SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. ___)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] 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 Rule 14a-11(c) or Rule 14a-12
Willow Grove Bancorp, Inc.
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on the 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>
Willow Grove Bancorp, Inc.
Welsh & Norristown Roads
Maple Glen, Pennsylvania 19002
(215) 646-5405
June 23, 1999
Dear Stockholder:
You are cordially invited to attend a Special Meeting of Stockholders of
Willow Grove Bancorp, Inc. The meeting will be held at Williamson's Restaurant,
located at 500 Blair Mill Road, Horsham, Pennsylvania, on Tuesday, July 27, 1999
at 11:00 a.m., Eastern Time. The matters to be considered by stockholders at the
Special Meeting are described in the accompanying materials.
It is very important that your shares be voted at the Special Meeting
regardless of the number you own or whether you are able to attend the meeting
in person. We urge you to mark, sign, and date your proxy card today and return
it in the envelope provided, even if you plan to attend the Special Meeting.
This will not prevent you from voting in person, but will ensure that your vote
is counted if you are unable to attend.
Your continued support of and interest in Willow Grove Bancorp, Inc. is
sincerely appreciated.
Sincerely,
/s/Frederick A. Marcell, Jr.
Frederick A. Marcell, Jr.
President and Chief Executive Officer
<PAGE>
WILLOW GROVE BANCORP, INC.
Welsh & Norristown Roads
Maple Glen, Pennsylvania 19002
(215) 646-5405
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NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held on July 27, 1999
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NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders ("Special
Meeting") of Willow Grove Bancorp, Inc. (the "Company") will be held at
Williamson's Restaurant, located at 500 Blair Mill Road, Horsham, Pennsylvania,
on Tuesday, July 27, 1999 at 11:00 a.m., Eastern Time, for the following
purposes, all of which are more completely set forth in the accompanying Proxy
Statement:
(1) To consider and approve the adoption of the 1999 Stock Option Plan;
(2) To consider and approve the adoption of the 1999 Recognition and
Retention Plan and Trust Agreement; and
(3) To transact such other business as may properly come before the
meeting or any adjournment thereof. Management is not aware of any
other such business.
The Board of Directors has fixed June 15, 1999 as the voting record date
for the determination of stockholders entitled to notice of and to vote at the
Special Meeting and at any adjournment thereof. Only those stockholders of
record as of the close of business on that date will be entitled to vote at the
Special Meeting or at any such adjournment.
By Order of the Board of Directors
/s/John T. Powers
John T. Powers
Corporate Secretary
Maple Glen, Pennsylvania
June 23, 1999
- --------------------------------------------------------------------------------
YOU ARE CORDIALLY INVITED TO ATTEND THE SPECIAL MEETING. IT IS IMPORTANT THAT
YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN IF YOU PLAN TO
BE PRESENT, YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY
PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU ATTEND THE MEETING, YOU MAY VOTE
EITHER IN PERSON OR BY PROXY. ANY PROXY GIVEN MAY BE REVOKED BY YOU IN WRITING
OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE THEREOF.
- --------------------------------------------------------------------------------
<PAGE>
WILLOW GROVE BANCORP, INC.
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PROXY STATEMENT
----------
SPECIAL MEETING OF STOCKHOLDERS
JULY 27, 1999
This Proxy Statement is furnished to holders of common stock, $.01 par
value per share ("Common Stock"), of Willow Grove Bancorp, Inc. (the "Company"),
a federal corporation and thrift holding company for Willow Grove Bank (the
"Bank"). The Company acquired all of the Bank's common stock issued in
connection with the reorganization of the Bank into the federal mutual holding
company form of ownership (the "Reorganization") in November 1998. Proxies are
being solicited on behalf of the Board of Directors of the Company to be used at
the Special Meeting of stockholders ("Special Meeting") to be held at
Williamson's Restaurant, located at 500 Blair Mill Road, Horsham, Pennsylvania,
on Tuesday, July 27, 1999 at 11:00 a.m., Eastern Time, and at any adjournment
thereof for the purposes set forth in the Notice of Special Meeting. This Proxy
Statement is first being mailed to stockholders on or about June 23, 1999.
The proxy solicited hereby, if properly signed and returned to the Company
and not revoked prior to its use, will be voted in accordance with the
instructions contained therein. If no contrary instructions are given, each
proxy received will be voted for the matters described below and, upon the
transaction of such other business as may properly come before the meeting, in
accordance with the best judgment of the persons appointed as proxies. Any
stockholder giving a proxy has the power to revoke it at any time before it is
exercised by (i) filing with the Secretary of the Company written notice thereof
(John T. Powers, Corporate Secretary, Willow Grove Bancorp, Inc., Welsh &
Norristown Roads, Maple Glen, Pennsylvania 19002); (ii) submitting a
duly-executed proxy bearing a later date; or (iii) appearing at the Special
Meeting and giving the Secretary notice of his or her intention to vote in
person. Proxies solicited hereby may be exercised only at the Special Meeting
and any adjournment thereof and will not be used for any other meeting.
VOTING
Only stockholders of record of the Company at the close of business on June
15, 1999 the ("Voting Record Date") are entitled to notice of and to vote at the
Special Meeting and at any adjournment thereof. On the Voting Record Date, there
were 5,143,487 shares of Common Stock issued and outstanding and the Company had
no other class of equity securities outstanding. Each share of Common Stock is
entitled to one vote at the Special Meeting on all matters properly presented at
the meeting.
The presence in person or by proxy of at least a majority of the issued and
outstanding shares of Common Stock entitled to vote is necessary to constitute a
quorum at the Special Meeting. The affirmative vote of the holders of a majority
of the total votes eligible to be cast (other than shares held by Willow Grove
Mutual Holding Company, the parent mutual holding company of the Company) in
person or by proxy at the Special Meeting is required for approval of the
proposals to approve the 1999 Stock Option Plan (the "Option Plan") and the 1999
Recognition and Retention Plan and Trust Agreement (the "Recognition Plan").
Under rules applicable to broker-dealers, the proposals to approve the Option
Plan and the Recognition Plan are considered "non-discretionary" items upon
which brokerage firms may not vote in their discretion on behalf of their
clients if such clients have not furnished voting instructions and for which
there may be "broker non-votes" at the meeting. Because of the required votes,
abstentions and broker non-votes will have the same effect as a vote against the
proposals to approve the Option Plan and the Recognition Plan.
1
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BENEFICIAL OWNERSHIP OF COMMON STOCK
BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of the Voting Record Date, certain
information as to the Common Stock beneficially owned by (i) each person or
entity, including any "group" as that term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended ("Exchange Act"), who or which was
known to the Company to be the beneficial owner of more than 5% of the issued
and outstanding Common Stock, (ii) the directors of the Company, (iii) certain
executive officers of the Company; and (iv) all directors and executive officers
of the Company as a group.
Amount and Nature
Name of Beneficial of Beneficial
Owner or Number of Ownership as of Percent of
Persons in Group June 15, 1999 (1) Common Stock
- ------------------ ----------------- ------------
Willow Grove Mutual Holding Company
Welsh & Norristown Roads
Maple Glen, Pennsylvania 19002 2,812,974 54.7%
Directors:
Lewis W. Hull 20,000 *
J. Ellwood Kirk 13,000(2) *
Stanley B. Kitzelman --
Charles F. Kremp, 3rd 10,000 *
William W. Langan 15,000(3) *
Frederick A. Marcell, Jr. 30,650(4) *
A. Brent O'Brien 15,000(5) *
Samuel H. Ramsey, III 28,900(6) *
William B. Weihenmayer 32,500(7) *
Other Executive Officers:
Thomas M. Fewer 24,600(8) *
John J. Foff, Jr. 8,000(9) *
John T. Powers 7,600(10) *
All Directors and Executive Officers of
the Company as a group (13 persons) 216,003 4.2%
- ----------
* Represents less than 1% of the outstanding stock.
(1) Based upon filings made pursuant to the Exchange Act and information
furnished by the respective individuals. Under regulations promulgated
pursuant to the Exchange Act, shares of Common Stock are deemed to be
beneficially owned by a person if he or she directly or indirectly has or
shares (i) voting power, which includes the power to vote or to direct the
voting of the shares, or (ii) investment power, which includes the power to
dispose or to direct the disposition of the shares. Unless otherwise
indicated, the named beneficial owner has sole voting and dispositive power
with respect to the shares.
(2) Includes 3,000 shares held by Mr. Kirk's spouse.
(3) All 15,000 shares are held by Mr. Langan's spouse.
(Footnotes continue on following page)
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(Footnotes continued from previous page)
(4) Includes 300 shares held by Mr. Marcell's spouse, 350 shares held by Mr.
Marcell's children, and 30,000 shares held in Mr. Marcell's account in the
Bank's (401)(k) retirement plan.
(5) All 15,000 shares are held jointly with Mr. O'Brien's spouse.
(6) Includes 3,000 shares held by Mr. Ramsey's spouse, 1,000 shares held in Mr.
Ramsey's IRA account and 6,400 shares held in a trust for which Mr. Ramsey
is a beneficiary.
(7) Includes 5,000 shares held by Mr. Weihenmayer's children.
(8) Includes 1,000 shares held by Mr. Fewer's children and 13,600 shares held
in Mr. Fewer's account in the Bank's 401(k) retirement plan.
(9) Includes 6,700 shares held in Mr. Foff's account in the Bank's 401(k)
retirement plan.
(10) Includes 100 shares held by Mr. Powers' children and 6,000 shares held in
Mr. Powers' account in the Bank's 401(k) retirement plan.
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PROPOSAL TO ADOPT THE 1999 STOCK OPTION PLAN
General
The Board of Directors has adopted the Option Plan which is designed to
attract and retain qualified personnel in key positions, provide directors,
officers and key employees with a proprietary interest in the Company and as an
incentive to contribute to the success of the Company and reward key employees
for outstanding performance. The Option Plan provides for the grant of incentive
stock options intended to comply with the requirements of Section 422 of the
Internal Revenue Code of 1986, as amended ("Code") ("incentive stock options"),
non-qualified or compensatory stock options and stock appreciation rights
(collectively "Awards"). Awards will be available for grant to directors and key
employees of the Company and any of its subsidiaries, except that non-employee
directors will be eligible to receive only awards of non-qualified stock
options. If stockholder approval is obtained, options to acquire shares of
Common Stock will be awarded to officers, key employees and directors of the
Company and the Bank with an exercise price equal to the fair market value of
the Common Stock on the date of grant.
Description of the Option Plan
The following description of the Option Plan is a summary of its terms and
is qualified in its entirety by reference to the Option Plan, a copy of which is
attached hereto as Appendix A.
Administration. The Option Plan will be administered and interpreted by a
committee of the Board of Directors ("Committee") that is comprised solely of
two or more non-employee directors. The members of the Committee will initially
consist of Messrs. Lewis W. Hull, William W. Langan and A. Brent O'Brien.
Stock Options. Under the Option Plan, the Board of Directors or the
Committee will determine which officers, key employees and non-employee
directors will be granted options, whether such options will be incentive or
compensatory options (in the case of options granted to employees), the number
of shares subject to each option, the exercise price of each option and whether
such options may be exercised by delivering other shares of Common Stock. The
per share exercise price of both an incentive stock and a compensatory option
shall at least equal the fair market value of a share of Common Stock on the
date the option is granted (110% of fair market value in the case of incentive
stock options granted to employees who are 5% stockholders).
All options granted to participants under the Option Plan shall become
vested and exercisable at the rate of 20% per year on each annual anniversary of
the date the options were granted, and the right to exercise shall be
cumulative. Notwithstanding the foregoing, no vesting shall occur on or after a
participant's employment or service with the Company is terminated for any
reason other than his death or disability. Unless the Committee or Board of
Directors shall specifically state otherwise at the time an option is granted,
all options granted to participants shall become vested and exercisable in full
on the date an optionee terminates his employment or service with the Company or
a subsidiary company because of his death or disability. In addition, all stock
options will become vested and exercisable in full on the date an optionee
terminates his employment or service with the Company or a subsidiary company
due to retirement or as the result of a change in control of the Company if, as
of such date of retirement or change in control of the Company: (i) such
treatment is either authorized or is not prohibited by applicable laws and
regulations, or (ii) an amendment to the Option Plan providing for such
treatment has been approved by the stockholders of the Company at a meeting of
stockholders held more than one year after the consummation of the Offering.
Each stock option or portion thereof shall be exercisable at any time on or
after it vests and is exercisable until the earlier of ten years after its date
of grant or six months after the date on which the optionee's employment
terminates (three years after termination of service in the case of non-employee
directors), unless extended by the Committee or the Board of Directors to a
period not to exceed five years from such termination. Unless stated otherwise
at the time an option is granted, (i) if an optionee terminates his employment
or service with the Company as a result of disability or retirement without
having fully exercised his options, the optionee shall have three years
following his termination
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due to disability or retirement to exercise such options, and (ii) if an
optionee terminates his employment or service with the Company following a
change in control of the Company without having fully exercised his options, the
optionee shall have the right to exercise such options during the remainder of
the original ten year term of the option. However, failure to exercise incentive
stock options within three months after the date on which the optionee's
employment terminates may result in adverse tax consequences to the optionee. If
an optionee dies while serving as an employee or a non-employee director or
terminates employment or service as a result of disability or retirement and
dies without having fully exercised his options, the optionee's executors,
administrators, legatees or distributees of his estate shall have the right to
exercise such options during the one year period following his death. In no
event shall any option be exercisable more than ten years from the date it was
granted.
Stock options are non-transferable except by will or the laws of descent
and distribution, and during an optionee's lifetime, shall be exercisable only
by such optionee or his guardian or legal representative. Notwithstanding the
foregoing, an optionee who holds non-qualified options may transfer such options
to his or her spouse, lineal ascendants, lineal descendants, or to a duly
established trust for the benefit of one or more of these individuals. Options
so transferred may thereafter be transferred only to the optionee who originally
received the grant or to an individual or trust to whom the optionee could have
initially transferred the option. Options which are so transferred shall be
exercisable by the transferee according to the same terms and conditions as
applied to the optionee.
Payment for shares purchased upon the exercise of options may be made (i)
in cash or by check, (ii) by delivery of a properly executed exercise notice,
together with irrevocable instructions to a broker to sell the shares and then
to properly deliver to the Company the amount of sale proceeds to pay the
exercise price, all in accordance with applicable laws and regulations or (iii)
if permitted by the Committee or the Board, by delivering shares of Common Stock
(including shares acquired pursuant to the exercise of an option) with a fair
market value equal to the total option price of the shares being acquired
pursuant to the option, by withholding some of the shares of Common Stock which
are being purchased upon exercise of an option, or any combination of the
foregoing. With respect to subclause (iii) in the preceding sentence, the shares
of Common Stock delivered to pay the purchase price must have either been (a)
purchased in open market transactions or (b) issued by the Company pursuant to a
plan thereof, in each case more than six months prior to the exercise date of
the option.
If the fair market value of a share of Common Stock at the time of exercise
is greater than the exercise price per share, this feature would enable the
optionee to acquire a number of shares of Common Stock upon exercise of the
Option, which is greater than the number of shares delivered as payment for the
exercise price. In addition, an optionee can exercise his or her option in whole
or in part and then deliver the shares acquired upon such exercise (if permitted
by the Committee or the Board) as-payment for the exercise price of all or part
of his options. Again, if the fair market value of a share of Common Stock at
the time of exercise is greater than the exercise price per share, this feature
would enable the optionee to either (i) reduce the amount of cash required to
receive a fixed number of shares upon exercise of the option or (ii) receive a
greater number of shares upon exercise of the option for the same amount of cash
that would have otherwise been used. Because options may be exercised in part
from time to time, the ability to deliver Common Stock as payment of the
exercise price could enable the optionee to turn a relatively small number of
shares into a large number of shares. In addition, an optionee can elect, with
the Committee's concurrence, to defer the delivery of the proceeds of the
exercise of any compensatory option not transferred under the terms of the
Option Plan. Such deferral must comply with the provisions of the Option Plan
and other rules and regulations as may be established by the Committee.
Stock Appreciation Rights. Under the Option Plan, the Board of Directors or
the Committee is authorized to grant rights to optionees ("Stock Appreciation
Rights") under which an optionee may surrender any exercisable incentive stock
option or compensatory stock option or part thereof in return for payment by the
Company to the optionee of cash or Common Stock, or a combination thereof, in an
amount equal to the excess of the fair market value of the shares of Common
Stock subject to option at the time over the option price of such shares. Stock
Appreciation Rights may be granted concurrently with the stock options to which
they relate or, with respect to compensatory options,
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at any time thereafter which is prior to the exercise or expiration of such
options. The proceeds of the exercise of a stock appreciation right may also be
deferred as provided by the provisions of the Option Plan.
Number of Shares Covered by the Option Plan. A total of 224,087 shares of
Common Stock, which is equal to 10% of the minority interest of the Common Stock
sold in the Reorganization, has been reserved for future issuance pursuant to
the Option Plan. In the event of a stock split, subdivision, stock dividend or
any other capital adjustment, the number of shares of Common Stock under the
Option Plan, the number of shares to which any Award relates and the exercise
price per share under any option or stock appreciation right shall be adjusted
to reflect such increase or decrease in the total number of shares of Common
Stock outstanding or such capital adjustment. The Option Plan provides that
grants to each employee and non-employee director shall not exceed 25% and 5% of
the shares of Common Stock available under the Option Plan, respectively. Awards
made to non-employee directors in the aggregate may not exceed 30% of the number
of shares available under the Option Plan.
Amendment and Termination of the Option Plan. Unless sooner terminated, the
Option Plan shall continue in effect for a period of ten years from June 22,
1999, the date the Option Plan was adopted by the Board of Directors.
Termination of the Option Plan shall not affect any previously granted Awards.
Federal Income Tax Consequences. Under current provisions of the Code, the
federal income tax treatment of incentive stock options and compensatory stock
options is different. As regards incentive stock options, an optionee who meets
certain holding period requirements will not recognize income at the time the
option is granted or at the time the option is exercised, and a federal income
tax deduction generally will not be available to the Company at any time as a
result of such grant or exercise. With respect to compensatory stock options,
the difference between the fair market value on the date of exercise and the
option exercise price generally will be treated as compensation income upon
exercise, and the Company will be entitled to a deduction in the amount of
income so recognized by the optionee. Upon the exercise of a stock appreciation
right, the holder will realize income for federal income tax purposes equal to
the amount received by him, whether in cash, shares of stock or both, and the
Company will be entitled to a deduction for federal income tax purposes in the
same amount.
Section 162(m) of the Code generally limits the deduction for certain
compensation in excess of $1.0 million per year paid by a publicly-traded
corporation to its chief executive officer and the four other most highly
compensated executive officers ("covered executives"). Certain types of
compensation, including compensation based on performance goals, are excluded
from the $1.0 million deduction limitation. In order for compensation to qualify
for this exception: (i) it must be paid solely on account of the attainment of
one or more preestablished, objective performance goals; (ii) the performance
goal must be established by a compensation committee consisting solely of two or
more outside directors, as defined; (iii) the material terms under which the
compensation is to be paid, including performance goals, must be disclosed to,
and approved by, stockholders in a separate vote prior to payment; and (iv)
prior to payment, the compensation committee must certify that the performance
goals and any other material terms were in fact satisfied (the "Certification
Requirement").
Treasury regulations provide that compensation attributable to a stock
option or stock appreciation right is deemed to satisfy the requirement that
compensation be paid solely on account of the attainment of one or more
performance goals if: (i) the grant is made by a compensation committee
consisting solely of two or more outside directors, as defined; (ii) the plan
under which the option or stock appreciation right is granted states the maximum
number of shares with respect to which options or stock appreciation rights may
be granted during a specified period to any employee; and (iii) under the terms
of the option or stock appreciation right, the amount of compensation the
employee could receive is based solely on an increase in the value of the stock
after the date of grant or award. The Certification Requirement is not necessary
if these other requirements are satisfied.
The Option Plan has been designed to meet the requirements of Section
162(m) of the Code and, as a result, the Company believes that compensation
attributable to stock options and stock appreciation rights granted under the
Option Plan in accordance with the foregoing requirements will be fully
deductible under Section 162(m) of the Code.
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If the non-excluded compensation of a covered executive exceeded $1.0 million,
however, compensation attributable to other awards, such as restricted stock,
may not be fully deductible unless the grant or vesting of the award is
contingent on the attainment of a performance goal determined by a compensation
committee meeting specified requirements and disclosed to and approved by the
stockholders of the Company. The Board of Directors believes that the likelihood
of any impact on the Company from the deduction limitation contained in Section
162(m) of the Code is remote at this time.
The above description of tax consequences under federal law is necessarily
general in nature and does not purport to be complete. Moreover, statutory
provisions are subject to change, as are their interpretations, and their
application may vary in individual circumstances. Finally, the consequences
under applicable state and local income tax laws may not be the same as under
the federal income tax laws.
Accounting Treatment. Stock appreciation rights will, in most cases,
require a charge against the earnings of the Company each year representing
appreciation in the value of such rights over periods in which they become
exercisable. Such charge is based on the difference between the exercise price
specified in the related option and the current market price of the Common
Stock. In the event of a decline in the market price of the Common Stock
subsequent to a charge against earnings related to the estimated costs of stock
appreciation rights, a reversal of prior charges is made in the amount of such
decline (but not to exceed aggregate prior charges).
Neither the grant nor the exercise of an incentive stock option or a
non-qualified stock option under the Option Plan currently requires any charge
against earnings under generally accepted accounting principles. In October
1995, the Financial Accounting Standards Board ("FASB") issued Statement of
Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation," which is effective for transactions entered into after December
15, 1995. This Statement establishes financial accounting and reporting
standards for stock-based employee compensation plans. This Statement defines a
fair value method of accounting for an employee stock option or similar equity
instrument and encourages all entities to adopt that method of accounting for
all of their employee stock compensation plans. However, it also allows an
entity to continue to measure compensation cost for those plans using the
intrinsic value method of accounting prescribed by APB Opinion No. 25,
"Accounting for Stock Issued to Employees." Under the fair value method,
compensation cost is measured at the grant date based on the value of the award
and is recognized over the service period, which is usually the vesting period.
Under the intrinsic value method, compensation cost is the excess, if any, of
the quoted market price of the stock at grant date or other measurement date
over the amount an employee must pay to acquire the stock. The Company
anticipates that it will use the intrinsic value method, in which event pro
forma disclosure will be included in the footnotes to the Company's financial
statements to show what net income and earnings per share would have been if the
fair value method had been utilized. If the Company elects to utilize the fair
value method, its net income and earnings per share may be adversely affected.
Stockholder Approval. No Awards will be granted under the Option Plan
unless the Option Plan is approved by stockholders. Stockholder ratification of
the Option Plan will also satisfy Nasdaq Stock Market ("Nasdaq Stock Market")
listing, federal tax, and requirements of the Office of Thrift Supervision
("OTS").
Awards to be Granted. The Board of Directors of the Company adopted the
Option Plan and the Committee established thereunder intends to grant options to
executive officers, employees and non-employee directors of the Company and the
Bank. However, the timing of any such grants, the individual recipients and the
specific amounts of such grants have not been determined
Regulatory Requirements. The Option Plan and the Recognition Plan (the
"Plans") comply with applicable OTS regulations and are required to be submitted
to the OTS after approval by stockholders. No assurance can be given as to
whether the OTS will raise any objections to the Plans as presented to
stockholders or whether the OTS may require modifications to be made to the
Plans. A vote for approval of the Plans shall be deemed to be a vote for
approval of the Plans as the same may be required to be modified by the OTS,
provided that the change is not material as determined by the Company. The
Company will not make any modification to the Plans which would increase the
level of benefits
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from that presented. Non-objection to the Plans by the OTS shall not constitute
approval or endorsement of the Plans by the OTS.
Under OTS regulations, certain stock benefit plans established or
implemented within one year following the completion of a mutual to stock
conversion are required to contain certain restrictions and limitations, which
are contained in the Plans. Specifically, the OTS regulations provide, among
other provisions, that awards begin vesting no earlier than one year from the
date the plans are approved by stockholders, shall not vest at a rate in excess
of 20% per year and shall not provide for accelerated vesting except in the case
of disability or death. Recently, the OTS has authorized the elimination of
these provisions more than one year after a conversion, provided that
stockholder approval of such amendments to the plans is obtained. The Plans
provide that in the event of termination of service following a change in
control of the Company or retirement, vesting of awards would accelerate if, as
of such date: (i) such treatment is either authorized or is not prohibited by
applicable law and regulations, or (ii) amendments to the Plans providing for
such treatment has been approved by the stockholders of the Company at a meeting
of stockholders held more than one year after the consummation of the
Conversion. The Company currently plans to submit amendments to the Plans to
stockholders at its first meeting of stockholders held one year after the
Conversion in order to remove these restrictions and to provide that new awards
granted after such stockholder approval shall vest at the rate determined by the
Board or the Committee at the time of grant and that both existing and new
awards shall accelerate and vest upon termination of service to the Company upon
retirement or following a change in control of the Company.
The Board of Directors recommends that stockholders vote FOR adoption of
the 1999 Stock Option Plan.
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PROPOSAL TO ADOPT THE 1999 RECOGNITION
AND RETENTION PLAN AND TRUST AGREEMENT
General
The Board of Directors of the Company has adopted the Recognition Plan, the
objective of which is to enable the Company to provide officers, key employees
and directors with a proprietary interest in the Company and as an incentive to
contribute to its success. Officers, key employees and directors of the Company
and the Bank who are selected by the Board of Directors of the Company or
members of a committee appointed by the Board will be eligible to receive
benefits under the Recognition Plan. If stockholder approval is obtained, shares
will be granted to officers, key employees and directors as determined by the
Committee or the Board of Directors.
Description of the Recognition Plan
The following description of the Recognition Plan is a summary of its terms
and is qualified in its entirety by reference to the Recognition Plan, a copy of
which is attached hereto as Appendix B.
Administration. A committee of the Board of Directors of the Company will
administer the Recognition Plan, which shall consist of two or more members of
the Board, each of whom shall be a non-employee director of the Company. The
members of the Committee will initially consist of Messrs. Lewis W. Hull,
William W. Langan and A. Brent O'Brien, who will also serve as trustees of the
trust established pursuant to the Recognition Plan ("Trust"). The trustees will
have the responsibility to invest all funds contributed by the Company to the
Trust.
Upon stockholder approval of the Recognition Plan, the Company will
contribute sufficient funds to the Trust so that the Trust can purchase a number
of shares of Common Stock equal to 4% of the Common Stock sold in the
Reorganization, or 89,635 shares. It is currently anticipated that these shares
will be acquired through open market purchases to the extent available, although
the Company reserves the right to issue previously unissued shares or treasury
shares to the Recognition Plan. The issuance of new shares by the Company would
be dilutive to the voting rights of existing stockholders and to the Company's
book value per share and earnings per share.
Grants. Shares of Common Stock granted pursuant to the Recognition Plan
will be in the form of restricted stock payable over a five-year period at a
rate of 20% per year, beginning one year from the anniversary date of the grant.
A recipient will be entitled to all voting and other stockholder rights with
respect to shares which have been earned and allocated under the Recognition
Plan. In addition, recipients of shares of restricted stock that have been
granted pursuant to the Recognition Plan that have not yet been earned and
distributed (other than shares granted pursuant to Performance Share Awards (as
defined below)) are entitled to direct the trustees of the Trust as to the
voting of such shares on the recipients behalf. However, until such shares have
been earned and allocated, they may not be sold, assigned, pledged or otherwise
disposed of and are required to be held in the Trust. In addition, any cash
dividends or stock dividends declared in respect of unvested share awards will
be held by the Trust for the benefit of the recipients and such dividends,
including any interest thereon, will be paid out proportionately by the Trust to
the recipients thereof as soon as practicable after the share awards become
earned.
If a recipient terminates employment or service with the Company for
reasons other than death, disability or retirement, the recipient will forfeit
all rights to the allocated shares under restriction. All shares subject to an
award held by a recipient whose employment or service with the Company or any
subsidiary terminates due to death or disability shall be deemed earned as of
the recipient's last day of employment or service with the Company or any
subsidiary and shall be distributed as soon as practicable thereafter. In
addition, in the event that a recipient's employment or service with the Company
or any subsidiary terminates due to retirement or following a change in control
of the Company all shares subject to an award held by a recipient shall be
deemed earned as of the recipient's last day of employment with or service to
the Company or any subsidiary and shall be distributed as soon as practicable
thereafter, provided that as of the date of such retirement or change in
control: (i) such treatment is either authorized
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<PAGE>
or is not prohibited by applicable laws and regulations, or (ii) an amendment to
the Recognition Plan providing for such treatment has been approved by the
stockholders of the Company at a meeting of stockholders held more than one year
after the consummation of the Reorganization.
Performance Share Awards. The Recognition Plan provides the Committee with
the ability to condition or restrict the vesting or exercisability of any
Recognition Plan award upon the achievement of performance targets or goals as
set forth under the Recognition Plan. Any Recognition Plan award subject to such
conditions or restrictions is considered to be a "Performance Share Award."
Subject to the express provisions of the Recognition Plan and as discussed in
this paragraph, the Committee has discretion to determine the terms of any
Performance Share Award, including the amount of the award, or a formula for
determining such, the performance criteria and level of achievement related to
these criteria which determine the amount of the award granted, issued,
retainable and/or vested, the period as to which performance shall be measured
for determining achievement of performance (a "performance period"), the timing
of delivery of any awards earned, forfeiture provisions, the effect of
termination of timing of delivery of any awards earned, forfeiture provisions,
the effect of termination of employment for various reasons, and such further
terms and conditions, in each case not inconsistent with the Recognition Plan,
as may be determined from time to time by the Committee. Each Performance Share
Award shall be granted and administered to comply with the requirements of
Section 162(m) of the Code. Accordingly, the performance criteria upon which
Performance Share Awards are granted, issued, retained and/or vested shall be a
measure based on one or more Performance Goals (as defined below).
Notwithstanding satisfaction of any Performance Goals, the number of shares
granted, issued, retainable and/or vested under a Performance Share Award may be
reduced or eliminated, but not increased, by the Committee on the basis of such
further considerations as the Committee in its sole discretion shall determine.
Subject to stockholder approval of the Plan, the Performance Goals for any
Performance Share Award shall be based upon any one or more of the following
performance criteria, either individually, alternatively or any combination,
applied to either the Company as a whole or to a business unit or subsidiary,
either individually, alternatively or in any combination, and measured either on
an absolute basis or relative to a pre-established target, to previous years'
results or to a designated comparison group, in each case as preestablished by
the Committee under the terms of the Performance Share Award: net income, as
adjusted for non-recurring items; cash earnings; earnings per share; cash
earnings per share; return on average equity; return on average assets; assets;
stock price; total stockholder return; capital; net interest income; market
share; cost control or efficiency ratio; and asset growth. The Committee is
considering engaging outside compensation consultants to assist it in
establishing such performance-based targets.
Federal Income Tax Consequences. Pursuant to Section 83 of the Code,
recipients of Recognition Plan awards will recognize ordinary income in an
amount equal to the fair market value of the shares of Common Stock granted to
them at the time that the shares vest and become transferable. A recipient of a
Recognition Plan award may also elect, however, to accelerate the recognition of
income with respect to his or her grant to the time when shares of Common Stock
are first transferred to him or her, notwithstanding the vesting schedule of
such awards. The Company will be entitled to deduct as a compensation expense
for tax purposes the same amounts recognized as income by recipients of
Recognition Plan awards in the year in which such amounts are included in
income.
Section 162(m) of the Code generally limits the deduction for certain
compensation in excess of $1.0 million per year paid by a publicly-traded
corporation to its covered executives. Certain types of compensation, including
compensation based on performance goals, are excluded from the $1.0 million
deduction limitation. In order for compensation to qualify for this exception:
(i) it must be paid solely on account of the attainment of one or more
preestablished, objective performance goals; (ii) the performance goal must be
established by a compensation committee consisting solely of two or more outside
directors, as defined; (iii) the material terms under which the compensation is
to be paid, including performance goals, must be disclosed to and approved by
stockholders in a separate vote prior to payment; and (iv) prior to payment, the
compensation committee must certify that the performance goals and any other
material terms were in fact satisfied.
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<PAGE>
The Recognition Plan has been designed to meet the requirements of Section
162(m) of the Code and, as a result, the Company believes that compensation
attributable to Performance Share Awards granted under the Recognition Plan in
accordance with the foregoing requirements will be fully deductible under
Section 162(m) of the Code. The Board of Directors believes that the likelihood
of any impact on the Company from the deduction limitation contained in Section
162(m) of the Code is remote at this time.
The above description of tax consequences under federal law is necessarily
general in nature and does not purport to be complete. Moreover, statutory
provisions are subject to change, as are their interpretations, and their
application may vary in individual circumstances. Finally, the consequences
under applicable state and local income tax laws may not be the same as under
the federal income tax laws.
Accounting Treatment. For a discussion of SFAS No. 123, see "Proposal to
Adopt the 1999 Stock Option Plan - Description of Option Plan - Accounting
Treatment." Under the intrinsic value method, the Company will also recognize a
compensation expense as shares of Common Stock granted pursuant to the
Recognition Plan vest. The amount of compensation expense recognized for
accounting purposes is based upon the fair market value of the Common Stock at
the date of grant to recipients, rather than the fair market value at the time
of vesting for tax purposes. The vesting of plan share awards will have the
effect of increasing the Company's compensation expense.
Stockholder Approval. No shares will be granted under the Recognition Plan
unless the Recognition Plan is approved by stockholders.
Shares to be Granted. The Board of Directors of the Company adopted the
Recognition Plan and the Committee established thereunder intends to grant
shares to executive officers, key employees and non-employee directors of the
Company and the Bank. The Recognition Plan provides that grants to each employee
and each non-employee director shall not exceed 25% and 5% of the shares of
Common Stock available under the Recognition Plan, respectively. Awards made to
non-employee directors in the aggregate may not exceed 30% of the number of
shares available under the Recognition Plan. However, the timing of any such
grants, the individual recipients and the specific amounts of such grants have
not been determined.
Regulatory Requirements. For a discussion of OTS requirements related to
the Recognition Plan see "Proposal to Adopt the 1999 Stock Option Plan -
Description of the Option Plan - Regulatory Requirements."
The Board of Directors recommends that stockholders vote FOR adoption of
the 1999 Recognition and Retention Plan and Trust Agreement.
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MANAGEMENT COMPENSATION
Summary Compensation Table
The following table sets forth a summary of certain information concerning
the compensation paid by the Bank (including amounts deferred to future periods
by the officers) for services rendered in all capacities during the fiscal year
ended June 30, 1998 to the President and Chief Executive Officer of the Bank and
the three other officers of the Bank whose compensation exceeded $100,000.
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------------------- ---------------------------------
Awards Payouts
----------------------- -------
Other Securities
Name and Fiscal Annual Restricted Underlying LTIP All Other
Principal Position Year Salary Bonus Compensation Stock Options Payouts Compensation(1)
------------------ ------ ------ ----- ------------ ---------- ---------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Frederick A. Marcell, Jr.
President and Chief
Executive Officer 1998 $142,000 $21,675 -- -- -- -- $15,700
Thomas M. Fewer
Senior Vice President 1998 $ 87,500 $13,977 -- -- -- -- $10,937
John J. Foff, Jr.
Senior Vice President
and Chief Financial
Officer 1998 $ 87,500 $13,977 -- -- -- -- $10,937
John T. Powers
Senior Vice President,
Community Banking 1998 $ 87,500 $13,977 -- -- -- -- $10,079
</TABLE>
- ----------
(1) Consists of the Bank's contributions to the Bank's 401(k) profit sharing
plan and the Bank's money purchase plan to the account of the named
executive officers. In addition to the amounts allocated under the Bank's
401(k) profit sharing plan and money purchase plan, in fiscal 1998, the
Bank adopted a supplemental executive retirement plan ("SERP") for the
benefit of Mr. Marcell. The Bank accrued $234,000 with respect to such SERP
in the fiscal year. Under the Bank's 401(k) profit sharing plan for fiscal
1998, $5,050, $4,375, $4,375 and $3,516, respectively, was allocated to the
accounts of Messrs. Marcell, Fewer, Foff and Powers. Under the Bank's money
purchase pension plan in fiscal 1998, $10,650, $6,562, $6,562 and $6,562,
respectively, was allocated to the accounts of Messrs. Marcell, Fewer, Foff
and Powers.
Employment Agreements
In connection with the Reorganization and Stock Issuance, the Bank (the
"Employer") entered into employment agreements with each of Messrs. Marcell,
Fewer, Foff and Powers (the "Executives"), which agreements superseded existing
employment agreements with such persons. The Employer has agreed to employ Mr.
Marcell for a term of two years and Messrs. Fewer, Foff and Powers for a term of
one year, in each case in their current respective positions. The agreements
with the Executives are at their current salary levels. The Executives'
compensation and expenses shall be paid by the Bank in the same proportion as
the time and services actually expended by the Executives on behalf of the
Employer. With respect to the Executives, the employment agreements will be
reviewed annually by the Boards of Directors of the Employer. The term of the
Executives' employment agreements shall be extended annually for a successive
additional one-year period unless the Bank provides notice not less than 30 days
prior to such date, not to extend the employment term.
Each of the employment agreements is terminable with or without cause by
the Employer. The Executives have no right to compensation or other benefits
pursuant to the employment agreements for any period after voluntary termination
or termination by the Employer for cause, disability, retirement or death. In
the event that (i) the Executive terminates his employment because of failure to
comply with any material provision of the employment agreement by
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<PAGE>
the Employer or the Employer changes the Executive's title or duties or (ii) the
employment agreement is terminated by the Employer other than for cause,
disability, retirement or death or by the executive as a result of certain
adverse actions which are taken with respect to the executive's employment
following a change in control of the Company, as defined, the Executives will be
entitled to a cash severance amount equal to their base salary plus bonus
received in the prior year, multiplied by the number of years in the initial
term of the employment agreement (two in the case of Mr.
Marcell and one in the case of the other Executives).
A change in control is generally defined in the employment agreements to
include any change in control of the Company required to be reported under the
federal securities laws, as well as (i) the acquisition by any person of 20% or
more of the Company's outstanding voting securities and (ii) a change in a
majority of the directors of the Company during any three-year period without
the approval of at least two-thirds of the persons who were directors of the
Company at the beginning of such period.
Although the above-described employment agreements could increase the cost
of any acquisition of control of the Company, management of the Company does not
believe that the terms thereof would have a significant anti-takeover effect.
The Company and/or the Bank may determine to enter into similar employment
agreements with other officers of the Company and/or the Bank in the future.
Directors' Compensation. Members of the Bank's Board of Directors, except
for Mr. Marcell, receive $1,000 per Board meeting and $500 per committee
meeting. The Chairman of the Board of Directors receives $1,260 per Board
meeting and the chairman of each committee receives $600 per committee meeting.
To receive such compensation, directors may not be absent for more than two
Board meetings or two committee meetings. Board fees are subject to periodic
adjustment by the Board of Directors.
Money Purchase Plan. The Bank maintains a Money Purchase Plan (the
"Retirement Plan") which provides retirement benefits for all full-time
employees who have attained the age of 21 and have completed one year of service
with the Bank. The Retirement Plan is a tax-qualified money purchase plan
pursuant to which the Bank's contributions are fixed based upon the compensation
of each participant. For each participant, the Bank's contribution is an amount
equal to 7.5% of the participant's base salary. With the consent of the
Retirement Plan's administrator, the Retirement Plan may also accept rollover
contributions from employees. Messrs. Marcell, Fewer, Foff and Powers are
trustees of the Retirement Plan. A participant's account balance becomes 100%
vested after completion of seven years of service. A participant also becomes
100% vested in his account balance in the event of death, disability or
retirement. Normal retirement age under the Retirement Plan is 65. Retirement
expense is funded as accrued and amounted to $182,000 for fiscal year 1998.
Supplemental Executive Retirement Plan. The Bank adopted a supplemental
executive retirement plan ("SERP") in fiscal 1998 in order to supplement the
retirement benefits payable to Mr. Marcell pursuant to the Bank's qualified
plans. The SERP provides for payments for a period of ten years beginning at
retirement based on a percentage of annual cash compensation. Assuming Mr.
Marcell remains in the Bank's employ at age 68, the SERP provides for an annual
benefit equal to 50% of his annual cash compensation. In the event that Mr.
Marcell retires prior to age 68, his benefit will be reduced in increments of 5%
per year. The Bank accrued $234,000 on a pre-tax basis $144,000 after tax for
the year ended June 30, 1998, which included estimated costs for past service.
Transactions With Certain Related Persons
In accordance with applicable federal laws and regulations, the Bank offers
mortgage loans to its directors, officers and employees as well as members of
their immediate families for the financing of their primary residences and
certain other loans. These loans are generally made on substantially the same
terms as those prevailing at the time for comparable transactions with
non-affiliated persons. It is the belief of management that these loans neither
involve more than the normal risk of collectibility nor present other
unfavorable features.
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<PAGE>
Section 22(h) of the Federal Reserve Act generally provides that any credit
extended by a savings institution, such as the Savings Bank, to its executive
officers, directors and, to the extent otherwise permitted, principal
stockholder(s), or any related interest of the foregoing, must be on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions by the savings institution
with non-affiliated parties; unless the loans are made pursuant to a benefit or
compensation program that (i) is widely available to employees of the
institution and (ii) does not give preference to any director, executive officer
or principal stockholder, or certain affiliated interests of either, over other
employees of the savings institution, and must not involve more than the normal
risk of repayment or present other unfavorable features.
STOCKHOLDER PROPOSALS
Any proposal which a stockholder wishes to have included in the proxy
materials of the Company relating to the first annual meeting of stockholders of
the Company, which is expected to be held on October 26, 1999, must have been
received at the principal executive offices of the Company, Welsh & Norristown
Roads, Maple Glen, Pennsylvania 19002, Attention: John T. Powers, Corporate
Secretary, no later than July 26, 1999. If such proposal is in compliance with
all applicable requirements, including those found in Rule 14a-8 under the
Exchange Act, it will be included in the proxy statement and set forth on the
form of proxy issued for such annual meeting of stockholders. It is urged that
any such proposals be sent certified mail, return receipt requested.
Stockholder proposals which are not submitted for inclusion in the
Company's proxy materials pursuant to Rule 14a-8 under the Exchange Act may be
brought before an annual meeting pursuant to Section 15 of the Company's Bylaws,
which provides that business at an annual meeting of stockholders must be (a)
properly brought before the meeting by or at the direction of the Board of
Directors, or (b) otherwise properly brought before the meeting by a
stockholder. For business to be properly brought before an annual meeting by a
stockholder, the stockholder must have given timely notice thereof in writing to
the Secretary of the Company. To be timely with respect to the Company's first
annual meeting of stockholders, a stockholder's notice must have been delivered
to or mailed and received at the principal executive offices of the Company no
later than September 26, 1999. A stockholder's notice to the Secretary must set
forth as to each matter the stockholder proposes to bring before the annual
meeting (a) a brief description of the business desired to be brought before the
annual meeting, (b) the name and address, as they appear on the Company's books,
of the stockholder proposing such business, (c) the class and number of shares
of the Company which are beneficially owned by the stockholder and (d) any
material interest of the stockholder in such business.
OTHER MATTERS
Management is not aware of any business to come before the Special Meeting
other than the matters described above in this Proxy Statement. However, if any
other matters should properly come before the meeting, it is intended that the
proxies solicited hereby will be voted with respect to those other matters in
accordance with the judgment of the persons voting the proxies.
The cost of the solicitation of proxies will be borne by the Company. The
Company has retained Corporate Investor Communications, Inc., a professional
proxy solicitation firm, to assist in the solicitation of proxies. Such firm
will be paid a fee of $4,000, plus reimbursement for out-of-pocket expenses. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending the proxy
materials to the beneficial owners of the Common Stock. In addition to
solicitations by mail, directors, officers and employees of the Company may
solicit proxies personally or by telephone without additional compensation.
14
<PAGE>
APPENDIX A
WILLOW GROVE BANCORP, INC.
1999 STOCK OPTION PLAN
ARTICLE I
ESTABLISHMENT OF THE PLAN
Willow Grove Bancorp, Inc. (the "Corporation") hereby establishes this 1999
Stock Option Plan (the "Plan") upon the terms and conditions hereinafter stated.
ARTICLE II
PURPOSE OF THE PLAN
The purpose of this Plan is to improve the growth and profitability of the
Corporation and its Subsidiary Companies by providing Employees and Non-Employee
Directors with a proprietary interest in the Corporation as an incentive to
contribute to the success of the MHC, the Corporation and the Subsidiary
Companies, and rewarding Employees and Non-Employee Directors for outstanding
performance. All Incentive Stock Options issued under this Plan are intended to
comply with the requirements of Section 422 of the Code, and the regulations
thereunder, and all provisions hereunder shall be read, interpreted and applied
with that purpose in mind. Each recipient of an Award hereunder is advised to
consult with his or her personal tax advisor with respect to the tax
consequences under federal, state, local and other tax laws of the receipt
and/or exercise of an Award hereunder.
ARTICLE III
DEFINITIONS
3.01 "Award" means an Option or Stock Appreciation Right granted pursuant
to the terms of this Plan.
3.02 "Bank" means Willow Grove Bank, the wholly owned subsidiary of the
Corporation.
3.03 "Board" means the Board of Directors of the Corporation.
3.04 "Change in Control of the Corporation" shall mean the occurrence of
any of the following: (i) the acquisition of control of the Corporation as
defined in 12 C.F.R. ss.574.4, unless a presumption of control is successfully
rebutted or unless the transaction is exempted by 12 C.F.R. ss.574.3(c)(vii), or
any successor to such sections; (ii) an event that would be required to be
reported in response to Item 1(a)of Form 8-K or Item 6(e) of Schedule 14A of
Regulation 14A pursuant to the Exchange Act, or any successor thereto, whether
or not any class of securities of the Corporation is registered under the
Exchange Act; (iii) any "person," other than the MHC, (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Corporation representing 20% or more of the
combined voting power of the Corporation's then outstanding securities except
for any securities purchased by the Corporation or the Bank; or (iv) during any
period of thirty-six consecutive months during the term of an Option,
individuals who at the beginning of such period constitute the Board of
Directors of the Corporation cease for any reason to constitute at least a
majority thereof unless the election, or the nomination for election by
stockholders, of each new director was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning of the
period; provided, however, that no Change in Control of the corporation shall be
deemed to have occurred in the event that the MHC undertakes a mutual to stock
conversion.
3.05 "Code" means the Internal Revenue Code of 1986, as amended.
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<PAGE>
3.06 "Committee" means a committee of two or more directors appointed by
the Board pursuant to Article IV hereof each of whom shall be a Non-Employee
Director as defined in Rule 16b-3(b)(3)(i) of the Exchange Act or any successor
thereto and within the meaning of Section 162(m) of the Code and the regulations
promulgated thereunder.
3.07 "Common Stock" means shares of the common stock, par value $.01 per
share, of the Corporation.
3.08 "Disability" means any physical or mental impairment which qualifies
an individual for disability benefits under the applicable long-term disability
plan maintained by the MHC, the Corporation or a Subsidiary Company, or, if no
such plan applies, which would qualify such individual for disability benefits
under the long-term disability plan maintained by the Corporation, if such
individual were covered by that plan.
3.09 "Effective Date" means the day upon which the Board approves this
Plan.
3.10 "Employee" means any person who is employed by the MHC, the
Corporation, the Bank or any Subsidiary Company, or is an Officer of the MHC,
the Corporation, the Bank or any Subsidiary Company, but not including directors
who are not also Officers of or otherwise employed by the MHC, the Corporation,
the Bank or any Subsidiary Company.
3.11 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
3.12 "Fair Market Value" shall be equal to the fair market value per share
of the Corporation's Common Stock on the date an Award is granted. For purposes
hereof, the Fair Market Value of a share of Common Stock shall be the closing
sale price of a share of Common Stock on the date in question (or, if such day
is not a trading day in the U.S. markets, on the nearest preceding trading day),
as reported with respect to the principal market (or the composite of the
markets, if more than one) or national quotation system in which such shares are
then traded, or if no such closing prices are reported, the mean between the
high bid and low asked prices that day on the principal market or national
quotation system then in use, or if no such quotations are available, the price
furnished by a professional securities dealer making a market in such shares
selected by the Committee.
3.13 "Incentive Stock Option" means any Option granted under this Plan
which the Board intends (at the time it is granted) to be an incentive stock
option within the meaning of Section 422 of the Code or any successor thereto.
3.14 "MHC" means Willow Grove Mutual Holding Company, the parent mutual
holding company of the Corporation.
3.15 "Non-Employee Director" means a member of the Board of the Corporation
or Board of Directors of either the MHC or the Bank or any successor thereto,
including an Advisory Director or a Director Emeritus of the Boards of the
Corporation and/or the MHC or the Bank, who is not an Officer or Employee of the
Corporation, the MHC, the Bank or any Subsidiary Company.
3.16 "Non-Qualified Option" means any Option granted under this Plan which
is not an Incentive Stock Option.
3.17 "Offering" means the offering of Common Stock to the public in
connection with the conversion of the Bank to the stock form of organization,
the establishment of the MHC and the issuance of the capital stock of the Bank
to the Corporation.
3.18 "Officer" means an Employee whose position in the MHC, the Corporation
or a Subsidiary Company is that of a corporate officer, as determined by the
Board.
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3.19 "Option" means a right granted under this Plan to purchase Common
Stock.
3.20 "Optionee" means an Employee or Non-Employee Director or former
Employee or Non-Employee Director to whom an Option is granted under the Plan.
3.21 "Retirement" means a termination of employment which constitutes a
"retirement" under any applicable qualified pension benefit plan maintained by
the MHC, the Corporation or a Subsidiary Corporation, or, if no such plan is
applicable, which would constitute "retirement" under the Corporation's pension
benefit plan, if such individual were a participant in that plan.
3.22 "Stock Appreciation Right" means a right to surrender an Option in
consideration for a payment by the Corporation in cash and/or Common Stock, as
provided in the discretion of the Board or the Committee in accordance with
Section 8.10.
3.23 "Subsidiary Companies" means those subsidiaries of the MHC and the
Corporation, including the Bank, which meet the definition of "subsidiary
corporations" set forth in Section 424(f) of the Code, at the time of granting
of the Option in question.
ARTICLE IV
ADMINISTRATION OF THE PLAN
4.01 Duties of the Committee. The Plan shall be administered and
interpreted by the Committee, as appointed from time to time by the Board
pursuant to Section 4.02. The Committee shall have the authority to adopt, amend
and rescind such rules, regulations and procedures as, in its opinion, may be
advisable in the administration of the Plan, including, without limitation,
rules, regulations and procedures which (i) deal with satisfaction of an
Optionee's tax withholding obligation pursuant to Section 12.02 hereof, (ii)
include arrangements to facilitate the Optionee's ability to borrow funds for
payment of the exercise or purchase price of an Award, if applicable, from
securities brokers and dealers, (iii) establish the method and arrangements by
which an optionee may defer a Non-Qualified Option or Stock Appreciation Right
pursuant to Article XIII hereof, and (iv) include arrangements which provide for
the payment of some or all of such exercise or purchase price by delivery of
previously-owned shares of Common Stock or other property and/or by withholding
some of the shares of Common Stock which are being acquired. The interpretation
and construction by the Committee of any provisions of the Plan, any rule,
regulation or procedure adopted by it pursuant thereto or of any Award shall be
final and binding in the absence of action by the Board.
4.02 Appointment and Operation of the Committee. The members of the
Committee shall be appointed by, and will serve at the pleasure of, the Board.
The Board from time to time may remove members from, or add members to, the
Committee, provided the Committee shall continue to consist of two or more
members of the Board, each of whom shall be a Non-Employee Director, as defined
in Rule 16b-3(b)(3)(i) of the Exchange Act or any successor thereto. In
addition, each member of the Committee shall be an "outside director" within the
meaning of Section 162(m) of the Code and regulations thereunder at such times
as is required under such regulations. The Committee shall act by vote or
written consent of a majority of its members. Subject to the express provisions
and limitations of the Plan, the Committee may adopt such rules, regulations and
procedures as it deems appropriate for the conduct of its affairs. It may
appoint one of its members to be chairman and any person, whether or not a
member, to be its secretary or agent. The Committee shall report its actions and
decisions to the Board at appropriate times but in no event less than one time
per calendar year.
4.03 Revocation for Misconduct. The Board or the Committee may by
resolution immediately revoke, rescind and terminate any Option, or portion
thereof, to the extent not yet vested, or any Stock Appreciation Right, to the
extent not yet exercised, previously granted or awarded under this Plan to an
Employee who is discharged from the employ of the Corporation or a Subsidiary
Company for cause, which, for purposes hereof, shall mean termination
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because of the Employee's personal dishonesty, incompetence, willful misconduct,
breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, willful violation of any law, rule, or regulation (other
than traffic violations or similar offenses) or final cease-and-desist order.
Options granted to a Non-Employee Director who is removed for cause pursuant to
the Corporation's Certificate of Incorporation and Bylaws or the Bank's Charter
and Bylaws shall terminate as of the effective date of such removal.
4.04 Limitation on Liability. Neither the members of the Board nor any
member of the Committee shall be liable for any action or determination made in
good faith with respect to the Plan, any rule, regulation or procedure adopted
by it pursuant thereto or any Awards granted under it. If a member of the Board
or the Committee is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of anything done or not
done by him in such capacity under or with respect to the Plan, the Corporation
shall, subject to the requirements of applicable laws and regulations, indemnify
such member against all liabilities and expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in the best interests of the
Corporation and its Subsidiary Companies and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful.
4.05 Compliance with Law and Regulations. All Awards granted hereunder
shall be subject to all applicable federal and state laws, rules and regulations
and to such approvals by any government or regulatory agency as may be required.
The Corporation shall not be required to issue or deliver any certificates for
shares of Common Stock prior to the completion of any registration or
qualification of or obtaining of consents or approvals with respect to such
shares under any federal or state law or any rule or regulation of any
government body, which the Corporation shall, in its sole discretion, determine
to be necessary or advisable. Moreover, no Option or Stock Appreciation Right
may be exercised if such exercise would be contrary to applicable laws and
regulations.
4.06 Restrictions on Transfer. The Corporation may place a legend upon any
certificate representing shares acquired pursuant to an Award granted hereunder
noting that the transfer of such shares may be restricted by applicable laws and
regulations.
ARTICLE V
ELIGIBILITY
Awards may be granted to such Employees and Non-Employee Directors of the
MHC, the Corporation and the Subsidiary Companies as may be designated from time
to time by the Board or the Committee. Awards may not be granted to individuals
who are not Employees or Non-Employee Directors of either the Corporation or its
Subsidiary Companies. Non-Employee Directors shall be eligible to receive only
Awards of Non-Qualified Options pursuant to this Plan.
ARTICLE VI
COMMON STOCK COVERED BY THE PLAN
6.01 Option Shares. The aggregate number of shares of Common Stock which
may be issued pursuant to this Plan, subject to adjustment as provided in
Article IX, shall be 224,087, which is equal to 10% of the shares of Common
Stock sold to the public in the Offering. None of such shares shall be the
subject of more than one Award at any time, but if an Option as to any shares is
surrendered before exercise, or expires or terminates for any reason without
having been exercised in full, or for any other reason ceases to be exercisable,
the number of shares covered thereby shall again become available for grant
under the Plan as if no Awards had been previously granted with respect to such
shares. Notwithstanding the foregoing, if an Option is surrendered in connection
with the exercise of a Stock Appreciation Right, the number of shares covered
thereby shall not be available for grant under the Plan. During the
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time this Plan remains in effect, grants to each Employee and each Non-Employee
Director shall not exceed 25% and 5% of the shares of Common Stock available
under the Plan, respectively. Awards made to Non-Employee Directors in the
aggregate may not exceed 30% of the number of shares available under this Plan.
6.02 Source of Shares. The shares of Common Stock issued under the Plan may
be authorized but unissued shares, treasury shares or shares purchased by the
Corporation on the open market or from private sources for use under the Plan.
ARTICLE VII
DETERMINATION OF
AWARDS, NUMBER OF SHARES, ETC.
The Board or the Committee shall, in its discretion, determine from time to
time which Employees and Non-Employee Directors will be granted Awards under the
Plan, the number of shares of Common Stock subject to each Award, whether each
Option will be an Incentive Stock Option or a Non-Qualified Stock Option (in the
case of Employees) and the exercise price of an Option. In making all such
determinations there shall be taken into account the duties, responsibilities
and performance of each respective Employee and Non-Employee Director, his
present and potential contributions to the growth and success of the
Corporation, his salary and such other factors deemed relevant to accomplishing
the purposes of the Plan.
ARTICLE VIII
OPTIONS AND STOCK APPRECIATION RIGHTS
Each Option granted hereunder shall be on the following terms and
conditions:
8.01 Stock Option Agreement. The proper Officers on behalf of the
Corporation and each Optionee shall execute a Stock Option Agreement which shall
set forth the total number of shares of Common Stock to which it pertains, the
exercise price, whether it is a Non-Qualified Option or an Incentive Stock
Option, and such other terms, conditions, restrictions and privileges as the
Board or the Committee in each instance shall deem appropriate, provided they
are not inconsistent with the terms, conditions and provisions of this Plan.
Each Optionee shall receive a copy of his executed Stock Option Agreement.
8.02 Option Exercise Price.
(a) Incentive Stock Options. The per share price at which the subject
Common Stock may be purchased upon exercise of an Incentive Stock Option
shall be no less than one hundred percent (100%) of the Fair Market Value
of a share of Common Stock at the time such Incentive Stock Option is
granted, except as provided in Section 8.09(b).
(b) Non-Qualified Options. The per share price at which the subject
Common Stock may be purchased upon exercise of a Non-Qualified Option shall
be established by the Committee at the time of grant, but in no event shall
be less than the one hundred percent (100%) of the Fair Market Value of a
share of Common Stock at the time such Non-Qualified Option is granted.
8.03 Vesting and Exercise of Options.
(a) General Rules. Incentive Stock Options and Non-Qualified Options
granted to Optionees shall become vested and exercisable at the rate of 20%
per year over five years, commencing one year from the date of grant and an
additional 20% shall vest on each successive anniversary of the date the
Option was granted, and the
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right to exercise shall be cumulative. Notwithstanding the foregoing,
except as provided in Section 8.03(b) hereof, no vesting shall occur on or
after an Optionee's employment or service as a Non-Employee Director is
terminated for any reason other than his death or Disability. In
determining the number of shares of Common Stock with respect to which
Options are vested and/or exercisable, fractional shares will be rounded up
to the nearest whole number if the fraction is 0.5 or higher, and down if
it is less.
(b) Accelerated Vesting. Unless the Board or the Committee shall
specifically state otherwise at the time an Option is granted, all Options
granted under this Plan shall become vested and exercisable in full on the
date an Optionee terminates his employment with the MHC, the Corporation or
a Subsidiary Company or service as a Non-Employee Director because of his
death or Disability. All Options hereunder shall become immediately vested
and exercisable in full on the date an Optionee terminates his employment
with the MHC, the Corporation or a Subsidiary Corporation due to Retirement
if as of the date of such Retirement (i) such treatment is either
authorized or is not prohibited by applicable laws and regulations, or (ii)
an amendment to the Plan providing for such treatment has been approved by
the stockholders of the Corporation at a meeting of stockholders held more
than one year after the consummation of the Offering. In addition, all
Options hereunder shall become immediately vested and exercisable in full
as of the effective date of a Change in Control of the Corporation if as of
the date of such Change in Control of the Corporation (i) such treatment is
either authorized or is not prohibited by applicable laws and regulations
or (ii) an amendment to the Plan providing for such treatment has been
approved by the stockholders of the Corporation at a meeting of
stockholders held more than one year after consummation of the Offering.
8.04 Duration of Options.
(a) General Rule. Except as provided in Sections 8.04(b) and 8.09,
each Option or portion thereof granted to an Employee shall be exercisable
at any time on or after it vests and becomes exercisable until the earlier
of (i) ten (10) years after its date of grant or (ii) six (6) months after
the date on which the Employee ceases to be employed by the MHC, the
Corporation and all Subsidiary Companies, unless the Board or the Committee
in its discretion decides at the time of grant or thereafter to extend such
period of exercise upon termination of employment to a period not exceeding
five (5) years.
Except as provided in Section 8.04(b), each Option or portion thereof
granted to a Non-Employee Director shall be exercisable at any time on or
after it vests and becomes exercisable until the earlier of (i) ten (10)
years after its date of grant or (ii) three (3) years after the date on
which the Non-Employee Director ceases to serve as a director of the MHC,
the Corporation and all Subsidiary Companies, unless the Board or the
Committee in its discretion decides at the time of grant or thereafter to
extend such period of exercise upon termination of service to a period not
exceeding five (5) years.
(b) Exceptions. Unless the Board or the Committee shall specifically
state otherwise at the time an Option is granted: (i) if an Employee
terminates his employment with the MHC, the Corporation or a Subsidiary
Company as a result of Disability or Retirement without having fully
exercised his Options, the Employee shall have the right, during the three
(3) year period following his termination due to Disability or Retirement,
to exercise such Options, and (ii) if a Non-Employee Director terminates
his service as a director with the MHC, the Corporation or a Subsidiary
Company as a result of Disability or Retirement without having fully
exercised his Options, the Non-Employee Director shall have the right,
during the three (3) year period following his termination due to
Disability or Retirement, to exercise such Options.
Unless the Board or the Committee shall specifically state otherwise
at the time an Option is granted, if an Employee or Non-Employee Director
terminates his employment or service with the MHC, the Corporation or a
Subsidiary Company following a Change in Control of the Corporation without
having fully exercised his Options, the Optionee shall have the right to
exercise such Options during the remainder of the original ten (10) year
term of the Option from the date of grant.
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If an Optionee dies while in the employ or service of the MHC, the
Corporation or a Subsidiary Company or terminates employment or service
with the MHC, the Corporation or a Subsidiary Company as a result of
Disability or Retirement and dies without having fully exercised his
Options, the executors, administrators, legatees or distributees of his
estate shall have the right, during the one (1) year period following his
death, to exercise such Options.
In no event, however, shall any Option be exercisable more than ten
(10) years from the date it was granted.
8.05 Nonassignability. Options shall not be transferable by an Optionee
except by will or the laws of descent or distribution, and during an Optionee's
lifetime shall be exercisable only by such Optionee or the Optionee's guardian
or legal representative. Notwithstanding the foregoing, or any other provision
of this Plan, an Optionee who holds Non-Qualified Options may transfer such
Options to his or her spouse, lineal ascendants, lineal descendants, or to a
duly established trust for the benefit of one or more of these individuals.
Options so transferred may thereafter be transferred only to the Optionee who
originally received the grant or to an individual or trust to whom the Optionee
could have initially transferred the Option pursuant to this Section 8.05.
Options which are transferred pursuant to this Section 8.05 shall be exercisable
by the transferee according to the same terms and conditions as applied to the
Optionee.
8.06 Manner of Exercise. Options may be exercised in part or in whole and
at one time or from time to time. The procedures for exercise shall be set forth
in the written Stock Option Agreement provided for in Section 8.01 above.
8.07 Payment for Shares. Payment in full of the purchase price for shares
of Common Stock purchased pursuant to the exercise of any Option shall be made
to the Corporation upon exercise of the Option. All shares sold under the Plan
shall be fully paid and nonassessable. Payment for shares may be made by the
Optionee (i) in cash or by check, (ii) by delivery of a properly executed
exercise notice, together with irrevocable instructions to a broker to sell the
shares and then to properly deliver to the Corporation the amount of sale
proceeds to pay the exercise price, all in accordance with applicable laws and
regulations, or (iii) at the discretion of the Committee, by delivering shares
of Common Stock (including shares acquired pursuant to the exercise of an
Option) equal in Fair Market Value to the purchase price of the shares to be
acquired pursuant to the Option, by withholding some of the shares of Common
Stock which are being purchased upon exercise of an Option, or any combination
of the foregoing. With respect to subclause (iii) hereof, the shares of Common
Stock delivered to pay the purchase price must have either been (a) purchased in
open market transactions or (b) issued by the Corporation pursuant to a plan
thereof, in each case more than six months prior to the exercise date of the
Option.
8.08 Voting and Dividend Rights. No Optionee shall have any voting or
dividend rights or other rights of a stockholder in respect of any shares of
Common Stock covered by an Option prior to the time that his name is recorded on
the Corporation's stockholder ledger as the holder of record of such shares
acquired pursuant to an exercise of an Option.
8.09 Additional Terms Applicable to Incentive Stock Options. All Options
issued under the Plan as Incentive Stock Options will be subject, in addition to
the terms detailed in Sections 8.01 to 8.08 above, to those contained in this
Section 8.09.
(a) Notwithstanding any contrary provisions contained elsewhere in
this Plan and as long as required by Section 422 of the Code, the aggregate
Fair Market Value, determined as of the time an Incentive Stock Option is
granted, of the Common Stock with respect to which Incentive Stock Options
are exercisable for the first time by the Optionee during any calendar year
under this Plan, and stock options that satisfy the requirements of Section
422 of the Code under any other stock option plan or plans maintained by
the Corporation (or any parent or Subsidiary Company), shall not exceed
$100,000.
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(b) Limitation on Ten Percent Stockholders. The price at which shares
of Common Stock may be purchased upon exercise of an Incentive Stock Option
granted to an individual who, at the time such Incentive Stock Option is
granted, owns, directly or indirectly, more than ten percent (10%) of the
total combined voting power of all classes of stock issued to stockholders
of the Corporation or any Subsidiary Company, shall be no less than one
hundred and ten percent (110%) of the Fair Market Value of a share of the
Common Stock of the Corporation at the time of grant, and such Incentive
Stock Option shall by its terms not be exercisable after the earlier of the
date determined under Section 8.03 or the expiration of five (5) years from
the date such Incentive Stock Option is granted.
(c) Notice of Disposition; Withholding; Escrow. An Optionee shall
immediately notify the Corporation in writing of any sale, transfer,
assignment or other disposition (or action constituting a disqualifying
disposition within the meaning of Section 421 of the Code) of any shares of
Common Stock acquired through exercise of an Incentive Stock Option, within
two (2) years after the grant of such Incentive Stock Option or within one
(1) year after the acquisition of such shares, setting forth the date and
manner of disposition, the number of shares disposed of and the price at
which such shares were disposed of. The Corporation shall be entitled to
withhold from any compensation or other payments then or thereafter due to
the Optionee such amounts as may be necessary to satisfy any withholding
requirements of federal or state law or regulation and, further, to collect
from the Optionee any additional amounts which may be required for such
purpose. The Committee or the Board may, in its discretion, require shares
of Common Stock acquired by an Optionee upon exercise of an Incentive Stock
Option to be held in an escrow arrangement for the purpose of enabling
compliance with the provisions of this Section 8.09(c).
8.10 Stock Appreciation Rights.
(a) General Terms and Conditions. The Board or the Committee may, but
shall not be obligated to, authorize the Corporation, on such terms and
conditions as it deems appropriate in each case, to grant rights to
Optionees to surrender an exercisable Option, or any portion thereof, in
consideration for the payment by the Corporation of an amount equal to the
excess of the Fair Market Value of the shares of Common Stock subject to
the Option, or portion thereof, surrendered over the exercise price of the
Option with respect to such shares (any such authorized surrender and
payment being hereinafter referred to as a "Stock Appreciation Right").
Such payment, at the discretion of the Board or the Committee, may be made
in shares of Common Stock valued at the then Fair Market Value thereof, or
in cash, or partly in cash and partly in shares of Common Stock.
The terms and conditions with respect to a Stock Appreciation Right
may include (without limitation), subject to other provisions of this
Section 8.10 and the Plan: the period during which, date by which or event
upon which the Stock Appreciation Right may be exercised; the method for
valuing shares of Common Stock for purposes of this Section 8.10; a ceiling
on the amount of consideration which the Corporation may pay in connection
with exercise and cancellation of the Stock Appreciation Right; and
arrangements for income tax withholding. The Board or the Committee shall
have complete discretion to determine whether, when and to whom Stock
Appreciation Rights may be granted.
(b) Time Limitations. If a holder of a Stock Appreciation Right
terminates service with the Corporation as an Officer or Employee, the
Stock Appreciation Right may be exercised only within the period, if any,
within which the Option to which it relates may be exercised.
(c) Effects of Exercise of Stock Appreciation Rights or Options. Upon
the exercise of a Stock Appreciation Right, the number of shares of Common
Stock available under the Option to which it relates shall decrease by a
number equal to the number of shares for which the Stock Appreciation Right
was exercised. Upon the exercise of an Option, any related Stock
Appreciation Right shall terminate as to any number of shares of Common
Stock subject to the Stock Appreciation Right that exceeds the total number
of shares for which the Option remains unexercised.
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(d) Time of Grant. A Stock Appreciation Right granted in connection
with an Incentive Stock Option must be granted concurrently with the Option
to which it relates, while a Stock Appreciation Right granted in connection
with a Non-Qualified Option may be granted concurrently with the Option to
which it relates or at any time thereafter prior to the exercise or
expiration of such Option.
(e) Non-Transferable. The holder of a Stock Appreciation Right may not
transfer or assign the Stock Appreciation Right otherwise than by will or
in accordance with the laws of descent and distribution, and during a
holder's lifetime a Stock Appreciation Right may be exercisable only by the
holder.
ARTICLE IX
ADJUSTMENTS FOR CAPITAL CHANGES
The aggregate number of shares of Common Stock available for issuance under
this Plan, the number of shares to which any outstanding Award relates, the
maximum number of shares that can be covered by Award to each Employee and each
Non-Employee Director and the exercise price per share of Common Stock under any
outstanding Option shall be proportionately adjusted for any increase or
decrease in the total number of outstanding shares of Common Stock issued
subsequent to the effective date of this Plan resulting from a split,
subdivision or consolidation of shares or any other capital adjustment, the
payment of a stock dividend, or other increase or decrease in such shares
effected without receipt or payment of consideration by the Corporation. If,
upon a merger, consolidation, reorganization, liquidation, recapitalization or
the like of the Corporation, the shares of the Corporation's Common Stock shall
be exchanged for other securities of the Corporation or of another corporation,
each recipient of an Award shall be entitled, subject to the conditions herein
stated, to purchase or acquire such number of shares of Common Stock or amount
of other securities of the Corporation or such other corporation as were
exchangeable for the number of shares of Common Stock of the Corporation which
such optionees would have been entitled to purchase or acquire except for such
action, and appropriate adjustments shall be made to the per share exercise
price of outstanding Options. Notwithstanding any provision to the contrary
herein and to the extent permitted by applicable laws and regulations and
interpretations thereof, the exercise price of shares subject to outstanding
Awards may be proportionately adjusted upon the payment of a special large and
nonrecurring dividend that has the effect of a return of capital to the
stockholders, providing that the adjustment to the per share exercise price
shall satisfy the criteria set forth in Emerging Issues Task Force 90-9 (or any
successor thereto) so that the adjustments do not result in compensation
expense, and provided further that if such adjustment with respect to incentive
stock options would be treated as a modification of the outstanding incentive
stock options with the effect that, for purposes of Sections 422 and 425(h) of
the Code, and the rules and regulations promulgated thereunder, new Incentive
Stock Options would be deemed to be granted hereunder, then no adjustment to the
per share exercise price of outstanding stock options shall be made.
ARTICLE X
AMENDMENT AND TERMINATION OF THE PLAN
The Board may, by resolution, at any time terminate or amend the Plan with
respect to any shares of Common Stock as to which Awards have not been granted,
subject to any required stockholder approval or any stockholder approval which
the Board may deem to be advisable for any reason, such as for the purpose of
obtaining or retaining any statutory or regulatory benefits under tax,
securities or other laws or satisfying any applicable stock exchange listing
requirements. The Board may not, without the consent of the holder of an Award,
alter or impair any Award previously granted or awarded under this Plan except
as specifically authorized herein.
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ARTICLE XI
EMPLOYMENT AND SERVICE RIGHTS
Neither the Plan nor the grant of any Awards hereunder nor any action taken
by the Committee or the Board in connection with the Plan shall create any right
on the part of any Employee or Non-Employee Director to continue in such
capacity.
ARTICLE XII
WITHHOLDING
12.01 Tax Withholding. The Corporation may withhold from any cash payment
made under this Plan sufficient amounts to cover any applicable withholding and
employment taxes, and if the amount of such cash payment is insufficient, the
Corporation may require the Optionee to pay to the Corporation the amount
required to be withheld as a condition to delivering the shares acquired
pursuant to an Award. The Corporation also may withhold or collect amounts with
respect to a disqualifying disposition of shares of Common Stock acquired
pursuant to exercise of an Incentive Stock Option, as provided in Section
8.09(c).
12.02 Methods of Tax Withholding. The Board or the Committee is authorized
to adopt rules, regulations or procedures which provide for the satisfaction of
an Optionee's tax withholding obligation by the retention of shares of Common
Stock to which the Employee would otherwise be entitled pursuant to an Award
and/or by the Optionee's delivery of previously owned shares of Common Stock or
other property.
ARTICLE XIII
DEFERRED PAYMENTS
13.01 Deferral of Options and Stock Appreciation Rights. Notwithstanding
any other provision of this Plan, any Optionee may elect, with the approval of
the Committee and consistent with any rules and regulations established by the
Board, to defer the delivery of the proceeds of the exercise of any
Non-Qualified Option not transferred under the provisions of Section 8.05 hereof
and Stock Appreciation Rights.
13.02 Timing of Election. The election to defer the delivery of the
proceeds from the exercise of any eligible Non-Qualified Option or Stock
Appreciation Right must be made at least six (6) months prior to the date such
Option or Stock Appreciation Right is exercised or at such other time as the
Committee may specify. Deferrals of eligible Non-Qualified Options or Stock
Appreciation Rights shall only be allowed for exercises of Options and Stock
Appreciation Rights that occur while the Participant is in active service with
the MHC, the Corporation or one of the Subsidiary Companies. Any election to
defer the proceeds from the exercise of an eligible Non-Qualified Option or
Stock Appreciation Right shall be irrevocable as long as the Optionee remains an
Employee or an Non-Employee Director.
ARTICLE XIV
EFFECTIVE DATE OF THE PLAN; TERM
14.01 Effective Date of the Plan. This Plan shall become effective on the
Effective Date, and Awards may be granted hereunder no earlier than the date
that this Plan is approved by stockholders of the Corporation and prior to the
termination of the Plan, provided that this Plan is approved by stockholders of
the Corporation pursuant to Article XV hereof.
14.02 Term of the Plan. Unless sooner terminated, this Plan shall remain in
effect for a period of ten (10) years ending on the tenth anniversary of the
Effective Date. Termination of the Plan shall not affect any Awards previously
granted and such Awards shall remain valid and in effect until they have been
fully exercised or earned, are surrendered or by their terms expire or are
forfeited.
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ARTICLE XV
STOCKHOLDER APPROVAL
The Corporation shall submit this Plan to stockholders for approval at a
meeting of stockholders of the Corporation held within twelve (12) months
following the Effective Date in order to meet the requirements of (i) Section
422 of the Code and regulations thereunder, (ii) Section 162(m) of the Code and
regulations thereunder, (iii) the Nasdaq Stock Market for continued quotation of
the Common Stock on the Nasdaq Stock Market and (iv) the regulations of the
Office of Thrift Supervision.
ARTICLE XVI
MISCELLANEOUS
16.01 Governing Law. To the extent not governed by federal law, this Plan
shall be construed under the laws of the State of Pennsylvania.
16.02 Pronouns. Wherever appropriate, the masculine pronoun shall include
the feminine pronoun, and the singular shall include the plural.
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APPENDIX B
WILLOW GROVE BANCORP, INC.
1999 RECOGNITION AND RETENTION PLAN AND TRUST AGREEMENT
ARTICLE I
ESTABLISHMENT OF THE PLAN AND TRUST
1.01 Willow Grove Bancorp, Inc. (the "Corporation") hereby establishes the
1999 Recognition and Retention Plan (the "Plan") and Trust (the "Trust") upon
the terms and conditions hereinafter stated in this 1999 Recognition and
Retention Plan and Trust Agreement (the "Agreement").
1.02 The Trustee hereby accepts this Trust and agrees to hold the Trust
assets existing on the date of this Agreement and all additions and accretions
thereto upon the terms and conditions hereinafter stated.
ARTICLE II
PURPOSE OF THE PLAN
The purpose of the Plan is to retain personnel of experience and ability in
key positions by providing Employees and Non-Employee Directors with a
proprietary interest in the Corporation and its Subsidiary Companies as
compensation for their contributions to the MHC, the Corporation and the
Subsidiary Companies and as an incentive to make such contributions in the
future. Each Recipient of a Plan Share Award hereunder is advised to consult
with his or her personal tax advisor with respect to the tax consequences under
federal, state, local and other tax laws of the receipt of a Plan Share Award
hereunder.
ARTICLE III
DEFINITIONS
The following words and phrases when used in this Agreement with an initial
capital letter, unless the context clearly indicates otherwise, shall have the
meanings set forth below. Wherever appropriate, the masculine pronouns shall
include the feminine pronouns and the singular shall include the plural.
3.01 "Bank" means Willow Grove Bank, the wholly owned subsidiary of the
Corporation.
3.02 "Beneficiary" means the person or persons designated by a Recipient to
receive any benefits payable under the Plan in the event of such Recipient's
death. Such person or persons shall be designated in writing on forms provided
for this purpose by the Committee and may be changed from time to time by
similar written notice to the Committee. In the absence of a written
designation, the Beneficiary shall be the Recipient's surviving spouse, if any,
or if none, his estate.
3.03 "Board" means the Board of Directors of the Corporation.
3.04 "Change in Control of the Corporation" shall mean the occurrence of
any of the following: (i) the acquisition of control of the Corporation as
defined in 12 C.F.R. ss.574.4, unless a presumption of control is successfully
rebutted or unless the transaction is exempted by 12 C.F.R. ss.574.3(c)(vii), or
any successor to such sections; (ii) an event that would be required to be
reported in response to Item 1(a) of Form 8-K or Item 6(e) of Schedule 14A of
Regulation 14A pursuant to the Exchange Act or any successor thereto, whether or
not any class of securities of the Corporation is registered under the Exchange
Act; (iii) any "person," other than the MHC, (as such term is used in Sections
13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Corporation representing 20% or
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more of the combined voting power of the Corporation's then outstanding
securities except for any securities purchased by the Corporation or the Bank;
or (iv) during any period of thirty-six consecutive months during the term of a
Plan Share Award, individuals who at the beginning of such period constitute the
Board of Directors of the Corporation cease for any reason to constitute at
least a majority thereof unless the election, or the nomination for election by
stockholders, of each new director was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning of the
period; provided, however, that no Change in Control of the Corporation shall be
deemed to have occurred in the event that the MHC undertakes a mutual to stock
conversion.
3.05 "Code" means the Internal Revenue Code of 1986, as amended.
3.06 "Committee" means the committee appointed by the Board pursuant to
Article IV hereof.
3.07 "Common Stock" means shares of the common stock, $.01 par value per
share, of the Corporation.
3.08 "Disability" means any physical or mental impairment which qualifies
an individual for disability benefits under the applicable long-term disability
plan maintained by the MHC, the Corporation or a Subsidiary Company or, if no
such plan applies, which would qualify such individual for disability benefits
under the long-term disability plan maintained by the Corporation, if such
individual were covered by that plan.
3.09 "Effective Date" means the day upon which the Board approves this
Plan.
3.10 "Employee" means any person who is employed by the MHC, the
Corporation, the Bank, or any Subsidiary Company, or is an Officer of the MHC,
the Corporation, the Bank, or any Subsidiary Company, but not including
directors who are not also Officers of or otherwise employed by the MHC, the
Corporation, the Bank or a Subsidiary Company.
3.11 "Employer Group" means the MHC, the Corporation and any Subsidiary
Company which, with the consent of the Board, agrees to participate in the Plan.
3.12 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
3.13 "MHC" means Willow Grove Mutual Holding Company, the parent mutual
holding company of the Corporation.
3.14 "Non-Employee Director" means a member of the Board of the Corporation
or the Board of Directors of either the MHC or the Bank or any successor
thereto, including an Advisory Director or a Director Emeritus of the Boards of
the Corporation and/or the MHC or the Bank, who is not an Officer or Employee of
the Corporation, the MHC or the Bank or any Subsidiary Company.
3.15 "Offering" means the offering of Common Stock to the public in
connection with the conversion of the Bank to the stock form of organization,
the establishment of the MHC and the issuance of the capital stock of the Bank
to the Corporation.
3.16 "Officer" means an Employee whose position in the MHC, the Corporation
or a Subsidiary Company is that of a corporate officer, as determined by the
Board.
3.17 "Performance Share Award" means a Plan Share Award granted to a
Recipient pursuant to Section 7.05 of the Plan.
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3.18 "Performance Goal" means an objective for the MHC, the Corporation or
any Subsidiary Company or any unit thereof or any Employee of the foregoing that
may be established by the Committee for a Performance Share Award to become
vested, earned or exercisable. The establishment of Performance Goals are
intended to make the applicable Performance Share Awards "performance-based"
compensation within the meaning of Section 162(m) of the Code, and the
Performance Goals shall be based on one or more of the following criteria:
(i) net income, as adjusted for non-recurring items;
(ii) cash earnings;
(iii) earnings per share;
(iv) cash earnings per share;
(v) return on average equity;
(vi) return on average assets;
(vii) assets;
(viii) stock price;
(ix) total stockholder return;
(x) capital;
(xi) net interest income;
(xii) market share;
(xiii) cost control or efficiency ratio; and
(xiv) asset growth.
3.19 "Plan Shares" or "Shares" means shares of Common Stock which may be
distributed to a Recipient pursuant to the Plan.
3.20 "Plan Share Award" or "Award" means a right granted under this Plan to
receive a distribution of Plan Shares upon completion of the service
requirements described in Article VII, and includes Performance Share Awards.
3.21 "Recipient" means an Employee or Non-Employee Director who receives a
Plan Share Award or Performance Share Award under the Plan.
3.22 "Retirement" means a termination of employment which constitutes a
"retirement" under any applicable qualified pension benefit plan maintained by
the MHC, the Corporation or a Subsidiary Company, or, if no such plan is
applicable, which would constitute "retirement" under the Corporation's pension
benefit plan, if such individual were a participant in that plan.
3.23 "Subsidiary Companies" means those subsidiaries of the MHC and the
Corporation, including the Bank, which meet the definition of "subsidiary
corporation" set forth in Section 424(f) of the Code, at the time of the
granting of the Plan Share Award in question.
3.24 "Trustee" means such firm, entity or persons approved by the Board to
hold legal title to the Plan and the Plan assets for the purposes set forth
herein.
ARTICLE IV
ADMINISTRATION OF THE PLAN
4.01 Duties of the Committee. The Plan shall be administered and
interpreted by the Committee, which shall consist of two or more members of the
Board, each of whom shall be a Non-Employee Director, as defined in Rule
16b-3(b)(3)(i) of the Exchange Act. In addition, each member of the Committee
shall be an "outside director" within the meaning of Section 162(m) of the Code
and the regulations thereunder at such times as is required under
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such regulations. The Committee shall have all of the powers allocated to it in
this and other Sections of the Plan. The interpretation and construction by the
Committee of any provisions of the Plan or of any Plan Share Award granted
hereunder shall be final and binding in the absence of action by the Board. The
Committee shall act by vote or written consent of a majority of its members.
Subject to the express provisions and limitations of the Plan, the Committee may
adopt such rules, regulations and procedures as it deems appropriate for the
conduct of its affairs. The Committee shall report its actions and decisions
with respect to the Plan to the Board at appropriate times, but in no event less
than once per calendar year.
4.02 Role of the Board. The members of the Committee and the Trustee shall
be appointed or approved by, and will serve at the pleasure of, the Board. The
Board may in its discretion from time to time remove members from, or add
members to, the Committee, and may remove or replace the Trustee, provided that
any directors who are selected as members of the Committee shall be Non-Employee
Directors.
4.03 Limitation on Liability. No member of the Board or the Committee shall
be liable for any determination made in good faith with respect to the Plan or
any Plan Shares or Plan Share Awards granted under it. If a member of the Board
or the Committee is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of anything done or not
done by him in such capacity under or with respect to the Plan, the Corporation
shall, subject to the requirements of applicable laws and regulations, indemnify
such member against all liabilities and expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in the best interests of the
MHC, the Corporation and any Subsidiary Companies and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful.
4.04 Compliance with Laws and Regulations. All Awards granted hereunder
shall be subject to all applicable federal and state laws, rules and regulations
and to such approvals by any government or regulatory agency or stockholders as
may be required.
4.05 Restrictions on Transfer. The Corporation may place a legend upon any
certificate representing shares issued pursuant to a Plan Share Award noting
that such shares may be restricted by applicable laws and regulations.
ARTICLE V
CONTRIBUTIONS
5.01 Amount and Timing of Contributions. The Board shall determine the
amount (or the method of computing the amount) and timing of any contributions
by the Corporation and any Subsidiary Companies to the Trust established under
this Plan. Such amounts may be paid in cash or in shares of Common Stock and
shall be paid to the Trust at the designated time of contribution. No
contributions by Employees or Non-Employee Directors shall be permitted.
5.02 Investment of Trust Assets; Number of Plan Shares. Subject to Section
8.02 hereof, the Trustee shall invest all of the Trust's assets primarily in
Common Stock. The aggregate number of Plan Shares available for distribution
pursuant to this Plan shall be 89,635 shares of Common Stock, subject to
adjustment as provided in Section 10.01 hereof, which shares shall be purchased
(from the Corporation and/or, if permitted by applicable regulations, from
stockholders thereof) by the Trust with funds contributed by the Corporation.
During the time this Plan remains in effect, Awards to each Employee and each
Non-Employee Director shall not exceed 25% and 5% of the shares of Common Stock
available under the Plan, respectively. Plan Share Awards to Non-Employee
Directors in the aggregate shall not exceed 30% of the number of shares
available under this Plan.
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ARTICLE VI
ELIGIBILITY; ALLOCATIONS
6.01 Awards. Plan Share Awards and Performance Share Awards may be made to
such Employees and Non-Employee Directors as may be selected by the Board or the
Committee. In selecting those Employees to whom Plan Share Awards and/or
Performance Share Awards may be granted and the number of Shares covered by such
Awards, the Board or the Committee shall consider the duties, responsibilities
and performance of each respective Employee and Non-Employee Director, his
present and potential contributions to the growth and success of the
Corporation, his salary and such other factors as deemed relevant to
accomplishing the purposes of the Plan. The Board or the Committee may but shall
not be required to request the written recommendation of the Chief Executive
Officer of the Corporation other than with respect to Plan Share Awards and/or
Performance Share Awards to be granted to him.
6.02 Form of Allocation. As promptly as practicable after an allocation
pursuant to Sections 6.01 that a Plan Share Award or a Performance Share Award
is to be issued, the Board or the Committee shall notify the Recipient in
writing of the grant of the Award, the number of Plan Shares covered by the
Award, and the terms upon which the Plan Shares subject to the Award shall be
distributed to the Recipient. The date on which the Board or the Committee so
notifies the Recipient shall be considered the date of grant of the Plan Share
Award or the Performance Share Award. The Board or the Committee shall maintain
records as to all grants of Plan Share Awards or Performance Share Awards under
the Plan.
6.03 Allocations Not Required to any Specific Employee or Non-Employee
Director. No Employee or Non-Employee Director shall have any right or
entitlement to receive a Plan Share Award hereunder, such Awards being at the
total discretion of the Board or the Committee.
ARTICLE VII
EARNING AND DISTRIBUTION OF PLAN SHARES; VOTING RIGHTS
7.01 Earning Plan Shares; Forfeitures.
(a) General Rules. Subject to the terms hereof, Plan Share Awards
granted shall be earned by a Recipient at the rate of twenty percent (20%)
of the aggregate number of Shares covered by the Award as of each annual
anniversary of the date of grant of the Award. If the employment of an
Employee or service as a Non-Employee Director is terminated prior to the
fifth (5th) annual anniversary of the date of grant of a Plan Share Award
for any reason (except as specifically provided in subsections (b), (c) and
(d) below), the Recipient shall forfeit the right to any Shares subject to
the Award which have not theretofore been earned. In the event of a
forfeiture of the right to any Shares subject to an Award, such forfeited
Shares shall become available for allocation pursuant to Section 6.01
hereof as if no Award had been previously granted with respect to such
Shares. No fractional shares shall be distributed pursuant to this Plan.
(b) Exception for Terminations Due to Death, Disability or Retirement.
Notwithstanding the general rule contained in Section 7.01(a), all Plan
Shares subject to a Plan Share Award held by a Recipient whose employment
with the MHC, the Corporation or any Subsidiary Company or service as a
Non-Employee Director terminates due to death or Disability shall be deemed
earned as of the Recipient's last day of employment with or service to the
MHC, the Corporation or any Subsidiary Company (provided, however, no such
accelerated vesting shall occur if a Recipient remains employed by at least
one member of the Employer Group) and shall be distributed as soon as
practicable thereafter. All Plan Shares subject to a Plan Share Award held
by a Recipient whose employment with the MHC, the Corporation or any
Subsidiary Company or service as a Non-Employee Director terminates due to
Retirement shall be deemed earned as of the Recipient's last day of
employment with or service to the MHC, the Corporation or any Subsidiary
Company (provided, however, no such accelerated vesting shall occur
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if a Recipient remains employed by at least one member of the Employer
Group) and shall be distributed as soon as practicable thereafter if as of
the date of such Retirement (i) such treatment is either authorized or is
not prohibited by applicable laws and regulations, or (ii) such provision
has been approved by stockholders of the Corporation at a meeting of
stockholders held more than one (1) year after the consummation of the
Offering.
(c) Exception for a Change in Control of the Corporation.
Notwithstanding the general rule contained in Section 7.01(a), all Plan
Shares subject to a Plan Share Award held by a Recipient shall be deemed to
be earned as of the effective date of a Change in Control of the
Corporation if, as of the date of such Change in Control of the Corporation
(i) such treatment is either authorized or is not prohibited by applicable
laws and regulations, or (ii) an amendment to the Plan providing for such
treatment has been approved by stockholders of the Corporation at a meeting
of the stockholders held more than one (1) year after the consummation of
the Offering.
(d) Revocation for Misconduct. Notwithstanding anything hereinafter to
the contrary, the Board may by resolution immediately revoke, rescind and
terminate any Plan Share Award or Performance Share Award or portion
thereof, previously awarded under this Plan, to the extent Plan Shares have
not been distributed hereunder to the Recipient, whether or not yet earned,
in the case of an Employee who is discharged from the employ of the MHC,
the Corporation or any Subsidiary Company for cause (as hereinafter
defined). Termination for cause shall mean termination because of the
Employee's personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to perform
stated duties, willful violation of any law, rule, or regulation (other
than traffic violations or similar offenses) or final cease-and-desist
order. Plan Share Awards granted to a Non-Employee Director who is removed
for cause pursuant to the Corporation's Certificate of Incorporation and
Bylaws or the Bank's Charter and Bylaws shall terminate as of the effective
date of such removal.
7.02 Distribution of Dividends. Any cash dividends (including special large
and nonrecurring dividends including any that has the effect of a return of
capital to the Corporation's stockholders) or stock dividends declared in
respect of each unvested Plan Share Award (including a Performance Share Award)
will be held by the Trust for the benefit of the Recipient on whose behalf such
Plan Share Award (including a Performance Share Award) is then held by the Trust
and such dividends, including any interest thereon, will be paid out
proportionately by the Trust to the Recipient thereof as soon as practicable
after the Plan Share Awards become earned. Any cash dividends or stock dividends
declared in respect of each vested Plan Share held by the Trust will be paid by
the Trust, as soon as practicable after the Trust's receipt thereof, to the
Recipient on whose behalf such Plan Share is then held by the Trust.
7.03 Distribution of Plan Shares.
(a) Timing of Distributions: General Rule. Subject to the provisions
of Section 7.05 hereof, Plan Shares shall be distributed to the Recipient
or his Beneficiary, as the case may be, as soon as practicable after they
have been earned.
(b) Form of Distributions. All Plan Shares, together with any Shares
representing stock dividends, shall be distributed in the form of Common
Stock. One share of Common Stock shall be given for each Plan Share earned
and distributable. Payments representing cash dividends shall be made in
cash.
(c) Withholding. The Trustee may withhold from any cash payment or
Common Stock distribution made under this Plan sufficient amounts to cover
any applicable withholding and employment taxes, and if the amount of a
cash payment is insufficient, the Trustee may require the Recipient or
Beneficiary to pay to the Trustee the amount required to be withheld as a
condition of delivering the Plan Shares. The Trustee shall pay over to the
MHC, the Corporation or any Subsidiary Company which employs or employed
such Recipient any such amount withheld from or paid by the Recipient or
Beneficiary.
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(d) Restrictions on Selling of Plan Shares. Plan Share Awards may not
be sold, assigned, pledged or otherwise disposed of prior to the time that
they are earned and distributed pursuant to the terms of this Plan. Upon
distribution, the Board or the Committee may require the Recipient or his
Beneficiary, as the case may be, to agree not to sell or otherwise dispose
of his distributed Plan Shares except in accordance with all then
applicable federal and state securities laws, and the Board or the
Committee may cause a legend to be placed on the stock certificate(s)
representing the distributed Plan Shares in order to restrict the transfer
of the distributed Plan Shares for such period of time or under such
circumstances as the Board or the Committee, upon the advice of counsel,
may deem appropriate.
7.04 Voting of Plan Shares. After a Plan Share Award (other than a
Performance Share Award) has been made, the Recipient shall be entitled to
direct the Trustee as to the voting of the Plan Shares which are covered by the
Plan Share Award and which have not yet been earned and distributed to him
pursuant to Section 7.03, subject to rules and procedures adopted by the
Committee for this purpose. All shares of Common Stock held by the Trust which
have not been awarded under a Plan Share Award, shares subject to Performance
Share Awards which have not yet vested and shares which have been awarded as to
which Recipients have not directed the voting shall be voted by the Trustee in
its discretion.
7.05 Performance Awards
(a) Designation of Performance Share Awards. The Committee may
determine to make any Plan Share Award a Performance Share Award by making
such Plan Share Award contingent upon the achievement of a Performance Goal
or any combination of Performance Goals. Each Performance Share Award shall
be evidenced by a written agreement ("Award Agreement"), which shall set
forth the Performance Goals applicable to the Performance Share Award, the
maximum amounts payable and such other terms and conditions as are
applicable to the Performance Share Award. Each Performance Share Award
shall be granted and administered to comply with the requirements of
Section 162(m) of the Code.
(b) Timing of Grants. Any Performance Share Award shall be made not
later than 90 days after the start of the period for which the Performance
Share Award relates and shall be made prior to the completion of 25% of
such period. All determinations regarding the achievement of any
Performance Goals will be made by the Committee. The Committee may not
increase during a year the amount of a Performance Share Award that would
otherwise be payable upon achievement of the Performance Goals but may
reduce or eliminate the payments as provided for in the Award Agreement.
(c) Restrictions on Grants. Nothing contained in the Plan will be
deemed in any way to limit or restrict the Committee from making any Award
or payment to any person under any other plan, arrangement or
understanding, whether now existing or hereafter in effect.
(d) Rights of Recipients. Notwithstanding anything to the contrary
herein, a Participant who receives a Performance Share Award payable in
Common Stock shall have no rights as a stockholder until the Common Stock
is issued pursuant to the terms of the Award Agreement.
(e) Transferability. A Participant's interest in a Performance Share
Award may not be sold, assigned, transferred, pledged, or otherwise
encumbered.
(f) Distribution. No Performance Share Award or portion thereof that
is subject to the attainment or satisfaction of a condition of a
Performance Goal shall be distributed or considered to be earned or vested
until the Committee certifies in writing that the conditions or Performance
Goal to which the distribution, earning or vesting of such Award is subject
have been achieved.
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ARTICLE VIII
TRUST
8.01 Trust. The Trustee shall receive, hold, administer, invest and make
distributions and disbursements from the Trust in accordance with the provisions
of the Plan and Trust and the applicable directions, rules, regulations,
procedures and policies established by the Committee pursuant to the Plan.
8.02 Management of Trust. It is the intent of this Plan and Trust that the
Trustee shall have complete authority and discretion with respect to the
arrangement, control and investment of the Trust, and that the Trustee shall
invest all assets of the Trust in Common Stock to the fullest extent
practicable, except to the extent that the Trustee determines that the holding
of monies in cash or cash equivalents is necessary to meet the obligations of
the Trust. In performing their duties, the Trustee shall have the power to do
all things and execute such instruments as may be deemed necessary or proper,
including the following powers:
(a) To invest up to one hundred percent (100%) of all Trust assets in
Common Stock without regard to any law now or hereafter in force limiting
investments for trustees or other fiduciaries. The investment authorized
herein may constitute the only investment of the Trust, and in making such
investment, the Trustee are authorized to purchase Common Stock from the
Corporation or from any other source, and such Common Stock so purchased
may be outstanding, newly issued, or treasury shares.
(b) To invest any Trust assets not otherwise invested in accordance
with (a) above, in such deposit accounts, and certificates of deposit,
obligations of the United States Government or its agencies or such other
investments as shall be considered the equivalent of cash.
(c) To sell, exchange or otherwise dispose of any property at any time
held or acquired by the Trust.
(d) To cause stocks, bonds or other securities to be registered in the
name of a nominee, without the addition of words indicating that such
security is an asset of the Trust (but accurate records shall be maintained
showing that such security is an asset of the Trust).
(e) To hold cash without interest in such amounts as may in the
opinion of the Trustee be reasonable for the proper operation of the Plan
and Trust.
(f) To employ brokers, agents, custodians, consultants and
accountants.
(g) To hire counsel to render advice with respect to their rights,
duties and obligations hereunder, and such other legal services or
representation as they may deem desirable.
(h) To hold funds and securities representing the amounts to be
distributed to a Recipient or his Beneficiary as a consequence of a dispute
as to the disposition thereof, whether in a segregated account or held in
common with other assets of the Trust.
Notwithstanding anything herein contained to the contrary, the Trustee
shall not be required to make any inventory, appraisal or settlement or report
to any court, or to secure any order of court for the exercise of any power
herein contained, or give bond.
8.03 Records and Accounts. The Trustee shall maintain accurate and detailed
records and accounts of all transactions of the Trust, which shall be available
at all reasonable times for inspection by any legally entitled person or entity
to the extent required by applicable law, or any other person determined by the
Board or the Committee.
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8.04 Expenses. All costs and expenses incurred in the operation and
administration of this Plan shall be borne by the Corporation or, in the
discretion of the Corporation, the Trust.
8.05 Indemnification. Subject to the requirements of applicable laws and
regulations, the Corporation shall indemnify, defend and hold the Trustee
harmless against all claims, expenses and liabilities arising out of or related
to the exercise of the Trustee's powers and the discharge of their duties
hereunder, unless the same shall be due to their gross negligence or willful
misconduct.
ARTICLE IX
DEFERRED PAYMENTS
9.01 Deferral of Plan Shares. Notwithstanding any other provision of this
Plan, any Recipient may elect, with the approval of the Committee and consistent
with any rules and regulations established by the Board, to defer the receipt of
Plan Shares granted hereunder.
9.02 Timing of Election. The election to defer the delivery of any Plan
Shares must be made no later than the last day of the calendar year preceding
the calendar year in which the Recipient would otherwise have an unrestricted
right to receive such Shares. Deferrals of eligible Plan Shares shall only be
allowed for Plan Share Awards for which all applicable restrictions lapse while
the Recipient is in active service with the MHC, the Corporation or one of the
Subsidiary Companies. Any election to defer the proceeds from an eligible Plan
Share Award shall be irrevocable as long as the Recipient remains an Employee or
an Non-Employee Director.
ARTICLE X
MISCELLANEOUS
10.01 Adjustments for Capital Changes. The aggregate number of Plan Shares
available for distribution pursuant to the Plan Share Awards and the number of
Shares to which any unvested Plan Share Award relates shall be proportionately
adjusted for any increase or decrease in the total number of outstanding shares
of Common Stock issued subsequent to the effective date of the Plan resulting
from any split, subdivision or consolidation of shares or other capital
adjustment, the payment of a stock dividend or other increase or decrease in
such shares effected without receipt or payment of consideration by the
Corporation. If, upon a merger, consolidation, reorganization, liquidation,
recapitalization or the like of the Corporation or of another corporation, each
recipient of a Plan Share Award shall be entitled, subject to the conditions
herein stated, to receive such number of shares of Common Stock or amount of
other securities of the Corporation or such other corporation as were
exchangeable for the number of shares of Common Stock of the Corporation which
such Recipients would have been entitled to receive except for such action.
10.02 Amendment and Termination of Plan. The Board may, by resolution, at
any time amend or terminate the Plan, subject to any required stockholder
approval or any stockholder approval which the Board may deem to be advisable
for any reason, such as for the purpose of obtaining or retaining any statutory
or regulatory benefits under tax, securities or other laws or satisfying any
applicable stock exchange listing requirements. The Board may not, without the
consent of the Recipient, alter or impair his Plan Share Award except as
specifically authorized herein. Upon termination of the Plan, the Recipient's
Plan Share Awards shall be distributed to the Recipient regardless of whether or
not such Plan Share Award had otherwise been earned under the service
requirements set forth in Article VII. Notwithstanding any other provision of
the Plan, this Plan may not be terminated until such time as all Plan shares
held by the Trust have been awarded to Plan Recipients and shall be deemed to be
earned prior to the time of termination.
10.03 Nontransferable. Plan Share Awards and Performance Share Awards and
rights to Plan Shares shall not be transferable by a Recipient, and during the
lifetime of the Recipient, Plan Shares may only be earned by and paid to a
Recipient who was notified in writing of an Award by the Committee pursuant to
Section 6.02. No
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Recipient or Beneficiary shall have any right in or claim to any assets of the
Plan or Trust, nor shall the MHC, the Corporation or any Subsidiary Company be
subject to any claim for benefits hereunder.
10.04 Employment or Service Rights. Neither the Plan nor any grant of a
Plan Share Award, Performance Share Award or Plan Shares hereunder nor any
action taken by the Trustee, the Committee or the Board in connection with the
Plan shall create any right on the part of any Employee or Non-Employee Director
to continue in such capacity.
10.05 Voting and Dividend Rights. No Recipient shall have any voting or
dividend rights or other rights of a stockholder in respect of any Plan Shares
covered by a Plan Share Award or Performance Share Award, except as expressly
provided in Sections 7.02, 7.04 and 7.05 above, prior to the time said Plan
Shares are actually earned and distributed to him.
10.06 Governing Law. To the extent not governed by federal law, the Plan
and Trust shall be governed by the laws of the State of Pennsylvania.
10.07 Effective Date. This Plan shall be effective as of the Effective
Date, and Awards may be granted hereunder no earlier than the date this Plan is
approved by the stockholders of the Corporation and prior to the termination of
the Plan. Notwithstanding the foregoing or anything to the contrary in this
Plan, the implementation of this Plan is subject to the approval of the
Corporation's stockholders.
10.08 Term of Plan. This Plan shall remain in effect until the earlier of
(i) ten (10) years from the Effective Date, (ii) termination by the Board, or
(iii) the distribution to Recipients and Beneficiaries of all the assets of the
Trust.
10.09 Tax Status of Trust. It is intended that the trust established hereby
be treated as a Grantor Trust of the Corporation under the provisions of Section
671 et seq. of the Code, as the same may be amended from time to time.
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IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed by its duly authorized officers and the corporate seal to be affixed
and duly attested, and the initial Trustees of the Trust established pursuant
hereto have duly and validly executed this Agreement, all on this 22nd day of
June, 1999.
WILLOW GROVE BANCORP, INC.
By: /s/ Frederick A. Marcell, Jr.
--------------------------------------
Frederick A. Marcell, Jr.
President and Chief Executive Officer
ATTEST: TRUSTEES:
/s/ John T. Powers /s/ Frederick A. Marcell, Jr.
- ------------------------------ --------------------------------------
John T. Powers, Secretary Frederick A. Marcell, Jr.
President and Chief Executive Officer
/s/ Thomas M. Fewer
--------------------------------------
Thomas M. Fewer
Senior Vice President and Chief Credit
Officer
/s/ John J. Foff, Jr.
--------------------------------------
John J. Foff, Jr.
Senior Vice President, Chief Financial
Officer and Treasurer
/s/ John T. Powers
--------------------------------------
John T. Powers
Senior Vice President and Corporate
Secretary
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[FORM OF REVOCABLE PROXY]
WILLOW GROVE BANCORP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF WILLOW GROVE
BANCORP, INC. FOR USE AT THE SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON JULY
27, 1999 AND AT ANY ADJOURNMENT THEREOF.
The undersigned hereby appoints the Board of Directors of Willow Grove
Bancorp, Inc. (the "Company"), or any successors thereto, as proxies with full
powers of substitution, to represent and vote, as designated below, all the
shares of Common Stock of the Company held of record by the undersigned on June
15, 1999 at the Special Meeting of Stockholders to be held at Williamson's
Restaurant, located at 500 Blair Mill Road, Horsham, Pennsylvania on Tuesday,
July 27, 1999, at 11:00 a.m., Eastern Time, and any adjournment thereof.
1. PROPOSAL to adopt the 1999 Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. PROPOSAL to adopt the 1999 Recognition and Retention Plan and Trust
Agreement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
The Board of Directors Recommends a Vote in Favor of Proposals 1 and 2 above.
<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS. THE SHARES OF THE
COMPANY'S COMMON STOCK WILL BE VOTED AS SPECIFIED. IF NOT OTHERWISE SPECIFIED,
THIS PROXY WILL BE VOTED FOR THE PROPOSALS TO ADOPT THE 1999 STOCK OPTION PLAN
AND THE 1999 RECOGNITION AND RETENTION PLAN AND TRUST AGREEMENT AND OTHERWISE AT
THE DISCRETION OF THE PROXIES. YOU MAY REVOKE THIS PROXY AT ANY TIME PRIOR TO
THE TIME IT IS VOTED AT THE SPECIAL MEETING.
Dated: _________________, 1999
-----------------------------------
-----------------------------------
Signatures
Please sign this proxy exactly as your names(s) appear(s) on this proxy. When
signing in a representative capacity, please give title. When shares are held
jointly, only one holder need sign.
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PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
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