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:
|X| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|_| 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:
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|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
---------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<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 16, 1999
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of First
West Chester Corporation (the "Corporation") will be held on Tuesday, March 16,
1999, at 10:00 a.m., at the West Chester Golf and Country Club, 111 West
Ashbridge Street, West Chester, Pennsylvania, for consideration of and action by
the holders of the Corporation's common stock ("Common Stock") upon the
following matters:
1. The election of three Class III directors, with each director to
serve until the 2002 Annual Meeting of Shareholders and until the election and
qualification of his respective successor;
2. The approval of certain amendments to the Corporation's 1995 Stock
Option Plan to grant additional options to non-employee directors of the
Corporation;
3. The approval of an amendment to the Corporation's Articles of
Incorporation to increase the number of authorized shares of the Corporation;
4. The ratification of the appointment of Grant Thornton, LLP as the
Corporation's independent public accountants for the year ending December 31,
1999; 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 3,
1999, 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,
1998, 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.
<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 19, 1999, to each shareholder of
record of First West Chester Corporation, a Pennsylvania 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 16, 1999, 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 three Class III directors nominated by the Board of Directors;
(ii) for the approval of certain amendments to the Corporation's 1995 Stock
Option Plan to grant additional options to non-employee directors of the
Corporation; (iii) for the approval of the amendment to the Corporation's
Articles of Incorporation increasing the number of shares of Common Stock, $1.00
par value, the Corporation is authorized to issue; (iv) for the ratification of
the appointment of Grant Thornton, LLP as the Corporation's independent public
accountants for the year ending December 31, 1999; 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.
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.
VOTING SECURITIES OF THE CORPORATION
Only shareholders of record at the close of business on February 3,
1999 (the "Record Date"), are entitled to notice of, and to vote at, the Annual
Meeting. As of the Record Date, there were 4,616,026 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. If a broker holding shares of Common Stock in street name
for the benefit of its customers returns a signed proxy for such shares, the
shares represented by such proxy will be considered present at the Annual
Meeting and will be counted towards a quorum.
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 802,684 shares of Common Stock, representing 17.4% of
the total outstanding shares of the Corporation's Common Stock. Of these shares,
545,476 shares (11.8% of the total outstanding shares) 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 257,208 shares of
Common Stock (5.6% of the total outstanding shares) 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.
<PAGE>
STOCK OWNERSHIP
---------------
The following table sets forth, as of December 31, 1998 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 of the executive officers of the Corporation; (ii) each of the
directors and the nominees for directorship of the Corporation; (iii) each
holder who is the beneficial owner of more than five percent (5%) of the issued
and outstanding shares of Common Stock (other than the Financial Management
Services Department of the Bank); and (iv) all directors and executive officers
of the Corporation as a group. An asterisk (*) appears beside the names of the
persons nominated and proposed for re-election at the Annual Meeting as Class
III directors.
<TABLE>
<CAPTION>
Number of Shares(1)(2) Percentage(3)
---------------------- -------------
NAMED EXECUTIVE OFFICERS
- ------------------------
<S> <C> <C>
Charles E. Swope 185,346 (4) 3.99%
Peter J. D'Angelo 16,694 (5) ---
Kevin C. Quinn 11,847 (6) ---
J. Duncan Smith 15,434 (7) ---
David W. Glarner 14,640 (8) ---
CLASS I DIRECTORS (TERM EXPIRING IN 2000)
- -----------------------------------------
John J. Ciccarone 156,944 (9) 3.39%
Clifford E. DeBaptiste 102,567 (10) 2.22%
J. Carol Hanson 9,142 (11) ---
John B. Waldron 13,840 (12) ---
CLASS II DIRECTORS (TERM EXPIRING IN 2001)
- ------------------------------------------
M. Robert Clarke 13,000 (13) ---
Edward J. Cotter 45,801 (14) ---
David L. Peirce 27,296 (15) ---
Charles E. Swope 185,346 (4) ---
CLASS III DIRECTORS (TERM EXPIRING IN 1999)
- -------------------------------------------
*John A. Featherman, III 34,379 (16) ---
*John S. Halsted 15,982 (17) ---
*Devere Kauffman 30,172 (18) ---
BENEFICIAL OWNER
- ----------------
Jane C. and Lawrence E. MacElree 251,152 (19) 5.44%
7080 Goshen Road
Newtown Square, PA 19073
All directors and executive officers 722,825 15.12%
as a group (20 persons)
- ------------------
<FN>
(1) Shares of Common Stock which are held in the Corporation's retirement
savings plan (the "Retirement Savings Plan") are reported as of
December 31, 1998, the last date for which such information is
available.
<PAGE>
(2) Includes shares that may be acquired within sixty days of December31,
1998 ("Option Shares") through the exercise of stock options.
(3) Percentages are omitted for those owning less than one percent of the
shares of Common Stock outstanding.
(4) Mr. Swope is the Chairman, President and Chief Executive Officer of the
Corporation and the Bank. Of the 185,346 shares shown, Mr. Swope has
sole voting and investment power of 87,132 shares; 15,408 shares are
held by a trust for the benefit of the Swope Foundation, of which Mr.
Swope is President; 5,519 shares are held by Mr. Swope's minor son;
23,097 shares are held by Mr. Swope's wife; 15,662 shares are held in
the Retirement Savings Plan which has sole voting power with respect to
such shares; 10,528 shares are held in an IRA account; and 28,000
Option Shares. 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 104,434
shares of Common Stock held in the Retirement Savings Plan; Mr. Swope
disclaims that he is the beneficial owner of such shares.
(5) Of the 16,694 shares shown, Mr. D'Angelo shares, with his wife, voting
and investment power of 1,202 shares; 1,492 shares are held in the
Retirement Savings Plan; and 14,000 Option Shares.
(6) Of the 11,847 shares shown, Mr. Quinn shares with his mother, voting
and investment power of 200 shares; 1,647 shares are held in the
Retirement Savings Plan which has sole voting power with respect to
such shares; and 10,000 Option Shares.
(7) Of the 15,434 shares shown, Mr. Smith shares, with his wife, voting and
investment power of 196 shares; 1,238 shares are held in the Retirement
Savings Plan which has sole voting power with respect to such shares;
and 14,000 Option Shares.
(8) Of the 14,640 shares shown, Mr. Glarner shares, with his wife, voting
and investment power of 1,048 shares; 1,392 shares are held in the
Retirement Savings Plan; and 12,200 Option Shares.
(9) Of the 156,944 shares shown, Mr. Ciccarone shares, with his wife,
voting and investment power of 149,678 shares; 266 shares are held by
Mr. Ciccarone's wife as custodian for his son; and 7,000 Option Shares.
(10) Of the 102,567 shares shown, Mr. DeBaptiste has sole voting and
investment power of 95,567 shares; and 7,000 Option Shares.
(11) Of the 9,142 shares shown, Ms. Hanson has sole voting and investment
power of 2,142 shares; and 7,000 Option Shares.
(12) Of the 13,840 shares shown, Mr. Waldron shares, with his wife, voting
and investment power of 8,640 shares; sole voting and investment power
of 200 shares; and 5,000 Option Shares.
(13) Of the 13,000 shares shown, Mr. Clarke shares, with his wife, voting
and investment power of 6,000 shares; and 7,000 Option Shares.
(14) Of the 45,801 shares shown, Mr. Cotter has sole voting and investment
power of 2,414 shares; Mr. Cotter's wife has sole voting and investment
power of 21,437 shares; and 7,000 Option Shares. Mr. Cotter has 14,950
shares in trust.
(15) Of the 27,296 shares shown, Mr. Peirce has sole voting and investment
power of 18,296 shares; and 7,000 Option Shares. Mr. Peirce has 2,000
shares in trust.
<PAGE>
(16) Of the 34,379 shares shown, Mr. Featherman has sole voting and
investment power of 10,320 shares; 4,000 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; Mr.
Featherman shares voting and investment power of 6,143 shares with his
wife; 2,064 shares are held by Mr. Featherman as custodian for his
daughter; Mr. Featherman's wife has sole voting and investment power of
1,857 shares; and 7,000 Option Shares. Mr. Featherman has 2,995 in
trust.
(17) Of the 15,982 shares shown, Mr. Halsted has sole voting and investment
power of 5,782 shares; 2,400 shares are owned by the Gawthrop,
Greenwood & Halsted Profit Sharing Plan, of which Mr. Halsted is a
trustee; 400 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 400 shares; and 7,000
Option Shares.
(18) Of the 30,172 shares shown, Mr. Kauffman has sole voting and investment
power of 12,572 shares; Mr. Kauffman has power of attorney over 10,600
shares owned by his wife and 7,000 Option Shares.
(19) Of the 251,152 shares shown, Mrs. MacElree has sole voting and
investment power of 209,458 and Mr. MacElree has sole voting and
investment power of 41,694 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.
</FN>
</TABLE>
GENERAL INFORMATION ABOUT THE BOARD OF DIRECTORS
There were seven (7) meetings of the Board of Directors of the
Corporation during 1998. Each incumbent director, with the exception of Mr.
Kauffman, attended at least 75% of the aggregate of (1) the total number of
meetings of the Board of Directors of the Corporation held during the period in
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 on which such
incumbent served during the period in which such incumbent was a committee
member.
Directors who are not also officers of the Corporation or Bank (each a
"non-employee director") generally receive a fee of $450 for each Board meeting
attended and $300 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 "Plan"), options to purchase shares
of Common Stock are awarded to each director annually through September 30, 1999
according to formulas set forth in the Plan. During 1998, in accordance with the
Plan, each non-employee director received options to purchase 4,000 shares of
Common Stock. Also, each director, including Mr. Swope, received a cash bonus of
$1,000 for 1998.
An amendment to the Plan has been proposed which would modify the
formula for non-employee director awards such that each non-employee director
would receive an option to purchase 4,000 shares of Common Stock on the annual
grant date in 1999. In addition, it is proposed that each non-employee director
receive an option to purchase 1,000 shares of Common Stock upon approval of the
proposal by the shareholders. See "Amendment of the 1995 Stock Option Plan" for
a discussion of the Plan and these proposed amendments.
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. The Board of Directors of the
Bank, however, has a Personnel and Compensation Committee which makes
recommendations to the Boards of Directors of the Bank and the Corporation.
<PAGE>
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 nor 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 2000 Annual Meeting, the Class II Directors are serving a three-year
term until the 2001 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.
The Board of Directors presently consists of eleven directors due to
the resignation of Richard M. Armstrong, a Class III director and Director
Emeritus, in December 1997. Pursuant to the Corporation's Articles and By-Laws,
the remaining members of the Board of Directors have the exclusive authority to
appoint a director to fill the vacancy caused by the resignation of a director.
At the Annual Meeting, three Class III directors are to be elected to
serve until the 2002 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 three nominees receiving the highest number of votes by the holders
of the Common Stock present or represented at the Annual Meeting and entitled to
vote thereat shall be elected as Class III directors. Abstentions will have no
effect on the outcome of the vote for the election of directors. Brokers holding
shares of Common Stock in street name who do not receive voting instructions
from the beneficial owners of such shares may return a signed proxy for such
shares and direct the voting of the shares in accordance with the Board of
Director's recommendation.
The names of the nominees for Class III directors of the Corporation,
their ages and certain other information as of February 1, 1999, is set forth as
follows:
Name Age Position
---- --- --------
John A. Featherman, III 60 Director
John S. Halsted 65 Director
Devere Kauffman 88 Director
Mr. Featherman has been a director of the Corporation since 1985 and a
director of the Bank since 1985. Mr. Featherman is a principal of the law firm
of MacElree, Harvey, Gallagher, Featherman & Sebastian, Ltd. and is a member of
the Board of Directors and Secretary of the Chester County Community Foundation.
Mr. Halsted has been a director of the Corporation since 1991 and a
director of the Bank since 1991. Mr. Halsted is a principal of the law firm of
Gawthrop, Greenwood & Halsted, P.C. and currently serves as solicitor of Chester
County.
Mr. Kauffman has been a director of the Corporation since 1984 and a
director of the Bank since 1968. Mr. Kauffman was formerly a General Partner of
Kauffman's, a department store.
<PAGE>
Recommendation of the Board of Directors
The Board of Directors has unanimously recommended the slate of
nominees for election as Class III directors. The Board of Directors recommends
that the shareholders vote FOR the election of such slate of nominees as Class
III directors of the Board of Directors of the Corporation.
DIRECTORS AND EXECUTIVE OFFICERS
Set forth below 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:
DIRECTORS
John J. Ciccarone, 70, has been Director of the Corporation and the Bank since
1987. He is President of Omega Industries, Inc., a real estate development
company.
M. Robert Clarke, 52, has been Director of the Corporation and the Bank since
1993. He is President of Clarke, Nicolini & Associates, Ltd. Mr. Clarke is a
Certified Public Accountant.
Edward J. Cotter, 78, has been Director and Secretary of the Corporation since
1984 and Director of the Bank since 1972. He is currently retired. He was
previously Executive Director of Barclay Friends Hall Corporation, a long term
care facility.
Clifford E. DeBaptiste, 74, has been Director of the Corporation since 1984 and
Director of the Bank since 1975. He is Chairman, Supervisor and Director of
DeBaptiste Funeral Homes, Inc. He also serves as President of Perry Funeral
Homes, Inc.
John A. Featherman, III, 60, see "Election of Directors" for additional
biographical information.
John S. Halsted, 65, see "Election of Directors" for additional biographical
information.
J. Carol Hanson, 51, has been Director of the Corporation and Director of the
Bank since 1995. She is Executive Director of Barclay Friends Hall Corporation,
a long term care facility.
Devere Kauffman, see "Election of Directors" for additional biographical
information.
David L. Peirce, 70, has been Director of the Corporation since 1984 and
Director of the Bank since 1973. He is currently retired. He was previously
President and CEO of Denney-Reyburn Company, a paper converter.
John B. Waldron, 68, has been Director of the Corporation since 1984 and
Director of the Bank since 1981. He is an Associate of Arthur Hall Insurance
Group and former owner of John B. Waldron Insurance Agency.
Charles E. Swope, 68, has been Director, President and CEO of the Corporation
since 1984. He has also served as Chairman of the Board of the Corporation since
1987. Mr. Swope served the Bank as Director since 1972, President since 1973,
CEO since 1978, and Chairman since 1987.
EXECUTIVE OFFICERS
Charles E. Swope, 68, has been Director, President and CEO of the Corporation
since 1984. See "Election of Directors" for additional biographical information.
<PAGE>
Peter J. D'Angelo, 53, became Executive Vice President of the Bank in 1997. He
had served the Bank as Senior Vice President-Commercial Loan Department and
Cashier since 1996 and as Vice President of the Bank since 1986.
Kevin C. Quinn, 44, became Executive Vice President of the Bank in 1998. He had
served as Senior Vice President-Financial Management Services Department since
1990. He has also served as Assistant Treasurer of the Corporation since 1986.
J. Duncan Smith, 40, became Executive Vice President of the Bank in 1998. He had
served the Bank as Senior Vice President-Finance and Accounting since 1996 and
Vice President and Comptroller of the Bank since 1993. He has also served as
Treasurer of the Corporation since 1993.
David W. Glarner, 47, became Senior Vice President-Mortgage Lending Department
of the Bank in 1996. He had served the Bank as Vice President since 1983.
James K. Gallagher, 62, became Senior Vice President-Leasing Department of the
Bank in 1998. He had served the Bank as Vice President since 1988.
Linda M. Hicks, 45, became Senior Vice President-Financial Management Services
Department of the Bank in 1998. She had served as Vice President since 1990.
Maryann L. Himes, 52, became Senior Vice President-Executive Department of the
Bank in 1998. She had served the Bank as Vice President since 1996 and Assistant
to the President since 1988. She has also served as Assistant Secretary of the
Corporation since 1984.
Richard W. Kaufmann, 51, became Senior Vice President-Commercial Loan Department
of the Bank in 1998. He had served the Bank as Vice President since 1996. Prior
to joining the Bank, he served as Vice President of the Philadelphia Business
Banking Group of Meridian Bank from 1990 to 1995.
William D. Wagenmann, Jr., 55, became Senior Vice President-Human Resources of
the Bank in 1997. Prior to joining the Bank, he served as Director of Human
Resources for Morgan, Lewis & Bockius from 1994 to 1997 and of Dechert, Price &
Rhoads from 1991 to 1994.
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.
EXECUTIVE COMPENSATION
Compensation
The following table sets forth a summary of compensation paid or
accrued by the Corporation for services rendered for each of the last three
fiscal years by the Chief Executive Officer and the four most highly compensated
executive officers of the Corporation or the Bank (whose salary and bonus
exceeded $100,000 in 1998) (the "Named Executive Officers") for each of the last
three fiscal years:
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term
------------------- ---------
(A) (B) (C) (D) (E) (F) (G)
Name and Other Annual Stock All Other
Principal Salary Bonus Compensation Options Compensation
Position Year ($)(1) ($)(2) ($)(3) (#)(4) ($)(5)
-------- ---- ----- ---- ----- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Charles E. Swope, 1998 $310,000 $46,309 -- 16,000 $64,856
President, CEO and 1997 288,750 32,394 -- 12,000 62,111
Chairman of the Corp. and 1996 275,000 29,059 -- 8,000 61,220
the Bank
Peter J. D'Angelo 1998 110,000 10,339 -- 8,000 14,231
Exec. Vice President of 1997 85,555 8,077 -- 6,000 10,526
the Bank 1996 75,555 9,304 -- 4,000 9,478
Kevin C. Quinn, 1998 110,000 11,298 -- 8,000 13,972
Exec. Vice President 1997 95,000 10,927 -- 6,000 11,683
Of the Bank 1996 88,200 10,662 -- 4,000 11,130
J. Duncan Smith, 1998 110,000 10,614 -- 8,000 13,720
Treasurer of the Corp.; 1997 91,163 10,779 -- 6,000 11,106
Exec. Vice President of 1996 86,822 10,522 -- 4,000 10,577
the Bank
David W. Glarner 1998 100,000 10,286 -- 5,000 11,778
Senior Vice President of 1997 85,555 8,077 -- 6,000 9,351
the Bank 1996 75,555 9,304 -- 4,000 8,386
__________________
<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 1999, Mr. Swope was paid a bonus of $31,000 and Messrs.
D'Angelo, Quinn, and Smith were paid $5,500 respectively, and Mr.
Glarner was paid $5,000 based upon the performance of the Corporation
and the Bank in 1998.
(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 of the specified fiscal year pursuant to the Plan. See
"Stock Options."
(5) Amounts shown for 1998 include: (i) contributions to a qualified
defined contribution plan for the benefit of Messrs. Swope, D'Angelo,
Quinn, Smith, and Glarner of $8,250, $5,700, $5,700, $5,700 and $5,100,
respectively; (ii) contributions to non-qualified, supplemental
retirement plans for the benefit of Messrs. Swope, D'Angelo, Quinn,
Smith, and Glarner of $18,300, $3,300, $3,300, $3,300 and $3,000,
respectively; (iii) matching contributions to the 401(k) plan accounts
of Messrs. Swope, D'Angelo, Quinn, Smith, and Glarner of $6,045,
<PAGE>
$4,125, $4,125, $4,125 and $2,250, respectively; (iv) payments of
$8,341, $1,106, $847, $595 and $1,428 for Messrs. Swope, D'Angelo,
Quinn, Smith, and Glarner, 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, 1998, to each of the Named
Executive Officers of the Corporation:
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
Potential Realizable Value
At Assumed Annual Rates
Individual Grants Of Stock Price Appreciation
---------------------------
% of Total
Options Market
Number Granted to Price
of Employees on
Options in Exercise Date of Expiration
Name Granted FiscalYear Price Grant Date 5% 10%
- ---- ------- ---------- --------- -------- ---------- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Charles E. Swope 16,000 8.3% $17.69 $17.69 9/30/08 $178,002 $451,093
Peter J. D'Angelo 8,000 4.1% 17.69 17.69 9/30/08 89,001 225,546
Kevin C. Quinn 8,000 4.1% 17.69 17.69 9/30/08 89,001 225,546
J. Duncan Smith 8,000 4.1% 17.69 17.69 9/30/08 89,001 225,546
David W. Glarner 5,000 2.6% 17.69 17.69 9/30/08 55,626 140,967
- ---------------------
<FN>
(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.
</FN>
</TABLE>
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, 1998:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Shares Acquired Value Options at Fiscal Year End Fiscal Year End (1)
Name on Exercise Realized Vested Unvested Unvested Vested
- ---- ----------- -------- ------ -------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
Charles E. Swope -- -- 44,000 -- $252,800 --
Peter J. D'Angelo -- -- 22,000 -- 126,400 --
Kevin C. Quinn 4,000 $47,360 18,000 -- 81,040 --
J. Duncan Smith -- -- 22,000 -- 126,400 --
David W. Glarner 1,200 $14,808 17,200 -- 99,058 --
<FN>
(1) Based upon the average bid and asked prices for the Common Stock on
December 31, 1998 of $20.00, as quoted by F.J. Morrissey & Co., less
the exercise price.
</FN>
</TABLE>
<PAGE>
Employment Agreement
Effective January 1, 1998, Mr. Swope, the Corporation and the Bank
(collectively referred to in this section as the "Corporation") entered into a
new employment agreement (the "Agreement") with the effect of extending the term
of a previous employment agreement between Mr. Swope and the Corporation. The
Agreement is for a period of ten years, terminating on December 31, 2007, unless
terminated earlier in accordance with the Agreement. Pursuant to the Agreement,
Mr. Swope will serve as the President and Chief Executive Officer of the
Corporation and the Bank in 1999. 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 and benefits as
determined by the Board of Directors from time to time, but which may not be
materially different from that which he received as of the date of the
Agreement. 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 continue 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
from receipt of notice of such breach 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.
Report on Executive Compensation
As members of the Personnel and Compensation Committee and the Stock
Option Committee (collectively referred to herein as the "Committee"), it is our
duty to administer the Corporation's various employee benefit plans, including
its 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 of the Corporation all aspects of
compensation for the executive officers of the Corporation and the Bank.
The Committee is composed of two independent non-employee directors and
one employee director, Charles E. Swope, Chairman of the Board and President.
The Committee is responsible for setting and administering the salaries and the
annual bonus plans that govern the compensation paid to all executive officers
of the Corporation and the Bank, except that the full Board of Directors is
responsible for ratifying the salaries and bonuses paid to the executive
officers.
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.
The compensation program is intended to motivate and retain the key
management talent needed in a highly competitive area. The base salaries for all
executive officers were set at levels intended to accomplish this goal.
Mr. Swope's base salary was set at $310,000 effective January 1, 1998.
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
his rights under an Employment Agreement with the Corporation and the Bank which
is described elsewhere in this Proxy Statement. This Employment Agreement was
extended by the Board for a period of ten years to terminate on December 31,
<PAGE>
2007, unless terminated earlier in accordance with the Employment Agreement. Mr.
Swope did not participate in the deliberation of the Committee regarding its
recommendation to the Board of Directors for his compensation. Mr. Swope did
participate in the deliberation of the Board of Directors regarding executive
officer compensation; however, Mr. Swope abstained from vote on his own salary.
The Corporation's Incentive Plan for 1998 placed emphasis on the
Corporation's performance, including, but not limited to, improvement in return
on assets, return on equity, loan growth, average deposit growth, and the
efficiency ratio. Based upon these factors, the Committee awarded cash bonuses
to each executive officer in 1998 equal to 5% of such officer's annual base
compensation and to the Chief Executive Officer equal to 10% of such officer's
annual base compensation. These bonuses were paid in 1999. Mr. Swope's bonus for
1998, which was paid in 1999, was $31,000. In addition, during 1998, Mr. Swope
was granted Stock Options for 16,000 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). Mr. Swope continues to provide
leadership to support the aggressive business strategy of the Corporation which
is designed to enhance the overall performance and profitability of the
Corporation and his compensation recognizes his ability to enhance the long-term
value to the shareholders.
Personnel and Compensation Committee of the Bank
David L. Peirce, Chairman
John A. Featherman
Charles E. Swope
Compensation Committee Interlocks and Insider Participation
During 1998, the Personnel and Compensation Committee of the Bank
consisted of Messrs. Peirce, Featherman and Swope. No member of the Compensation
Committee, other than Mr. Swope, 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 1998 and will be retained again during 1999.
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 1998, all Section 16(a) filing requirements
applicable to its officers, directors and greater than ten-percent beneficial
owners were timely met.
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 1998. All loans and commitments to lend money
extended to such parties were made on substantially the same terms, including
interest rates and collateral, as those prevailing 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.
<PAGE>
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 1998
and will again be retained in 1999.
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,
1994, 1995, 1996, 1997 and 1998, for: (i) the Corporation, (ii) the NASDAQ
Market Value Weighted Index (the "NASDAQ Index"), and (iii) a published industry
index, the SNL $250-$500 Million Bank Asset-Size Index (the "SNL Peer Group
Index"). The comparison assumes $100 was invested on December 31, 1993, in the
Corporation's Common Stock and in each of the foregoing indices and reinvestment
of dividends.
In prior years, the Corporation's Stock Price Performance Graph
compared the Corporation's stock price performance to the NASDAQ Index and a
peer group index comprised of thirteen Pennsylvania and New Jersey Banks with
total assets of between $300 million and $500 million whose stock is traded on
the NASDAQ market (the "Selected Bank Index"). During 1998, four of the thirteen
banks comprising the Selected Bank Index merged into or were acquired by other
organizations. Consequently, the Corporation has decided to use the SNL Peer
Group Index for its stock price comparisons in the future. The Corporation
believes the SNL Peer Group Index reflects the stock price performance of banks
that are comparable in size to the Corporation and will provide an appropriate
peer group comparison of the Corporation's stock price performance. The
following graph includes a comparison to the stock price performance of the nine
banks remaining in the Selected Bank Index.
[GRAPH OMITTED]
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
First West Chester Corp.... 100.00 103.64 143.80 160.43 236.28 304.02
NASDAQ Index............... 100.00 97.75 138.26 170.01 208.58 293.21
SNL Peer Group Index....... 100.00 107.90 145.61 189.07 327.00 292.84
Selected Bank Index........ 100.00 103.28 142.89 176.08 335.18 292.02
</TABLE>
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 Selected Bank Index currently consists of Broad National Bancorp;
Bryn Mawr Bank Corporation; Community Banks, Inc.; Progress Financial
Corporation; Raritan Bancorp. Inc.; Royal Bancshares of Pennsylvania; SunBancorp
Inc.; TF Financial Corporation; and WVS Financial Corporation. In prior years,
this index also included BCB Financial Services; Carnegie Bancorp.; First
Shenango Corp.; and Heritage Bancorp Inc.
<PAGE>
AMENDMENT OF THE 1995 STOCK OPTION PLAN
Description of the Proposed Amendments
The Corporation's Board of Directors has approved a proposal to amend
the Director Plan under the Corporation's 1995 Stock Option Plan (also referred
to as the "Director Plan") subject to the approval of the holders of a majority
of the outstanding voting stock of the Corporation. The amendment would modify
the formula by which options are awarded to directors to increase the annual
award to each eligible non-employee director from an option to purchase 3,000
shares to an option to purchase 4,000 shares, and award options to purchase
1,000 shares of the corporation's Common Stock to each eligible non-employee
director upon approval of such amendment by the Corporation's stockholders. In
addition, the number of shares allocated for award to directors would be
increased from 144,000 to 154,000 shares and, consequently, the number of shares
allocated for award to key employees would be reduced from 663,500 to 653,500
shares. The following information provides a summary of the Director Plan as it
is proposed to be amended. All share numbers used in this discussion have been
adjusted to give effect for the two stock dividends paid during the period the
Plan has been in effect.
Description of the Plan
The purpose of the Plan is to provide additional incentive to directors
to enter into or remain in the service of the Corporation or the Bank. 154,000
shares are reserved for issuance under the Director Plan. Since the inception of
the Director Plan, the Corporation has awarded options to purchase 106,000
shares to non-employee directors including the additional 1,000 shares to be
granted upon the approval of the proposed amendments by the Corporation's
shareholders.
The Director Plan provides for the automatic award of options to each
non-employee director who is serving as such on each of five annual grant dates
through September 30, 1999 (each a "Grant Date") (the "Annual Director
Options"). The options awarded on September 30, 1999 will entitle the holder to
purchase 4,000 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 44,000
divided by the number of non-employee directors. The Board of Directors,
however, has sole discretion, if it determines such action to be in the best
interests of the Corporation, to elect not to grant all or any portion of the
options scheduled to be granted on the annual Grant Date or may grant all or any
portion of such options subject to terms and conditions (including vesting
schedules for the exercisability of such options) which are not inconsistent
with the other terms of the Plan. In addition, the Director Plan as amended
would award options to purchase 1,000 shares of Common Stock to each
non-employee director on March 16, 1999 (each an "Additional Option"). 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 must 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 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 in good faith, in the case of an option granted under 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 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) 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 (c)
either three months or one year (depending upon the Grant Date) following
termination of the Optionee's service with the Corporation.
<PAGE>
During an Optionee's lifetime, such option may only be exercised by the
Optionee. 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.
Options granted under the Director Plan are not qualified for treatment
as "incentive stock options" under Section 422 of the Internal Revenue Code.
Effect of Proposed Amendments
The effect of the proposed amendments will be (i) to award options to
purchase 1,000 shares of stock to each incumbent non-employee director upon
approval of the amendments (the "Additional Options"); (ii) to increase the
number of shares of stock subject to the Annual Director Options which will be
awarded on the Grant Date in 1999, from 3,000 shares to 4,000 shares, on such
Grant Date; and (iii) to increase the number of shares allocated for award to
directors from 144,000 to 154,000 shares and decrease the number of shares
allocated for award to key employees from 663,000 to 653,500 shares.
Set forth below is a table showing the increase in the potential
realizable value of benefits that will be received in 1999 by the non-executive
directors, Named Executive Officers and other officers of the Corporation or
Bank pursuant to (i) the Additional Options and (ii) the increased number of
Annual Director Options which would be awarded in 1999 if the amendments to the
Plan are adopted.
<PAGE>
<TABLE>
<CAPTION>
Increase in Potential Realizable Value
Number of At Assumed Annual Rates
Name and Position Option Shares Of Stock Price Appreciation
- ----------------- ------------- -------------------------------------
For Option Term (1)
-------------------
5% 10%
---- ----
<S> <C> <C> <C>
Non Executive Director
Group 20,000 $222,500 $563,860
Named Executive Officers 0 0 0
Executive Officer Group 0 0 0
Non-Executive Officer
Employee Group 0 0 0
<FN>
(1) The increase in potential realizable value assumes that (i) each of the
current ten non-employee directors receive an Additional Option to
purchase 1,000 shares and an additional Annual Director Option to
purchase 1,000 shares, each with an assumed exercise price equal to the
average bid and asked prices for the Common Stock on December 31, 1998
of $20.00; and (ii) 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 option.
</FN>
</TABLE>
Approval of the proposed amendments to the Plan requires the
affirmative votes of the holders of a majority of the shares present in person
or by proxy and entitled to vote at the 1999 Annual Meeting. Abstentions will
have the same effect on the outcome of such vote as a "no" vote. If a broker
holding shares of Common Stock for its customers in street name returns a signed
proxy but does not receive voting instructions from the beneficial owners of
such shares and does not have discretionary authority to vote such shares, the
shares will not be voted and will have the same effect on the outcome of such
vote as a "no" vote.
Recommendation of the Board of Directors
<PAGE>
The Board of Directors recommends that the shareholders vote FOR the
approval of the amendment of the Plan as described in this Proxy Statement.
AMENDMENT OF THE CORPORATION'S
ARTICLES OF INCORPORATION
The Corporation's Board of Directors has unanimously approved a
proposal to amend the Corporation's Articles of Incorporation (the "Amendment")
subject to the approval of the holders of a majority of the outstanding shares
of Common Stock of the Corporation.
The Amendment increases the number of shares of Common Stock that the
Corporation is authorized to issue from 5,000,000 shares to 10,000,000 shares.
The Board of Directors believes that approval of the Amendment will provide the
Corporation with additional flexibility for possible future stock dividends,
acquisitions and other corporate purposes. The Corporation has no specific plan
to take such actions at this time, however approval of the Amendment at this
time will enable the Corporation to be in a position to act quickly should it
determine that such actions are in the best interest of the Corporation in the
future.
The Amendment would amend Article 5 of the Corporation's Articles of
Incorporation so that such Article, in its entirety, would read as follows:
"The aggregate number of shares of capital stock
which the Corporation shall have authority to issue
is ten million (10,000,000) shares of common stock
with a par value of $1.00 per share."
Approval of the Amendment requires the affirmative votes of the holders
of a majority of the outstanding shares of Common Stock entitled to vote at the
1999 Annual Meeting. Abstentions will have the same effect on the outcome of
such vote as a "no" vote. If a broker holding shares of Common Stock for its
customers in street name returns a signed proxy but does not receive voting
instructions from the beneficial owners of such shares and does not have
discretionary authority to vote such shares, the shares will not be voted and
will have the same effect on the outcome of such vote as a "no" vote.
<PAGE>
Recommendation of the Board of Directors
The Board of Directors recommends that the shareholders vote FOR the
approval of the Amendment as described in this Proxy Statement.
RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed the firm of Grant Thornton, LLP as
independent public accounts for the year ending December 31, 1999. This
appointment will be submitted to the shareholders for ratification at the 1999
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.
Ratification of this proposal requires the affirmative votes of the
holders of a majority of the shares present in person or by proxy and entitled
to vote at the 1999 Annual Meeting. Abstentions will have the same effect on the
outcome of such vote as a "no" vote. If a broker holding shares of Common Stock
for its customers in street name returns a signed proxy but does not receive
voting instructions from the beneficial owners of such shares and does not have
discretionary authority to vote such shares, the shares will not be voted and
will have the same effect on the outcome of such vote as a "no" vote.
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, 1999.
SHAREHOLDER PROPOSALS
Shareholders intending to submit proposals to be included in the
Company's next Proxy Statement must send their proposal to the Secretary of the
Company at 9 North High Street, West Chester, PA 19380 not later than October
22, 1999. Such proposals must relate to matters appropriate for stockholder
action and be consistent with regulations of the Securities and Exchange
Commission.
Shareholders intending to present proposals at the next annual meeting
of the Company and not intending to have such proposals included in the
Company's next Proxy Statement must send their proposal to the Secretary of the
Company at the address given in the prior paragraph not later than January 5,
2000. If notification of a stockholder proposal is not received by such date,
the Proxies may vote, in their discretion, any and all of the proxies received
in this solicitation against such proposal.
<PAGE>
ADDITIONAL INFORMATION
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, 1999. REQUESTS SHOULD BE DIRECTED TO MR. JOHN STODDART,
SHAREHOLDER RELATIONS OFFICER, 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 19, 1999
<PAGE>
PROXY Proxy
FIRST WEST CHESTER CORPORATION
ANNUAL MEETING OF SHAREHOLDERS, MARCH 16, 1999
THIS PROXY IS SOLICITED ON BEHALF OF
THE CORPORATION'S BOARD OF DIRECTORS
The undersigned, revoking all prior proxies delivered to the
Corporation, hereby appoints Dr. Robert Poole 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 3, 1999, at the 1999
Annual Meeting of Shareholders to be held on March 16, 1999, or any adjournment
thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" (1) THE ELECTION OF THE
NOMINEES TO SERVES AS CLASS III DIRECTORS, (2) THE APPROVAL OF THE AMENDMENTS TO
THE CORPORATION'S 1995 STOCK OPTION PLAN, (3) THE APPROVAL OF THE AMENDMENTS TO
THE CORPORATION'S ARTICLES OF INCORPORATION, 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 THREE CLASS III DIRECTORS (Term to expire in 2002)
FOR all nominees listed below (except as WITHHOLD AUTHORITY to vote for
all nominees marked to the contrary below) |_| listed below |_|
(INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name in the list below.)
JOHN A. FEATHERMAN, III
JOHN S. HALSTED
DEVERE KAUFFMAN
2. APPROVAL OF CERTAIN AMENDMENTS TO THE DIRECTORS PLAN UNDER THE
CORPORATION'S 1995 STOCK OPTION PLAN AS DESCRIBED IN THE PROXY
STATEMENT DATED FEBRUARY __, 1999.
|_| FOR |_| ABSTAIN |_| AGAINST
3. APPROVAL OF THE AMENDMENT TO THE CORPORATION'S ARTICLES OF
INCORPORATION AS DESCRIBED IN THE PROXY STATEMENT DATED FEBRUARY ___,
1999.
4. PROPOSAL TO RATIFY THE APPOINTMENT OF GRANT THORNTON, LLP as the
independent public accountants of the Corporation for the year ending
December 31, 1999.
|_| FOR |_| 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:_________________________ _____________________________(SEAL)
Signature
_____________________________(SEAL)
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE.
<PAGE>
APPENDIX A
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 807,500**
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.
(b) Allocation of Option Shares. Of the 807,500 Option Shares, 653,500
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 154,000 Option Shares shall be reserved for issuance to non-employee
Directors of the Company or the Bank under the Director Plan.
* Restated as of January 29, 1999 as approved by Board and as to be submitted
to shareholders.
** All shares adjusted for stock dividends in April 1997 and November 1998.
<PAGE>
(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 443,500 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
220,000 Employee Option Shares shall be granted to key employees in accordance
with the following schedule:
<TABLE>
<CAPTION>
Grant Dates
-----------
September September September September September
18, 30, 30, 30, 30,
Key Employee 1995 1996 1997 1998 1999
- ------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
President 8,000 8,000 8,000 8,000 8,000
Option Option Option Option Option
Shares Shares Shares Shares Shares
Each of 9 Other
Executive Officers* 4,000 4,000 4,000 4,000 4,000
Option Option Option Option Option
Shares Shares Shares Shares Shares
</TABLE>
*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 36,000 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.
(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 (i) an Option to purchase
2,000 Option Shares on each of the following dates: September 18, 1995,
September 30, 1996 and September 30, 1997; (ii) an Option to purchase 1,000
Option Shares on March 17, 1998; (iii) 3,000 Option Shares on September 30,
1998; (iv) an Option to purchase 1,000 Option Shares on March 16, 1999; (v) an
Option to purchase 4,000 Option Shares on September 30, 1999, each at the Option
Price defined below. If a Director is serving on the Board of the Company and
the Bank at the time 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'."
<PAGE>
(e) Limitation on Scheduled Grants. Notwithstanding the provisions of
Sections 2(c) and 2(d), the Board of Directors in its sole discretion may, if
the Board determines such action to be in the best interests of the Corporation,
elect not to grant all or any portion of the options scheduled to be granted on
the Grant Dates set forth in such Sections (the "Scheduled Grants") or may grant
all or any portion of the Scheduled Grants subject to such terms and conditions
(including vesting schedules for the exercisability of such Options) as the
Board may from time to time provide which are not inconsistent with the other
terms of the Plan.
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 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
<PAGE>
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 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:
<PAGE>
(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;
(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
Nonqualified 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 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.
<PAGE>
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 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
<PAGE>
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) 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 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, the aggregate number of Option Shares which is reserved for
issuance under the Director Plan and the Key Employee Plan, the number of Option
Shares to be granted to each director under the Director Plan, the number of
Option Shares to be granted to each key employee under the formula provision of
the Key Employee Plan, and such other share numbers set forth herein 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.
<PAGE>
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 than once every six months, other than
to comport with changes in the Code, the Employee Retirement Income Security
Act, or the rules thereunder, 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.
<PAGE>
February 4, 1999
VIA: EDGARLINK
OFIS Filer Support
Sec Operations Center
6432 General Green Way
Alexandria, VA 22312
FIRST WEST CHESTER CORPORATION
Commission File Number 0-12870
Gentlemen:
Pursuant to the requirements of the Securities and Exchange Act of 1934
and the rules promulgated thereunder, we are filing herewith the above listed
registrant's preliminary Proxy Statement to be used in conjunction with the
Annual Meeting of Shareholders to be held on March 16, 1999. The foregoing
materials will be mailed to shareholders on approximately February 19, 1999.
Very truly yours,
/s/ J. Duncan Smith, CPA
------------------------
Treasurer
(Principal Accounting
and Financial Officer)
Enclosures
