PROGRESS FINANCIAL CORPORATION
4 Sentry Parkway, Suite 230
P.O. Box 3036
Blue Bell, PA 19422-0764
(610) 825-8800
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 13, 1997
NOTICE IS HEREBY GIVEN THAT the Annual Meeting of Stockholders of Progress
Financial Corporation will be held at the Plymouth Country Club, Plymouth and
Belvoir Roads, Norristown, Pennsylvania, on Tuesday, May 13, 1997 at 9:00 a.m.
for the following purposes:
1. To elect three directors for a term of three years or until their
successors have been elected and qualified;
2. To approve the proposal to adopt the Amended and Restated 1993 Stock
Incentive Plan.
3. To approve the proposal to adopt the Amended and Restated 1993
Directors' Stock Option Plan.
4. To ratify the appointment of Coopers & Lybrand L.L.P. as the Company's
independent accountants for the year ending December 31, 1997; and
5. To transact such other business as may properly come before the meeting
and all adjournments thereof.
Stockholders of record at the close of business on March 21, 1997 are
entitled to notice of and to vote at the meeting and all adjournments thereof.
A copy of the Company's Annual Report for 1996 is enclosed. The Annual
Report is not to be regarded as proxy solicitation material.
BY ORDER OF
THE BOARD OF DIRECTORS
/s/Eric J. Morgan
Eric J. Morgan
Corporate Secretary
Blue Bell, Pennsylvania
March 31, 1997
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 THE MEETING, YOU MAY VOTE
EITHER IN PERSON OR BY PROXY. ANY PROXY GIVEN MAY BE REVOKED BY YOU IN WRITING
OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE THEREOF.
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] 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 Pursuant to Section 240.14a-11(c) or Section 240.14a-12
PROGRESS FINANCIAL CORPORATION
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(Name of Registrant as Specified In Its Charter)
PROGRESS FINANCIAL CORPORATION
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
PROGRESS FINANCIAL CORPORATION
4 Sentry Parkway, Suite 230
P.O. Box 3036
Blue Bell, PA 19422-0764
(610) 825-8800
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 13, 1997
INTRODUCTORY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by
and on behalf of the Board of Directors of Progress Financial Corporation (the
"Company") of proxies to be used at the Annual Meeting of Stockholders of the
Company to be held on May 13, 1997 at 9:00 a.m., at the Plymouth Country Club,
Plymouth and Belvoir Roads, Norristown, Pennsylvania, and at any adjournment or
adjournments thereof. The approximate date on which this Proxy Statement and the
accompanying Proxy are to be mailed to stockholders is April 7, 1997.
At the Annual Meeting, stockholders will be asked to elect three directors
to serve for three year terms. A. John May, III, Charles J. Tornetta and W. Kirk
Wycoff, each of whom is a current director of the Company will each serve for
terms expiring at the Company's 2000 Annual Meeting. In addition, stockholders
will be asked to approve the proposal to adopt the Amended and Restated 1993
Stock Incentive Plan ("Restated Incentive Plan"); to approve the proposal to
adopt the Amended and Restated 1993 Directors' Stock Option Plan ("Restated
Directors' Plan"); to ratify the appointment of Coopers and Lybrand L.L.P. as
the Company's independent accountants for the year ending December 31, 1997; and
to transact such other business as may properly come before the meeting and all
adjournments thereof.
The accompanying proxy is solicited by the Board of Directors of the
Company for use at the Annual Meeting of Stockholders of the Company at the time
and place, and for the purposes, set forth above. The proxy solicited hereby, if
properly signed and returned to the Company and not revoked before it is voted,
will be voted in accordance with the instructions contained therein. If no
instructions are given, each proxy received will be voted "FOR" the slate of
directors nominated by the Board of Directors as described herein, "FOR" the
proposal to adopt the Restated Incentive Plan, "FOR" the proposal to adopt the
Restated Directors' Plan, "FOR" the appointment of Coopers and Lybrand L.L.P. as
the Company's independent accountants for the year ending December 31, 1997, and
"FOR" any other matters as may properly come before the meeting.
Any stockholder giving a proxy has the power to revoke it at any time
before it is exercised by: (i) filing with the Company written notice thereof
(Attention: Eric J. Morgan, Corporate Secretary, Progress Financial Corporation,
4 Sentry Parkway, Suite 230, P.O. Box 3036, Blue Bell, Pennsylvania 19422-0764;
(ii) submitting a duly executed proxy bearing a later date; or (iii) appearing
at the Annual Meeting and giving the Company notice of his or her intention to
vote in person. Proxies solicited hereby may be exercised only at the Annual
Meeting and any adjournments thereof and will not be used for any other meeting.
Only stockholders of record at the close of business on March 21, 1997 will
be entitled to receive notice of and to vote at the Annual Meeting. On the
record date, there were 3,775,748 shares of Common Stock, par value $1.00 per
share ("Common Stock") of the Company issued and outstanding and held by
approximately 1,500 holders of record, and the Company had no other class of
equity securities outstanding. Each share of Common Stock entitles the holder to
one vote, and votes may not be voted cumulatively with respect to the election
of directors. A majority of the shares of Common Stock entitled to vote, present
in person or represented by proxy, will constitute a quorum for purposes of the
meeting.
-1-
Directors will be elected by a plurality of the votes cast at the Annual
Meeting. The affirmative vote of a majority of the total votes cast at the
Annual Meeting is required for approval of the proposals to adopt the Restated
Stock Incentive Plan, to adopt the Restated Director's Plan and to ratify the
appointment of the Company's independent auditors. Abstentions will be counted
for purposes of determining the presence of a quorum at the Annual Meeting.
Abstentions will not be counted as votes cast and, thus, will have no effect on
the plurality vote for the election of directors or vote on the proposals to
adopt the Restated Incentive Plan and the Restated Directors' Plan and to ratify
the appointment of the Company's independent accountants. Under rules applicable
to broker-dealers, the election of directors and the proposal to ratify the
accountants 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." The proposals to approve the Restated Incentive Plan and the Restated
Directors' Plan, however, are considered "non-discretionary" and for which there
will be broker non-votes. A broker non-vote will have the same effect as a vote
against the proposals to approve the Restated Incentive Plan and the Restated
Directors' Plan.
ELECTION OF DIRECTORS
The Certificate of Incorporation of the Company provides that the Board of
Directors shall consist of no fewer than seven nor more than twenty-one members,
the exact number to be fixed from time to time by resolution of the Board of
Directors, and shall be divided into three classes as nearly equal in number as
possible. The members of each class are to be elected for a term of three years
and until their successors are elected and qualified. One class of directors is
to be elected annually except, in the event of a change in the number of or
composition of the Board of Directors, directors may be elected to more than one
class in order to more nearly achieve equality in the classes. By affirmative
vote of a majority of the Board of Directors, a resolution was adopted which
presently fixes the number of the members of the Board at eleven.
Unless otherwise directed, each proxy executed and returned by a
stockholder will be voted for the election of the three nominees listed below.
If any person named as nominees should be unable or unwilling to stand for
election at the time of the Annual Meeting, the proxies will vote for a
replacement nominee or nominees recommended by the Board of Directors. At this
time, the Board of Directors knows of no reason why any of the persons listed
below may not be able to serve as a director if elected.
-2-
Information with Respect to Nominees for Director and Directors Whose Term
Continues
The following tables set forth certain information regarding each nominee
for election, including the principal occupations of such persons during at
least the past five years and the number and percent of shares of Common Stock
beneficially owned by such persons as of March 21, 1997. No nominee for director
or director is related to any other nominee for director or director or
executive officer of the Company by blood, marriage or adoption, and there was
no arrangement or understanding pursuant to which any of the nominees for
director or director was selected as a nominee for director or director.
Nominees for Director for a three year term
Amount of
Principal Director Common Stock
Occupation During of Beneficially
At Least the Past Company Term Owned as of
Name Age Five Years Since Expires March 21, 1997 (1)
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A. John May, III 41 Partner in the law firm 1993 2000 14,893 (2)
Pepper, Hamilton & Scheetz,
Philadelphia, Pennsylvania
Charles J. 66 President of Tornetta 1991 2000 63,408 (1.67%)(3)
Tornetta Realty Corporation, a
real estate broker in
Norristown, Pennsylvania.
Also, President of
Commonwealth Insurance
Agency.
W. Kirk 39 Chairman, President and 1991 2000 304,655 (7.67%)(4)
Wycoff Chief Executive Officer
of the Company and the
Bank.
The Board of Directors recommends that stockholders vote FOR the election of the
above nominees.
-3-
Members of Board Continuing in Office
Amount of
Principal Director Common Stock
Occupation During of Beneficially
At Least the Past Company Term Owned as of
Name Age Five Years Since Expires March 21, 1997 (1)
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William O. 56 Managing Partner of Kistler-Tiffany 1990 1998 100,480 (2.65%) (5)
Daggett, Jr. Companies, a firm engaged in financial
and estate planning and employee
benefits. Also, President, Benefit
Designs, Inc.; Vice President, Group
Brokerage Associates, Inc.; and
Chairman of Board of NABCO.
H. Wayne 48 Chairman and CEO Progress Realty 1996 1998 17,092 (6)
Griest Advisors, L.P. and Quaker State Leasing
Company since January 1996. Former
President of The Lee Financing Group,
Inc. in Wayne, Pennsylvania from July
1986 until November 1995.
Joseph R. 54 Principal of KMR Management, Inc., a 1992 1998 8,750 (7)
Klinger management consulting company in
Glenside, Pennsylvania.
William L. 45 Attorney/Partner with the law firm 1990 1998 90,976 (2.39%) (8)
Mueller Brandt, Haughey, Penberthy, Lewis &
Hyland in Moorestown, New Jersey since
December 1996. Former attorney with Clark,
Ladner, Fortenbaugh & Young in Cherry
Hill, New Jersey from November 1987 until
November 1996.
John E. F. 56 Consultant and President of Corson 1991 1999 12,250 (7)
Corson Investments, a group of family holding
companies in Plymouth Meeting,
Pennsylvania.
Donald F. U. 60 Chairman of the Board of Adage Inc., a 1987 1999 199,468 (5.21%) (9)
Goebert wireless communications firm in West
Chester, Pennsylvania.
-4-
Members of Board Continuing in Office (continued)
Amount of
Principal Director Common Stock
Occupation During of Beneficially
At Least the Past Company Term Owned as of
Name Age Five years Since Expires March 21, 1997(1)
- ----------------------------------------------------------------------
Paul M. 37 President of DAR 1991 1999 31,550 (7)
LaNoce Industrial Products
Inc., an industrial
manufacturer in
Philadelphia,
Pennsylvania.
Janet E. 42 Chief Operating 1996 1999 12,500 (10)
Paroo Officer of Global
Health Group, Inc.,
a health care company
in West Conshohocken,
Pennsylvania involved
with the development
and management of health
care facilities, systems
and programs primarily
in South East Asia and
India, since 1995; Banker
for Meridian Bank in
Philadelphia, Pennsylvania
from 1986 to 1995
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(1) Unless otherwise indicated, the number of shares owned is less than 1%
of the issued and outstanding Common Stock of the Company.
(2) Includes 2,000 shares which are held by a guardian with or for the
benefit of certain family members and 2,500 shares subject to stock
options which are exercisable within 60 days of March 21, 1997.
(3) Includes 25,000 common stock warrants and 5,750 shares subject to stock
options, in each case which are exercisable within 60 days of March 21,
1997.
(4) Includes 12,000 shares which are held jointly by Mr. Wycoff with or for
the benefit of certain family members and 12,500 common stock warrants
and 183,000 shares subject to stock options, in each case which are
exercisable within 60 days of March 21, 1997.
(5) Includes 82,230 shares owned by companies of which Mr. Daggett is a
director, officer and 10% stockholder and 12,500 common stock warrants
and 5,750 shares subject to stock options, in each case which are
exercisable within 60 days of March 21, 1997.
(6) Includes 1,700 shares subject to stock options which are exercisable
within 60 days of March 21, 1997.
(7) Includes 5,750 shares subject to stock options which are exercisable
within 60 days of March 21, 1997.
(8) Includes 60,226 shares held jointly by Mr. Mueller with or for the
benefit of certain family members and 25,000 common stock warrants and
5,750 shares subject to stock options, in each case which are
exercisable within 60 days of March 21, 1997.
(9) Includes 143,718 shares owned by companies of which Mr. Goebert is a
director, officer and 10% stockholder and 50,000 common stock warrants
and 5,750 shares subject to stock options, in each case which are
exercisable within 60 days of March 21, 1997.
(10) Includes 2,500 shares subject to stock options which are exercisable
within 60 days of March 21, 1997.
-5-
THE BOARD OF DIRECTORS OF THE COMPANY AND ITS COMMITTEES
The Board of Directors of the Company held five meetings during 1996. Each
incumbent director of the Company attended no fewer than 75% of the aggregate
number of meetings of the Company's Board of Directors and all committees of
the Company's Board on which he or she served during 1996.
Nominations for membership of the Board of Directors of the Company are
made by the Board of Directors or by any stockholder entitled to vote at the
Annual Meeting. Section 8.4(d) of the Company's Certificate of Incorporation
sets forth the procedures which stockholders must follow in order to make
nominations for election to the Board of Directors. In general, such nominations
must be submitted in writing to the Company at least 90 days prior to the date
of the Annual Meeting. The Company is not required to include such nominations
in its proxy statement. The Board of Directors has determined that if any
stockholder properly makes such a nomination, the ballots provided for use by
stockholders at the Annual Meeting will bear the name of such nominee or
nominees.
Listed below are the committees of the Board of Directors, along with
directors who are serving as members of each committee in 1997.
The Audit Committee of the Company and the Bank recommends to the Board
independent auditors to perform audit and non-audit services, reviews the scope
and results of such services, reviews with management and the independent
auditors the systems of internal control and audit, assures adherence in
accounting and financial reporting to generally accepted accounting principals,
and performs such other duties deemed appropriate by the Board of Directors. The
Audit Committee met four times in 1996. For 1997, the following Board members
are serving on the Audit Committee: William O. Daggett, Jr., Chairman,
John E.F. Corson and Paul LaNoce.
The Board of Directors, except for Mr. Wycoff, determines compensation for
executive officers and participates on the Stock Compensation Committee. They
administer and award grants under the Company's stock benefit plans. No other
member of the Board, except Mr. Griest, is a current or former officer or
employee of the Company or its subsidiaries.
-6-
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information relating to the only
persons known to the Company to be the beneficial owners of 5% or more of the
Company's Common Stock as of March 21, 1997, and the amount of Common Stock of
the Company held by all directors and executive officers of the Company as a
group as of such date.
Amount of Common Stock Percent
Name and Address of Beneficially Owned of Common
Beneficial Owner as of March 21, 1997 Stock
- --------------------------------------------------------------------------------
SOP Partners, L.P. 250,000 (1) 6.21%
Two World Trade Center
104th Floor
New York, NY 10048
Directors and executive 805,847 (2) 17.59%
officers of the Company as a
group (13 persons)
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(1) Includes 50,000 common stock warrants which are exercisable within 60 days
of March 21, 1997.
(2) Includes 12,000 shares which are held jointly by Mr. Wycoff with or for the
benefit of certain family members, 72,230 shares which are owned by
companies of which Mr. Daggert is a director, officer or 10% stockholder,
143,718 shares owned by companies of which Mr. Goebert is a director,
officer or 10% stockholder and 60,226 shares held jointly by Mr. Mueller
with or for the benefit of certain family members. Also includes 204,750
shares subject to stock options and 125,000 common stock warrants held by
the group, in each case which are exercisable within 60 days of March 21,
1997.
-7-
EXECUTIVE COMPENSATION AND TRANSACTIONS
Executive Compensation
The following table sets forth a summary of certain information concerning
the compensation awarded to or paid by the Company to the following executive
officers of the Company for services rendered in all capacities during the last
three fiscal years. No other executive officer of the Company received annual
compensation in excess of $100,000 during the last fiscal year.
Summary Compensation Table
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Annual Compensation Long Term Compensation
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Other Awards Payouts All Other
Name and Base Annual ------------------------ Compensation
Principal Position Year Salary Bonus Compensation Options LTIP (6)
(1) (3) (4) Payouts (5)
- -----------------------------------------------------------------------------------------------------------------------
W. Kirk Wycoff 1996 $265,000 $63,923 --- 36,000 N/A $ 4,751
Chairman, President 1995 $235,420 $ 9,181 --- --- N/A $ 3,204
and Chief Executive 1994 $226,042 (2) $20,000 --- --- N/A $ 5,850
Officer
H. Wayne Griest(7) 1996 $115,000 $ 5,975 --- 5,000 N/A $ 2,521
Chairman and Chief
Executive Officer of
Progress Realty
Advisors, L.P. and
Quaker State Leasing
Company
Eric J. Morgan 1996 $ 91,927 $15,085 --- 4,000 N/A $ 2,742
Senior Vice 1995 $ 87,550 $ 1,707 --- 2,500 N/A $ 2,512
President 1994 $ 85,000 $ 2,011 --- 2,500 N/A $ 2,364
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(1) Includes amounts deferred pursuant to the Company's 401(k) Profit Sharing
Plan, which generally allows employees to defer up to 12% of their
compensation, subject to applicable limitations set forth in the Internal
Revenue Code.
(2) Includes directors fees of $6,100 paid to Mr. Wycoff in 1994. Mr. Wycoff
did not receive directors fees in 1995 or 1996.
(3) Does not include amounts attributable to miscellaneous benefits received by
the named executive officers. In the opinion of management of the Company,
the costs to the Company of providing such benefits to any individual
executive officer the year ended December 31, 1996 did not exceed the
lessor of $50,000 or 10% of the total of annual salary and bonus reported
for the individual.
(4) Represents options granted pursuant to the Company's Stock Incentive Plan.
(5) The Company does not have a long term incentive program as of December 31,
1996.
(6) Consists of employer contributions made by the Company pursuant to the
401(k) profit sharing plan in 1996, 1995 and 1994, respectively, and
allocations pursuant to the Company's Employee Stock Ownership Plan
("ESOP") during 1995 and 1994. The market value of the ESOP allocations for
the named executive officers in 1996, 1995 and 1994 were $5,894, $793, and
$836, respectively.
(7) Effective January 1996, Mr. Griest joined the Company as Chairman and Chief
Executive Officer of Progress Realty Advisors, L.P. ("PRA") and Quaker
State Leasing Company. Previously, Mr. Griest served as a consultant to PRA
and received $25,308 and $58,000 in 1995 and 1994, respectively, for such
services.
-8-
STOCK OPTION GRANTS
The following tables sets forth certain information concerning exercises of
stock options by the named executive officers during the year ended December 31,
1996 and options held at December 31, 1996.
Aggregate Option Exercises in Last Fiscal Year and Year End Option Value
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Number of Unexercised Value of Unexercised
Options at Year End Options at Year End (1)
Shares
Acquired on Value -------------------------------------------------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- --------------------------------------------------------------------------------------------------------------------
W. Kirk Wycoff 5,000 $36,875 140,000 36,000 $857,500 $101,340
Eric J. Morgan --- --- 7,500 4,000 $28,750 $13,000
H. Wayne Griest --- --- --- 5,000 --- $14,375
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(1) Based on a per share market price of $8.375 at December 31, 1996.
REPORT OF THE COMPENSATION COMMITTEE
The entire Board of Directors, except for Mr. Wycoff, establishes the
policy for compensation of executive officers of the Company. The Stock
Compensation Committee review's the Company's Key Employee Stock Compensation
Program and recommends to the Board changes or additions to this program. The
Committee and the Board members establishing executive officer compensation are
composed entirely of outside directors who are not eligible to participate in
the plans over which they have authority.
The overall goal of the Company's compensation policy is to motivate,
reward and retain its key executive officers. The Board believes this is best
accomplished through an appropriate mix of competitive base salaries, bonus and
stock incentives.
The Board considers the following in determining base salary levels:
1. the amount of responsibility the executive officer has, experience and
the number of years in office, and
2. compensation levels of corresponding positions at other thrift
companies of similar size within the Mid-Atlantic region. For 1996,
Mr. Wycoff's salary was near the average of comparative thrift
companies based on the 1996 executive compensation survey prepared by
SNL Securities.
The Board grants bonuses to executive officers, including the Chief
Executive Officer, based upon the degree of attainment or performance objectives
for the year. The performance objectives include net interest income,
non-interest income, non-interest expenses and net income. For 1996, Mr. Wycoff
did not receive the maximum bonus payment because all targeted performance goals
were not met. Positive achievements for the year included loan growth of 13.5%,
growth in core business and consumer deposits, and repositioning of deposits
services.
John E. F. Corson Paul M. LaNoce
William O. Daggett, Jr. A. John May, III
Donald F. U. Goebert William L. Mueller
H. Wayne Griest Janet E. Paroo
Joseph R. Klinger Charles J. Tornetta
-9-
EMPLOYMENT AGREEMENTS
The Company and the Bank (the "Employers") have entered into an employment
contract commencing March 1, 1997 with W. Kirk Wycoff which provides for his
employment for a period of three years with provisions for automatic one-year
extensions unless sooner terminated by death, disability or termination for
cause. The employment contract provides for a base salary, bonus plan, and
entitles Mr. Wycoff to participate in all benefit plans and programs available
to executive officers.
The employment agreement is terminable with or without cause by the
Employer or Mr. Wycoff. Mr Wycoff shall have no right to compensation or other
benefits pursuant to the employment agreement for any period after voluntary
termination or termination by the Employer for cause, disability, retirement or
death, provided, however, that if the employment agreement is terminated by the
Employer other than for cause, disability, retirement or death or by Mr. Wycoff
following a change in control of the Company, as defined, Mr. Wycoff will be
entitled to a cash severance amount equal to 2.99 times the amount of
Mr. Wycoff's annual compensation.
A change in control is generally defined in the employment agreement to
mean a change in control of a nature that would be required to be reported in
response to Item 6(e) of the SEC proxy rules, provided that a change of control
shall be deemed to have occurred if (i) the acquisition by any person of 25% or
more of the Company's outstanding voting securities, or (ii) during any two-year
period a change in a majority of the directors of the Company has occurred
without the approval of at least two-thirds of the persons who were directors of
the Company at the beginning of such period.
DIRECTORS' FEES
The Board of the Bank meets monthly and the Board of the Company meets
quarterly. Cash compensation is paid to Directors for attendance at regularly
scheduled and special Board meetings. Each non-officer director receives a fee
of $500 for attendance at each regular or special Board meetings and each
non-officer director who attends a committee meeting also receives $250 per
meeting attended.
DIRECTORS' STOCK OPTION PLAN
The Company has adopted the 1993 Directors' Stock Option Plan (the
"Directors' Plan") which provides for the grant of compensatory stock options to
non-employee directors of the Company and the Bank. Pursuant to the Directors'
Plan, in June 1993 each director of the Company or the Bank who was not an
employee of the Company or any subsidiary was granted a compensatory stock
option to purchase 5,000 shares of Common Stock, at an exercise price of $3.50
per share. In addition, options to purchase 250 shares were granted to each
non-employee director on December 31, 1993, 1994, 1995 and 1996 and will also be
granted options to purchase 250 shares on December 31, 1997 unless the Plan is
amended as set forth under "Proposal to Adopt the Amended and Restated 1993
Director's Stock Option Plan". The exercise price is equal to the fair market
value of a share of Common Stock on the date of grant. Options granted pursuant
to the Directors' Plan are vested and exercisable six months from the date of
grant.
-10-
PERFORMANCE GRAPH
The following graph compares the yearly cumulative total return on the
Common Stock of Progress Financial Corporation over the five year period ending
December 31, 1996 with (i) the yearly cumulative total return on all stocks
included on the NASDAQ Stock Market and (ii) the yearly cumulative total return
on the stocks included in the NASDAQ Bank Stocks Index. All of the cumulative
returns are computed assuming the reinvestment of dividends at the frequency
with which dividends were paid during the applicable years.
[LINE GRAPH APPEARS HERE]
[?PLOT POINTS TO FOLLOW]
The index level for all series was set to 100 on 12/31/92.
-11-
INDEBTEDNESS OF MANAGEMENT
The Bank offers certain loans to its directors, officers and employees. It
is the belief of management that these loans do not involve more than the normal
risk of collectibility. Except for the waiving in most cases of loan origination
fees for officers and employees during their employment or association with the
Bank, these loans are made on substantially the same terms as those prevailing
at the time for comparable transactions with nonaffiliated persons. Executive
officers, directors, officers and employees of the Bank receive no discount from
the market interest rate for loans made by the Bank. However, the Bank in most
cases continues to discount loan origination fees for loans to officers and
employees. As of December 31, 1996, seventeen loans totalling $641,763 (or 3.22%
of the Company's total stockholders' equity) were outstanding to the Company's
directors and executive officers as a group.
As of December 31, 1996, the following directors and senior officer of the
Company had loans from the Bank which exceeded an aggregate of $60,000
outstanding during 1996.
Highest Principal
Principal Balance
Interest Type Balance as of
Name Rate of Loan During 1996 December 31, 1996
- ---------------------------------------------------------------------------------------------------------------
Eric J. Morgan 6.875% Residential Mortgage $276,975 $ 273,364
(Senior Vice President)
William L. Mueller 6.75% Residential Mortgage $195,794 $ 193,185
(Director)
W. Kirk Wycoff 8.25% Installment Loan $ 12,962 $ 1,415
(Chairman) 8.45% Installment Loan $ 39,353 $ 36,651
10.25% Progress Bank Visa Card $ 13,850 $ 13,061
Paul LaNoce 8.09% Installment Loan $ 38,232 $ 37,537
(Director) 8.75% Commercial Loan $ 49,423 $ 48,000
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Pursuant to Item 405 of Regulation S-K, the Company is required to
disclose (based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Company pursuant to Rule 16a-3(e) during its most recent fiscal
year and Forms 5 and amendments thereto furnished to the Company with respect to
its most recent year) each person who, at any time during the fiscal year, was a
director, executive officer or beneficial owner of more than ten percent of the
Company's common stock that failed to file on a timely basis, as disclosed in
the above Forms, reports required by Section 16(a) of the Exchange Act during
the most recent fiscal year or prior fiscal years.
Based upon its review of Forms 3, 4 and 5 and amendments thereto furnished
to the Company during and with respect to 1996, the Company is not aware of any
director, officer, beneficial owner of more than 10 percent of the Company's
common stock or any other person subject to Section 16 of the Securities
Exchange Act of 1934 who has failed to file any such form on a timely basis
during 1996.
-12-
PROPOSAL TO ADOPT THE AMENDED AND RESTATED
1993 STOCK INCENTIVE PLAN
General
In 1993, the Company adopted the 1993 Stock Incentive Plan (the "Plan"),
which provides for the grant of stock options and stock appreciation rights to
officers and employees of the Company. The number of shares of Common Stock
initially reserved for issuance under the Plan was 176,488, of which 0 shares
remain available for issuance to date in order to fund additional grants under
the Plan. As a result, the Board of Directors recently amended the Plan to
increase the total number of shares of Common Stock reserved for issuance upon
exercise of awards granted under the Plan by 160,000, from 176,488 to 336,488.
As a result of recent amendments to the rules promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act, the Plan also has been
amended to provide that awards may be vested and exercisable from the date of
grant and not following six months thereafter, as was originally provided in
the Plan in order to ensure that the grant of options under the Plan would not
be deemed a purchase of Common Stock for purposes of the short-swing profits
recovery provision of Section 16(b) of the Exchange Act. The Plan has also been
amended to provide that the entire Board of Directors or a duly authorized
committee thereof may grant awards under the Plan rather than solely by a
committee as originally provided in the Plan and to provide that nonqualified
options granted pursuant to the Plan may be transferred to an optionees' family
members. The Plan has been restated to reflect the foregoing.
The Plan is designed to attract and retain qualified personnel in key
positions, provide officers and key employees with a proprietary interest in the
Company as an incentive to contribute to the success of the Company and to
reward key employees for outstanding performance and the attainment of targeted
goals. The Plan provides for the grant of incentive stock options intended to
comply with the requirements of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code")("incentive stock options"), non-qualified or
compensatory stock options and stock appreciation rights (collectively
"Awards"). Awards are available for grant to officers and key employees of the
Company and any subsidiaries.
Description of the Amended and Restated 1993 Stock Incentive Plan
The following description of the Restated Plan is a summary of its terms
and is qualified in its entirety by reference to the Restated Plan, a copy of
which is attached hereto as Appendix A.
Administration. The Plan is administered and interpreted by a committee of
the Board of Directors ("Committee") that is composed solely of two or more
non-employee directors.
Number of Shares Covered by the Plan. A total of 336,488 shares of Common
Stock has been reserved for issuance pursuant to the Plan. In the event of a
stock split, reverse stock split or stock dividend, the number of shares of
Common Stock under the 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.
Stock Options. Under the Plan, the Board of Directors or the Committee
determines which officers and key employees will be granted options, whether
such options will be incentive or compensatory options, the number of shares
subject to each option, whether such options may be exercised by delivering
other shares of Common Stock and when such options become exercisable. The per
share exercise price of an incentive stock option shall be not less than the
fair market value of a share of Common Stock on the date the option is granted,
and the per share exercise price of a compensatory stock option shall at least
equal the greater of par value or 85% of the fair market value of a share of
Common Stock on the date the option is granted.
Stock options shall become vested and exercisable in the manner specified
by the Board or the Committee, provided that all outstanding stock options (as
well as stock appreciation rights) will become immediately vested and
exercisable if there is a "change in control" or a "threatened change in
control" of the Company, as defined in the Plan.
--13--
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 three months after the date on which the optionee's employment
terminates, unless extended by the Board or the Committee to a period not to
exceed five years from such termination. However, failure to exercise incentive
stock options within three months after the date on which the optionee's
employment terminates may result in adverse tax consequences to the optionee. If
an optionee dies while serving as an employee or terminates his service as a
result of disability or retirement without having fully exercised his options,
the optionee's executors, administrators, legatees or distributees of his estate
shall have the right to exercise such options during the twelve-month period
following the earlier of his death or termination due to disability or
retirement, provided no option will 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. 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 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
either in cash, by certified or cashier's check or, if permitted by the Board of
Directors or the Committee, 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, by withholding some of the shares of Common
Stock which are being purchased upon exercise of an option, or any combination
of the foregoing. To the extent an optionee already owns shares of Common Stock
prior to the exercise of his or her option, such shares could be used (if
permitted by Committee or the Board) as payment for the exercise price 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 (1) reduce the amount of cash required to
receive a fixed number of shares upon exercise of the option or (2) 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 relatively small number of
shares into a large number of shares.
Stock Appreciation Rights. Under the Plan, the Board of Directors or the
Committee is authorized to grant stock appreciation rights to optionees under
which an optionee may surrender any exercisable incentive stock option or
compensatory stock option or any portion thereof in return for payment by the
Company to the optionee of cash or Common Stock in an amount equal to the excess
of the fair market value of the shares of Common Stock subject to option, or
portion thereof, at the time over the exercise price of the option with respect
to such shares, or a combination of cash and Common Stock. Stock appreciation
rights which relate to incentive stock options must be granted concurrently with
the incentive stock options, while stock appreciation rights which relate to
compensatory stock options may be granted concurrently with the option or at any
time thereafter which is prior to the exercise or expiration of such options.
Amendment and Termination of the Plan. The Plan initially became
effective 1993 upon adoption by the Board and the stockholders of the Company.
The amendments to the Plan increasing the total number of shares of Common Stock
which may be issued under the Plan from 176,488 to 336,488 becomes effective in
March 1997. The Plan shall remain in effect for a period of ten years from the
effective date of the Restated Plan. The Board may at any time terminate or
amend the Plan with respect to any shares of Common Stock as to which Awards
have not been granted. Termination of the 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 substantially different. As regards to incentive stock options,
an optionee who does not dispose of the shares within two years after the option
was granted, or within one year
--14--
after the option was exercised, will not recognize at the time the option is
exercised, and no federal income tax deduction will be available to the Company
at any time as a result of such grant or exercise. However, the excess of the
fair market value of the stock subject to an incentive stock option on the date
such option is exercised over the exercise price of the option will be treated
as an item of tax preference in the year of exercise for purposes of the
alternative minimum tax. If stock acquired pursuant to an incentive stock
option is disposed of before the holding periods described above expire, then
the excess of the fair market value (but not in excess of the sales proceeds) of
such stock on the option exercise date over the option exercise price will be
treated as compensation income to the options in the year in which such
disposition occurs and, if it complies with applicable withholding requirements,
the Company will be entitled to a commensurate income tax deduction. If the
holding periods are satisfied, any difference between the sales proceeds and the
fair market value of the stock on the option exercise date will be treated as
long-term capital gain or loss.
With respect to compensatpory stock options, the difference between the
fair market value of the Common Stock 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 a subsequent disposition of the shares, the
difference between the amount received by the optionee and the fair market value
on the option exercise date will be treated as long or short-term capital gain
or loss, depending on whether the shares were held for more than one year.
No federal income tax consequences are incurred by the Company or the
holder at the time a stock appreciation right is granted. However, 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 at the same time and in the same amount.
The above description of tax consequences 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 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 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.
-15-
Stockholder Approval. No awards will be granted under the Plan for
issuance in excess of the 176,488 shares of Common Stock initially authorized
under the Plan unless the Restated Plan is approved by stockholders.
Stockholder ratification of the Plan will also satisfy certain Nasdaq market
listing and tax requirements.
Awards to be Granted. The Board of Directors of the Company adopted the
Restated Plan providing for an additional 160,000 shares of common stock to be
available for grant under the Plan. The Committee established thereunder
intends to grant options to executive officers, non-employee directors and
employees of the Company with a per share exercise price equal to the fair
market value of a share of Common Stock on the date of grant. The following
table sets forth certain information with respect to grants of the additional
shares available under the Restated Plan. Other than grants to Mr. Wycoff, the
committee has not yet determined the amount or timing of such grants to
executive officers, non-employee directors and employees.
Number of Shares
Name of Individual or Subject to
Number of Persons in Group Title Stock Options
- ------------------------------ ----------- ---------------------
W. Kirk Wycoff President and Chief 61,557
Executive Officer
The terms of the option shall provide that they will be vested and
exercisable 50% in year one, 25% in year two, and 25% in year three commencing
on April 1, 1997.
On March 21, 1997, the closing price of share of Common Stock as reported by
the Nasdaq Stock Market National Market was $8.75.
The Board of Directors recommends that stockholders vote FOR adoption of the
Amended and Restated 1993 Stock Incentive Plan.
PROPOSAL TO ADOPT THE AMENDED AND RESTATED
1993 DIRECTORS' STOCK OPTION PLAN
General
In 1993, the Company adopted the 1993 Directors' Stock Option Plan
("Directors' Plan"), which provides for the grant of stock options to
non-employee directors of the Company pursuant to a formula. The number of
shares of Common Stock initially reserved for issuance under the Directors' Plan
was 50,000, of which only 2,500 shares remain available for issuance to date in
order to fund additional grants under the Directors' Plan. As a result, the
Board of Directors recently amended the Directors' Plan to increase the total
number of shares of Common Stock reserved for issuance upon exercise of awards
granted under the Directors' Plan by 40,000, from 50,000 to 90,000. As a result
of recent amendments to the rules promulgated by the Securities and Exchange
Commission under Section 16 of the Exchange Act, the Directors' Plan also has
been amended to provide that awards may be vested and exercisable from the date
of grant and not six months thereafter, as was originally provided in the
Directors' Plan in order to ensure that the grant of options under the
Directors' Plan would not be deemed a purchase of Common Stock for purposes of
the short-swing profits recovery provision of Section 16(b) of the Exchange Act.
The Directors' Plan has been amended to provide that, in addition to an annual
formula grant of options to non-employee directors, the Board of Directors or a
duly authorized committee thereof may award an annual discretionary grant of
options under the Directors' Plan and to provide that options granted pursuant
to the Directors' Plan may be transferred to an optionee's family members. The
Directors' Plan has been restated to reflect the foregoing.
Description of Directors' Plan
The following description of the Restated Directors' Plan is a summary of
its terms and is qualified in its entirety by reference to the Restated
Directors' Plan, a copy of which is attached hereto as Appendix B.
Administration and Eligibility. The Directors' Plan is administered and
interpreted by the entire Board of Directors of the Company or a committee of
two or more non-employee directors ("Committee"). Options are granted to each
director of the Company who is not an employee of the Company or any subsidiary
("non-employee director").
Grants. Under the Directors' Plan, each non-employee director of the
Company on the initial effective date of the Directors' Plan in 1993 was granted
compensatory options to purchase 5,000 shares of Common Stock and at the end of
each year from 1993 until 1997, each non-employee director was to receive an
option to purchase 250 shares of Common Stock with an exercise price equal to
the fair market value of a share of Common Stock on the date the option is
granted. Under the Restated Directors' Plan, each non-employee director shall
annually receive a grant of an option to purchase 500 shares of Common Stock
commencing on December 31, 1997 plus an additional discretionary grant of
options. The Board or the Committee shall annually determine, in its discretion,
which non-employee directors shall receive a discretionary grant of an option
and the number of shares subject to each such option. The exercise price of the
options shall be equal to the fair market value of a share of Common Stock on
the date of grant. Options granted pursuant to the Directors' Plan are vested
and exercisable immediately upon grant. Options or any portion thereof are
exercisable at any time on or after they vest until the earlier of ten years
after the date of grant or three years after the date on which an optionee
ceases to be a non-employee director.
The purchase price for shares of Common Stock purchased pursuant to the
exercise of an option must be paid in full upon exercise of the option. Payment
may be made in cash or by delivering shares of Common Stock equal in fair market
value to the purchase price of the shares, or a combination of cash and Common
Stock.
Options granted pursuant to the Directors' Plan are not transferable except
by will or the laws of descent and distribution and during an optionee's
lifetime may be exercised only by the optionee or his or her guardian or legal
representative. Not withstanding the foregoing, an optionee may transfer such
options to his or her spouse, lineal ascendants, lineal descendants, or to a
duly established trust for the benefit or 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. If a non-employee
--17--
director dies while serving as a non-employee director or within three years
following the termination of the optionee's service as a non-employee director
as a result of disability, retirement or resignation without having fully
exercised his or her options, then such person or the executors, administrators,
legatees or distributees of his or her estate shall have the right, during the
twelve-month period following such death, disability or retirement, to exercise
his or her options, provided that no option is exercisable more than ten years
from the date it was granted. Options granted to a non-employee director who is
removed for cause shall terminate as of the effective date of such removal.
Neither the Directors' Plan nor the grant of any options thereunder, nor any
action taken by the Board of Directors in connection with the Directors' Plan,
shall create any right on the part of any non-employee director of the Company
to continue as such.
Number of Shares Covered by the Directors' Plan. A total of 90,000
authorized but unissued shares of Common Stock has been reserved for issuance
pursuant to the Directors' Plan. In the event of a stock split, reserve stock
split or stock dividend, the number of shares of Common Stock under the
Directors' Plan, the number of shares to which any option relates and the
exercise price per share under the option shall be adjusted to reflect such
increase or decrease in the total number of shares of Common Stock outstanding.
Amendment and Termination of the Directors' Plan. The Directors' Plan
initially became effective in 1993 upon adoption by the Board and the
stockholders of the Company.
The amendments to the Directors' Plan increasing the total number of shares
of Common Stock which may be issued under the Directors' Plan from 50,000 to
90,000 becomes effective in March 1997. The Directors' Plan shall remain in
effect for a period of ten years from the effective date of the Restated
Directors' Plan. The Board may at any time terminate or amend the Directors'
Plan with respect to any shares of Common Stock as to which Awards have not been
granted. Termination of the Directors' Plan shall not affect any previously
granted options.
Stockholder Approval. No options will be granted under the Directors' Plan
for issuance in excess of the 50,000 shares of Common Stock initially authorized
under the Directors' Plan unless the Restated Directors' Plan is approved by
stockholders. Stockholder ratification of the Directors' Plan will also satisfy
certain Nasdaq market listing requirements.
Federal Income Tax Consequences. Under current provisions of the Code, the
difference between the fair market value of the Common Stock on the date of
exercise of a non-qualified stock option 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 a subsequent disposition of the shares, the difference between the amount
received by the optionee and the fair market value of the Common Stock on the
option exercise date will be treated as long or short-term capital gain or loss,
depending on whether the shares were held for more than one year.
The above description of tax consequences 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. For a discussion of SFAS No. 123, see "Proposal to
Adopt the Amended and Restated 1993 Stock Incentive Plan - Accounting
Treatment."
Awards to be Granted. The Board of Directors of the Company adopted the
Restated Directors' Plan and pursuant thereto the nine non-employee directors of
the Company will each receive an annual grant of an option to purchase 500
shares of Common Stock and an additional discretionary grant of options, in an
amount to be determined each year, commencing on December 31, 1997.
The Board of Directors recommends that stockholders vote FOR adoption of the
Amended and Restated 1993 Directors' Stock Option Plan.
--18--
STOCKHOLDER PROPOSALS
Any proposal which a stockholder wishes to have presented at the next
annual meeting and included in the management proxy materials relating to such
meeting must be received at the main office of the Company no later than
December 9, 1997. If such proposal is in compliance with all of the
requirements of Rule 14a-8 promulgated under the Securities Exchange Act of
1934, 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.
OTHER MATTERS
Management is not aware of any business to come before the Annual Meeting
other than those matters described herein. 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.
ANNUAL REPORTS AND FINANCIAL STATEMENTS
A copy of the Company's Annual Report to Stockholders for the year ended
December 31, 1996 accompanies this Proxy Statement. Copies of the Company's
Form 10-K and/or additional copies of the Company's Annual Report to
Stockholders may be obtained by written request. Such written request should
be directed to Patricia Ellick, Progress Financial Corporation, 4 Sentry
Parkway, Suite 230, P.O. Box 3036, Blue Bell, PA 19422-0764.
By Order of the Board of Directors
/s/ Eric J. Morgan
Eric J. Morgan
Corporate Secretary
Blue Bell, Pennsylvania
March 31, 1997
-19-
Appendix A
PROGRESS FINANCIAL CORPORATION
AMENDED AND RESTATED
1993 STOCK INCENTIVE PLAN
ARTICLE I
ESTABLISHMENT OF THE PLAN
Progress Financial Corporation (the "Company") hereby establishes this
Amended and Restated 1993 Stock Incentive 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
Company and its Subsidiary Companies by attracting and retaining qualified
personnel, providing such Employees with a proprietary interest in the Company
as an incentive to contribute to the success of the Company and its Subsidiary
Companies, and rewarding those Employees for outstanding performance and the
attainment of targeted goals. All Incentive Stock Options issued under this
Plan are intended to comply with the requirements of Section 422 of the Code,
and the regulations thereunder, and all provisions hereunder shall be read,
interpreted and applied with that purpose in mind.
ARTICLE III
DEFINITIONS
3.01 "Award" means an Option or Stock Appreciation Right granted pursuant
to the terms of this Plan.
3.02 "Board" means the Board of Directors of the Company.
3.03 "Code" means the Internal Revenue Code of 1986, as amended.
3.04 "Committee" means a committee of not less than two 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.
3.05 "Common Stock" means shares of the common stock, $1.00 par value per
share, of the Company.
3.06 "Director" means a member of the Board of Directors of the Company.
3.07 "Disability" means any physical or mental impairment which qualifies
an Employee for disability benefits under the applicable long-term disability
plan maintained by the Company or a Subsidiary Company, or, if no such plan
applies, which would qualify such Employee for disability benefits under the
long-term disability plan maintained by the Company, if such Employee were
covered by that plan.
3.08 "Effective Date" means March 18, 1997, the date on which this
Amended and Restated Plan was adopted by the Board of Directors of the Company.
3.09 "Employee" means any person who is employed by the Company or a
Subsidiary Company, including Officers, but not including Directors who are not
also Officers of or otherwise employed by the Company or a Subsidiary Company.
-20-
3.10 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
3.11 "Fair Market Value" shall be equal to the fair market value per share
of the Company'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) in which such shares are then traded, or if no such
closing prices are reported, the mean between the high bid and low asked prices
that day on the principal market or national quotation system then in use, or if
no such quotations are available, the price furnished by a professional
securities dealer making a market in such shares selected by the Committee.
3.12 "Incentive Stock Option" means any Option granted under this Plan
which the Board intends (at the time it is granted) to be an incentive stock
option within the meaning of Section 422 of the Code or any successor thereto.
3.13 "Non-Qualified Option" means any Option granted under this Plan which
is not an Incentive Stock Option.
3.14 "Officer" means an Employee whose position in the Company or
Subsidiary Company is that of a corporate officer, as determined by the Board.
3.15 "Option" means a right granted under this Plan to purchase Common
Stock.
3.16 "Optionee" means an Employee or former Employee to whom an Option is
granted under the Plan.
3.17 "Retirement" means a termination of employment which constitutes a
"retirement" under any applicable qualified pension benefit plan maintained by
the Company or a Subsidiary Company, or if no such plan is applicable, which
would constitute "retirement" under any qualified pension benefit plan
maintained by the Company or a Subsidiary Company, if such individual were a
participant in such plan.
3.18 "Stock Appreciation Right" means a right to surrender an Option in
consideration for a payment by the Company in cash and/or Common Stock, as
provided in the discretion of the Committee, in accordance with Section 8.10.
3.19 "Subsidiary Companies" means those subsidiaries of the Company which
meet the definition of "subsidiary corporations" set forth in Section 425 (f) of
the Code, at the time of granting of the Option in question.
ARTICLE IV
ADMINISTRATION OF THE PLAN
4.01 Duties of the Committee. The Plan shall be administered and
interpreted by the Committee, as appointed from time to time by the Board
pursuant to Section 4.02. The Committee shall have the authority in its absolute
discretion to adopt, amend and rescind such rules, regulations and procedures
as, in its opinion, may be advisable in the administration of the Plan,
including, without limitation, rules, regulations and procedures which (i) deal
with satisfaction of an Employee's tax withholding obligation pursuant to
Section 12.02 hereof, (ii) include arrangements to facilitate the Employee's
ability to borrow funds for payment of the exercise or purchase price of an
Award, if applicable, from securities brokers and dealers, and (iii) include
arrangements which provide for the payment of some or all of such exercise or
purchase price by delivery of previously-owned shares of Common Stock or other
property and/or by withholding some of the shares of Common Stock which are
being acquired. The interpretation and construction by the Committee of any
provisions of the Plan, any rule, regulation or procedure adopted by it pursuant
thereto or of any Award shall be final and binding in the absence of action by
the Board of Directors.
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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. 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 Company or a Subsidiary
Company for cause, which, for purposes hereof, shall mean termination for:
(1) conviction of a felony involving the misappropriation of the Company's or
any Subsidiary's assets or a conviction of a felony which results in a
substantial, demonstrable threat to the Company's or any Subsidiary's
reputation, or (ii) gross and willful failure to perform a substantial portion
of employee's duties and responsibilities as an employee, which failure
continues for more than thirty (30) days after written notice given to employee
pursuant to a two-thirds vote of all of the members of the Board of Directors of
the Company or any Subsidiary, as the case may be, then in office, such vote to
set forth in reasonable detail the nature of such failure.
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
by it pursuant thereto or any Awards granted under it. 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 Company
shall indemnify such member against expenses (including attorney's 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
Company 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 Company shall not be required to issue or deliver any certificates for
shares of Common Stock prior to the completion of any registration or
qualification of or obtaining of consents or approvals with respect to such
shares under any federal or state law or any rule or regulation of any
government body, which the Company 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 Company 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 of the Company and its Subsidiary
Companies as may be designated from time to time by the Board or the Committee.
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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 336,488. None of such shares shall be the subject of more
than one Award at any time, but if an Option as to any shares is surrendered
before exercise (including surrender in connection with exercise of a Stock
Appreciation Right), 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.
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
Company 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 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 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 individual, his present and
potential contributions to the growth and success of the Company, his salary and
such other factors as the Board or the Committee shall deem 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 of the Company and each
Optionee shall execute a Stock Option Agreement which shall set forth the total
number of shares of Common Stock to which it pertains, the exercise price,
whether it is a Non-Qualified Option or an Incentive Stock Option, and such
other terms, conditions, restrictions and privileges as the Committee in each
instance shall deem appropriate, provided they are not inconsistent with the
terms, conditions and provisions of this Plan. Each Optionee shall receive a
copy of his executed Stock Option Agreement.
8.02 Option Exercise Price.
(a) Incentive Stock Options. The per share price at which the subject
Common Stock may be purchased upon exercise of an Incentive Stock Option shall
be no less than one hundred percent (100%) of the Fair Market Value of a share
of Common Stock at the time such Incentive Stock Option is granted, except as
provided in Section 8.09(b).
(b) Non-Qualified Options. The per share price at which the subject Common
Stock may be purchased upon exercise of a Non-Qualified Option shall be no less
than the greater of (i) the par value or (ii) eight-five percent (85%) of the
Fair Market Value of a share of Common Stock at the time such Non-Qualified
Option is granted.
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8.03 Vesting and Exercise of Options.
(a) General Rules. Incentive Stock Options and Non-Qualified Options 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, no vesting shall occur on or after an Optionee's employment with
the Company and all Subsidiary 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,
fractional shares will be rounded up to the nearest whole number if the fraction
is 0.5 or higher, and down if it is less.
(b) Accelerated Vesting Upon Death, Disability or Retirement. Unless the
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
Company or a Subsidiary Company because of his death, Disability or Retirement.
(c) Accelerated Vesting for Changes in Control. Notwithstanding the general
rule described in Section 8.03 (a), all outstanding Options shall become
immediately vested and exercisable in the event there is an actual or threatened
change in control of the Company.
(1) Change in Control. A "change in control of the Company" shall mean a
change in control of a nature that would be required to be reported in response
to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Exchange
Act, whether or not the Company in fact is required to comply with Regulation
14A thereunder; provided that, without limitation, such a change in control
shall be deemed to have occurred if (i) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act), other than the Company, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing 25% or
more of the combined voting power of the Company's then outstanding securities,
or (ii) during any period of twenty-four consecutive months during the term of
an Option, individuals who at the beginning of such period constitute the Board
of the Company cease for any reason to constitute at least a majority thereof,
unless the election, or the nomination for election by the Company's
stockholders, of each director who was not a director at the date of grant has
been approved in advance by directors representing at least two-thirds of the
directors then in office who were directors at the beginning of the period.
(2) Threatened Change in Control. A "threatened change in control of the
Company" shall mean any set of circumstances which in the opinion of the Board,
as expressed through a resolution, poses a real, substantial and immediate
possibility of leading to a change in control of the Company as defined in
clause (1) above.
8.04 Duration of Options.
(a) General. Except as provided in Sections 8.04(c) and 8.09, each Option
or portion thereof shall be exercisable at any time on or after it vests and
becomes exercisable until the earlier of (i) ten (10) years after its date of
grant or (ii) three (3) months after the date on which the Optionee ceases to be
employed by the Company 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 from three (3) months to a period not exceeding five (5)
years. 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.
(b) Exception for Termination Due to Death, Disability or Retirement. If
an Optionee dies while in the employ of the Company or a Subsidiary Company or
terminates employment with the Company or a Subsidiary Company as a result of
Disability or Retirement without having fully exercised his Options, the
Optionee or the executors, administrators, legatees or distributees of his
estate shall have the right, during the twelve-month period following the
earlier of his death, Disability or Retirement, to exercise such Options to the
extent vested on the date of such death, Disability or Retirement. In no event,
however, shall any Option be exercisable more than ten (10) years from the date
it was granted.
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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 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 any Option shall be made
to the Company upon exercise of the Option. All Shares sold under the Plan shall
be fully paid and nonassessable. Payments for shares may be made by the Optionee
in cash or, 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) or other property equal in Fair Market Value to the purchase price of
the shares to be acquired pursuant to the Option, by withholding some of the
shares of Common Stock which are being purchased upon exercise of an Option, or
any combination of the foregoing.
8.08 Voting and Divided Rights. No Optionee shall have any voting or
dividend rights or other rights of a stockholder in respect of any shares of
Common Stock covered by an Option prior to the time that his name is recorded on
the Company's stockholder 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
for the first time by the Optionee during any calendar year, under this Plan and
stock options that satisfy the requirements of Section 422 of the Code under any
other stock option plan or plans maintained by the Company (or any parent or
Subsidiary Company), shall not exceed $100,000.
(b) Limitation on Ten Percent Stockholders. The price at which shares of
Common Stock may be purchased upon exercise of an Incentive Stock Option granted
to an individual who, at the time such Incentive Stock Option is granted, owns,
directly or indirectly, more than ten percent (10%) of the total combined voting
power of all classes of stock issued to stockholders of the Company 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 Company at the time
of grant, and such Incentive Stock Option shall by its terms not be exercisable
after the earlier of the date determined under Section 8.03 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 Company 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 Company 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
--25--
federal or state law or regulation and, further, to collect from the Optionee
any additional amounts which may be required for such purpose. The Committee
may, in its discretion, require shares of Common Stock acquired by an Optionee
upon exercise of an Incentive Stock Option to be held in an escrow arrangement
for the purpose of enabling compliance with the provisions of this Section
8.09(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 Company, 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 Company of an amount equal to the excess of the Fair Market Value of the
shares of Common Stock subject to the Option, or portion thereof, surrendered
over the exercise price of the Option with respect to such shares (any such
authorized surrender and payment being hereinafter referred to as a "Stock
Appreciation Right"). Such payment, at the discretion of the 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 set 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 Company 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 Company 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.
ARTICLE IX
ADJUSTMENTS FOR CAPITAL CHANGES
The aggregate number of shares of Common Stock available for issuance under
this Plan, the number of shares to which any Award relates and the exercise
price per share of Common Stock under any Option shall be proportionately
adjusted for any increase or decrease in the total number of outstanding shares
of Common Stock issued subsequent to the Effective Date of this Plan resulting
from a split, subdivision or consolidation of shares or any other capital
adjustment, the payment of a stock dividend, or other increase or decrease in
such shares effected without receipt or payment of consideration by the Company.
If, upon a merger, consolidation, reorganization, liquidation, recapitalization
or the like of the Company, the shares of the Company's Common Stock shall be
exchanged for other securities of the
- 26 -
Company 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 Company or such
other corporation as were exchangeable for the number of shares of Common Stock
of the Company which such optionees would have been entitled to purchase or
acquire except for such action, and appropriate adjustments shall be made to the
per share exercise price of outstanding Options.
ARTICLE X
AMENDMENT AND TERMINATION OF THE PLAN
The Board may, by resolution, at any time terminate or amend the Plan with
respect to any shares of Common Stock as to which Awards have not been granted,
subject to any applicable regulatory requirements and any required stockholder
approval or any stockholder approval which the Board may deem to be advisable
for any reason, such as for the purpose of obtaining or retaining any statutory
or regulatory benefits under tax, securities or other laws or satisfying any
applicable stock exchange listing requirements. The Board may not, without the
consent of the holder of an Award, alter or impair any Award previously granted
or awarded under this Plan as specifically authorized herein.
ARTICLE XI
CONTINUATION 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 of the Company or a Subsidiary Company to continue
as such.
ARTICLE XII
WITHHOLDING
12.01 Tax Withholding. The Company 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
Company may require the Optionee to pay to the Company the amount required to be
withheld as a condition to delivering the shares acquired pursuant to an Award.
The Company 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 Common
Stock to which the Optionee would otherwise be entitled pursuant to an Award
and/or by the Optionee's delivery of previously-owned shares of Common Stock or
other property.
ARTICLE XIII
EFFECTIVE DATE OF THE PLAN; TERM
13.01 Effective Date of the Plan. This Plan initially became effective upon
adoption by the Board of Directors and stockholders of the Corporation in 1993.
The amendments to this Plan increasing the total number of shares of Common
Stock which may be issued under the Plan from 176,488 to 336,488 and otherwise
amending and restating this Plan became effective upon adoption by the Board on
March 18, 1997 (the "Effective Date"), subject to approval of the Corporation's
stockholders at or before the next annual meeting of stockholders of the
Corporation.
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13.02 Term of Plan. Unless sooner terminated, this Plan shall remain in
effect for a period of ten (10) years ending on the tenth anniversary of the
Effective Date. Termination of the Plan shall not affect any Awards previously
granted and such Awards shall remain valid and in effect until they have been
fully exercised or earned, are surrendered or by their terms expire or are
forfeited.
ARTICLE XIV
MISCELLANEOUS
14.01 Governing law. This Plan shall be construed under the laws of the
State of Delaware.
14.02 Pronouns. Wherever appropriate, the masculine pronoun shall include
the feminine pronoun, and the singular shall include the plural.
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Appendix B
PROGRESS FINANCIAL CORPORATION
AMENDED AND RESTATED
1993 DIRECTORS' STOCK OPTION PLAN
ARTICLE I
ESTABLISHMENT OF THE PLAN
Progress Financial Corporation (the "Corporation") hereby establishes this
Amended and Restated 1993 Directors' 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 by providing non-employee directors with a proprietary interest in
the Corporation through the grant of non-qualified stock options (an "Option" or
"Options") to purchase shares of the Corporation's common stock, par value $1.00
per share (the "Common Stock").
ARTICLE III
ADMINISTRATION OF THE PLAN
3.01 Administration. This Plan shall be administered by the entire Board of
Directors of the Corporation (the "Board") or a committee of two or more
directors appointed by the Board, each of whom shall be a "non-employee
director" as defined in Rule 16b-3(b)(3)(i) of the Securities Exchange Act of
1934 ("Exchange Act") or any successor thereto (the "Committee"). The Committee
or the Board shall have the power, subject to and within the limits of the
express provisions of this Plan, to exercise such powers and to perform such
acts as are deemed necessary or expedient to promote the best interests of the
Corporation with respect to this Plan.
3.02 Compliance with Law and Regulations. All Options granted hereunder
shall be subject to all applicable Federal and state laws, rules and regulations
and to such approvals by any government or regulatory agency as may be required.
The Corporation shall not be required to issue or deliver any certificates for
shares of Common Stock prior to the completion of any registration or
qualification of or obtaining of consents or approvals with respect to such
shares under any Federal or state law or any rule or regulation of any
government body, which the Corporation shall, in its sole discretion, determine
to be necessary or advisable. Moreover, no Option may be exercised if such
exercise or issuance would be contrary to applicable laws and regulations.
3.03 Restrictions on Transfer. The Corporation may place a legend upon any
certificate representing shares acquired pursuant to an Option granted hereunder
noting that the transfer of such shares may be restricted by applicable laws and
regulations.
ARTICLE IV
ELIGIBILITY
Options shall be granted pursuant to the terms hereof to each director of
the Corporation who is not an employee of the Corporation or any subsidiary of
the Corporation ("Non-Employee Director"). No honorary directors, advisory
directors or directors emeritus shall be entitled to receive Options hereunder.
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ARTICLE V
COMMON STOCK COVERED BY THE PLAN
5.01 Option Shares. The aggregate number of shares of Common Stock of the
Corporation which may be issued pursuant to this Plan, subject to adjustment as
provided in Article VIII, shall be 90,000 shares.
5.02 Source of Shares. The shares of Common Stock issued under this 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 VI
OPTION GRANTS
6.01 Annual Grants. Each Non-Employee Director of the Corporation shall be
annually granted an Option to purchase 500 shares of Common Stock on December 31
of each year commencing on December 31, 1997 with a per share exercise price
equal to the Fair Market Value of a share of Common Stock on such date.
6.02 Discretionary Grants. The Board or the Committee shall, in addition to
the annual grants provided for in Section 6.01, grant an Option to purchase
shares of Common Stock to Non-Employee Directors. The Board or the Committee
shall annually determine, in its discretion, which Non-Employee Directors shall
receive a discretionary grant of an Option and the number of shares of Common
Stock subject to each such Option. In making all such determinations there shall
be taken into account the duties, responsibilities and performance of each
respective individual, his present and potential contributions to the growth and
success of the Corporation and such other factors as the Board or the Committee
shall deem relevant to accomplishing the purposes of the Plan.
ARTICLE VII
OPTION TERMS
Each Option granted hereunder shall be on the following terms and
conditions:
7.01 Option Agreement. The proper officers of the Corporation and each
optionee shall execute an Option Agreement which shall set forth the total
number of shares of Common Stock to which it pertains, the exercise price and
such other terms, conditions and provisions as are appropriate, provided that
they are not inconsistent with the terms, conditions and provisions of this
Plan. Each optionee shall receive a copy of his executed Option Agreement.
7.02 Option Exercise Price. The per share exercise price at which the
shares of Common Stock may be purchased upon exercise of an Option granted
pursuant to Article VI hereof shall be equal to the greater of (i) the par value
of a share of Common Stock and (ii) the Fair Market Value of a share of Common
Stock as of the date of grant. For purposes of this Plan, the Fair Market Value
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) 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 Board.
7.03 Vesting and Exercise of Options. Options granted pursuant to this Plan
shall be vested and exercisable immediately upon grant.
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7.04 Duration of Options.
(a) Each Option or portion thereof shall be exercisable at any time on or
after it vests until the earlier of (i) ten (10) years after the date of grant
or (ii) the third annual anniversary of the date on which the optionee ceases to
be a Non-Employee Director.
(b) Exception for Termination Due to Death, Disability, Retirement or
Resignation. If an optionee dies while serving as a Non-Employee Director or
within three (3) years following the termination of the optionee's service as a
Non-Employee Director as a result of disability, retirement or resignation
without having fully exercised his Options, the Optionee's executors,
administrators, legatees or distributees of his estate shall have the right ,
during the twelve-month period following such death, to exercise such Options,
provided that no Options shall be exercisable more than ten (10) years from the
date it was granted.
(c) Options granted to a Non-Employee Director who is removed for cause
pursuant to the Corporation's Articles of Incorporation shall terminate as of
the effective date of such removal.
7.05 Transferability. 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 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 7.05. Options which are transferred pursuant to
this Section 7.05 shall be exercisable by the transferee according to the same
terms and conditions as applied to the Optionee.
7.06 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 Option Agreement provided for in Section 7.01.
7.07 Payment for Shares. Payment in full of the purchase price for shares
of Common Stock purchased pursuant to the exercise of an Option shall be made to
the Corporation upon exercise of the Option. Payment for shares may be made by
the optionee in cash or by delivering shares of Common Stock equal in fair
market value to the purchase price of the shares to be acquired pursuant to the
Option, or any combination of the foregoing.
7.08 Voting and Dividend Rights. No optionee shall have any voting or
dividend rights or other rights of a stockholder in respect of any shares of
Common Stock covered by an Option prior to the time that his name is recorded on
the Corporation's stockholder ledger as the holder of record of such shares
acquired pursuant to an exercise of an Option.
ARTICLE VIII
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 Option relates and the exercise
price per share of Common Stock under any Option shall be proportionately
adjusted for any increase or decrease in the total number of outstanding shares
of Common Stock issued subsequent to the effective date of this Plan resulting
from a split, subdivision or consolidation of shares or any other capital
adjustment, the payment of a stock dividend, or other increase or decrease in
such shares effected without receipt or payment of consideration by the
Corporation, 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 Option 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.
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ARTICLE IX
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 Options have not been
granted, subject to any applicable regulatory requirements and any required
stockholder approval or any stockholder approval which the Board may deem to be
advisable for any reason, such as for the purpose of obtaining or retaining any
statutory or regulatory benefits under tax, securities or other laws or
satisfying any applicable stock exchange listing requirements. The Board may
not, without the consent of the holder of an Option, alter or impair any Option
previously granted or awarded under this Plan as specifically authorized herein.
ARTICLE X
RIGHTS TO CONTINUE AS A DIRECTOR
Neither the Plan nor the grant of any Options hereunder nor any action
taken by the Board or the Committee in connection with the Plan shall create
any right on the part of any Non-Employee Director of the Corporation to
continue as such.
ARTICLE XI
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 Option.
ARTICLE XII
EFFECTIVE DATE OF THE PLAN; TERM
12.01 Effective Date of the Plan. This Plan initially became effective
upon adoption by the Board of Directors and the stockholders of the Corporation
in 1993. The amendments to this Plan increasing the total number of shares of
Common Stock which may be issued under the Plan from 50,000 to 90,000 and
otherwise amending and restating this Plan became effective upon adoption by the
Board on March 18, 1997(the "Effective Date"), subject to approval of the
Corporation's stockholders at or before the next annual meeting of stockholders
of the Corporation.
12.02 Term of Plan. Unless soon terminated, this Plan shall remain in
effect for a period of ten years from the Effective Date. Termination of the
Plan shall not affect any Options previously granted and such Options 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 XIII
MISCELLANEOUS
13.01 Governing Law. This Plan shall be construed under the laws of the
State of Delaware.
13.02 Pronouns. Wherever appropriate, the masculine pronoun shall
include the feminine pronoun, and the singular shall include the plural.
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