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
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
FIRST LEESPORT BANCORP, INC.
(Name of Registrant as Specified in its Charter)
Registrant
(Name of Person(s) Filing Proxy Statement)
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:
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
FIRST LEESPORT BANCORP, INC.
_______________
NOTICE
OF
ANNUAL MEETING OF STOCKHOLDERS
to be held April 27, 1999
_______________
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Stockholders (the "Meeting") of First Leesport Bancorp, Inc. (the
"Company") will be held on April 27, 1999 at 1:30 P.M. (Eastern
Time) at the Leesport Market and Auction, R.D. #1, Leesport,
Pennsylvania, for the following purposes:
(1) To elect three Class II directors to hold office
for three years from the date of election and one Class III
director to hold office for one year from the date of election
and until their respective successors shall have been elected and
qualified (Matter No. 1).
(2) To approve an amendment to the Company's Articles
of Incorporation that would increase the Company's authorized
capital stock to 10,000,000 shares of Common Stock (Matter
No. 2).
(3) To approve an amendment to the Company's Articles
of Incorporation that would reduce the percentage of outstanding
shares that must vote to approve certain mergers and
consolidations (Matter No. 3).
(4) To approve the First Leesport Bancorp, Inc. 1998
Employee Stock Incentive Plan (Matter No. 4).
(5) To approve the First Leesport Bancorp, Inc. 1998
Independent Directors Stock Option Plan (Matter No. 5).
(6) To approve the appointment of Beard & Company,
Inc. as the Company's independent auditors for 1999 (Matter
No. 6).
(7) To transact such other business as may properly be
presented at the Meeting or any adjournment or adjournments
thereof.
Only stockholders of record at the close of business on
March 12, 1999, will be entitled to notice of, and to vote at,
the Meeting.
WHETHER OR NOT YOU PLAN ON ATTENDING THE MEETING IN PERSON,
PLEASE SIGN, DATE, AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE
PROVIDED.
BY ORDER OF THE BOARD OF DIRECTORS
RAYMOND H. MELCHER, JR.
President
Leesport, Pennsylvania
March 23, 1999
<PAGE>
PROXY STATEMENT
For Annual Meeting
April 27, 1999
GENERAL INFORMATION
Solicitation of Proxies
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of the Company
for use at the Company's Annual Meeting of Stockholders to be
held April 27, 1999 (the "Meeting"). The expense of soliciting
proxies will be borne by the Company. It is expected that the
solicitation of proxies will be primarily by mail. The Company's
directors, officers and employees may also solicit proxies
personally and by telephone.
The execution and return of the enclosed proxy will not
affect a stockholder's right to attend the Meeting and vote in
person. Any stockholder filing a proxy may revoke it at any time
before it is exercised by either submitting to the Secretary of
the Company a written notice of its revocation or a subsequently
executed proxy, or by attending the Meeting and electing to vote
in person. Only stockholders of record at the close of business
on March 12, 1999, are entitled to notice of, and to vote at, the
Meeting. On that date there were 1,273,284 shares of the
Company's common stock outstanding, each of which will be
entitled to one vote on each matter properly presented at the
Meeting. This Proxy Statement and the accompanying Proxy Card
were first mailed to stockholders on or about March 23, 1999.
If the enclosed proxy is appropriately marked, signed and
returned in time to be voted at the Meeting, the shares
represented by the proxy will be voted in accordance with the
instructions marked thereon. Signed proxies not marked to the
contrary will be voted:
- "FOR" the election, as directors, of the Board of
Directors' nominees (see Matter No. 1);
- "FOR" approval of the amendment to the Company's
Articles of Incorporation to increase the number of authorized
shares of common stock to 10,000,000 shares (see Matter No. 2);
- "FOR" approval of the amendment to the Company's
Articles of Incorporation to reduce the vote required to approve
certain mergers and consolidations (see Matter No. 3);
- "FOR" approval of the First Leesport Bancorp, Inc.
1998 Employee Stock Incentive Plan (see Matter No. 4);
- "FOR" approval of the 1998 Independent Directors
Stock Option Plan (see Matter No. 5); and
<PAGE 1>
- "FOR" approval of appointment of Beard & Company,
Inc. as the Company's auditors for 1999 (see Matter No. 6).
Signed proxies will be voted "FOR" or "AGAINST" each other
matter that properly comes before the Meeting, or any adjournment
or adjournments thereof, in the discretion of the persons named
as proxyholders.
Annual Report
The Company's annual report for the year ended December 31,
1998, is enclosed with this Proxy Statement and is furnished to
stockholders for information only and no part thereof is
incorporated by reference herein.
Quorum
The presence, in person or by proxy, of shareholders
entitled to cast at least a majority of the votes that all
shareholders are entitled to cast shall constitute a quorum at
the Meeting. Abstentions with respect to one or more proposals
voted upon at the Meeting will be included for purposes of
determining the presence of a quorum at the Meeting.
PAGE 2
<PAGE>
MATTER NO. 1
ELECTION OF DIRECTORS
General
The Bylaws of the Company (the "Bylaws") provide that the
Company's business shall be managed by a Board of Directors of
not less than five and not more than twenty-five persons. The
Board of Directors of the Company, as provided in the Bylaws, is
divided into three classes: Class I, Class II and Class III,
with each class being as nearly equal in number as possible.
As of March 12, 1999, the Board of Directors consisted of
ten members, with four members in Class I, three members in
Class II, and three members in Class III.
Under the Bylaws, a vacancy in the Board of Directors is
filled by the remaining members of the Board. If the vacancy
results from the death, resignation or removal of a director, the
director elected to fill the vacancy will become a member of the
class in which the vacancy occurred. By comparison, persons
elected by the Board of Directors in connection with an increase
in the size of the Board are designated by the Board of Directors
as belonging to either Class I, Class II, or Class III. In
either case, the Bylaws further provide that each director so
elected remains a member of the Board of Directors until his or
her successor is elected by the stockholders at the next annual
meeting of stockholders, or at any prior special meeting duly
called for that purpose.
The term of office for each director in Class II expires on
the date of the Annual Meeting of Stockholders on April 27, 1999.
Accordingly, three Class II directors have been nominated for
election at the Meeting.
Edward C. Barrett was elected as a director by the Board of
Directors on November 10, 1998, to fill a vacancy in Class III.
In accordance with the Bylaws, Mr. Barrett has been nominated for
election as a Class III director.
The three nominees for Class II receiving the highest number
of votes at the Meeting and the nominee in Class III receiving
the highest number of votes at the Meeting will be elected to
serve as directors. The term of office for those nominees
elected as Class II directors at the Meeting will expire in 2002
and the term of office for the nominee elected as a Class III
director will expire in 2000.
It is the intention of the persons named as proxyholders to
vote, in their discretion, all shares that they represent FOR the
election of the three Class II nominees and FOR the election of
the one Class III nominee.
<PAGE 3>
Nominations
The Bylaws permit nominations for election to the Board of
Directors to be made by the Board of Directors or by any
stockholder entitled to vote for the election of directors.
Nominations for directors made by stockholders, other than those
made by management of the Company, must be made by notice in
writing to the Secretary of the Company no less than twenty days
prior to the Meeting. The notification should contain the
following information, to the extent known by the notifying
stockholder: (1) the name and address of each proposed nominee;
(2) the principal occupation of each proposed nominee; (3) the
total number of shares of capital stock of the Company that will
be voted for each proposed nominee; (4) the name and address of
the notifying stockholder; and (5) the number of shares of
capital stock of the Company owned by the notifying stockholder.
Nominations not made in accordance with the foregoing
procedure may be disregarded by the presiding officer at the
Meeting. Additionally, the nominee must be qualified to serve as
a director of the Company. The Bylaws require a director to be a
stockholder of the Company, to have had his principal residence
in Berks County, Pennsylvania for at least one year prior to the
time of election, and to be under the mandatory retirement age,
which precludes nomination and election of a person who would
reach the age of 70 at any time during his or her term, if
elected.
As of the date of this Proxy Statement, the Company has not
received a notice of nomination for election as a director from
any stockholder.
Any stockholder who wishes to withhold authority from the
proxyholders to vote for the election of directors or to withhold
authority to vote for any individual nominee may do so by marking
his or her proxy to that effect. No proxy may be voted for a
greater number of persons than the number of nominees named. If
any nominee should become unable to serve, the persons named in
the proxy may vote for another nominee. The Company's
management, however, has no present reason to believe that any
nominee listed below will be unable to serve as a director, if
elected.
Directors
The following table sets forth information concerning the
nominees for election as directors and the continuing directors,
including their principal occupations or employment during the
past five years and their ownership of common shares of the
Company as of February 15, 1999. Each of these persons is
presently a director of the Company.
<PAGE 4>
<TABLE>
<CAPTION>
Name, Address, and Percent of
Principal Occupation During Shares of Common Total Shares
Past 5 years Age Director Since Stock Owned Outstanding
<S> <C> <C> <C> <C>
NOMINEES FOR CLASS II DIRECTORS TO SERVE UNTIL 2002
RAYMOND H. MELCHER, JR. 47 1998 10,530(2) *
Wyomissing, Pennsylvania
President and Chief Executive
Officer of the Company since
June 1998; prior
thereto President and
Chief Executive Officer of
Security National Bank of
Pottstown since March 1994.
WILLIAM J. KELLER 65 1986 6,456(3) *
Fleetwood, Pennsylvania
President of William J.
Keller Mobile Homes, Inc.
(a mobile home retailer)
CHARLES J. HOPKINS 48 1999 57,791 4.5%
Wyomissing, Pennsylvania
President of
Essick & Barr, Inc.
NOMINEES FOR CLASS III DIRECTOR TO SERVE UNTIL 2000
EDWARD C. BARRETT 50 1998 200 *
Wyomissing Hills, Pennsylvania
Executive Vice President and
Chief Operating Officer of
Eltrax Systems, Inc.
CLASS I DIRECTORS SERVING UNTIL 2001
JOHN T. CONNELLY 63 1976(1) 6,710(4) *
Wyomissing Hills, Pennsylvania
Chairman of the Company
since May
1998; prior thereto
President and Chief Executive
Officer of the Company since
1976.
KAREN A. RIGHTMIRE 51 1994 220 *
Reading, Pennsylvania
President, United Way
of Berks County, Pennsylvania
since 1989
RICHARD L. HENRY 50 1994 1,388 *
Reading, Pennsylvania
President of RLH Enterprises,
Inc. (car wash) and President
of Manor Equipment, Inc.
Lawn/Garden Equipment Retailer
ALFRED J. WEBER 46 1995 215 *
Reading, Pennsylvania
President, Tweed Weber, Inc.
(management consulting firm) <PAGE 5>
CONTINUING CLASS III DIRECTORS SERVING UNTIL 2000
HARRY J. O'NEILL III 49 1984(1) 3,100 *
Leesport, Pennsylvania
President of O'Neill
Financial, Inc. (personal
holding company)
DANIEL W. WEIST 44 1993 200 *
Leesport, Pennsylvania
President of Leesport
Farmers Market, Inc. since
1999; prior thereto Vice
President of Leesport
Farmers Market, Inc.
All Directors and Executive 112,264 8.8%
Officers as a Group (18
persons)
_______________
</TABLE>
* Less than 1% of the outstanding shares of Common Stock.
(1) With respect to John T. Connelly and Harry J. O'Neill, III,
the period indicated includes the period served as director
of the Bank.
(2) Includes 300 shares owned jointly with his wife and 1,500
shares owned by his wife.
(3) Includes 6,255 shares owned jointly with his wife.
(4) Includes 680 shares owned jointly with his wife and 6,030
shares owned by his wife.
PAGE 6
<PAGE>
ADDITIONAL INFORMATION
Board and Committee Meetings
During 1998, the Company's Board of Directors met 8 times
and the Bank's Board of Directors met 14 times.
The Company's Board of Directors has created an Executive
Committee and is authorized, under the Company's By-laws, to
create such other committees as it deems appropriate. At
present, no other committees have been established, and other
committee functions are presently performed by committees of the
Bank's Board. There is no Nominating Committee or Compensation
Committee. The duties typically performed by these committees
are performed by the Executive Committee of the Company's Board
of Directors. The Bank's Board has an Executive Committee, Audit
Committee, Asset Liability Management Committee, Executive Credit
Committee, CRA Committee and Insurance Committee.
The Executive Committee of the Bank and the Company met
11 times during 1998. The Executive Committee may exercise the
authority of the respective Boards to the extent permitted by law
during intervals between meetings of such Boards. The members of
the Executive Committee of the Company and the Bank are
Raymond H. Melcher, Jr., John T. Connelly, Karen A. Rightmire,
Alfred J. Weber and Edward C. Barrett.
The Audit Committee of the Bank, which met 4 times during
1998, is responsible for reporting to the Board on the general
financial condition of the Bank and the results of the annual
audit, and is responsible for ensuring that the Bank's activities
are being conducted in accordance with law and the rules and
regulations established by the Comptroller of the Currency and
other regulatory and supervisory authorities. The Audit
Committee also reviews the work of the Loan Review Officer and
Security Officer in accordance with such supervisory regulations.
In addition, the Audit Committee recommends to the Board the
services of a reputable public accounting firm who the Board then
appoints at the annual reorganization meeting of the Board. The
members of the Audit Committee are Harry J. O'Neill, III,
Daniel W. Weist and Edward C. Barrett.
The Asset Liability Management Committee, which met 9 times
during 1998, is responsible for monitoring interest rate
sensitivities of the Bank's assets and liabilities and matching
the maturities on the Bank's assets and liabilities. The members
of the Asset Liability Committee are John T. Connelly,
Frederick P. Henrich, Raymond H. Melcher, Jr., James E.
Kirkpatrick, and Janet McIlhenny.
The Executive Credit Committee, which met 5 times during
1998, is responsible for approving credits up to limits
established by the Board of Directors, for reviewing in detail
the status of delinquent loans and the overall rate of <PAGE 7>
delinquency of the loan portfolio. The members of the Executive
Credit Committee are John T. Connelly, Daniel W. Weist,
William J. Keller, Charles J. Hopkins, and Harry J. O'Neill, III.
The Insurance Committee, which met 1 time during 1998, is
responsible for reviewing and making recommendations to the Board
concerning the Company's insurance coverages. The Insurance
Committee was eliminated in 1998, and its duties were transferred
to Essick & Barr, Inc., the Bank's insurance agency subsidiary.
The members of the Insurance Committee were Frederick P. Henrich,
Raymond H. Melcher, Jr., and Gary W. Krick.
The CRA Committee, which met 3 times in 1998, consists of:
John T. Connelly, Janet L. McIlhenny, Holly A. Balatgek,
Raymond H. Melcher, Jr., and Karen A. Rightmire. The purpose of
the CRA Committee is to identify and address community credit
needs through outreach to community groups, evaluate the Bank's
written Community Reinvestment Act ("CRA") policy, provide for
internal training of all levels of bank employees and directors,
and ensure compliance with the CRA performance category
guidelines.
During 1998, all of the directors of the Company attended at
least 75% of the aggregate of all meetings of the Company's Board
of Directors and the Bank Board committees on which they served.
Director Compensation
Directors who are not officers of the Company or of the Bank
receive an annual fee of $1,500 and $300 for each meeting of the
Bank's Board of Directors and $150 for each Bank Board committee
meeting that they attend. In addition, the Secretary of the
Board of Directors receives $750 per year. Directors receive no
fees for attending meetings of the Company's Board of Directors.
Certain directors have entered into agreements with the Bank
providing for the deferral of part or all of the fees payable to
them by the Bank. See "Deferred Compensation and Salary
Continuation Agreements" herein.
The Company and the Bank maintain a directors and officers
liability insurance policy. The policy covers all directors and
officers of the Company and the Bank for certain liability, loss,
damage, and expense that they may incur in their capacities as
such. To date, no claims have been filed under this insurance
policy.
PAGE 8
<PAGE>
Executive Officers
The following table sets forth certain information for each
of the Company's executive officers as of February 15, 1999:
<TABLE>
<CAPTION>
Percent of
Shares of Total
Position Common Shares Principal Occupation
Name, Address, and Position Held Stock Out- for
Held with the Company Age Since Owned standing Past 5 Years
<S> <C> <C> <C> <C> <C>
RAYMOND H. MELCHER, JR. 47 1998 10,530(1) * President and Chief
Wyomissing, Pennsylvania Executive Officer
President and Chief of the Company since
Executive Officer June 1998; prior
thereto President and
Chief Executive
Officer of Security
National Bank of
Pottstown since March
1994
JOHN T. CONNELLY 63 1986 6,710(2) * Chairman of the
Wyomissing Hills, Pennsylvania Company since
Chairman May 1998; prior
thereto President of
Company since 1986
GARY W. KRICK(7) 52 1986 3,217(3) * Vice President of
Reading, Pennsylvania Company since 1986.
Vice President
FREDERICK P. HENRICH 39 1986 83(4) * Treasurer of the
Wernersville, Pennsylvania Company since January
Treasurer and Chief 1986 and Chief
Financial Officer Financial Officer of
the Bank since January
1990
CHARLES J. HOPKINS 48 1998 57,791 4.5% President of Essick &
Wyomissing, Pennsylvania Barr, Inc. since 1992
President of Essick & Barr,
Inc.
MICHAEL D. HUGHES 47 1998 21,498 1.7% Senior Vice President
Reading, Pennsylvania of Essick & Barr, Inc.
Senior Vice President of since 1992
Essick & Barr, Inc.
JAMES E. KIRKPATRICK 37 1998 200 * Vice President of
Sinking Spring, Pennsylvania Commercial Lending
Vice President of since December
Commercial Lending 1998; prior thereto
Vice President of
Commercial Lending at
Pennsylvania National
Bank since 1993
LINDA N. MENSCH 43 1998 -0- * Vice President of
Reading, Pennsylvania Retail Banking since
<PAGE 9>
Vice President-Director January, 1999; prior
of Retail Banking thereto Vice President
of Bank of
Pennsylvania since
1994
M. JANE LAUSER 54 1989 216(5) * Vice President of the
Leesport, Pennsylvania Bank since May 1989
Vice President of the Bank
SHEILA L. REPPERT 47 1996 35(6) * Vice President of the
Bethel, Pennsylvania Bank since 1996;
Vice President of the Bank Human Resources
Officer prior to that
since 1987
JANET BRYANT-MCILHENNY 43 1996 205(8) * Vice President of the
Fleetwood, Pennsylvania Bank since 1996; Vice
Vice President Marketing President of Great
of the Bank Valley Savings Bank
prior to that since
1985.
All executive officers as 100,485 7.9%
a group (11 persons)
_______________
</TABLE>
* Less than 1% of the outstanding shares of common stock.
(1) Includes 300 shares owned jointly with his wife and 1,500
shares owned by his wife.
(2) Includes 680 shares owned jointly with his wife and 6,030
shares owned by his wife.
(3) Includes 2,858 shares owned jointly with his wife and
162 shares owned jointly with his sons.
(4) All shares owned jointly with his or her spouse.
(5) Includes 164 shares owned jointly with her husband,
26 shares owned jointly with her son, and 26 shares owned
jointly by her husband and son.
(6) Includes 30 shares owned jointly with her daughter.
(7) Gary W. Krick is retiring on March 31, 1999.
(8) Includes 200 shares owned jointly with her husband.
Executive Compensation
The following table sets forth certain information with
respect to the compensation of the Company's President and Chief
Executive Officer and each other executive officer of the Company
<PAGE 10> whose total cash compensation exceeded $100,000 in the
fiscal year ended December 31, 1998 (the "Named Executive
Officers").
<TABLE>
<CAPTION>
SUMMARY OF COMPENSATION
Annual Long Term Compensation
Compensation Awards
Securities
Restricted Underlying All other
Name and Stock Options/SARs Compensation
Principal Position Year Salary(1) Bonus Award (#) (2)(3)(4)
<S> <C> <C> <C> <C> <C> <C>
Raymond H. Melcher, 1998 $ 89,104 $ -0- $5,450 4,000 $ -0-
Jr.
President and Chief
Executive Officer
John T. Connelly, 1998 $116,000 $ -0- -0- $0 $42,435
Chairman 1997 116,000 32,452 -0- $0 $42,144
1996 112,000 13,375 -0- $0 $38,301
_________________
</TABLE>
(1) The amount indicated includes amounts which were deferred
pursuant to the Bank's 401(k) plan. The Bank adopted a
defined contribution plan under Section 401(k) of the
Internal Revenue Code during 1990. Under the 401(k) plan,
employees who elect to participate may elect to have his or
her earnings reduced and to cause the amount of such
reduction to be contributed, on his or her behalf, to the
401(k) plan's relating trust in an amount from 1% to 10% of
his or her earnings. The Bank will make a matching
contribution equal to 50% of the employees' salary reduction
up to a maximum of 3.5% of the employee's salary. Any
employee who has reached the age of 21 and has worked 1,000
hours in a plan year is eligible to participate in the
401(k) plan.
(2) The amount indicated reflects no portion of the contribution
made by the Bank to the Bank's noncontributory pension plan,
which is a defined benefit plan, because such contribution
is determined actuarially for all participants in the
aggregate and is not allocable to any one participant or
group of participants.
(3) The Company provides other benefits to certain executive
officers in connection with their employment. The value of
such personal benefits which is not directly related to job
performance is not included in the table above because the
value of such benefits does not exceed the lesser of $50,000
or 10% of the salary and bonus paid to the named individual.
<PAGE 11>
(4) Represents the cost of purchasing life insurance policy to
fund obligation under Salary Continuation Agreement for
Mr. Connelly and the Company's matching contribution to
Mr. Connelly's account under the Bank's 401(k) plan.
Mr. Melcher was not eligible to participate in the Bank's
401(k) plan in 1998.
The following table sets forth information concerning grants
of stock options during the fiscal year ended December 31, 1998
to the Named Executed Officers.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
Number of % of Total Potential Realizable
Securities Options Value at Assumed
Underlying Granted to Exercise Annual Rates of
Options Employees or Base Expir- Price Appreciation
Granted(1) in Fiscal Price(2) ation for Option Term
Name (#) Year ($/Sh) Date 5% ($)(3) 10%($)(3)
<S> <C> <C> <C> <C> <C> <C>
Raymond H. Melcher, Jr. 1,000 2.2% $23.875 12/22/08 $15,015 $ 38,051
3,000 6.6% $27.25 06/15/08 $51,412 $130,288
_______________________
</TABLE>
(1) All amounts represent nonqualified stock options. Terms of
outstanding nonqualified stock options are for a period of
ten years from the date the option is granted. The options
granted to Mr. Melcher, vest ratably over a period of five
years and may not be exercised until six months after the
date they are granted. At the option of the committee
administering the Employee Stock Incentive Plan or the Board
of Directors, options may be exercised during a period not
to exceed three months following an optionee's voluntary
termination of employment other than by reason of retirement
or disability.
(2) Under the terms of the plan, the exercise price per share
must at least equal the par value of the Company's common
stock. The exercise price may be paid in cash, in shares of
First Leesport common stock valued at fair market value on
the date of exercise, or pursuant to a cashless exercise
procedure under which the optionee pays part or all of the
exercise price by surrendering shares of stock received upon
exercise of the option.
(3) The dollar amounts set forth under these columns are the
result of calculations made at the 5% and 10% appreciation
rates set forth in Securities and Exchange Commission
regulations and are not intended to indicate future price
appreciation, if any, of First Leesport common stock.
<PAGE 12>
The following table sets forth information concerning
exercised and unexercised options to purchase First Leesport
common stock granted to the Named Executive Officers:
AGGREGATED OPTIONS EXERCISED IN LAST YEAR
AND DECEMBER 31, 1998 OPTION VALUE
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
December 31, December 31,
Shares 1997(#) 1997($)
Acquired on Value Realized Exercisable/ Exercisable/
Name Exercise(#) ($) Unexercisable Unexercisable(2)
<S> <C> <C> <C> <C>
Raymond H. Melcher, -0- -0- -0-/4,000(1) -0-/$875
Jr.
_________________
<FN>
(1) Options for 1,000 shares have an exercise price of $23.875 per share and
options for 3,000 shares have an exercise price of $27.25 per share.
(2) Based on a market value of $23 per share for First Leesport common stock at
December 31, 1998.
</TABLE>
Executive Employment Agreements
The Company and the Bank have entered into an employment
agreement dated June 15, 1998 with Raymond H. Melcher, Jr. (the
"Employment Agreement"). The Agreement has an initial term of
three years and, unless terminated as set forth therein, is
automatically extended annually to provide a new term of three
years except that, at certain times, notice of non-extension may
be given, in which case the Employment Agreement will expire at
the end of its then current term. No such notice has been given.
The Employment Agreement provides a base salary of $150,000
which, if increased by action of the Board of Directors, becomes
the new base salary provided thereafter by the Employment
Agreement. Mr. Melcher is to be provided with exclusive use of
an automobile, with all insurance, maintenance and operating
costs to be paid by the Company and the Bank. In addition, the
Employment Agreement provides, among other things, the right to
participate in any bonus plan approved by the Board of Directors
and insurance, vacation, pension and other fringe benefits for
Mr. Melcher.
If Mr. Melcher's employment is terminated without cause (as
defined), whether or not a change in control (as defined) of the
Company has occurred, or if Mr. Melcher voluntarily terminates
employment for certain reasons following a change in control,
Mr. Melcher becomes entitled to severance benefits under the
<PAGE 13> Employment Agreement. Such reasons include any
reduction in title or responsibilities, any assignment of duties
and responsibilities inconsistent with Mr. Melcher's status as
President and Chief Executive Officer, a reduction in salary or
benefits, or any reassignment to a location greater than 25 miles
from the location of Mr. Melcher's office on the date of the
change in control. If any such termination occurs, Mr. Melcher
will be paid an amount equal to 2.99 times his base compensation
as determined under Section 280G of the Internal Revenue Code.
The payment to which Mr. Melcher is entitled decreases at six
month intervals if his termination or resignation occurs after he
attains age 62-1/2.
The Employment Agreement contains provisions restricting
Mr. Melcher's right to compete with the Company and the Bank for
a period of one year unless his employment is terminated other
than for cause.
The Company and the Bank have entered into an employment
agreement dated October 15, 1997 with John T. Connelly. The
employment agreement provides that Mr. Connelly is to serve as
Chairman of the Board of Directors of the Company and the Bank.
As Chairman of the Board, Mr. Connelly will be a full time
employee and will be entitled to an annual base salary of
$116,000 and will participate in all of the Company's employee
benefit plans except any executive incentive plan. The
employment agreement terminates on July 31, 2000 unless
terminated earlier for Cause or Disability (both as defined in
the Severance Agreement dated January 1, 1991 between the Company
and Mr. Connelly). Absent a change in control (as defined in the
Severance Agreement), Mr. Connelly's employment can be terminated
upon thirty days written notice, in which event Mr. Connelly will
be entitled to receive his annual base salary and other employee
benefits until July 31, 2000.
Severance Agreement
In January 1991, the Company entered into an agreement with
John T. Connelly that provides that, in the event of a "change in
control" of the Company or the Bank, if Mr. Connelly's employment
is terminated or if he resigns as a result of diminution in
position, compensation or benefits, reassignment to a location
beyond 25 miles from Leesport, Pennsylvania, or significantly
increased travel requirements, he will be entitled generally to a
lump sum payment equal to 2.99 times his base compensation. The
payment to which Mr. Connelly is entitled decreases at six month
intervals if his termination or resignation occurs after he
attains age 62-1/2. The agreement has a two year term with
automatic annual renewal for a period of two years unless the
other party gives notice of nonrenewal, in which case the
agreement continues until the end of the current term. The
compensation payable under the agreement in the event of a
"change in control" will not be reduced by any compensation or
benefits payable by a subsequent employer.
<PAGE 14>
Deferred Compensation and Salary Continuation Agreements
The Bank has entered into agreements with certain directors
of the Bank that permit the director to defer part or all of his
director fees until the director ceases to be a director of the
Bank. Interest accrues on the deferred fees at an annual rate of
8%. The director is an unsecured creditor of the Bank with
respect to such deferred fees. The agreements also provide that
if the director dies or becomes disabled while a director of the
Bank, the director receives certain death or disability benefits.
The Company has purchased whole life insurance policies on the
directors to fund its obligations under these agreements.
The Bank has entered into agreements with certain of its
executive officers that provide for monthly payments to the
officer if such officer's employment is involuntarily terminated
without cause before age 65 for reasons other than death,
disability or a change in control of the Bank or the Company. In
addition, the officer is entitled to such monthly payments if the
officer terminates his employment on or after age 65 or if the
officer's employment is terminated (whether voluntarily or
involuntarily) for reasons other than death, disability, or
retirement within 36 months after a "change in control" has
occurred. A "change in control" is deemed to have occurred if
the transfer of 51% or more of the Bank's or the Company's
outstanding voting stock has occurred in a transaction or series
of related transactions. The agreements also provide for the
payment of such benefits to the officer if such officer dies
while employed by the Bank. In addition, the agreements provide
for disability benefits and for certain reduced benefits upon
retirement on or after age 60 but prior to age 65. The Bank has
purchased certain whole life insurance policies on its officers
to fund its obligations under these agreements.
Legal Proceedings
The nature of the Bank's business generates a certain amount
of litigation involving matters arising in the ordinary course of
business. In the opinion of the management of the Bank, there
are no proceedings pending to which the Bank is a party or to
which its property is subject, that, if determined adversely to
the Bank, would be material in relation to the Bank's
stockholders' equity or financial condition, nor are there any
proceedings pending other than ordinary routine litigation
incident to the business of the Bank. In addition, no material
proceedings are pending or are known to be threatened or
contemplated against the Bank by governmental authorities or
other parties.
<PAGE 15>
Transactions with Management and Others
Some of the directors and officers of the Company, and the
companies with which they are associated, are customers of and
during 1998 had banking transactions with the Bank in the
ordinary course of the Bank's business, and intend to do so in
the future. All loans and commitments to loan included in such
transactions were made in the ordinary course of business under
substantially the same terms, including interest rates,
collateral, and repayment terms, as those prevailing at the time
for comparable transactions with other persons and, in the
opinion of the Bank's management, do not involve more than the
normal risk of collection or present other unfavorable features.
At December 31, 1998 total loans and commitments of approximately
$4,996,000 were outstanding to the Company's executive officers
and directors and their affiliated businesses, which represented
24.3% of the Company's stockholders' equity.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), requires First Leesport's officers
and directors, and any persons owning ten percent or more of
First Leesport's common stock, to file in their personal
capacities initial statements of beneficial ownership, statements
of change in beneficial ownership and annual statements of
beneficial ownership with the Securities and Exchange Commission
(the "SEC"). Persons filing such beneficial ownership statements
are required by SEC regulation to furnish First Leesport with
copies of all such statements filed with the SEC. The rules of
the SEC regarding the filing of such statements require that
"late filings" of such statements be disclosed in First
Leesport's proxy statement. Based solely on First Leesport's
review of reports on Form 3 filed by its directors and executive
officers, it appears that Edward C. Barrett, Richard L. Henry,
Harry J. O'Neill III, Karen Rightmire, Alfred J. Weber, and
Daniel W. Weist failed to file reports on Form 3 on a timely
basis. First Leesport may not have advised such persons of their
obligation to file such reports. All such persons have recently
filed such reports with the SEC.
MATTER NO. 2
PROPOSAL TO AMEND FIRST LEESPORT'S ARTICLES OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
FROM 2,000,000 SHARES TO 10,000,000 SHARES
The Board of Directors has approved an amendment to Article
Fifth of the Articles of Incorporation that, if adopted, would
increase the number of authorized shares of First Leesport common
stock from 2,000,000 to 10,000,000 shares. The Board of
Directors recommends that shareholders approve this amendment.
At March 1, 1999, there were 1,273,284 shares of First
Leesport common stock issued and outstanding. Of the remaining
<PAGE 16> 726,716 shares of authorized common stock on such date,
250,000 shares are reserved for issuance under the Company's
stock option plans, leaving only 476,716 shares of common stock
available for issuance. Because approximately 487,262 shares may
be issued in connection with First Leesport's pending acquisition
of Merchants of Shenandoah Ban-Corp., additional authorized
shares are required to complete such acquisition.
Matter No. 2 is being proposed because the Board of
Directors believes that it is advisable to have a greater number
of authorized but unissued shares of common stock available for
various corporate programs and purposes. The Company may from
time to time consider acquisitions, stock dividends or stock
splits, and public or private financings to provide the Company
with capital, which may involve the issuance of additional shares
of common stock or securities convertible into common stock.
Also, additional shares of common stock may be necessary to meet
anticipated future obligations under First Leesport's stock
option plans. The Board of Directors believes that having
authority to issue additional shares of common stock will avoid
the possible delay and significant expense of calling and holding
a special meeting of shareholders to increase authorized capital.
The Company has no present plan, agreement or understanding
involving the issuance of its common stock except for shares
required or permitted to be issued upon exercise of outstanding
stock options and in connection with First Leesport's pending
acquisition of Merchants of Shenandoah Ban-Corp. It is possible,
however, that additional merger and acquisition opportunities
involving the issuance of shares of common stock will develop.
It is also possible that an increase in the market price for
common stock, and conditions in the capital markets generally,
may make a stock dividend, a stock split or a public offering of
the Company's stock desirable. First Leesport believes that an
increase in the number of authorized shares of First Leesport's
common stock will enhance its ability to respond promptly to any
such opportunities.
If Matter No. 2 is approved, the Board of Directors will not
solicit shareholder approval to issue additional authorized
shares of common stock, except to the extent that such approval
may be required by law or the rules of the National Association
of Securities Dealers, Inc. (the "NASD"), and such shares may be
issued for such consideration, cash or otherwise, at such times
and in such amounts as the Board of Directors may determine.
Under the rules of the NASD applicable to First Leesport,
shareholder approval must be obtained prior to the issuance of
shares for certain purposes, including the issuance of greater
than 20% of First Leesport's then outstanding shares in
connection with an acquisition by First Leesport.
Although the Board of Directors presently intends to employ
the additional shares of common stock solely for the purposes set
forth above, such shares could be used by the Board of Directors
to dilute the stock ownership of persons seeking to obtain
<PAGE 17> control of the Company, thereby possibly discouraging
or deterring a nonnegotiated attempt to obtain control of the
Company and making removal of incumbent management more
difficult. The proposal, however, is not a result of, nor does
the Board of Directors have knowledge of, any effort to
accumulate First Leesport capital stock or to obtain control of
First Leesport by means of a merger, tender offer, solicitation
in opposition to the Board of Directors or otherwise.
The amendment of the Articles of Incorporation to increase
the number of authorized shares of common stock from 2,000,000 to
10,000,000 will consist of a revision of Article Fifth of the
Articles of Incorporation to provide as follows:
"FIFTH. The aggregate number of shares of
capital stock which the Corporation shall
have authority to issue is 10,000,000 shares
of common stock, par value $5.00 per share."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS
AMENDMENT. The affirmative vote of a majority of all votes cast
at the Meeting is required to approve this amendment.
Abstentions and broker nonvotes will not constitute or be counted
as "votes" cast for purposes of the Meeting. All proxies will be
voted "FOR" approval of the amendment unless a shareholder
specifies to the contrary on such shareholder's proxy card.
MATTER NO. 3
PROPOSAL TO AMEND FIRST LEESPORT'S ARTICLES OF INCORPORATION
TO REDUCE THE PERCENTAGE OF OUTSTANDING SHARES THAT MUST
VOTE TO APPROVE CERTAIN MERGERS AND CONSOLIDATIONS
The Board of Directors has approved an amendment to Article
Twelfth of the Articles of Incorporation that, if adopted, would
decrease the percentage of outstanding shares that must vote to
approve certain mergers and consolidations to which the Company
is a party. The Board of Directors recommends that shareholders
approve this amendment.
Article Twelfth of the Company's Articles of Incorporation
presently require any merger or consolidation to which the
Company is a party be approved by the affirmative vote of the
holders of at least 70% of the outstanding shares of common stock
of the Company. This supermajority vote is required even if the
Company is the survivor in the merger or if the Board of
Directors believes that the merger or consolidation is in the
best interests of the shareholders. As the Company grows and has
more shareholders, obtaining approval of holders of 70% of the
outstanding shares may be extremely difficult and costly. The
Company may be required to engage professional proxy solicitors
in order to ensure that the necessary number of shareholders
execute and return their proxy cards. Under the NASD's rules
brokers are not allowed to vote shares registered in their names
on mergers or consolidations unless directed how to vote by the
<PAGE 18> beneficial owner. Because the Company's Articles of
Incorporation now require approval of 70% of the outstanding
shares, these broker nonvotes would in effect be a vote against
any proposed merger or consolidation.
The proposed amendment would reduce the required vote to
approve a merger or consolidation to a majority of the votes cast
at any shareholder meeting called to approve such transaction if
(i) the members of the Board of Directors of the Company would
constitute a majority of the Board of Directors of the surviving
entity (in the case of a merger) or of the new entity (in the
case of a consolidation), and (ii) if after the merger or
consolidation is completed shareholders of the Company will hold
such number of shares of the new or surviving entity as are
entitled to cast, in the aggregate, at least a majority of the
votes that can be cast for the election of directors of the new
or surviving entity.
Except for the pending merger with Merchants of Shenandoah
Ban-Corp., the Company has no present plan, agreement or
understanding involving any merger or consolidation. It is
possible, however, that other merger or consolidation
opportunities may occur in which the lower shareholder approval
requirement will enhance its ability to take advantage of such
opportunities without reducing shareholder protection against an
unwelcome hostile takeover of the Company.
The amendment of the Articles of Incorporation to reduce the
percentage of votes required to approve certain mergers and
consolidations will consist of a revision of Article Twelfth of
the Articles of Incorporation to provide as follows:
"12. Shareholder Action. No merger,
consolidation, liquidation or dissolution of
the Corporation nor any action that would
result in the sale or other disposition of
all or substantially all of the assets of the
Corporation shall be valid unless first
approved by the affirmative vote of the
holders of at least seventy percent (70%) of
the outstanding shares of Common Stock.
Notwithstanding the preceding sentence, this
Article 12 shall not apply to any merger or
consolidation involving the Corporation if
(i) members of the Board of Directors of the
Corporation will constitute at least a
majority of the Board of Directors of the
surviving or new corporation or entity and
(ii) shareholders of the Corporation will
hold in the aggregate voting shares of the
surviving or new corporation or entity to be
outstanding immediately after completion of
the merger or consolidation entitled to cast
at least a majority of the votes entitled to
be cast generally for the election of
<PAGE 19> directors. This Article may not be
amended unless first approved by the
affirmative vote of the holders of at least
seventy percent (70%) of the outstanding
shares of Common Stock."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS
AMENDMENT. The affirmative vote of 70% of all votes entitled to
be cast at the Meeting is required to approve this amendment.
Abstentions and broker nonvotes will, in effect, constitute
"votes" against the proposed amendment. All proxies will be
voted "FOR" approval of the amendment unless a shareholder
specifies to the contrary on such shareholder's proxy card.
MATTER NO. 4
PROPOSAL TO APPROVE THE FIRST LEESPORT
BANCORP, INC. 1998 EMPLOYEE STOCK INCENTIVE PLAN
The Board of Directors has adopted, subject to shareholder
approval, the First Leesport Bancorp, Inc. 1998 Employee Stock
Incentive Plan (the "Employee Stock Incentive Plan"). The Board
believes the Employee Stock Incentive Plan will benefit
shareholders by allowing the Company to attract and retain
employees who have the ability to enhance the value of the
Company and by aligning the interests of employees with those of
the shareholders through increased stock ownership. The Board
therefore recommends approval of the Employee Stock Incentive
Plan.
The following is a summary of the Employee Stock Incentive
Plan. The summary is qualified in its entirety by reference to
the full text of the Employee Stock Incentive Plan, which is
attached to this Proxy Statement as Exhibit A.
General Information
The Employee Stock Incentive Plan will be administered by a
committee of two or more members of the Board selected by the
Board (which may be the entire Board) (the "Committee"). The
Committee will be authorized to grant to employees up to 200,000
shares of the Company's common stock in the form of stock
options, restricted stock, and stock appreciation rights
("SARs"). The Employee Stock Incentive Plan will become
effective upon approval by the shareholders and will expire on
November 10, 2008 unless terminated earlier by the Board.
Authority of Committee
The Employee Stock Incentive Plan will be administered and
interpreted by the Committee. The Committee will select persons
to receive grants from among the Company's employees, determine
the types of grants and number of shares to be awarded to
grantees, and set the terms, conditions and provisions of the
grants consistent with the Employee Stock Incentive Plan. The
<PAGE 20> Committee may establish rules for administration of the
Employee Stock Incentive Plan.
Eligible Persons
The Committee will select grantees from among the employees
(including any officer) of the Company and its subsidiaries.
Currently, approximately 120 employees will be eligible,
including 15 executive officers. The number of eligible persons
can be expected to vary from year to year.
Shares Subject to Plan
Subject to adjustment as described below, a maximum of
200,000 shares of the Company's common stock may be issued under
the Employee Stock Incentive Plan in the form of stock options,
restricted stock awards, or SARs. These shares may be unissued
shares or treasury shares. Payment of cash in lieu of shares is
deemed an issuance of the shares for purposes of determining the
maximum number of shares available for grants under the Employee
Stock Incentive Plan as a whole or with respect to any individual
grantee. In the event of a stock split, stock dividend, spinoff,
or other relevant change affecting the common stock of the
Company, adjustments may be made to the number of shares
available for grants and to the number of shares and price under
outstanding grants made before the event.
Grants Under Employee Stock Incentive Plan
Stock Options. The Committee may grant nonqualified options
and Incentive Stock Options ("ISOs"). The Committee shall
establish the option price, which may not be less than 100% of
the fair market value of the stock on the date of grant in the
case of ISOs and not less than the par value of the Company's
common stock in the case of nonqualified options. The Committee
does not have discretion to reprice outstanding options.
The term of the option and the period during which it may be
exercised are also established by the Committee, provided that
the term may not exceed ten years. Option may not be exercised
during the first six months after the date the option is granted.
The option price may be satisfied in cash, or, if permitted by
the Committee, by delivering to the Company shares of Company
common stock, whether already owned or issuable under the option,
having a fair market value equal to the option price, or a
combination of cash and shares.
SARs. The Committee may grant SARs either separately or in
tandem with options. Each SAR entitles the holder to receive
upon exercise of the SAR the excess of the fair market value of
the Company's common stock on the date of exercise over the price
for such SAR established by the Committee when the SAR was
granted, multiplied by the number of shares for which the SAR is
exercised. Upon exercise of a SAR, the holder will receive such
amount in either cash or shares of common stock of the Company,
<PAGE 21> or in some combination of cash and stock, as determined
by the Committee. No SAR may be exercised during the first six
months after the date it is granted.
Restricted Stock Grants. The Committee may also issue
shares under a restricted stock grant. The grant would set forth
a restriction period during which a grantee who is an employee of
the Company must remain in the employment of the Company. If the
grantee's employment terminates during the period, the grant
would terminate and the shares would be returned to the Company.
The Committee could, however, provide complete or partial
exceptions to that requirement as it deems equitable. The
grantee could not dispose of the shares prior to the expiration
of the restriction period. During this period, the grantee would
be entitled to vote the shares and receive dividends. Upon a
lapse of the restrictions, any restrictive legend on the stock
certificate would be removed.
Acceleration of Exercise Period.
The Committee may, in its sole discretion, permit
acceleration of the exercise of any option or SAR or the
termination of the restriction on any restricted stock as the
Committee may deem necessary or appropriate and may condition
such acceleration upon such terms as the Committee may designate.
In addition, any restrictions on exercise of options or SARs or
the transfer of any restricted stock will cease upon the
occurrence of certain events that could constitute a change in
control of the Company.
Forfeiture
If the Committee finds that any holder of an option, SAR, or
restricted stock engaged in fraud, embezzlement, theft,
commission of a felony, or dishonesty in the course of employment
by the Company or any subsidiary, or that the holder disclosed
trade secrets of the Company, the holder will forfeit all right
under such options, SARs, and restricted stock awards that have
not been fully exercised.
Federal Income Tax Consequences of Stock Options
Tax Consequences. The Employee Stock Incentive Plan permits
eligible employees of First Leesport and its subsidiaries to
receive grants of incentive stock options, which qualify for
certain tax benefits. In addition, the Employee Stock Incentive
Plan permits employees of First Leesport to receive grants of
nonqualified stock options, which do not qualify for such tax
benefits.
The Employee Stock Incentive Plan is not a qualified plan
under Section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code"). First Leesport has been advised that under
the Code, the following federal income tax consequences will
result when incentive stock options or nonqualified stock
<PAGE 22> options, or any combination thereof, are granted or
exercised, although the following is not intended to be a
complete statement of the applicable law.
Incentive Stock Options. An optionee generally will not be
deemed to receive any income for federal tax purposes at the time
an incentive stock option is granted, nor will First Leesport be
entitled to a tax deduction at that time. Upon the sale or
exchange of the shares at least two years after the grant of the
option and one year after receipt of the shares by the optionee
upon exercise, the optionee will recognize long-term capital gain
or loss upon the sale of such shares equal to the difference
between the amount realized on such sale and the exercise price.
If the foregoing holding periods are not satisfied or the
option is exercised more than three months after the optionee's
employment with First Leesport has terminated, the optionee will
recognize ordinary income equal to the difference between the
exercise price and the lower of the fair market value of the
stock at the date of the option exercise or the sale price of the
stock. If the sale price exceeds the fair market value on the
date of exercise, the gain in excess of the ordinary income
portion will be treated as either long-term or short-term capital
gain, depending on whether the stock has been held for more than
12 months on the date of sale. Any loss on disposition is a
long-term or short-term capital loss, depending upon whether the
optionee had held the stock for more than 12 months. A different
rule for measuring ordinary income upon such a premature
disposition may apply if the optionee is a director or 10 percent
shareholder of First Leesport or an officer of First Leesport
subject to Section 16(b) of the Securities Exchange Act of 1934.
If First Leesport cancels an option, the optionee recognizes
income to the extent of the amount paid by First Leesport to
cancel the option over the optionee's basis in such option, if
any.
No income tax deduction will be allowed First Leesport with
respect to shares purchased by an optionee upon the exercise of
an incentive stock option, provided that such shares are held at
least two years after the date of grant and at least one year
after the date of exercise. However, if those holding periods
are not satisfied, First Leesport may deduct an amount equal to
the ordinary income recognized by the optionee upon disposition
of the shares.
The exercise of an incentive stock option and the sale of
stock acquired by such exercise could subject an optionee to
alternative minimum tax liability for federal income tax
purposes.
Nonqualified Stock Options. An optionee will not be deemed
to receive any income for federal tax purposes at the time a
nonqualified stock option is granted, nor will First Leesport be
entitled to a tax deduction at that time. At the time of
exercise, however, the optionee will realize ordinary income in
<PAGE 23> an amount equal to the excess of the market value of
the shares at the time of exercise of the option over the option
price of such shares. First Leesport is allowed a federal income
tax deduction in an amount equal to the ordinary income
recognized by the optionee due to the exercise of a nonqualified
stock option at the time of such recognition by the optionee.
Stock-for-Stock Exchange. An optionee who exchanges
"statutory option stock" of First Leesport in payment of the
price upon the exercise of an incentive stock option will be
deemed to make a "disqualifying disposition" of the statutory
option stock so transferred unless the applicable holding
requirements (two years from the date of the grant and one year
after the exercise of an incentive stock option) with respect to
such statutory option stock are met after the exercise of
incentive stock options but also upon the exercise of qualified
stock options and stock acquired under certain other stock
purchase plans. If an optionee exercises nonqualified stock
options by exchanging previously-owned statutory option stock,
the Internal Revenue Service has ruled that the optionee will not
recognize gain on the disposition of the statutory option stock
(assuming the holding period requirements applicable to such
statutory option stock have been satisfied) because of the non-
recognition rule of Code Section 1036.
New Plan Benefits Table
The following table shows the number of stock options
("Units") which were granted for 1998 pursuant to the Employee
Stock Incentive Plan to (i) the Named Executive Officers;
(ii) all current executive officers as a group; (iii) all current
directors who are not executive officers as a group; and (iv) all
employees, including all current officers who are not executive
officers, as a group. <PAGE 24>
NEW PLAN BENEFITS
Name and Position 1998 Employee Incentive Stock Plan
Number of Units Dollar Value($)
Raymond H. Melcher, Jr. 4,000 -0-
President and Chief
Executive Officer
All executive officers, 45,152 -0-
as a group (15 persons)
All directors who are -0- -0-
not executive officers,
as a group (8 persons)
All employees, including 3,000 -0-
all current officers who
are not executive officers,
as a group (120 persons)
If the Employee Stock Incentive Plan is approved by the
Shareholders, First Leesport anticipates that the plan will be
registered with the Securities and Exchange Commission and with
any applicable state securities commission where registration is
required by July 31, 1999. The cost of such registrations will
be borne by First Leesport.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE
"FOR" ADOPTION OF THE EMPLOYEE STOCK INCENTIVE PLAN. The
affirmative vote of a majority of all votes cast at the Meeting
is required to approve this proposal. Abstentions and broker
nonvotes will not constitute or be counted as "votes" cast for
purposes of the Meeting. All proxies will be voted "FOR"
approval of the proposal unless a shareholder specifies to the
contrary on such shareholder's proxy card.
MATTER NO. 5
PROPOSAL TO APPROVE THE FIRST LEESPORT BANCORP, INC.
1998 INDEPENDENT DIRECTORS STOCK OPTION PLAN
Description of the 1998 Independent Directors Stock Option Plan
The purposes of the First Leesport Bancorp, Inc. 1998
Directors Stock Option Plan (the "Directors Stock Option Plan")
are to promote the long-term success of the Company by creating a
long-term mutuality of interests between the nonemployee
Directors and shareholders of the Company, to provide an
additional inducement for such Directors to remain with the
Company and to provide a means through which the Company may
attract able persons to serve as Directors.
The principal features of the Directors Stock Option Plan
are summarized below. The summary is qualified in its entirety
<PAGE 25> by reference to the full text of the Directors Stock
Option Plan which is appended as Exhibit "B" to this proxy
statement.
Subject to adjustment as described below, the Directors
Stock Option Plan authorizes the grant of options for the
purchase of up to 50,000 shares of First Leesport's common stock.
Unless terminated earlier by the Board of Directors, the
Directors Stock Option Plan will terminate on November 10, 2004.
Under the Directors Stock Option Plan, only nonqualified
stock options may be granted to eligible directors of First
Leesport. As of the Record Date, First Leesport had eight
directors who would be eligible to participate in the Directors
Stock Option Plan.
In the event of a stock split, stock dividend, spinoff, or
other relevant change affecting the common stock of the Company,
adjustments may be made to the number of shares available for
grants and to the number of shares and price under outstanding
options granted before such event.
The Directors Stock Option Plan authorizes a committee
composed of at least two members of the Board, who serve at the
discretion of the Board, to administer and interpret the
Directors Stock Option Plan. Any shares as to which an option,
expires, lapses unexercised, or is terminated or canceled may be
subject to a new option.
The exercise price for options granted under the Directors
Stock Option Plan will be the fair market value of the Company's
common stock on the date the option is granted. Therefore no
dollar value or gain to the optionee is possible without
appreciation in the stock price after the date the option is
granted.
The stock options granted under the Directors Stock Option
Plan may be exercised for 10 years after the date of grant.
Except as provided by the Board of Directors, no option may be
transferred by the optionee other than by will or by the laws of
descent and distribution, and each option is exercisable during
the optionee's lifetime only by the optionee.
In the event an optionee ceases to be a director for any
reason, stock options may continue to be exercised during the
term of the option up to 12 months from the date such termination
of service as a director.
Acceleration of Exercise Period
Any restrictions on exercise of options will cease upon the
occurrence of certain events that could constitute a change in
control of the Company.
<PAGE 26>
Forfeiture
If the Committee finds that any holder of an option, engaged
in fraud, embezzlement, theft, commission of a felony, or
dishonesty in the course of employment by the Company or any
subsidiary, or that that holder disclosed trade secrets of the
Company, the holder will forfeit all right under such options
that have not been fully exercised.
The Board may amend, suspend or terminate the Directors
Stock Option Plan at any time without shareholder approval,
subject to the requirements of applicable securities and tax
laws. The Board may not modify or amend the Directors Stock
Option Plan with respect to any outstanding option or impair or
cancel any outstanding option without the consent of the affected
optionee.
Tax Consequences
The Directors Stock Option Plan permits nonemployee
directors of First Leesport to receive grants of nonqualified
stock options. The Directors Stock Option Plan is not a
qualified plan under Code Section 401(a) and is not subject to
the provisions of the Employee Retirement Income Security Act of
1974, as amended. First Leesport has been advised that under the
Code, the following federal income tax consequences will result
when nonqualified stock options are granted or exercised,
although the following is not intended to be a complete statement
of the applicable law.
An optionee will not be deemed to receive any income for
federal tax purposes at the time a nonqualified stock option is
granted, nor will First Leesport be entitled to a tax deduction
at that time. At the time of exercise, however, the optionee
will realize ordinary income in an amount equal to the excess of
the market value of the shares at the time of exercise of the
option over the option price of such shares. First Leesport is
allowed a federal income tax deduction in an amount equal to the
ordinary income recognized by the optionee due to the exercise of
a nonqualified stock option at the time of such recognition by
the optionee.
Stock-for-Stock Exchange
If an optionee exercises nonqualified stock options by
exchanging previously-owned statutory option stock, the Internal
Revenue Service has ruled that the optionee will not recognize
gain on the disposition of the statutory option stock (assuming
the holding period requirements applicable to such statutory
option stock have been satisfied) because of the nonrecognition
rule of Code Section 1036.
If the Directors Stock Option Plan is approved by the
shareholders, First Leesport anticipates that the Plan will be
registered with the Securities and Exchange Commission and with
<PAGE 27> any applicable state securities commission where
registration is required by July 31, 1999. The cost of such
registrations will be borne by First Leesport.
As provided above, only nonemployee directors of First
Leesport will be eligible to receive stock options under the
Directors Stock Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR
ADOPTION OF THE DIRECTORS STOCK OPTION PLAN. The affirmative
vote of a majority of all votes cast at the Meeting is required
to adopt the Directors Stock Option Plan. Abstentions and broker
nonvotes will not constitute or be counted as "votes" cast for
purposes of the Meeting. All proxies will be voted "FOR"
adoption of the Directors Stock Option Plan unless a shareholder
specifies to the contrary on such shareholder's proxy card.
MATTER NO. 6
APPOINTMENT OF AUDITORS
The Board has appointed Beard & Company, Inc., Certified
Public Accountants, as the Company's independent auditors for
1999. Beard & Company, Inc. has acted as the Company's
independent auditors since August 14, 1990. The appointment was
recommended by the Audit Committee and is subject to stockholder
approval. The Board recommends that you vote "FOR" the
appointment. If this proposal does not receive the affirmative
vote of shareholders holding a majority of the shares voted at
the Meeting, the Board will reconsider the appointment.
Representatives of Beard & Company, Inc. will be at the Meeting.
Principal Stockholders
To the Company's knowledge, no person or group beneficially
owned 5% or more of the Company's outstanding common stock as of
February 15, 1999.
Other Matters
Management knows of no business other than as described
above that is planned to be brought before the Meeting. Should
any other matters arise, however, the persons named on the
enclosed proxy will vote thereon according to their best
judgment.
Stockholders are not entitled to dissenters rights with
respect to either matter scheduled to be acted upon.
The Company's Board of Directors has appointed Judges of
Election to tabulate votes cast at the Meeting. The Judges of
Election will not count abstentions or broker nonvotes as votes
cast for or against either matter to be considered at the
Meeting.
<PAGE 28>
Stockholder Proposals for Next Annual Meeting
Any stockholder proposal for consideration at the annual
meeting of stockholders to be held in 2000 must be received by
the Company at its principal offices not later than November 10,
1999, in order for it to be included in the Company's proxy
materials relating to such annual meeting of stockholders. A
stockholder proposal submitted after November 10, 1999, or which
does not otherwise meet the requirements of the applicable
regulations relating to stockholder proposals, will not be
included in the Company's proxy materials, but may nonetheless be
presented at the Annual Meeting of Stockholders in 2000. If the
stockholder intending to present such a proposal has not provided
the Company notice of the matter on or before February 7, 2000,
the proxyholders of the Board of Directors would have
discretionary authority to vote on such proposal at the
Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
DANIEL W. WEIST
Secretary
PAGE 29
<PAGE>
EXHIBIT "A"
FIRST LEESPORT BANCORP, INC.
1998 EMPLOYEE STOCK INCENTIVE PLAN
1. Purpose. The purpose of this Employee Stock Incentive Plan
(the "Plan") is to advance the development, growth and
financial condition of First Leesport Bancorp, Inc. (the
"Corporation") and each subsidiary thereof, as defined in
Section 424 of the Internal Revenue Code of 1986, as amended
(the "Code"), by providing incentives through participation
in the appreciation of the common stock of the Corporation
to secure, retain and motivate personnel who may be
responsible for the operation and for management of the
affairs of the Corporation and any subsidiary now or
hereafter existing ("Subsidiary").
2. Term. The Plan shall become effective as of the date it is
adopted by the Corporation's Board of Directors (the
"Board"), and shall be presented for approval at the next
meeting of the Corporation's shareholders. Any and all
options and rights awarded under the Plan (the "Awards")
before it is approved by the Corporation's shareholders
shall be conditioned upon and may not be exercised before
receipt of shareholder approval, and shall lapse upon
failure to receive such approval. Unless previously
terminated by the Board, the Plan shall terminate on and no
options shall be granted after the tenth anniversary of the
effective date of the Plan.
3. Stock. Shares of the Corporation's common stock (the
"Stock"), that may be issued under the Plan shall not
exceed, in the aggregate, 200,000 shares, as may be adjusted
pursuant to Section 19 hereof. Shares may be either
authorized and unissued shares or authorized shares issued
by and subsequently reacquired by the Corporation as
treasury stock. Under no circumstances shall any fractional
shares be awarded under the Plan. Except as may be
otherwise provided in the Plan, any Stock subject to an
Award that, for any reason, lapses or terminates prior to
exercise shall again become available for grant under the
Plan. While the Plan is in effect, the Corporation shall
reserve and keep available the number of shares of Stock
needed to satisfy the requirements of the Plan. The
Corporation shall apply for any requisite governmental
authority to issue shares under the Plan. The Corporation's
failure to obtain any such governmental authority deemed
necessary by the Corporation's legal counsel for the lawful
issuance and sale of Stock under the Plan shall relieve the
Corporation of any duty or liability for the failure to
issue or sell the Stock.
<PAGE 30>
4. Administration. The ability to control and manage the
operation and administration of the Plan shall be vested in
the Board or in a committee of two or more members of the
Board selected by the Board (the "Committee"). The
Committee shall have the authority and discretion to
interpret the Plan, to establish, amend and rescind any
rules and regulations relating to the Plan, to determine the
terms and provisions of any agreements made pursuant to the
Plan, and to make any and all determinations that may be
necessary or advisable for the administration of the Plan.
Any interpretation of the Plan by the Committee and any
decision made by the Committee under the Plan is final and
binding.
The Committee shall be responsible and shall have full,
absolute and final power of authority to determine what, to
whom, when and under what facts and circumstances Awards
shall be made, the form, number, terms, conditions and
duration thereof (including but not limited to when
exercisable), the number of shares of Stock subject thereto,
and the stock option exercise prices. The Committee shall
make all other determinations and decisions, take all
actions and do all things necessary or appropriate in and
for the administration of the Plan. No member of the
Committee or of the Board shall be liable for any decision,
determination or action made or taken in good faith by such
person under or with respect to the Plan or its
administration.
5. Awards. Awards may be made under the Plan in the form of
(a) "Qualified Options" to purchase Stock, which are
intended to qualify for certain tax treatment as incentive
stock options under Sections 421 and 422 of the Code,
(b) "Non-Qualified Options" to purchase Stock, which are not
intended to qualify under Sections 421 through 424 of the
Code, (c) Stock Appreciation Rights ("SARs"), or
(d) "Restricted Stock". More than one Award may be granted
to an eligible person, and the grant of any Award shall not
prohibit the grant of another Award, either to the same
person or otherwise, or impose any obligation to exercise on
the participant. All Awards and the terms and conditions
thereof shall be set forth in written agreements, in such
form and content as approved by the Committee from time to
time, and shall be subject to the provisions of the Plan
whether or not contained in such agreements. Multiple
Awards for a particular person may be set forth in a single
written agreement or in multiple agreements, as determined
by the Committee, but in all cases each agreement for one or
more Awards shall identify each of the Awards thereby
represented as a Qualified Option, Non-Qualified Option,
Stock Appreciation Right or Restricted Stock, as the case
may be.
6. Eligibility. Persons eligible to receive Awards shall be
those key officers and other employees of the Corporation
<PAGE 31> and each Subsidiary as determined by the
Committee. A person's eligibility to receive an Award shall
not confer upon him or her any right to receive an Award.
Except as otherwise provided, a person's eligibility to
receive or actual receipt of an Award under the Plan shall
not limit or affect his or her benefits under or eligibility
to participate in any other incentive or benefit plan or
program of the Corporation or any of its affiliates.
7. Qualified Options. In addition to other applicable
provisions of the Plan all Qualified Options and Awards
thereof shall be under and subject to the following terms
and conditions:
(a) issued by options intended to be Qualified Options
shall be 200,000 shares;
(b) No Qualified Option shall be awarded more than ten (10)
years after the date the Plan is adopted by the Board
or the date the Plan is approved by the Corporation's
shareholders, whichever is earlier;
(c) The time period during which any Qualified Option is
exercisable, as determined by the Committee, shall not
commerce before the expiration of six (6) months or
continue beyond the expiration of ten (10) years after
the date the Qualified Option is awarded;
(d) If a participant, who was awarded a Qualified Option,
ceases to be employed by the Corporation or any
Subsidiary for any reason other than his or her death,
the Committee may permit the participant thereafter to
exercise the option during its remaining term for a
period of not more than three months after cessation of
employment to the extent that the Qualified Option was
then and remains exercisable, unless such employment
cessation was due to the participant's disability, as
defined in Section 22(e)(3) of the Code, in which case
the three (3) month period shall be twelve (12) months;
if the participant dies while employed by the
Corporation or a Subsidiary, the Committee may permit
the participant's qualified personal representatives,or
any persons who acquire the Qualified Option pursuant
to his or her Will or laws of descent and distribution,
to exercise the Qualified Option during its remaining
term for a period of not more than twelve (12) months
after the participant's death to the extent that the
Qualified Option was then and remains exercisable; the
Committee may impose terms and conditions upon and for
the exercise of a Qualified Option after the cessation
of the participant's employment or his or her death;
(e) The purchase price of Stock subject to any Qualified
Option shall not be less than the Stock's fair market
<PAGE 32> value at the time the Qualified Option is
awarded and shall not be less than the Stock's par
value; and
(f) Qualified Options may not be sold, transferred or
assigned by the participant except by will or the laws
of descent and distribution.
8. Non-Qualified Options. In addition to other applicable
provisions of the Plan, all Non-Qualified Options and Awards
thereof shall be under and subject to the following terms
and conditions:
(a) The time period during which any Non-Qualified Option
is exercisable shall not commence before the expiration
of six (6) months or continue beyond the expiration of
ten (10) years after the date the Non-Qualified Option
is awarded;
(b) If a participant who was awarded a Non-Qualified Option
ceases to be eligible under the Plan before lapse or
full exercise of the option, the Committee may permit
the participant to exercise the option during its
remaining term, to the extent that the option was then
and remains exercisable, or for such time period and
under such terms and conditions as may be prescribed by
the Committee;
(c) The purchase price of a share of Stock subject to any
Non-Qualified Option shall not be less than the Stock's
par value; and
(d) Except as otherwise provided by the Committee, Non-
Qualified Stock Options granted under the Plan are not
transferable except as designated by the participant by
Will and the laws of descent and distribution.
9. Stock Appreciation Rights. In addition to other applicable
provisions of the Plan, all SARs and Awards thereof shall be
under and subject to the following terms and conditions:
(a) SARs may be granted either alone, or in connection with
another previously or contemporaneously granted Award
(other than another SAR) so as to operate in tandem
therewith by having the exercise of one affect the
right to exercise the other, as and when the Committee
may determine; however, no SAR shall be awarded in
connection with a Qualified Option more than ten (10)
years after the date the Plan is adopted by the Board
or the date the Plan is approved by the Corporation's
stockholders, whichever date is earlier;
(b) Each SAR shall entitle the participant to receive upon
exercise of the SAR all or a portion of the excess of
(1) the fair market value at the time of such exercise
<PAGE 33> of a specified number of shares of Stock as
determined by the Committee, over (ii) a specified
price as determined by the Committee of such number of
shares of Stock that, on a per share basis, is not less
than the Stock's fair market value at the time the SAR
is awarded, or if the SAR is connected with another
Award, such lesser percentage of the Stock purchase
price thereunder as may be determined by the Committee;
(c) Upon exercise of any SAR, the participant shall be paid
either in cash or in Stock, or in any combination
thereof, as the Committee shall determine. If such
payment is to be made in Stock, the number of shares
thereof to be issued pursuant to the exercise shall be
determined by dividing the amount payable upon exercise
by the Stock's fair market value at the time of
exercise;
(d) The time period during which any SAR is exercisable, as
determined by the Committee, shall not commence before
the expiration of six (6) months; however, no SAR
connected with another Award shall be exercisable
beyond the last date that such other connected Award
may be exercised;
(e) If a participant holding a SAR, before its lapse or
full exercise, ceases to be eligible under the Plan,
the Committee may permit the participant thereafter to
exercise such SAR during its remaining term, to the
extent that the SAR was then and remains exercisable,
for such time period and under such terms and
conditions as may be prescribed by the Committee;
(f) No SAR shall be awarded in connection with any
Qualified Option unless the SAR (i) lapses no later
than the expiration date of such connected Option,
(ii) is for not more than the difference between the
Stock purchase price under such connected Option and
the Stock's fair market value at the time the SAR is
exercised, (iii) is transferable only when and as such
connected Option is transferable and under the same
conditions, (iv) may be exercised only when such
connected Option may be exercised, and (v) may be
exercised only when the Stock's fair market value
exceeds the Stock purchase price under such connected
Option.
10. Restricted Stock. In addition to other applicable
provisions of the Plan, all Restricted Stock and Awards
thereof shall be under and subject to the following terms
and conditions:
(a) Restricted Stock shall consist of shares of Stock that
may be acquired by and issued to a participant at such
time, for such or no purchase price, and under and
<PAGE 34> subject to such transfer, forfeiture and
other restrictions, conditions or terms as shall be
determined by the Committee, including but not limited
to prohibitions against transfer, substantial risks of
forfeiture within the meaning of Section 83 of the
Code, and attainment of performance or other goals,
objectives or standards, all for or applicable to such
time periods as determined by the Committee;
(b) Except as otherwise provided in the Plan or the
Restricted Stock Award, a participant holding shares of
Restricted Stock shall have all the rights as does a
holder of Stock, including without limitation the right
to vote such shares and receive dividends with respect
thereto; however, during the time period of any
restrictions, conditions or terms applicable to such
Restricted Stock, the shares thereof and the right to
vote the same and receive dividends thereon shall not
be sold, assigned transferred, exchanged, pledged,
hypothecated, encumbered or otherwise disposed of
except as permitted by the Plan or the Restricted Stock
Award;
(c) Each certificate issued for shares of Restricted Stock
shall be deposited with the Secretary of the
Corporation, or the officer thereof, and shall bear a
legend in substantially the following form and content:
This Certificate and the shares of Stock
hereby represented are subject to the
provisions of the Corporation's 1998 Stock
Incentive Plan and a certain agreement
entered into between the holder and the
Corporation pursuant to the Plan. The
release of this Certificate and the shares of
Stock hereby represented from such provisions
shall occur only as provided by the Plan and
agreement, a copy of which are on file in the
office of the Secretary of the Corporation.
Upon the lapse or satisfaction of the restrictions,
conditions and terms applicable to the Restricted
Stock, a certificate for the shares of Stock free of
restrictions and without the legend shall be issued to
the participant;
(d) If a participant's employment with the Corporation or a
Subsidiary ceases for any reason prior to the lapse of
the restrictions, conditions or terms applicable to his
or her Restricted Stock, all of the participant's
Restricted Stock still subject to unexpired
restrictions, conditions or terms shall be forfeited
absolutely by the participant to the Corporation
without payment or delivery of any consideration or
other thing of value by the Corporation or its
<PAGE 35> affiliates, and thereupon and thereafter
neither the participant nor his or her heirs, personal
or legal representatives, successors, assigns,
beneficiaries, or any claimants under the participant's
will or laws of descent and distribution shall have any
rights or claims to or interests in the forfeited
Restricted Stock or any certificates representing
shares thereof, or claims against the Corporation or
its affiliates with respect thereto.
11. Exercise. Except as otherwise provided in the Plan, Awards
may be exercised in whole or in part by giving written
notice thereof to the Secretary of the Corporation, or his
or her designee, identifying the Award to be exercised, the
number of shares of Stock with respect thereto, and other
information pertinent to exercise of the Award. The
purchase price of the shares of Stock with respect to which
an Award is exercised shall be paid with the written notice
of exercise, either in cash or in securities of the
Corporation, including securities issuable hereunder, at its
then current fair market value, or in any combination
thereof, as the Committee shall determine. Funds received
by the Corporation from the exercise of any Award shall be
used for its general corporate purposes.
The number of shares of Stock subject to an Award shall be
reduced by the number of shares of Stock with respect to
which the participant has exercised rights under the Award.
If a SAR is awarded in connection with another Award, the
number of shares of Stock that may be acquired by the
participant under the other connected Award shall be reduced
by the number of shares of Stock with respect to which the
participant has exercised his or her SAR, and the number of
shares of Stock subject to the participant's SAR shall be
reduced by the number of shares of Stock acquired by the
participant pursuant to the other connected award.
The Committee may permit an acceleration of previously
established exercise terms of any Awards as, when, under
such facts and circumstances, and subject to such other or
further requirements and conditions as the Committee may
deem necessary or appropriate.
In addition:
(a) if the Corporation or its shareholders execute an
agreement to dispose of all or substantially all of the
Corporation's assets or stock by means of sale, merger,
consolidation, reorganization, liquidation or
otherwise, as a result of which the Corporation's
shareholders,immediately before the transaction, will
not own at least fifty percent(50%) of the total
combined voting power of all classes of voting stock of
the surviving entity (be it the Corporation or
otherwise) immediately after the consummation of the
<PAGE 36> transaction, then any and all outstanding
Awards shall immediately become and remain exercisable
or, if the transaction is not consummated , until the
agreement relating to the transaction expires or is
terminated,in which case, all Awards shall be treated
as if the agreement was never executed;
(b) if there is an actual, attempted or threatened change
in the ownership of at least twenty-five percent (25%)
of all classes of voting stock of the Corporation
through the acquisition of, or an offer to acquire such
percentage of the Corporation's voting stock by any
person or entity, or persons or entities acting in
concert or as a group, and such acquisition or offer
has not been duly approved by the Board, then any and
all outstanding Awards shall immediately become and
remain exercisable, or
(c) if during any period of two (2) consecutive years, the
individuals who at the beginning of such period
constituted the Board cease, for any reason, to
constitute at least a majority of the Board (unless the
election of each director of the Board who was not a
director of the Board at the beginning of such 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) then any and all Awards
shall immediately become and remain exercisable.
12. Right of First Refusal. Each written agreement for an Award
may contain a provision that requires as a condition to
exercising a Qualified Option or a Non-Qualified Option that
the participant agree prior to selling, transferring or
otherwise disposing of any shares of Stock obtained through
the exercise of the Award to first offer such shares of
Stock to the Corporation for purchase. The terms and
conditions of such right of first refusal shall be
determined by the Committee in its sole and absolute
discretion, provided that the purchase price shall be at
least equal to the Stock's fair market value as determined
under paragraph 14 below, and shall be subject to all
applicable federal and state laws, rules and regulations.
13. Withholding. When a participant exercises a stock option or
Stock Appreciation Right awarded under the Plan, the
Corporation, in its discretion and as required by law, may
require the participant to remit to the Corporation an
amount sufficient to satisfy fully any federal, state and
other jurisdictions' income and other tax withholding
requirements prior to the delivery of any certificates for
shares of Stock. At the Committee's discretion, remittance
may be made in cash, shares already held by the participant
or by the withholding by the Corporation of sufficient
shares issuable pursuant to the option to satisfy the
participant's withholding obligation. <PAGE 37>
14. Value. Where used in the Plan, the "fair market value" of
Stock or any of options or rights with respect thereto,
including Awards, shall mean and be determined by (a) the
average of the highest and lowest reported sales prices
thereof on the principal established domestic securities
exchange on which listed, and if not listed, then (b) the
average of the dealer " bid" and "ask" prices thereof on the
over-the-counter market, as reported by the National
Association of Securities Dealers Automated Quotation System
("NASDAQ") in either case as of the specified or otherwise
required or relevant time, or if not traded as of such
specified, required or relevant time, then based upon such
reported sales or "bid" and "ask" prices before and/or after
such time in accordance with pertinent provisions of and
principles under the Code and the regulations promulgated
thereunder.
15. Amendment. To the extent permitted by applicable law, the
Board may amend, suspend, or terminate the Plan at any time.
The amendment or termination of this Plan shall not, without
the consent of the participants, alter or impair any rights
or obligations under any Award previously granted hereunder.
From time to time, the Committee may rescind, revise and add
to any of the terms, conditions and provisions of the Plan
or of an Award as necessary, or appropriate to have the Plan
and any Awards thereunder be or remain qualified and in
compliance with all applicable laws, rules and regulations,
and the Committee may delete, omit or waive of the terms
conditions or provisions that are no longer required by
reason of changes of applicable laws, rules or regulations,
including but not limited to, the provisions of Sections 421
and 422 of the Code, Section 16 of the Securities Exchange
Act of 1934, as amended, (the "1934 Act") and the rules and
regulations promulgated by the Securities and Exchange
Commission. Without limiting the generality of the preceding
sentence, each Qualified Option shall be subject to such
other and additional terms, conditions and provisions as the
Committee may deem necessary or appropriate in order to
qualify as a Qualified Option under Section 422 of the Code,
including, but not limited to, the following provisions:
(a) At the time a Qualified Option is awarded, the
aggregate fair market value of the Stock subject
thereto and of any Stock or other capital stock with
respect to which incentive stock options qualifying
under Sections 421 and 422 of the Code are exercisable
for the first time by the participant during any
calendar year under the Plan and any other plans of the
Corporation or its affiliates, shall not exceed
$100,000.00; and
(b) No Qualified Option, shall be awarded to any person if,
at the time of the Award, the person owns shares of the
stock of the Corporation possessing more than ten
<PAGE 38> percent (10%) of the total combined voting
power of all classes of stock of the Corporation or its
affiliates, unless, at the time the Qualified Option is
awarded. the exercise price of the Qualified Option is
at least one hundred and ten percent (110%) of the fair
market value of the Stock on the date of grant and the
option, by its terms, is not exercisable after the
expiration of five (5) years from the date it is
awarded.
16. Continued Employment. Nothing in the Plan or any Award
shall confer upon any participant or other persons any right
to continue in the employ of, or maintain any particular
relationship with, the Corporation or its affiliates, or
limit or affect any rights, powers or privileges that the
Corporation or its affiliates may have to supervise,
discipline and terminate the participant. However, the
Committee may require, as a condition of making and/or
exercising any Award, that a participant agree to, and in
fact provide services, either as an employee or in another
capacity, to or for the Corporation or any Subsidiary for
such time period as the Committee may prescribe. The
immediately preceding sentence shall not apply to any
Qualified Option to the extent such application would result
in disqualification of the option under Sections 421 and 422
of the Code.
17. General Restrictions. If the Committee or Board determines
that it is necessary or desirable to: (a) list, register or
qualify the Stock subject to the Award, or the Award itself,
upon any securities exchange or under any federal or state
securities or other laws, (b) obtain the approval of any
governmental authority, or (c) enter into an agreement with
the participant with respect to disposition of any Stock
(including, without limitations an agreement that, at the
time of the participant's exercise of the Award, any Stock
thereby acquired is and will be acquired solely for
investment purposes and without any intention to sell or
distribute the Stock), then such Award shall not be
consummated, in whole or in part, unless the listing,
registration, qualification, approval or agreement as the
case may be, shall have been appropriately effected or
obtained to the satisfaction of the Committee and legal
counsel for the Corporation.
18. Rights. Except as otherwise provided in the Plan,
participants shall have no rights as a holder of the Stock
unless and until one or more certificates for the shares of
Stock are issued and delivered to the participants.
19. Adjustments. In the event that the shares of common stock
of the Corporation, as presently constituted, shall be
changed into or exchanged for a different number or kind of
shares of common stock or other securities of the
Corporation or of other securities of the Corporation or of
<PAGE 39> another corporation (whether by reason of merger,
consolidation, recapitization, reclassification, split-up,
combination of shares or otherwise) or if the number of such
shares of common stock shall be increased through the
payment of a stock dividend, stock split or similar
transaction, then, there shall be substituted for or added
to each share of common stock of the Corporation that was
theretofore appropriated, or which thereafter may become
subject to an option under the Plan, the number and kind of
shares of common stock or other securities into which each
outstanding share of the common stock of the Corporation
shall be so changed or for which each such share shall be
exchanged or to which each such shares shall be entitled, as
the case may be. Each outstanding Award shall be
appropriately amended as to price and other terms as may be
necessary to reflect the foregoing events.
If there shall be any other change in the number or kind of
the outstanding shares of the common stock of the
Corporation, or of any common stock or other securities in
which such common stock shall have been changed, or for
which it shall have been exchanged, and if a majority of the
disinterested members of the Committee shall, in its sole
discretion, determine that such change equitably requires an
adjustment in any Award that was theretofore granted or that
may thereafter be granted under the Plan, then such
adjustment shall be made in accordance with such
determination.
The grant of an Award under the Plan shall not affect in any
way the right or power of the Corporation to make
adjustments, reclassifications, reorganizations or changes
of its capital or business structure, to merge, to
consolidate, to dissolve, to liquidate or to sell or
transfer all or any part of its business or assets.
Fractional shares resulting from any adjustment in Awards
pursuant to this Section 19 may be settled as a majority of
the members of the Board of Directors or of the Committee,
as the case may be, shall determine.
To the extent that the foregoing adjustments relate to
common stock or securities of the Corporation, such
adjustments shall be made by a majority of the members of
the Board or of the Committee, as the case may be, whose
determination in that respect shall be final, binding and
conclusive. Notice of any adjustment shall be given by the
Corporation to each holder of an Award that is so adjusted.
20. Forfeiture. Notwithstanding anything to the contrary in
this Plan, if the Committee finds, after full consideration
of the facts presented on behalf of the Corporation and the
involved participant, that he or she has been engaged in
fraud, embezzlement, theft, commission of a felony, or
dishonesty in the course of his or her employment by the
<PAGE 40> Corporation or by any Subsidiary and such action
has damaged the Corporation or the Subsidiary, as the case
may be, or that the participant has disclosed trade secrets
of the Corporation or its affiliates, the participant shall
forfeit all rights under and to all unexercised Awards, and
under and to all exercised Awards under which the
Corporation has not yet delivered payment or certificates
for shares of Stock (as the case may be), all of which
Awards and rights shall be automatically canceled. The
decision of the Committee as to the cause of the
participant's discharge from employment with the Corporation
or any Subsidiary and the damage thereby suffered shall be
final for purposes of the Plan, but shall not affect the
finality of the participant's discharge by the Corporation
or Subsidiary for any other purposes. The preceding
provisions of this paragraph shall not apply to any
Qualified Option to the extent such application would result
in disqualification of the option as an incentive stock
option under Sections 421 and 422 of the Code.
21. Indemnification. In and with respect to the administration
of the Plan, the Corporation shall indemnify each member of
the Committee and/or of the Board, each of whom shall be
entitled, without further action on his or her part, to
indemnification from the Corporation for all damages,
losses, judgments, settlement amounts, punitive damages,
excise taxes, fines, penalties, costs and expenses
(including without limitation attorneys' fees and
disbursements) incurred by the member in connection with any
threatened, pending or completed action, suit or other
proceedings of any nature, whether civil, administrative
investigative or criminal, whether formal or informal, and
whether by or in the right or name of the Corporation, any
class of its security holders, or otherwise, in which the
member may be or may have been involved, as a party or
otherwise, by reason of his or her being or having been a
member of the Committee and/or of the Board, whether or not
he or she continues to be a member of the Committee or of
the Board. The provisions, protection and benefits of this
Section shall apply and exist to the fullest extent
permitted by applicable law to and for the benefit of all
present and future members of the Committee and/or of the
Board and their respective heirs, personal and legal
representatives, successors and assigns, in addition to all
other rights that they may have as a matter of law, by
contract, or otherwise, except (a) to the extent there is
entitlement to insurance proceeds under insurance coverages
provided by the Corporation on account of the same matter
or proceeding for which indemnification hereunder is
claimed, or (b) to the extent there is entitlement to
indemnification from the Corporation, other that under this
Section, on account of the same matter or proceeding for
which indemnification hereunder is claimed.
<PAGE 41>
22. Taxes. The issuance of shares of Common Stock under the
Plan shall be subject to any applicable taxes or other laws
or regulations of the United States of America and any state
or local authority having jurisdiction there over.
23. Miscellaneous.
(a) Any reference contained in this Plan to particular
section or provision of law, rule or regulation,
including but not limited to the Code and the 1934 Act,
shall include any subsequently enacted or promulgated
section or provision of law, rule or regulation as the
case may be. With respect to persons subject to
Section 16 of the 1934 Act, transactions under this
Plan are intended to comply with all applicable
conditions of Section 16 and the rules and regulations
promulgated thereunder, or any successor rules and
regulations that may be promulgated by the Securities
and Exchange Commission, and to the extent any
provision of this Plan or action by the Committee falls
to so comply, it shall be deemed null and void, to the
extent permitted by applicable law and deemed advisable
by the Committee.
(b) Where used in this Plan: the plural shall include the
singular, and unless the context otherwise clearly
requires, the singular shall include the plural; and
the term "affiliates" shall mean each and every
Subsidiary and any parent of the Corporation.
(c) Plan are for convenience only, and shall not limit or
affect the meaning, interpretation or construction of
any of the provisions of the Plan.
------------
END
------------
PAGE 42
<PAGE>
EXHIBIT "B"
FIRST LEESPORT BANCORP, INC.
1998 INDEPENDENT DIRECTORS STOCK OPTION PLAN
1. Purpose. The 1998 Independent Directors Stock Option
Plan (the "Plan") was established to advance the development,
growth and financial condition of First Leesport Bancorp, Inc
(the "Corporation") and its subsidiaries, by providing an
incentive, through participation in the appreciation of the
capital stock of the Corporation, and thereby securing, retaining
and motivating members of the Corporation's Board of Directors
who are not officers or employees of the Corporation or any
subsidiary thereof (the "non-employee directors").
2. Term. The plan shall become effective as of the date
it is adopted by the Corporation's Board of Directors (the
"Board"), and shall be presented for approval at the next meeting
of the Corporation's shareholders. Any and all options awarded
under the Plan before it is approved by the Corporation's
shareholders shall be conditioned upon, and may not be exercised
before, receipt of shareholder approval, and shall lapse upon
failure to receive such approval. Unless previously terminated
by the Board, the Plan shall terminate on, and no options shall
be granted after the sixth anniversary of the effective date of
the Plan.
3. Stock. The shares of the Corporation's common stock
(the "Common Stock") issuable under the Plan shall not exceed
50,000 shares. The amount of the Common Stock issuable under the
Plan may be adjusted pursuant to Section 10 hereof. The Common
Stock issuable hereunder may either be authorized and unissued
shares of Common Stock, or authorized shares of Common Stock
issued by the Corporation and subsequently reacquired by it as
treasury stock, or shares purchased in open market transactions.
Under no circumstances shall fractional shares be issued under
the Plan. The Corporation's failure to obtain any governmental
authority deemed necessary by the Corporation's legal counsel for
the proper grant of the stock options under this Plan and/or the
issuance of Common Stock under the Plan shall relieve the
Corporation of any duty or liability for the failure to grant
stock options under the Plan and/or issue Common Stock under the
Plan as to which such authority has not been obtained.
4. Stock Options. Options will be granted under the Plan
period as determined by the Board with no commitment annually or
otherwise. Each non-employee director who is a member of the
Corporation's Board of Directors on the grant date shall be
awarded stock options to purchase shares of Common Stock (the
"Stock Options") under the following terms and conditions:
(a) The time period during which any Stock Option is
exercisable shall be ten (10) years after the date of the grant.
<PAGE 43>
(b) If a director, who has received an award pursuant
to the Plan, ceases to be a member of the Board of Directors for
any reason, then the director may exercise the Stock Option not
more than three (3) months after such cessation. If a director,
who has received an award pursuant to the Plan dies, the
director's qualified personal representative, or any person who
acquires a Stock Option pursuant to the director's Will or the
laws of descent and distribution, may exercise such stock Option
during its remaining term for a period of not more than twelve
(12) months after the director's death to the extent that the
Stock Option would then be and remains exercisable.
(c) The purchase price of a share of Common Stock
subject to a Stock Option shall be the fair market value of the
Common Stock on the date of grant, as determined under Section 6
thereof.
(d) The Stock Option shall be made by a written
agreement in accordance with the terms of this Plan, and pursuant
to additional terms as may be determined by the Committee (as
such term is defined in Section 12 hereof) (the "Stock Option
Agreement").
5. Exercise. Except as otherwise provided in the Plan, a
Stock Option may be exercised in whole or in part by giving
written notice thereof to the Secretary of the Corporation, or
his designee, identifying the Stock Option being exercised, the
number of shares of Common Stock with respect thereto, and other
information pertinent to the exercise of the Stock Option. The
purchase price of the shares of Common Stock with respect to
which a Stock Option is exercised shall be paid with the written
notice of exercise, either in cash or in Common Stock, including
Common Stock issuable hereunder, at its then current fair market
value, or any combination of cash or Common Stock. Funds
received by the Corporation from the exercise of any Stock Option
shall be used for its general corporate purposes. The number of
shares of Common Stock subject to a Stock Option shall be reduced
by the number of shares of Common Stock with respect to which the
director has exercised rights under the related Stock Option
Agreement.
If the Corporation or its shareholders execute an agreement
to dispose of all or substantially all of the Corporation's
assets or capital stock by means of sale, merger, consolidation,
reorganization, liquidation or otherwise, as a result of which
the Corporation's shareholders as of immediately before such
transaction will not own at least fifty percent (50%) of the
total combined voting power of all classes of voting capital
stock of the surviving entity (be it the Corporation or
otherwise) immediately after the consummation of such
transaction, thereupon any and all outstanding Stock Options
<PAGE 44> shall immediately become exercisable until the
consummation of such transaction, or if not consummated, until
the agreement therefor expires or is terminated, in which case
thereafter all Stock Options shall be treated as if the agreement
never had been executed. If during any period of two (2)
consecutive years, the individuals, who at the beginning of such
period, constituted the Board of Directors, cease for any reason
to constitute at least a majority of the Board of Directors
(unless the election of each director of the Board of Directors,
who was not a director of the Board of Directors at the beginning
of such 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) thereupon any and all outstanding Stock
Options shall immediately become exercisable. If there is an
actual, attempted or threatened change in the ownership of at
least twenty-five percent (25%) of any class of voting stock of
the Corporation through the acquisition of, or an offer to
acquire, such percentage of the Corporation's voting stock by any
person or entity, or persons or entities acting in concert or as
a group, and such acquisition or offer has not been duly approved
by the Board of Directors, thereupon any and all outstanding
Stock Options shall immediately become exercisable.
6. Value. Where used in the Plan, the "fair market value"
of Stock or any options or rights with respect thereto, including
Awards, shall mean and be determined by (a) the average of the
highest and lowest reported sales prices thereof on the principal
established domestic securities exchange on which listed, and if
not listed, then (b) the average of the dealer (bid" and "ask"
prices thereof on the over-the-countermarket, as reported by the
National Association of Securities Dealers Automated Quotation
System ("NASDAQ"), in either case as of the specified or
otherwise required or relevant time, or if not traded as of such
specified, required or relevant time, then based on such reported
sales or "bid" and "ask" prices before and/or after such time in
accordance with pertinent provisions of and principles under the
Code and the regulations promulgated thereunder.
7. Continued Relationship. Nothing in the Plan or in any
Stock Option shall confer upon any director any right to continue
his relationship with the Corporation as a director, or limit or
affect any rights, powers or privileges that the Corporation or
its shareholders may have with respect to the director's
relationship with the Corporation.
8. General Restrictions. The Board of Directors may
require, in its discretion, (a) the listing, registration or
qualification of the Common Stock issuable pursuant to the Plan
on any securities exchange or under any federal or state
securities or other laws, (b) the approval of any governmental
authority, or (c) an execution of agreement by any director with
respect to disposition of any Common Stock (including, without
limitation, that at the time of the director's exercise of the
Stock Option, any Common Stock thereby acquired is being and will
be acquired solely for investment purposes and without any
<PAGE 45> intention to sell or distribute the Common Stock). If
the Board of Directors so requires, then Stock Options shall not
be exercised, in whole or in part, unless such listing,
registration, qualification, approval or agreement has been
appropriately effected or obtained to the satisfaction of the
Board of Directors and legal counsel for the Corporation.
Notwithstanding anything to the contrary herein, a director shall
not sell, transfer or otherwise dispose of any shares of Common
Stock acquired pursuant to a Stock Option unless at least six (6)
months have elapsed from the date the Stock Option was granted
and, in any event, the transfer or disposition is made in
accordance with Section 16 of the Securities Exchange Act of
1934, as amended, and as the same may be amended from time to
time.
9. Rights. Except as otherwise provided in the Plan, a
director shall have no rights as a holder of the Common Stock
subject to a Stock Option unless and until one or more
certificates for the shares of Common Stock are issued and
delivered to the director. No Stock Option, or the grant
thereof, shall limit or affect the right or power of the
Corporation or its affiliates to adjust, reclassify,
recapitalize, reorganize or otherwise change its or their capital
or business structure, or to merge, consolidate, dissolve,
liquidate or sell any or all of its or their business, property
or assets.
10. Adjustments. In the event that the shares of Common
Stock of the Corporation, as presently constituted, shall be
changed into or exchanged for a different number or kind of
shares of Common Stock or other securities of the Corporation or
of another corporation (whether by reason of merger,
consolidation, recapitalization, reclassification, split-up,
combination of shares or otherwise) or if the number of shares of
Common Stock shall be increased through the payment of a stock
dividend, stock split or similar transaction, then, there shall
be substituted for or added to each share of Common Stock of the
Corporation that was theretofore appropriated, or that thereafter
may become subject to a Stock Option under the Plan, the number
and kind of shares of Common Stock or other securities into which
each outstanding share of the Common Stock of the Corporation
shall be so changed or for which each such share shall be
exchanged or to which each share shall be entitled, as the case
may be. Each outstanding Stock Option shall be appropriately
amended as to price and other terms, as may be necessary to
reflect the foregoing events.
If there shall be any other change in the number or kind of
the outstanding shares of Common Stock of the Corporation, or of
any Common Stock or other securities into which such Common Stock
shall have been changed, or for which it shall have been
exchanged, and if a majority of the members of the Board of
Directors shall, in their sole discretion, determine that the
change equitably requires an adjustment in any Stock Option that
was theretofore granted or that may thereafter be granted under
<PAGE 46> the Plan, then such adjustment shall be made in
accordance with the determination.
The grant of a Stock Option pursuant to the Plan shall not
affect, in any way, the right or power of the Corporation to make
adjustments, reclassifications, reorganizations or changes of its
capital or business structure, to merge, to consolidate, to
dissolve, to liquidate or to sell or transfer all or any part of
its business or assets.
Fractional shares resulting from any adjustment in a Stock
Option pursuant to this Section 10 may be settled as a majority
of the members of the Board of Directors or of the Committee, as
the case may be, shall determine.
To the extent that the foregoing adjustments relate to
Common Stock or securities of the Corporation, such adjustments
shall be made by a majority of the members of the Board of
Directors or of the Committee, as the case may be, whose
determination in that respect shall be final, binding and
conclusive. Notice of any adjustment shall be given by the
Corporation to each holder of a Stock Option that is so adjusted.
11. Forfeiture. Notwithstanding anything to the contrary
in this Plan, if any option holder is engaged in fraud,
embezzlement, theft, commission of a felony, or dishonesty in the
course of his relationship with the Corporation or its
affiliates, or has disclosed trade secrets of the Corporation or
its affiliates, the option holder shall forfeit all rights under
and to all unexercised Stock Options, and all exercised Stock
Options for which the Corporation has not yet delivered
certificates for shares of Common Stock, and all rights to
receive Stock Options shall be automatically canceled.
12. Administration. The ability to control and manage the
operation and administration of the Plan shall be vested in the
Board of Directors or in a committee of two or more members of
the Board of Directors, selected by the Board of Directors (the
"Committee"). The Committee shall have the authority and
discretion to interpret the Plan, to establish, amend and rescind
any rules and regulations relating to the Plan, to determine the
terms and provisions of any agreements made pursuant to the Plan,
and to make any and all determinations that may be necessary or
advisable for the administration of the Plan. Any interpretation
of the Plan by the Committee and any decision made by it under
the Plan is final and binding.
13. Miscellaneous. Any reference contained in this Plan to
a particular section or provision of law, rule or regulation
shall include any subsequently enacted or promulgated section or
provision of law, rule or regulation, as the case may be. With
respect to the persons subject to Section 16 of the Securities
Exchange Act of 1934, as amended, transactions under this Plan
are intended to comply with all applicable conditions of the Rule
and the regulations promulgated thereunder or any successor rule
<PAGE 47> that may be promulgated by the Securities and Exchange
Commission. To the extent any provision of this Plan fails to so
comply, it shall be deemed null and void, to the extent permitted
by applicable law, subject to the provisions of Section 15,
below. Where used in this Plan, the plural shall include the
singular, and, unless the context otherwise clearly requires, the
singular shall include the plural and the masculine shall include
the feminine. The captions of the numbered Sections contained
in this Plan are for convenience only, and shall not limit or
affect the meaning, interpretation or construction of any of the
provisions of the Plan.
14. Transferability. Except as otherwise provided by the
Board of Directors, Stock Options granted under the Plan are not
transferable except as designated by the participant by will and
the laws of descent and distribution.
15. Amendment. The Plan may be amended, suspended or
terminated, without notice, by a majority vote of the Board of
Directors of the Corporation.
16. Taxes. The issuance of shares of Common Stock under
the Plan shall be subject to any applicable taxes or other laws
or regulations of the United States of American and any state or
local authority having jurisdiction there over.
----------
END
----------
PAGE 48
<PAGE>
FIRST LEESPORT BANCORP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
I/We hereby appoint Mrs. Jenette Eck, as proxyholder, with
the power to appoint her substitute, and hereby authorize her to
represent and to vote, as designated on the reverse side, all the
shares of common stock of First Leesport Bancorp, Inc. held of
record by me/us on March 12, 1999, at the Annual Meeting of
Stockholders to be held on April 27, 1999, or any adjournment
thereof.
This proxy when properly executed will be voted in the
manner directed hereon. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE ELECTION OF DIRECTORS, AND FOR MATTERS NO. 2, 3,
4, 5 and 6. This proxy will be voted, in the discretion of the
proxyholders, upon such other business as may properly come
before the Annual Meeting of Stockholders or any adjournment
thereof.
* The votes shown on the reverse side are the total votes that
may be cast by this proxy, based on one vote per each share
of First Leesport Bancorp, Inc. common stock held.
PLEASE VOTE AND SIGN ON THE OTHER SIDE. NO POSTAGE IS
REQUIRED IF THIS PROXY IS RETURNED IN THE ENCLOSED
ENVELOPE AND MAILED IN THE UNITED STATES
PAGE 49
<PAGE>
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
FIRST LEESPORT BANCORP, INC.
April 27, 1999
Please Detach and Mail in the Envelope Provided
[ X ] Please mark your votes as in this example.
MATTER NO. 1 - ELECTION OF THREE CLASS II DIRECTORS AND ONE
CLASS III DIRECTOR
Nominees for Class II Directors Nominee for Class III Director
Raymond H. Melcher, Jr. Edward C. Barrett
William J. Keller
Charles J. Hopkins
[ ] FOR all nominees listed hereon (except as marked to the
contrary below)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed
(INSTRUCTION: To withhold authority to vote for any individual
nominee write that nominee's name on the space provided below.)
___________________________
MATTER NO. 2 - AMENDMENT OF THE COMPANY'S ARTICLES OF
INCORPORATION TO INCREASE THE COMPANY'S AUTHORIZED
COMMON STOCK
FOR [ ] AGAINST [ ] ABSTAIN [ ]
MATTER NO. 3 - AMENDMENT OF THE COMPANY'S ARTICLES OF
INCORPORATION TO DECREASE THE PERCENTAGE OF SHARES
REQUIRED TO APPROVE CERTAIN MERGERS AND
CONSOLIDATIONS
FOR [ ] AGAINST [ ] ABSTAIN [ ]
MATTER NO. 4 - APPROVAL OF THE 1998 EMPLOYEE STOCK INCENTIVE PLAN
FOR [ ] AGAINST [ ] ABSTAIN [ ]
MATTER NO. 5 - APPROVAL OF THE 1998 INDEPENDENT DIRECTOR'S STOCK
OPTION PLAN
FOR [ ] AGAINST [ ] ABSTAIN [ ]
<PAGE 50>
MATTER NO. 6 - APPOINTMENT OF BEARD & COMPANY AS THE COMPANY'S
AUDITORS FOR 1999.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
The undersigned hereby acknowledges receipt of the Proxy
Statement dated March 23, 1999, and hereby revokes any proxy or
proxies heretofore given to vote shares at said meeting or any
adjournments thereof.
Dated:__________________ ___________________________________
Signature
Dated:__________________ ___________________________________
Signature if held jointly
Note: Please sign exactly as name appears hereon. 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. If a
partnership, please sign in partnership name by
authorized person. <PAGE 51>
