Exhibit 10.37

 

THE AMERICAN HOME BANK, NATIONAL ASSOCIATION

2001 STOCK OPTION INCENTIVE PLAN(1)

 

1.                                       Purpose.  American Home Bank, N.A., a
national banking association (“Bank”), has adopted this 2001 Stock Option
Incentive Plan (the “Plan”).  The Plan is intended to recognize the
contributions made to Bank by employees (including employees who are members of
the Board of Directors) of Bank or any Affiliate, to provide such persons with
additional incentive to devote themselves to the future success of Bank or an
Affiliate, and to improve the ability of Bank or an Affiliate to attract, retain
and motivate individuals upon whom Bank’s sustained growth and financial success
depend.  Through the Plan, Bank will provide such persons with an opportunity to
acquire or increase their proprietary interest in Bank, and to align their
interest with the interests of shareholders, through receipt of rights to
acquire Bank’s Common Stock, par value $1.00 per Share (the “Common Stock”), and
through the transfer or issuance of Common Stock or other Awards.  In addition,
the Plan is intended as an additional incentive to directors of Bank who are not
employees of Bank or an Affiliate to serve on the Board of Directors and to
devote themselves to the future success of Bank by providing them with an
opportunity to acquire or increase their proprietary interest in Bank through
the receipt of rights to acquire Common Stock.  Furthermore, the Plan may be
used to encourage consultants and advisors of Bank to further the success of
Bank.

 

2.                                       Definitions.  Unless the context
clearly indicates otherwise, the following terms shall have the following
meanings:

 

“Affiliate” shall mean a corporation which is a parent corporation or a
subsidiary corporation with respect to Bank within the meaning of
Section 424(e) or (f) of the Code, or any successor provision.

 

“Award” shall mean a transfer of Common Stock made pursuant to the terms of the
Plan or the grant to a person of performance units or other rights containing
such terms, benefits or restrictions as the Committee shall specify in the Award
Agreement.

 

“Award Agreement” shall mean the agreement between Bank and a Grantee with
respect to an Award made pursuant to the Plan.

 

“Bank” shall mean American Home Bank, N.A., a national banking association.

 

“Board” shall mean the Board of Directors of Bank.

 

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(1) Effective December 31, 2008, American Home Bank, National Association was
merged with and into First National Bank of Chester County, a wholly-owned
subsidiary of First Chester County Corporation and the options issued and
outstanding under the Plan became options to acquire shares of First Chester
County Corporation.  All references to the “Bank” herein should be deemed to be
references to First Chester County Corporation (except that in Section 15, the
reference to the “Bank” should be deemed to be a reference to either First
Chester County Corporation or First National Bank of Chester County).  No
further options may be granted under this Plan.

 

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“Change of Control” shall have the meaning as set forth in Section 9 of the
Plan.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended, or any
successor statute, and the rules and regulations issued pursuant to that statute
or any successor statute.

 

“Committee” shall have the meaning set forth in Section 3 of the Plan.

 

“Common Stock” shall have the meaning set forth in Section 1 of the Plan.

 

“Disability” shall mean the inability of an Optionee or Award holder to perform
the essential duties of his or her position with Bank, as determined in good
faith by the Committee.

 

“Employee” shall mean an employee of Bank or an Affiliate.

 

“Fair Market Value” shall have the meaning set forth in Subsection 8(b) of the
Plan.

 

“Grantee” shall mean a person to whom an Award has been granted pursuant to the
Plan.

 

“ISO” shall mean an Option granted under the Plan which qualifies and is
intended to qualify as an “incentive stock option” within the meaning of
Section 422(b) of the Code.

 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, or
any successor statute, and the rules and regulations issued pursuant to that
statute or any successor statute.

 

“Non-Employee Director” shall mean a member of the Board who is a “non-employee
director”, as that term is defined in paragraph (b)(3) of Rule 16b-3, and an
“outside director”, as that term is defined in Treasury Regulations
Section 1.162-27 promulgated under the Code.

 

“Non-qualified Stock Option” shall mean an Option granted under the Plan which
is not intended to qualify, or otherwise does not qualify, as an ISO.

 

“Option” shall mean either an ISO or a Non-qualified Stock Option granted under
the Plan.

 

“Optionee” shall mean a person to whom an Option has been granted under the
Plan, which Option has not been exercised and has not expired or terminated.

 

“Option Document” shall mean the document described in Section 8 of the Plan,
which sets forth the terms and conditions of each grant of Options.

 

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“Option Price” shall mean the price at which Shares may be purchased upon
exercise of an Option, as calculated pursuant to Subsection 8(b) of the Plan.

 

“Rule 16b-3” shall mean Rule 16b-3 promulgated under the Exchange Act, or any
successor rule.

 

“Section 16 Officers” shall mean any person who is an “officer” within the
meaning of Rule 16a-1(f) promulgated under the Exchange Act or any successor
rule, and who is subject to the reporting requirements under Section 16 of the
Exchange Act with respect to Bank’s Common Stock.

 

“Securities Act” shall mean the Securities Act of 1933, as amended, or any
successor statute, and the rules and regulations issued pursuant to that statute
or any successor statute.

 

“Shares” shall mean the shares of Common Stock of Bank which are the subject of
Options or granted as Awards under the Plan.

 

3.                                       Administration of the Plan.  The Board
may administer the Plan and/or it may, in its discretion, designate a committee
composed of two or more directors to operate and administer the Plan with
respect to all or a designated portion of the participants.  To the extent that
the Committee is empowered to grant Options to Section 16 Officers or persons
whose compensation might have limits on deductibility under Code Section 162(m),
each member of the Committee designated by the Board shall be a Non-Employee
Director.  Any such committee designated by the Board, and the Board itself in
its administrative capacity with respect to the Plan, is referred to as the
“Committee.”

 

(a)                                  Meetings.  The Committee shall hold
meetings at such times and places as it may determine and shall keep minutes of
its meetings.  The Committee may take action only upon the agreement of a
majority of the whole Committee.  Any action which the Committee shall take
through a written instrument signed by all of its members shall be as effective
as though it had been taken at a meeting duly called and held.

 

(b)                                 Exculpation.  No member of the Committee
shall be personally liable for monetary damages for any action taken or any
failure to take any action in connection with the administration of the Plan or
the granting of Options or Awards under the Plan, unless (i) the member has
breached or failed to perform the duties of such member’s office under
Subchapter B of Chapter 17 of the Pennsylvania Business Corporation Law, and
(ii) the breach or failure to perform constitutes self-dealing, wilful
misconduct or recklessness; provided, however, that the provisions of this
Subsection 3(b) shall not apply to the responsibility or liability of a member
pursuant to any criminal statute, or to the liability of a member for the
payment of taxes pursuant to local, Pennsylvania or federal law.

 

(c)                                  Indemnification.  Service on the Committee
shall constitute service as a member of the Board.  Each member of the Committee
shall be entitled, without further act on the member’s part, to indemnity from
Bank and to limitation of liability, to

 

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the fullest extent provided by applicable law and by Bank’s Articles of
Association and/or Bylaws, in connection with or arising out of any action, suit
or proceeding with respect to the administration of the Plan or the granting of
Options or Awards thereunder in which the member may be involved by reason of
the member being or having been a member of the Committee, whether or not the
member continues to be a member of the Committee at the time of the action, suit
or proceeding.

 

(d)                                 Interpretation.  The Committee shall have
the power and authority to (i) interpret the Plan, (ii) adopt, amend and revoke
rules and regulations for its administration that are not inconsistent with the
express terms of the Plan including, without limitation, rules and
interpretations to determine the number of Shares remaining available for
issuance under the Plan, and (iii) waive requirements relating to formalities or
other matters that do not either modify the substance of the rights intended to
be granted by Options and Awards or constitute a material amendment for any
purpose under the Code.  Any such actions by the Committee shall be final,
binding and conclusive on all parties in interest.

 

(e)                                  Amendment of Options and Awards.  Subject
to the provisions of the Plan, the Committee shall have the right to amend any
Option Document or Award Agreement issued to an Optionee or Award holder,
subject to the Optionee’s or Award holder’s consent, if such amendment is not
favorable to the Optionee or Award holder or if such amendment has the effect of
changing an ISO to a Non-Qualified Stock Option; provided, however, that the
consent of the Optionee or Award holder shall not be required for any amendment
made pursuant to Subsection 8(e)(i)(C) or Section 9 of the Plan, as applicable.

 

4.                                       Grants of Options under the Plan. 
Grants of Options under the Plan may be in the form of a Non-qualified Stock
Option, an ISO or a combination thereof, at the discretion of the Committee.

 

5.                                       Eligibility.  All Employees, members of
the Board and consultants and advisors to Bank shall be eligible to receive
Options and Awards hereunder.  Consultants and advisors shall be eligible only
if they render bona fide services to Bank unrelated to the offer or sale of
securities.  The Committee, in its sole discretion, shall determine whether an
individual qualifies as an Employee.  Notwithstanding the foregoing, only
individuals who qualify as employees of Bank or an Affiliate under Treasury
Regulations Section 1.421-7(h) shall be eligible to receive an ISO.

 

6.                                       Shares Subject to Plan.  The aggregate
maximum number of Shares for which Awards or Options may be granted pursuant to
the Plan is 260,000(2).  The number of Shares which may be issued under the Plan
shall be subject to adjustment in accordance with Section 10.  The Shares shall
be issued from authorized and unissued Common Stock or Common Stock held in or
hereafter acquired for the treasury of Bank.  If an Option terminates or expires
without having been fully exercised for any reason or if Shares subject to an
Award have been conveyed back to Bank pursuant to the terms of an Award
Agreement, the Shares for which the Option was not exercised or the Shares

 

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(2) No additional shares may be granted pursuant to the Plan.

 

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that were conveyed back to Bank (in either case, as the number of such Shares
may have been adjusted pursuant to Section 10 of the Plan or otherwise) shall
again be available for issuance pursuant to the terms of one or more Options, or
one or more Awards, granted pursuant to the Plan.

 

7.                                       Term of the Plan.  The Plan is
effective as of August 20, 2001, the date on which it was adopted by the Board. 
No ISO may be granted under the Plan after August 19, 2001.

 

8.                                       Option Documents and Terms.  Each
Option granted under the Plan shall be a Non-qualified Stock Option unless the
Option shall be specifically designated at the time of grant to be an ISO.  If
any Option designated an ISO is determined for any reason not to qualify as an
incentive stock option within the meaning of Section 422 of the Code, such
Option shall be treated as a Non-qualified Stock Option for all purposes under
the provisions of the Plan.  Options granted pursuant to the Plan shall be
evidenced by the Option Documents in such form as the Committee shall approve
from time to time, which Option Documents shall comply with and be subject to
the following terms and conditions and such other terms and conditions as the
Committee shall require from time to time which are not inconsistent with the
terms of the Plan.

 

(a)                                  Number of Option Shares.  Each Option
Document shall state the number of Shares to which it pertains.  An Optionee may
receive more than one Option, which may include Options which are intended to be
ISOs and Options which are not intended to be ISOs, but only on the terms and
subject to the conditions and restrictions of the Plan.  Notwithstanding
anything herein to the contrary, no Optionee shall be granted Options during one
fiscal year of Bank for more than 35,000 Shares (such number to be subject to
adjustment in accordance with Section 10).

 

(b)                                 Option Price.  Each Option Document shall
state the Option Price, which, for a Non-qualified Stock Option, need not be the
Fair Market Value of the Shares on the date the Option is granted and, for an
ISO, shall be at least 100% of the Fair Market Value of the Shares on the date
the Option is granted, as determined by the Committee in accordance with this
Subsection 8(b); provided, however, that if an ISO is granted to an Optionee who
then owns, directly or by attribution under Section 424(d) of the Code, Shares
possessing more than ten percent of the total combined voting power of all
classes of stock of Bank or an Affiliate, then, to the extent required by
Section 424(d) of the Code, the Option Price shall be at least 110% of the Fair
Market Value of the Shares on the date the Option is granted.  If the Common
Stock is traded in a public market, then the Fair Market Value per Share shall
be: (i) if the Common Stock is listed on a national securities exchange or
included in the NASDAQ System, the last reported sale price thereof on the
relevant date, (ii) if the Common Stock is not so listed or included, the mean
between the last reported “bid” and “asked” prices thereof on the relevant date,
as reported on NASDAQ, or (iii) if not so reported, as reported by the National
Daily Quotation Bureau, Inc. or as reported in a customary financial reporting
service, as applicable and as the Committee determines.  If the Common Stock is
not traded in a public market, then the Fair Market Value per Share shall be
determined in good faith by the Committee in accordance with
Section 422(c)(1) of the Code and the rules and principles of valuation set
forth in Treasury Regulations Section 20.2031-2(f)

 

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relating to the valuation of stocks and bonds not actively traded.  Subject to
the foregoing, the Committee shall have full authority and discretion and may
rely on the opinion of a qualified business valuation consultant.

 

(c)                                  Exercise.  No Option shall be deemed to
have been exercised prior to the receipt by Bank of written notice of such
exercise and, unless arrangements satisfactory to Bank have been made for
payment through a broker in accordance with procedures permitted by rules or
regulations of the Federal Reserve Board, receipt of payment in full of the
Option Price for the Shares to be purchased.  Each such notice shall specify the
number of Shares to be purchased and contain such other information as the
Committee may require.

 

(d)                                 Medium of Payment.  Subject to the terms of
the applicable Option Document, an Optionee shall pay for Shares (i) in cash,
(ii) by certified or cashier’s check payable to the order of Bank, or (iii) by
such other mode of payment as the Committee may approve, including, without
limitation, the Optionee’s note in form approved by the Committee and payment
through a broker in accordance with procedures permitted by rules or regulations
of the Federal Reserve Board.

 

(e)                                  Termination of Options.

 

(i)                                     No Option shall be exercisable after the
first to occur of the following:

 

(A)                              Expiration of the Option term specified in the
Option Document, which, in the case of an ISO, shall not occur after (1) ten
years from the date of grant, or (2) five years from the date of grant if the
Optionee on the date of grant owns, directly or by attribution under
Section 424(d) of the Code, shares possessing more than ten percent of the total
combined voting power of all classes of stock of Bank or of an Affiliate;

 

(B)                                Except to the extent otherwise provided in an
Optionee’s Option Document, a finding by the Committee, after full consideration
of the facts presented on behalf of both Bank and the Optionee, that the
Optionee has been engaged in disloyalty to Bank or an Affiliate, including,
without limitation, fraud, embezzlement, theft, commission of a felony or proven
dishonesty in the course of employment or service, or has disclosed trade
secrets or confidential information of Bank or an Affiliate.  In such event, in
addition to immediate termination of the Option, the Optionee shall
automatically forfeit all Shares for which Bank has not yet delivered the share
certificates upon refund by Bank of the Option Price.  Notwithstanding anything
herein to the contrary, Bank may withhold delivery of share certificates pending
the resolution of any inquiry that could lead to a finding resulting in a
forfeiture;

 

(C)                                The date, if any, set by the Committee as an
accelerated expiration date in the event of the liquidation or dissolution of
Bank;

 

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(D)                               The occurrence of such other event or events
as may be set forth in the Plan or the Option Document as causing an accelerated
expiration of the Option; or

 

(E)                                 Except as otherwise set forth in the Option
Document and subject to the foregoing provisions of this Subsection 8(e),
immediately upon termination of the Optionee’s employment or service with Bank
or its Affiliates for any reason other than Disability or death or six months
after such termination due to Optionee’s Disability or death.  With respect to
this Subsection 8(e)(i)(E), the only Options that may be exercised during the
six-month period are Options which were exercisable on the last date of such
employment or service and not Options which, if the Optionee were still employed
or rendering service during such six-month period, would become exercisable,
unless the Option Document specifically provides to the contrary or the
Committee otherwise approves.  The terms of an executive severance agreement or
other agreement between Bank and an Optionee, approved by the Committee or the
Board, whether entered into prior or subsequent to the grant of an Option, which
provide for Option exercise dates later than those set forth in Subsection
8(e)(i) shall be deemed to be Option terms approved by the Committee and
consented to by the Optionee.

 

(ii)                                  Notwithstanding the foregoing, the
Committee may extend the period during which all or any portion of an Option may
be exercised, provided that any change pursuant to this Subsection
8(e)(ii) which would cause an ISO to become a Non-qualified Stock Option may be
made only with the consent of the Optionee.

 

(iii)                               Notwithstanding anything to the contrary
contained in the Plan or an Option Document, an ISO shall be treated as a
Non-qualified Stock Option to the extent such ISO is exercised at any time after
the expiration of the time period permitted under the Code for the exercise of
an ISO.

 

(f)                                    Transfers.  Except as otherwise provided
in this Subsection 8(f), no Option granted under the Plan may be transferred,
except by will or by the laws of descent and distribution, and, during the
lifetime of the person to whom an Option is granted, such Option may be
exercised only by the Optionee.  Notwithstanding the foregoing, an Option, other
than an ISO, shall be transferable pursuant to a “domestic relations order” as
defined in the Code or Title I of the Employee Retirement Income Security Act,
or the rules thereunder, and also shall be transferable, without payment of
consideration, to (i) immediate family members of the holder (i.e., spouse or
former spouse, parents, issue, including adopted and “step” issue, or siblings),
(ii) trusts for the benefit of immediate family members, (iii) partnerships
whose only partners are such family members, and (iv) to any transferee
permitted by a rule adopted by the Committee or approved by the Committee in an
individual case.  Any transferee will be subject to all of the conditions set
forth in the Option prior to its transfer.

 

(g)                                 Limitation on ISO Grants.  To the extent
that the aggregate Fair Market Value of the Shares of Common Stock (determined
at the time the ISO is granted) with respect to which ISOs under all incentive
stock option plans of Bank or its Affiliates are exercisable for the first time
by the Optionee during any calendar year exceeds

 

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$100,000, such ISOs shall, to the extent of such excess, be treated as
Non-qualified Stock Options.

 

(h)                                 Other Provisions.  Subject to the provisions
of the Plan, the Option Document shall contain such other provisions, including,
without limitation, provisions authorizing the Committee to accelerate the
exercisability of all or any portion of an Option granted pursuant to the Plan,
additional restrictions upon the exercise of the Option or additional
limitations upon the term of the Option, as the Committee deems advisable.

 

9.                                       Change of Control.  In the event of a
Change of Control, the Committee may take whatever actions it deems necessary or
desirable with respect to any of the Options outstanding or Award Shares not yet
fully vested or paid for, all of which need not be treated identically,
including, without limitation, accelerating (a) the expiration or termination
date in the respective Option Documents to a date no earlier than 30 days after
notice of such acceleration is given to the Optionees, or (b) the exercisability
of the Option.  Notwithstanding the foregoing, in the event of a Change of
Control, Options granted pursuant to the Plan will become automatically
exercisable in full.

 

A “Change of Control” shall be deemed to have occurred upon the earliest to
occur of any of the following events, each of which shall be determined
independently of the others:

 

(i)                                     any Person (as defined below) becomes a
“beneficial owner,” as such term is used in Rule 13d-3 promulgated under the
Exchange Act, of fifty percent or more (as determined by the Committee) of
Bank’s stock entitled to vote in the election of directors.  For purposes of the
Plan, the term “Person” is used as such term is used in Sections 13(d) and
14(d) of the Exchange Act; provided, however, that, unless the Committee
determines to the contrary, the term shall not include Bank, any trustee or
other fiduciary holding securities under an employee benefit plan of Bank, or
any corporation owned, directly or indirectly, by the shareholders of Bank in
substantially the same proportions as their ownership of stock of Bank;

 

(ii)                                  individuals who are Continuing Directors
cease to constitute a majority of the members of the Board (“Continuing
Directors” for this purpose being the members of the Board on the date of
adoption of the Plan, provided that any person becoming a member of the Board
subsequent to such date whose election or nomination for election was supported
by two-thirds of the directors who then comprised the Continuing Directors shall
be considered to be a Continuing Director);

 

(iii)                               shareholders of Bank adopt a plan of
complete or substantial liquidation or an agreement providing for the
distribution of all or substantially all of its assets;

 

(iv)                              Bank is party to a merger, consolidation,
other form of business combination or a sale of all or substantially all of its
assets, unless the business of Bank is continued following any such transaction
by a resulting entity (which may be, but need not be, Bank) and the shareholders
of Bank immediately prior to such transaction (the

 

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“Prior Shareholders”) hold, directly or indirectly, at least two-thirds of the
voting power of the resulting entity (there being excluded from the voting power
held by the Prior Shareholders, but not from the total voting power of the
resulting entity, any voting power received by Affiliates of a party to the
transaction (other than Bank) in their capacities as shareholders of Bank);

 

(v)                                 there is a Change of Control of Bank of a
nature that would be required to be reported in response to item 1(a) of Current
Report on Form 8-K or item 6(e) of Schedule 14A of Regulation 14A or any similar
item, schedule or form under the Exchange Act, as in effect at the time of the
change, whether or not Bank is then subject to such reporting requirement;

 

(vi)                              the Bank is a subject of a “Rule 13e-3
transaction” as that term is defined in Exchange Act Rule 13e-3; or

 

(vii)                           there has occurred a “change of control,” as
such term (or any term of like import) is defined in any of the following
documents which is in effect with respect to Bank at the time in question:  any
note, evidence of indebtedness or agreement to lend funds to Bank, any option,
incentive or employee benefit plan of Bank or any employment, severance,
termination or similar agreement with any person who is then an employee of
Bank.

 

10.                                 Adjustments on Changes in Capitalization.

 

(a)                                  In the event that the outstanding Shares
are changed by reason of a reorganization, merger, consolidation,
recapitalization, reclassification, stock split-up, combination or exchange of
Shares and the like (not including the issuance of Common Stock on the
conversion of other securities of Bank which are convertible into Common Stock)
or dividends payable in Shares, an equitable adjustment may be made by the
Committee as it deems appropriate in the aggregate number of Shares available
under the Plan and in the number of Shares and price per Share subject to
outstanding Options.  Unless the Committee makes other provisions for the
equitable settlement of outstanding Options, if Bank shall be reorganized,
consolidated, or merged with another corporation, or if all or substantially all
of the assets of Bank shall be sold or exchanged, an Optionee shall at the time
of issuance of the stock under such corporate event be entitled to receive, upon
the exercise of his or her Option, the same number and kind of Shares of stock
or the same amount of property, cash or securities as the Optionee would have
been entitled to receive upon the occurrence of any such corporate event as if
the Optionee had been, immediately prior to such event, the holder of the number
of Shares covered by his or her Option.

 

(b)                                 Any adjustment under this Section 10 in the
number of Shares subject to Options shall apply proportionately to only the
unexercised portion of any Option granted hereunder.  If a fraction of a Share
would result from any such adjustment, the fraction shall be eliminated, unless
the Committee otherwise determines.

 

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(c)                                  The Committee shall have authority to
determine the adjustments to be made under this Section 10, and any such
determination by the Committee shall be final, binding and conclusive.

 

11.                                 Terms and Conditions of Awards.  Awards
granted pursuant to the Plan shall be evidenced by written Award Agreements in
such form as the Committee shall approve from time to time, which Award
Agreements shall comply with and be subject to the following terms and
conditions and such other terms and conditions which the Committee shall require
from time to time which are not inconsistent with the terms of the Plan.

 

(a)                                  Number of Shares.  Each Award Agreement
shall state the number of Shares or other units or rights to which it pertains.

 

(b)                                 Purchase Price.  Each Award Agreement shall
specify the purchase price, if any, which applies to the Award.  If the Board
specifies a purchase price, the Grantee shall be required to make payment on or
before the payment date specified in the Award Agreement.  A Grantee shall make
payment (i) in cash, (ii) by certified check payable to the order of Bank, or
(iii) by such other mode of payment as the Committee may approve.

 

(c)                                  Grant.  In the case of an Award which
provides for a grant of Shares without any payment by the Grantee, the grant
shall take place on the date specified in the Award Agreement.  In the case of
an Award which provides for a payment, the grant shall take place on the date
the initial payment is delivered to Bank, unless the Committee or the Award
Agreement otherwise specifies.  Notwithstanding the foregoing, as a precondition
to a grant, Bank may require an acknowledgment by the Grantee as required with
respect to Options under Subsection 8(c).

 

(d)                                 Conditions.  The Committee may specify in an
Award Agreement any conditions under which the Grantee of that Award shall be
required to convey to Bank the Shares covered by the Award.  Upon the occurrence
of any such specified condition, the Grantee shall forthwith surrender and
deliver to Bank the certificates evidencing such Shares as well as completely
executed instruments of conveyance.  The Committee, in its discretion, may
provide that certificates for Shares transferred pursuant to an Award be held in
escrow by Bank or its designee until such time as every condition has lapsed and
that the Grantee be required, as a condition of the Award, to deliver to such
escrow agent or Bank officer stock transfer powers covering the Award Shares
duly endorsed by the Grantee.  Unless otherwise provided in the Award Agreement
or determined by the Committee, dividends and other distributions made on Shares
held in escrow shall be deposited in escrow, to be distributed to the party
becoming entitled to the Shares on which the distribution was made.  Stock
certificates evidencing Shares subject to conditions shall bear a legend to the
effect that the Shares evidenced thereby are subject to repurchase by, or
conveyance to, Bank in accordance with the terms applicable to such Shares under
an Award made pursuant to the Plan, and that the Shares may not be sold or
otherwise transferred.

 

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(e)                                  Lapse of Conditions.  Upon termination or
lapse of all forfeiture conditions, Bank shall cause certificates without the
legend referring to Bank’s repurchase or acquisition right (but with any other
legends that may be appropriate) evidencing the Shares covered by the Award to
be issued to the Grantee upon the Grantee’s surrender to Bank of the legended
certificates held by the Grantee.

 

(f)                                    Rights as Shareholder.  Upon payment of
the purchase price, if any, for Shares covered by an Award and compliance with
the acknowledgment requirement of Subsection 11(c), the Grantee shall have all
of the rights of a shareholder with respect to the Shares covered thereby,
including the right to vote the Shares and (subject to the provisions of
Subsection 11(d)) receive all dividends and other distributions paid or made
with respect thereto, except to the extent otherwise provided by the Committee
or in the Award Agreement.

 

12.                                 Amendment of the Plan.  The Board may amend
the Plan from time to time in such manner as it may deem advisable. 
Nevertheless, the Board may not change the class of persons eligible to receive
an ISO or increase the maximum number of Shares as to which Options may be
granted under the Plan, or to any individual under the Plan in any year, without
obtaining approval, within twelve months before or after such action, by the
shareholders in the manner required by state law.  No amendment to the Plan
shall adversely affect any outstanding Option or Award, however, without the
consent of the Optionee or Grantee, as the case may be.

 

13.                                 No Commitment to Retain.  The grant of an
Option or Award pursuant to the Plan shall not be construed to imply or to
constitute evidence of any agreement, express or implied, on the part of Bank or
any Affiliate to retain the Optionee or Grantee as an employee, director,
consultant or advisor of Bank or any Affiliate, or in any other capacity.

 

14.                                 Withholding of Taxes.  In connection with
any event relating to an Option or Award, Bank shall have the right to
(a) require the recipient to remit or otherwise make available to Bank an amount
sufficient to satisfy any federal, state and/or local withholding tax
requirements prior to the delivery or transfer of any certificates for such
Shares, or (b) take whatever other action it deems necessary to protect its
interests with respect to tax liabilities, including, without limitation,
withholding any Shares, funds or other property otherwise due to the Optionee or
Grantee.  The Bank’s obligations under the Plan shall be conditioned on the
Optionee’s or Grantee’s compliance, to Bank’s satisfaction, with any withholding
requirement.

 

15.                                 Forfeiture of Rights.  Notwithstanding
anything to the contrary contained in the Plan or any Option Document or Award
Agreement, if directed to do so by Bank’s primary federal regulator in the event
that Bank’s capital falls below certain minimum requirements, Bank will notify
all Optionees and Award holders that they must exercise all of their rights
under such documents within 30 days after receipt of such notice (or such longer
or shorter period as such regulator may prescribe) or forfeit such rights after
the expiration of such period.  To the extent not timely exercised prior to the
expiration of such period, all such rights shall become void.

 

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16.                                 Governing Law.  The validity, construction,
interpretation and effect of the Plan shall be governed exclusively by and
determined in accordance with the law of the Commonwealth of Pennsylvania,
except to the extent preempted by federal law, which under such circumstances
shall govern.

 

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