<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. __)
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of Commission Only (as
/X/ Definitive Proxy Statement permitted by Rule 14a-6(e)(2))
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
LAUREL CAPITAL GROUP, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------
(2) Form, Schedule or Registration No.:
------------------------------
(3) Filing Party:
------------------------------
(4) Date Filed:
------------------------------
* No Fee Required
<PAGE> 2
LAUREL CAPITAL GROUP, INC.
2724 HARTS RUN ROAD
ALLISON PARK, PENNSYLVANIA 15101
(412) 487-7400
NOTICE OF ANNUAL MEETING
TO BE HELD ON NOVEMBER 14, 1996
NOTICE IS HEREBY GIVEN that an Annual Meeting of Stockholders of Laurel
Capital Group, Inc. (the "Company") will be held at the Holiday Inn - Allegheny
Valley, R.I.D.C. Park, 180 Gamma Drive, Pittsburgh, Pennsylvania 15238, on
Thursday, November 14, 1996 at 10:30 a.m., Eastern Time, for the following
purposes, all of which are more completely set forth in the accompanying Proxy
Statement:
(1) To elect three directors for a term of three years or until their
successors have been elected and qualified;
(2) To consider and approve the 1996 Stock Option Plan;
(3) To ratify the appointment of KPMG Peat Marwick as the Company's
independent auditors for the year ending June 30, 1997; and
(4) To transact such other business as may properly come before the meeting.
Stockholders of record at the close of business on September 30, 1996 are
entitled to notice of and to vote at the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
John A. Howard, Jr.
Secretary
Allison Park, Pennsylvania
October 10, 1996
==================================================================
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS
IMPORTANT THAT YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER
YOU OWN. EVEN IF YOU PLAN TO BE PRESENT, YOU ARE URGED TO
COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY IN
THE ENVELOPE PROVIDED. IF YOU ATTEND THIS MEETING, YOU MAY VOTE
EITHER IN PERSON OR BY YOUR PROXY. ANY PROXY GIVEN MAY BE REVOKED
BY YOU IN WRITING OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE
THEREOF.
==================================================================
<PAGE> 3
LAUREL CAPITAL GROUP, INC.
-------------------
PROXY STATEMENT
-------------------
ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is furnished to the holders of common stock of
Laurel Capital Group, Inc. (the "Company") in connection with the solicitation
of proxies on behalf of the Board of Directors, to be used at the Annual
Meeting of Stockholders ("Annual Meeting") to be held at the Holiday Inn,
Allegheny Valley, R.I.D.C. Park, 180 Gamma Drive, Pittsburgh, Pennsylvania
15238, on Thursday, November 14, 1996 at 10:30 a.m., Eastern Time, and at any
adjournment thereof for the purposes set forth in the Notice of Annual Meeting.
This Proxy Statement is expected to be mailed to stockholders on or about
October 10, 1996.
Each proxy solicited hereby, if properly signed and returned to the
Company, will be voted in accordance with the instructions contained therein if
it is not revoked prior to its use. If no contrary instructions are given,
each proxy received will be voted (i) for the election of the three nominees
described herein, (ii) for the proposal to adopt the 1996 Stock Option Plan
(the "Option Plan"), (iii) for the ratification of KPMG Peat Marwick as the
Company's independent auditors for the year ending June 30, 1997, and (iii)
upon such other matters as may properly come before the Annual Meeting in
accordance with the best judgment of the persons appointed as proxies. Any
stockholder giving a proxy has the power to revoke it at any time before it is
exercised by (i) filing with the Secretary of the Company written notice
thereof (John A. Howard, Jr., Secretary, Laurel Capital Group, Inc., 2724 Harts
Run Road, Allison Park, Pennsylvania 15101), (ii) submitting a duly executed
proxy bearing a later date, or (iii) by appearing at the Annual Meeting and
giving the Secretary notice of his or her intention to vote in person. Proxies
solicited hereby may be exercised only at the Annual Meeting and any
adjournment thereof and will not be used for any other meeting.
Laurel Capital Group, Inc. is a bank holding company for Laurel
Savings Bank (the "Bank"), a Pennsylvania chartered stock savings bank. The
Company owns 100% of the Bank's common stock.
VOTING SECURITIES AND BENEFICIAL
OWNERSHIP THEREOF
Only stockholders of record at the close of business on September 30,
1996 ("Voting Record Date") will be entitled to vote at the Annual Meeting. On
the Voting Record Date, there were 1,514,285 shares of common stock, $.01 par
value per share (the "Common Stock"), of the Company outstanding. The Company
had no other class of equity securities outstanding. Each share of Common
Stock is entitled to one vote at the Annual Meeting.
Directors are elected by a plurality of the votes cast with a quorum
present. A quorum consists of stockholders representing, either in person or
by proxy, a majority of the outstanding Common Stock entitled to vote at the
meeting. Abstentions are considered in determining the presence of a quorum
and will not affect the plurality vote required for the election of directors.
The affirmative vote of the holders of a majority of the total votes eligible
to be cast in person or by proxy at the Annual Meeting is required for approval
of the proposal to approve the Option Plan. The affirmative vote of the
holders of a majority of the total votes present in person or by proxy is
required to ratify the appointment of the independent auditors. Because of the
required votes, abstentions will have the effect of a vote against the proposal
with respect to the Option Plan. Under rules of the New York Stock Exchange,
the proposals for adoption of the Option Plan and ratification of the auditors
are considered "discretionary" items upon which brokerage firms may vote in
their discretion on behalf of their clients if such clients have not furnished
voting instructions and for which there will not be "broker non-votes."
<PAGE> 4
The following table sets forth information as of September 30, 1996
with respect to ownership of the Common Stock by the one entity which is known
to the Company to be the beneficial owner of more than 5% of the Common Stock
and by all directors and executive officers of the Company as a group. For
information with respect to the beneficial ownership of Common Stock by
individual directors, see "Information with Respect to Nominees for Director,
Directors Whose Terms Continue and Executive Officers."
<TABLE>
<CAPTION>
Name and Address Amount and Nature Percent
of Beneficial Owner of Beneficial Ownership(1) of Class(1)
------------------- -------------------------- -----------
<S> <C> <C>
First Manhattan Company 145,212(2) 9.6%
437 Madison Avenue
New York, New York 10022
All directors and executive
officers as a group (10 persons) 175,131(3) 11.6%
</TABLE>
- - ----------------
(1) Based upon information provided by the respective beneficial owners
and filings made pursuant to the Securities Exchange Act of 1934, as amended
("Exchange Act"), and other information. The amounts and percentages reflect
the stock splits declared and paid by the Company prior to the Voting Record
Date. Beneficial ownership is direct except as otherwise indicated by
footnote. In accordance with Rule 13d-3 of the Exchange Act, a person is
deemed to be the beneficial owner of a security if he or she has or shares
voting power or dispositive power with respect to such security or has the
right to acquire such ownership within 60 days.
(2) First Manhattan Company is the general partner of both First Save
Associates, L.P. and Second Save Associates, L.P., which, to the knowledge of
the Company, beneficially owned 6.2% and 2.4%, respectively, of the issued and
outstanding Common Stock as of September 30, 1996. First Manhattan Company has
stated in its filings under the Exchange Act that there are no other
relationships, contracts, understandings or arrangements between the two
partnerships.
(3) Includes options covering 78,467 shares of Common Stock which are
exercisable within 60 days of September 30, 1996. See "Information with
Respect to Nominees for Director, Directors Whose Terms Continue and Executive
Officers."
INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTOR,
DIRECTORS WHOSE TERMS CONTINUE AND EXECUTIVE OFFICERS
ELECTION OF DIRECTORS
The Bylaws of the Company presently provide that the Board of
Directors shall consist of eight members. The Company's Bylaws further provide
that the Board of Directors shall be divided into three classes as nearly equal
in number as possible. The members of each class are to be elected for a term
of three years and until their successors are elected and qualified. One class
of directors is to be elected annually. There are no arrangements or
understandings between the Company and any person pursuant to which such person
has been elected a director. No director is related to any other director or
any executive officer of the Company or its subsidiary by blood, marriage or
adoption.
2
<PAGE> 5
THE NOMINEES
Unless otherwise directed, each proxy executed and returned by a
stockholder will be voted for the election of all the nominees listed below.
If any of the nominees should be unable or unwilling to stand for election at
the time of the Annual Meeting, the proxies will nominate and vote for the
replacement nominee recommended by the Board of Directors. At this time, the
Board of Directors knows of no reason why the persons listed below may not be
able to serve as a director if elected.
Article 7.F. of the Company's Articles of Incorporation provides that,
with respect to this Annual Meeting, stockholders may submit nominations for
election to the Board of Directors to the Secretary of the Company so that it
is delivered or received no later than the close of business on the tenth day
following the day on which notice of the date of this Annual Meeting was mailed
(October 10, 1996). Article 7.F. also sets forth the required information in
such notice of nomination.
NOMINESS FOR TERMS EXPIRING IN 1999
<TABLE>
<CAPTION>
Position with the Company Common Stock
and Principal Occupation Beneficially
During the Past Five Director Owned as of
Name Age Years(1) Since September 30, 1996(2)(3)
---- --- ------------------------- -------- ------------------------
Amount Percentage
------ ----------
<S> <C> <C> <C> <C> <C>
Richard S. Hamilton 51 Director; President of AAA 1986 19,700 1.3%
West Penn/West Virginia,
Pittsburgh, Pennsylvania.
J. Harold Norris 70 Director, retired; previously 1967 11,139 (4)(5)
Department Manager, Port
Authority of Allegheny
County, Pittsburgh,
Pennsylvania.
Edwin R. Maus 54 Director; President and Chief 1989 53,423 3.5%(6)
Executive Officer of the
Company since 1992; President
and Chief Executive Officer
of the Bank since 1989;
joined the Bank in 1987 as
Vice President of Operations.
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS THAT THE ABOVE
NOMINEES BE ELECTED AS DIRECTORS.
3
<PAGE> 6
MEMBERS OF THE BOARD CONTINUING IN OFFICE
DIRECTORS WHOSE TERMS EXPIRE IN 1998
<TABLE>
<CAPTION>
Position with the Company Common Stock
and Principal Occupation Beneficially
During the Past Five Director Owned as of
Name Age Years(1) Since September 30, 1996(2)(3)
---- --- ------------------------- -------- ------------------------
Amount Percentage
------ ----------
<S> <C> <C> <C> <C> <C>
Richard J. Cessar 67 Chairman of the Board; retired; 1969 9,688 (4)(5)(7)
previously Pennsylvania
State Legislator.
Arthur G. Borland 66 Director; Retired; previously 1986 9,013 (4)
Secretary, Oberg Manufacturing
Company, Inc., a manufacturer
of carbide stamping dyes,
Freeport, Pennsylvania.
</TABLE>
DIRECTORS WHOSE TERMS EXPIRE IN 1997
<TABLE>
<CAPTION>
Position with the Company Common Stock
and Principal Occupation Beneficially
During the Past Five Director Owned as of
Name Age Years(1) Since September 30, 1996(2)(3)
---- --- ------------------------- -------- ------------------------
Amount Percentage
------ ----------
<S> <C> <C> <C> <C> <C>
Harvey J. Haughton 83 Director; retired; previously 1972 16,056 1.1%
Vice President of Finance,
Jones and Laughlin Steel
Corporation, Pittsburgh,
Pennsylvania.
Annette D. Ganassi 40 Director; President/ 1992 9,711 (4)
Owner of Annette
Ganassi Oldsmobile,
Pontiac, GMC Truck,
Glenshaw,
Pennsylvania.
</TABLE>
(FOOTNOTES ON FOLLOWING PAGE)
4
<PAGE> 7
- - ---------------
(1) Unless otherwise noted, each director has held his or her currently
listed position for the last five years.
(2) Based on information furnished by the respective individuals. Under
applicable regulations, shares are deemed to be beneficially owned by a person
if he or she directly or indirectly has or shares the power to vote or dispose
of the shares, whether or not he or she has any economic interest in the
shares. Unless otherwise indicated, the named beneficial owner has sole voting
and dispositive power with respect to the shares.
(3) Under applicable regulations, a person is also deemed to have
beneficial ownership of any shares which may be acquired within 60 days
pursuant to the exercise of outstanding stock options. The amounts set forth
in the table include shares which may be received upon exercise of stock
options within 60 days of the Voting Record Date as follows: Mr. Maus, 31,579
shares; Mr. Hamilton, 2,874 shares; Mr. Haughton, 1,874 shares; Ms. Ganassi,
2,875 shares; and Messrs. Borland, Cessar and Norris, 2,811 shares each.
(4) Represents less than 1% of the Common Stock outstanding.
(5) Other than shares subject to options, the shares are owned jointly
with the respective individual's spouse.
(6) Includes 15,489 shares owned jointly with Mr. Maus' spouse and 6,355
shares held in an IRA.
(7) Represents 1,036 shares held jointly with Mr. Cessar's spouse.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
The following information is provided with respect to executive
officers of the Company and/or the Bank who are not also directors. There are
no arrangements or understandings between the Company or the Bank and any
person pursuant to which a person has been elected as an officer.
RICHARD P. BRUCKMAN - Mr. Bruckman joined the Bank in 1964, has served
in various positions with the Bank, including branch manager, and served as
Vice President of Finance of the Bank from 1982 until June 1992 when he assumed
the position of Vice President-Controller.
JOHN A. HOWARD, JR. - Mr. Howard joined the Bank in July 1992 as Chief
Financial Officer, was appointed a Vice President in August 1992, a Senior Vice
President in July 1994 and Corporate Secretary/Treasurer in August 1994. Mr.
Howard presently serves in the same capacities for the Company. From 1985
until July 1992, Mr. Howard served in various positions with Community Bancorp,
Inc. and its wholly owned subsidiary, Community Savings Bank, Monroeville,
Pennsylvania, including Controller, Chief Financial Officer and Senior Vice
President.
BERNARD W. PRAZER - Mr. Prazer joined the Bank in May 1991 as Vice
President of Lending. From December 1990 to May 1991, Mr. Prazer served as a
consultant with Asset Strategy Group, New York, New York, a company which
performed due diligence for the Resolution Trust Corporation. From 1989 to
1990, Mr. Prazer served as Vice President of Bauer Capital Management
Corporation, Pittsburgh, Pennsylvania, a construction development company, and
from 1979 to 1989 served in various positions with Atlantic Financial Federal,
Pittsburgh, Pennsylvania including Vice President and Chief Regional Lending
Officer for the Western Pennsylvania Region.
5
<PAGE> 8
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than 10% of the Common Stock, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission ("SEC") and the National Association of Securities Dealers, Inc.
("NASD"). Officers, directors and greater than 10% stockholders are required
by regulation to furnish the Company with copies of all Section 16(a) forms
they file. The Company knows of no person who owns 10% or more of the Common
Stock.
Based solely on review of the copies of such forms furnished to the
Company, the Company believes that during fiscal 1996, all Section 16(a) filing
requirements applicable to its officers and directors were complied with, other
than as noted herein. Richard P. Bruckman, an officer of the Company, did not
timely file a report with respect to the exercise of a stock option in fiscal
1996. Mr. Bruckman has subsequently filed the report.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company meets on an as needed basis.
Each member of the Board of Directors of the Company also serves as a trustee
of the Bank. During the year ended June 30, 1996, the Board of Directors of
the Company met twelve times. No director attended fewer than 75% of the
aggregate of the total number of Board meetings of the Company held during
fiscal 1996 and the total number of meetings held by committees on which he or
she served during the year. Directors of the Company did not receive any fee
directly from the Company during fiscal 1996.
The Executive Committee is authorized to exercise all the authority of
the Board of Directors in the management of the Company between Board meetings
except as otherwise provided in the Company's Bylaws. The Executive Committee
currently consists of Messrs. Cessar, Maus, Haughton and Norris. The Executive
Committee did not meet during the year ended June 30, 1996.
The Audit Committee supervises the internal audit function, reviews
with management and independent auditors the systems of internal controls and
monitors the Company's adherence in accounting and financial reporting to
generally accepted accounting principles. The Audit Committee currently
consists of Messrs. Borland, Haughton and Ms. Ganassi. The Audit Committee met
once in fiscal 1996.
The entire Board of Directors acts as the Nominating Committee. The
Nominating Committee recommends persons to serve as directors in order to fill
vacancies on the Board which may occur and makes nominations for directors to
be elected by the stockholders of the Company. The Nominating Committee met in
August, 1996. Although the Nominating Committee will consider nominees
recommended by stockholders, it has not actively solicited recommendations for
nominees from stockholders. If such stockholder nominations are properly made,
ballots will be provided bearing the name of the stockholders' nominee or
nominees at the Annual Meeting.
The Board of Trustees of the Bank meets regularly each month and may
have additional special meetings. During fiscal 1996, no director attended
less than 75% of both the number of Board meetings and any meetings of
committees thereof on which he or she served during the year. The Bank pays
each trustee, other than Mr. Maus, $1,000 per month and the Chairman of the
Board receives $1,300 per month. The Board of Trustees of the Bank has
established various standing committees of the Board, including Audit and
Executive Committees, which perform substantially similar duties as the
comparable committees of the Board of Directors of the Company.
6
<PAGE> 9
EXECUTIVE COMPENSATION
REMUNERATION OF EXECUTIVE OFFICER
SUMMARY COMPENSATION TABLE. The Summary Compensation Table below
includes compensation information on the President and Chief Executive Officer
of the Company during the fiscal years ended June 30, 1996, 1995 and 1994.
There were no other executive officers of the Company or the Bank whose total
compensation exceeded $100,000 for services rendered in all capacities during
the fiscal years ended June 30, 1996, 1995 and 1994.
<TABLE>
<CAPTION>
Name and Principal Fiscal All Other
Position Year Annual Compensation Compensation(1)
- - ------------------ ------ ------------------------------------------ ---------------
Other Annual
Salary Bonus Compensation(2)
------ ----- ---------------
<S> <C> <C> <C> <C> <C>
Edwin R. Maus 1996 $120,000 $18,000 $0 $6,900
President and Chief 1995 112,200 16,300 0 6,425
Executive Officer 1994 100,158 15,000 0 5,757
</TABLE>
- - ---------------
(1) Includes employer matching contributions accrued pursuant to the
Bank's defined contribution pension plan.
(2) Does not include amounts attributable to miscellaneous benefits
received by the named executive officer. In the opinion of management
of the Company, the costs to the Company of providing such benefits to
the named executive officer during the year ended June 30, 1996 did
not exceed the lesser of $50,000 or 10% of the total annual salary and
bonus reported for such individual.
STOCK OPTIONS
The following table sets forth certain information concerning
individual grants of stock options awarded to the named executive officer
during the year ended June 30, 1996.
<TABLE>
<CAPTION>
=======================================================================================================
Potential Realizable
Value at Assumed
Annual Rates of Stock
Individual Grants Price Appreciation for
- - ----------------------------------------------------------------------------- Option Term
Options % of Total Exercise Expiration ----------------------
Name Granted Options Granted Price (3) Date 5% 10%
to Employees (2)
- - -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Edwin R. Maus 7,500 (1) 20.2% $15.00 (1) 8/17/05 $ 70,725 $179,325
12,750 33.6% $16.38 9/21/05 $128,688 $326,188
=======================================================================================================
</TABLE>
- - ---------------
(1) Such amounts have been adjusted to reflect the three-for-two stock
split paid on September 15, 1995.
(2) Percentage of options granted to all employees during the first year
ended June 30, 1996.
(3) In all cases the exercise price was based on the market price of a
share of Common Stock at the time of grant.
7
<PAGE> 10
(4) Assumes future stock prices of $24.43 and $38.91 for the options
expiring on August 17, 2005 and stock prices of $26.67 and $42.47 for
the options expiring on September 21, 2005, based on compounded rates
of return of 5% and 10% respectively, from the date of the grant to
the end of the term of the options.
Mr. Maus did not exercise any options during fiscal 1996. The
following table sets forth for Mr. Maus information with respect to the
aggregate number of unexercised options at the end of the fiscal year and the
value with respect thereto.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR END OPTION VALUES
<TABLE>
<CAPTION>
====================================================================================
Number of Unexercised Value of Unexercised
Options at Year End Options at Year End(1)
---------------------------- ---------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- - ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Edwin R. Maus 31,579 16,089 $113,137 $ 0
====================================================================================
</TABLE>
- - ---------------
(1) Based on the average of the bid and asked prices of the Common Stock
of $14.75 at June 30, 1996.
EMPLOYMENT AGREEMENT
The Company and the Bank (collectively, the "Employers") have entered
into an employment agreement ("Agreement") with Edwin R. Maus for a term of
three years in his current position as President and Chief Executive Officer at
a minimum base salary of $100,000 per year. The Board of Directors of the
Employers and Mr. Maus may mutually agree to extend the term of the Agreement
for an additional one year as of each or any annual anniversary of the date of
the Agreement by affirmatively approving an addendum to the Agreement at least
45 days prior to such anniversary date.
The Agreement is terminable with or without cause by the Employers.
The officer shall have no right to compensation or other benefits pursuant to
the Agreement for any period after voluntary termination or termination by the
Employers for cause, disability, retirement or death, provided, however, that
(i) in the event that the officer terminates his employment because of failure
of the Employer to comply with any material provision of the Agreement or (ii)
the Agreement is terminated by the Employers other than for cause, disability,
retirement or death or by the officer as a result of certain adverse actions
which are taken with respect to the officer's employment following a Change in
Control of the Company, as defined, the officer will be entitled to a cash
severance amount equal to 2.99 times his base salary.
Although the above-described Agreement could increase the cost of any
acquisition of control of the Company, management of the Company does not
believe that the terms thereof would have a significant anti-takeover effect.
INDEBTEDNESS OF MANAGEMENT
The Bank offers to its directors, officers and employees first
mortgage loans for the financing of their primary residences, second mortgage
loans secured by the borrower's primary residence which may be used for any
purpose, and consumer loans of all kinds. Any credit extended by the Bank to
its executive officers, directors and, to the extent otherwise permitted,
principal stockholder(s), or any related interest of the foregoing, must (i) be
on substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions by the Bank with
non-affiliated parties and (ii) not involve more than the normal risk of
repayment or present other unfavorable features. However, loans previously
made by the Bank to such persons remain in effect pursuant to their original
terms. Prior to the adoption of such policy, officers, directors
8
<PAGE> 11
and employees received a modest reduction of the interest rate on these loans
as compared to the rate charged non-affiliates of the Bank. These loans were
otherwise made in the normal course of business on substantially the same terms
as those prevailing at the time for comparable transactions with non-affiliated
persons, including, but not limited to, the payment of fees and requirements
for collateral. Upon termination of employment, the interest rate on these
loans is increased to the market rate that existed at the time the loan was
made. It is the belief of management that these loans neither involve more
than the normal risk of collectability nor present other unfavorable features.
No director, executive officer or any member of their immediate families had
preferential loans in excess of $60,000 during fiscal year 1996.
PROPOSAL TO ADOPT THE 1996 STOCK OPTION PLAN
GENERAL
The Board of Directors has adopted the Option Plan which is designed
to attract and retain qualified personnel in key positions, provide officers,
directors and key employees with a proprietary interest in the Company as an
incentive to contribute to the success of the Company and reward key employees
for outstanding performance. The Option Plan provides for the grant of
incentive stock options intended to comply with the requirements of Section 422
of the Code ("incentive stock options"), non-incentive or compensatory stock
options and stock appreciation rights (collectively "Awards"). Awards will be
available for grant to directors and key employees of the Company and any
subsidiaries, except that non-employee directors will be eligible to receive
only non-incentive stock options. If stockholder approval is obtained, options
to acquire shares of Common Stock will be awarded to directors of the Company
with an exercise price equal to the fair market value of the Common Stock on
the date of such approval. In the discretion of the Board of Directors,
options may also be awarded to key employees of the Company and the Bank with
an exercise price equal to the fair market value of the Common Stock on the
date of such award.
DESCRIPTION OF THE OPTION PLAN
The following description of the Option Plan is a summary of its terms
and is qualified in its entirety by reference to the Option Plan, a copy of
which is attached hereto as Appendix A.
ADMINISTRATION. The Option Plan is administered and interpreted by a
committee of the Board of Directors ("Committee"). The current members of the
Committee are Messrs. Cessar and Hamilton.
STOCK OPTIONS. Under the Option Plan, the Committee determines which
officers and key employees will be granted options, whether such options will
be incentive or compensatory options, the number of shares subject to each
option, the exercise price of each option, whether such options may be
exercised by delivering other shares of Common Stock and when such options
become exercisable. The per share exercise price of a stock option shall be
required to at least equal the fair market value of a share of Common Stock on
the date the option is granted.
Stock options granted to employees shall become vested and exercisable
in the manner specified by the Committee, provided that all options become
fully vested and exercisable in the event of a change in control of the
Company, as defined in the Option Plan, or upon termination of employment of
the optionee due to death, disability or retirement. Each stock option or
portion thereof shall be exercisable at any time on or after it vests and is
exercisable until ten years after its date of grant or three months after the
date on which the optionee's employment with the Company terminates, unless
extended by the Committee to a period not to exceed five years from such
termination. However, failure to exercise incentive stock options within three
months after the date on which the optionee's employment terminates may result
in adverse tax consequences to the optionee. Stock options are
non-transferable except by will or the laws of descent and distribution. If an
optionee dies while employed or within three years following the termination of
the optionee's employment as a result of disability or retirement without
having fully exercised his options, the optionee's executors, administrators,
9
<PAGE> 12
legatees or distributees of his estate shall have the right to exercise such
options during the twelve-month period following such death, provided no option
will be exercisable more than ten years from the date it was granted.
GRANTS TO DIRECTORS. Pursuant to the terms of the Option Plan, each
non-employee director will receive a non-qualified option to purchase 3,148
shares of Common Stock upon approval of the Option Plan by stockholders.
Options granted to non-employee directors shall have an exercise price equal to
the fair market value of a share of Common Stock on the date of grant. Such
stock options to directors will be vested and exercisable over three years at
the rate of 33.3% per year commencing the date such options are granted,
provided that all options become fully vested and exercisable in the event of a
change in control of the Company, as defined in the Option Plan, or upon
termination of service of the optionee due to death, disability or retirement.
Options granted to non-employee directors will be exercisable until ten years
from the date of grant. However, if an optionee dies while serving as a
non-employee director or within three years following the termination of the
optionee's service as a director as a result of disability or retirement
without having fully exercised his options, the optionee's executors,
administrators, legatees or distributees of his estate shall have the right to
exercise such options during the twelve-month period following such death,
provided that no option will be exercisable within six months after the date of
grant or more than ten years from the date it was granted.
STOCK APPRECIATION RIGHTS. Under the Option Plan, the Committee is
authorized to grant rights to optionees ("stock appreciation rights") under
which an optionee may surrender any exercisable incentive stock option or
compensatory stock option or part thereof in return for payment by the Company
to the optionee of cash or Common Stock in an amount equal to the excess of the
fair market value of the shares of Common Stock subject to option at the time
over the option price of such shares, or a combination of cash and Common
Stock. Stock appreciation rights may be granted concurrently with the stock
options to which they relate or at any time thereafter which is prior to the
exercise or expiration of such options.
NUMBER OF SHARES COVERED BY THE OPTION PLAN. A total of 75,562 shares
of Common Stock has been reserved for future issuance pursuant to the Option
Plan (4.99% of the issued and outstanding Common Stock on the Voting Record
Date). In the event of a stock split, reverse stock split or stock dividend,
the number of shares of Common Stock under the Option Plan, the number of
shares to which any Award relates and the exercise price per share under any
option or stock appreciation right shall be adjusted to reflect such increase
or decrease in the total number of shares of the Common Stock outstanding.
AMENDMENT AND TERMINATION OF THE OPTION PLAN. Unless sooner
terminated, the Option Plan shall continue in effect for a period of ten years
from September 12, 1996, the date the Option Plan was adopted by the Board and
became effective by its terms. Termination of the Option Plan shall not affect
any previously granted Awards.
FEDERAL INCOME TAX CONSEQUENCES. Under current provisions of the
Code, the federal income tax treatment of incentive stock options and
compensatory stock options is different. With regard to incentive stock
options, an optionee who meets certain holding period requirements will not
recognize income at the time the option is granted or at the time the option is
exercised, and a federal income tax deduction generally will not be available
to the Company at any time as a result of such grant or exercise. With respect
to compensatory stock options, the difference between the fair market value on
the date of exercise and the option exercise price generally will be treated as
compensation income upon exercise, and the Company will be entitled to a
deduction in the amount of income so recognized by the optionee. Upon the
exercise of a stock appreciation right, the holder will realize income for
federal income tax purposes equal to the amount received by him, whether in
cash, shares of stock or both, and the Company will be entitled to a deduction
for federal income tax purposes in the same amount.
The above description of tax consequences under federal law is
necessarily general in nature and does not purport to be complete. Moreover,
statutory provisions are subject to change, as are their interpretations,
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and their application may vary in individual circumstances. Finally, the
consequences under applicable state and local income tax laws may not be the
same as under the federal income tax laws.
ACCOUNTING TREATMENT. Stock appreciation rights will, in most cases,
require a charge against the earnings of the Company each year representing
appreciation in the value of such rights over periods in which they become
exercisable. Such charge is based on the difference between the exercise price
specified in the related option and the current market price of the Common
Stock. In the event of a decline in the market price of the Common Stock
subsequent to a charge against earnings related to the estimated costs of stock
appreciation rights, a reversal of prior charges is made in the amount of such
decline (but not to exceed aggregate prior charges).
Neither the grant nor the exercise of an incentive stock option or a
non-qualified stock option under the Option Plan currently requires any charge
against earnings under GAAP. This treatment has been reviewed by the Financial
Accounting Standards Board ("FASB"), which resulted in the issuance in October
1995 of Statement of Financial Accounting Standard ("SFAS") No. 123,
"Accounting for Stock-Based Compensation." This statement will require
footnote disclosure to show the theoretical effect of deducting the
compensation cost of stock options from earnings. In certain circumstances,
shares issuable pursuant to outstanding options under the Option Plan will be
considered outstanding for purposes of calculating earnings per share.
STOCKHOLDER APPROVAL. No Awards will be granted under the Option Plan
unless the Option Plan is approved by stockholders. Stockholder ratification
of the Option Plan will also enable recipients of Awards under the Option Plan
to qualify for certain exemptive treatment from the short-swing profit
provisions of Section 16(b) of the Exchange Act.
AWARDS TO BE GRANTED. As previously stated, each non-employee
director will receive a non-qualified option to purchase 3,148 shares of Common
Stock upon approval of the Option Plan by stockholders. As a result, all
non-employee directors as a group (six persons) will receive non-qualified
options to purchase 18,890 shares of Common Stock. Presently, no determination
has been made with respect to the grant of incentive options to executive
officers and employees.
On October 7, 1996, the last sale price of a share of Common Stock as
reported by the Nasdaq SmallCap Market was $16.00.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR ADOPTION
OF THE 1996 STOCK OPTION PLAN.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of the Company has appointed KPMG Peat Marwick
as independent auditors of the Company for the year ending June 30, 1997 and
has further directed that the selection of such auditors be submitted for
ratification by the stockholders at the Annual Meeting. The Company has been
advised by KPMG Peat Marwick that neither that firm nor any of its associates
has any relationship with the Company or its subsidiary other than the usual
relationship that exists between independent certified public accountants and
clients. KPMG Peat Marwick will have a representative at the Annual Meeting
who will have an opportunity to make a statement, if he or she so desires, and
who will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION
OF THE APPOINTMENT OF KPMG PEAT MARWICK AS THE COMPANY'S INDEPENDENT AUDITORS
FOR FISCAL 1997.
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STOCKHOLDER PROPOSALS
Any proposal which a stockholder wishes to have presented at the next
Annual Meeting of Stockholders, to be held in November 1997, must be received
at the main office of the Company, 2724 Harts Run Road, Allison Park,
Pennsylvania 15101, no later than June 13, 1997. If such proposal is in
compliance with all of the requirements of Rule 14a-8 of the Exchange Act, it
will be included in the Proxy Statement and set forth on the form of proxy
issued for the next Annual Meeting of Stockholders. It is urged that any such
proposals be sent by certified mail, return receipt requested.
ANNUAL REPORTS
A copy of the Company's Annual Report to Stockholders for the year
ended June 30, 1996 accompanies this Proxy Statement. Such Annual Report is
not part of the proxy solicitation materials.
UPON RECEIPT OF A WRITTEN REQUEST, THE COMPANY WILL FURNISH TO ANY
STOCKHOLDER WITHOUT CHARGE A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K
("FORM 10-K") FOR THE YEAR ENDED JUNE 30, 1996 AND THE LIST OF THE EXHIBITS
THERETO REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER
THE EXCHANGE ACT. SUCH WRITTEN REQUEST SHOULD BE DIRECTED TO MR. EDWIN R.
MAUS, PRESIDENT, LAUREL CAPITAL GROUP, INC., 2724 HARTS RUN ROAD, ALLISON PARK,
PENNSYLVANIA 15101. THE FORM 10-K IS NOT PART OF THE PROXY SOLICITATION
MATERIALS.
OTHER MATTERS
Each proxy solicited hereby also confers discretionary authority on
the Board of Directors of the Company to vote the proxy with respect to the
approval of the minutes of the last meeting of stockholders, the election of
any person as director if a nominee is unable to serve or for good cause will
not serve, matters incident to the conduct of the meeting, and upon such other
matters as may properly come before the Annual Meeting. Management is not
aware of any business that may properly come before the Annual Meeting other
than those matters described above in this Proxy Statement. However, if any
other matters should properly come before the Annual Meeting, it is intended
that the proxies solicited hereby will be voted with respect to those other
matters in accordance with the judgment of the persons voting the proxies.
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of the Company's Common Stock. In addition to
solicitations by mail, directors, officers and employees of the Company may
solicit proxies personally or by telephone without additional compensation.
BY ORDER OF THE BOARD OF DIRECTORS
John A. Howard, Jr.
Secretary
October 10, 1996
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APPENDIX A
LAUREL CAPITAL GROUP, INC.
1995 STOCK OPTION PLAN
ARTICLE I
ESTABLISHMENT OF THE PLAN
Laurel Capital Group, Inc. (the "Corporation") hereby establishes this 1996
Stock Option Plan (the "Plan") upon the terms and conditions hereinafter
stated.
ARTICLE II
PURPOSE OF THE PLAN
The purpose of this Plan is to improve the growth and profitability of the
Corporation and its Subsidiary Companies by providing Employees and
Non-Employee Directors with a proprietary interest in the Corporation as an
incentive to contribute to the success of the Corporation and its Subsidiary
Companies, and rewarding those Employees for outstanding performance and the
attainment of targeted goals. All Incentive Stock Options issued under this
Plan are intended to comply with the requirements of Section 422 of the Code,
and the regulations thereunder, and all provisions hereunder shall be read,
interpreted and applied with that purpose in mind.
ARTICLE III
DEFINITIONS
3.01 "Award" means an Option or Stock Appreciation Right granted pursuant to
the terms of this Plan.
3.02 "Bank" means Laurel Savings Bank, the wholly owned subsidiary of the
Corporation.
3.03 "Board" means the Board of Directors of the Corporation.
3.04 "Code" means the Internal Revenue Code of 1986, as amended.
3.05 "Committee" means a committee of two or more directors appointed by the
Board pursuant to Article IV hereof, none of whom shall be an Officer or
Employee of the Corporation.
3.06 "Common Stock" means shares of the common stock, $.01 par value per
share, of the Corporation.
3.07 "Disability" means any physical or mental impairment which qualifies an
Employee for disability benefits under the applicable long-term disability plan
maintained by the Corporation or a Subsidiary Company, or, if no such plan
applies, which would qualify such Employee for disability benefits under the
Federal Social Security System.
3.08 "Effective Date" means the day upon which the Board approves this Plan.
3.09 "Employee" means any person who is employed by the Corporation or a
Subsidiary Company, or is an Officer of the Corporation or a Subsidiary
Company, but not including directors who are not also Officers of or otherwise
employed by the Corporation or a Subsidiary Company.
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3.10 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
3.11 "Fair Market Value" shall be equal to the fair market value per share
of the Corporation's Common Stock on the date an Award is granted. For
purposes hereof, the Fair Market Value of a share of Common Stock shall be the
closing sale price of a share of Common Stock on the date in question (or, if
such day is not a trading day in the U.S. markets, on the nearest preceding
trading day), as reported with respect to the principal market (or the
composite of the markets, if more than one) or national quotation system in
which such shares are then traded, or if no such closing prices are reported,
the mean between the high bid and low asked prices that day on the principal
market or national quotation system then in use, or if no such quotations are
available, the price furnished by a professional securities dealer making a
market in such shares selected by the Committee.
3.12 "Incentive Stock Option" means any Option granted under this Plan which
the Board intends (at the time it is granted) to be an incentive stock option
within the meaning of Section 422 of the Code or any successor thereto.
3.13 "Non-Employee Director" means a member of the Board who is not an
Officer or Employee of the Corporation or any Subsidiary Company.
3.14 "Non-Qualified Option" means any Option granted under this Plan which is
not an Incentive Stock Option.
3.15 "Officer" means an Employee whose position in the Corporation or
Subsidiary Company is that of a corporate officer, as determined by the Board.
3.16 "Option" means a right granted under this Plan to purchase Common Stock.
3.17 "Optionee" means an Employee or Non-Employee Director or former Employee
or Non-Employee Director to whom an Option is granted under the Plan.
3.18 "Retirement" means a termination of employment upon or after attainment
of age sixty-five (65) or such earlier age as may be specified in any
applicable qualified pension benefit plan maintained by the Corporation or a
Subsidiary Company.
3.19 "Stock Appreciation Right" means a right to surrender an Option in
consideration for a payment by the Corporation in cash and/or Common Stock, as
provided in the discretion of the Committee in accordance with Section 8.10.
3.20 "Subsidiary Companies" means those subsidiaries of the Corporation,
including the Bank, which meet the definition of "subsidiary corporations" set
forth in Section 425(f) of the Code, at the time of granting of the Option in
question.
ARTICLE IV
ADMINISTRATION OF THE PLAN
4.01 DUTIES OF THE COMMITTEE. The Plan shall be administered and interpreted
by the Committee, as appointed from time to time by the Board pursuant to
Section 4.02. The Committee shall have the authority in its absolute
discretion to adopt, amend and rescind such rules, regulations and procedures
as, in its opinion, may be advisable in the administration of the Plan,
including, without limitation, rules, regulations and procedures which (i) deal
with satisfaction of an Optionee's tax withholding obligation pursuant to
Section 12.02 hereof, (ii) include arrangements to facilitate the Optionee's
ability to borrow funds for payment of the exercise
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or purchase price of an Award, if applicable, from securities brokers and
dealers, and (iii) include arrangements which provide for the payment of some
or all of such exercise or purchase price by delivery of previously-owned
shares of Common Stock or other property and/or by withholding some of the
shares of Common Stock which are being acquired. The interpretation and
construction by the Committee of any provisions of the Plan, any rule,
regulation or procedure adopted by it pursuant thereto or of any Award shall be
final and binding.
4.02 APPOINTMENT AND OPERATION OF THE COMMITTEE. The members of the
Committee shall be appointed by, and will serve at the pleasure of, the Board.
The Board from time to time may remove members from, or add members to, the
Committee, provided the Committee shall continue to consist of two or more
members of the Board, none of whom shall be an Officer or Employee of the
Corporation. The Committee shall act by vote or written consent of a majority
of its members. Subject to the express provisions and limitations of the Plan,
the Committee may adopt such rules, regulations and procedures as it deems
appropriate for the conduct of its affairs. It may appoint one of its members
to be chairman and any person, whether or not a member, to be its secretary or
agent. The Committee shall report its actions and decisions to the Board at
appropriate times but in no event less than one time per calendar year.
4.03 REVOCATION FOR MISCONDUCT. The Committee may by resolution immediately
revoke, rescind and terminate any Option, or portion thereof, to the extent not
yet vested, or any Stock Appreciation Right, to the extent not yet exercised,
previously granted or awarded under this Plan to an Employee who is discharged
from the employ of the Corporation or a Subsidiary Company for cause, which,
for purposes hereof, shall mean termination because of the Employee's personal
dishonesty, incompetence, willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure to perform stated duties,
willful violation of any law, rule, or regulation (other than traffic
violations or similar offenses) or final cease-and-desist order. Options
granted to a Non-Employee Director who is removed for cause pursuant to the
Corporation's Articles of Incorporation shall terminate as of the effective
date of such removal.
4.04 LIMITATION ON LIABILITY. No member of the Committee shall be liable for
any action or determination made in good faith with respect to the Plan, any
rule, regulation or procedure adopted by it pursuant thereto or any Awards
granted under it. If a member of the Committee is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of anything done or not done by him in such capacity under or with respect to
the Plan, the Corporation shall, subject to the requirements of applicable laws
and regulations, indemnify such member against all liabilities and expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in the best interests of the Corporation and its Subsidiary Companies and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful.
4.05 COMPLIANCE WITH LAW AND REGULATIONS. All Awards granted hereunder shall
be subject to all applicable federal and state laws, rules and regulations and
to such approvals by any government or regulatory agency as may be required.
The Corporation shall not be required to issue or deliver any certificates for
shares of Common Stock prior to the completion of any registration or
qualification of or obtaining of consents or approvals with respect to such
shares under any Federal or state law or any rule or regulation of any
government body, which the Corporation shall, in its sole discretion, determine
to be necessary or advisable. Moreover, no Option or Stock Appreciation Right
may be exercised if such exercise would be contrary to applicable laws and
regulations.
4.06 RESTRICTIONS ON TRANSFER. The Corporation may place a legend upon any
certificate representing shares acquired pursuant to an Award granted hereunder
noting that the transfer of such shares may be restricted by applicable laws
and regulations.
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ARTICLE V
ELIGIBILITY
Awards may be granted to such Employees or Non-Employee Directors of the
Corporation and its Subsidiary Companies as may be designated from time to time
by the Committee. Awards may not be granted to individuals who are not
Employees or Non-Employee Directors of either the Corporation or its Subsidiary
Companies. Non-Employee Directors shall be eligible to receive only
Non-Qualified Options pursuant to Section 8.02 of the Plan.
ARTICLE VI
COMMON STOCK COVERED BY THE PLAN
6.01 OPTION SHARES. The aggregate number of shares of Common Stock which may
be issued pursuant to this Plan, subject to adjustment as provided in Article
IX, shall be 74,812 which is equal to 4.99% of the issued and outstanding
shares of Common Stock as of September 30, 1996, the voting record date for the
1996 Annual Meeting. None of such shares shall be the subject of more than one
Award at any time, but if an Option as to any shares is surrendered before
exercise, or expires or terminates for any reason without having been exercised
in full, or for any other reason ceases to be exercisable, the number of shares
covered thereby shall again become available for grant under the Plan as if no
Awards had been previously granted with respect to such shares.
Notwithstanding the foregoing, if an Option is surrendered in connection with
the exercise of a Stock Appreciation Right, the number of shares covered
thereby shall not be available for grant under the Plan.
6.02 SOURCE OF SHARES. The shares of Common Stock issued under the Plan may
be authorized but unissued shares, treasury shares or shares purchased by the
Corporation on the open market or from private sources for use under the Plan.
ARTICLE VII
DETERMINATION OF
AWARDS, NUMBER OF SHARES, ETC.
The Committee shall, in its discretion, determine from time to time which
Employees will be granted Awards under the Plan, the number of shares of Common
Stock subject to each Award, whether each Option will be an Incentive Stock
Option or a Non-Qualified Stock Option and the exercise price of an Option. In
making all such determinations there shall be taken into account the duties,
responsibilities and performance of each respective Employee, his present and
potential contributions to the growth and success of the Corporation, his
salary and such other factors as the Committee shall deem relevant to
accomplishing the purposes of the Plan. Non-Employee Directors shall be
eligible to receive only Non-Qualified Options pursuant to Section 8.02 of the
Plan.
ARTICLE VIII
OPTIONS AND STOCK APPRECIATION RIGHTS
Each Option granted hereunder shall be on the following terms and conditions:
8.01 STOCK OPTION AGREEMENT. The proper Officers on behalf of the
Corporation and each Optionee shall execute a Stock Option Agreement which
shall set forth the total number of shares of Common Stock to which it
pertains, the exercise price, whether it is a Non-Qualified Option or an
Incentive Stock Option, and such other terms, conditions, restrictions and
privileges as the Committee in each instance shall deem appropriate,
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provided they are not inconsistent with the terms, conditions and provisions of
this Plan. Each Optionee shall receive a copy of his executed Stock Option
Agreement.
8.02 (A) INITIAL GRANTS TO NON-EMPLOYEE DIRECTORS. Non-Qualified Options to
purchase shares of Common Stock shall be initially granted to each Non-Employee
Director as of the day that the Plan is approved by stockholders of the
Corporation, effective at such time and with a per share exercise price equal
to the Fair Market Value of a share of Common Stock on such date.
(B) VESTING AND EXERCISE OF OPTIONS. Non-Qualified Options granted to
Non-Employee Directors shall be vested and exercisable over three years at the
rate of 33.3% per year commencing on the date of grant.
8.03 OPTION EXERCISE PRICE.
(A) INCENTIVE STOCK OPTIONS. The per share price at which the subject
Common Stock may be purchased upon exercise of an Incentive Stock Option shall
be no less than one hundred percent (100%) of the Fair Market Value of a share
of Common Stock at the time such Incentive Stock Option is granted, except as
provided in Section 8.10(b).
(B) NON-QUALIFIED OPTIONS. The per share price at which the subject
Common Stock may be purchased upon exercise of a Non-Qualified Option shall be
established by the Committee at the time of grant, but in no event shall be
less than the greater of (i) the par value or (ii) one hundred percent (100%)
of the Fair Market Value of a share of Common Stock at the time such
Non-Qualified Option is granted.
8.04 VESTING AND EXERCISE OF OPTIONS.
(A) GENERAL RULES. Incentive Stock Options and Non-Qualified Options
granted to Employees shall become vested and exercisable at the rate, to the
extent and subject to such limitations as may be specified by the Committee,
provided, however, that in the case of any Option exercisable within the first
six months following the date the Option is granted, the shares of Common Stock
received upon the exercise of such Option may not be sold or disposed of by the
Optionee for the first six months following the date of grant. Notwithstanding
the foregoing, no vesting shall occur on or after an Optionee's employment or
service with the Corporation and all Subsidiary Companies is terminated for any
reason other than his death or Disability. In determining the number of shares
of Common Stock with respect to which Options are vested and/or exercisable,
fractional shares will be rounded up to the nearest whole number if the
fraction is 0.5 or higher, and down if it is less.
(B) ACCELERATED VESTING UPON DEATH, DISABILITY OR RETIREMENT. Unless the
Committee shall specifically state otherwise at the time an Option is granted,
all Options granted under this Plan shall become vested and exercisable in full
on the date an Optionee terminates his employment or service with the
Corporation or a Subsidiary Company because of his death, Disability or
Retirement.
(C) ACCELERATED VESTING FOR CHANGES IN CONTROL. Notwithstanding the
general rule described in Section 8.04(a), all outstanding Options shall become
immediately vested and exercisable in the event there is a change in control of
the Corporation. A "change in control of the Corporation" for this purpose
shall mean a change in control of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated
under the Exchange Act, or any successor thereto, whether or not the
Corporation in fact is required to comply with Regulation 14A thereunder.
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8.05 DURATION OF OPTIONS.
(A) GENERAL RULE. Except as provided in Sections 8.05(b) and 8.10, each
Option or portion thereof granted to Employees shall be exercisable at any time
on or after it vests and becomes exercisable until the earlier of (i) ten (10)
years after its date of grant or (ii) three (3) months after the date on which
the Optionee ceases to be employed by the Corporation and all Subsidiary
Companies, unless the Committee in its discretion decides at the time of grant
to extend such period of exercise upon termination of employment or service
from three (3) months to a period not exceeding five (5) years. Each Option or
portion thereof granted to Non-Employee Directors shall be exercisable at any
time on or after it vests until ten (10) years after the date of grant.
(B) EXCEPTION FOR TERMINATION DUE TO DEATH, DISABILITY OR RETIREMENT. If
an Employee dies while in the employ or service of the Corporation or a
Subsidiary Company or terminates employment or service with the Corporation or
a Subsidiary Company as a result of Disability or Retirement without having
fully exercised his Options, the Optionee or the executors, administrators,
legatees or distributees of his estate shall have the right, during the
twelve-month period following the earlier of his death, Disability or
Retirement, to exercise such Options to the extent vested on the date of such
death, Disability or Retirement. If a Non-Employee Director dies while serving
as a Non-Employee Director or within three (3) years following the termination
of service as a Non-Employee Director as a result of Disability, Retirement or
resignation without fully exercising his Options, the Non-Employee Director's
executors, administrators, legatees or distributees of his estate shall have
the right, during the twelve-month period following such death, to exercise
such Options. In no event, however, shall any Option be exercisable more than
ten (10) years from the date it was granted.
8.06 NONASSIGNABILITY. Options shall not be transferable by an Optionee
except by will or the laws of descent or distribution, and during an Optionee's
lifetime shall be exercisable only by such Optionee or the Optionee's guardian
or legal representative.
8.07 MANNER OF EXERCISE. Options may be exercised in part or in whole and at
one time or from time to time. The procedures for exercise shall be set forth
in the written Stock Option Agreement provided for in Section 8.01 above.
8.08 PAYMENT FOR SHARES. Payment in full of the purchase price for shares of
Common Stock purchased pursuant to the exercise of any Option shall be made to
the Corporation upon exercise of the Option. All shares sold under the Plan
shall be fully paid and nonassessable. Payment for shares may be made by the
Optionee in cash or, at the discretion of the Committee, by delivering shares
of Common Stock (including shares acquired pursuant to the exercise of an
Option) or other property equal in Fair Market Value to the purchase price of
the shares to be acquired pursuant to the Option, by withholding some of the
shares of Common Stock which are being purchased upon exercise of an Option, or
any combination of the foregoing. Notwithstanding the foregoing, payment may
also be made by delivering a properly executed exercise notice together with
irrevocable instructions to a broker to promptly deliver to the Corporation the
amount of sale or loan proceeds to pay the exercise price.
8.09 VOTING AND DIVIDEND RIGHTS. No Optionee shall have any voting or
dividend rights or other rights of a stockholder in respect of any shares of
Common Stock covered by an Option prior to the time that his name is recorded
on the Corporation's stockholder ledger as the holder of record of such shares
acquired pursuant to an exercise of an Option.
8.10 ADDITIONAL TERMS APPLICABLE TO INCENTIVE STOCK OPTIONS. All Options
issued under the Plan as Incentive Stock Options will be subject, in addition
to the terms detailed in Sections 8.01 to 8.09 above, to those contained in
this Section 8.10.
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(A) Notwithstanding any contrary provisions contained elsewhere in this
Plan and as long as required by Section 422 of the Code, the aggregate Fair
Market Value, determined as of the time an Incentive Stock Option is granted,
of the Common Stock with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year, under
this Plan and stock options that satisfy the requirements of Section 422 of the
Code under any other stock option plan or plans maintained by the Corporation
(or any parent or Subsidiary Company), shall not exceed $100,000.
(B) LIMITATION ON TEN PERCENT STOCKHOLDERS. The price at which shares of
Common Stock may be purchased upon exercise of an Incentive Stock Option
granted to an individual who, at the time such Incentive Stock Option is
granted, owns, directly or indirectly, more than ten percent (10%) of the total
combined voting power of all classes of stock issued to stockholders of the
Corporation or any Subsidiary Company, shall be no less than one hundred and
ten percent (110%) of the Fair Market Value of a share of the Common Stock of
the Corporation at the time of grant, and such Incentive Stock Option shall by
its terms not be exercisable after the earlier of the date determined under
Section 8.04 or the expiration of five (5) years from the date such Incentive
Stock Option is granted.
(C) NOTICE OF DISPOSITION; WITHHOLDING; ESCROW. An Optionee shall
immediately notify the Corporation in writing of any sale, transfer, assignment
or other disposition (or action constituting a disqualifying disposition within
the meaning of Section 421 of the Code) of any shares of Common Stock acquired
through exercise of an Incentive Stock Option, within two (2) years after the
grant of such Incentive Stock Option or within one (1) year after the
acquisition of such shares, setting forth the date and manner of disposition,
the number of shares disposed of and the price at which such shares were
disposed of. The Corporation shall be entitled to withhold from any
compensation or other payments then or thereafter due to the Optionee such
amounts as may be necessary to satisfy any withholding requirements of Federal
or state law or regulation and, further, to collect from the Optionee any
additional amounts which may be required for such purpose. The Committee may,
in its discretion, require shares of Common Stock acquired by an Optionee upon
exercise of an Incentive Stock Option to be held in an escrow arrangement for
the purpose of enabling compliance with the provisions of this Section 8.10(c).
8.11 STOCK APPRECIATION RIGHTS.
(A) GENERAL TERMS AND CONDITIONS. The Committee may, but shall not be
obligated to, authorize the Corporation, on such terms and conditions as it
deems appropriate in each case, to grant rights to Optionees to surrender an
exercisable Option, or any portion thereof, in consideration for the payment by
the Corporation of an amount equal to the excess of the Fair Market Value of
the shares of Common Stock subject to the Option, or portion thereof,
surrendered over the exercise price of the Option with respect to such shares
(any such authorized surrender and payment being hereinafter referred to as a
"Stock Appreciation Right"). Such payment, at the discretion of the Committee,
may be made in shares of Common Stock valued at the then Fair Market Value
thereof, or in cash, or partly in cash and partly in shares of Common Stock.
The terms and conditions set with respect to a Stock Appreciation Right may
include (without limitation), subject to other provisions of this Section 8.11
and the Plan, the period during which, date by which or event upon which the
Stock Appreciation Right may be exercised; the method for valuing shares of
Common Stock for purposes of this Section 8.11; a ceiling on the amount of
consideration which the Corporation may pay in connection with exercise and
cancellation of the Stock Appreciation Right; and arrangements for income tax
withholding. The Committee shall have complete discretion to determine
whether, when and to whom Stock Appreciation Rights may be granted.
Notwithstanding the foregoing, the Corporation may not permit the exercise of a
Stock Appreciation Right issued pursuant to this Plan until this Plan has been
outstanding for at least six months from the date of grant.
(B) TIME LIMITATIONS. If a holder of a Stock Appreciation Right
terminates service with the Corporation as an Officer or Employee, the Stock
Appreciation Right may be exercised only within the period,
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if any, within which the Option to which it relates may be exercised.
Notwithstanding the foregoing, any election by an Optionee to exercise the
Stock Appreciation Rights provided in this Plan shall be made during the period
beginning on the third business day following the release for publication of
quarterly or annual financial information required to be prepared and
disseminated by the Corporation pursuant to the requirements of the Exchange
Act and ending on the twelfth business day following such date. The required
release of information shall be deemed to have been satisfied when the
specified financial data appears on or in a wire service, financial news
service or newspaper of general circulation or is otherwise first made publicly
available.
(C) EFFECTS OF EXERCISE OF STOCK APPRECIATION RIGHTS OR OPTIONS. Upon the
exercise of a Stock Appreciation Right, the number of shares of Common Stock
available under the Option to which it relates shall decrease by a number equal
to the number of shares for which the Stock Appreciation Right was exercised.
Upon the exercise of an Option, any related Stock Appreciation Right shall
terminate as to any number of shares of Common Stock subject to the Stock
Appreciation Right that exceeds the total number of shares for which the Option
remains unexercised.
(D) TIME OF GRANT. A Stock Appreciation Right may be granted concurrently
with the Option to which it relates or at any time thereafter prior to the
exercise or expiration of such Option.
(E) NON-TRANSFERABLE. The holder of a Stock Appreciation Right may not
transfer or assign the Stock Appreciation Right otherwise than by will or in
accordance with the laws of descent and distribution, and during a holder's
lifetime a Stock Appreciation Right may be exercisable only by the holder.
ARTICLE IX
ADJUSTMENTS FOR CAPITAL CHANGES
The aggregate number of shares of Common Stock available for issuance under
this Plan, the number of shares to which any Award relates and the exercise
price per share of Common Stock under any Option shall be proportionately
adjusted for any increase or decrease in the total number of outstanding shares
of Common Stock issued subsequent to the effective date of this Plan resulting
from a split, subdivision or consolidation of shares or any other capital
adjustment, the payment of a stock dividend, or other increase or decrease in
such shares effected without receipt or payment of consideration by the
Corporation. If, upon a merger, consolidation, reorganization, liquidation,
recapitalization or the like of the Corporation, the shares of the
Corporation's Common Stock shall be exchanged for other securities of the
Corporation or of another corporation, each recipient of an Award shall be
entitled, subject to the conditions herein stated, to purchase or acquire such
number of shares of Common Stock or amount of other securities of the
Corporation or such other corporation as were exchangeable for the number of
shares of Common Stock of the Corporation which such optionees would have been
entitled to purchase or acquire except for such action, and appropriate
adjustments shall be made to the per share exercise price of outstanding
Options.
ARTICLE X
AMENDMENT AND TERMINATION OF THE PLAN
The Board may, by resolution, at any time terminate or amend the Plan with
respect to any shares of Common Stock as to which Awards have not been granted,
subject to any required stockholder approval or any stockholder approval which
the Board may deem to be advisable for any reason, such as for the purpose of
obtaining or retaining any statutory or regulatory benefits under tax,
securities or other laws or satisfying any applicable stock exchange listing
requirements. The Board may not, without the consent of the holder of an
Award, alter or impair any Award previously granted or awarded under this Plan
as specifically authorized herein. Notwithstanding anything contained in this
Plan to the contrary, the provisions of Articles V, VII and VIII of this Plan
relating to Awards granted to Non-Employee Directors shall not be amended more
than once
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every six months, other than to comport with changes in the Code, the Employee
Retirement Income Security Act of 1974, as amended, or the rules and
regulations promulgated under such statutes.
ARTICLE XI
EMPLOYMENT RIGHTS
Neither the Plan nor the grant of any Awards hereunder nor any action taken
by the Committee or the Board in connection with the Plan shall create any
right on the part of any Employee or Non-Employee Director of the Corporation
or a Subsidiary Company to continue in such capacity.
ARTICLE XII
WITHHOLDING
12.01 TAX WITHHOLDING. The Corporation may withhold from any cash payment
made under this Plan sufficient amounts to cover any applicable withholding and
employment taxes, and if the amount of such cash payment is insufficient, the
Corporation may require the Optionee to pay to the Corporation the amount
required to be withheld as a condition to delivering the shares acquired
pursuant to an Award. The Corporation also may withhold or collect amounts
with respect to a disqualifying disposition of shares of Common Stock acquired
pursuant to exercise of an Incentive Stock Option, as provided in Section
8.10(c).
12.02 METHODS OF TAX WITHHOLDING. The Committee is authorized to adopt
rules, regulations or procedures which provide for the satisfaction of an
Optionee's tax withholding obligation by the retention of shares of Common
Stock to which the Employee would otherwise be entitled pursuant to an Award
and/or by the Optionee's delivery of previously-owned shares of Common Stock or
other property.
ARTICLE XIII
EFFECTIVE DATE OF THE PLAN; TERM
13.01 EFFECTIVE DATE OF THE PLAN. This Plan shall become effective on the
Effective Date; however, no Awards may be granted hereunder unless this Plan is
approved by the requisite vote of the holders of the outstanding voting shares
of the Corporation at a meeting of stockholders of the Corporation held within
twelve (12) months of the Effective Date.
13.02 TERM OF PLAN. Unless sooner terminated, this Plan shall remain in
effect for a period of ten (10) years ending on the tenth anniversary of the
Effective Date. Termination of the Plan shall not affect any Awards previously
granted and such Awards shall remain valid and in effect until they have been
fully exercised or earned, are surrendered or by their terms expire or are
forfeited.
ARTICLE XIV
MISCELLANEOUS
14.01 GOVERNING LAW. To the extent not governed by Federal law, this Plan
shall be construed under the laws of the Commonwealth of Pennsylvania.
14.02 PRONOUNS. Wherever appropriate, the masculine pronoun shall include
the feminine pronoun, and the singular shall include the plural.
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