DAUPHIN DEPOSIT CORP, DEF 14A, 1995-03-10

DAUPHIN DEPOSIT CORP
DEF 14A, 1995-03-10
STATE COMMERCIAL BANKS

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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
[X] Definitive Proxy Statement RULE 14C-5(D)(2))

[_] Definitive Additional Materials

[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12

DAUPHIN DEPOSIT CORPORATION
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

DAUPHIN DEPOSIT CORPORATION
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.

[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).

[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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>

[LOGO OF DAUPHIN DEPOSIT CORP. APPEARS HERE]

213 MARKET STREET
HARRISBURG, PENNSYLVANIA 17101

March 17, 1995

To the Shareholders of
Dauphin Deposit Corporation

You are cordially invited to attend the 1995 Annual Meeting of Shareholders
of your Corporation, Dauphin Deposit Corporation, which will be held on Monday,
April 17, 1995, at 9:00 A.M., at the Harrisburg Hilton and Towers, One North
Second Street, Harrisburg, Pennsylvania. A Notice of the Annual Meeting, a
Proxy Statement, a Proxy and a Reservation Form are enclosed herewith.

The Annual Report of Dauphin Deposit Corporation also is enclosed. We hope
that you take the opportunity to review the material contained in the Annual
Report, which reflects that your Corporation had another successful year in
1994.

The Board of Directors recommends a vote for the election to the Board of the
18 nominees listed in the Proxy Statement and for approval of the Dauphin
Deposit Corporation 1995 Stock Incentive Plan, a copy of which is attached as
Exhibit A to the Proxy Statement. Please sign, date and return the Proxy
promptly, whether or not you are able to attend the meeting. If you plan to
attend the meeting, please return the white copy of the Reservation Form along
with your Proxy. A postage paid return envelope is enclosed for your
convenience. Please bring the yellow copy of the Reservation Form with you to
the meeting.

Very truly yours,

[SIGNATURE OF CHRISTOPHER R. JENNINGS
APPEARS HERE]

Christopher R. Jennings
Chairman of the Board and
Chief Executive Officer

[Signature of Robert L. Fryer, Jr.
appears here]
Robert L. Fryer, Jr.
President and Chief
Operating Officer

<PAGE>

[LOGO OF DAUPHIN DEPOSIT CORP. APPEARS HERE]

213 MARKET STREET
HARRISBURG, PENNSYLVANIA 17101

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 17, 1995

To the Shareholders of
Dauphin Deposit Corporation

Notice is Hereby Given, that the Annual Meeting of Shareholders of Dauphin
Deposit Corporation will be held on April 17, 1995, at 9:00 A.M., at the
Harrisburg Hilton and Towers, One North Second Street, Harrisburg,
Pennsylvania, to hear the Annual Report of the President and to vote upon the
following matters:

1. To elect 18 Directors; for a list of nominees, see the attached Proxy
Statement.

2. To approve the Dauphin Deposit Corporation 1995 Stock Incentive Plan,
a copy of which is attached as Exhibit A to the Proxy Statement.

3. To consider and vote upon such other business as properly may come
before the meeting and any adjournments thereof.

Only those shareholders of record at the close of business on March 3, 1995
will be entitled to notice of, and to vote at, such meeting and any
adjournments thereof.

Enclosed herewith is a Proxy Statement and a Proxy. You are urged to sign,
date and return the enclosed Proxy as promptly as possible whether or not you
plan to attend the meeting in person.

By Order of the Board of Directors,

[SIGNATURE OF CLAIRE D. FLEMMING
APPEARS HERE]

Claire D. Flemming, Secretary

March 17, 1995
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[LOGO OF DAUPHIN DEPOSIT CORP. APPEARS HERE]

213 MARKET STREET
HARRISBURG, PENNSYLVANIA 17101

PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 17, 1995
APPROXIMATE DATE OF MAILING PROXY STATEMENT AND
PROXY TO SHAREHOLDERS:
MARCH 17, 1995

USE OF PROXY AND GENERAL INFORMATION

A Proxy for use in connection with the Annual Meeting of Shareholders of
Dauphin Deposit Corporation (herein called the "Corporation") to be held on
Monday, April 17, 1995, at 9:00 A.M., at the Harrisburg Hilton & Towers, One
North Second Street, Harrisburg, Pennsylvania, is enclosed. This Proxy is
solicited by the Board of Directors of the Corporation, and costs of
solicitation will be borne by the Corporation. The Corporation has engaged
Corporate Investor Communications, Inc., Carlstadt, New Jersey, a proxy
solicitation firm, to solicit proxies for the Annual Meeting from brokers and
nominees holding Corporation common stock. This solicitation is estimated to
cost $4,750 plus reasonable out-of-pocket expenses incurred by the solicitation
firm. The Proxy is revocable by the person giving it, by filing with the
Secretary of the Corporation either a written notice revoking the Proxy or a
duly executed Proxy bearing a later date. Shares of stock of the Corporation
represented by properly executed and filed Proxies will be voted in accordance
with the specifications of the Proxies. If not otherwise specified, the Proxy
will be voted FOR the election as Directors of the 18 nominees named in this
Proxy Statement, FOR approval of the Corporation 1995 Stock Incentive Plan, as
described on pages 16 to 20 hereof, and upon the transaction of such other
business as properly may come before the meeting, in accordance with the best
judgment of the persons appointed as Proxies.

OUTSTANDING STOCK AND PRINCIPAL HOLDERS THEREOF

As of March 3, 1995, there were 30,869,518 shares of common stock of the
Corporation issued and outstanding and entitled to vote, having a par value of
$5.00 per share (the "Common Stock"). Only those shareholders of record at the
close of business on March 3, 1995 will be entitled to receive notice of, and
to vote at the Annual Meeting of Shareholders of the Corporation. Each
outstanding share is entitled to one vote on all matters. Shareholders do not
have the right to vote their shares cumulatively in the election of Directors.
A majority of the outstanding Common Stock present in person or by proxy
constitutes a quorum for the transaction of business at the Annual Meeting. In
the case of the election of Directors, the nominees receiving the highest
number of votes, up to the number of Directors to be elected, shall be elected
to the Board of Directors. The affirmative vote of the holders of a majority of
the shares of Common Stock present in person or by proxy and entitled to vote
at the Annual Meeting is required to approve the Corporation 1995 Stock
Incentive Plan. Abstentions and broker non-votes will not constitute or be
counted as votes cast for purposes of the Annual Meeting.
<PAGE>

As of March 3, 1995, Dauphin Deposit Bank and Trust Company ("Dauphin Bank"),
which includes the Bank of Pennsylvania Division, the Valleybank Division, and
the Farmers Bank Division, all of the outstanding stock of which is held by the
Corporation, held, either directly or by way of its nominees, an aggregate of
approximately 7.38% or approximately 2,277,079 shares, of the outstanding
Common Stock in its trust department as fiduciary for numerous separate trusts,
estates and agency accounts which beneficially own such shares. Of these
shares, Dauphin Bank had sole voting power with respect to 1,826,056 shares,
shared voting power with respect to 451,023 shares, sole investment power with
regard to 1,034,353 shares and shared investment power with regard to 1,242,726
shares. Pursuant to provisions of the applicable governing instruments and/or
in accordance with applicable principles of fiduciary law, Dauphin Bank, as
fiduciary, has the right and power exercisable either alone or in conjunction
with a co-fiduciary, to vote such shares, either in person or by proxy, for the
election, as Directors, of the Board of Directors' nominees, and for approval
of the Corporation 1995 Stock Incentive Plan, so long as such votes are in the
best interest of any such trust, estate or agency account and the beneficiaries
or principals thereof. Dauphin Bank intends to vote such shares in favor of the
election of the Board of Directors' nominees as Directors and for approval of
the Corporation 1995 Stock Incentive Plan.

To the best of the Corporation's information and belief, no other person
holds beneficially or of record, directly or indirectly, five percent (5%) or
more of the outstanding shares of Common Stock.

SECURITY OWNERSHIP OF MANAGEMENT

The following table sets forth, as of March 3, 1995, information relating to
beneficial ownership of shares of Common Stock by each of the Corporation's
present Directors, each nominee for Director, each named executive officer of
the Corporation set forth in the executive compensation tables and all of the
Corporation's Directors and executive officers as a group.

<TABLE>
<CAPTION>
NAME OF BENEFICIAL OWNER NUMBER OF SHARES (1)
------------------------ --------------------
<S> <C> <C>
William H. Alexander.................................... 10,592 (2)
Robert L. Fryer, Jr. ................................... 12,616
James O. Green.......................................... 45,674 (3)
Derek C. Hathaway....................................... 1,000
Alfred G. Hemmerich..................................... 1,886
Lee H. Javitch.......................................... 23,860 (4)
Christopher R. Jennings................................. 64,346
William J. King......................................... 223,728 (5)
William T. Kirchhoff.................................... 41,969 (6)
Lawrence J. LaMaina, Jr. ............................... 75,215 (7)
Andrew Maier, II........................................ 6,964 (8)
James E. Marley......................................... 1,010
Robert F. Nation........................................ 42,000 (9)
Elmer E. Naugle......................................... 41,688
Walter F. Raab.......................................... 10,000
Paul C. Raub............................................ 28,988 (10)
Henry W. Rhoads......................................... 48,246 (11)
Robert A. Rupel......................................... 3,427 (12)
Jean D. Seibert......................................... 150,148
Paul B. Shannon......................................... 33,530 (13)
R. Champlin Sheridan, Jr. .............................. 17,050 (14)
All Directors and Executive Officers as a Group
(27 in number, including those listed above)........... 947,006
</TABLE>

2
<PAGE>

- --------
(1) Except as otherwise stated in the following notes, each named individual
has sole voting and investment power over the shares listed opposite his
or her name. Each Director and executive officer owns less than 1% of the
Corporation's outstanding Common Stock. All Directors and executive
officers as a group owned 3.03% of the outstanding Common Stock. The
amounts shown include the following shares of Common Stock which the
named executive officers and all executive officers as a group have the
right to acquire within 60 days of March 3, 1995 through the exercise of
stock options granted pursuant to the Corporation's Stock Option Plan of
1986: Mr. King (182,634), Mr. Jennings (53,408), Mr. LaMaina (30,198),
Mr. Shannon (27,820), Mr. Rupel (2,600) and all executive officers as a
group (336,950). Non-employee Directors are not eligible to participate
in the Stock Option Plan of 1986.
(2) Includes 3,058 shares held jointly with spouse, 1,990 shares held by a
corporation of which Mr. Alexander is a controlling person and 5,544
shares held as co-trustee.
(3) Includes 37,400 shares held in trust for benefit of Mr. Green.
(4) Includes 1,260 shares held as co-trustee.
(5) Includes 2,014 shares held directly by spouse.
(6) Includes 1,161 shares held directly by spouse and 30,000 shares held by
profit sharing plan of corporation of which Mr. Kirchhoff is a
controlling person.
(7) Includes 45,017 shares held jointly with spouse.
(8) Includes 4,000 shares held in trust for benefit of Mr. Maier and his
spouse.
(9) Includes 10,500 shares held directly by spouse.
(10) Includes 14,494 shares held directly by spouse.
(11) Includes 4,148 shares held directly by spouse and 24,200 shares held as
co-trustee.
(12) Includes 566 shares held jointly with spouse.
(13) Includes 5,710 shares held jointly with spouse.
(14) Includes 1,741 shares held jointly with spouse and 2,437 shares held
directly by spouse.

ELECTION OF DIRECTORS

The By-Laws of the Corporation authorize the Board of Directors to fix the
number of Directors to be elected each year, provided that such number will
not be less than 5 nor more than 30. In accordance with the By-Laws, the Board
of Directors has fixed the number of Directors to be elected at 18. The
persons named in the enclosed Proxy intend to exercise the authority conferred
therein to vote in favor of the election as Directors of the 18 nominees
listed below (or a lesser number if any named nominees are unavailable for
election) if no contrary instruction is given on the Proxy. The Board of
Directors does not know of any reason for such unavailability by a nominee.
All nominees presently are Directors of the Corporation. Each Director elected
at the Annual Meeting of Shareholders will, in the absence of resignation,
removal or disqualification, serve for one year from the Annual Meeting and
until his or her successor is duly elected and qualifies. There are no present
Directors of the Corporation whose terms of office extend beyond the Annual
Meeting of April 17, 1995. The information given below has been furnished by
the nominees for the benefit of the shareholders.

3
<PAGE>

<TABLE>
<CAPTION>
POSITION WITH CORPORATION (OTHER
THAN AS DIRECTOR), IF ANY, PRESENT
DIRECTOR PRINCIPAL OCCUPATION AND PRINCIPAL
NAME AND AGE SINCE* OCCUPATION FOR PAST FIVE YEARS
- ------------ -------- --------------------------------------------------------
<S> <C> <C>
James O. Green.......... 1984 Retired, formerly Chairman of the Board (1983 to 1986)
70 Green's Dairy Inc.
Derek C. Hathaway....... 1995 Chairman of the Board, President and Chief Executive Of-
50 ficer (1994 to date) and President and Chief Operating
Officer (1991 to 1994) of Harsco Corporation (diversi-
fied products manufacturer).
Alfred G. Hemmerich..... 1983 Retired October 1, 1993, formerly President (1990 to Oc-
66 a,b,c tober, 1993) Green Hills Management Company (real estate
development); Vice President (1977 to 1990),
Gilbert/Commonwealth, Inc. (consulting engineers).
Lee H. Javitch.......... 1982 Private Investor; formerly Chairman of the Board and
64 b Chief Executive Officer of Giant Food Stores, Inc.,
Carlisle, Pennsylvania.
Christopher R. Jennings. 1987 Chairman of the Board, Chief Executive Officer and
51 c Chairman of the Executive Committee (January, 1995 to
date) of the Corporation and Dauphin Bank; President
(1987 to 1994) and Chief Operating Officer (May, 1992 to
January, 1995) of the Corporation.
William J. King......... 1980 Retired, January, 1995, formerly Chairman of the Board
65 a,c (1987 to 1994), Chief Executive Officer (1986 to 1994),
Chairman of Executive Committee (1982 to 1994) of Dau-
phin Bank and the Corporation.
William T. Kirchhoff.... 1979 Executive Vice President, Cleveland Brothers Equipment
53 c Company, Inc. (sale of construction equipment).
Lawrence J. LaMaina, 1992 Vice Chairman of the Corporation (1992 to date), Presi-
Jr..................... dent of the Southern Division of Dauphin Bank (1994 to
60 c date), formerly, Chairman, President and Chief Executive
Officer of Farmers Bank and Trust Company.
Andrew Maier, II........ 1995 President, Maier's Bakery, Reading, Pennsylvania.
45
James E. Marley......... 1993 Chairman of the Board (1993 to date), Chief Operating
59 a Officer (1990 to 1992) and President (1986 to 1992) of
AMP Incorporated (manufacturer of electrical compo-
nents); Director of AMP Incorporated, Armstrong World
Industries, Inc. and Harsco Corporation.
Robert F. Nation........ 1978 President, Penn Harris Company (owner and operator of
68 a,b,c motor inns); Director of Harsco Corporation.
Elmer E. Naugle......... 1982 Retired 1987, formerly fiscal officer, Shippensburg
70 a State University.
Walter F. Raab.......... 1977 Director and member of the Executive Committee of the
70 a,b Board of Directors of AMP Incorporated (manufacturer of
electrical components); Chairman and Chief Executive Of-
ficer of AMP Incorporated (1982 to 1/1/90); Director of
the West Company, Air Products and Chemicals, Inc. and
the Harris Corporation.
</TABLE>

4
<PAGE>

a. Member of Audit Committee of the Corporation.
b. Member of Management Development and Compensation Committee of the
Corporation.
c. Member of Executive Committee of the Corporation.

All nominees except Messrs. Fryer, Hathaway, King and Sheridan also are
Directors of Dauphin Bank.

The Audit Committee of the Corporation reviews the scope of the external
audit by the Corporation's independent certified public accountants. The
Committee also recommends the selection of independent certified public
accountants to the Executive Committee and the Board of Directors of the
Corporation. The Committee held 5 meetings during 1994.

The Management Development and Compensation Committee of the Corporation
reviews and evaluates salaries of all officers of Dauphin Bank of $65,000 or
more and makes recommendations as to such salaries to the Board of Directors of
Dauphin Bank. During 1994, the Committee held 5 meetings.

The Corporation does not have a Nominating Committee, but recommendations for
election as Directors of the Corporation are made by the Executive Committee to
the Board, which then nominates candidates for election to the Board. During
1994, the Executive Committee held 13 meetings.

The Board of Directors of the Corporation held 5 meetings during 1994. All of
the Directors of the Corporation attended at least 75 percent of the aggregate
of (1) the total number of meetings of the Board of Directors of the
Corporation (held during the period which they served as a Director) and (2)
the total number of meetings held by all committees of the Board of Directors
of the Corporation on which they served (during the periods that they served),
except Mr. Marley, who attended 50% of the meetings held.

EXECUTIVE COMPENSATION

The following table shows, for the fiscal years ending December 31, 1992,
1993 and 1994, the cash compensation paid or accrued, as well as certain other
compensation paid or accrued for those years,

5
<PAGE>

to the Chief Executive Officer of the Corporation and to each of the other
four most highly compensated executive officers of the Corporation in all
capacities in which they served:

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM COMPENSATION
---------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------- ------------------- -------
(A) (B) (C) (D) (E) (F) (G) (H) (I)
OTHER ALL
NAME ANNUAL RESTRICTED OTHER
AND COMPEN- STOCK OPTIONS/ LTIP COMPEN-
PRINCIPAL SALARY BONUS SATION AWARD(S) SARS PAYOUTS SATION
POSITION YEAR ($) ($)1/ ($) ($) (#) (2) ($) ($)
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William J. King,........ 1994 450,000 207,658 -- -- 35,000 -- 5,934(3)
Chairman of the 1993 425,000 193,996 -- -- 35,000 -- 5,695
Board, Chairman of the 1992 400,000 176,585 -- -- 29,600 -- 9,202
Executive Committee and
Chief Executive Officer
of Dauphin Bank and the
Corporation
Christopher R.
Jennings,............... 1994 322,875 118,644 -- -- 25,000 -- 4,056(4)
President and Chief 1993 307,500 108,228 -- -- 20,000 -- 4,012
Operating Officer of 1992 290,000 98,806 -- -- 16,600 -- 4,702
the Corporation
Lawrence J. LaMaina,
Jr.,................... 1994 250,000 91,865 -- -- 13,000 -- 3,899(6)
Vice Chairman 1993 240,750 97,314 -- -- 13,000 -- 4,272
of the Corporation and 1992(5) 209,698 87,200 -- -- 6,400 -- 21,272
President of the
Southern Division of
Dauphin Bank
Paul B. Shannon,........ 1994 210,000 77,167 -- -- 15,000 -- 3,429(7)
Vice Chairman 1993 200,000 70,392 -- -- 15,000 -- 3,363
and Chief Credit 1992 173,667 58,879 -- -- 13,000 -- 4,569
Policy Officer of the
Corporation and
President of Dauphin
Bank
Robert A. Rupel,........ 1994 125,000 40,808 -- -- 5,000 -- 2,929(8)
President of the 1993 118,000 34,186 -- -- 5,000 -- 2,319
Eastern
Division of Dauphin 1992 110,000 27,867 -- -- 4,000 -- 931
Bank
</TABLE>
- --------
(1) Reflects bonus earned during the fiscal year and paid during the next
fiscal year. Also includes a voluntary year-end distribution equal to two
weeks of base salary paid by Dauphin Bank each year to all of its
respective employees, including Messrs. King, Jennings, LaMaina, Shannon
and Rupel.

(2) Non-qualified options to acquire shares of Common Stock. Mr. King also was
granted 35,000 stock appreciation rights ("SARs") in tandem with the non-
qualified options awarded to him in 1994.

(3) Consists of $2,310 in Corporation contributions to the Corporation's
401(k) Savings Plan, $1,624 in premiums on a term life insurance policy
for Mr. King's benefit, and $2,000, which represents the economic benefit
to Mr. King under the Corporation's split dollar life insurance program.

6
<PAGE>

(4) Consists of $2,310 in Corporation contributions to the Corporation's 401(k)
Savings Plan, $1,163 in premiums on a term life insurance policy for Mr.
Jennings' benefit, and $583, which represents the economic benefit to Mr.
Jennings under the Corporation's split dollar life insurance program.

(5) On July 1, 1992, FB&T Corporation was merged with and into the Corporation
and, as a consequence thereof, Farmers Bank became a wholly-owned
subsidiary of the Corporation. In accordance with the terms of the merger,
Mr. LaMaina, who was previously Chairman, President and Chief Executive
Officer of FB&T Corporation and Farmers Bank, was appointed Vice Chairman
of the Corporation and remained Chairman, President and CEO of Farmers
Bank. The salary listed for Mr. LaMaina reflects total base salary paid
during calendar year 1992 even though the merger was not consummated until
July 1, 1992. Similarly, Mr. LaMaina's bonus was paid in accordance with
the Farmers Bank Incentive Compensation Plan for services rendered during
calendar year 1992. In addition to the salary and bonus listed for services
rendered during 1992, Mr. LaMaina also received a payment of $690,000 from
FB&T Corporation immediately prior to the effective date of the merger in
settlement of his rights pursuant to the change in control provisions of
his employment agreement with FB&T Corporation. The employment agreement
terminated on July 1, 1992, the effective date of the merger.

(6) Consists of $2,310 in Corporation contributions to the Corporation's 401(k)
Savings Plan, $422 in premiums on a term life insurance policy for Mr.
LaMaina's benefit, and $1,167, which represents the economic benefit to Mr.
LaMaina under the Corporation's split dollar life insurance program.

(7) Consists of $2,310 in Corporation contributions to the Corporation's 401(k)
Savings Plan, $760 in premiums on a term life insurance policy for Mr.
Shannon's benefit, and $359, which represents the economic benefit to Mr.
Shannon under the Corporation's split dollar life insurance program.

(8) Consists of $2,269 in Corporation contributions to the Corporation's 401(k)
Savings Plan, $454 in premiums on a term life insurance policy for Mr.
Rupel's benefit, and $206, which represents the economic benefit to Mr.
Rupel under the Corporation's split dollar life insurance program.

Stock Options.

The following table contains information concerning the grant of stock
options under the Corporation's Stock Option Plan of 1986 to the Chief
Executive Officer and the other four highest compensated executive officers of
the Corporation during the year ending December 31, 1994.

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM (1)
- ------------------------------------------------------------------- ---------------------
(A) (B) (C) (D) (E) (F) (G)
NO. OF % OF
SECURITIES TOTAL
UNDER- OPTIONS
LYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES OR BASE EXPIRA-
GRANTED IN FISCAL PRICE TION
NAME (#) (2) YEAR ($/SH) (3) DATE (4) 5% ($) 10% ($)
---- ---------- ---------- ---------- -------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
William J. King......... 35,000 21.81% $25.63 7/14/04 $ 564,150 $ 1,429,667
Christopher R. Jennings. 25,000 15.58% $25.63 7/14/04 $ 402,964 $ 1,021,190
Lawrence J. LaMaina,
Jr. ................... 13,000 8.10% $25.63 7/14/04 $ 209,541 $ 531,019
Paul B. Shannon......... 15,000 9.35% $25.63 7/14/04 $ 241,779 $ 612,714
Robert A. Rupel......... 5,000 3.12% $25.63 7/14/04 $ 80,593 $ 204,238
</TABLE>

7
<PAGE>

- --------
(1) Illustrates value that would be realized upon exercise of the options
immediately prior to the expiration of their term, assuming the specified
compounded rates of appreciation on the Common Stock over the term of the
options.

(2) The date of grant for all options is July 14, 1994. All options granted are
non-qualified stock options without SAR's, except for the grant to Mr.
King, which included 35,000 SAR's in tandem with the non-qualified stock
options. The options vest over a five year period with 20% of the options
becoming exercisable for shares each year on the anniversary of the date of
grant. To the extent not already exercisable, the options become
automatically exercisable in the event of a merger or consolidation of the
Corporation in which the Corporation is not the surviving entity, or the
sale of all or substantially all of the assets of the Corporation, or an
offer to purchase made by a party, other than the Corporation, to all
stockholders of the Corporation for at least 35% of the outstanding stock.
In addition, the Management Development and Compensation Committee of the
Board of Directors may, in its discretion, accelerate the vesting schedule,
upon such terms and conditions as it may impose.

(3) The exercise price of all options granted is equal to the market price of
the Common Stock on the date of grant. The exercise price may be paid in
cash, or in shares of Common Stock owned by the option holder prior to
exercising the option, provided such shares have a fair market value on the
date of payment equal to the option exercise price for the shares of Common
Stock being purchased, or partly in cash and partly in such shares of
Common Stock. Each SAR entitles the holder thereof to surrender to the
Corporation an unexercised related option and to receive from the
Corporation in exchange therefor, a payment equal to the excess of the fair
market value on the exercise date of one share of Common Stock over the
exercise price of the related option times the number of shares covered by
the option which is surrendered.

(4) All options expire 10 years from the date of grant. Notwithstanding the
foregoing: (1) In the event of normal or early retirement prior to the end
of the option term, the option shall remain exercisable for a period of
three years from the date of retirement (but not later than the end of the
option term) to the extent the option was vested, by acceleration or
otherwise, at the time of retirement; (2) in the event an option holder
ceases to be employed by reason of death or disability prior to the end of
the option term, the option shall remain exercisable for one year from the
date of cessation of employment (but not later than the end of the option
term) to the extent the option was vested, by acceleration or otherwise, at
the time of cessation of employment; and (3) in the event an option holder
ceases to be employed other than by reason of death or disability, the
option shall remain exercisable for three months from the date of cessation
of employment (but not later than the end of the option term) to the extent
the option was exercisable at the time of cessation of employment.

8
<PAGE>

Option/SAR Exercises and Holdings.

The following table sets forth information with respect to the Chief
Executive Officer and the other four highest compensated executive officers of
the Corporation concerning the exercise of options and/or stock appreciation
rights ("SARs") during the year ending December 31, 1994 and unexercised
options and SARs held as of the end of 1994.

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUE

<TABLE>
<CAPTION>
(A) (B) (C) (D) (E)
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FY-END (#) FY-END ($)
--------------- ----------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED ($)(1) UNEXERCISABLE UNEXERCISABLE(2)
---- --------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C>
William J. King......... 9,566 $100,043 113,134/92,600 $788,692/
$ 87,453
Christopher R. Jennings. 0 $ 0 53,408/57,600 $355,084/
$ 49,045
Lawrence J. LaMaina,
Jr..................... 3,900 $ 60,509 23,249/37,395 $202,833/
$109,632
Paul B. Shannon......... 0 $ 0 27,820/39,800 $165,829/
$ 40,158
Robert A. Rupel......... 0 $ 0 2,600/11,400 $ 148/
$ 222
</TABLE>
- --------
(1) Fair market value of Common Stock at exercise, minus the exercise price.

(2) Fair market value of Common Stock at year-end ($23.815 per share).

Pension Plans.

The Corporation maintains the Dauphin Deposit Corporation Pension Plan (the
"Pension Plan") which is a non-contributory defined benefit pension plan. The
Pension Plan provides benefits for all eligible employees, including the named
executive officers.

The Pension Plan's current benefit formula provides plan participants with a
normal retirement benefit equal to 1.375% of a participant's average
compensation not in excess of a participant's covered compensation multiplied
by the participant's applicable benefit service credited after July 1, 1985
plus 1.625% of a participant's average compensation in excess of a
participant's covered compensation multiplied by the participant's applicable
benefit service, not in excess of 35 years, credited after July 1, 1985.
Different benefit formulas apply for service prior to July 1, 1985 depending on
the retirement plan in which the employee participated prior to 1985. A
participant's average compensation is computed using the five consecutive plan
years which produce the highest average. A participant's covered compensation
is the average of the Social Security taxable wage bases in effect during the
35 years ending with the year in which an individual attains Social Security
retirement age. The covered compensation figure is adjusted each year until the
participant reaches Social Security retirement age in order to reflect changes
in the Social Security taxable wage base. For purposes of the Pension Plan,
compensation is defined as a participant's annual rate of earnings as of
January 1st, exclusive of overtime and bonuses, subject, however, to a maximum
compensation limit for 1994 of $150,000, as adjusted. Generally, the Plan also
provides a death benefit in the form of a survivor annuity to the surviving
spouse of a vested active or vested former participant who dies prior to the
commencement of retirement benefits.

9
<PAGE>

The Corporation and Dauphin Bank have also entered into non-qualified
Supplemental Pension Agreements with Mr. King and Mr. Jennings. Under the
Supplemental Pension Agreements, Mr. King and Mr. Jennings upon retirement are
generally entitled to a benefit equal to 55% of their highest five year average
compensation reduced by their applicable benefit under the Pension Plan, their
applicable social security benefit and the applicable benefit from their prior
employer's qualified retirement plan.

The following table sets forth the projected pension benefits payable to a
covered participant upon normal retirement in 1994 under the Pension Plan based
on various levels of average compensation and assuming the current benefit
formulas were in effect for the entire period of credited service. The
narrative immediately below the table sets forth the additional pension
benefits payable to Messrs. King and Jennings under their non-qualified
Supplemental Pension Agreements based on certain assumptions set forth in the
narrative.

PENSION PLAN TABLE

<TABLE>
<CAPTION>
YEARS OF SERVICE
AVERAGE ----------------------------
COMPENSATION 10 15 25 35
- ------------ ------- ------ ------ ------
<S> <C> <C> <C> <C>
$ 20,000.......................................... $ 2,750 $4,125 $6,875 $9,625
50,000.......................................... 7,517 11,276 18,793 26,310
80,000.......................................... 12,392 18,588 30,981 43,373
100,000.......................................... 15,642 23,463 39,106 54,748
150,000*......................................... 23,767 35,651 59,418 83,185
200,000.......................................... 23,767 35,651 59,418 83,185
250,000.......................................... 23,767 35,651 59,418 83,185
300,000.......................................... 23,767 35,651 59,418 83,185
350,000.......................................... 23,767 35,651 59,418 83,185
400,000.......................................... 23,767 35,651 59,418 83,185
450,000.......................................... 23,767 35,651 59,418 83,185
500,000.......................................... 23,767 35,651 59,418 83,185
550,000.......................................... 23,767 35,651 59,418 83,185
600,000.......................................... 23,767 35,651 59,418 83,185
650,000.......................................... 23,767 35,651 59,418 83,185
700,000.......................................... 23,767 35,651 59,418 83,185
</TABLE>

Mr. King's yearly supplemental pension benefit, commencing February 1, 1995,
and payable in equal monthly installments in a joint and survivor form, is
$190,009. Mr. Jennings' yearly supplemental pension benefit, commencing at his
normal retirement and payable in equal monthly installments for his lifetime,
is $152,298 (assumes 1994 compensation for supplemental pension purposes
remains constant at $431,103 to normal retirement).
- --------
* Benefits payable from the Pension Plan are subject to maximums prescribed in
the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended,
and by the Internal Revenue Code of 1986, as amended. A maximum compensation
limit under the Pension Plan for 1994 of $150,000 must be applied by law in
calculating benefits. Figures in the Pension Plan Table above show normal
retirement benefits payable under the Pension Plan assuming normal retirement
in 1994.

The projected benefit amounts set forth in the table are not subject to
reduction for social security benefits. Voluntary year end distributions and
incentive payments made under the Annual Management Performance Incentive Plan
do not qualify as compensation covered under the Pension Plan. Compensation
utilized for purposes of determining benefits under the Pension Plan as of
December 31, 1994 is as follows: Mr. King $450,000, Mr. Jennings $322,875, Mr.
LaMaina $250,000,

10
<PAGE>

Mr. Shannon $210,000 and Mr. Rupel $125,000. For purposes of the Pension Plan
at December 31, 1994, Mr. King had 15 years and 4 months of service, Mr.
Jennings had 7 years and 5 months of service, Mr. Shannon had 15 years and 3
months of service, Mr. LaMaina had 2 years and 6 months of service and Mr.
Rupel had 2 years and 10 months of service.

The Pension Plan costs are based on actuarial assumptions, and cannot be
specifically allocated to any one individual. No contribution to the Pension
Plan was required or made for 1994.

Change in Control and Employment Agreements.

The Corporation and Dauphin Bank have entered into various Change in Control
Agreements with the executive officers listed in the Summary Compensation
Table. In addition, the Corporation and Dauphin Bank have entered into an
employment contract with Mr. LaMaina which also contains change in control
provisions.

Where change in control benefits are provided under an Agreement, the
agreements generally provide that if the executive officer's employment with
the Corporation or Dauphin Bank, respectively, is terminated pursuant to a
change in control, the executive officer's base salary in effect on the date of
termination, plus an amount equal to bonuses, if any, earned by the executive
officer for the immediately preceding year will continue for a period of two to
five years, depending on the particular Agreement, but not beyond the date on
which the respective executive officer attains age 65 or dies. Each payment
made following termination, however, will be reduced by the executive officer's
earned income from all sources during the corresponding pay period. Mr.
Jennings' Agreement provides that an amount equal to slightly less than three
times his average annual compensation for the prior 5 years will be paid to him
in a lump sum upon termination pursuant to a change in control and also
provides for a one year consulting agreement following termination at his
annual base salary on the date of termination. The Agreements with Messrs.
King, Jennings, Shannon and Rupel provide that the Corporation or Dauphin Bank,
as applicable, will also provide the executive officer with available insurance
coverages in effect at the time of the executive officer's termination pursuant
to a change in control, offset by coverage by any subsequent employment. Such
benefits will continue for a period of two years or until the executive officer
attains the age of 65, depending on the particular agreement. Depending on the
particular Agreement, the Corporation or Dauphin Bank, as applicable, will also
continue to provide the executive officer with the pre-retirement death
benefits and the supplemental retirement income benefits described above
following termination of employment. A termination pursuant to a change in
control may occur in connection with a merger, consolidation, acquisition,
reorganization, sale of assets or significant stock acquisition of the
Corporation or Dauphin Bank, as applicable.

In connection with the merger of FB&T Corporation into the Corporation on
July 1, 1992, the Corporation and Farmers Bank and Trust Company of Hanover
(which merged into Dauphin Bank on July 1, 1994) entered into an
employment/consulting agreement with Mr. LaMaina for a minimum of three (3)
years. In addition to the change in control provisions previously discussed,
the terms of Mr. LaMaina's Agreement include a base annual salary of $225,000
in calendar year 1992 and $240,750 thereafter (subject to increase upon merit
review), the opportunity for additional incentive compensation and other fringe
benefits. The employment/consulting agreement with Mr. LaMaina was amended on
April 2, 1993 to extend the term of full-time employment until January 31,
1996.

The benefits provided under the Agreements are unfunded and will be paid out
of the general assets of the Corporation or Dauphin Bank, at such time as the
benefits become payable.

BOARD MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION.

Set forth below is a report submitted by the Management Development and
Compensation Committee of the Board of Directors (the "Compensation Committee")
addressing the Corporation's

11
<PAGE>

executive compensation policies for 1994. The Compensation Committee is
composed of the following non-employee Directors of the Corporation: Robert F.
Nation--Chairman, Alfred G. Hemmerich, Lee H. Javitch, Walter F. Raab, Henry W.
Rhoads and R. Champlin Sheridan, Jr.

The key elements of the Corporation's executive compensation package consist
of base salary, annual bonus and stock options. In addition to the programs
discussed herein, the Compensation Committee takes into account the full
compensation package afforded by the Corporation to the executive officers,
including pension benefits, supplemental retirement benefits, insurance and
other benefits.

The Corporation's executive compensation program, particularly the annual
bonus, is designed to be closely linked to corporate performance and returns to
shareholders. To this end, the Corporation, in conjunction with its independent
compensation consultants, has developed an overall compensation strategy and
specific compensation plans that tie a significant portion of executive
compensation to the Corporation's success in meeting specified performance
goals. The overall objectives of this strategy are to attract and retain the
best possible executive talent, to motivate these executives to achieve the
goals inherent in the Corporation's business strategy, to link executive and
shareholder interests through equity based plans and finally to provide a
compensation package that recognizes individual contributions as well as
overall business results.

The Compensation Committee is composed entirely of independent non-employee
Directors of the Corporation. The Compensation Committee is responsible for
setting and administering the policies which cover both annual compensation
(base salary and annual bonus) and grants pursuant to the Corporation's Stock
Option Plan of 1986, as amended (the "Stock Option Plan"). Each year the
Compensation Committee conducts a full review of the Corporation's executive
compensation program. This review includes a report from management as to
corporate performance for the prior year, as well as the preparation and
presentation to the Compensation Committee of a financial plan for the current
year. This review in 1994 also included recommendations from the Corporation's
independent compensation consultants as to bonus award opportunities under the
Corporation's Annual Management Performance Incentive Plan (the "Incentive
Bonus Plan") and the grant of options pursuant to the Stock Option Plan. The
Compensation Committee considered the Corporation's business plan and expected
results and the Corporation's strategic initiatives and results achieved. The
Compensation Committee also compares the Corporation's compensation program
with the compensation programs of a list of peer group companies compiled by
Dauphin Bank which is composed of regional banks of varying asset size located
both within and outside of the Corporation's traditional central and south
central Pennsylvania market area. For purposes of determining appropriate
levels of stock option grants, the Compensation Committee also considers a
separate list of peer group companies with stock option plans compiled by the
Corporation's independent compensation consultants using long term incentive
plan surveys. The peer group companies listed represent the Corporation's
direct and indirect competitors for executive talent in the banking industry.
With respect to comparisons with peer group companies, the Compensation
Committee considers both the performance and compensation levels of these
comparable companies in establishing the Corporation's executive compensation
levels. For 1994, the compensation amounts of the Corporation's named executive
officers fell within the median range of compensation paid by the other peer
group companies. The peer group lists reviewed by the Compensation Committee
represent only a small portion of those companies comprising the Nasdaq Bank
Stocks Index which the Corporation uses as its industry index in the
Performance Graph set forth elsewhere in this Proxy Statement. The Nasdaq Banks
Stock Index includes all commercial banks and bank holding companies which
stock is traded on the Nasdaq National Market and the Nasdaq Small Cap Market.

The Compensation Committee meets without the Chief Executive Officer present
to evaluate his performance under the Corporation's executive compensation
program and reports on that evaluation to the full Board of Directors. With
regard to the other four highest paid executive officers

12
<PAGE>

not including the Chief Executive Officer, the Compensation Committee considers
the recommendations of the Chief Executive Officer as to base salary,
performance under the Incentive Bonus Plan and grants of options and/or stock
appreciation rights ("SARs") under the Stock Option Plan.

Base Salary.

The Compensation Committee approves annual base salary adjustments for all
officers with annual base salaries of $65,000 and above. Base salaries for new
officers are initially determined by evaluating the responsibility of the
position held and the experience of the individual, and by reference to the
competitive market place for executive talent, including a comparison to base
salaries for comparable positions at the financial institutions included in the
list of peer group companies compiled by Dauphin Bank. With the exception of
Mr. LaMaina, whose base salary is set pursuant to the terms of an employment
agreement entered into on July 1, 1992 in connection with the FB&T Corporation
merger, the base salary of the named executive officers is reviewed and
approved each year by the Compensation Committee prior to approval by the full
Board of Directors.

Typically, annual salary adjustments for executive officers are determined by
evaluating the performance of the Corporation and its executive officers, and
by taking into account any additional or new responsibilities assumed by
individual executive officers in connection with promotions or organizational
changes. It has been the practice of the Corporation, upon recommendation from
the Chief Executive Officer, to treat overall corporate performance as the
primary factor in the amount of salary adjustments for executive officers. In
measuring corporate performance, the Committee considers return on equity,
return on assets, earnings per share and total return to shareholders.

With respect to the base salary granted to Mr. King in 1994, the Compensation
Committee took into account the Corporation's performance during 1993 and also
compared Mr. King's base salary with the base salaries of the chief executive
officers of the peer companies referred to above. Particular emphasis was
placed upon the Corporation's success in meeting its return on equity goal in
1993 and the assessment by the Compensation Committee of Mr. King's individual
performance. Mr. King was granted a base salary of $450,000 for 1994, an
increase of 5.9% over his $425,000 base salary for 1993.

Annual Bonus.

The Compensation Committee reviews the tentative award payments and
performance levels for participants in the Incentive Bonus Plan in January of
each year. Under the Incentive Bonus Plan, bonus awards are calculated based on
corporate and individual performance in accordance with a formula previously
approved by the Compensation Committee. As for named executive officers, the
corporate performance measures typically account for up to 75% of the award
payment while the individual performance measures are accorded a weight of up
to 25%. The corporate performance measure under the Incentive Bonus Plan for
1994 was return on equity. For each year of participation, the Compensation
Committee determines those executive officers eligible to participate in the
Incentive Bonus Plan and establishes target bonus awards based on a percentage
of the respective officer's base salary for the year in question. Actual bonus
awards under the Incentive Bonus Plan formula are tied to actual corporate and
individual performance and may be higher or lower than the pre-set target bonus
awards. In no event, however, can a participant's actual bonus award exceed
150% of the participant's target bonus award. The Compensation Committee
approves annual return on equity targets and individual performance targets at
the beginning of each year and bonus award recommendations based on these
targets made by senior management at the close of the year.

In 1994, the Corporation achieved 92% of its target return on equity goal. In
addition, during 1994 Mr. King achieved 100% of his previously established
individual performance objectives. Based

13
<PAGE>

on these results, Mr. King was awarded a bonus of $190,350, a 7.1% increase
over the bonus paid to him in 1993. In awarding this bonus, the Compensation
Committee also considered Mr. King's role in promoting the long-term strategic
growth of the Corporation. Mr. King's actual bonus award for 1994 amounted to
approximately 94% of the pre-set target bonus award.

In addition to the incentive bonus discussed above, it has been the annual
practice of the Board of Directors of Dauphin Bank to consider awarding a
discretionary year-end bonus distribution to all employees of Dauphin Bank
equal to two weeks of each employee's base salary. This discretionary year-end
bonus is considered and approved by the Dauphin Bank Board of Directors.

In 1994, the Dauphin Bank Board of Directors approved such a discretionary
year-end bonus for all employees of Dauphin Bank. As a result, Mr. King
received an additional bonus distribution of $17,308 at year-end 1994.

Stock Option Plan.

Under the Stock Option Plan, which was approved by the shareholders at the
1987 Annual Meeting, incentive stock options, non-qualified stock options and
stock appreciation rights in conjunction with such options, may be granted to
executive officers of the Corporation or its subsidiaries. The Compensation
Committee sets guidelines for the size of stock option awards based on a
recommendation each year from the Corporation's independent compensation
consultants and management. Although the size of awards is largely a subjective
determination based on the particular executive officer, factors considered
include competitive compensation data from the list of peer group companies
compiled by the Corporation's independent compensation consultants, the amount
of options previously awarded to an executive officer and the value of
unexercised in-the-money options at year end. In the event of poor corporate
performance, the Compensation Committee can elect not to award options. In
1994, the stock option award to the Chief Executive Officer fell below the
median level for such compensation as determined by reference to peer group
companies reviewed.

Stock options during 1994 were granted with an exercise price equal to 100%
of the fair market value of the Common Stock on the date of grant and vest over
a five year vesting schedule (20% vested per year). All options granted were
non-qualified stock options. No SARs were granted during 1994, except for the
grant to Mr. King which included SARs in tandem with non-qualified stock
options.

In 1994, Mr. King received options to purchase 35,000 shares of Common Stock
with an exercise price of $25.63 per share. This represents the same number of
options that were granted to Mr. King in 1993. Mr. King presently is the
beneficial owner, directly and indirectly, of 41,094 shares of Common Stock and
also holds presently exercisable options to purchase an additional 182,634
shares. The Compensation Committee believes that significant equity interests
in the Corporation held by the Corporation's senior management are beneficial
to the common interests of shareholders and management.

MANAGEMENT DEVELOPMENT AND
COMPENSATION COMMITTEE
Robert F. Nation--Chairman
Alfred G. Hemmerich
Lee H. Javitch
Walter F. Raab
Henry W. Rhoads
R. Champlin Sheridan, Jr.

14
<PAGE>

Performance Graph.

The following graph compares the yearly percentage change in the cumulative
total stockholder return on the Common Stock during the five years ended
December 31, 1994 with the cumulative total return on (i) a broad equity market
index, the S&P 500 Index and (ii) a published industry index, the Nasdaq Bank
Stocks Index. The comparison assumes $100 was invested on December 31, 1989 in
the Common Stock and in each of the indices and assumes reinvestment of
dividends.

FIVE YEAR CUMULATIVE TOTAL RETURN

[CHART APPEARS HERE]

<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Dauphin Deposit................................ 100 90 126 168 188 183
S&P 500........................................ 100 97 126 135 149 150
Nasdaq Bank Stocks............................. 100 73 120 175 199 199
</TABLE>

Directors' Fees.

Directors of the Corporation who are not officers of the Corporation receive
an annual retainer fee of $5,000 and are paid $425 for attendance at the Annual
Meeting and at each Board Meeting and $450 for attendance at each meeting of
the Executive Committee of the Board, $275 for attendance at each meeting of
the Audit Committee of the Board and $250 for attendance at each meeting of any
other committee of the Board. Directors of Dauphin Bank who are not officers of
Dauphin Bank

15
<PAGE>

are paid $325 for attendance at each meeting of the Board, $450 for attendance
at each meeting of the Executive Committee of the Board, $275 for attendance at
each meeting of the Trust Committee of the Board and $250 for attendance at
each meeting of any other committee of the Board. Non-officer Directors who
serve on bank Advisory Boards receive attendance fees ranging from $100 to $300
per meeting, depending upon the particular Advisory Board. Members of the
Farmers Bank Advisory Board also receive an annual retainer of $8,500 and
members of the Valleybank Advisory Board also receive an annual retainer of
$2,000.

PROPOSAL TO APPROVE THE DAUPHIN DEPOSIT CORPORATION
1995 STOCK INCENTIVE PLAN

At the present time, the Corporation administers the 1986 Stock Option Plan
(the "1986 Plan"), which was approved by the shareholders at the 1987 Annual
Meeting. The 1986 Plan expires in 1996 and the number of shares available for
additional option grants under the 1986 Plan has nearly been depleted.
Therefore, on January 23, 1995, the Board adopted, subject to shareholder
approval, the Dauphin Deposit Corporation 1995 Stock Incentive Plan (the "Stock
Incentive Plan"), which is intended to supplement and ultimately replace the
1986 Plan. The Stock Incentive Plan is set forth in Exhibit A to this Proxy
Statement and reference is made to such Exhibit for a complete statement of its
terms and provisions.

Summary.

The Stock Incentive Plan is administered by a committee consisting of at
least three members of the Board (the "Committee") all of whom must be
"disinterested persons" within the meaning of Rule 16b-3 of the Securities and
Exchange Commission. Under the Stock Incentive Plan, the Committee may, from
time to time, grant incentive stock options, non-qualified stock options, stock
appreciation rights, stock bonus awards, which may but need not be in the form
of restricted stock awards or performance unit awards, and other awards that
provide a participant with the right to purchase or otherwise acquire
Corporation Common Stock or that are valued by reference to the market value of
Corporation Common Stock (hereinafter collectively referred to as "Stock
Incentives"). Grants of Stock Incentives may be made by the Committee to
employees of the Corporation or its direct or indirect subsidiaries taking into
account, among other things, their potential contribution to the success of the
Corporation and the services rendered or to be rendered by such individuals.
Subject to restrictions noted herein, the Committee has broad authority to
determine the terms and conditions upon which such Stock Incentives may be
granted, including, among other things, when they may be granted, their
duration, and conditions for their exercise and forfeiture. The Committee has
authority to grant awards of one type or of several types and in such
combinations as the Committee may, in its discretion, determine. Each Stock
Incentive shall be evidenced by a written instrument in such form as the
Committee shall determine, signed by a duly authorized officer of the
Corporation.

The Stock Incentive Plan authorizes the issuance of up to 2,000,000 shares of
Corporation Common Stock, par value $5.00 per share. The number of shares
authorized to be issued under the Stock Incentive Plan and outstanding awards
granted under the Stock Incentive Plan are subject to equitable adjustment as
determined by the Committee in the event of stock dividends, stock splits and
similar transactions.

Amendments to Stock Incentive Plan.

The Board of Directors may amend or terminate the Stock Incentive Plan at any
time provided that, without shareholder approval, no amendment may (i)
materially increase the benefits accruing to participants under the Stock
Incentive Plan, (ii) increase the aggregate number of shares which may be
issued under the Stock Incentive Plan or (iii) materially modify the
requirements as to

16
<PAGE>

eligibility for participation in the Stock Incentive Plan. On March 3, 1995,
the closing price per share of Corporation Common Stock was $25.00. Should any
Stock Incentive granted under the Stock Incentive Plan expire, be canceled or
otherwise terminate prior to its exercise in full, or should any restricted
stock be forfeited, the shares subject to such stock option or such forfeited
restricted stock shall be available for further grants under the Stock
Incentive Plan, subject to certain limitations set forth in the Stock Incentive
Plan.

Stock Options.

Stock options will give the optionee the right to purchase a number of shares
of Common Stock at future dates and at an established price, all as determined
by the Committee on the date of the grant. In the case of incentive stock
options, the price must not be less than 100% of the fair market value of the
stock at the time of grant (110% in the case of grantees owning more than 10%
of the Corporation's Common Stock), and in the case of non-qualified stock
options, the price must not be less than 85% of the fair market value at the
time of grant. The definition of "fair market value" under the Stock Incentive
Plan is the mean between the high and low sales price of a share of Common
Stock on the Nasdaq National Market System (or alternative market in which the
stock is then traded) on the date the stock is valued pursuant to the Stock
Incentive being issued.

The purchase price of shares subject to a stock option may be paid in whole
or in part in cash, by check, or if so provided in the grant form and subject
to such terms and conditions as the Committee may impose, by delivering to the
Corporation a properly executed exercise notice together with a copy of
irrevocable instructions to a stock broker to sell immediately some or all of
the shares acquired by exercise of the option and to deliver promptly to the
Corporation an amount of sales proceeds sufficient to pay the purchase price,
or if so provided in the grant form and subject to such terms and conditions as
are specified therein, in shares of Corporation Common Stock surrendered to the
Corporation at the time of exercise. Shares of Common Stock thus surrendered in
payment of the exercise price of an option shall be valued at the fair market
value of such shares on the date of exercise of the option. If so provided in
the grant form and subject to such terms and conditions as are specified
therein, in lieu of the foregoing methods of payment, the Committee may permit
any portion of the purchase price to be paid by a promissory note secured by a
pledge of the purchased shares in such form and containing such provisions as
the Committee may approve.

The Committee may specify, at the time of grant of an incentive stock option
or, with respect to a non-qualified stock option, at or after the time of
grant, that a participant shall be granted a non-qualified stock option (a
"restored option") if and when such participant exercises all or part of an
option by surrendering shares of Common Stock already owned in full or partial
payment of the option price or where shares of Common Stock are surrendered or
withheld to satisfy tax obligations incident to the exercise of such option.

The Committee may cancel any outstanding option with the consent of the
holder thereof and regrant the option at a lower price, provided that the price
satisfies the pricing requirements set forth above on the date of regrant, and
no additional consideration need be received by the Corporation in exchange for
such cancellation and regrant.

Stock Appreciation Rights.

A stock appreciation right ("SAR") under the Stock Incentive Plan gives the
holder the right to receive, subject to the terms of the grant, stock, cash, or
both stock and cash, in an amount equal to the appreciation between the date of
grant and the date of exercise of the right in the fair market value of one
share of Common Stock. The Committee determines what portion of the
appreciation is paid in cash or stock and the fair market value of any shares
issued in payment. SARs may be granted in tandem with an option, in addition to
an option, or may be free standing and not related to an option.

17
<PAGE>

Stock Bonus Awards.

Stock bonus awards are an amount of cash or shares of Common Stock which are
distributed to a participant or which the Committee agrees to distribute in the
future to a participant in lieu of, or as a supplement to, any other
compensation that may have been earned for services rendered by the participant
prior to the date the award is made. Performance unit awards and restricted
stock awards are specific types of stock bonus awards. All or any portion of
the stock bonus award may, but need not be, made in the form of a performance
unit award or a restricted stock award. Typically, a performance unit award
means an amount of cash or shares of Corporation Common Stock or a combination
of each, that would be distributed in the future if continued employment or
other performance objectives or contingencies specified by the Committee are
attained by a participant. A restricted stock award typically means shares of
Corporation Common Stock which are issued or transferred to a participant and
which will become free of restrictions specified by the Committee if continued
employment and/or other performance objectives or contingencies specified by
the Committee are attained. All stock bonus awards, including performance unit
awards and restricted stock awards, shall be subject to such terms and
conditions, including, without limitations, restrictions on the sale or other
disposition of the shares issued or transferred pursuant to such award, and
conditions calling for forfeiture of the award or the shares issued or
transferred pursuant thereto, as the Committee shall determine. Upon the
issuance or transfer of shares to a participant pursuant to a stock bonus
award, the participant shall be fully entitled to receive dividends, to vote
and to exercise all other rights of a shareholder except to the extent
otherwise provided in the award. Any stock bonus award may, in the discretion
of the Committee, be settled in cash, on each date on which shares would
otherwise have been delivered or become unrestricted pursuant to the terms and
conditions of the award, in an amount equal to the fair market value on such
date of the shares which would otherwise have been delivered or become
unrestricted.

Change In Control and Termination of Employment.

The Stock Incentive Plan provides that any Stock Incentive which is
outstanding, but not yet exercisable, vested or payable at the time of a change
in control shall become exercisable, vested and payable at that time. A change
in control under the Stock Incentive Plan occurs upon (a) the acquisition by
any person or group, directly or indirectly, of securities of the Corporation
representing more than 20% of the combined voting power of the Corporation's
then outstanding securities or (b) the approval by the Corporation's
shareholders of (i) an agreement for the sale or disposition of all or
substantially all of the Corporation's assets, (ii) a plan of complete
liquidation, or (iii) a reorganization, consolidation or merger of the
Corporation in which the Corporation is not the continuing or surviving
corporation, or pursuant to which shares of Corporation Common Stock would be
converted into cash, securities or other property, other than a reorganization,
consolidation or merger where the holders of the Corporation's Common Stock
immediately prior to the transaction will, following such transaction,
beneficially own more than 50% of the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors of the corporation resulting from the transaction, or (c) the persons
who are members of the Board of Directors of the Corporation immediately before
a reorganization, merger, consolidation, contested election or tender or
exchange offer, cease to constitute a majority of the Board of Directors as a
result of such transaction or transactions. The Committee may also cause any
Stock Incentive outstanding at the time of a change in control to be assumed or
new rights of equivalent value to be substituted therefore by the successor or
surviving corporation in the change in control.

The Committee also may authorize the holder of an option or SAR to exercise
the option or SAR following the termination of the participant's employment
with the Corporation or its subsidiaries, or following the participant's
disability, whether or not the option or SAR would otherwise be exercisable
following such event, provided that in no event may an option or SAR be
exercised after

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the expiration of its term. The Committee also may authorize a stock bonus
award, performance unit award or restricted stock award to become
nonforfeitable, fully earned and payable following a change in control, the
termination of the participant's employment with the Corporation or its
subsidiaries or the participant's disability, whether or not the award would
otherwise become nonforfeitable, fully earned and payable following such event.

Federal Tax Information.

Some of the stock options issuable under the Stock Incentive Plan are
intended to constitute "incentive stock options" within the meaning of Section
422A of the Internal Revenue Code of 1986, as amended, while other stock
options granted under the Stock Incentive Plan will be "non-qualified stock
options." Generally, upon the exercise of an incentive stock option, the
optionee will recognize no income for federal income tax purposes. The
difference between the exercise price of the incentive stock option and the
fair market value of the shares subject to the option at the time of exercise
is an item of tax preference which may require payment of an alternative
minimum tax. On the sale of shares acquired by exercise of an incentive stock
option (assuming that the sale does not occur within two years of the date of
grant of the option or within one year from the date of exercise), any gain
will be taxed to the optionee as capital gain. A sale of shares acquired by
exercise of an incentive stock option within two years of the date of grant of
the option or within one year from the date of exercise will result in the
optionee recognizing ordinary income to the extent the fair market value of a
share on the date of exercise exceeds the exercise price. In contrast, except
as noted below, upon the exercise of a non-qualified option, the optionee
recognizes taxable income (subject to withholding) in an amount equal to the
difference between the then fair market value of the shares on the date of
exercise and the exercise price. Upon any subsequent sale of such shares by the
optionee, any difference between the sale price and the optionee's tax basis in
the shares will be treated generally as capital gain or loss. Special rules may
apply to executive officers and directors who are subject to the "short-swing
profit" recapture provisions of the Securities Exchange Act of 1934 (the
"Exchange Act").

The Corporation will not be entitled to a tax deduction upon the grant or
exercise of an incentive stock option, or upon the sale of any shares acquired
pursuant to such exercise, except that a tax deduction may be available to the
Corporation if the employee sells the shares so acquired within two years of
the date the option was granted or one year of the date of exercise. Upon the
exercise of a non-qualified stock option, the Corporation is entitled to a
deduction for federal income tax purposes in an amount equal to the income
recognized by the optionee, provided the Corporation complies with applicable
tax withholding requirements.

An employee recognizes no taxable income and the Corporation is not entitled
to a deduction when an SAR is granted. Upon the exercise of an SAR, the grantee
recognizes taxable income (subject to withholding) in an amount equal to any
cash received plus an amount equal to the fair market value of any stock
received. The Corporation is entitled to a deduction for federal tax purposes
in an amount equal to the income recognized by the grantee.

At the time restricted stock granted under the Stock Incentive Plan is either
transferable or no longer subject to a substantial risk of forfeiture, the
grantee recognizes taxable income (subject to withholding) in an amount equal
to the difference between the then fair market value of the stock and the
amount paid for the stock (if any). However, the grantee may make an election
to be taxed as of the date that restricted stock is granted, in which case the
grantee recognizes taxable income (subject to withholding) in an amount equal
to the difference between the fair market value of the stock as of the grant
date and the amount paid for the stock (if any). The Corporation generally will
be entitled to a deduction equal to the amount the grantee takes into income.

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<PAGE>

The grantee of a performance unit award recognizes taxable income (subject to
withholding) at the time the performance unit becomes exercisable in an amount
equal to the then fair market value of Corporation Common Stock, unless the
terms under which the performance unit was granted require forfeiture of the
restricted stock to which it is related upon exercise of the performance unit.
If the terms under which the performance unit was granted do require forfeiture
of the restricted stock to which it is related, if any, the grantee does not
recognize income until the performance unit is actually exercised. The
Corporation is entitled to a deduction for federal tax purposes with respect to
a performance unit in an amount equal to the income recognized by the grantee.

The federal income tax consequences to a participant and to the Corporation
may vary from those described above, depending upon individual actions and
circumstances, including restrictions and other terms and conditions applicable
to the particular award granted under the Stock Incentive Plan.

The affirmative vote of the holders of a majority of the shares of Common
Stock present in person or by proxy at the Annual Meeting is required to
approve the Stock Incentive Plan.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE STOCK
INCENTIVE PLAN.

TRANSACTIONS WITH MANAGEMENT

Dauphin Bank has had in the past, and expects to have in the future,
transactions in the ordinary course of its business, with Directors and
officers of Dauphin Bank, the Corporation and their associates, on
substantially the same terms, including interest rates and collateral on loans,
as those prevailing at the same time for comparable transactions with other
persons, which do not involve more than the normal risk of collectibility or
present other unfavorable features.

Henry W. Rhoads, a Director and member of the Executive Committee of the
Corporation and Dauphin Bank, is a partner in the law firm of Rhoads & Sinon,
which the Corporation and its subsidiaries have retained for past years and the
present year as general counsel. Dauphin Bank and the Corporation paid the law
firm approximately $1,370,000 in 1994 as compensation for legal services to the
Corporation, Dauphin Bank and other subsidiaries. In addition, the Rhoads &
Sinon law firm entered into a 15 year lease with Dauphin Bank in 1989 pursuant
to which the firm occupies a portion of Dauphin Bank's office building on
Market Square, Harrisburg, Pennsylvania, at an annual base rent of $339,785.
Commencing in the sixth year of the initial lease term, an annual additional
rent may be due based on increases in the Consumer Price Index. The law firm
has the option to renew the lease for two (2) consecutive additional terms.

SECTION 16(A) OF THE EXCHANGE ACT

Section 16(a) of the Securities Exchange Act of 1934 requires that directors
and certain officers of the Corporation file reports of ownership and changes
in ownership with the Securities and Exchange Commission as to the shares of
Corporation Common Stock beneficially owned by them.

Based solely on its review of copies of such forms received by it, the
Corporation believes that during the Corporation's fiscal year ending on
December 31, 1994, all filing requirements applicable to its directors and
officers were complied with in a timely fashion.

RELATIONS WITH INDEPENDENT AUDITORS

KPMG Peat Marwick LLP was the appointed independent auditor for the
Corporation in 1994. It is anticipated that the same firm will be selected for
the current year. The firm is a member of the

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<PAGE>

SEC Practice Section of the American Institute of Certified Public Accountants
and has submitted a copy of its peer review results to the Corporation.

During 1994, the Corporation's independent auditors, KPMG Peat Marwick LLP,
performed certain non-audit services which are in addition to its basic
engagement for the examination of the Corporation's financial statements. The
Audit Committee of the Board of Directors of the Corporation approved the audit
and non-audit services performed by the Corporation's independent auditors and
considered the possible effect of the non-audit services on the independence of
the auditors, prior to granting approval for each service.

A representative of the auditing firm will be present at the Shareholders
Meeting to make a statement if he desires to do so and to respond to
appropriate questions.

SHAREHOLDER PROPOSALS

The Corporation must receive by November 18, 1995 any shareholder proposals
for such proposals to be considered for inclusion in the Corporation's Proxy
Statement and Proxy for the 1996 Annual Meeting of Shareholders.

OTHER BUSINESS

The Board of Directors of the Corporation does not intend to present any
business at the Annual Meeting other than the matters hereinabove referred to,
and the Board does not know of any other matters to be presented for action at
the meeting. Discretionary authority to vote on any other matters that may come
before the meeting will be conferred by such Proxies upon the person voting
them, unless a shareholder specifically indicates in such Proxy that such
authority is withheld. It is the intention of the persons designated as proxies
to vote in accordance with their best judgment on such matters.

It is important that proxies be returned promptly. Shareholders are urged to
vote, sign, date and return the accompanying form of Proxy in the enclosed
envelope.

By Order of the Board of Directors,

[SIGNATURE OF CLAIRE D. FLEMMING
APPEARS HERE]

Claire D. Flemming, Secretary

March 17, 1995

THE CORPORATION IS FURNISHING EACH PERSON SOLICITED A COPY OF ITS 1994 ANNUAL
REPORT TO SHAREHOLDERS WHICH INCLUDES A COPY OF THE CORPORATION'S ANNUAL REPORT
ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1994, AS FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934.

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EXHIBIT "A"

DAUPHIN DEPOSIT CORPORATION

1995 STOCK INCENTIVE PLAN

1. PURPOSES. The purposes of this Plan are (a) to provide competitive
incentives that will enable the Company to attract, retain, motivate and reward
employees, and (b) to give the Company's employees an interest parallel to the
interests of the Company's shareholders generally.

2. DEFINITIONS. Unless otherwise required by the context, the following
terms, when used in this Plan, shall have the meanings set forth in this
Section 2.

(a) "Beneficiary" means a person or entity (including a trust or estate),
designated in writing by a participant on such forms and in accordance with
such terms and conditions as the Committee may prescribe, to whom the
participant's rights under the Plan shall pass in the event of the death of the
participant.

(b) "Board" or "Board of Directors" means the Board of Directors of the
Company, as constituted from time to time.

(i) any person (as such term is used in Sections 13(d) and 14(d)(2) of
the Exchange Act), other than the Company, a Subsidiary, an employee
benefit plan (or related trust) of the Company or a Subsidiary, or
affiliates (as defined in Rule 12b-2 under the Exchange Act), becomes the
beneficial owner (as determined pursuant to Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing
more than 20% of the combined voting power of the Company's then
outstanding securities;

(ii) shareholders approve (A) an agreement for the sale or disposition of
all or substantially all of the Company's assets to an entity which is not
a Subsidiary, (B) a plan of complete liquidation, or (C) a reorganization,
consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of Common
Stock would be converted into cash, securities or other property other than
a reorganization, consolidation or merger in which the holders of Common
Stock immediately prior to the reorganization, consolidation or merger
will, following such reorganization, consolidation or merger, beneficially
own, directly or indirectly, more than 50% of the combined voting power of
the then outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation resulting
from such reorganization, consolidation or merger; or

(iii) the persons who were members of the Board of Directors immediately
before a tender or exchange offer by any person other than the Company or a
Subsidiary, or before a reorganization, merger, consolidation, or contested
election, or before any series of such transactions, cease to constitute a
majority of the Board of Directors as a result of such transaction or
transactions.

(d) "Code" means the Internal Revenue Code of 1986, as amended and in effect
from time to time. References to a particular section of the Code shall include
references to any related Treasury Regulations and to successor provisions.

(e) "Committee" means the Committee appointed by the Board of Directors to
administer the Plan pursuant to the provisions of Section 11(a) below.

(f) "Common Stock" means common stock of the Company, par value $5.00 per
share.

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(g) "Company" means Dauphin Deposit Corporation, a Pennsylvania business
corporation and registered bank holding company under the Bank Holding Company
Act of 1956, as amended, its successors and assigns.

(h) "Employee" means an employee of the Company or a Subsidiary, regularly
employed on a full-time basis, including an officer or director if he is such
an employee.

(i) "Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time.

(j) "Fair Market Value" on a particular date means as follows:

(i) if the Common Stock is listed or admitted to trading on such date on
a national exchange, the mean between the high and low sales price of a
share of Common Stock on such date as reported in the principal
consolidated transaction reporting system with respect to securities listed
or admitted to trading on such national exchange or, if no sales were
reported on such date, the mean between the high and low sales price on the
next preceding day on which there was a reported sale; or

(ii) if the Common Stock is not listed or admitted to trading on any
national exchange, the mean between the high and low sales price of a share
of Common Stock on such date in the over-the-counter market, as reported by
the National Association of Securities Dealers, Inc. Automated Quotation
System, the National Quotation Bureau or such other system then in use with
regard to the Common Stock or, if no sales were reported on such date, the
mean between the high and low sales price on the next preceding day on
which there was a reported sale; or

(iii) if the Common Stock is publicly traded but not quoted by any such
system, the mean of the closing bid and asked prices of a share of Common
Stock on such date as furnished by a professional market maker selected by
the Committee making a market in the Common Stock or, if bid and asked
prices are not available on such date, the mean between the closing bid and
asked prices furnished by such market maker on the next preceding day for
which such prices are available.

In the case of an Incentive Stock Option, if the foregoing method of
determining fair market value should be inconsistent with Section 422 of the
Code, "Fair Market Value" shall be determined by the Committee in a manner
consistent with such section of the Code and shall mean the value as so
determined.

(k) "Incentive Stock Option" means an option, including an Option as the
context may require, intended to meet the requirements of Section 422 of the
Code.

(l) "Non-Qualified Stock Option" means an option, including an Option as the
context may require, which is not intended to be an Incentive Stock Option.

(m) "Option" means an option granted under this Plan to purchase shares of
Common Stock. Options may be Incentive Stock Options or Non-Qualified Stock
Options.

(n) "Performance Unit Award" means an amount of cash or shares of Common
Stock or a combination of each, that will be distributed in the future if
continued employment or other performance objectives or contingencies specified
by the Committee are attained. Such other performance objectives may include,
without limitation, corporate, divisional or business unit financial or
operating performance measures and such other contingencies may include the
participant's depositing with the Company, acquiring or retaining for
stipulated time periods specified amounts of Common Stock. The amount of the
award may but need not be determined by reference to the market value of Common
Stock.

(o) "Plan" means the Dauphin Deposit Corporation 1995 Stock Incentive Plan
set forth in these pages, as amended from time to time.

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(p) "Restricted Stock Award" means shares of Common Stock which are issued or
transferred to an Employee under Section 5 below and which will become free of
restrictions specified by the Committee if continued employment and/or other
performance objectives or contingencies specified by the Committee are
attained. Such other performance objectives may include, without limitation,
corporate, divisional or business unit financial or operating performance
measures and such other contingencies may include the participant's depositing
with the Company, acquiring or retaining for stipulated time periods specified
amounts of Common Stock.

(q) "SEC Rule 16b-3" means Rule 16b-3 of the Securities and Exchange
Commission promulgated under the Exchange Act, as such rule or any successor
rule may be in effect from time to time.

(r) "Section 16 Person" means a person subject to potential liability under
Section 16(b) of the Exchange Act with respect to transactions involving equity
securities of the Company.

(s) "Stock Appreciation Right" means a right granted under Section 7 below.

(t) "Stock Bonus Award" means an amount of cash or shares of Common Stock
which is distributed to an Employee or which the Committee agrees to distribute
in the future in lieu of, or as a supplement to, any other compensation that
may have been earned by services rendered prior to the date the award is made.
The amount of the award may but need not be determined by reference to the
market value of Common Stock. Performance Unit Awards and Restricted Stock
Awards are specific types of Stock Bonus Awards.

(u) "Stock Incentive" means an award granted under this Plan in one of the
forms provided for in Section 3.

(v) "Subsidiary" means a corporation or other form of business association of
which shares (or other ownership interests) having more than 50% of the voting
power are owned or controlled, directly or indirectly, by the Company;
provided, however, that in the case of an Incentive Stock Option, the term
"Subsidiary" shall mean a Subsidiary (as defined by the preceding clause) which
is also a "subsidiary corporation" as defined in Section 424(f) of the Code.

3. GRANTS OF STOCK INCENTIVES.

(a) Subject to the provisions of the Plan, the Committee may at any time, or
from time to time, grant the following types of awards to any Employee:

(i) Stock Bonus Awards, which may but need not be Performance Unit Awards
or Restricted Stock Awards,

(ii) Options,

(iii) Stock Appreciation Rights, and

(iv) any awards not embraced within (i), (ii) or (iii) above that provide
the participant with the right to purchase or otherwise acquire Common
Stock or that are valued by reference to the market value of Common Stock
(including, but not limited to, phantom securities and dividend
equivalents).

Any such awards shall be in a form determined by the Committee and shall have
such terms and conditions as are determined by the Committee (which may include
terms contingent upon a Change of Control), provided that such awards shall not
be inconsistent with the terms and purposes of the Plan.

(b) After a Stock Incentive has been granted,

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<PAGE>

(i) the Committee may waive any term or condition thereof that could have
been excluded from such Stock Incentive when it was granted, and

(ii) with the written consent of the affected participant, may amend any
Stock Incentive after it has been granted to include (or exclude) any
provision which could have been included in (or excluded from) such Stock
Incentive when it was granted,

and no additional consideration need be received by the Company in exchange for
such waiver or amendment.

(c) The Committee may (but need not) grant any Stock Incentive linked to
another Stock Incentive. Linked Stock Incentives may be granted as either
alternatives or supplements to one another. The terms and conditions of any
such linked Stock Incentives shall be determined by the Committee, subject to
the provisions of the Plan.

4. STOCK SUBJECT TO THIS PLAN.

(a) Subject to the provisions below of Paragraph 4(c) and of Section 9, the
maximum number of shares of Common Stock which may be issued or transferred
pursuant to Stock Incentives is 2,000,000 shares of Common Stock.

(b) Such shares may be authorized but unissued shares of Common Stock, shares
of Common Stock held in the treasury, whether acquired by the Company
specifically for use under this Plan or otherwise, or shares issued or
transferred to, or otherwise acquired by, a grantor trust pursuant to Paragraph
12(d) below, as the Committee may from time to time determine, provided,
however, that any shares acquired or held by the Company for the purposes of
this Plan shall, unless and until issued or transferred to a grantor trust
pursuant to Paragraph 12(d) below or to an Employee in accordance with the
terms and conditions of a Stock Incentive, be and at all times remain treasury
shares of the Company, irrespective of whether such shares are entered in a
special account for purposes of this Plan, and shall be available for any
corporate purpose.

(c) Subject to the provisions of Section 5(c) and Section 7(f), if any shares
of Common Stock subject to a Stock Incentive shall not be issued or transferred
to an Employee and shall cease to be issuable or transferable to an Employee
because of the termination, expiration or cancellation, in whole or in part, of
such Stock Incentive or for any other reason, or if any such shares shall,
after issuance or transfer, be reacquired by the Company because of an
Employee's failure to comply with the terms and conditions of a Stock
Incentive, the shares not so issued or transferred, or the shares so reacquired
by the Company, as the case may be, shall no longer be charged against the
limitation provided for in Paragraph (a) above of this Section 4 and may again
be made subject to Stock Incentives; provided that the number of shares not so
issued or transferred and any such reacquired shares may again be made subject
to Stock Incentives for Section 16 Persons only if the forfeiting Employee
received no benefits of ownership such as dividends (but excluding voting
rights) from the shares or if SEC Rule 16b-3 would otherwise be satisfied.

5. STOCK BONUS AWARDS, PERFORMANCE UNIT AWARDS AND RESTRICTED STOCK
AWARDS. Stock Bonus Awards, Performance Unit Awards and Restricted Stock Awards
shall be subject to the following provisions:

(a) An Employee may be granted a Stock Bonus Award, Performance Unit
Award or Restricted Stock Award whether or not he is eligible to receive
similar or dissimilar incentive compensation under any other plan or
arrangement of the Company.

(b) Shares of Common Stock subject to a Stock Bonus Award may be issued
or transferred to an Employee at the time such Award is granted, or at any
time subsequent thereto, or in installments from time to time, as the
Committee shall determine. In the event that any such

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issuance or transfer shall not be made to the Employee at the time such
Award is granted, the Committee may but need not provide for payment to
such Employee, either in cash or shares of Common Stock, from time to time
or at the time or times such shares shall be issued or transferred to such
Employee, of amounts not exceeding the dividends which would have been
payable to such Employee in respect of such shares (as adjusted under
Section 9) if such shares had been issued or transferred to such Employee
at the time such Award was granted.

(c) Any Stock Bonus Award, Performance Unit Award or Restricted Stock
Award may, in the discretion of the Committee, be settled in cash, on each
date on which shares would otherwise have been delivered or become
unrestricted, in an amount equal to the Fair Market Value on such date of
the shares which would otherwise have been delivered or become
unrestricted; and the number of shares for which such cash payment is made
shall be added back to the maximum number of shares available for use under
the Plan, provided that the number of shares for which such cash payment is
made may be made subject to Stock Incentives for Section 16 Persons only if
such add-back would satisfy SEC Rule 16b-3.

(d) Stock Bonus Awards, Performance Unit Awards and Restricted Stock
Awards shall be subject to such terms and conditions, including, without
limitation, restrictions on the sale or other disposition of the shares
issued or transferred pursuant to such Award, and conditions calling for
forfeiture of the Award or the shares issued or transferred pursuant
thereto in designated circumstances, as the Committee shall determine;
provided, however, that upon the issuance or transfer of shares to an
Employee pursuant to any such Award, the recipient shall, with respect to
such shares, be and become a shareholder of the Company fully entitled to
receive dividends, to vote and to exercise all other rights of a
shareholder except to the extent otherwise provided in the Award. All or
any portion of a Stock Bonus Award may but need not be made in the form of
a Performance Unit Award or a Restricted Stock Award. In the case of a
Restricted Stock Award, the Committee may but need not (unless required by
applicable law) require the recipient to pay the par value of the shares to
be issued or transferred pursuant thereto.

(e) Each Stock Bonus Award, Performance Unit Award and Restricted Stock
Award shall be evidenced by a written instrument in such form as the
Committee shall determine, signed by an officer of the Company duly
authorized to do so, provided that such instrument is consistent with this
Plan and incorporates it by reference.

6. OPTIONS. Options shall be subject to the following provisions:

(a) Subject to the provisions of Section 9, the purchase price per share
shall be, in the case of an Incentive Stock Option, not less than 100% of
the Fair Market Value of a share of Common Stock on the date the Incentive
Stock Option is granted (or in the case of any optionee who, at the time
such Incentive Stock Option is granted, owns stock possessing more than 10
percent of the total combined voting power of all classes of stock of his
employer corporation or of its parent or subsidiary corporation, not less
than 110% of the Fair Market Value of a share of Common Stock on the date
the Incentive Stock Option is granted) and, in the case of a Non-Qualified
Stock Option, not less than 85% of the Fair Market Value of a share of
Common Stock on the date the Non-Qualified Stock Option is granted. Subject
to the foregoing limitations, the purchase price per share may, if the
Committee so provides at the time of grant of an Option, be indexed to the
increase or decrease in an index specified by the Committee.

(b) The purchase price of shares subject to an Option may be paid in
whole or in part (i) in cash, (ii) by bank certified, cashier's or personal
check subject to collection, (iii) if so provided in the Option and subject
to such terms and conditions as the Committee may impose, by delivering to
the Company a properly executed exercise notice together with a copy of
irrevocable instructions to a stockbroker to sell immediately some or all
of the shares acquired by exercise of the option and to deliver promptly to
the Company an amount of sale proceeds (or, in lieu of or pending a sale,
loan proceeds) sufficient to pay the purchase price, or (iv) if so provided
in the

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Option and subject to such terms and conditions as are specified in the
Option, in shares of Common Stock surrendered to the Company. Shares of
Common Stock thus surrendered shall be valued at their Fair Market Value on
the date of exercise. If so provided in the Option and subject to such
terms and conditions as are specified in the Option, in lieu of the
foregoing methods of payment, any portion of the purchase price of the
shares to be issued or transferred may be paid by a promissory note secured
by a pledge of the purchased shares in such form and containing such
provisions (which may but need not provide for interest and for payment of
the note at the election of the Employee in cash or in shares of Common
Stock surrendered to the Company) as the Committee may approve; provided
that (A) if the Committee permits any such note to be paid by surrender of
shares of Common Stock, such shares shall be valued at their Fair Market
Value on the date of such surrender, and (B) in the case of an Incentive
Stock Option, any such note shall bear interest at the minimum rate
required to avoid imputation of interest under federal income tax laws
applicable at the time of exercise, and (C) any such note shall mature in
ten years or such lesser period as may be specified by the Committee.

(c) Options may be granted for such lawful consideration, including money
or other property, tangible or intangible, or labor or services received or
to be received by the Company, as the Committee may determine when the
Option is granted. Property for purposes of the preceding sentence shall
include an obligation of the Company unless prohibited by applicable law.
Subject to the foregoing and the other provisions of this Section 6, each
Option may be exercisable in full at the time of grant or may become
exercisable in one or more installments and at such time or times, as the
Committee may determine. The Committee may at any time accelerate the date
on which an Option becomes exercisable, and no additional consideration
need be received by the Company in exchange for such acceleration. Unless
otherwise provided in the Option, an Option, to the extent it becomes
exercisable, may be exercised at any time in whole or in part until the
expiration or termination of the Option.

(d) Each Option shall be exercisable during the life of the optionee only
by him or his guardian or legal representative, and after death only by his
Beneficiary or, absent a Beneficiary, by his estate or by a person who
acquired the right to exercise the Option by will or the laws of descent
and distribution; provided that an Option of a Section 16 Person and any
Incentive Stock Option may be exercisable after death by a Beneficiary only
if such exercise would be permissible under and consistent with SEC Rule
16b-3 or Section 422 of the Code, as the case may be. Notwithstanding any
other provision of this Plan, (i) no Option shall be exercisable after the
tenth anniversary of the date the Option was granted, and (ii) no Incentive
Stock Option which is granted to any optionee who, at the time such Option
is granted, owns stock possessing more than 10 percent of the total
combined voting power of all classes of stock of his employer corporation
or of its parent or subsidiary corporation, shall be exercisable after the
expiration of five (5) years from the date such Option is granted. If an
Option is granted for a term of less than ten years, the Committee may, at
any time prior to the expiration of the Option, extend its term for a
period ending not later than on the tenth anniversary of the date the
Option was granted, and no additional consideration need be received by the
Company in exchange for such extension. The Committee may but need not
provide for an Option to be exercisable after termination of employment
until its fixed expiration date (or until an earlier date or specified
event occurs).

(e) An Option may, but need not, be an Incentive Stock Option. All shares
of Common Stock which may be made subject to Stock Incentives under this
Plan may be made subject to Incentive Stock Options; provided that the
aggregate Fair Market Value (determined as of the time the option is
granted) of the stock with respect to which Incentive Stock Options may be
exercisable for the first time by any Employee during any calendar year
(under all plans, including this Plan, of his employer corporation and its
parent and subsidiary corporations) shall not exceed $100,000.

(f) Each Option shall be evidenced by a written instrument, signed by an
officer of the Company duly authorized to do so, which shall contain such
terms and conditions, and shall be in

A-6
<PAGE>

such form, as the Committee shall determine, provided the instrument is
consistent with this Plan and incorporates it by reference. An Option, if
so approved by the Committee, may include terms, conditions, restrictions
and limitations in addition to those provided for in this Plan including,
without limitation, terms and conditions providing for the transfer or
issuance of shares, on exercise of an Option, which may be non-transferable
and forfeitable to the Company in designated circumstances.

(g) The Committee may specify, at the time of grant of an Incentive Stock
Option or, with respect to a Non-Qualified Stock Option, at or after the
time of grant, that an Employee shall be granted a Non-Qualified Stock
Option (a "Restored Option") if and when (i) such Employee exercises all or
part of an Option, including a previously granted Restored Option (an
"Original Option") by surrendering shares of Common Stock already owned by
him in full or partial payment of the option price under such Original
Option and/or (ii) shares of Common Stock are surrendered or withheld to
satisfy tax obligations incident to the exercise of such Original Option.
All Restored Options are subject to the availability of shares of Common
Stock under the Plan at the time of such exercise. A Restored Option shall
cover a number of shares of Common Stock not greater than the number of
shares of Common Stock surrendered in payment of the option price under
such Original Option and/or used to satisfy any tax obligation incident to
the exercise of such Original Option. Each Restored Option shall have an
option price equal to the Fair Market Value of the Common Stock on the date
of grant of the Restored Option and shall expire on the stated expiration
date of the Original Option. The date of grant of a Restored Option shall
be the date on which the exercise of the Original Option or a previously
granted Restored Option resulted in the grant of such Restored Option. A
Restored Option shall be exercisable at any time and from time to time from
or after the date of grant of the Restored Option (or as the Committee in
its sole discretion shall otherwise specify in the written instrument
evidencing the Restored Option). The written instrument evidencing a
Restored Option shall contain such other terms and conditions, which may
include a restriction on the transferability of the Common Stock received
upon the exercise of the Original Option or Restored Option, as the
Committee in its sole discretion may deem desirable.

(h) The Committee may cancel any outstanding Option with the consent of
the holder thereof and re-grant the Option at a lower price, provided that
such price satisfies the requirements of Section 6(a) above on the date of
regrant, and no additional consideration need be received by the Company in
exchange for such cancellation and regrant.

(i) No option shall be exercisable unless and until the Company (i)
obtains the approval of all regulatory bodies whose approval counsel to the
Company may deem necessary or desirable, and (ii) complies with all legal
requirements deemed applicable by counsel to the Company.

(j) An Option shall be considered exercised if and when written notice,
signed by the person exercising the Option and stating the number of shares
with respect to which the Option is being exercised, is received by the
Secretary on a properly completed form approved for this purpose by the
Committee, accompanied by full payment of the Option exercise price in one
or more of the forms authorized by the Committee and described in Section
6(b) above for the number of shares to be purchased. No Option may at any
time be exercised with respect to a fractional share.

7. STOCK APPRECIATION RIGHTS. Stock Appreciation Rights shall be subject to
such terms and conditions, not inconsistent with the Plan, as shall from time
to time be determined by the Committee and to the following terms and
conditions:

(a) Stock Appreciation Rights may be granted in connection with all or
any part of an Option, either at the time of the grant of such Option or at
any time thereafter during the term of the Option (in either case, "Linked
Stock Appreciation Rights"), or may be granted without reference to an
Option ("Free-Standing Stock Appreciation Rights").

A-7
<PAGE>

(b) Linked Stock Appreciation Rights may be granted either as an
alternative or a supplement to a specified Option (the "related" Option).
Each Linked Stock Appreciation Right that is granted as an alternative to
an Option shall entitle the holder to receive the amount determined
pursuant to Section 7(e) below if and when he surrenders a related Option
to purchase one share of Common Stock that is then exercisable. Each Linked
Stock Appreciation Right that is granted as a supplement to an Option shall
entitle the holder to receive the amount determined pursuant to Section
7(e) below if and when the holder purchases a share under the related
Option.

(c) Stock Appreciation Rights may be granted for such lawful
consideration, including money or other property, tangible or intangible,
or labor or services received or to be received by the Company, as the
Committee may determine when the Rights are granted. Property for purposes
of the preceding sentence shall include an obligation of the Company unless
prohibited by applicable law. Subject to the foregoing and the other
provisions of this Section 7, Stock Appreciation Rights may be exercisable
in full at the time of grant or may become exercisable in one or more
installments and at such time or times, as the Committee may determine. The
Committee may at any time accelerate the date on which Stock Appreciation
Rights become exercisable, and no additional consideration need be received
by the Company in exchange for such acceleration. Unless otherwise provided
in the Rights, Stock Appreciation Rights, to the extent they become
exercisable, may be exercised at any time in whole or in part until they
expire or terminate.

(d) No Free-Standing Stock Appreciation Right shall be exercisable after
the tenth anniversary of the date it was granted, and no Linked Stock
Appreciation Right shall be exercisable after the related Option ceases to
be exercisable. If the Committee grants a Stock Appreciation Right for a
lesser term than that permitted by the preceding sentence, the Committee
may, at any time prior to its expiration, extend its term to the maximum
term permitted by the preceding sentence, and no additional consideration
need be received by the Company in exchange for such extension. The
Committee may but need not provide for Stock Appreciation Rights to be
exercisable after termination of employment until they expire pursuant to
the first sentence of this paragraph 7(d) (or until an earlier date or
specified event occurs).

(e) Upon exercise of Stock Appreciation Rights, the holder thereof shall
be entitled to receive cash or shares of Common Stock or a combination of
each, as the Committee in its sole discretion may determine, equal to the
amount by which the Fair Market Value of a share of Common Stock on the
date of such exercise exceeds the Base Price of the Stock Appreciation
Rights, multiplied by the number of Stock Appreciation Rights exercised;
provided that in no event shall a fractional share be issued. In the case
of Linked Stock Appreciation Rights, the Base Price shall be the price at
which shares may be purchased under the related Option, unless the
Committee specified a different price when the Rights were granted (which
shall not be less than the lowest price at which the related Option could
have been granted under Section 6 above). In the case of Free-Standing
Stock Appreciation Rights, the Base Price shall be the Fair Market Value of
a share of Common Stock on the date the Rights were granted, unless the
Committee specified a different price when the Rights were granted (which
shall not be less than 85% of the Fair Market Value of a share of Common
Stock on the date the Rights were granted).

(f) The maximum number of shares available for use under the Plan shall
be charged only for the number of shares which are actually issued or
transferred in settlement of Stock Appreciation Rights, except if and to
the extent that Company counsel determines that, with respect to Section 16
Persons, SEC Rule 16b-3 requires that a different number of shares be so
charged. In the case of an exercise of a Linked Stock Appreciation Right
that is alternative to an Option, if the number of shares of Common Stock
previously charged against the maximum number of shares available for use
under the Plan on account of the surrendered portion of the

A-8
<PAGE>

Option exceeds the number of shares (if any) actually issued or transferred
pursuant to such surrender, the excess may be added back to the number of
shares available for use under the Plan, provided that the number of shares
added back may be made subject to Stock Incentives for Section 16 Persons
only if such add-back would satisfy SEC Rule 16b-3.

(g) Stock Appreciation Rights shall be exercisable during the life of the
Employee only by him or his guardian or legal representative, and after
death only by his Beneficiary or, absent a Beneficiary, by his estate or by
a person who acquired the Stock Appreciation Rights by will or the laws of
descent and distribution; provided that Stock Appreciation Rights of a
Section 16 Person and Stock Appreciation Rights linked to an Incentive
Stock Option may be exercisable after death by a Beneficiary only if such
exercise would be permissible under and consistent with SEC Rule 16b-3 or
Section 422 of the Code, as the case may be.

(h) Each Stock Appreciation Right shall be evidenced by a written
instrument, which shall contain such terms and conditions, and shall be in
such form, as the Committee shall determine, provided the instrument is
consistent with the Plan and incorporates it by reference.

8. CERTAIN CHANGE IN CONTROL, TERMINATION OF EMPLOYMENT AND DISABILITY
PROVISIONS. Notwithstanding any provision of the Plan to the contrary, any
Stock Incentive which is outstanding but not yet exercisable, vested or payable
at the time of a Change in Control shall become exercisable, vested and payable
at that time. Any Option affected by the preceding sentence shall remain
exercisable until it expires or terminates pursuant to its terms and
conditions. Subject to the foregoing provisions of this Section 8, the
Committee may at any time, and subject to such terms and conditions as it may
impose:

(a) authorize the holder of an Option or Stock Appreciation Right to
exercise the Option or Stock Appreciation Right following the termination
of the participant's employment with the Company and its Subsidiaries, or
following the participant's disability, whether or not the Option or Stock
Appreciation Right would otherwise be exercisable following such event,
provided that in no event may an Option or Right be exercised after the
expiration of its term;

(b) grant Options and Stock Appreciation Rights which become exercisable
only in the event of a Change in Control;

(c) provide for Stock Appreciation Rights to be exercised automatically
and only for cash in the event of a Change in Control;

(d) authorize a Stock Bonus Award, Performance Unit Award or Restricted
Stock Award to become non-forfeitable, fully earned and payable following
(i) a Change in Control, (ii) the termination of the participant's
employment with the Company and its Subsidiaries, or (iii) the
participant's disability, whether or not the Award would otherwise become
non-forfeitable, fully earned and payable following such event;

(e) grant Stock Bonus Awards, Performance Unit Awards and Restricted
Stock Awards which become non-forfeitable, fully earned and payable only in
the event of a Change in Control;

(f) provide in advance or at the time of a Change in Control for cash to
be paid in settlement of any Option, Stock Appreciation Right, Stock Bonus
Award, Performance Unit Award or Restricted Stock Award in the event of a
Change in Control, either at the election of the participant or at the
election of the Committee; and

(g) cause any Stock Incentive then outstanding to be assumed or new
rights of equivalent value substituted therefor by the successor
corporation in any Change in Control.

9. ADJUSTMENT PROVISIONS. In the event that any recapitalization, or
reclassification, split-up or consolidation of shares of Common Stock shall be
affected, or the outstanding shares of Common Stock shall be, in connection
with a merger or consolidation of the Company or a sale by the Company of all
or a part of its assets, exchanged for a different number or class of shares of
stock or other

A-9
<PAGE>

securities or property of the Company or any other entity or person, or a
record date for determination of holders of Common Stock entitled to receive a
dividend or other distribution payable in Common Stock or other property (other
than normal cash dividends) shall occur, (a) the number and class of shares or
other securities or property that may be issued or transferred pursuant to
Stock Incentives thereafter granted or that may be optioned or awarded under
the Plan to any employee, (b) the number and class of shares or other
securities or property that may be issued or transferred under outstanding
Stock Incentives, (c) the purchase price to be paid per share under outstanding
and future Stock Incentives, and (d) the price to be paid per share by the
Company or a Subsidiary for shares or other securities or property issued or
transferred pursuant to Stock Incentives which are subject to a right of the
Company or a Subsidiary to reacquire such shares or other securities or
property, shall in each case be equitably adjusted as determined by the
Committee; provided that with respect to Incentive Stock Options any such
adjustments shall comply with Sections 422 and 424 of the Code.

10. EFFECTIVE DATE AND DURATION OF PLAN. The Plan shall become effective when
adopted by the Board, provided that the shareholders of the Company thereafter
approve it at a duly held stockholders' meeting. If the Plan is not so approved
by shareholders, the Plan (and any Stock Incentive granted thereunder) shall be
null, void and of no force or effect. If so approved, the Plan shall remain in
effect until all shares authorized to be issued or transferred hereunder have
been exhausted or until the Plan is sooner terminated by the Board of
Directors, and shall continue in effect thereafter with respect to any Stock
Incentives outstanding at the time of such termination. In no event shall an
Incentive Stock Option be granted under the Plan more than ten (10) years from
the date the Plan is adopted by the Board, or the date the Plan is approved by
the shareholders of the Company, whichever is earlier.

11. ADMINISTRATION.

(a) The Plan shall be administered by a committee of the Board consisting of
three or more directors appointed from time to time by the Board. No person
shall be appointed to or shall serve as a member of such committee unless at
the time of such appointment and service he shall be a "disinterested person,"
as defined in SEC Rule 16b-3. Notwithstanding the foregoing, the Board may, in
its discretion, delegate to another committee of the Board any or all of the
authority and responsibility of the Committee with respect to awards to
employees who are not subject to Section 16 of the Exchange Act at the time any
such delegated authority or responsibility is exercised. Such other committee
may consist of three or more directors who may, but need not, be officers or
employees of the Company or of any of its Subsidiaries. To the extent that the
Board has delegated to such other committee the authority and responsibility of
the Committee pursuant to the foregoing, all references to the Committee in the
Plan shall be to such other committee. Unless the Board determines otherwise,
the Committee shall be comprised solely of "outside directors" within the
meaning of Section 162(m)(4)(C)(i) of the Internal Revenue Code of 1986 as
amended by the Omnibus Budget Reconciliation Act of 1993.

(b) The Committee may establish such rules and regulations, not inconsistent
with the provisions of the Plan, as it may deem necessary for the proper
administration of the Plan, and may amend or revoke any rule or regulation so
established. The Committee shall, subject to the provisions of the Plan, have
full power to interpret, administer and construe the Plan and full authority to
make all determinations and decisions thereunder including without limitation
the authority to (i) select the participants in the Plan, (ii) determine when
Stock Incentives shall be granted, (iii) determine the number of shares to be
made subject to each Stock Incentive, (iv) determine the type of Stock
Incentive to grant, and (v) determine the terms and conditions of each Stock
Incentive, including the exercise price, in the case of an Option or Stock
Appreciation Right, and whether specific awards shall be linked to one another
and if so whether they shall be alternative to or supplement one

A-10
<PAGE>

another. The interpretation by the Committee of the terms and provisions of the
Plan and its administration thereof, and all action taken by the Committee,
shall be final, binding and conclusive on the Company, its stockholders,
Subsidiaries, all participants and employees, and upon their respective
Beneficiaries, successors and assigns, and upon all other persons claiming
under or through any of them.

(c) Members of the Board of Directors and members of the Committee acting
under this Plan shall be indemnified by the Company in respect of all their
activities under the Plan to the maximum extent permitted by law and shall
incur no liability except for gross or willful misconduct in the performance of
their duties.

12. GENERAL PROVISIONS.

(a) Any provision of the Plan to the contrary notwithstanding, any derivative
security issued under the Plan (within the meaning of Paragraph (a)(2) of SEC
Rule 16b-3 as amended in SEC Release No. 34-28869), including without
limitation any Option or Stock Appreciation Right, shall not be transferable by
the participant other than by will or the laws of descent and distribution or
to a Beneficiary designated by the participant or pursuant to a qualified
domestic relations order as defined by the Code or Title I of the Employee
Retirement Income Security Act, as amended, or the rules thereunder. Any
purported transfer of a derivative security to a Beneficiary by a Section 16
Person, and any purported transfer of an Incentive Stock Option to a
Beneficiary, shall be effective only if such transfer is permissible under and
consistent with SEC Rule 16b-3 or Section 422 of the Code, as the case may be.

(b) Nothing in this Plan or in any instrument executed pursuant hereto shall
confer upon any person any right to continue in the employment or other service
of the Company or a Subsidiary, or shall affect the right of the Company or a
Subsidiary to terminate the employment or other service of any person at any
time with or without cause.

(c) No shares of Common Stock shall be issued or transferred pursuant to a
Stock Incentive unless and until all legal requirements applicable to the
issuance or transfer of such shares have been satisfied. Any such issuance or
transfer shall be contingent upon the person acquiring the shares giving the
Company any assurances that counsel to the Company may deem necessary or
desirable to assure compliance with all applicable legal requirements.

(d) No person (individually or as a member of a group) and no Beneficiary or
other person claiming under or through him, shall have any right, title or
interest in or to any shares of Common Stock (i) issued or transferred to, or
acquired by, a grantor trust (ii) allocated, or (iii) reserved for the purposes
of this Plan, or subject to any Stock Incentive, except as to such shares of
Common Stock, if any, as shall have been issued or transferred to him. The
Committee may (but need not) provide at any time or from time to time
(including without limitation upon or in contemplation of a Change in Control)
for a number of shares of Common Stock, equal to the number of such shares
subject to Stock Incentives then outstanding, to be issued or transferred to,
or acquired by, a grantor trust for the purpose of satisfying the Company's
obligations under such Stock Incentives, and, unless prohibited by applicable
law, such shares held in trust shall be considered authorized and issued shares
with full dividend and voting rights, notwithstanding that the Stock Incentives
to which such shares relate shall not have been exercised or may not be
exercisable or vested at that time.

(e) The Company and its Subsidiaries may make such provisions as they may
deem appropriate for the withholding of any taxes which they determine they are
required to withhold in connection with any Stock Incentive. Without limiting
the foregoing, the Committee may, subject to such terms and conditions as it
may impose, permit or require any withholding tax obligation arising in
connection with the grant, exercise, vesting, distribution or payment of any
Stock Incentive to be satisfied in whole or in part, with or without the
consent of the participant, by having the Company

A-11
<PAGE>

withhold all or any part of the shares of Common Stock that vest or would
otherwise be distributed at such time. Any shares so withheld shall be valued
at their Fair Market Value on the date of such withholding.

(f) Nothing in this Plan is intended to be a substitute for, or shall
preclude or limit the establishment or continuation of, any other plan,
practice or arrangement for the payment of compensation or fringe benefits to
directors, officers, employees or consultants generally, or to any class or
group of such persons, which the Company or any Subsidiary now has or may
hereafter lawfully put into effect, including, without limitation, any
incentive compensation, retirement, pension, group insurance, stock purchase,
stock bonus or stock option plan.

(g) The Committee may establish such additional terms and conditions as it
determines to be necessary or advisable with respect to transactions by and
with respect to Section 16 Persons under the Plan to comply with any applicable
conditions of SEC Rule 16b-3. Further, it is intended that this Plan and any
Stock Incentive granted to any Section 16 Person with respect to the Plan be
eligible for exemption under SEC Rule 16b-3. Accordingly, unless the Committee
determines otherwise, if any provision of the Plan or any such Stock Incentive
does not comply with the requirements of SEC Rule 16b-3 then applicable to the
Plan or such Stock Incentive, such provision shall be deemed amended to the
extent necessary to conform to such requirements.

(h) The Company's obligation to issue or transfer shares of Common Stock or
to pay money in respect of any Stock Incentive shall be subject to the
condition that such issuance, transfer or payment would not, in the opinion of
counsel to the Company, cause any impairment of the Company's capital or
constitute a breach of or cause the Company to be in violation of any covenant,
warranty or representation made by the Company in any credit agreement to which
the Company is a party.

(i) By accepting any benefits under the Plan, each participant, and each
person claiming under or through him, shall be conclusively deemed to have
indicated his acceptance and ratification of, and consent to, all provisions of
the Plan and any action or decision under the Plan by the Company, its agents
and employees, and the Board of Directors and the Committee.

(j) The validity, construction, interpretation and administration of the Plan
and of any determinations or decisions made thereunder, and the rights of all
persons having or claiming to have any interest therein or thereunder, shall be
governed by, and determined exclusively in accordance with, the laws of the
Commonwealth of Pennsylvania, but without giving effect to the principles of
conflicts of laws thereof.

(k) The use of the masculine gender shall also include within its meaning the
feminine. The use of the singular shall include within its meaning the plural
and vice versa.

13. AMENDMENT AND TERMINATION. The Plan may be amended by the Board of
Directors at any time and in any respect, including without limitation to
permit or facilitate qualification of Options theretofore or thereafter granted
as Incentive Stock Options under the Code, provided that, without stockholder
approval, no amendment shall (a) materially increase the benefits accruing to
Section 16 Persons who are participants under the Plan within the meaning of
SEC Rule 16b-3, (b) increase the aggregate number of shares which may be issued
under Incentive Stock Options under the Plan within the meaning of Proposed
Treasury Regulation Section 1.422A(b)(iv) or its successor, (c) materially
increase the number of securities which may be issued to Section 16 Persons
under the Plan within the meaning of SEC Rule 16b-3, or (d) materially modify
the requirements as to eligibility for participation in the Plan by Section 16
Persons within the meaning of SEC Rule 16b-3. The Plan may also be terminated
at any time by the Board of Directors. No amendment or termination of this Plan
shall adversely affect any Stock Incentive granted prior to the date of such
amendment or termination without the written consent of the participant.

A-12
<PAGE>

PROXY

DAUPHIN DEPOSIT CORPORATION

Annual Meeting April 17, 1995

The undersigned hereby appoints F. Richard W. Cook, Larry A. Hartman and Linda
R. Schroeder, or any of them, my true and lawful attorney(s) with full power of
substitution for me and in my name, place and stead, to vote all stock of the
undersigned at the Annual Meeting of Shareholders of Dauphin Deposit
Corporation, to be held at the Harrisburg Hilton and Towers, One North Second
Street, Harrisburg, Pennsylvania, on Monday, April 17, 1995 at 9:00 a.m., and at
all adjournments thereof. IF NO DIRECTIONS ARE GIVEN, THE PROXIES WILL VOTE FOR
THE ELECTION AS DIRECTORS OF THE 18 NOMINEES NAMED ON THE REVERSE SIDE, FOR THE
APPROVAL OF THE DAUPHIN DEPOSIT CORPORATION 1995 STOCK INCENTIVE PLAN AND UPON
THE TRANSACTION OF SUCH OTHER BUSINESS AS PROPERLY MAY COME BEFORE THE MEETING,
IN ACCORDANCE WITH THE BEST JUDGMENT OF THE PERSONS APPOINTED AS PROXIES HEREIN.

(Please mark, sign, date and return this proxy in the enclosed postage paid
envelope.)
<PAGE>

1. ELECTION OF DIRECTORS
Robert L. Fryer, Jr., James O. Green,
FOR WITHHOLD Derek C. Hathaway, Alfred G. Hemmerich,
all nominees AUTHORITY Lee H. Javitch, Christopher R. Jennings,
listed (except to vote for William J. King, William T. Kirchhoff,
as marked to all nominees Lawrence J. LaMaina, Jr., Andrew Maier, II,
the contrary) listed James E. Marley, Robert F. Nation,
Elmer E. Naugle, Walter F. Raab, Paul C.
Raub, Henry W. Rhoads, Jean D. Seibert and
R. Champlin Sheridan, Jr.

(Instructions: To withhold authority to vote
for any individual, strike a line through the
nominee's name in the list above.)
[ ] [ ]

2. TO APPROVE THE DAUPHIN DEPOSIT CORPORATION 1995 STOCK INCENTIVE PLAN.

FOR AGAINST ABSTAIN
[ ] [ ] [ ]

3. IN THE DISCRETION OF THE PERSONS NAMED IN THIS PROXY, TO VOTE UPON THE
TRANSACTION OF SUCH OTHER BUSINESS AS PROPERLY MAY COME BEFORE THE MEETING
AND ANY ADJOURNMENTS THEREOF.

The undersigned acknowledges receipt of
notice of the aforesaid Annual Meeting
of Shareholders.

DATED: , 1995
----------------------------
(SEAL)
-----------------------------------
(SEAL)
-----------------------------------

Note: The signature(s) on this Proxy must
correspond with the name(s) as written
upon the face of the share certificate.
Executors, administrators, trustees,
guardians, and other fiduciaries please
so indicate when signing.
"PLEASE MARK INSIDE BLUE BOXES SO
THAT DATA PROCESSING EQUIPMENT
WILL RECORD YOUR VOTES" THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF DAUPHIN DEPOSIT
CORPORATION.