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Exhibit 99.2
EQUALITY BANCORP, INC.
1997 STOCK OPTION AND INCENTIVE PLAN
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SECTION 1. PURPOSE.
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The purpose of the Equality Bancorp, Inc. 1997 Stock Option
and Incentive Plan (the "Plan") is to benefit Equality Bancorp, Inc.
(the "Company") and its Subsidiaries (as defined in Section 2) by
recognizing the contributions made to the Company by officers and other
key employees (including Directors of the Company who are also
employees) of the Company and its Subsidiaries, to provide such persons
with additional incentive to devote themselves to the future success of
the Company, and to improve the ability of the Company to attract,
retain and motivate individuals, by: providing such persons with a
favorable opportunity to acquire or increase their proprietary interest
in the Company over a period of years through receipt of options to
acquire common stock of the Company. In addition, the Plan is intended
as an additional incentive to members of the Board of Directors of the
Company who are not employees of the Company ("Non-Employee Directors")
to serve on the Board of Directors of the Company (the "Board") and to
devote themselves to the future success of the Company by providing them
with a favorable opportunity to acquire or increase their proprietary
interest in the Company through receipt of options to acquire common
stock of the Company.
The Company may grant stock options that constitute
"incentive stock options" ("ISOs") within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"), or stock
options that do not constitute ISOs ("NSOs") (ISOs and NSOs being
hereinafter collectively referred to as "Options").
SECTION 2. ELIGIBILITY.
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Non-Employee Directors shall participate in the Plan only in
accordance with the provisions of Section 5 of the Plan. The Committee
(as defined in Section 3) shall initially, and from time to time
thereafter, select those officers and other key employees (including
Directors of the Company who are also employees) (collectively referred
to herein as "Key Employees") of the Company or any other entity of
which the Company is the direct or indirect beneficial owner of not less
than fifty percent (50%) of all issued and outstanding equity interests
("Subsidiaries"), to participate in the Plan on the basis of the special
importance of their services in the management, development and
operations of the Company or its Subsidiaries (each such Director and
Key Employee receiving Options granted under the Plan is referred to
herein as an "Optionee").
SECTION 3. ADMINISTRATION.
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3.1. The Committee. The Plan shall be administered by the
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Compensation Committee of the Board (the "Committee"). The Committee
shall be comprised of two (2) or more members of the Board who are "non-
employee directors" within the meaning of Rule 16b-3 promulgated under
the Securities Exchange Act of 1934, as amended (the "1934 Act"), or any
successor rule or regulation.
3.2. Authority of the Committee. No person, other than
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members of the Committee, shall have any authority concerning decisions
regarding the Plan. Subject to the express provisions of this Plan,
including but not limited to Section 5, the Committee shall have sole
discretion concerning all matters relating to the Plan and Options
granted hereunder. The Committee, in its sole discretion, shall
determine the Key Employees of the Company and its Subsidiaries to whom,
and the time or times at
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which Options will be granted, the number of shares to be subject to
each Option, the expiration date of each Option, the time or times
within which the Option may be exercised, the cancellation of the Option
(with the consent of the holder thereof) and the other terms and
conditions of the grant of the Option. The terms and conditions of the
Options need not be the same with respect to each Optionee or with
respect to each Option.
The Committee may, subject to the provisions of the Plan,
establish such rules and regulations as it deems necessary or advisable
for the proper administration of the Plan, and may make determinations
and may take such other action in connection with or in relation to the
Plan as it deems necessary or advisable. Each determination or other
action made or taken pursuant to the Plan, including interpretation of
the Plan and the specific terms and conditions of the Options granted
hereunder by the Committee shall be final and conclusive for all
purposes and upon all persons including, but without limitation, the
Company, its Subsidiaries, the Committee, the Board, officers and the
affected employees of the Company and/or its Subsidiaries and their
respective successors in interest.
No member of the Committee shall, in the absence of bad
faith, be liable for any act or omission with respect to service on the
Committee. Service on the Committee shall constitute service as a
Director of the Company so that members of the Committee shall be
entitled to indemnification pursuant to the Company's Certificate of
Incorporation and By-Laws.
SECTION 4. SHARES OF COMMON STOCK SUBJECT TO PLAN.
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4.1. The total number of shares of common stock, par value
$.01 per share, of the Company (the "Common Stock"), that may be issued
and sold under the Plan initially shall be 132,250. To effectuate the
adjustments set forth in Section 4.2 hereof, the total number of shares
of Common Stock that may be available for Options under the Plan shall
be adjusted on January 1 of each calendar year, within the Applicable
Period (as defined below), so that the total number of shares of Common
Stock that may be issued and sold under the Plan as of January 1 of each
calendar year within the Applicable Period shall be equal to ten percent
(10%) of the outstanding shares of Common Stock of the Company on such
date, less the number of shares of Common Stock that may be issued and
sold under the Equality Savings and Loan Association 1993 Stock Option
and Incentive Plan; provided, however, that no such adjustment shall
reduce the total number of shares of Common Stock that may be issued and
sold under the Plan below 132,250. For purposes of the preceding
sentence, Applicable Period shall be the ten-year period commencing on
the Effective Date (as defined in Section 14) and ending on the date
that is ten years thereafter. The number of shares of Common Stock
delivered by any such Optionee or withheld by the Company on behalf of
any such Optionee pursuant to Section 8.2 or 8.3 of the Plan shall once
again be available for issuance pursuant to subsequent Options. Any
shares of Common Stock subject to issuance upon exercise of Options but
which are not issued because of a surrender (other than pursuant to
Sections 8.2 or 8.3 of the Plan), forfeiture, expiration, termination or
cancellation of any such Option, to the extent consistent with
applicable law, rules and regulations, shall once again be available for
issuance pursuant to subsequent Options.
4.2. The number of shares of Common Stock subject to the
Plan and to Options granted under the Plan shall be adjusted as follows:
(a) in the event that the number of outstanding shares of Common Stock
is changed by any stock dividend, stock split or combination of shares,
the number of shares subject to the Plan and to Options previously
granted thereunder shall be proportionately adjusted; (b) in the event
of any merger, consolidation or reorganization of the Company with any
other corporation or corporations, there shall be substituted on an
equitable basis as determined by the Board of Directors, in its sole
discretion, for each share of Common Stock then subject to the Plan and
for each share of Common Stock then subject to an Option granted under
the Plan, the number and kind of shares of stock, other securities, cash
or other property to which the holders of Common Stock of the Company are
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entitled pursuant to the transaction; and (c) in the event of any other
change in the capitalization of the Company, the Committee, in its sole
discretion, shall provide for an equitable adjustment in the number of
shares of Common Stock then subject to the Plan and to each share of
Common Stock then subject to an Option granted under the Plan. In the
event of any such adjustment, the exercise price per share shall be
proportionately adjusted.
SECTION 5. GRANT OF OPTIONS TO NON-EMPLOYEE DIRECTORS.
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5.1. Grants. Each individual who is a Non-Employee
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Director on the effective date of the Plan shall be granted
automatically a NSO to purchase 5,000 shares of Common Stock on the
effective date of the Plan. Non-Employee Directors shall also be
eligible to receive discretionary grants of NSOs as determined by the
Committee from time to time.
5.2. Exercise Price and Period. The per share Option
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exercise price of each such NSO granted to a Non-Employee Director shall
be the "Fair Market Value," on the date on which the Option is granted,
of the Common Stock subject to the Option. "Fair Market Value" shall
mean the average of the closing price for Company Stock as reported on
The Nasdaq Stock Market for the 20 business days ending on the third
business day preceding the date with respect to which such Company Stock
is being valued, for which trades in Company Stock were reported on The
Nasdaq Stock Market. If no trades occur on a certain day, the closing
price for the last preceding day on which trading occurred will be used
as the closing price for that day. In the event that Company Stock is
not readily tradable on an established securities market, the fair
market value of Company Stock shall be determined by an independent
appraiser meeting requirements similar to the requirements of the
treasury regulations promulgated under Section 170(a)(1) of the Code.
Each such NSO shall become exercisable with respect to one-
fifth of the total number of shares of Common Stock subject to the
Option on the date twelve months after the date of its grant and with
respect to an additional one-fifth of the total number of shares of
Common Stock subject to the Option at the end of each twelve-month
period thereafter during the succeeding four years. Each NSO shall
expire on the date ten years after the date of grant.
In addition to the terms and conditions set forth in this
Section 5, NSOs also shall be subject to such terms and conditions
applicable to ISOs according to Sections 6.2, 6.3, 6.4 and 6.6,
provided, however, such additional terms and conditions are not
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inconsistent with the terms and conditions set forth in Section 5 of
this Plan.
SECTION 6. GRANTS OF OPTIONS TO EMPLOYEES.
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6.1. Grant. Subject to the terms of the Plan, the
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Committee may from time to time grant Options, which may be ISOs or
NSOs, to Key Employees of the Company or any of its Subsidiaries.
Unless otherwise expressly provided at the time of the grant, Options
granted under the Plan to Key Employees will be ISOs.
6.2. Option Agreement. Each Option shall be evidenced by a
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written Option Agreement specifying the type of Option granted, the
Option exercise price, the terms for payment of the exercise price, the
expiration date of the Option, the number of shares of Common Stock to
be subject to each Option and such other terms and conditions
established by the Committee, in its sole discretion, not inconsistent
with the Plan.
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6.3. Expiration. Except to the extent otherwise provided
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in or pursuant to Section 7, each Option shall expire, and all rights to
purchase shares of Common Stock shall expire, on the tenth anniversary
of the date on which the Option was granted.
6.4. Exercise Period. Except to the extent otherwise
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provided in or pursuant to Section 7 or in the proviso to this sentence,
Options shall become exercisable pursuant to the following schedule:
with respect to one-fifth of the total number of shares of Common Stock
subject to Option on the date twelve months after the date of its grant
and with respect to an additional one-fifth of the total number of
shares of Common Stock subject to the Option at the end of each twelve-
month period thereafter during the succeeding four years; provided,
however, that the Committee, in its sole discretion, shall have the
authority to shorten or lengthen the exercise schedule with respect to
any or all Options, or any part thereof, granted to Key Employees under
the Plan, subject to applicable law.
6.5. Required Terms and Conditions of ISOs. Each ISO
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granted to a Key Employee shall be in such form and subject to such
restrictions and other terms and conditions as the Committee may
determine, in its sole discretion, at the time of grant, subject to the
general provisions of the Plan, the applicable Option Agreement, and the
following specific rules:
(a) Except as provided in Section 6.5(d), the per
share exercise price of each ISO shall be the Fair Market
Value of the shares of Common Stock on the date such ISO is
granted.
(b) The aggregate Fair Market Value (determined with
respect to each ISO at the time such Option is granted) of
the shares of Common Stock with respect to which ISOs are
exercisable for the first time by an individual during any
calendar year (under all incentive stock option plans of the
Company and its parent and subsidiary corporations) shall
not exceed $100,000. If the aggregate Fair Market Value
(determined at the time of grant) of the Common Stock
subject to an Option, which first becomes exercisable in any
calendar year exceeds the limitation of this Section 6.5(b),
so much of the Option that does not exceed the applicable
dollar limit shall be an ISO and the remainder shall be a
NSO; but in all other respects, the original Option
Agreement shall remain in full force and effect.
(c) As used in this Section 6, the words "parent"
and "subsidiary" shall have the meanings given to them in
Section 424(e) and 424(f) of the Code.
(d) Notwithstanding anything herein to the contrary,
if an ISO is granted to an individual who owns stock
possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or of
its parent or subsidiary corporations, within the meaning of
Section 422(b)(6) of the Code, (i) the purchase price of
each share of Common Stock subject to the ISO shall be not
less than one hundred ten percent (110%) of the Fair Market
Value of the Common Stock on the date the ISO is granted,
and (ii) the ISO shall expire and all rights to purchase
shares thereunder shall cease no later than the fifth
anniversary of the date the ISO was granted.
(e) No ISOs may be granted under the Plan after
September 26, 2007.
6.6. Required Terms and Conditions of NSOs. Each NSO
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granted to Key Employees or Non-employee Directors shall be in such
form and subject to such restrictions and other terms and conditions as
the Committee may determine, in its sole discretion, at the time of
grant, subject to the general provisions of the Plan, the applicable
Option Agreement, and the following specific rule: the per share
exercise price of each NSO shall be the Fair Market Value of the shares
of Common Stock on the
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date the NSO is granted; provided however, that in no event may the
exercise price be less than the par value of the shares of Common Stock
subject to such NSO.
SECTION 7. EFFECT OF TERMINATION OF EMPLOYMENT.
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7.1. Termination Generally. Except as provided in Sections
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7.2 and 7.3, or by the Committee, in its sole discretion, any Option not
yet exercisable shall terminate on the date of the Optionee's
termination of employment with the Company and its Subsidiaries or
termination of service on the Board for any reason. An Optionee's
transfer of employment from the Company to a Subsidiary, or from a
Subsidiary to the Company, or from a Subsidiary to another Subsidiary,
shall not constitute a termination of employment for purposes of the
Plan. Options granted under the Plan shall not be affected by any
change of duties in connection with the employment of the Optionee or by
leave of absence authorized by the Company or a Subsidiary.
7.2. Death and Disability. In the event of an Optionee's
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death or Disability (as defined below) during employment with the
Company or any of its Subsidiaries or during service on the Board, all
Options held by the Optionee shall become fully exercisable on such date
of death or Disability. Each of the Options held by such an Optionee
shall expire on the earlier of: (a) the first anniversary of the date
of the Optionee's death or Disability; or (b) the date that such Option
expires in accordance with its terms. For purposes of this Section 7.2,
"Disability" shall mean the inability of an individual to discharge
current job responsibilities by reason of any medical determinable
physical or mental impairment which is expected to result in death or
which has lasted or can be expected to last for a continuous period of
not less than twelve (12) months. The Committee, in its sole
discretion, shall determine the date of any Disability.
7.3. Retirement of Employees.
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(a) Non-Employee-Directors. In the event the
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service of a Non-Employee Director on the Board shall be
terminated by reason of the retirement of such Non-Employee
Director of the Company in accordance with the Company's
retirement policy for Directors, any Options granted to such
Non-Employee Director shall continue to vest and remain
exercisable pursuant to Section 5, in the same manner and to
the same extent as if such Director had continued his or her
service on the Board during such period.
(b) Key Employees Who Are Also Directors.
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Section 7.3(a) shall be applicable to Options held by any
Key Employee who is also a Director in the event the
employment of such Key Employee with the Company and/or its
Subsidiaries shall be terminated by reason of Employee
Retirement, so long as the service of such Key Employee on
the Board continues after such Employee Retirement.
SECTION 8. EXERCISE OF OPTIONS.
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8.1. Notice. A person entitled to exercise an Option may
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do so by delivery of a written notice to that effect specifying the
number of shares of Common Stock with respect to which the Option is
being exercised and any other information the Committee may prescribe.
The notice shall be accompanied by payment as described in Section 8.2.
The notice of exercise shall be accompanied by the Optionee's copy of
the writing or writings evidencing the grant of the Option. All notices
or requests provided for herein shall be delivered to the Secretary of
the Company.
8.2. Exercise Price. Except as otherwise provided in the
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Plan or in any Option Agreement, the Optionee shall pay the purchase
price of the shares of Common Stock upon exercise of any Option:
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(a) in cash; (b) in cash received from a broker-dealer to whom the
Optionee has submitted an exercise notice consisting of a fully endorsed
Option (however, in the case of an Optionee subject to Section 16 of the
1934 Act, this payment option shall only be available to the extent such
insider complies with Regulation T issued by the Federal Reserve Board);
(c) by delivering shares of Common Stock having an aggregate Fair Market
Value on the date of exercise equal to the Option exercise price; (d) by
directing the Company to withhold such number of shares of Common Stock
otherwise issuable upon exercise of such Option having an aggregate Fair
Market Value on the date of exercise equal to the Option exercise price;
(e) in the case of a Key Employee or Non-Employee Director, by such
other medium of payment as the Committee, in its discretion, shall
authorize at the time of grant; or (f) by any combination of (a), (b),
(c), (d) and (e). In the case of an election pursuant to (a) or (b)
above, cash shall mean cash or a check issued by a federally insured
bank or savings and loan, and made payable to the Company. In the case
of payment pursuant to (b), (c) or (d) above, the Optionee's election
must be made on or prior to the date of exercise and shall be
irrevocable. In lieu of a separate election governing each exercise of
an Option, an Optionee may file a blanket election with the Committee
that shall govern all future exercises of Options until revoked by the
Optionee. The Company shall issue, in the name of the Optionee, stock
certificates representing the total number of shares of Common Stock
issuable pursuant to the exercise of any Option as soon as reasonably
practicable after such exercise, provided that any shares of Common
Stock purchased by an Optionee through a broker-dealer pursuant to
clause (b) above shall be delivered to such broker-dealer in accordance
with 12 C.F.R. Section 220.3(e)(4) or other applicable provision of law.
8.3. Taxes Generally. At the time of the exercise of any
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Option, as a condition of the exercise of such Option, the Company may
require the Optionee to pay the Company an amount equal to the amount of
the tax the Company or any Subsidiary may be required to withhold to
obtain a deduction for federal and state income tax purposes as a result
of the exercise of such Option by the Optionee or to comply with
applicable law.
8.4. Payment of Taxes. At any time when an Optionee is
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required to pay an amount required to be withheld under applicable
income tax or other laws in connection with the exercise of an Option,
the Optionee may satisfy this obligation in whole or in part by:
(a) directing the Company to withhold such number of shares of Common
Stock otherwise issuable upon exercise of such Option having an
aggregate Fair Market Value on the date of exercise equal to the amount
of tax required to be withheld; or (b) delivering shares of Common Stock
of the Company having an aggregate Fair Market Value equal to the amount
required to be withheld. In the case of payment of taxes pursuant to
(a) or (b) above, the Optionee's election must be made on or prior to
the date of exercise and shall be irrevocable. The Committee may
disapprove any election or delivery or may suspend or terminate the
right to make elections or deliveries. In lieu of a separate election
governing each exercise of an Option, an Optionee may file a blanket
election with the Committee which shall govern all future exercises of
Options until revoked by the Optionee.
SECTION 9. TRANSFERABILITY OF OPTIONS.
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No Option granted pursuant to the Plan shall be transferable
otherwise than by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined by the Code.
Notwithstanding the preceding sentence, an Option Agreement for NSOs may
provide that the Optionee, at any time prior to his death, may assign
all or any portion of an Option granted to him to (i) his spouse or
lineal descendant, (ii) the trustee of a trust for the primary benefit
of his spouse or lineal descendant, (iii) a partnership of which his
spouse and lineal descendants are the only partners, or (iv) a tax
exempt organization as described in Code Section 501(c)(3). In such
event, the spouse, lineal descendant, trustee, partnership or tax exempt
organization will be entitled to all of the rights of the Optionee with
respect to the assigned portion of such Option, and such portion of the
Option will continue to be subject to all of the terms, conditions and
restrictions applicable to the Option, as set forth herein and in the
related Option
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Agreement immediately prior to the effective date of the assignment.
Any such assignment will be permitted only if: (i) the Optionee does not
receive any consideration therefore; and (ii) the assignment is
expressly permitted by the applicable Agreement as approved by the
Committee. Any such assignment shall be evidenced by an appropriate
written document executed by the Optionee, and a copy thereof shall be
delivered to the Company on or prior to the effective date of the
assignment.
SECTION 10. RIGHTS AS STOCKHOLDER.
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An Optionee or a transferee of an Optionee pursuant to
Section 9 shall have no rights as a stockholder with respect to any
Common Stock covered by an Option or receivable upon the exercise of an
Option until the Optionee or transferee shall have become the holder of
record of such Common Stock, and no adjustments shall be made for
dividends in cash or other property or other distributions or rights in
respect to such Common Stock for which the record date is prior to the
date on which the Optionee shall have in fact become the holder of
record of the shares of Common Stock acquired pursuant to the Option.
SECTION 11. POSTPONEMENT OF EXERCISE.
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The Committee may postpone any exercise of an Option for
such time as the Committee in its sole discretion may deem necessary in
order to permit the Company (a) to effect, amend or maintain any
necessary registration of the Plan or the shares of Common Stock
issuable upon the exercise of an Option under the Securities Act of
1933, as amended, or the securities laws of any applicable jurisdiction,
(b) to permit any action to be taken in order to (i) list such shares of
Common Stock on a stock exchange if shares of Common Stock are then
listed on such exchange or (ii) comply with restrictions or regulations
incident to the maintenance of a public market for its shares of Common
Stock, including any rules or regulations of any stock exchange on which
the shares of Common Stock are listed, or (c) to determine that such
shares of Common Stock and the Plan are exempt from such registration or
that no action of the kind referred to in (b)(ii) above needs to be
taken; and the Company shall not be obligated by virtue of any terms and
conditions of any Option or any provision of the Plan to recognize the
exercise of an Option or to sell or issue shares of Common Stock in
violation of the Securities Act of 1933 or the law of any government
having jurisdiction thereof. Any such postponement shall not extend the
term of an Option and neither the Company nor its directors or officers
shall have any obligation or liability to an Optionee, to the Optionee's
successor or to any other person with respect to any shares of Common
Stock as to which the Option shall lapse because of such postponement.
SECTION 12. TRUST AGREEMENT.
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The Company may enter into a trust agreement ("Trust
Agreement") whereby the Company shall agree to contribute to a trust
("Trust") for the purpose of accumulating shares of Common Stock to
assist the Company in fulfilling its obligations to Optionees hereunder.
Such Trust Agreement shall be substantially in the form of the model
trust agreement set forth in Internal Revenue Service Revenue Procedure
92-64, or any subsequent Internal Revenue Service Revenue Procedure, and
shall include provisions required in such model trust agreement that all
assets of the Trust shall be subject to the creditors of the Company in
the event of insolvency.
SECTION 13. TERMINATION OR AMENDMENT OF PLAN.
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The Board or the Committee may terminate, suspend, or amend
the Plan, in whole or in part, from time to time, without the approval
of the stockholders of the Company to the extent allowed by law.
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The Committee may correct any defect or supply an omission
or reconcile any inconsistency in the Plan or in any Option granted
hereunder in the manner and to the extent it shall deem desirable, in
its sole discretion, to effectuate the Plan.
No amendment or termination of the Plan shall in any manner
affect any Option theretofore granted without the consent of the
Optionee, except that the Committee may amend the Plan in a manner that
does affect Options theretofore granted upon a finding by the Committee
that such amendment is in the best interest of holders of outstanding
Options affected thereby.
This Plan is intended to comply with all applicable
requirements of Rule 16b-3 or its successors under the 1934 Act, insofar
as participants subject to Section 16 of the 1934 Act are concerned. To
the extent any provision of the Plan does not so comply, the provision
shall, to the extent permitted by law and deemed advisable by the
Committee, be deemed null and void with respect to such participants.
SECTION 14. EFFECTIVE DATE.
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The Plan shall be effective upon the date of approval of the
Plan by an affirmative vote of a majority of the shares of the voting
stock of the Company entitled to be voted by the holders of stock
represented at a duly held stockholders' meeting, within 12 months after
the date of adoption of the Plan by the Board.
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