SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
First West Chester Corporation
------------------------------
(Name of Registrant as Specified In Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(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:
_______________________________________________________________
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_______________________________________________________________
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_______________________________________________________________
(4) Date Filed:
_______________________________________________________________
<PAGE>
FIRST WEST CHESTER CORPORATION
9 North High Street
West Chester, Pennsylvania 19380
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD 10:00 A.M., MARCH 18, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of First
West Chester Corporation (the "Corporation") will be held on Tuesday, March 18,
1997, at 10:00 a.m., at the West Chester Golf and Country Club, 111 West
Ashbridge Street, West Chester, Pennsylvania 19380, for consideration of and
action by the holders of the Corporation's common stock ("Common Stock") upon
the following matters:
1. The election of four Class I directors, with each director to
serve until the 2000 Annual Meeting of Shareholders and until
the election and qualification of his respective successor;
2. The approval of certain amendments to the Corporation's Stock
Bonus Plan;
3. The approval of certain amendments to the Corporation's 1995
Stock Option Plan;
4. The ratification of the appointment of Grant Thornton, LLP as
the Corporation's independent public accountants for the year
ending December 31, 1997; and
5. The transaction of such other business as may properly come
before the Annual Meeting and any adjournment thereof, and
matters incident to the conduct of the Annual Meeting.
The Board of Directors has fixed the close of business on February 5,
1997, as the record date for the determination of holders of stock of the
Corporation entitled to notice of, and to vote at, the Annual Meeting. The
Corporation's Annual Report to Shareholders for the year ended December 31,
1996, accompanies this Notice and Proxy Statement.
THE BOARD OF DIRECTORS HOPES THAT YOU WILL FIND IT CONVENIENT TO ATTEND
THE ANNUAL MEETING IN PERSON, BUT WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE
SIGN, DATE AND RETURN THE ENCLOSED PROXY TO ASSURE THAT YOUR SHARES ARE
REPRESENTED AT THE ANNUAL MEETING. RETURNING YOUR PROXY DOES NOT DEPRIVE YOU OF
YOUR RIGHT TO ATTEND THE ANNUAL MEETING AND VOTE YOUR SHARES IN PERSON.
By Order of the Board of Directors
EDWARD J. COTTER, Secretary
West Chester, Pennsylvania
February 21, 1997
<PAGE>
FIRST WEST CHESTER CORPORATION
9 North High Street
West Chester, Pennsylvania 19380
--------------------------------
PROXY STATEMENT
---------------
This Proxy Statement is furnished and is being mailed with the
accompanying proxy on approximately February 21, 1997, to each shareholder of
record of First West Chester Corporation (the "Corporation") in connection with
the solicitation of proxies by the Board of Directors of the Corporation, to be
voted at the Annual Meeting of Shareholders of the Corporation to be held on
Tuesday, March 18, 1997, at 10:00 a.m., at the West Chester Golf and Country
Club, 111 West Ashbridge Street, West Chester, Pennsylvania, and at any
adjournment thereof, for the purposes stated below.
Any person giving a proxy has the power to revoke it at any time before
its exercise by a later dated proxy, a written revocation sent to the Secretary
of the Corporation or attendance at the Annual Meeting and voting in person. In
the absence of contrary instructions, properly executed proxies, received and
unrevoked, will be voted by the persons named in the proxy: (i) for the election
of each of the four Class I directors nominated by the Board of Directors; (ii)
for the approval of certain amendments to the Corporation's Stock Bonus Plan as
described in this Proxy Statement; (iii) for the approval of certain amendments
to the Corporation's 1995 Stock Option Plan as described in this Proxy
Statement; (iv) for the ratification of the appointment of Grant Thornton, LLP
as the Corporation's independent public accountants for the year ending December
31, 1997; and (v) in their discretion, on such other business as may properly
come before the Annual Meeting and matters incident to the conduct of the Annual
Meeting.
VOTING SECURITIES OF THE CORPORATION
Only shareholders of record at the close of business on February 5,
1997 (the "Record Date"), are entitled to notice of, and to vote at, the Annual
Meeting. As of the Record Date, there were 1,715,941 shares of Common Stock
outstanding and entitled to one vote per share, without cumulative voting. The
holders of a majority of the outstanding shares of Common Stock, present either
in person or by proxy, will constitute a quorum for the transaction of business
at the Annual Meeting.
As of the Record Date, the Financial Management Services Department of
The First National Bank of West Chester (the "Bank"), a wholly-owned subsidiary
of the Corporation, held 322,361 shares of Common Stock, representing 18.8% of
the total outstanding Common Stock. Of these shares, 173,095 shares (10.1% of
the total outstanding Common Stock) are held in accounts where the Bank is sole
trustee or executor and may not be voted by the Bank's Financial Management
Services Department in the election of directors; however, the shares may
otherwise be voted by the Bank. The remaining 149,266 shares of Common Stock are
held in accounts where the Bank is co-trustee, agent or custodian, and these
shares may not be voted by the Bank without the authorization of the other
co-trustee, agent or custodian.
The following table sets forth, as of December 31, 1996 unless
otherwise noted, the number and percentage of shares of Common Stock which,
according to information supplied to the Corporation, are beneficially owned by:
(i) each person who is the beneficial owner of more than five percent (5%) of
the Common Stock, other than the Financial Management Services Department of the
Bank; (ii) each of the [named] executive officers of the Corporation; (iii) each
of the directors and the nominees for directorship of the Corporation
individually; and (iv) all current directors and executive officers of the
Corporation as
-1-
<PAGE>
a group. Unless otherwise indicated, the shares listed in the table are owned
directly by the individual and the individual has sole voting and investment
power with respect to the shares. An asterisk (*) appears beside the names of
the persons nominated and proposed for re-election at the Annual Meeting as
Class I directors.
<TABLE>
<CAPTION>
Name and Address Number of Shares(1) Percentage(2)
- ---------------- ------------------- -------------
BENEFICIAL OWNER
- ----------------
<S> <C> <C>
Jane C. and Lawrence E. MacElree 93,51 (3) 5.45%
7080 Goshen Road
Newtown Square, PA 19073
EXECUTIVE OFFICERS (4)
- ----------------------
Charles E. Swope 63,824 (5) 3.71%
James D. Gruver 6,500 (6) --
William E. Hughes, Sr. 4,366 (7) --
Eric W. Rohrbach 1,431 (8) --
Kevin C. Quinn 2,551 (9) --
Peter J. D'Angelo 2,370 (10) --
Maryann L. Himes 2,410 (11) --
David W. Glarner 2,238 (12) --
J. Duncan Smith 1,863 (13) --
CLASS I DIRECTORS (TERM EXPIRING IN 1997)
- -----------------------------------------
*John J. Ciccarone 54,485 (14) 3.17%
908 Sheridan Drive
West Chester, PA 19382
*Clifford E. DeBaptiste 39,67 (15) 2.31%
Worthington and Miner Streets
West Chester, PA 19382
-2-
<PAGE>
Name and Address Number of Shares(1) Percentage(2)
- ---------------- ------------------- -------------
*J. Carol Hanson 1,519 (16) --
1251 Morstein Road
West Chester, PA 19380
*John B. Waldron 4,065 (17) --
1423 Manorwood Drive
West Chester, PA 19382
CLASS II DIRECTORS (TERM EXPIRING IN 1998)
- ------------------------------------------
M. Robert Clarke 3,000 (18) --
10 Andrews Lane
Glenmoore, PA 19343
Edward J. Cotter 15,309 (19) --
500 North Franklin Street
West Chester, PA 19380
David L. Peirce 8,361 (20) --
395 Eaton Way
West Chester, PA 19380
Charles E. Swope 63,82 (5) 3.71%
9 North High Street
West Chester, PA 19380
CLASS III DIRECTORS (TERM EXPIRING IN 1999)
- -------------------------------------------
Richard M. Armstrong 27,51 (21) 1.60%
P.O. Box 566
West Chester, PA 19381-0566
John A. Featherman, III 10,68 (22) --
17 West Miner Street
West Chester, PA 19382
John S. Halsted 4,029 (23) --
234 North Union Street
Kennett Square, PA 19348
Devere Kauffman 9,440 (24) --
Riddle Village
311 Arlington
Media, PA 19063
-3-
<PAGE>
Name and Address Number of Shares(1) Percentage(2)
- ---------------- ------------------- -------------
All directors and
executive officers
as a group (20 persons) 265,632 15.27%
- --------------------
<FN>
(1) Shares of Common Stock which are held in the Corporation's retirement
savings plan (the "Retirement Savings Plan") are reported as of June
30, 1996, the last date for which such information is available.
(2) Percentages are omitted for those owning less than one percent of the
shares of Common Stock outstanding.
(3) Of the 93,515 shares shown, Mrs. MacElree has sole voting and
investment power of 78,547 and Mr. MacElree has sole voting and
investment power of 14,968 shares. Mrs. MacElree disclaims that she is
the beneficial owner of any shares owned by Mr. MacElree and Mr.
MacElree disclaims that he is the beneficial owner of any shares owned
by Mrs. MacElree.
(4) The address for each executive officer is 9 North High Street, West
Chester, PA 19380.
(5) Mr. Swope is the Chairman, President and Chief Executive Officer of the
Corporation and the Bank. Of the 63,824 shares shown, 4,366 shares are
held by a trust for the benefit of the Swope Foundation, of which Mr.
Swope is President, 1,600 shares are held by Mr. Swope's minor son,
1,900 shares are held by Mr. Swope's wife, 4,450 shares are held in the
Retirement Savings Plan, which has sole voting power with respect to
such shares, and 3,000 shares are shares underlying options to purchase
shares of Common Stock which are exercisable within sixty days of
December 31, 1996. In addition to the shares of Common Stock described
herein, Mr. Swope, as the President and Chief Executive Officer of the
Bank which is the Trustee of the Retirement Savings Plan may be deemed
to be the beneficial owner of an aggregate of a further 29,641 shares
of Common Stock held in the Retirement Savings Plan; Mr. Swope
disclaims that he is the beneficial owner of such shares.
(6) Of the 6,500 shares shown, Mr. Gruver shares, with his wife, voting and
investment power of 3,388 shares, 612 shares are held in the Retirement
Savings Plan, which has sole voting power with respect to such shares,
and 1,500 shares are shares underlying options to purchase shares of
Common Stock which are exercisable within sixty days of December 31,
1996.
(7) Of the 4,366 shares shown, Mr. Hughes shares, with his wife, voting and
investment power of 1,179 shares, 1,687 shares are held in the
Retirement Savings Plan, which has sole voting power with respect to
such shares, and 1,500 shares are shares underlying options to purchase
shares of Common Stock which are exercisable within sixty days of
December 31, 1996.
(8) Of the 1,431 shares shown as beneficially owned by Mr. Rohrbach, 589
shares are held in the Retirement Savings Plan, which has sole voting
power with respect to such shares.
-4-
<PAGE>
(9) Of the 2,551 shares shown, Mr. Quinn shares voting and investment power
of 447 shares with his wife and 75 shares with his mother, 529 shares
are held in the Retirement Savings Plan, which has sole voting power
with respect to such shares, and 1,500 shares are shares underlying
options to purchase shares of Common Stock which are exercisable within
sixty days of December 31, 1996.
(10) Of the 2,370 shares shown, Mr. D'Angelo shares, with his wife, voting
and investment power of 451 shares, 419 shares are held in the
Retirement Savings Plan, which has sole voting power with respect to
such shares, and 1,500 shares are shares underlying options to purchase
shares of Common Stock which are exercisable within sixty days of
December 31, 1996.
(11) Of the 2,410 shares shown, Ms. Himes shares, with her son, voting and
investment power of 253 shares, 657 shares are held in the Retirement
Savings Plan, which has sole voting power with respect to such shares,
and 1,500 shares are shares underlying options to purchase shares of
Common Stock which are exercisable within sixty days of December 31,
1996.
(12) Of the 2,238 shares shown, Mr. Glarner shares, with his wife, voting
and investment power of 393 shares, 345 shares are held in the
Retirement Savings Plan, which has sole voting power with respect to
such shares, and 1,500 shares are shares underlying options to purchase
shares of Common Stock which are exercisable within sixty days of
December 31, 1996.
(13) Of the 1,863 shares shown, Mr. Smith shares voting and investment power
of 70 shares with his wife, 293 shares are held in the Retirement
Savings Plan, which has sole voting power with respect to such shares,
and 1,500 shares are shares underlying options to purchase shares of
Common Stock which are exercisable within sixty days of December 31,
1996.
(14) Of the 54,485 shares shown, Mr. Ciccarone shares, with his wife, voting
and investment power of 53,735 shares and 750 shares are shares
underlying options to purchase shares of Common Stock which are
exercisable within sixty days of December 31, 1996.
(15) Of the 39,672 shares shown as beneficially owned by Mr. DeBaptiste, 750
shares are shares underlying options to purchase shares of Common Stock
which are exercisable within sixty days of December 31, 1996.
(16) Of the 1,519 shares shown as beneficially owned by Ms. Hanson, 750
shares are shares underlying options to purchase shares of Common Stock
which are exercisable within sixty days of December 31, 1996.
(17) Of the 4,065 shares shown, Mr. Waldron shares, with his wife, voting
and investment power of 3,315 shares and 750 shares are shares
underlying options to purchase shares of Common Stock which are
exercisable within sixty days of December 31, 1996.
(18) Of the 3,000 shares shown, Mr. Clarke shares, with his wife, voting and
investment power of 2,250 shares and 750 shares are shares underlying
options to purchase shares of Common Stock which are exercisable within
sixty days of December 31, 1996.
-5-
<PAGE>
(19) Of the 15,309 shares shown, Mr. Cotter's wife has sole voting and
investment power of 7,696 shares and 750 shares are shares underlying
options to purchase shares of Common Stock which are exercisable within
sixty days of December 31, 1996.
(20) Of the 8,361 shares shown as beneficially owned by Mr. Peirce, 750
shares are shares underlying options to purchase shares of Common Stock
which are exercisable within sixty days of December 31, 1996.
(21) Of the 27,510 shares shown as beneficially owned by Mr. Armstrong, 750
shares are shares underlying options to purchase shares of Common Stock
which are exercisable within sixty days of December 31, 1996.
(22) Of the 10,689 shares shown, 1,500 shares are owned by FIRSTNATCO FBO
MacElree, Harvey, Gallagher, Featherman & Sebastian, Ltd. Profit
Sharing and 401(k) Plan, of which Mr. Featherman is a co-trustee,
sharing voting and investment powers with one other trustee (such 1,500
shares are in Mr. Featherman's account under the said Plan); Mr.
Featherman shares voting and investment power of 2,115 shares with his
wife; 710 shares are held by Mr. Featherman's daughter in a custodial
account, of which Mr. Featherman is the Custodian; Mr. Featherman's
wife has sole voting and investment power of 639 shares; and 750 shares
are shares underlying options to purchase shares of Common Stock which
are exercisable within sixty days of December 31, 1996.
(23) Of the 4,029 shares shown, 900 shares are owned by the Gawthrop,
Greenwood & Halsted Profit Sharing Plan, of which Mr. Halsted is a
trustee; 150 shares are owned by Abstracting Company of Chester County,
of which Mr. Halsted is a shareholder and a director; Mr. Halsted's
wife has sole voting and investment power of 150 shares; and 750 shares
are shares underlying options to purchase shares of Common Stock which
are exercisable within sixty days of December 31, 1996.
(24) Of the 9,440 shares shown, Mr. Kauffman has power of attorney over
3,975 shares owned by his wife and 750 shares are shares underlying
options to purchase shares of Common Stock which are exercisable within
sixty days of December 31, 1996.
</FN>
</TABLE>
GENERAL INFORMATION ABOUT THE BOARD OF DIRECTORS
There were six (6) meetings of the Board of Directors of the
Corporation and twenty-nine (29) meetings of the Board of Directors of the Bank
during 1996. Each incumbent director attended at least 75% of the aggregate of
(1) the total number of meetings of the Board of Directors of the Corporation
and the Bank held during the period for which such incumbent was a director, and
(2) the total number of meetings held by all committees of the Board of
Directors of the Corporation and the Bank on which such incumbent served.
Directors, with the exception of Mr. Swope (each a "non-employee
director"), generally receive a fee of $400 for each Board meeting and $250 for
each committee meeting attended. Additionally, a quarterly fee of $100 is paid
to Mr. Cotter for serving as the Secretary of the Board. Pursuant to the 1995
Stock Option Plan (the "1995 Plan"), options to purchase shares of Common Stock
are awarded to each non-employee director annually through September 30, 1999
according to a formula set forth in the 1995
-6-
<PAGE>
Plan. In accordance with such formula, each non-employee director received
options to purchase 750 shares of Common Stock during 1996. Each director,
including Mr. Swope, also received a cash bonus of $1,000 for 1996.
The Board of Directors of the Corporation does not have a standing
compensation, audit or nominating committee. These functions are performed on an
ad hoc basis by the Board of Directors as a whole. However, the Board of
Directors of the Corporation does have an Executive Committee, a Finance
Committee and a Stock Option Committee. The Board of Directors of the Bank has
an Executive Committee, a Personnel and Compensation Committee and several
committees for selected management functions. The membership of, and certain
other information relating to, the primary committees, is set forth in the
following paragraphs.
The Executive Committee of the Board of Directors of the Corporation
consists of Messrs. Swope, Armstrong, Peirce and Cotter. Four (4) meetings were
held during 1996. This Committee has authority to exercise the powers of the
Board of Directors of the Corporation in the management of the business and
business affairs of the Corporation between scheduled meetings of the Board.
The Finance Committee of the Board of Directors of the Corporation
consists of Messrs. Peirce, Halsted and Swope. Four (4) meetings were held
during 1996. This Committee meets quarterly to review the overall financial
condition of the Bank and make recommendations for a quarterly dividend.
The Stock Option Committee of the Board of Directors of the Corporation
consists of Messrs. Peirce and Featherman and administers the "Key Employee
Plan" under the 1995 Stock Option Plan. Two (2) meetings were held during 1996.
The Executive Committee of the Board of Directors of the Bank consists
of Messrs. Swope, Armstrong, Cotter, Kauffman and Peirce. Four (4) meetings were
held during 1996. This Committee has authority to exercise the powers of the
Board of Directors of the Bank in the management of the business affairs of the
Bank between scheduled meetings of the Board.
The Personnel and Compensation Committee of the Board of Directors of
the Bank consists of Messrs. Peirce and Featherman. Five (5) meetings were held
during 1996. This Committee reviews and makes recommendations to the Board of
Directors of the Bank regarding compensation and other personnel matters
relating to the officers of the Bank.
ELECTION OF DIRECTORS
The Corporation's Articles of Incorporation and Bylaws provide that the
Board of Directors shall be divided into three classes, each as nearly equal in
number as possible, and shall consist of not less than nine or more than 25
members, as fixed from time to time by the Board of Directors. The Board of
Directors has fixed the number of directors at 12, four of whom are to be Class
I Directors, four of whom are to be Class II Directors and four of whom are to
be Class III Directors. The Class I Directors are serving a three-year term
until the 1997 Annual Meeting, the Class II Directors are serving a three-year
term until the 1998 Annual Meeting, and the Class III Directors are serving a
three-year term until the 1999 Annual Meeting. Each director also serves until
his or her earlier resignation or removal or until a successor has been elected
and qualified.
-7-
<PAGE>
At the Annual Meeting, four Class I directors are to be elected to
serve until the 2000 Annual Meeting and until their respective successors have
been elected and qualified. The intention of the persons named in the proxy,
unless otherwise directed, is to vote all proxies in favor of the election to
the Board of Directors for the nominees listed below. The Board has no reason to
believe that any of the nominees will be unable or unwilling to be a candidate
for election at the time of the Annual Meeting. If any nominee is unable or
unwilling to serve, the persons named in the proxy will use their best judgment
in selecting and voting for a substitute candidate.
The nominees receiving the highest number of votes by the holders of
the Common Stock present at the Annual Meeting and entitled to vote thereat
shall be elected. Abstentions will have no effect on the outcome of the vote for
the election of directors. If a broker that is a record holder of Common Stock
does not return a signed proxy, the shares of Common Stock represented by such
proxy will not be considered present at the Annual Meeting and, therefore, will
not be counted towards a quorum and will not be voted.
The names of the nominees for Class I directors of the Corporation,
their ages and certain other information as of February 1, 1997, is set forth as
follows:
Name Age Position
---- --- --------
John J. Ciccarone 68 Director
Clifford E. DeBaptiste 72 Director
J. Carol Hanson 49 Director
John B. Waldron 66 Director
Mr. Ciccarone has been a director of the Bank and the Corporation since
1987. Mr. Ciccarone is the President of Omega Industries, Inc., a real estate
development company.
Mr. DeBaptiste has been a director of the Bank since 1975 and a
director of the Corporation since 1984. Mr. DeBaptiste is the Chairman,
Supervisor and Director of DeBaptiste Funeral Homes, Inc. and President of Perry
Funeral Homes, Inc.
Ms. Hanson has been a director of the Bank and the Corporation since
1995. Ms. Hanson is the Executive Director of Barclay Friends Hall Corporation,
a long term care facility.
Mr. Waldron has been a director of the Bank since 1981 and a director
of the Corporation since 1984. Mr. Waldron is an Associate of the Arthur Hall
Insurance Group and former owner of John B. Waldron Insurance Agency.
Recommendation of the Board of Directors
The Board of Directors has unanimously recommended the slate of
nominees for election as Class I directors at the Annual Meeting. The Board of
Directors recommends that the shareholders vote FOR the election of such slate
of nominees as Class I directors of the Board of Directors of the Corporation.
-8-
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
Set forth in the following table are the names and ages of the
directors and executive officers of the Corporation and the Bank, their
positions with the Corporation and the Bank, their principal occupations during
the past five years and their directorships with other companies which are
subject to the reporting requirements of Federal securities laws:
<TABLE>
<CAPTION>
Position(s) with Principal
Corporation Occupations
----------- -----------
Position(s) with Outside
Name & Age Bank Directorships
- ---------- ------------------- --------------
<S> <C> <C>
Richard M. Armstrong, Director since 1984 President, Richard M. Armstrong
------------------- Co. Inc. and Armstrong
85 Director since 1959 Engineering Associates, Inc.
John J. Ciccarone, Director since 1987 President, Omega Industries, Inc.,
------------------- a real estate development company.
68 Director since 1987
M. Robert Clarke, Director since 1993 Certified Public Accountant,
------------------- President of Clarke, Nicolini &
50 Director since 1993 Associates, Ltd.
Edward J. Cotter, Director and Secretary Retired. Former Executive
since 1984 Director, Barclay Friends Hall
76 ------------------- Corporation, a long term care
Director since 1972 facility.
Clifford E. DeBaptiste, Director since 1984 Chairman, Supervisor and
------------------- Director, DeBaptiste Funeral
72 Director since 1975 Homes, Inc.; President, Perry
Funeral Homes, Inc.
John A. Featherman, III, Director since 1985 Attorney, MacElree Harvey,
------------------- Gallagher, Featherman &
58 Director since 1985 Sebastian, Ltd.
John S. Halsted Director since 1991 Attorney, Gawthrop, Greenwood
------------------- & Halsted, P.C.; Solicitor,
63 Director since 1991 County of Chester.
J. Carol Hanson, Director since 1995 Executive Director, Barclay
------------------- Friends Hall Corporation, a long
49 Director since 1995 term care facility.
-9-
<PAGE>
Position(s) with Principal
Corporation Occupations
----------- -----------
Position(s) with Outside
Name & Age Bank Directorships
- ---------- ------------------- --------------
Devere Kauffman, Director since 1984 Former General Partner,
------------------- Kauffman's, a department store.
86 Director since 1968
David L. Peirce, Director since 1984 Former President and CEO,
------------------- Denney-Reyburn Company, a
68 Director since 1973 paper converter.
John B. Waldron, Director since 1984 Associate, Arthur Hall Insurance
------------------- Group; Former Owner, John B.
66 Director since 1981 Waldron Insurance Agency.
Charles E. Swope, Director, President and CEO President, CEO and Chairman of
since 1984; Chairman of the the Corporation and the Bank.
66 Board since 1987.
-------------------
Director since 1972, President
since 1973, CEO since 1978,
Chairman since 1987
Peter J. D'Angelo, N/A Senior Vice President --
------------------- Commercial Loan Department
51 Senior Vice President since and Cashier of the Bank since
1996. 1996; Vice President since 1986.
David W. Glarner, N/A Senior Vice President -- Mortgage
-------------------- Lending Department since 1996;
46 Senior Vice President since Vice President since 1983.
1996.
James D. Gruver, N/A Senior Vice President --
-------------------- Operations since 1987.
50 Senior Vice President
since 1987.
Maryann L. Himes, Assistant Secretary since 1984 Vice President and Assistant to
------------------------------ the President since 1996;
50 Vice President and Assistant to Assistant to the President since
President since 1996; Assistant to 1988.
the President since 1988.
William E. Hughes, Sr., N/A Executive Vice President --
--------------------- Lending since 1996; Senior Vice
63 Executive Vice President since since 1984.
1996; Senior Vice President and
Senior Loan Officer since 1984.
Kevin C. Quinn, Assistant Treasurer since 1986 Senior Vice President -- Financial
------------------------------ Management Services Department
42 Senior Vice President since 1990.
since 1990.
-10-
<PAGE>
Position(s) with Principal
Corporation Occupations
----------- -----------
Position(s) with Outside
Name & Age Bank Directorships
- ---------- ---- -------------
Eric W. Rohrbach, N/A Senior Vice President --
------------------ Administration since 1987.
50 Senior Vice President
since 1987.
J. Duncan Smith, Treasurer since 1993 Treasurer of Corporation since
-------------------- 1993. Senior Vice President --
38 Senior Vice President since 1996; Finance and Accounting since
Vice President and Comptroller 1996; Vice President and
since 1993. Comptroller of the Bank since
1993. Vice President and Chief
Financial Officer of Security First
Bank (1988-1993).
</TABLE>
There are no family relationships between any director, executive
officer or person nominated or chosen by the Corporation to serve as a director
or executive officer.
-11-
<PAGE>
EXECUTIVE COMPENSATION
Compensation
The following table sets forth a summary of compensation paid or
accrued by the Corporation for services rendered by the Chief Executive Officer
and the most highly compensated executive officers of the Corporation or the
Bank (the "named executive officers") for each of the last three fiscal years:
SUMMARY COMPENSATION TABLE
<TABLE>
Annual Compensation Long Term
------------------- ---------
<CAPTION>
(A) (B) (C) (D) (E) (F) (G)
Name and Other Annual Stock All Other
Principal Salary Bonus Compensation Options Compensation
Position Year ($)(1) ($)(2) ($)(3) (#)(4) ($)(5)
-------- ---- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Charles E. Swope, 1996 $275,000 $29,059 -- 3,000 $61,220
President, CEO and 1995 243,853 17,476 -- 3,000 67,889
Chairman of the Corpo- 1994 212,796 16,204 -- -- 94,943
ration and the Bank
William E. Hughes, Sr., 1996 104,837 12,449 -- 1,500 15,470
Executive Vice President 1995 99,845 7,937 -- 1,500 14,954
and Senior Loan Officer 1994 95,090 6,283 -- -- 16,629
of the Bank
James D. Gruver, 1996 99,509 11,876 -- 1,500 12,938
Senior Vice President of 1995 94,771 7,589 -- 1,500 12,384
the Bank 1994 90,258 6,017 -- -- 6,004
Eric W. Rohrbach, 1996 99,509 11,876 -- 1,500 13,168
Senior Vice President 1995 94,771 7,589 -- 1,500 12,622
of the Bank 1994 90,258 6,017 -- -- 6,026
Kevin C. Quinn, 1996 88,200 10,662 -- 1,500 11,130
Senior Vice President 1995 84,000 6,822 -- 1,500 6,047
of the Bank 1994 80,000 5,177 -- -- 6,326
- ------------------------
<FN>
(1) Amounts shown include cash compensation earned and accrued by the named
executive officers as well as amounts earned but deferred at the
election of such officers.
(2) Amounts shown are bonuses paid during the specified fiscal year based
upon the performance of the Corporation and the Bank for the prior
fiscal year. In 1997, Messrs. Swope, Hughes, Gruver, Rohrbach and Quinn
were paid bonuses of $29,398, $11,207, $10,638, $10,638 and $9,429,
respectively, based upon the performance of the Corporation and the
Bank in 1996.
-12-
<PAGE>
(3) The value of amounts paid for perquisites and other personal benefits,
securities or property paid to any of the named executive officers does
not exceed 10% of the total of annual salary and bonus reported for
such person.
(4) Amounts shown reflect the number of shares underlying options granted
on September 30, 1996 pursuant to the 1995 Stock Option Plan. See
"Stock Options."
(5) Amounts shown for 1996 include: (i) contributions to a qualified
defined contribution plan and a supplemental benefit retirement plan
for the benefit of Messrs. Swope, Hughes, Gruver, Rohrbach and Quinn of
$16,350, $8,535, $8,056, $8,056 and $7,038, respectively; (ii) a
contribution of $7,500 to a non-qualified defined contribution plan for
the benefit of Mr. Swope; (iii) matching contributions to the 401(k)
plan accounts of Messrs. Swope, Hughes, Gruver, Rohrbach and Quinn of
$5,625, $3,600, $3,600, $3,600 and $3,258, respectively; (iv) payments
of $7,835, $3,335, $1,282, $1,512 and $834 for Messrs. Swope, Hughes,
Gruver, Rohrbach and Quinn, respectively, pursuant to a retirement life
insurance plan; and (v) $23,910 for the tax adjusted cost of Mr.
Swope's life insurance policy.
</FN>
</TABLE>
Stock Options
The following table sets forth grants of stock options made during the
Corporation's fiscal year ended December 31, 1996, to each of the named
executive officers of the Corporation:
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)
----------------------------------------------------------------------- ---------------------------
Number of % of Total Options
Options Granted to Employees Exercise Market Price on Expiration
Name Granted in Fiscal Year Price Date of Grant Date 5% 10%
- ---- ------- -------------- ----- --------------- ---- -- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Charles E. Swope 3,000 20% $ 29.63 $ 29.63 9/29/06 $ 55,893 $141,644
William E. Hughes, Sr. 1,500 10% 29.63 29.63 9/29/06 27,947 70,821
James D. Gruver 1,500 10% 29.63 29.63 9/29/06 27,947 70,821
Eric W. Rohrbach 1,500 10% 29.63 29.63 9/29/06 27,947 70,821
Kevin C. Quinn 1,500 10% 29.63 29.63 9/29/06 27,947 70,821
</TABLE>
- -----------------------------
(1) Assumes the price of the Corporation's Common Stock appreciates at a rate of
5% and 10%, respectively, compounded annually for the ten year term of the
options.
-13-
<PAGE>
Exercise of Options
The following table sets forth information regarding the exercise of
stock options and the value of any unexercised stock options of each of the
named executive officers of the Corporation during the fiscal year ended
December 31, 1996:
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Options at Fiscal Year End Fiscal Year End(1)
Shares Acquired Value -------------------------- -----------------------
Name on Exercise Realized Vested Unvested Vested Unvested
- ---- ----------- -------- ------ -------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Chares E. Swope -- -- 6,000 -- $24,126 --
William E. Hughes, Sr. -- -- 3,000 -- 12,063 --
James D. Gruver -- -- 3,000 -- 12,063 --
Eric W. Rohrbach 1,500 $10,00 11,500 -- 1,125 --
Kevin C. Quinn -- -- 3,000 -- 12,063 --
- ------------------------
<FN>
(1) Based upon the average bid price for the Common Stock on December 31, 1996
of $30.375, as quoted by F.J. Morrissey & Co., less the exercise price.
</FN>
</TABLE>
Employment Agreement
On December 30, 1994, Mr. Swope entered into an employment agreement
(the "Agreement") with the Corporation and the Bank, effective January 1, 1995.
The Agreement is for a period of ten years, terminating on December 31, 2004,
unless terminated earlier in accordance with the Agreement. Pursuant to the
Agreement, Mr. Swope was employed as the President and Chief Executive Officer
of the Corporation and the Bank in 1996. Mr. Swope's employment thereafter shall
be in the same position or at a rank not less than Senior Vice President. As
compensation under the Agreement, Mr. Swope receives a salary not less than, and
benefits which are not materially different from, that which he received as of
the date of the Agreement, as determined by the Board of Directors from time to
time. Mr. Swope is also reimbursed for reasonable business expenses and provided
with an automobile.
If the Corporation breaches the Agreement, Mr. Swope may leave the
Corporation's employ and have no further liability or obligation under the
Agreement and the Corporation will be obligated to con tinue to pay Mr. Swope
the salary and benefits being paid at the time of the breach for the remaining
term of the Agreement. Mr. Swope may also terminate the Agreement as of December
31 of any year, upon written notice to the Corporation on or before December 1st
of such year, and the Corporation shall have no further obligation to pay a
salary and benefits to Mr. Swope other than salary and benefits which have
accrued but remain unpaid at the termination. The Corporation may terminate the
Agreement upon a breach of the Agreement by Mr. Swope which is not cured within
30 days or upon his conviction of a crime which is a felony. During the term of
the Agreement and for two years thereafter, Mr. Swope may not be employed by any
other bank or financial institution doing business in Chester County,
Pennsylvania, unless this Agreement is terminated by Mr. Swope due to breach of
the Agreement by the Corporation or the Bank.
-14-
<PAGE>
Compensation Committee Interlocks and Insider Participation
During 1996, the Personnel and Compensation Committee of the Bank
consisted of Messrs. Peirce and Featherman. No member of the Compensation
Committee is a former or current officer or employee of the Corporation or the
Bank. Mr. Featherman is a principal in the law firm of MacElree, Harvey,
Gallagher, Featherman & Sebastian, Ltd., which was retained by the Corporation
as counsel during 1996 and will be retained again during 1997.
Report of the Personnel and Compensation Committee
To: The Board of Directors
As members of the Personnel and Compensation Committee (the
"Committee"), it is our duty to administer the Corporation's and the Bank's
various employee benefit plans, including the Stock Bonus Plan and Stock Option
Plan. In addition, we review the compensation levels of members of management,
evaluate the performance of management and consider management succession and
related matters. The Committee reviews in detail with the Board of Directors all
aspects of compensation for the executive officers of the Corporation and the
Bank. All salaries and bonuses paid to the executive officers are ratified by
the full Board of Directors.
The compensation policy of the Corporation, which is endorsed by the
Committee, is that a substantial portion of the annual compensation of each
executive officer relates to and must be contingent upon the individual
performance of such executive officer and the contribution of such executive
officer to the Corporation and the Bank.
Mr. Swope's base salary for 1996 was $275,000. The base salary of Mr.
Swope for fiscal year 1996 was based principally on his rights under an
Employment Agreement with the Corporation and the Bank (the "Agreement") which
is described elsewhere in this Proxy Statement. On the effective date of the
Agreement, Mr. Swope's base salary was set at $223,436. The perquisites and
other benefits received by Mr. Swope that are reported in the Summary
Compensation Table in this Proxy Statement are provided pursuant to the
Agreement. Also, during 1996, Mr. Swope was granted Stock Options for 3,000
shares of the Corporation's common stock under the 1995 Stock Option Plan, a
director's bonus of $1,000 and an executive officer's bonus of $1,000 (after
taxes).
For 1996, the Committee awarded cash bonuses to each executive officer
based on the Corporation's performance including, but not limited to,
improvement on return on assets, return on equity, loan growth, average deposit
growth, and the Bank's efficiency ratio. Based upon these factors, bonuses were
awarded to each executive officer equal to 10.69% of such officer's annual base
compensation. Mr. Swope's bonus for 1996 (payable in 1997) was $29,398. Mr.
Swope continues to provide leadership and vision though his tenure as Chief
Executive Officer and his compensation recognizes his ability and dedication to
enhance the long-term value of the Corporation.
Personnel and Compensation Committee
David L Peirce, Chairman
John A. Featherman, III
-15-
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The following graph illustrates a five year comparison of cumulative
shareholder return on the Common Stock for each of the years ended December 31,
1992, 1993, 1994, 1995 and 1996, for (i) the Corporation, (ii) the NASDAQ Market
Value Weighted Index, and (iii) a peer group index. The peer group index
consists of Pennsylvania and New Jersey Banks with total assets of between 100
million and 500 million whose stock is traded on the NASDAQ market. The
comparison assumes $100 was invested on December 31, 1991, in the Corporation's
Common Stock and in each of the foregoing indices and assumes reinvestment of
dividends.
[GRAPHIC OMITTED]
The historical stock price performance of the Corporation's Common
Stock shown on the Stock Price Performance Graph is not necessarily indicative
of future price performance.
The peer group index consists of BCB Financial Services; Broad National
Bancorp; Bryn Mawr Bank Corporation; Carnegie Bancorp.; Community Banks, Inc.;
First Shenango Corp.; Heritage Bancorp Inc.; Progress Financial Corporation;
Raritan Bancorp. Inc.; Royal Bancshares of Pennsylvania; SunBancorp Inc.; TF
Financial Corporation; and WVS Financial Corporation.
-16-
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Some of the directors and executive officers of the Corporation, as
well as members of their families and companies with which they are associated,
were customers of, and had banking transactions with the Bank in the ordinary
course of its business during 1996. All loans and commitments to lend to such
parties were made on substantially the same terms, including interest rates and
collateral, as those pre vailing at the time for comparable transactions with
other persons. In the opinion of management, the loans and commitments do not
involve more than a normal risk of collectibility or present other unfavorable
features.
The law firm of MacElree, Harvey, Gallagher, Featherman & Sebastian,
Ltd., of which Mr. Featherman, a director of the Corporation and the Bank, is a
principal, was retained by the Corporation and the Bank as counsel during 1996
and will again be retained in 1997.
The law firm of Gawthrop, Greenwood & Halsted, P.C., of which Mr.
Halsted, a director of the Corporation and the Bank, is a principal, was
retained by the Corporation for a legal matter in 1996. The Corporation and the
Bank may retain such law firm in 1997.
AMENDMENT OF THE STOCK BONUS PLAN
Description of the Proposed Amendments
The Corporation's Board of Directors has approved several amendments to
the Corporation's Stock Bonus Plan (the "Bonus Plan"). Certain of these
amendments require the approval of the holders of a majority of the shares of
Common Stock present or represented and entitled to vote at the 1997 Annual
Meeting. The amendments which require approval of the shareholders would amend
the Bonus Plan as follows: (i) to permit bonuses to be paid by the issuance of
new shares of Common Stock, by the reissuance of shares held in the
Corporation's treasury or, as now permitted, by shares purchased on the open
market; (ii) to give the Committee (as defined below) the discretion to allow
persons who receive bonuses ("Recipients") to choose whether to take their
bonuses in stock, cash or a combination thereof, or as now permitted, for the
Committee to have sole authority to decide the form of any bonus awarded under
the Bonus Plan; (iii) to eliminate the requirement that any material amendment
of the Bonus Plan must be approved by the shareholders in order to be effective,
thus permitting the Committee or the Board of Directors to amend the Bonus Plan
in their sole discretion; and (iv) to redefine the eligibility requirements of
the Bonus Plan to permit the Committee, in its discretion, to award bonuses to
persons who are or were employed by the Corporation or the Bank regardless of
the length of such employment or whether the employee is in the employ of the
Corporation or the Bank at the end of the calendar year. The following
"Description of the Bonus Plan" describes the Bonus Plan as it is proposed to be
amended.
Description of the Bonus Plan
The purpose of the Bonus Plan is to promote the interests of the
Corporation by encouraging and enabling employees of the Corporation or the Bank
to acquire financial interests in the Corporation through the acquisition of
shares of Common Stock. Under the Bonus Plan, the Corporation may grant bonuses
to its employees consisting of shares of Common Stock, cash or a combination
thereof.
-17-
<PAGE>
The Bonus Plan is administered by the Personnel and Compensation
Committee of the Board of Directors of the Bank (the "Committee"). All persons
who have been in the employ of the Corporation or the Bank may be eligible to
receive a bonus under the Bonus Plan subject to the sole discretion of the
Committee to award any bonus under the Bonus Plan. The Committee has the sole
discretion to determine which of such eligible employees will receive bonuses
and may establish rules, regulations and formulas for determining the amount of
any bonus to be paid. The Committee will determine the terms, conditions and
restrictions applicable to any bonus, which terms, conditions or restrictions
need not be the same for all Recipients nor for all bonuses. The Committee or
the Board of Directors may terminate, suspend or amend the Bonus Plan at any
time at their sole discretion.
The shares of Common Stock which may be awarded as bonuses under the
Bonus Plan may be (i) purchased by the corporation on the open market through an
independent agent, (ii) newly issued shares of Common Stock, or (iii) shares of
Common Stock held by the Corporation in its treasury. Whenever shares are
purchased on the open market, the price per share of Stock awarded to any
Recipient shall be the average of the price per share paid by the Agent for all
such shares. Shares which are issued from shares held in the Corporation's
treasury or which are newly issued shares will be valued at fair market value,
as defined herein. The fair market value shall be the mean between the highest
bid price and lowest asked price last quoted by the then current market maker(s)
in the Corporation's Stock (the "Market Maker(s)"), on the date of the award. If
no such bid and asked price is available, the fair market value shall be the
most recent highest bid price and lowest asked price last quoted by the Market
Maker.
Federal Income Tax Consequences
The following is a brief description of the federal income tax
consequences of stock awards which may be granted under the Bonus Plan under
present tax laws.
Upon the issuance of Common Stock to a participant pursuant to a stock
award, the participant will generally recognize ordinary compensation income in
an amount equal to the fair market value of such stock on the date of issuance,
and the Corporation will be entitled to a corresponding deduction. If the sale
of the stock awards to a participant could subject such participant to liability
under Section 16(b) of the Exchange Act, unless the participant makes a timely
election under Section 83(b) of the Internal Revenue Code, the recognition of
ordinary compensation income (and the Corporation's corresponding deduction)
will be deferred until the time such sale would no longer subject the
participant to suit under Section 16(b), and the amount of income will be based
upon the fair market value of the Common Stock at such later time.
Recommendation of the Board of Directors
Approval of the amendment of the Bonus Plan requires the affirmative
votes of the holders of a majority of the shares of Common Stock present or
represented and entitled to vote at the 1997 Annual Meeting. Abstentions will
have the same effect on the outcome of such vote as a "no" vote. If a broker
that is a record holder of Common Stock does not return a signed proxy, the
shares of Common Stock represented by such proxy will not be considered present
at the Annual Meeting and, therefore, will not be counted towards a quorum and
will not be voted.
The Board of Directors recommends that the shareholders vote FOR the
approval of the amendment of the Bonus Plan.
-18-
<PAGE>
AMENDMENT OF THE 1995 STOCK OPTION PLAN
Description of the Proposed Amendments
The Corporation's Board of Directors has approved a proposal to make
certain amendments to the Corporation's 1995 Stock Option Plan (the "Plan")
which require the approval of the holders of a majority of the outstanding
voting stock of the Corporation. One amendment would eliminate the requirement
of shareholder approval to make certain amendments (the "Amendment Authority
Amendment"). Another amendment would modify a provision of the Plan which
accelerates the expiration date of an option granted to any person ("Optionee")
under the Plan if the Optionee's employment or service with the Corporation or
the Bank is terminated other than, in the case of options granted to key
employees, for cause (as defined in the Plan), or due the death or disability of
the Optionee (the "Acceleration Amendment").
The Amendment Authority Amendment. The Plan as originally adopted
provided that certain amendments to the Plan relating to options which may be
granted to key employees would only become effective if approved by the
shareholders of the Corporation within a period of twelve months of the approval
of such amendment by the Board of Directors. Specifically, amendments which
required shareholder approval included amendments that would: (i) change the
eligibility of employees, (ii) increase the maximum number of shares of the
Corporation's common stock which may be subject to options granted under the
plan, (iii) extend the expiration date of the Plan, (iv) decrease the exercise
price, or (v) materially increase the benefits accruing to the optionees. The
requirement that shareholders approve the foregoing amendments was intended to
comply with certain tax and securities laws and rules. In August of 1996, new
rules were adopted by the Securities and Exchange Commission (the "SEC") which
eliminated the requirement that shareholders approve certain amendments to plans
such as the Plan. Consequently, the Board of Directors has approved, and
recommends to the shareholders that the Plan be amended to eliminate the
requirement of shareholder approval in those cases where it is no longer
necessary in order to comply with the SEC rules.
As proposed, the Plan would be amended to eliminate the provision that
shareholder approval is required for amendments relating to (i) an extension of
the expiration date of the Plan, (ii) decreasing the exercise price of any
option, or (iii) materially increasing the benefits accruing to the optionees.
Shareholder approval will continue to be required for amendments that would (i)
change the eligibility of employees or (ii) increase the maximum number of
shares of the Corporation's common stock which may be subject to options granted
under the Plan.
The Acceleration Amendment. The Plan as originally adopted provided
that upon the termination of an Optionee's employment or service with the
Corporation or the Bank, other than for cause or due to the death or disability
of the Optionee, the expiration date of any option held by such Optionee would
be accelerated to the date three months from the date the Optionee's employment
or service with the Corporation or the Bank terminated. In the case of an option
granted to a key employee, if the termination is for cause, any options held by
such Optionee would be immediately terminated. In the case of all options
granted under the Plan, if termination of employment or service is due to the
death or disability of the Optionee, all options held by such Optionee would be
accelerated to the date one year from the date of termination.
As amended, the Plan requires that upon the termination of an
Optionee's employment other than for cause, or, in the case of a director, the
termination of his or her service with the Corporation or the
-19-
<PAGE>
Bank, the expiration date of any option held by such Optionee will be
accelerated to the date that is one year from the date the Optionee's employment
with the Corporation or the Bank terminates. The provisions relating to
termination for cause or due to the death or disability of an Optionee are
unchanged.
The Acceleration Amendment would be applicable only to options which
may be granted subsequent to the approval of such amendment. Options which have
been previously granted may be modified by action of the Board of Directors or
the Committee, pursuant to their respective authority under the Plan.
The following "Description of the Plan" describes the Plan as it is
proposed to be amended.
Description of the Plan
The purpose of the Plan is to provide additional incentive to key
employees and directors to enter into or remain in the employ or service of the
Corporation or the Bank. The Plan is divided into two parts: (i) the Key
Employee Plan and (ii) the Director Plan. The Plan provides for up to 187,500
shares of Common Stock to be issued pursuant to the exercise of options granted
under the terms of the Plan. Of the 187,500 shares which may be issued under the
Plan, 146,250 shares are reserved for issuance under the Key Employee Plan and
41,250 shares are reserved for issuance under the Director Plan.
The Key Employee Plan is administered by a Stock Option Committee of
the Board of Directors of the Corporation. Currently, the members of the Stock
Option Committee are Messrs. Peirce and Featherman. Under the Key Employee Plan,
options are granted to key employees of the Corporation and the Bank as follows:
(i) options to purchase up to 63,750 shares of Common Stock may be granted to
key employees of the Corporation or the Bank at such times and in such amounts
and on such terms and conditions as determined by the Stock Option Committee
pursuant to the terms of the Plan, and (ii) options to purchase up to 82,500
shares of Common Stock will be granted to the executive officers of the Bank and
Corporation who are in the employ of the Bank or Corporation on any of five
annual grant dates through September 30, 1999 (each a "Grant Date"). On each
Grant Date, the President of the Corporation shall receive options to purchase
3,000 shares of Common Stock and each of the other executive officers then
holding office shall receive options to purchase 1,500 shares of Common Stock,
unless the number of executive officers other than the President holding office
on any such Grant Date shall exceed nine, in which case each executive officer
other than the President shall receive an option for that number of shares equal
to 13,500 divided by the number of executive officers then in office.
The Director Plan provides for the automatic award of options to each
non-employee director who is serving as such on a Grant Date. The options
awarded on any Grant Date will entitle the holder to purchase 750 shares of
Common Stock, unless the number of non-employee directors on such Grant Date
exceeds 11, in which case each non-employee director will receive an option for
that number of shares equal to 8,250 divided by the number of non-employee
directors. If a director is serving on the Board of both entities, such director
is only eligible for a grant of options under the Director Plan as a director of
the Corporation. The Director Plan is administered by the Board of Directors.
The exercise price for each share of Common Stock purchased pursuant to
an option granted under the Plan shall be at least equal to the "fair market
value" of a share of Common Stock on the Grant Date for such option. If
available, the "fair market value" shall be the mean between the highest bid
price and lowest asked priced last quoted by the then current market makers of
the Common Stock on the Grant Date
-20-
<PAGE>
or the immediately preceding business day if the Grant Date is not a business
day. If no such bid and asked price is available, then the fair market value
shall be determined by the Stock Option Committee (as defined below) in good
faith in the case of an option granted under the Key Employee Plan (see below)
or shall be the mean between the most recent highest bid price and lowest asked
price last quoted by the market makers of the Common Stock in the case of an
option granted under the Director Plan.
No option may be granted under the Plan after September 17, 2005. No
option may be exercised prior to six months following the Grant Date. Each
option granted expires on the earlier of (a) the tenth anniversary of its Grant
Date, (b) in the case of an incentive stock option, five years after the Grant
Date if the Optionee beneficially owns shares possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the
Corporation or the Bank, (c) the date set by the Board of Directors of the
Corporation as an accelerated expiration date after a finding by such Board that
the options materially adversely affect the Corporation (or may in the future),
or in the case of incentive stock options, where there has been a "change in
control" (as defined in the Plan) in the Corporation, (d) one year following
termination of the Optionee's employ or service with the Corporation or Bank for
any reason other than for cause (for an option granted under the Key Employee
Plan), or (e) in the case of an option granted under the Key Employee Plan,
immediately upon the determination by the Stock Option Committee that an
employee has been terminated for cause.
No option granted under the Plan may be transferred except by will or
by the laws of descent and distribution, except that nonqualified options may be
transferred by an Optionee pursuant to a qualified domestic relations order as
defined in the Internal Revenue Code or Title I of ERISA. During an Optionee's
lifetime, such option may only be exercised by the Optionee. The Corporation is
not obligated to register any shares issued pursuant to the exercise of an
option granted under the Plan or to take any action which would make available
to any Optionee any exemption from such registration; however, the Corporation
has filed, and the shares issuable upon exercise of any option under the Plan
are covered by, a currently effective registration statement.
The options granted under the Key Employee Plan are intended to be
"incentive stock options" in accordance with Section 422 of the Internal Revenue
Code (each, an "ISO") if exercised prior to the date which is three months after
termination of employment. The Stock Option Committee may designate any grant as
a "nonqualified stock option" ("NQSO") in its discretion. Options granted under
the Director Plan are NQSOs.
Federal Income Tax Consequences
The following is a brief description of the federal income tax
consequences, under present tax laws, of options granted under the 1995 Stock
Option Plan.
Incentive Stock Options. There will be no federal income tax
consequences to either the participant or the Corporation upon the grant of an
ISO. The participant will not have to recognize any income upon the exercise of
an ISO, and the Corporation will not be allowed any deduction, as long as the
participant does not dispose of the shares within two years from the date the
ISO was granted or within one year from the date the shares were transferred to
the participant (the "holding period requirement") and, provided further, such
exercise occurs within three months after termination of employment (if the
exercise occurs later than three months after termination of employment, then
the option will be considered an NQSO and
-21-
<PAGE>
the tax treatment will be as set forth below for NQSOs). Upon a sale of the
shares after the holding period requirement is satisfied, the participant will
recognize a long-term capital gain (or loss) measured by the excess (or deficit)
of the amount realized from such sale over the option price of such shares, but
no deduction will be allowed to the Corporation. If a participant disposes of
shares before the holding period requirement is satisfied, the participant will
recognize ordinary income in the year of disposition, and the Corporation will
be entitled to a corresponding deduction, in an amount equal to the lesser of
(a) the excess of the fair market value of the shares on the date of exercise
over the option price of the shares or (b) the excess of the amount realized
from such disposition over the option price of the shares. Where shares are sold
before the holding period requirement is satisfied, the participant will also
recognize a capital gain to the extent that the amount realized from the
disposition of the shares exceeded the fair market value of the shares on the
date of exercise.
A participant may under certain circumstances be permitted to pay all
or a portion of the option price of an ISO by delivering Common Stock of the
Corporation. If the Common Stock delivered by a participant as payment of the
option price was acquired through a prior exercise of an ISO or an option
granted under an employee stock purchase plan, and if the holding period
requirement applicable to such Common Stock has not yet been met, the delivery
of such Common Stock to the Corporation could be treated as a taxable sale or
disposition of such stock. In general, where a participant pays the option price
of an ISO by delivering Common Stock of the Corporation, the participant will
have a zero tax basis in the shares received that are in excess of the number of
shares of Common Stock delivered in payment of the option price.
For alternative minimum tax purposes, regardless of whether the
participant satisfies the holding period requirement, the excess of the fair
market value of the shares on the exercise date over the option price will be
treated as a positive adjustment to the participant's alternative minimum
taxable income for the year the ISO is exercised. If the shares are disposed of
in the year the ISO was exercised, however, the positive adjustment taken into
account for alternative minimum tax purposes will not exceed the gain realized
on such sale. Exercise of an ISO may thus result in liability for alternative
minimum tax.
Non-qualified Stock Options. There will be no federal income tax
consequences to either the participant or the Corporation upon the grant of a
NQSO. Upon the exercise of an NQSO, the participant will recognize ordinary
compensation income in an amount equal to the excess of the fair market value of
each share on the date of exercise over the option price, and the Corporation
will be entitled to a federal income tax deduction of the same amount.
If a participant pays the option price of a NQSO by surrendering Common
Stock held by the participant, then, to the extent the shares received upon
exercise of the option do not exceed the number of shares delivered, the
participant will be treated as making a tax-free exchange of stock and the new
shares received will have the same tax basis and holding period requirement as
the shares given up. In such case, the participant will recognize ordinary
compensation income in an amount equal to the fair market value of the shares
received in excess of the shares delivered in payment of the option price. The
basis of such additional shares will equal their fair market value on the date
the option was exercised.
Recommendation of the Board of Directors
Approval of the amendment of the Plan requires the affirmative votes of
the holders of a majority of the outstanding shares of Common Stock entitled to
vote at the 1997 Annual Meeting. Abstentions will
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<PAGE>
have the same effect on the outcome of such vote as a "no" vote. If a broker
that is a record holder of Common Stock does not return a signed proxy, the
shares of Common Stock represented by such proxy will not be considered present
at the Annual Meeting and, therefore, will not be counted towards a quorum and
will not be voted.
The Board of Directors recommends that the shareholders vote FOR the
approval of the amendment of the Plan.
RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed the firm of Grant Thornton, LLP as
independent public accountants for the year ending December 31, 1997. This
appointment will be submitted to the shareholders for ratification at the 1997
Annual Meeting.
The submission of the appointment of Grant Thornton, LLP for
ratification by the shareholders is not required by law or by the Bylaws of the
Corporation. The Board of Directors is nevertheless submitting it to the
shareholders to ascertain their views. If the shareholders do not ratify the
appointment, the selection of other independent public accountants will be
considered by the Board of Directors.
A representative of Grant Thornton, LLP is expected to be present at
the Annual Meeting to respond to appropriate questions and will have the
opportunity to make a statement if he so desires.
Recommendation of the Board of Directors
The Board of Directors recommends that the shareholders vote FOR the
ratification of Grant Thornton, LLP as the Corporation's independent public
accountants for the year ending December 31, 1997.
OTHER MATTERS
No other matters requiring a vote of the shareholders are expected to
come before the Annual Meeting. However, if other matters should properly come
before the Annual Meeting, it is the intention of the persons named in the
enclosed proxy to vote in accordance with their best judgment on such matters.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Corporation's officers and directors, and persons who own more than
ten percent of a registered class of the Corporation's equity securities, to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission ("SEC"). Officers, directors and greater than ten-percent
shareholders are required by SEC regulation to furnish the Corporation with
copies of all Section 16(a) forms they file.
Based solely on review of the copies of such forms furnished to the
Corporation, or written representations that no Forms 5 were required, the
Corporation believes that, during 1996, all Section 16(a) filing requirements
applicable to its officers, directors and greater than ten-percent beneficial
owners were timely met.
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<PAGE>
EXPENSES OF SOLICITATION
The Corporation will bear the entire cost of soliciting proxies for the
Annual Meeting. In addition to the use of the mails, proxies may be solicited by
personal interview, telephone and telegram by the Corporation's directors,
officers and employees. Arrangements may also be made with brokerage houses and
other custodians, nominees and fiduciaries for forwarding proxy materials to
beneficial owners of shares held of record by such persons, and the Corporation
may reimburse such custodians, nominees and fiduciaries for reasonable
out-of-pocket expenses incurred by them in connection therewith.
SHAREHOLDER PROPOSALS
Proposals by Shareholders intended to be presented at the next Annual
Meeting of Shareholders of the Corporation must be received by the Corporation
at its executive offices at 9 North High Street, West Chester, Pennsylvania
19380, on or before October 24, 1997, to be included in the Corporation's Proxy
Statement and form of proxy for the 1998 annual meeting.
THE CORPORATION WILL PROVIDE TO EACH PERSON SOLICITED, WITHOUT CHARGE
EXCEPT FOR EXHIBITS, UPON REQUEST IN WRITING, A COPY OF ITS ANNUAL REPORT ON
FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES.
SUCH REPORT WILL BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OR
ABOUT MARCH 30, 1997. REQUESTS SHOULD BE DIRECTED TO MR. JOHN STODDART,
SHAREHOLDER RELATIONS REPRESENTATIVE, FIRST WEST CHESTER CORPORATION, 9 NORTH
HIGH STREET, WEST CHESTER, PENNSYLVANIA 19380.
By Order of the Board of Directors
Edward J. Cotter, Secretary
West Chester, Pennsylvania
February 21, 1997
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<PAGE>
APPENDIX A
PROXY PROXY
FIRST WEST CHESTER CORPORATION
ANNUAL MEETING OF SHAREHOLDERS, MARCH 18, 1997
THIS PROXY IS SOLICITED ON BEHALF OF
THE CORPORATION'S BOARD OF DIRECTORS
The undersigned hereby appoints Thomas R. Butler and N. Harlan Slack,
III, and each of them, jointly and severally, Proxies, with full power of
substitution, to vote, as designated below, all shares of Common Stock of First
West Chester Corporation held of record by the undersigned on February 5, 1997,
at the 1997 Annual Meeting of Shareholders to be held on March 18, 1997, or any
adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" (1) THE ELECTION OF THE
NOMINEES TO SERVE AS CLASS I DIRECTORS, (2) THE APPROVAL OF THE AMENDMENT OF THE
CORPORATION'S STOCK BONUS PLAN, (3) THE APPROVAL OF THE AMENDMENT OF THE
CORPORATION'S 1995 STOCK OPTION PLAN AND (4) THE RATIFICATION OF THE APPOINTMENT
OF GRANT THORNTON, LLP AS THE CORPORATION'S INDEPENDENT PUBLIC ACCOUNTANTS.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED BELOW.
IF NO DIRECTION IS GIVEN IN THE SPACE PROVIDED BELOW, THIS PROXY WILL BE VOTED
"FOR" ITEMS 1, 2, 3, 4 AND 5.
1. ELECTION OF FOUR CLASS I DIRECTORS (Term to expire in 2000).
FOR all nominees listed below (except as WITHHOLD AUTHORITY to vote for
marked to the contrary below) o all nominees listed below o
(INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name in thelist below.)
JOHN J. CICCARONE, CLIFFORD E. DEBAPTISTE, J. CAROL HANSON, JOHN B. WALDRON
2. APPROVAL OF CERTAIN AMENDMENTS TO THE CORPORATION'S STOCK BONUS PLAN AS
DESCRIBED IN THE PROXY STATEMENT.
o FOR o ABSTAIN AGAINST
3. APPROVAL OF CERTAIN AMENDMENTS TO THE CORPORATION'S 1995 STOCK OPTION PLAN
AS DESCRIBED IN THE PROXY STATEMENT.
o FOR o ABSTAIN AGAINST
4. PROPOSAL TO RATIFY THE APPOINTMENT OF GRANT THORNTON, LLP as the independent
public accountants of the Corporation for the year ending December 31, 1997.
o FOR o ABSTAIN AGAINST
5. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof
and matters incident to the conduct of the meeting.
Please sign exactly as the name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer and affix corporate seal. If a partnership, please sign
in partnership name by general partner.
DATED: __________________, 1997 _____________________________________(SEAL)
Signature
_____________________________________(SEAL)
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE.
<PAGE>
APPENDIX B
FIRST WEST CHESTER CORPORATION
AMENDED AND RESTATED
STOCK BONUS PLAN
Purpose
The purpose of the First West Chester Corporation Stock Bonus Plan (the
"Plan") is to promote the interests of First West Chester Corporation (the
"Corporation") by encouraging and enabling its employees and the employees of
its subsidiary, The First National Bank of West Chester (the "Bank"), to acquire
financial interests in the Corporation through the acquisition of shares of the
Corporation's Common Stock.
Under the Plan, the Corporation may grant bonuses to its employees
consisting of (i) shares of its Common Stock, par value $1.00 per share
("Stock"), (ii) shares of Stock and cash, or (iii) all cash. A portion or all of
the cash component, if any, of each bonus may be deducted from such bonus and
withheld by the Corporation in order to satisfy any withholding obligation to
which the Corporation may be subject under any federal, state or local tax law.
Eligibility
All persons who are, or were, in the employ of the Corporation or the
Bank may be eligible to receive bonuses under the Plan. The award of any bonus
under this Plan is solely within the discretion of the Committee, as defined
below.
Administration
The Plan will be administered by a committee (the "Committee")
appointed by the Board of Directors of the Corporation from among its members,
and shall by comprised of not less than two persons. Each member of the
Committee will serve at the will of, and may be removed, with or without cause,
by the Board of Directors.
No person, other than members of the Committee, shall have any
discretion as to decisions regarding the Plan or the bonuses granted pursuant to
the Plan. The Committee shall determine the employees (the "Recipients") to
whom, and the time or times at which, bonuses will be granted. The Committee, in
its sole discretion, shall determine whether bonuses will be granted in Stock,
Stock and cash or all in cash, or whether the Recipient may choose to receive
his or her bonus in Stock, Stock and cash or all in cash. The Committee shall
also have sole discretion to determine the total value of each bonus and all
other terms, conditions or restrictions applicable to any bonus. The Stock is
publicly traded, and the value of the shares of Stock awarded to employees in
bonuses will be determined on the open market. The terms, conditions or
restrictions applicable to bonuses granted under the Plan need not be the same
for all Recipients nor for all bonuses.
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<PAGE>
The Committee may, subject to the provisions of the Plan, establish
such rules and regulations, and revise or otherwise modify such rules and
regulations from time to time, as it deems necessary or advisable for the proper
administration of the Plan, including without limitation, establishing a formula
or formulas for determining the amount of bonus to be granted to any Recipient
or class of Recipient. The Committee may make determinations and take such other
action in connection with or in relation to the Plan as it deems necessary or
advisable. The Committee will have full power and authority to construe,
interpret and administer the Plan and each determination or other action made or
taken by the Committee in regard to the Plan, including, but not limited to,
interpretation of the Plan, shall be final, conclusive and binding for all
purposes and upon all persons, including, but not limited to, the Corporation,
the Committee, the Board of Directors and employees of the Corporation and the
Bank and their respective successors and assigns. The expenses of administering
the Plan will be borne by the Corporation.
Stock Subject to the Plan
If any portion of the bonuses to be paid hereunder will be paid in the
form of Stock, such shares of Stock may be shares newly issued by the
Corporation for such purpose, held in its treasury or purchased on the open
market. Shares which are purchased on the open market will be purchased through
an independent agent specified by the Corporation's Board of Directors (the
"Agent"). From time to time, but not more than once in any three-month period,
the Committee will determine the aggregate value of bonuses to be awarded
pursuant to the Plan in the form of Stock and will authorize the issuance of new
shares, the reissuance of shares held in treasury or the purchase by the Agent
on the open market of such number of shares of Stock having such value.
Whenever shares are purchased on the open market, the price per share
of Stock awarded to any Recipient shall be the average of the price per share
paid by the Agent for all such shares. Shares which are issued from shares held
in the Corporation's treasury or which are newly issued shares will be valued at
fair market value, as defined herein. The fair market value shall be the mean
between the highest bid price and lowest asked price last quoted by the then
current market maker(s) in the Corporation's Stock (the "Market Maker(s)"), on
the date of the award. If no such bid and asked price is available, the fair
market value shall be the most recent highest bid price and lowest asked price
last quoted by the Market Maker.
Transferability of Bonus Shares
Prior to issuing Stock bonuses, the Corporation will register the
shares of Stock subject to such bonuses with the Securities and Exchange
Commission. If such Stock is duly registered, all shares of Stock received by
employees who are not "affiliates" of the Corporation, as that term is defined
in Rule 144 under the Securities Act of 1933, as amended, pursuant to Stock
bonuses under the Plan (except for shares received by executive officers) will
be freely transferable. Shares of Stock received by employees who are affiliates
of the Corporation may be sold or transferred only in compliance with Rule 144.
Notwithstanding the foregoing, the shares of Stock
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<PAGE>
granted to Recipients pursuant to Stock bonuses under the Plan may be subject to
such terms and conditions as the Committee, in its sole discretion, determines
appropriate, including, without limitation, restrictions on the sale or other
disposition of such shares of Stock, and rights of the Corporation to reacquire
such Stock upon termination of the Recipient's employment within specified
periods. Stock certificates issued to Recipients of bonuses payable in shares of
Stock may bear a legend setting forth the applicable restrictions.
Shares Awarded to Executive Officers
All Stock bonuses granted pursuant to the Plan to the executive
officers of the Corporation or the Bank, if granted prior to approval of the
Plan by the Corporation's stockholders, shall be contingent upon the approval of
the Plan by such stockholders. In order for any Stock bonus granted to an
executive officer to be an exempt acquisition of the Corporation's securities
for purposes of Section 16 of the Securities Exchange Act of 1934, as amended,
such officer will be required to hold the shares of Stock he or she receives in
each bonus under the Plan for six months after the grant of such bonus. Stock
certificates issued to executive officers representing such Stock bonuses may
bear a legend setting forth the foregoing restriction.
Amendment of Plan
The Committee or the Board of Directors may terminate, suspend or amend
the Plan, as the Committee or the Board of Directors deems appropriate in their
sole discretion.
General
Unless otherwise determined by the Committee, the Plan shall be
unfunded and shall not create or be construed to create a trust or a separate
fund or funds. The Plan shall not establish any fiduciary relationship between
the Corporation and any Recipient or other person. No person shall have any
claim or right to be granted any bonus under the Plan. Nothing contained in the
Plan shall give any employee the right to be retained in the employment of the
Corporation or the Bank or affect the right of the Corporation to dismiss any
employee. This Plan shall not constitute a contract between the Corporation and
any employee. The Plan and all determinations made and actions taken pursuant
thereto shall be governed by the laws of the Commonwealth of Pennsylvania and
construed in accordance therewith.
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<PAGE>
APPENDIX C
FIRST WEST CHESTER CORPORATION
AMENDED AND RESTATED
1995 STOCK OPTION PLAN
----------------------
(1) Purpose.
-------
(a) Additional Incentive. The Plan is intended as an
additional incentive to key employees and members of the Board of Directors
(together, the "Optionees") to enter into or remain in the service or employ of
First West Chester Corporation, a Pennsylvania corporation (the "Company") or
its subsidiary, The First National Bank of West Chester (the "Bank"), and to
devote themselves to the Company's success by providing them with an opportunity
to acquire or increase their proprietary interest in the Company through receipt
of rights (the "Options") to acquire the Company's Common Stock, par value $1.00
per share (the "Common Stock").
(b) Two-Part Plan. The Plan shall be divided into two
sub-plans: the "Key Employee Plan" and the "Director Plan". All provisions
hereunder which refer to the "Plan" shall apply to each of the Key Employee Plan
and the Director Plan.
(c) Incentive Stock Option. Each Option granted under the Key
Employee Plan is intended to be an incentive stock option ("ISO") within the
meaning of section 422(b) of the Internal Revenue Code of 1986, as amended (the
"Code"), for federal income tax purposes, except to the extent (i) any such ISO
grant would exceed the limitation of subsection 4(a) below, or (ii) any Option
is specifically designated at the time of grant (the "Grant Date") as not being
an ISO (an Option which is not an ISO, and therefore is a nonqualified option,
is referred to herein as an "NQSO"). No Option granted to a person who is not an
employee of the Company or the Bank on the Grant Date shall be an ISO.
(2) Option Shares.
-------------
(a) Aggregate Maximum Number. The aggregate maximum number of
shares of the Common Stock for which Options may be granted under the Plan is
187,500 shares (the "Option Shares"), which number is subject to adjustment as
provided in Section 7. Option Shares shall be issued from authorized and
unissued Common Stock or Common Stock held in or hereafter acquired for the
treasury of the Company. If any outstanding Option granted under the Plan
expires, lapses or is terminated for any reason, the Option Shares allocable to
the unexercised portion of such Option may again be the subject of an Option
granted pursuant to the Plan.
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<PAGE>
(b) Allocation of Option Shares. Of the 187,500 Option Shares,
146,250 Option Shares (the "Employee Option Shares") shall be reserved for
issuance to key employees of the Company and the Bank under the Key Employee
Plan and the remaining 41,250 Option Shares shall be reserved for issuance to
non-employee Directors of the Company or the Bank under the Director Plan.
(c) Key Employee Plan Options. Options granted under the Key
Employee Plan may be either ISOs or NQSOs. Under the Key Employee Plan, Options
to purchase up to 63,750 Employee Option Shares (and any Employee Option Shares
not required for issuance under Options granted in accordance with the schedule
set forth below) shall be granted to key employees at such times in such amounts
and on such terms and conditions as determined by the Committee (as defined
below), in accordance with the terms of the Plan. Options to purchase up to
82,500 Employee Option Shares shall be granted to key employees in accordance
with the following schedule:
<TABLE>
Grant Dates
-----------
<CAPTION>
September September September September September
18, 30, 30, 30, 30,
Key Employee 1995 1996 1997 1998 1999
- ------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
President 3,000 3,000 3,000 3,000 3,000
Option Option Option Option Option
Shares Shares Shares Shares Shares
Each of 9 Other
Executive Officers* 1,500 1,500 1,500 1,500 1,500
Option Option Option Option Option
Shares Shares Shares Shares Shares
<FN>
*Should the number of Executive Officers (other than the President)
increase during the Term of the Plan as of any of the foregoing Grant
Dates, the Option granted to each Executive Officer as of such Grant
Date shall cover that number of Employee Option Shares determined by
dividing 13,500 by the number of Executive Officers (not including the
President). Should the number of Executive Officers decrease during the
Term of the Plan as of any of the foregoing Grant Dates, then the
number of Option Shares to be purchased through an Option grant by each
remaining Executive Officer shall not change. Any ungranted Options
resulting from such decrease shall be granted to key employees as
Employee Option Shares at such times in such amounts and on such terms
and conditions as determined by the Committee, in accordance with the
terms of the Key Employee Plan.
</FN>
</TABLE>
(d) Director Plan Options. Options granted under the Director Plan
shall be NQSOs. Under the Director Plan, each person serving as a Director of
the Company or the Bank on the Grant Date and who is not also a key or other
employee of any of such entities shall be awarded an Option to purchase 750
Option Shares at the Option Price (defined below) on September 18, 1995, and
then on September 30 of each of the following four years of the Term of the Plan
(as defined below). If a Director is serving on the Board of the Company and the
Bank at the time
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<PAGE>
of the grant of any Option under the Director Plan, then such Director shall
only be eligible for a grant of Options under the Director Plan as a Director of
the Company. Should the number of Directors eligible for the Director Plan
decrease during the Term of the Plan, the number of Option Shares granted to
each remaining Director shall not change. Any ungranted Option Shares resulting
from such decrease shall be reserved for future grant under the Director Plan
should the number of Directors increase. Should the number of Directors increase
during the Term of the Plan, then the Options covering the aggregate number of
Option Shares to be distributed on an annual basis shall be divided equally
among such increased number of Directors. Options granted under the Director
Plan shall be substantially in the form of the Option attached hereto as Exhibit
"A".
(3) Term of Plan. The Plan shall commence on September 18, 1995, but
shall terminate unless the Plan is approved by the stockholders of the Company
within twelve months of such date as set forth in Section 422(b)(1) of the Code.
Any Options granted pursuant to the Plan prior to Plan approval by the
stockholders of the Company shall be subject to such approval and,
notwithstanding anything to the contrary herein or in any Option Document (as
defined below), shall not be exercisable until such approval is obtained. No
Option may be granted under the Plan after September 17, 2005.
(4) Terms and Conditions of Options. Options granted pursuant to the
Plan shall be evidenced by written documents substantially in the forms attached
hereto as Exhibit "A" or, in the case of the Key Employee Plan, as the Committee
shall from time to time approve, subject to (a) the following terms and
conditions and (b) any other terms and conditions (including vesting schedules
for the exercisability of Options) which the Committee shall from time to time
provide which are not inconsistent with the terms of the Plan (collectively, the
"Option Documents").
(a) Number of Option Shares. Each Option Document shall state
the number of Option Shares to which it pertains. In the event that the
aggregate fair market value of Option Shares with respect to which ISOs are
exercisable for the first time by an Optionee during any calendar year
(determined as of the date the ISO is granted) and any options granted under
other incentive stock option plans of the Company or the Bank exceed $100,000,
the portion of such options in excess of $100,000 shall be treated as options
which are not ISOs in accordance with Section 422(d) of the Code.
(b) Option Price. Each Option Document shall state the price
at which an Option Share may be purchased (the "Option Price"), which shall be
at least 100% of the "fair market value" of a share of the Common Stock on the
date the Option is granted. If available, the "fair market value" shall be the
mean between the highest bid price and lowest asked price last quoted by the
then current market maker(s) in the Company's Common Stock (the "Market
Maker(s)"), on the Grant Date or the immediately preceding business day if the
Grant Date is not a business day. If no such bid and asked price is available,
the fair market value shall be determined by the Committee in good faith in the
case of the Key Employee Plan or shall be the mean between the most recent
highest bid price and lowest asked price last quoted by the Market
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<PAGE>
Maker(s) in the case of the Director Plan. If an ISO is granted to an Optionee
who then owns, directly or by attribution under Section 424(d) of the Code,
shares possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or the Bank, then the Option Price shall
be at least One Hundred and Ten Percent (110%) of the fair market value of the
Option Shares on the date the Option is granted.
(c) Medium of Payment. An Optionee shall pay for Options
Shares (i) in cash, (ii) by bank check payable to the order of the Company or
(iii) by such other mode of payment as the Committee may approve, including
payment through a broker in accordance with procedures permitted by Regulation T
of the Federal Reserve Board. Furthermore, the Committee may provide in an
Option Document that payment may be made in whole or in part in shares of the
Common Stock held by the Optionee for more than one year. If payment is made in
whole or in part in shares of the Common Stock, then the Optionee shall deliver
to the Company certificates registered in the name of such Optionee representing
shares of Common Stock legally and beneficially owned by such Optionee, free of
all liens, claims and encumbrances of every kind and having a fair market value
on the date of delivery of such notice that is not less than the Option Price of
the Option Shares with respect to which such Option is to be exercised,
accompanied by stock powers duly endorsed in blank by the record holder of the
shares represented by such certificates. In the event that certificates for
shares of the Company's Common Stock delivered to the Company represent a number
of shares in excess of the number of shares required to make payment for the
Option Price of the Option Shares (or the relevant portion thereof) with respect
to which such Option is to be exercised by payment in shares of Common Stock,
the stock certificate issued to the Optionee shall represent the Option Shares
in respect of which payment is made and such excess number of shares.
Notwithstanding the foregoing, the Board of Directors, in its sole discretion,
may refuse to accept shares of Common Stock in payment of the Option Price. In
that event, any certificates representing shares of Common Stock which were
delivered to the Company shall be returned to the Optionee with notice of the
refusal of the Board of Directors to accept such shares in payment of the Option
Price. The Board of Directors may impose such limitations or prohibitions on the
use of shares of the Common Stock to exercise an Option as it deems appropriate,
subject to the provisions of the Plan.
(d) Termination of Options. Each Option shall expire
on the tenth anniversary of its Grant Date. Notwithstanding the foregoing, no
Option shall be exercisable after the first to occur of the following:
(i) In the case of an ISO, five years from the date
of grant if, on such date the Optionee owns, directly or by attribution under
Section 424(d) of the Code, shares possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or the Bank);
(ii) The date set by the Board of Directors of the
Company to be an accelerated expiration date after a finding by the Board of
Directors of the Company that a change in the financial accounting treatment for
Options from that in effect on the date the Plan
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<PAGE>
was adopted materially adversely affects or, in the determination of such Board
of Directors, may materially adversely affect in the foreseeable future, the
Company and/or the Bank, provided such Board of Directors may take whatever
other action, including acceleration of any exercise provisions, it deems
necessary should it make the determination referred to hereinabove;
(iii) Expiration of one year from the date the
Optionee's employment or service with the Company or the Bank terminates for any
reason other than circumstances described by Subsection (d)(v), below;
(iv) In the case of an Option granted under the Key
Employee Plan, the Committee can accelerate the expiration date in the event of
a "Change in Control" (as defined in Subsection 4(e) below), provided an
Optionee who holds an Option is given written notice at least thirty (30) days
before the date so fixed; or
(v) In the case of an Option granted under the Key
Employee Plan, a finding by the Committee, after full consideration of the facts
presented on behalf of both the Company and the Optionee, that the Optionee has
been discharged from employment with the Company or the Bank for Cause. For
purposes of this Section, "Cause" shall mean: (A) a breach by Optionee of his
employment agreement with the Company or the Bank, (B) a breach of Optionee's
duty of loyalty to the Company or the Bank, including without limitation any act
of dishonesty, embezzlement or fraud with respect to the Company or the Bank,
(C) the commission by Optionee of a felony, a crime involving moral turpitude or
other act causing material harm to the Company's or the Bank's standing and
reputation, (D) Optionee's continued failure to perform his duties to the
Company or the Bank or (E) unauthorized disclosure of trade secrets or other
confidential information belonging to the Company or the Bank. In the event of a
finding that the Optionee has been discharged for Cause, in addition to
immediate termination of the Option, the Optionee shall automatically forfeit
all Option Shares for which the Company has not yet delivered the share
certificates upon refund of the Option Price.
(e) Change of Control. In the event of a Change in Control (as
defined below), the Committee may take whatever action with respect to the
Options outstanding under the Key Employee Plan it deems necessary or desirable,
including, without limitation, accelerating the expiration or termination date
in the respective Option Documents to a date no earlier than thirty (30) days
after notice of such acceleration is given to the Optionee. A "Change of
Control" shall be deemed to have occurred upon the earliest to occur of the
following events:
(i) The date the stockholders of the Company (or
the Board of Directors, if stockholder action is not required) approve a plan or
other arrangement pursuant to which the Company will be dissolved or liquidated;
(ii) the date the stockholders of the Company (or
the Board of Directors, if stockholder action is not required) approve a
definitive agreement to sell or otherwise dispose of all or substantially all of
the assets of the Company;
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<PAGE>
(iii) the date the stockholders of the Company (or
the Board of Directors, if stockholder action is not required) and the
stockholders of the other constituent corporation (or its board of directors if
stockholder action is not required) have approved a definitive agreement to
merge or consolidate the Company with or into such other corporation, other
than, in either case, a merger or consolidation of the Company in which holders
of shares of the Common Stock immediately prior to the merger or consolidation
will hold at least a majority of the ownership of common stock of the surviving
corporation (and, if one class of common stock is not the only class of voting
securities entitled to vote on the election of directors of the surviving
corporation, a majority of the voting power of the surviving corporation's
voting securities) immediately after the merger or consolidation, which common
stock (and, if applicable, voting securities) is to be held in the same
proportion as such holders' ownership of Common Stock immediately before the
merger or consolidation;
(iv) the date any entity, person or group, (within
the meaning of Section 13(d)(3) or Section 14(d)(2) of the Securities and
Exchange Act of 1934, as amended (the "Exchange Act")), other than (A) the
Company or any of its subsidiaries or any employee benefit plan (or related
trust) sponsored or maintained by the Company or any of its subsidiaries or (B)
any person who, on the date the Plan is approved by the stockholders, shall have
been the beneficial owner of at least twenty percent (20%) of the outstanding
Common Stock, shall have become the beneficial owner of, or shall have obtained
voting control over, more than fifty percent (50%) of the outstanding shares of
the Common Stock; or
(v) the first day after the date this Plan is
approved by the stockholders when directors are elected so that a majority of
the Board of Directors shall have been members of the Board of Directors for
less than twenty-four (24) months, unless the nomination for election of each
new director who was not a director at the beginning of such twenty-four (24)
month period was approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of such period.
(f) Transfers. No ISO granted under the Plan may be
transferred, except by will or by the laws of descent and distribution. During
the lifetime of the person to whom an ISO is granted, such Option may be
exercised only by him. No Nonqulified Option under the Plan may be transferred,
except by will or by the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Code or Title I of the
Employee Retirement Income Security Act, or the rules thereunder.
(g) Other Provisions. For Options granted pursuant to the Key
Employee Plan, the Option Documents shall contain such other provisions
including, without limitation, additional restrictions upon the exercise of the
Option or additional limitations upon the term of the Option, as the Committee
shall deem advisable.
(h) Amendment. (i) With respect to Options granted under the
Key Employee Plan, and subject to the provisions of the Plan, the Committee
shall have the right to amend
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<PAGE>
Option Documents issued to such Optionee, subject to the Optionee's consent if
such amendment is not favorable to the Optionee, except that the consent of the
Optionee shall not be required for any amendment made under Subsection 4(e)
above.
(ii) With respect to Options granted under the
Director Plan, and subject to the provisions of the Plan, the Board of Directors
of the Company shall have the right to amend Option Documents issued to such
Optionee, subject to the Optionee's consent if such amendment is not favorable
to the Optionee, except that the consent of the Optionee shall not be required
for any amendment made under Subsection 4(e) above.
(5) Administration.
--------------
(a) Director Plan. The grant of Options pursuant to the
Director Plan will be pursuant to the formula as set forth in Section 2(d)
above. The Board of Directors of the Company may make such interpretation and
construction of the Director Plan as necessary from time to time in its sole
discretion, such interpretation and construction of the Director Plan to be
final, binding and conclusive.
(b) Key Employee Plan. With respect to the Key Employee Plan,
the Board of Directors shall appoint a Stock Option Committee composed of two or
more of its directors to operate and administer the Key Employee Plan. The Stock
Option Committee is referred to herein as the "Committee."
(c) Meetings. The Committee shall hold meetings at such times
and places as it may determine. Acts approved at a meeting by a majority of the
members of the Committee or acts approved in writing by the unanimous consent of
the members of the Committee shall be the valid acts of the Committee.
(d) Discretion of Committee. The Committee shall from time to
time at its discretion grant Options pursuant to the terms of the Key Employee
Plan, except as otherwise provided in Section 2(c) herein. Except as otherwise
provided in Section 2(c) herein, the Committee shall have plenary authority to
determine the Optionees to whom and the times at which Options shall be granted,
the number of Option Shares to be covered by such Options and the price and
other terms and conditions thereof, including a specification with respect to
whether an Option is intended to be an ISO, subject, however, to the express
provisions of the Key Employee Plan and compliance with Rule 16b-3(d) of the
Exchange Act. In making such determinations the Committee may take into account
the nature of the Optionee's services and responsibilities, the Optionee's
present and potential contribution to the Company's success and such other
factors as it may deem relevant. The interpretation and construction by the
Committee of any provision of the Key Employee Plan or of any Option granted
under it shall be final, binding and conclusive.
(e) No Liability. No member of the Board of Directors or the
Committee shall be personally liable for any action or determination made in
good faith with respect to the
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<PAGE>
Key Employee Plan, the Director Plan or any Option thereunder. No member of the
Committee shall be liable for any act or omission of any other member of the
Committee or for any act or omission on his own part, including but not limited
to the exercise of any power and discretion given to him under the Key Employee
Plan, except those resulting from (i) any breach of such member's duty of
loyalty to the Company or its stockholders, (ii) acts or omissions not in good
faith or involving intentional misconduct or a knowing violation of law or (iii)
any transaction from which the member derived an improper personal benefit.
(f) Indemnification. In addition to such other rights of
indemnification as he may have as a member of the Board of Directors or the
Committee, and with respect to the administration of the Plan and the granting
of Options under it, each member of the Board of Directors and of the Committee
shall be entitled without further action on his part to be indemnified by the
Company for all expenses (including but not limited to reasonable attorneys'
fees and expenses, the amount of judgment and the amount of approved settlements
made with a view to the curtailment of costs of litigation, other than amounts
paid to the Company itself) reasonably incurred by him in connection with or
arising out of any action, suit or proceeding with respect to the administration
of the Plan or the granting of Options under it in which he may be involved by
reason of his being or having been a member of the Board of Directors or the
Committee, whether or not he continues to be such member of the Board of
Directors or the Committee at the time of the incurring of such expenses;
provided, however, that such indemnity shall not include any expenses incurred
by such member of the Board of Directors or Committee: (i) in respect of matters
as to which he shall be finally adjudged in such action, suit or proceeding to
have been guilty of gross negligence or willful misconduct in the performance of
his duties as a member of the Board of Directors or the Committee; or (ii) in
respect of any matter in which any settlement is effected in an amount in excess
of the amount approved by the Company on the advice of its legal counsel; and
provided further that no right of indemnification under the provisions set forth
herein shall be available to or accessible by any such member of the Committee
or the Board of Directors unless within five (5) days after institution of any
such action, suit or proceeding he shall have offered the Company in writing the
opportunity to handle and defend such action, suit or proceeding at its own
expense. The foregoing right of indemnification shall inure to the benefit of
the heirs, executors or administrators of each such member of the Board of
Directors or the Committee and shall be in addition to all other rights to which
such member of the Board of Directors or the Committee would be entitled to as a
matter of law, contract or otherwise.
(6) Exercise.
--------
(a) No Exercise Within Six Months. No Option shall be
exercisable prior to the date which is at least six months after the Grant Date.
(b) Notice. No Option shall be deemed to have been exercised
prior to the receipt by the Company of written notice of such exercise and of
payment in full of the Option Price for the Option Shares to be purchased. Each
such notice shall specify the number of
-8-
<PAGE>
Option Shares to be purchased and shall satisfy the securities law requirements
set forth in this Section 6.
(c) Restricted Stock. Each exercise notice shall (unless the
Option Shares are covered by a then current registration statement or a
Notification under Regulation A under the Securities Act of 1933, as amended
(the "Securities Act")), contain the Optionee's acknowledgment in form and
substance satisfactory to the Company that (i) such Option Shares are being
purchased for investment and not for distribution or resale (other than a
distribution or resale which, in the opinion of counsel satisfactory to the
Company, may be made without violating the registration provisions of the
Securities Act) and, in the case of an ISO, the Option Shares may not be sold
within one year of exercise or two years from the Grant Date in order to
maintain the ISO status of the Option; (ii) the Optionee has been advised and
understands that (A) the Option Shares have not been registered under the
Securities Act and are "restricted securities" within the meaning of Rule 144
under the Securities Act and are subject to restrictions on transfer and (B) the
Company is under no obligation to register the Option Shares under the
Securities Act or to take any action which would make available to the Optionee
any exemption from such registration, (iii) such Option Shares may not be
transferred without compliance with all applicable federal and state securities
laws, and (iv) an appropriate legend referring to the foregoing restrictions on
transfer and any other restrictions imposed under the Option Documents may be
endorsed on the certificates. Notwithstanding the above, should the Company be
advised by counsel that the issuance of Option Shares upon the exercise of an
Option should be delayed pending (A) registration under federal or state
securities laws, (B) the receipt of an opinion that an appropriate exemption
therefrom is available, (C) the listing or inclusion of the shares on any
securities exchange or in an automated quotation system or (D) the consent or
approval of any governmental regulatory body whose consent or approval is
necessary in connection with the issuance of such Option Shares, the Company may
defer the exercise of any Option granted hereunder until either such event in A,
B, C or D has occurred.
(7) Adjustments on Changes in Common Stock. The aggregate number of
shares of Common Stock as to which Options may be granted under the Director
Plan and the Key Employee Plan, the number of Option Shares covered by each
outstanding Option and the Option Price per Option Share specified in each
outstanding Option shall be appropriately adjusted in the event of a stock
dividend, stock split or other increase or decrease in the number of issued and
outstanding shares of Common Stock resulting from a subdivision or consolidation
of the Common Stock or other capital adjustment (not including the issuance of
Common Stock on the conversion of other securities of the Company which are
convertible into Common Stock) effected without receipt of consideration by the
Company. The Board of Directors shall have the authority to determine the
adjustments to be made under this Section and any such determination by the
Board of Directors shall be final, binding and conclusive, provided that no
adjustment shall be made which will cause an ISO to lose its status as such.
(8) Amendment of the Plan. The Board of Directors may amend the Plan
from time to time in such manner as it may deem advisable. Notwithstanding the
foregoing, (i) with respect to any amendments affecting the Director Plan, the
Plan provisions shall not be amended more
-9-
<PAGE>
than once every six months, and (ii) with respect to any amendments affecting
the Key Employee Plan, any amendment which would change the eligibility of
employees or the class of employees eligible to receive an Option or increase
the maximum number of shares as to which Options may be granted, will only be
effective if such action is approved by the holders of a majority of the
outstanding voting stock of the Company.
(9) Continued Employment. The grant of an Option pursuant to the Plan
shall not be construed to imply or to constitute evidence of any agreement,
express or implied, on the part of the Company or the Bank to retain the
Optionee in the employ of the Company or the Bank, as a member of the Board of
Directors or in any other capacity, whichever the case may be.
(10) Withholding of Taxes. Whenever the Company proposes or is required
to issue or transfer Option Shares, the Company shall have the right to (a)
require the recipient or transferee to remit to the Company an amount sufficient
to satisfy any federal, state and/or local withholding tax requirements prior to
the delivery or transfer of any certificate or certificates for such Option
Shares or (b) take whatever action it deems necessary to protect its interests.
(11) Effective Date. This Stock Option Plan shall be effective as of
the date specified in Section 3 above.
-10-
<PAGE>
EXHIBIT "A"
-----------
Option Documents
----------------
FORM OF STOCK OPTION AGREEMENT - DIRECTOR PLAN
Mr./Ms.
Director Stock Option Agreement
Dear :
In view of your substantial contributions toward the achievement of the
business goals and objectives of First West Chester Corporation (the "Company")
and The First National Bank of West Chester (the "Bank") and the expectation of
your future contributions, the Board of Directors of the Company is pleased to
award you an option to purchase shares of the Common Stock of the Company
pursuant to the First West Chester Corporation 1995 Stock Option Plan (the
"Plan"). A copy of the Plan is attached to this letter agreement as Exhibit "A"
and should be read in conjunction with this letter agreement. [Please be advised
that the Plan and any options granted thereunder will not be effective until a
majority of the stockholders of the Company approve the Plan. The Company
intends to present the Plan for approval at its 1996 Annual Meeting.] This
letter will serve as a stock option agreement between you and the Company. The
Option awarded to you is subject to the following terms.
[1. APPROVAL BY STOCKHOLDERS:
The Option granted hereunder has been granted prior to Plan
approval by the stockholders of the Company and therefore, shall be subject to
such approval. Notwithstanding anything to the contrary herein or in the Plan,
this Option shall not be exercisable until such approval is obtained.]
2. NUMBER OF SHARES:
You are awarded an option ("Option") to purchase a total of
500 shares of the Common Stock of the Company (the "Option Shares").
3. TYPE OF OPTIONS:
The Option awarded to you is an "NQSO" as that term is defined
in the Plan.
A-1
<PAGE>
4. EXERCISE PRICE:
The shares may be purchased upon your exercise of this Option
for the price of $___.__ per share (the "Option Price").
5. DATE OF GRANT OF AWARD:
The grant date of the award of this Option is [Date] (the
"Grant Date").
6. EXERCISE:
Your Option may not be exercised for six months following the
Grant Date. Your Option expires on the tenth anniversary of the Grant Date (with
respect to any number of shares subject to this option not previously
exercised), but may expire earlier upon the first to occur of the following:
(a) The date set by the Board of Directors of the
Company to be an accelerated expiration date after a finding by the Board of
Directors of the Company that a change in the financial accounting treatment for
Options from that in effect on the date the Plan was adopted materially
adversely affects or, in the determination of such Board of Directors, may
materially adversely affect in the foreseeable future, the Company and/or the
Bank;
(b) Expiration of one year from the date your service
with the Company or the Bank terminates for any reason.
7. NOTICE OF EXERCISE AND PAYMENT:
To exercise your Option, you must provide written notice of
the exercise marked for the attention of the Secretary of the Company specifying
the number of Option Shares to be purchased and satisfying the securities law
requirements set forth below. You shall also include payment of the Option Price
with such written notice in cash or bank check, payable to the order of the
Company. Upon receipt of such notice and payment, the Company will issue you a
certificate for the number of Option Shares with respect to which you have
exercised the Option.
8. SECURITIES LAW REQUIREMENTS:
Unless the Option Shares are covered by a then current
registration statement or a notification under Regulation A under the
Securitieis Act of 1933, as amende (the "Securities Act"), each exercise notice
shall contain your acknowledgment in a form and substance satisfactory to the
Company that (a) such Option Shares are being purchased for investment and not
for distribution or resale, (b) you have been advised and understand that (i)
the Option Shares have not been registered under the Securities Act and are
"restricted securities" within the meaning of Rule 144 under the Securities Act
and are subject to restrictions on transfer and (ii) the Company is under no
obligation to register the Option Shares under the Securities Act or to
A-2
<PAGE>
take any action which would make available to the Optionee any exemption from
such registration, (c) such Option Shares may not be transferred without
compliance with all applicable federal and state securities laws, and (d) an
appropriate legend referring to the foregoing restrictions on transfer and any
other restrictions imposed under the Option Documents may be endorsed on the
certificates. Notwithstanding the above, should the Company be advised by
counsel that the issuance of Option Shares upon the exercise of your Option
should be delayed pending (A) registration under federal or state securities
laws, (B) the receipt of an opinion that an appropriate exemption therefrom is
available, (C) the listing or inclusion of the shares on any securities exchange
or in an automated quotation system or (D) the consent or approval of any
governmental regulatory body whose consent or approval is necessary in
connection with the issuance of such Option Shares, the Company may defer the
exercise of your Option until either such event in A, B, C or D has occurred.
9. EXERCISE DATE:
The date on which the Company receives the documents specified
above in complete and otherwise acceptable form and the payments specified above
will be treated as the Exercise Date with respect to your exercise of the stock
option.
10. WITHHOLDING OF TAXES:
Upon exercise of your Option, the Company shall have the
right to (a) require you to remit to the Company an amount sufficient to satisfy
any federal, state and/or local withholding tax requirements prior to the
delivery or transfer of any certificate or certificates for such Option Shares
or (b) take whatever action it deems necessary to protect its interests.
11. NON-ASSIGNABILITY OF OPTION:
Except as provided by the Plan, the Option awarded to you is
exercisable only by you. The Option may not be transferred, assigned, pledged as
security or hypothecated in any way and is not subject to execution, attachment
or similar process. Upon any attempt by you to transfer, assign, pledge,
hypothecated or otherwise dispose of this Option or of any portion thereof or
upon the levy of any execution, attachment or similar process on this Option or
on any portion thereof, the Option awarded to you will immediately expire with
respect to the number of shares not exercised prior to such event.
12. RIGHTS IN SHARES SUBJECT TO OPTION:
You will not be treated as a holder of any of the shares
subject to this Option or of any rights of a holder of such shares unless and
until the shares are issued to you as evidenced by stock certificates.
A-3
<PAGE>
13. AFFECT ON EMPLOYMENT RELATIONSHIP:
This letter is not an employment agreement or service
contract. Therefore, none of the rights awarded to you by this letter affect, in
any way, your service relationship with the Company or the Bank.
14. OPTION AWARDED SUBJECT TO PLAN PROVISIONS:
The Plan provisions take precedence over the provisions of
this letter agreement. Therefore, in the case of any inconsistency between any
provision of this letter agreement and any provision of the Plan in effect on
the Grant Date, the provision of the Plan will control.
15. COUNTERPARTS:
This letter agreement may be executed in one or more
counterparts each of which shall be deemed an original and all of which shall be
deemed one and the same agreement.
If you accept the Option award evidenced by this letter agreement,
subject to the terms stated above, you should date and sign the enclosed copy of
this letter in the spaces indicated and return it to the Company marked for the
attention of the Secretary.
First West Chester Corporation
By:___________________________
Chairman of the Board
I acknowledge that I have read this letter agreement and agree to accept the
stock option award evidenced by it according to the terms set forth in such
letter agreement.
[ Name of Grantee ]
- -------------------------------- -------------------
Signature Date
A-4
<PAGE>
FORM OF STOCK OPTION AGREEMENT - KEY EMPLOYEE PLAN
INCENTIVE STOCK OPTION ("ISO")
Mr./Ms.
Key Employee Stock Option Agreement
Dear :
In view of your substantial contributions toward the achievement of the
business goals and objectives of First West Chester Corporation (the "Company")
and The First National Bank of West Chester (the "Bank") and the expectation of
your future contributions, the Board of Directors of the Company is pleased to
award you an option to purchase shares of the Common Stock of the Company
pursuant to the First West Chester Corporation 1995 Stock Option Plan (the
"Plan"). A copy of the Plan is attached to this letter agreement as Exhibit "A"
and should be read in conjunction with this letter agreement. [Please be advised
that the Plan and any options granted thereunder will not be effective until a
majority of the stockholders of the Company approve the Plan. The Company
intends to present the Plan for approval at its 1996 Annual Meeting.] This
letter will serve as a stock option agreement between you and the Company. The
Option awarded to you is subject to the following terms.
[1. APPROVAL BY STOCKHOLDERS:
The Option granted hereunder has been granted prior to Plan
approval by the stockholders of the Company and therefore, shall be subject to
such approval. Notwithstanding anything to the contrary herein or in the Plan,
this Option shall not be exercisable until such approval is obtained.]
2. NUMBER OF SHARES:
You are awarded an option ("Option") to purchase a total of
____ shares of the Common Stock of the Company (the "Option Shares").
3. TYPE OF OPTIONS:
The Option awarded to you is an Incentive Stock Option or ISO
as such terms are defined in the Plan.
A-5
<PAGE>
4. EXERCISE PRICE:
The shares may be purchased upon your exercise of this Option
for the price of $___.__ per share (the "Option Price").
5. DATE OF GRANT OF AWARD:
The grant date of the award of this Option is [Date] (the
"Grant Date").
6. EXERCISE:
Your Option may not be exercised for six months following the
Grant Date. Your Option expires on the tenth anniversary of the Grant Date (with
respect to any number of shares subject to this option not previously
exercised), but may expire earlier upon the first to occur of the following:
(a) Five years from the Grant Date if, on such date
you own, directly or by attribution, shares possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or the Bank);
(b) The date set by the Board of Directors of the
Company to be an accelerated expiration date after a finding by the Board of
Directors of the Company that a change in the financial accounting treatment for
Options from that in effect on the date the Plan was adopted materially
adversely affects or, in the determination of such Board of Directors, may
materially adversely affect in the foreseeable future, the Company and/or the
Bank;
(c) Expiration of one year from the date your
employment with the Company or the Bank terminates other than due to
circumstances described by Subsection (d), below, provided that this Option may
cease to be an ISO, if it would otherwise qualify as an ISO under Section 422 of
the Code, if not exercised within three months from the date your employment
with the Company or the Bank terminates;
(d) A finding by the Committee, after full
consideration of the facts presented on behalf of both the Company and you, that
you have been discharged from employment with the Company or the Bank for Cause
(as defined in the Plan). In the event of a finding that you have been
discharged for Cause, in addition to immediate termination of the Option, you
shall automatically forfeit all Option Shares for which the Company has not yet
delivered the share certificates upon refund of the Option Price; or
(e) The Committee can accelerate the expiration date
in the event of a "Change in Control" (as defined in the Plan), provided the
Committee gives you written notice at least thirty (30) days before the date so
fixed.
A-6
<PAGE>
7. NOTICE OF EXERCISE AND PAYMENT:
To exercise your Option, you must provide written notice of
the exercise marked for the attention of the Secretary of the Company specifying
the number of Option Shares to be purchased and satisfying the securities law
requirements set forth below. You shall also include payment of the Option Price
with such written notice in cash or bank check, payable to the order of the
Company. Upon receipt of such notice and payment, the Company will issue you a
certificate for the number of Option Shares with respect to which you have
exercised the Option.
8. SECURITIES LAW REQUIREMENTS:
Unless the Option Shares are covered by a then current
registration statement or a notification under Regulation A under the
Securitieis Act of 1933, as amende (the "Securities Act"), each exercise notice
shall contain your acknowledgment in a form and substance satisfactory to the
Company that (a) such Option Shares are being purchased for investment and not
for distribution or resale, (b) you have been advised and understand that (i)
the Option Shares have not been registered under the Securities Act and are
"restricted securities" within the meaning of Rule 144 under the Securities Act
and are subject to restrictions on transfer and (ii) the Company is under no
obligation to register the Option Shares under the Securities Act or to take any
action which would make available to the Optionee any exemption from such
registration, (c) such Option Shares may not be transferred without compliance
with all applicable federal and state securities laws, and (d) an appropriate
legend referring to the foregoing restrictions on transfer and any other
restrictions imposed under the Option Documents may be endorsed on the
certificates. Notwithstanding the above, should the Company be advised by
counsel that the issuance of Option Shares upon the exercise of your Option
should be delayed pending (A) registration under federal or state securities
laws, (B) the receipt of an opinion that an appropriate exemption therefrom is
available, (C) the listing or inclusion of the shares on any securities exchange
or in an automated quotation system or (D) the consent or approval of any
governmental regulatory body whose consent or approval is necessary in
connection with the issuance of such Option Shares, the Company may defer the
exercise of your Option until either such event in A, B, C or D has occurred.
9. EXERCISE DATE:
The date on which the Company receives the documents specified
above in complete and otherwise acceptable form and the payments specified above
will be treated as the Exercise Date with respect to your exercise of the stock
option.
10. WITHHOLDING OF TAXES:
Upon exercise of your Option, the Company shall have the
right to (a) require you to remit to the Company an amount sufficient to satisfy
any federal, state and/or local withholding tax requirements prior to the
delivery or transfer of any certificate or certificates for such Option Shares
or (b) take whatever action it deems necessary to protect its interests.
A-7
<PAGE>
11. NON-ASSIGNABILITY OF OPTION:
Except as provided by the Plan, the Option awarded to you is
exercisable only by you. The Option may not be transferred, assigned, pledged as
security or hypothecated in any way and is not subject to execution, attachment
or similar process. Upon any attempt by you to transfer, assign, pledge,
hypothecated or otherwise dispose of this Option or of any portion thereof or
upon the levy of any execution, attachment or similar process on this Option or
on any portion thereof, the Option awarded to you will immediately expire with
respect to the number of shares not exercised prior to such event.
12. RIGHTS IN SHARES SUBJECT TO OPTION:
You will not be treated as a holder of any of the shares
subject to this Option or of any rights of a holder of such shares unless and
until the shares are issued to you as evidenced by stock certificates.
13. AFFECT ON EMPLOYMENT RELATIONSHIP:
This letter is not an employment agreement or service
contract. Therefore, none of the rights awarded to you by this letter affect, in
any way, your employment or service relationship with the Company or the Bank.
14. OPTION AWARDED SUBJECT TO PLAN PROVISIONS:
The Plan provisions take precedence over the provisions of
this letter agreement. Therefore, in the case of any inconsistency between any
provision of this letter agreement and any provision of the Plan in effect on
the Grant Date, the provision of the Plan will control.
15. COUNTERPARTS:
This letter agreement may be executed in one or more
counterparts each of which shall be deemed an original and all of which shall be
deemed one and the same agreement.
A-8
<PAGE>
If you accept the Option award evidenced by this letter agreement,
subject to the terms stated above, you should date and sign the enclosed copy of
this letter in the spaces indicated and return it to the Company marked for the
attention of the Secretary.
First West Chester Corporation
By:___________________________
Chairman of the Board
I acknowledge that I have read this letter agreement and agree to accept the
stock option award evidenced by it according to the terms set forth in such
letter agreement.
[ Name of Grantee ]
- -------------------------------- -------------------
Signature Date
A-9
