<PAGE> 1
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SCHEDULE 14A
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material under Section 240.14a-12
LAUREL CAPITAL GROUP, INC.
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] $125 per Exchange Act Rules O-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2)of Schedule 14A.
[ ] 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 O-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
O-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:________________________________________________
(2) Form, Schedule or Registration Statement No.:__________________________
(3) Filing Party:__________________________________________________________
(4) Date Filed:____________________________________________________________
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<PAGE> 2
LAUREL CAPITAL GROUP, INC.
2724 HARTS RUN ROAD
ALLISON PARK, PENNSYLVANIA 15101
(412) 487-7404
NOTICE OF ANNUAL MEETING
TO BE HELD ON NOVEMBER 9, 2000
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 9, 2000 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 two directors for a term of three years or until
their successors have been elected and qualified;
(2) To consider and approve the 2000 Stock Option Plan;
(3) To ratify the appointment of KPMG LLP as the Company's
independent auditors for the year ending June 30, 2001; and
(4) To transact such other business as may properly come before
the meeting.
Stockholders of record at the close of business on September 26, 2000
are entitled to notice of and to vote at the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ JOHN A. HOWARD, JR.
John A. Howard, Jr.
Secretary
Allison Park, Pennsylvania
October 6, 2000
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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 9, 2000 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 6, 2000.
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 two nominees for
director described herein, (ii) for the proposal to adopt the 2000 Stock Option
Plan, (iii) for the ratification of KPMG LLP as the Company's independent
auditors for the year ending June 30, 2001, and (iv) 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 and the parent
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 26,
2000 ("Voting Record Date") will be entitled to vote at the Annual Meeting. On
the Voting Record Date, there were 1,962,881 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 Annual
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
2000 Stock 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 2000 Stock
Option Plan. Under rules of the New York Stock Exchange, the proposals for
adoption of the 2000 Stock 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."
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<PAGE> 4
PRINCIPAL HOLDERS OF COMMON STOCK
The following table sets forth information as of September 26, 2000
with respect to ownership of the Common Stock by the entities which are known to
the Company to be the beneficial owners 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."
Name and Address Amount and Nature Percent
of Beneficial Owner of Beneficial Ownership(1) of Class(1)
------------------- -------------------------- -----------
First Manhattan Company 187,774 9.57%
437 Madison Avenue
New York, New York 10022
The Banc Funds 154,277 7.86%
208 South LaSalle Street, Suite 1680
Chicago, Illinois 60604
Edwin R. Maus 113,685(2) 5.79%
2570 Cole Road
Wexford, Pennsylvania 15090
All directors and executive
officers as a group (12 persons) 369,836(3) 18.84%
----------------------
(1) Based upon information provided by the respective beneficial owners and
filings with the Securities and Exchange Commission ("SEC") 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) Includes options covering 73,813 shares of Common Stock which are
exercisable within 60 days of September 26, 2000, 30,340 shares owned jointly
with Mr. Maus' spouse and 9,532 shares held in an IRA.
(3) Includes options covering 205,671 shares of Common Stock which are
exercisable within 60 days of September 26, 2000. 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 seven 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 or until their successors are elected and
3
<PAGE> 5
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 the Bank by blood,
marriage or adoption.
THE NOMINEES
Unless otherwise directed, each proxy executed and returned by a
stockholder will be voted for the election of all the nominees for director
listed below. If either 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. As of
the date hereof, 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
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 60th day prior to the anniversary date of the
immediately preceding Annual Meeting of Stockholders of the Company. Article
7.F. also sets forth the required information in such notice of nomination. No
nominations were submitted by stockholders in connection with the Annual
Meeting.
Nominees for director will be elected by a plurality of the votes cast
by the shares of Common Stock entitled to vote in the election at the Annual
Meeting. Abstentions and broker non-votes will have no effect on the vote.
NOMINEES FOR DIRECTOR FOR THREE-YEAR TERM EXPIRING IN 2003
<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 26, 2000(2)(3)
---- --- ----------------------------------- ------ ------------------------
AMOUNT PERCENTAGE
---------- ----------
<S> <C> <C> <C> <C>
Harvey J. Haughton 87 Director; retired; previously Vice 1972 33,726 1.72%(4)
President of Finance, Jones and Laughlin
Steel Corporation, Pittsburgh,
Pennsylvania.
Annette D. Ganassi 44 Director; President/ 1992 25,972 1.32%
Owner of Annette
Ganassi Oldsmobile,
Pontiac, GMC Truck,
Glenshaw,
Pennsylvania.
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS THAT THE ABOVE
NOMINEES BE ELECTED AS DIRECTORS
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<PAGE> 6
MEMBERS OF THE BOARD CONTINUING IN OFFICE
DIRECTORS WHOSE TERMS EXPIRE IN 2001
<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 26, 2000(2)(3)
---- --- ----------------------------------- ------ ------------------------
AMOUNT PERCENTAGE
---------- ----------
<S> <C> <C> <C> <C>
Richard J. Cessar 71 Chairman of the Board since 1996; 1969 25,173 1.28%(5)
Chairman of the Board, Maglev Inc.,
previously Pennsylvania State legislator.
Arthur G. Borland 70 Director; retired; previously Secretary, 1986 23,160 1.18%(6)
Oberg Manufacturing Company, Inc., a
manufacturer of carbide stamping dies,
Freeport, Pennsylvania.
</TABLE>
DIRECTORS WHOSE TERMS EXPIRE IN 2002
<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 26, 2000(2)(3)
---- --- ----------------------------------- ------ ------------------------
AMOUNT PERCENTAGE
---------- ----------
<S> <C> <C> <C> <C>
Richard S. Hamilton 55 Director; President of AAA of West 1986 31,953 1.63%
Penn/West Virginia, Pittsburgh,
Pennsylvania.
J. Harold Norris 74 Director, retired; previously Department 1967 26,350 1.34%(7)
Manager, Port Authority of Allegheny
County, Pittsburgh, Pennsylvania.
Edwin R. Maus 58 Director; President and Chief Executive 1989 113,685 5.79%(8)
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>
----------------------
(1) Unless otherwise noted, each director has held his or her currently listed
position for the last five years.
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
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<PAGE> 7
(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, 73,813 shares; Ms. Ganassi,
13,954 shares; Mr. Hamilton 13,952 shares; Messrs. Borland and Cessar, 13,858
shares each; Mr. Norris 10,698 shares and Mr. Haughton 9,643 shares.
(4) Includes 24,083 shares held in trust for Mr. Haughton's spouse
(5) Includes 1,554 shares owned jointly with Mr. Cessar's spouse.
(6) Includes 5,788 shares owned jointly with Mr. Borland's children and 3,514
shares held in an IRA.
(7) Includes 13,142 shares owned jointly with Mr. Norris's spouse.
(8) Includes 30,340 shares owned jointly with Mr. Maus' spouse and 9,532 shares
held in an IRA.
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.
THOMAS A. WEBB - Mr. Webb joined the Bank in November 1998 as Vice
President and Chief Lending Officer. From 1993 to 1998, Mr. Webb served as Vice
President and Chief Lending Officer with Indiana First Savings Bank in Indiana,
Pennsylvania. From 1991 to 1993, Mr. Webb served as Assistant Vice President,
Consumer Lending of PNC Bank and from 1988 to 1991 served as Assistant Vice
President, Commercial Lending with First Federal of Pittsburgh.
WILLIAM T. PUZ - Mr. Puz joined the Bank in October 1990 as Credit and
Collections Officer and was promoted to Assistant Vice President in November
1992 and to Vice President in November 1998. From 1981 to 1990, Mr. Puz served
in various positions with Vanguard Federal Savings Bank, Vandergrift,
Pennsylvania, including Loan Service Counselor, Loan Officer and Assistant Vice
President.
NANCY KRULAC FAUST - Ms. Faust joined the Bank in November 1993 as
Internal Auditor and Compliance Officer and was promoted to Assistant Vice
President in July 1994 and to Vice President in November 1998. From 1985 to
1993, Ms. Faust served in various positions with Edwards Leap and Sauer,
Certified Public Accountants, Pittsburgh, Pennsylvania, including Staff
Accountant and Audit and Accounting Manager. From 1978 to 1985, Ms. Faust served
in the Accounting and Bank Operations departments at the Federal Home Loan Bank
of Pittsburgh, Pittsburgh, Pennsylvania.
6
<PAGE> 8
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 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 2000, all Section 16(a) filing
requirements applicable to its officers and directors were complied with, except
that Annette D. Ganassi and Thomas A. Webb did not timely file Form 4's with
respect to one stock purchase transaction by each of such individuals.
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, 2000, the Board of Directors of the Company
met twelve times. With the exception of Trustee Haughton, no director attended
fewer than 75% of the aggregate of the total number of Board meetings of the
Company held during fiscal 2000 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 fees directly from the Company during fiscal 2000.
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. During fiscal 2000 the
Executive Committee consisted of Messrs. Cessar, Maus, Haughton and Norris. The
Executive Committee met once during the fiscal year ended June 30, 2000.
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. During fiscal 2000 the Audit Committee
consisted of Messrs. Borland, Hamilton and Haughton. The Audit Committee met
twice in fiscal 2000.
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, 2000. 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 Human Resources Committee establishes and monitors policies,
practices and procedures relating to the compensation of, and incentive programs
for, the Company's executive management and other employees. The Human Resources
Committee also reviews job performance of the Company's officers. During fiscal
2000 the Human Resources Committee consisted of Messrs. Borland, Norris and Ms.
Ganassi. The Human Resources Committee met three times during fiscal 2000.
The Board of Trustees of the Bank meets regularly each month and may
have additional special meetings. With the exception of Trustee Haughton, during
fiscal 2000 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. Effective July 1, 2000, the Bank pays each trustee, other than Mr.
Maus, $1,200 per month and the Chairman of the Board receives $1,600 per month.
Trustees receive an additional $200 per month for each regular monthly board
meeting attended. The Board of Trustees of the Bank has established various
standing committees of the Board, including Audit Committee, Human Resources
Committee and Executive Committee, which perform substantially similar duties as
the comparable committees of the Board of Directors of the Company.
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<PAGE> 9
PERSONNEL COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The performance of both the Company and the Bank are evaluated along
with the contributions as related to the job performance of each member of
senior management. Such evaluation is the basis for determining compensation and
benefits afforded senior management. Economic conditions, similar financial
services data and peer group comparison surveys provide additional information
to assist in the compensation review process.
Employment contracts between Laurel Capital Group, Inc., Laurel Savings
Bank and two senior management executives were amended in February, 2000 to
extend their term for an additional one-year period effective February 18, 2000.
Net income for fiscal 1999 totaled $3.2 million while the combined
assets of the Bank and the Company increased approximately 4.7%. As a result of
this profitability and growth, the Human Resources Committee increased the
annual salary of Chief Executive Officer, Edwin R. Maus, by 10.1% and paid him a
bonus approximately equal to 2.6 times his fiscal 2000 monthly salary.
Submitted by the Human Resources Committee: Arthur G. Borland, Annette
D. Ganassi and J. Harold Norris.
PERFORMANCE GRAPH
The following table and graph compares the yearly cumulative total
return of the Common Stock over a five-year measurement period with (i) the
yearly cumulative total return on the stocks included in the Nasdaq Market Index
and (ii) the yearly cumulative total return on the stocks included in the Nasdaq
Bank Stock Market Index as reported by the Center for Research in Securities
Prices at the University of Chicago. The per share amounts have been adjusted to
reflect the five-for-four stock splits on August 14, 1992, September 17, 1993
and November 15, 1994 and the three-for-two stock splits on September 15, 1995
and January 16, 1998. All of these cumulative returns are computed assuming the
reinvestment of dividends at the frequency with which dividends were paid during
the applicable years.
TABLE OF CUMULATIVE VALUES
LAUREL CAPITAL GROUP, INC. COMPARATIVE PERFORMANCE GRAPH
<TABLE>
<CAPTION>
1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Laurel Capital Group, Inc... $100.00 $135.35 $198.69 $285.21 $233.70 $207.36
Nasdaq Market Index......... 100.00 128.39 156.15 205.59 293.79 437.18
Nasdaq Banks Index.......... 100.00 130.23 203.56 282.10 278.73 228.44
Book Value Per Share........ 8.45 9.29 9.83 10.73 11.29 11.62
Market Value Per Share...... 9.44 9.83 14.08 19.75 15.625 13.25
</TABLE>
8
<PAGE> 10
[PERFORMANCE GRAPH]
EXECUTIVE COMPENSATION
REMUNERATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE. The Summary Compensation Table below
includes compensation information on the President and Chief Executive Officer
and the other executive officer of the Company whose total compensation exceeded
$100,000 for services rendered in all capacities during the fiscal years ended
June 30, 2000, 1999 and 1998.
<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 2000 $164,000 $36,000 0 $10,000
President and Chief 1999 149,000 30,000 0 8,850
Executive Officer 1998 138,000 23,000 0 8,050
John A. Howard, Jr.
Senior Vice President, 2000 $116,000 $25,000 0 $7,050
Chief Financial 1999 101,000 20,000 0 6,050
Officer, Secretary 1998 91,000 15,000 0 5,300
and Treasurer
</TABLE>
---------------
(1) Includes employer matching contributions accrued pursuant to the Bank's
defined contribution pension plan. See "-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, 2000 did not
exceed the lesser of $50,000 or 10% of the total annual salary and
bonus reported for such individual.
9
<PAGE> 11
STOCK OPTIONS
No stock options were granted to Mr. Maus or Mr. Howard during fiscal
2000.
No stock options were exercised during fiscal 2000. The following table
sets forth 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>
================================================================================================================
Shares
Acquired on Value Number of Unexercised Value of Unexercised
Name Exercise Realized Options at Year End Options at Year End(1)
-------------- --------------- ------------- ---------------
Exercisable Unexercisable Exercisable Unexercisable
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Edwin R. Maus -- -- 73,813 11,101 $240,922 $(27,752)
----------------------------------------------------------------------------------------------------------------
John A. Howard, Jr. -- -- 31,436 5,000 $ 93,193 $(12,500)
================================================================================================================
</TABLE>
---------------------------
(1) Based on the closing price of the Common Stock of $13.25 at June 30,
2000.
EMPLOYMENT AGREEMENTS
The Company and the Bank (collectively, the "Employers") have entered
into employment agreements ("Agreements") with Edwin R. Maus and John A. Howard,
Jr. The Employers have agreed to employ Mr. Maus for a term of three years in
his current position as President and Chief Executive Officer at a minimum base
salary of $164,000 per year. The Employers have agreed to employ Mr. Howard for
a term of three years in his current position as Senior Vice President, Chief
Financial Officer, Secretary and Treasurer at a minimum base salary of $116,000
per year. The Board of Directors of the Employers and the executives may
mutually agree to extend the term of the Agreements for an additional one year
as of each or any annual anniversary of the date of the Agreements by
affirmatively approving an addendum to the Agreement at least 45 days prior to
such anniversary date.
The Agreements are terminable with or without cause by the Employers.
The executives shall have no right to compensation or other benefits pursuant to
the Agreements 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 executives terminate their employment because of
failure of the Employer to comply with any material provision of the Agreements
or (ii) the Agreements are terminated by the Employers other than for cause,
disability, retirement or death or by the executives as a result of certain
adverse actions which are taken with respect to the executive's employment
following a Change in Control of the Company, as defined, the executive will be
entitled to a cash severance amount equal to 2.99 times his base salary.
Although the above-described Agreements 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.
PENSION PLAN
The Bank has a defined contribution pension plan for qualifying
employees of the Bank which allows such employees to make contributions
("Employee Contributions") as permitted by Section 401(k) of the Internal
Revenue Code of 1986, as amended (the "Code"). The Bank makes annual
contributions equal to 5% of an employee's annual compensation ("Employer
Contributions"). Prior to October 1, 1993, Employer Contributions were 100%
vested only after five years of service and subsequent to October 1, 1993,
Employer Contributions become 20% vested after two years of service, 50% vested
after three years, 75% vested after four years and 100% vested after five years.
Employer Contributions also become fully vested upon normal retirement at age 65
or upon the death or permanent and complete disability of a participant while
employed by the Bank. Employee Contributions, which may be either pre-tax
contributions or after-tax contributions, are always fully vested and
non-forfeitable.
10
<PAGE> 12
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. Loans previously made by the
Bank to such persons remain in effect pursuant to their original terms. 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.
In addition, officers and directors of the Bank may receive loans pursuant to
employee benefit programs, provided that the program is widely available to all
employees of the Bank and does not give preference to such officers and
directors over other employees. No director, executive officer or any member of
their immediate families had preferential loans in excess of $60,000 during
fiscal year 2000.
PROPOSAL TO ADOPT THE 2000 STOCK OPTION PLAN
GENERAL
On September 14, 2000, the Board of Directors adopted the 2000 Stock
Option Plan which is designed to attract and retain qualified officers and other
employees, provide officers and other employees with a proprietary interest in
the Company as an incentive to contribute to the success of the Company and
reward officers and other employees for outstanding performance. The 2000 Stock
Option Plan provides for the grant of incentive stock options ("incentive stock
options") intended to comply with the requirements of Section 422 of the Code
and non-qualified or compensatory stock options (the incentive stock options and
the non-qualified options, together, the "options"). The Board of Directors
believes that the 2000 Stock Option Plan is in the best interest of the Company
and its shareholders. If shareholder approval is obtained, options to acquire
shares of Common Stock will be awarded to officers, key employees and directors
of the Company and the Bank with an exercise price equal to the fair market
value of the Common Stock on the date of grant.
DESCRIPTION OF THE 2000 STOCK OPTION PLAN
The following description of the 2000 Stock Option Plan is a summary of
its terms and is qualified in its entirety by reference to the 2000 Stock Option
Plan, a copy of which is attached hereto as Appendix A.
Administration. The 2000 Stock Option Plan will be administered and
interpreted by a Committee of the Board of Directors ("Committee") that is
comprised solely of non-employee directors of the Company.
Stock Options. Under the 2000 Stock Option Plan, the Board of Directors
or the Committee will determine which officers, key employees and non-employee
directors will be granted options, whether such options will be incentive or
compensatory options (in the case of options granted to employees), the number
of shares subject to each option, the exercise price of each option and whether
such options may be exercised by delivering other shares of Common Stock. The
per share exercise price of both an incentive stock and a compensatory option
shall at least equal the fair market value of a share of Common Stock on the
date the option is granted (110% of fair market value in the case of incentive
stock options granted to individuals who are 10% shareholders).
All options granted to participants under the 2000 Stock Option Plan
shall become vested and exercisable at the rate, to the extent and subject to
such limitations as may be specified by the Board or the Committee, and the
right to exercise shall be cumulative. Notwithstanding the foregoing, no vesting
shall occur on or after a participant's employment or service with the Company
is terminated for any reason other than his death, disability or retirement.
Unless the Committee or Board of Directors shall specifically state otherwise at
the time an option is granted, all options granted to participants shall become
vested and exercisable in full on the date an optionee terminates his employment
or
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service with the Company or a subsidiary company because of his death,
disability or retirement. In addition, all stock options will become vested and
exercisable in full as of the effective date of a change in control of the
Company.
Each stock option or portion thereof shall be exercisable at any time
on or after it vests and is exercisable until the earlier of ten years after its
date of grant or six months after the date on which the optionee's employment
terminates (one year after termination of service in the case of non-employee
directors), unless extended by the Committee or the Board of Directors to a
period not to exceed five years from such termination. Unless stated otherwise
at the time an option is granted, (i) if an optionee terminates his employment
or service with the Company as a result of disability or retirement without
having fully exercised his options, the optionee shall have one year following
his termination due to disability or retirement to exercise such options, and
(ii) if an optionee terminates his employment or service with the Company
following a change in control of the Company without having fully exercised his
options, the optionee shall have the right to exercise such options during the
remainder of the original ten year term of the option. 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. If an optionee dies while serving as an employee or a non-employee
director or terminates employment or service as a result of disability or
retirement and dies 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 one year period following his death.
In no event shall any option be exercisable more than ten years from the date it
was granted.
Stock options are non-transferable except by will or the laws of
descent and distribution, and during an optionee's lifetime, shall be
exercisable only by such optionee or his guardian or legal representative.
Notwithstanding the foregoing, an optionee who holds non-qualified options may
transfer such options to his or her spouse, lineal ascendants, lineal
descendants, or to a duly established trust for the benefit of one or more of
these individuals. Options so transferred may thereafter be transferred only to
the optionee who originally received the grant or to an individual or trust to
whom the optionee could have initially transferred the option. Options which are
so transferred shall be exercisable by the transferee according to the same
terms and conditions as applied to the optionee.
Payment for shares purchased upon the exercise of options may be made
(i) in cash or by check, (ii) by delivery of a properly executed exercise
notice, together with irrevocable instructions to a broker to sell the shares
and then to properly deliver to the Company the amount of sale proceeds to pay
the exercise price, all in accordance with applicable laws and regulations or
(iii) if permitted by the Committee or the Board, by delivering shares of Common
Stock (including shares acquired pursuant to the exercise of an option) with a
fair market value equal to the total option price of the shares being 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. With respect to subclause (iii) in the preceding sentence, the shares
of Common Stock delivered to pay the purchase price must have either been (a)
purchased in open market transactions or (b) issued by the Company pursuant to a
plan thereof, in each case more than six months prior to the exercise date of
the option.
If the fair market value of a share of Common Stock at the time of
exercise is greater than the exercise price per share, this feature would enable
the optionee to acquire a number of shares of Common Stock upon exercise of the
Option, which is greater than the number of shares delivered as payment for the
exercise price. In addition, an optionee can exercise his or her option in whole
or in part and then deliver the shares acquired upon such exercise (if permitted
by the Committee or the Board) as payment for the exercise price of all or part
of his options. Again, if the fair market value of a share of Common Stock at
the time of exercise is greater than the exercise price per share, this feature
would enable the optionee to either (i) reduce the amount of cash required to
receive a fixed number of shares upon exercise of the option or (ii) receive a
greater number of shares upon exercise of the option for the same amount of cash
that would have otherwise been used. Because options may be exercised in part
from time to time, the ability to deliver Common Stock as payment of the
exercise price could enable the optionee to turn a relatively small number of
shares into a large number of shares. In addition, an optionee can elect, with
the Committee's concurrence, to defer the delivery of the proceeds of the
exercise of any compensatory option not transferred under the terms of the 2000
Stock Option Plan. Such deferral must comply with the provisions of the 2000
Stock Option Plan and other rules and regulations as may be established by the
Board.
Stock Appreciation Rights. Under the 2000 Stock Option Plan, the Board
of Directors or 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, or a
combination thereof, in an amount equal to the excess of the fair market
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<PAGE> 14
value of the shares of Common Stock subject to option at the time over the
option price of such shares. Stock appreciation rights may be granted
concurrently with the stock options to which they relate or, with respect to
compensatory options, at any time thereafter which is prior to the exercise or
expiration of such options. The proceeds of the exercise of a stock appreciation
right may also be deferred as provided by the provisions of the 2000 Stock
Option Plan.
Number of Shares Covered by the 2000 Stock Option Plan. A total of
94,879 shares of Common Stock has been reserved for future issuance pursuant to
the 2000 Stock Option Plan. In the event of a stock split, subdivision, stock
dividend or any other capital adjustment, the number of shares of Common Stock
under the 2000 Stock 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 Common Stock outstanding or such capital adjustment.
Amendment and Termination of the 2000 Stock Option Plan. Unless sooner
terminated, the 2000 Stock Option Plan shall continue in effect for a period of
ten years from November 9, 2000 assuming approval of the 2000 Stock Option Plan
by shareholders on such date. Termination of the 2000 Stock 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. As regards 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.
Section 162(m) of the Code generally limits the deduction for certain
compensation in excess of $1.0 million per year paid by a publicly-traded
corporation to its chief executive officer and the four other most highly
compensated executive officers ("covered executives"). Certain types of
compensation, including compensation based on performance goals, are excluded
from the $1.0 million deduction limitation. In order for compensation to qualify
for this exception: (i) it must be paid solely on account of the attainment of
one or more preestablished, objective performance goals; (ii) the performance
goal must be established by a compensation committee consisting solely of two or
more outside directors, as defined; (iii) the material terms under which the
compensation is to be paid, including performance goals, must be disclosed to,
and approved by, shareholders in a separate vote prior to payment; and (iv)
prior to payment, the compensation committee must certify that the performance
goals and any other material terms were in fact satisfied (the "Certification
Requirement").
Treasury regulations provide that compensation attributable to a stock
option or stock appreciation right is deemed to satisfy the requirement that
compensation be paid solely on account of the attainment of one or more
performance goals if: (i) the grant is made by a compensation committee
consisting solely of two or more outside directors, as defined; (ii) the plan
under which the option or stock appreciation right is granted states the maximum
number of shares with respect to which options or stock appreciation rights may
be granted during a specified period to any employee; and (iii) under the terms
of the option or stock appreciation right, the amount of compensation the
employee could receive is based solely on an increase in the value of the stock
after the date of grant or award. The Certification Requirement is not necessary
if these other requirements are satisfied.
The 2000 Stock Option Plan has been designed to meet the requirements
of Section 162(m) of the Code and, as a result, the Company believes that
compensation attributable to stock options and stock appreciation rights granted
under the 2000 Stock Option Plan in accordance with the foregoing requirements
will be fully deductible under Section 162(m) of the Code. If the non-excluded
compensation of a covered executive exceeded $1.0 million, however, compensation
attributable to other awards, such as restricted stock, may not be fully
deductible unless the grant or vesting of the award is contingent on the
attainment of a performance goal determined by a compensation committee meeting
specified requirements and disclosed to and approved by the shareholders of the
Company. The Board of Directors believes that the likelihood of any impact on
the Company from the deduction limitation contained in Section 162(m) of the
Code is remote at this time.
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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, 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 2000 Stock Option Plan currently requires
any charge against earnings under generally accepted accounting principles. In
October 1995, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation," which is effective for transactions entered into after December
15, 1995. This Statement establishes financial accounting and reporting
standards for stock-based employee compensation plans. This Statement defines a
fair value method of accounting for an employee stock option or similar equity
instrument and encourages all entities to adopt that method of accounting for
all of their employee stock compensation plans. However, it also allows an
entity to continue to measure compensation cost for those plans using the
intrinsic value method of accounting prescribed by APB Opinion No. 25,
"Accounting for Stock Issued to Employees." Under the fair value method,
compensation cost is measured at the grant date based on the value of the award
and is recognized over the service period, which is usually the vesting period.
Under the intrinsic value method, compensation cost is the excess, if any, of
the quoted market price of the stock at grant date or other measurement date
over the amount an employee must pay to acquire the stock. The Company
anticipates that it will use the intrinsic value method, in which event pro
forma disclosure will be included in the footnotes to the Company's financial
statements to show what net income and earnings per share would have been if the
fair value method had been utilized. If the Company elects to utilize the fair
value method, its net income and earnings per share may be adversely affected.
Shareholder Approval. No awards will be granted under the 2000 Stock
Option Plan unless the 2000 Stock Option Plan is approved by shareholders.
Shareholder ratification of the 2000 Stock Option Plan will also satisfy The
Nasdaq Stock Market listing and federal tax requirements.
Awards to be Granted. The Board of Directors of the Company adopted the
2000 Stock Option Plan and the Committee established thereunder intends to grant
options to executive officers, employees and non-employee directors of the
Company and the Bank. No grants have been made to executive officers or
employees as of the date of this Proxy Statement. However, each non-employee
director will receive a non-qualified option to purchase 3,953 shares of Common
Stock upon approval of the 2000 Stock Option Plan by shareholders. 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.
On October 1, 2000, the closing price of a share of Common Stock on the
Nasdaq Stock Market was $14.25.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR
ADOPTION OF THE 2000 STOCK OPTION PLAN.
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RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of the Company has appointed KPMG LLP as
independent auditors of the Company for the year ending June 30, 2001 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 LLP that neither that firm nor any of its associates has any
relationship with the Company or the Bank other than the usual relationship that
exists between independent certified public accountants and clients. KPMG LLP
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 SHAREHOLDERS VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS THE COMPANY'S INDEPENDENT
AUDITORS FOR FISCAL 2001.
STOCKHOLDER PROPOSALS
Any proposal which a stockholder wishes to have presented at the next
Annual Meeting of Stockholders, to be held in November 2001, must be received at
the main office of the Company, 2724 Harts Run Road, Allison Park, Pennsylvania
15101, no later than June 9, 2001. 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, 2000 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, 2000 AND THE LIST OF THE EXHIBITS
THERETO REQUIRED TO BE FILED WITH THE SEC 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
/s/ JOHN A. HOWARD, JR.
John A. Howard, Jr.
October 6, 2000 Secretary
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APPENDIX A
LAUREL CAPITAL GROUP, INC.
2000 STOCK OPTION PLAN
ARTICLE I
ESTABLISHMENT OF THE PLAN
Laurel Capital Group, Inc. (the "Corporation") hereby establishes this
2000 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 Employees and Non-Employee Directors for outstanding
performance. 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. Each recipient of an Award hereunder is advised to
consult with his or her personal tax advisor with respect to the tax
consequences under federal, state, local and other tax laws of the receipt
and/or exercise of an Award hereunder.
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, a wholly owned subsidiary of the
Corporation.
3.03 "Board" means the Board of Directors of the Corporation.
3.04 "Change in Control of the Corporation" shall mean the occurrence
of any of the following: (i) the acquisition of control of the Corporation as
defined in 12 C.F.R. Section 225.41, unless a presumption of control is
successfully rebutted or unless the transaction is exempted by 12 C.F.R. Section
225.42, or any successor to such sections; (ii) an event that would be required
to be reported in response to Item 1(a) of Form 8-K or Item 6(e) of Schedule 14A
of Regulation 14A pursuant to the Exchange Act, or any successor thereto,
whether or not any class of securities of the Corporation is registered under
the Exchange Act; (iii) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Corporation representing 25% or more of the combined voting power of the
Corporation's then outstanding securities; or (iv) during any period of three
consecutive years during the term of an Award, individuals who at the beginning
of such period constitute the Board of Directors of the Corporation cease for
any reason to constitute at least two-thirds thereof unless the election, or the
nomination for election by shareholders, of each new director was approved by a
vote of at least majority of the directors then still in office who were
directors at the beginning of the period. If any of the events enumerated in
clauses (i) through (iv) occur, the Board shall determine the effective date of
the Change in Control resulting therefrom for purposes of the Plan.
3.05 "Code" means the Internal Revenue Code of 1986, as amended.
3.06 "Committee" means a committee of two or more directors appointed
by the Board pursuant to Article IV hereof, each of whom shall be a Non-Employee
Director as defined in Rule 16b-3(b)(3)(i) of the Exchange Act or any successor
thereto and within the meaning of Section 162(m) of the Code and the regulations
promulgated thereunder.
3.07 "Common Stock" means shares of common stock, par value $.01 per
share, of the Corporation.
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3.08 "Disability" means any physical or mental impairment which
qualifies an individual 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 individual for disability benefits
under the Federal Social Security System.
3.09 "Effective Date" means the later of the day upon which the Board
adopts this Plan or the day that the shareholders of the Corporation approve
this Plan.
3.10 "Employee" means any person who is employed by the Corporation,
the Bank or any Subsidiary Company, or is an Officer of the Corporation, the
Bank or any Subsidiary Company, but not including directors who are not also
Officers of or otherwise employed by the Corporation, the Bank or any Subsidiary
Company.
3.11 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
3.12 "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.
3.13 "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.
3.14 "Non-Employee Director" means a member of the Board of Directors
of either the Corporation or the Bank or any successors thereto, including an
advisory director or a director emeritus of the Boards of the Corporation and/or
the Bank or any successors thereto, who is not an Officer or Employee of the
Corporation or any Subsidiary Company.
3.15 "Non-Qualified Option" means any Option granted under this Plan
which is not an Incentive Stock Option.
3.16 "Offering" means the subscription and community offering of Common
Stock to the public (but not the exchange offer to former shareholders of the
Bank) in connection with the reorganization of the Bank from the mid-tier mutual
holding company structure to the stock holding company structure.
3.17 "Officer" means an Employee whose position in the Corporation or a
Subsidiary Company is that of a corporate officer, as determined by the Board.
3.18 "Option" means a right granted under this Plan to purchase Common
Stock.
3.19 "Optionee" means an Employee or Non-Employee Director or former
Employee or Non-Employee Director to whom an Option is granted under the Plan.
3.20 "Retirement" means a termination of employment which constitutes a
"retirement" under any applicable qualified pension benefit plan maintained by
the Corporation or a Subsidiary Corporation, or, if no such plan is applicable,
which would constitute "retirement" under the Corporation's pension benefit
plan, if such individual were a participant in that plan. With respect to
Non-Employee Directors, retirement means retirement from service on the Board of
Directors of the Corporation or the Bank or any successors thereto (including
service as a director emeritus or an advisory director) after attaining the age
of 65.
3.21 "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 Board or the Committee in accordance with
Section 8.10.
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3.22 "Subsidiary Companies" means those subsidiaries of the
Corporation, including the Bank, which meet the definition of "subsidiary
corporations" set forth in Section 424(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 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 12.01 hereof, (ii)
include arrangements to facilitate the Optionee's ability to borrow funds for
payment of the exercise or purchase price of an Award, if applicable, from
securities brokers and dealers, (iii) establish the method and arrangements by
which an optionee may defer the recognition of income upon the exercise of a
Non-Qualified Option or Stock Appreciation Right pursuant to Article XIII
hereof, and (iv) 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 in the
absence of action by the Board.
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, each of whom shall be a Non-Employee Director, as defined
in Rule 16b-3(b)(3)(i) of the Exchange Act or any successor thereto. In
addition, each member of the Committee shall be an "outside director" within the
meaning of Section 162(m) of the Code and regulations thereunder at such times
as is required under such regulations. 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 Board or 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 and Bylaws or the Bank's Charter and
Bylaws shall terminate as of the effective date of such removal.
4.04 Limitation on Liability. Neither the members of the Board nor any
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
pursuant thereto or any Awards granted hereunder. If a member of the Board or
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
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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.
ARTICLE V
ELIGIBILITY
Awards may be granted to such Employees and Non-Employee Directors of
the Corporation and its Subsidiary Companies as may be designated from time to
time by the Board or 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
Awards of Non-Qualified Options pursuant to this 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 94,879. None of such shares shall be the subject of more
than one Award at any time (provided that Stock Appreciation Rights and the
related Options shall be deemed to be a single Award), 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. During the time this Plan remains in effect, grants to an individual
Employee shall not exceed 25% of the shares of Common Stock available 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 Board or the Committee shall, in its discretion, determine from
time to time which Employees and Non-Employee Directors 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 and Non-Employee Director, his present and potential
contributions to the growth and success of the Corporation, his salary and such
other factors deemed relevant to accomplishing the purposes 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
Board or the Committee in each instance shall deem appropriate, provided they
are not
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inconsistent with the terms, conditions and provisions of this Plan. Each
Optionee shall receive a copy of his executed Stock Option Agreement.
8.02 Option Exercise Price.
(a) Incentive Stock Options. Except as provided in Section
8.09(b), 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, and subject to any applicable adjustment
pursuant to Article IX hereof.
(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 one hundred percent (100%) of the Fair Market Value of a
share of Common Stock at the time such Non-Qualified Option is granted, subject
to any applicable adjustment pursuant to Article IX hereof.
8.03 Vesting and Exercise of Options.
(a) General Rules. Incentive Stock Options and Non-Qualified
Options granted hereunder shall become vested and exercisable at the rate, to
the extent and subject to such limitations as may be specified by the Board or
the Committee. Notwithstanding the foregoing, except as provided in Section
8.03(b) hereof, no Option granted to an Employee or a Non-Employee Director
shall continue to vest on or after the date the Employee's employment or the
Non-Employee Director's service with the Corporation and all Subsidiary
Companies (or any successor companies) is terminated for any reason other than
his death, Disability or Retirement. In determining the number of shares of
Common Stock with respect to which Options are vested and/or exercisable, if
applicable, fractional shares shall be rounded down to the nearest whole number,
provided that such fractional Shares shall be aggregated and deemed vested on
the final date of vesting.
(b) Accelerated Vesting. Unless the Board or 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 with the Corporation or a Subsidiary
Company or service as a Non-Employee Director because of his death, Disability
or Retirement. In addition, all Options hereunder shall become immediately
vested and exercisable in full as of the effective date of a Change in Control
of the Corporation.
8.04 Duration of Options.
(a) General Rule. Except as provided in Sections 8.04(b) and
8.09, each Option or portion thereof granted to an Employee shall be exercisable
at any time on or after it vests and remain exercisable until the earlier of (i)
ten (10) years after its date of grant or (ii) six (6) months after the date on
which the Employee ceases to be employed by the Corporation and all Subsidiary
Companies, unless the Board or the Committee in its discretion decides at the
time of grant or thereafter to extend such period of exercise upon termination
of employment to a period not exceeding five (5) years.
Except as provided in Section 8.04(b), each Option or portion thereof
granted to a Non-Employee Director shall be exercisable at any time on or after
it vests and remain exercisable until the earlier of (i) ten (10) years after
its date of grant or (ii) one (1) year after the date on which the Non-Employee
Director ceases to serve as a director of the Corporation and all Subsidiary
Companies, unless the Board or the Committee in its discretion decides at the
time of grant or thereafter to extend such period of exercise upon termination
of service to a period not exceeding five (5) years.
(b) Exceptions. Unless the Board or the Committee shall
specifically state otherwise at the time an Option is granted: (i) if an
Employee terminates his employment with the Corporation or a Subsidiary Company
as a result of Disability or Retirement without having fully exercised his
Options, the Employee shall have the right, during the one (1) year period
following his termination due to Disability or Retirement, to exercise such
Options, and (ii) if a Non-Employee Director terminates his service as a
director with the Corporation or the Bank or any successors thereto as a result
of Disability or Retirement without having fully exercised his Options, the
Non-Employee Director shall have the right, during the one (1) year period
following his termination due to Disability or Retirement, to exercise such
Options.
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Unless the Board or the Committee shall specifically state otherwise at
the time an Option is granted, if an Employee or Non-Employee Director
terminates his employment or service with the Corporation or a Subsidiary
Company (or any successors thereto) following a Change in Control of the
Corporation without having fully exercised his Options, the Optionee shall have
the right to exercise such Options during the remainder of the original ten (10)
year term of the Option from the date of grant.
If an Optionee 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 and dies without
having fully exercised his Options, the executors, administrators, legatees or
distributees of his estate shall have the right, during the one (1) year period
following his 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.
8.05 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. Notwithstanding the foregoing, or any other provision
of this Plan, an Optionee who holds vested Non-Qualified Options may transfer
such Options to his or her spouse, lineal ascendants, lineal descendants, or to
a duly established trust for the benefit of one or more of these individuals.
Options so transferred may thereafter be transferred only to the Optionee who
originally received the grant or to an individual or trust to whom the Optionee
could have initially transferred the Option pursuant to this Section 8.05.
Options which are transferred pursuant to this Section 8.05 shall be exercisable
by the transferee according to the same terms and conditions as applied to the
Optionee.
8.06 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.
8.07 Payment for Shares. Payment in full of the purchase price for
shares of Common Stock purchased pursuant to the exercise of such Option shall
be made to the Corporation upon exercise of such Option. All shares sold under
the Plan shall be fully paid and nonassessable. Payment for shares may be made
by the Optionee (i) in cash or by check, (ii) by delivery of a properly executed
exercise notice, together with irrevocable instructions to a broker to sell the
shares and then to properly deliver to the Corporation the amount of sale
proceeds to pay the exercise price, all in accordance with applicable laws and
regulations, (iii) at the discretion of the Board or the Committee, by
delivering shares of Common Stock (including shares acquired pursuant to the
exercise of an Option) equal in Fair Market Value to the purchase price of the
shares to be acquired pursuant to the Option, (iv) at the discretion of the
Board or the Committee, by withholding some of the shares of Common Stock which
are being purchased upon exercise of an Option, or (v) any combination of the
foregoing. With respect to subclause (iii) hereof, the shares of Common Stock
delivered to pay the purchase price must have either been (x) purchased in open
market transactions or (y) issued by the Corporation pursuant to a plan thereof,
in each case more than six months prior to the exercise date of the Option.
8.08 Voting and Dividend Rights. No Optionee shall have any voting or
dividend rights or other rights of a shareholder 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 shareholder ledger as the holder of record of such shares
acquired pursuant to an exercise of an Option.
8.09 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 8.08 above, to those
contained in this Section 8.09.
(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 under this Plan for the first time by the Optionee during any
calendar year 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 Shareholders. 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
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is granted, owns, directly or indirectly, more than ten percent (10%) of the
total combined voting power of all classes of stock issued to shareholders 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 date of grant, and such Incentive Stock Option shall by
its terms not be exercisable after the earlier of the date determined under
Section 8.03 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 or the
Board 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 ensuring compliance with the provisions of this
Section 8.09(c).
8.10 Stock Appreciation Rights.
(a) General Terms and Conditions. The Board or 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 (each such right being hereinafter referred to as a "Stock Appreciation
Right"). Such payment, at the discretion of the Board or 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 with respect to a Stock Appreciation Right may
include (without limitation), subject to other provisions of this Section 8.10
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 8.10; 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 Board or the Committee shall have complete discretion to
determine whether, when and to whom Stock Appreciation Rights may be granted.
(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, if any, within
which the Option to which it relates may be exercised.
(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 granted in
connection with an Incentive Stock Option must be granted concurrently with the
Option to which it relates, while a Stock Appreciation Right granted in
connection with a Non-Qualified Option 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.
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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 outstanding Award relates,
the maximum number of shares that can be covered by Awards to each Employee,
each Non-Employee Director and all Non-Employee Directors as a group, and the
exercise price per share of Common Stock under any outstanding 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. Notwithstanding any provision to
the contrary herein and to the extent permitted by applicable laws and
regulations and interpretations thereof, the exercise price of shares subject to
outstanding Awards shall be proportionately adjusted upon the payment by the
Corporation of a special cash dividend or return of capital in an amount per
share which exceeds 10% of the Fair Market Value of a share of Common Stock as
of the date of declaration, provided that the adjustment to the per share
exercise price shall satisfy the criteria set forth in Emerging Issues Task
Force 90-9 (or any successor thereto) so that the adjustments do not result in
compensation expense, and provided further that if such adjustment with respect
to Incentive Stock Options would be treated as a modification of the outstanding
incentive stock options with the effect that, for purposes of Sections 422 and
425(h) of the Code, and the rules and regulations promulgated thereunder, new
Incentive Stock Options would be deemed to be granted hereunder, then no
adjustment to the per share exercise price of outstanding Incentive Stock
Options shall be made.
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 shareholder approval or any shareholder
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
except as specifically authorized herein.
ARTICLE XI
EMPLOYMENT AND SERVICE 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 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 8.09(c).
12.02 Methods of Tax Withholding. The Board or 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
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<PAGE> 25
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
DEFERRED PAYMENTS
13.01 Deferral of Options and Stock Appreciation Rights.
Notwithstanding any other provision of this Plan, any Optionee may elect, with
the approval of the Committee and consistent with any rules and regulations
established by the Board, to defer the delivery of the proceeds of the exercise
of any Non-Qualified Option which has not been transferred under the provisions
of Section 8.05 hereof and Stock Appreciation Rights.
13.02 Timing of Election. The election to defer the delivery of the
proceeds from the exercise of any eligible Non-Qualified Option or Stock
Appreciation Right must be made at least six (6) months prior to the date such
Option or Stock Appreciation Right is exercised or at such other time as the
Committee may specify. Deferrals of eligible Non-Qualified Options or Stock
Appreciation Rights shall only be allowed for exercises of Non-Qualified Options
and Stock Appreciation Rights that occur while the Participant is in active
service with the Corporation or one of the Subsidiary Companies. Any election to
defer the proceeds from the exercise of an eligible Non-Qualified Option or
Stock Appreciation Right shall be irrevocable as long as the Optionee remains an
Employee or a Non-Employee Director.
ARTICLE XIV
EFFECTIVE DATE OF THE PLAN; TERM
14.01 Effective Date of the Plan. This Plan shall become effective on
the Effective Date, and Awards may be granted hereunder no earlier than the date
that this Plan is approved by shareholders of the Corporation and no later than
the termination of the Plan, provided that this Plan is approved by shareholders
of the Corporation pursuant to Article XV hereof.
14.02 Term of the 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 XV
SHAREHOLDER APPROVAL
The Corporation shall submit this Plan to shareholders for approval at
a meeting of shareholders of the Corporation held within twelve (12) months
following the Effective Date in order to meet the requirements of (i) Section
422 of the Code and regulations thereunder, (ii) Section 162(m) of the Code and
regulations thereunder, and (iii) the Nasdaq Stock Market for continued
quotation of the Common Stock on the Nasdaq Stock Market.
ARTICLE XVI
MISCELLANEOUS
16.01 Governing Law. To the extent not governed by federal law, this
Plan shall be construed under the laws of the Commonwealth of Pennsylvania.
16.02 Pronouns. Wherever appropriate, the masculine pronoun shall
include the feminine pronoun, and the singular shall include the plural.
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<TABLE>
<S> <C> <C> <C> <C>
[X] PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS EXAMPLE LAUREL CAPITAL GROUP, INC.
WITH-
THIS PROXY IS SOLICITED ON BEHALF OF FOR HOLD EXCEPT
THE BOARD OF DIRECTORS OF LAUREL CAPITAL 1. ELECTION OF DIRECTORS [ ] [ ] [ ]
GROUP, INC. (THE "COMPANY") FOR USE ONLY
AT THE ANNUAL MEETING OF STOCKHOLDERS TO Nominees for three-year term:
BE HELD ON NOVEMBER 9, 2000 AND AT ANY
ADJOURNMENT THEREOF. HARVEY J. HAUGHTON ANNETTE D. GANASSI
The undersigned, being a stockholder INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
of the Company, hereby appoints the Board NOMINEE, MARK "EXCEPT" AND WRITE THAT NOMINEE'S NAME IN THE SPACE
of Directors or any successor thereto as PROVIDED BELOW.
proxies with full powers of substitution,
and hereby authorizes them to represent and -----------------------------------------------------------------------------
vote, as designated on this proxy card, all
the shares of common stock of the Company
("Common Stock") held of record by the FOR AGAINST ABSTAIN
undersigned on September 26, 2000 at the 2. PROPOSAL to approve the [ ] [ ] [ ]
Annual Meeting of Stockholders to be held 2000 Stock Option Plan.
at the Holiday Inn-Allegheny Valley,
R.I.D.C. Park, 180 Gamma Drive, Pittsburgh, 3. PROPOSAL to ratify the [ ] [ ] [ ]
Pennsylvania 15238 on Thursday, November 9, appointment of KPMG LLP
2000 at 10:30 a.m., Eastern Time, or any as the Company's
adjournment thereof, and thereat to act independent auditors
with respect to all votes that the for fiscal year ended
undersigned would be entitled to cast, if June 30, 2001.
then personally present, as set forth on
this proxy card (the Board of Directors 4. In their discretion, the proxies are authorized to vote with respect to
recommends that stockholders vote FOR matters incident to the conduct of the meeting and upon such other
proposals 1, 2 and 3). business as may properly come before the Annual Meeting.
PLEASE CHECK BOX IF YOU PLAN ------
------------------------ TO ATTEND THE MEETING. [ ]
Please be sure to sign and date Date
this Proxy in the box below.
-------------------------------------------------------------- SHARES OF COMMON STOCK OF THE COMPANY WILL BE VOTED AS
SPECIFIED. IF NOT OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR
THE ELECTION OF ALL OF THE NOMINEES NAMED IN PROPOSAL 1, FOR
PROPOSALS 2 AND 3, AND OTHERWISE AT THE DISCRETION OF THE PROXIES.
THIS PROXY MAY BE REVOKED AT ANY TIME PRIOR TO THE TIME IT IS
----Stockholder sign above---Co-holder (if any) sign above---- EXERCISED AT THE ANNUAL MEETING.
* DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED. *
LAUREL CAPITAL GROUP, INC.
------------------------------------------------------------------------------------------------------------------------------------
The above signed hereby acknowledges receipt of a Notice of Annual Meeting of Laurel Capital Group, Inc. to be held on
November 9, 2000 and any adjournment thereof, and a Proxy Statement for the Annual Meeting prior to the signing of this proxy card.
Please sign exactly as your name(s) appear(s) on this proxy card. When signing in a representative capacity, please give
title. Only one signature is required in the case of a joint account.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
