As filed with the Securities and Exchange Commission on
March 28, 1997
Registration No. _______________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------------------------------
FIRST NATIONAL COMMUNITY BANCORP, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania
(State or other jurisdiction of incorporation or organization)
6021
(Primary Standard Industrial Classification Code Number)
Applied For
(I.R.S. Employer Identification No.)
102 East Drinker Street
Dunmore, Pennsylvania 18512
(717) 346-7667
(Address, including ZIP Code, and telephone number, including
area code, of registrant's principal executive offices)
J. David Lombardi, President
FIRST NATIONAL COMMUNITY BANCORP, INC.
102 East Drinker Street
Dunmore, Pennsylvania 18512
(717) 346-7667
(Name, address, including ZIP Code, and telephone number,
including area code, of agent for service)
With A Copy To:
Nicholas Bybel, Jr., Esquire
Kimberly J. Kling, Esquire
Shumaker Williams, P.C.
Post Office Box 88
Harrisburg, Pennsylvania 17108
Telephone: (717) 763-1121
Approximate date of commencement of the proposed sale of the
securities to the public: As soon as practicable after the
effective date of the Registration Statement.
If the securities being registered on this Form are being
offered in connection with the formation of a holding company and
there is compliance with General Instruction G, check the
following box. [x]
<PAGE>
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
Proposed
Title of Each Amount Maximum Offering
Class of Securities to be Price
Being Registered Registered Per Unit<F1>
<S> <C> <C>
Common Stock par
value $1.25 per
share 1,090,424 Shares $ 25.85
<CAPTION>
Title of Each Proposed Maximum Amount
Class of Securities Aggregate Registration
Being Registered Offering Price<F1> Fee<F1>
<S> <C> <C>
Common Stock par
value $1.25 per
share $ 28,187,460.40 $ 8,541.65
<FN>
<F1> Estimated solely for the purpose of calculating the
registration fee and based, in accordance with Rule 457(f)(2),
upon the book value of the outstanding shares of First National
Community Bank, of 1,090,424 shares of common stock, par value
$1.25 per share, as of February 28, 1997, of $25.85 per share and
a maximum of 1,090,424 shares of such stock to be converted in
the reorganization into common stock of the Registrant with a par
value of $1.25 per share.
</FN>
</TABLE>
2
<PAGE>
FIRST NATIONAL COMMUNITY BANCORP, INC.
Cross Reference Sheet
Pursuant to Item 501(b)
PART I. INFORMATION REQUIRED IN THE PROSPECTUS
A. INFORMATION ABOUT THE TRANSACTION
Item 1. Forepart of Registration
Statement and Outside Front Outside Front Cover
Page of Prospectus Page
Item 2. Inside Front and Outside Back Inside Front Cover
Cover Pages of Prospectus Page; Available
Information;
Financial Statements
Item 3. Risk Factors, Ratio of Earnings
to Fixed Charges and Other Outside Front Cover
Information Page; Summary;
Introduction;
Proposed
Reorganization;
Description of the
Holding
Company; Description
of the Bank;
Description of the
Bank's Common Stock,
Comparative Market
Prices; Description
of the Holding
Company's Stock;
Comparison of
Shareholder Rights;
Principal Beneficial
Owners of the Bank's
Common Stock
Item 4. Terms of the Transaction Proposed
Reorganization --
Plan of
Reorganization and
Plan of Merger --
Reasons for the
Proposed
Reorganization;
Description of the
Holding Company's
Stock -- Common
Stock, -- Legal
Opinion, -- Anti-
takeover Provisions;
Comparison of
Shareholder Rights;
Proposed
Reorganization -- Tax
Consequences, --
Rights of Dissenting
Shareholders
Item 5. Pro Forma Financial Information Description of the
Bank's Common Stock -
- Capitalization
3
<PAGE>
Item 6. Material Contacts with the
Company Being Acquired Not Applicable
Item 7. Additional Information Required
for Reoffering by Persons and
Parties Deemed to Be Underwriters Not Applicable
Item 8. Interests of Named Experts and
Counsel Not Applicable
Item 9. Disclosures of Commission
Position on Indemnification Description of the
for Securities Act Liabilities Holding Company --
Indemnification for
Securities Act
Liabilities
B. INFORMATION ABOUT THE REGISTRANT
Item 10. Information with Respect to
S-3 Registrants Not Applicable
Item 11. Incorporation of Certain
Information by Reference Not Applicable
Item 12. Information with Respect to
S-2 or S-3 Registrants Not Applicable
Item 13. Incorporation of Certain
Information by Reference Not Applicable
Item 14. Information with Respect to
Registrants Other Than S-3 or
S-2 Registrants
(a) Description of Business Description of the
Holding Company;
Description of the
Bank
(b) Description of Property Description of the
Bank -- History and
Business
(c) Legal Proceedings Description of the
Bank -- Legal
Proceedings
(d) Market Price of and Dividends
on the Registrant's
4
<PAGE>
Common Equity and Related
Stockholder Matters Description of the
Bank's Common Stock -
- Comparative Market
Prices; Dividends
(e) Financial Statements Not Applicable
(f) Selected Financial Data Not Applicable
(g) Supplementary Financial
Information Not Applicable
(h) Management's Discussion
and Analysis of Financial
Condition and Results of
Operation Financial Statements
(i) Disagreement with Accountants
on Accounting and Financial
Disclosure Not Applicable
C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
Item 15. Information with Respect to S-3
Companies Not Applicable
Item 16. Information with Respect to S-2
or S-3 Companies Not Applicable
Item 17. Information with Respect to
Companies Other Than S-3 or S-2
Companies
(a) Description of the
Bank; Financial
Statements; Principal
Beneficial Owners of
the Bank's Common
Stock; Dividends;
Description of the
Bank's Common Stock
(b) Not Applicable
5
<PAGE>
D. VOTING AND MANAGEMENT INFORMATION
Item 18. Information if Proxies, Consents
or Authorizations are to be Solicited
(a) (1) Date, Time and Place
Information Introduction -- Date,
Place and Time of
Annual Meeting;
Outside Front Cover
Page; Summary
(2) Revocability of Proxy Introduction --
Voting and Revocation
of Proxies
(3) Dissenters' Rights of
Appraisal Summary; Proposed
Reorganization --
Rights of Dissenting
Shareholders
(4)Persons Making the
Solicitation Introduction --
Solicitation of
Proxies
(5)(i) Interest of Certain
Persons in Matters to
be Acted Upon Not Applicable
(ii) Voting Securities and
Principal Holders
Thereof Introduction;
Principal Beneficial
Owners of the Bank's
Common Stock
(6) Vote Required for
Approval Summary; Proposed
Reorganization --
Plan of
Reorganization,
Conditions to the
Consummation of the
Plan of
Reorganization
(7)(i)Directors and
Executive Officers Description of the
Holding Company --
6
<PAGE>
Management;
Description of the
Bank -- Directors;
Principal Officers of
the Bank
(ii) Executive Compensation Description of the
Holding Company --
Remuneration;
Description of the
Bank -- Remuneration
of Officers and
Directors
(iii)Certain Relationships
and Related
Transactions Description of the
Bank -- Certain
Transactions
(b) Incorporation by Reference
from Latest Annual Report on
Form 10-K Not Applicable
Item 19. Information if Proxies, Consents
or Authorizations are not to be
Solicited or in an Exchange Offer Not Applicable
7
<PAGE>
FIRST NATIONAL COMMUNITY BANK
102 EAST DRINKER STREET
DUNMORE, PA 18512-2491
(717)346-7667
_________________________________________________________________
April 22, 1997
TO OUR SHAREHOLDERS:
The Board of Directors of First National Community Bank (the
"Bank") cordially invites you to attend the Annual Meeting of
Shareholders which will commence at 2:00 p.m., prevailing time on
Wednesday, May 21, 1997, at the Main Office of the Bank, 102 East
Drinker Street, Dunmore, Pennsylvania 18512-2491.
The Notice of Annual Meeting and the Proxy Statement on the
following pages address the formal business of the meeting. The
formal business schedule includes a proposal to approve and adopt
a Plan of Reorganization and a Plan of Merger, and the election
of eleven Bank Directors to serve for a one year term.
At the Annual Meeting of Shareholders, the Board of
Directors recommends that you vote in favor of the proposal to
approve and adopt a Plan of Reorganization and Plan of Merger
which will have the effect of reorganizing the Bank into a bank
holding company. The Board of Directors believes that the
formation of a bank holding company at this time is an important
and necessary part of the Bank's plans for the future.
Under the proposed Plan of Reorganization, each share of
Common Stock of the Bank presently held by you would be converted
into one (1) share of Common Stock of First National Community
Bancorp, Inc. (the "Holding Company"), a bank holding company
whose only substantial asset would be all of the Common Stock of
the Bank. If the Plan of Reorganization is approved and adopted,
the Bank's shareholders (other than dissenting shareholders) will
automatically become shareholders of the Holding Company. Since
the Holding Company will own all of the outstanding shares of the
Bank, your interest in the Bank at the time of the reorganization
will remain essentially the same, except that it will be indirect
rather than direct. The conversion of Common Stock of the Bank
into Common Stock of the Holding Company will be tax free for
federal income tax purposes.
<PAGE>
THE BOARD OF DIRECTORS BELIEVES THAT THE PLAN OF
REORGANIZATION AND PLAN OF MERGER ARE IN THE BEST INTERESTS OF
THE BANK AND ITS SHAREHOLDERS AND URGES YOU TO VOTE IN FAVOR OF
THE PLAN OF REORGANIZATION AND PLAN OF MERGER. THE APPROVAL AND
ADOPTION OF THE PLAN OF REORGANIZATION AND PLAN OF MERGER
REQUIRES AN AFFIRMATIVE VOTE OF THE HOLDERS OF AT LEAST
TWO-THIRDS (2/3) OF THE OUTSTANDING SHARES OF THE BANK'S COMMON
STOCK. IT IS, THEREFORE, EXTREMELY IMPORTANT FOR YOU TO SIGN,
DATE AND RETURN YOUR ENCLOSED PROXY AS SOON AS POSSIBLE IN THE
PRE-ADDRESSED AND STAMPED ENVELOPE SUPPLIED FOR YOUR CONVENIENCE,
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING.
We urge you to carefully review the enclosed Proxy
Statement/Prospectus that describes the Plan of Reorganization
and the Plan of Merger proposal in detail. Again, your Board of
Directors strongly recommends that you vote FOR the proposal.
On behalf of the Board of Directors, thank you for your
cooperation and continued support.
Very truly yours,
/s/ J. David Lombardi
---------------------
J. David Lombardi,
President and CEO
<PAGE>
----------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 21, 1997
----------------------------------------
TO THE SHAREHOLDERS OF FIRST NATIONAL COMMUNITY BANK:
Notice is hereby given that the Annual Meeting of
Shareholders of First National Community Bank (the "Bank") will
be held at 2:00 p.m., prevailing time, on Wednesday, May 21,
1997, at the Main Office of First National Community Bank, 102
East Drinker Street, Dunmore, Pennsylvania 18512-2491, for the
following purposes:
1. To consider and act upon a proposal to approve and
adopt the Plan of Reorganization and Plan of Merger dated as of
March 12, 1997, providing, among other things, for the merger of
the Bank and First National Community Interim Bank (the "Interim
Bank"), a national banking association organized under the laws
of the United States, a subsidiary of First National Community
Bancorp, Inc. (the "Holding Company") and for the automatic
conversion of each share of the Common Stock of the Bank into one
(1) share of the Common Stock of the Holding Company;
2. To elect eleven (11) Bank Directors to serve for a one
year term; and
3. To transact such other business as may properly come
before the Annual Meeting and any adjournment or postponement
thereof.
You are urged to mark, sign, date and promptly return your
Proxy in the enclosed envelope so that your shares may be voted
in accordance with your wishes and in order that the presence of
a quorum may be assured. The prompt return of your signed Proxy,
regardless of the number of shares you hold, will aid the Bank in
reducing the expense of additional proxy solicitation. The
giving of such Proxy does not affect your right to vote in person
if you attend the meeting and give notice to the Cashier of the
Bank.
Only those shareholders of record at the close of business
on February 28, 1997, will be entitled to notice of and to vote
at the Annual Meeting and any adjournment or postponement
thereof.
A copy of the Bank's Annual Report for the fiscal year ended
December 31, 1996, was mailed to Shareholders on or about March
21, 1997. Additional copies of the Bank's Annual Report for the
1995 fiscal year and 1994 fiscal year may be obtained at no cost
by contacting William S. Lance, Senior Vice President, First
National Community Bank, 102 East Drinker Street, Dunmore,
Pennsylvania 18512-2491; telephone: (717) 346-7667.
<PAGE>
AN AFFIRMATIVE VOTE OF THE HOLDERS OF AT LEAST TWO-THIRDS
(2/3) OF THE OUTSTANDING SHARES IS REQUIRED FOR APPROVAL AND
ADOPTION OF THE PLAN OF REORGANIZATION AND PLAN OF MERGER.
THEREFORE, WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING
IN PERSON, YOU ARE URGED TO SIGN, DATE AND PROMPTLY RETURN THE
ENCLOSED PROXY. A SELF-ADDRESSED STAMPED ENVELOPE IS ENCLOSED
FOR YOUR CONVENIENCE.
By Order of the Board of Directors,
/s/ J. David Lombardi
---------------------------
J. David Lombardi,
President and CEO
April 22, 1997
<PAGE>
PROXY STATEMENT/PROSPECTUS
FIRST NATIONAL COMMUNITY BANCORP, INC.
1,090,424 Shares Common Stock
($1.25 par value)
FIRST NATIONAL COMMUNITY BANK
PROXY STATEMENT
First National Community Bancorp, Inc., a newly formed
Pennsylvania business corporation (the "Holding Company"),
proposes to issue 1,090,424 shares of its common stock to
shareholders of First National Community Bank (the "Bank") in a
reorganization whereby the Bank will become a wholly-owned
subsidiary of the Holding Company, and shareholders of the Bank
will become shareholders of the Holding Company.
This Proxy Statement/Prospectus includes this cover page and
a Proxy Statement of the Bank for use in connection with an
Annual Meeting of Shareholders to be held on Wednesday, May 21,
1997. The proposed reorganization and related matters to be
acted upon at the shareholders' meeting are described in this
Proxy Statement/Prospectus.
If the proposed reorganization is approved and adopted, and
certain other conditions are met, each shareholder of the Bank
will receive one (1) share of Holding Company common stock in
exchange for one (1) share of common stock of the Bank held by
shareholders as of February 28, 1997. See section entitled
"PROPOSED REORGANIZATION - Conversion of Stock."
The affirmative vote of the holders of at least two-thirds
(2/3) of the outstanding shares of the Bank is required under the
National Bank Act to approve and adopt the Plan of Reorganization
and Plan of Merger.
_________________________________
This Proxy Statement/Prospectus does not cover resales of
shares of Holding Company common stock upon consummation of the
proposed reorganization, and no person is authorized to make use
of the Proxy Statement/Prospectus in connection with any such
resale.
The principal executive office of the Holding Company is
located at 102 East Drinker Street, Dunmore, Pennsylvania
18512-2491. The Holding Company's telephone number is (717)
346-7667.
_________________________________
i
<PAGE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC"), THE OFFICE OF
THE COMPTROLLER OF THE CURRENCY (THE "OCC"), THE PENNSYLVANIA
DEPARTMENT OF BANKING, THE BOARD OF GOVERNORS OF THE FEDERAL
RESERVE SYSTEM (THE "FEDERAL RESERVE BOARD"), THE PENNSYLVANIA
SECURITIES COMMISSION OR ANY OTHER STATE SECURITIES COMMISSION.
NONE OF THE AFOREMENTIONED HAS PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS
ACCOUNTS OR DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. THE COMMON
STOCK IS NOT GUARANTEED BY THE BANK OR HOLDING COMPANY. THERE
CAN BE NO ASSURANCE THAT THE TRADING PRICE OF THE COMMON STOCK
OFFERED HEREBY WILL NOT DECREASE AT ANY TIME.
_________________________________
AVAILABLE INFORMATION
The Holding Company has filed with the Securities and
Exchange Commission in Washington, D.C. a Registration Statement
under the Securities Act of 1933, as amended, for the
registration of its common stock to be issued and exchanged in
the proposed reorganization.
The registration statement of which this Proxy
Statement/Prospectus is a part is on file with the Securities and
Exchange Commission in Washington, D.C. The registration
statement, including the exhibits thereto, contains information
in addition to that contained herein. The registration statement
and exhibits may be examined during normal business hours at the
Securities and Exchange Commission's public reference room
located at Judiciary Plaza, 450 Fifth Street, N.W., Washington,
DC 20549 and also at the regional offices of the SEC located at
75 Park Place, 14th Floor, New York, New York 10007; Curtis
Center, Independence Square West, 601 Walnut Street, Suite 1005E,
Philadelphia, Pennsylvania 19106; and Northwestern Atrium Center,
500 West Madison Street, Suite 400, Chicago, Illinois 60661.
Copies of such material may be obtained from the public reference
section of the SEC at Judiciary Plaza 450 Fifth Street, N.W.,
Washington, DC 20549, at prescribed rates. The SEC maintains a
Web site that contains reports, proxy and information statements
and other information regarding registrants that file
electronically with the SEC. The address of the SEC site is
http://www.sec.gov.
The Bank is subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Act"), and,
accordingly, does file reports, proxy statements and other
information with the Office of the Comptroller of the Currency
(the "OCC"). Documents filed with the OCC can be inspected and
copied at the OCC, 250 E Street, Washington, D.C. 20219 and at
the OCC's northeastern district office, 1114 Avenue of the
Americas, Suite 3900, New
ii
<PAGE>
York, New York 10036. A copy of the Bank's Annual Report on Form
10-KSB including the financial statements and the schedules
thereto, for the year ended December 31, 1996, may be obtained at
no cost by contacting William S. Lance, Senior Vice President,
First National Community Bank, 102 East Drinker Street, Dunmore,
Pennsylvania 18512-2491.
__________________________
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY
REFERENCE WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH.
THESE DOCUMENTS ARE AVAILABLE UPON REQUEST FROM WILLIAM S. LANCE,
TREASURER, FIRST NATIONAL COMMUNITY BANCORP, INC., AND SENIOR
VICE PRESIDENT OF FIRST NATIONAL COMMUNITY BANK, 102 EAST DRINKER
STREET, DUNMORE, PENNSYLVANIA 18512; TELEPHONE (717) 346-7667.
IN ORDER TO ENSURE TIMELY DELIVERY OF SUCH DOCUMENTS, ANY REQUEST
SHOULD BE MADE BY MAY 14, 1997.
The date of this Proxy Statement/Prospectus is April 22, 1997.
iii
<PAGE>
TABLE OF CONTENTS
Page
----
SUMMARY viii
ANNUAL MEETING OF FIRST NATIONAL COMMUNITY BANK viii
PROPOSED REORGANIZATION x
INTRODUCTION 1
Date, Place and Time of Annual Meeting 1
Purpose of the Annual Meeting 1
Record Date; Quorum; Voting Rights 2
Solicitation of Proxies 2
Voting and Revocation of Proxies 3
PRINCIPAL BENEFICIAL OWNERS OF THE BANK'S COMMON STOCK 3
Principal Owners 3
Beneficial Ownership by Officers and Directors 4
PROPOSED REORGANIZATION 5
Plan of Reorganization and Plan of Merger 5
Reasons for the Proposed Reorganization 6
Shareholder Approval 8
Effective Date 8
Effect of Reorganization on Bank's Business
and Shareholders 8
Conversion of Stock 9
Exchange of Stock Certificates 9
Failure To Surrender Stock Certificates 9
Trading and Resale of Holding Company Common Stock 9
Tax Consequences 10
Rights of Dissenting Shareholders 11
Regulatory Approvals 12
DESCRIPTION OF THE HOLDING COMPANY 13
Organization 13
Management 14
Remuneration 14
Indemnification for Securities Act Liabilities 14
Supervision and Regulation of the Holding Company 15
Permitted Activities 16
Issuance of Additional Securities 18
iv
<PAGE>
ELECTION OF DIRECTORS 19
Information as to Nominees and Directors 19
Board of Directors Interlocks and Insider Participation 21
EXECUTIVE COMPENSATION 21
Summary Compensation Table 22
Profit Sharing Plan 22
Employment Agreement 23
Compensation of Directors 24
DESCRIPTION OF THE BANK 25
History and Business 25
Competition 26
Supervision and Regulation of the Bank 26
The Federal Reserve System 27
Monetary Policy 27
Deposit Insurance 28
Legislation 29
Legal Proceedings 34
Directors 34
Principal Officers of the Bank 35
CERTAIN TRANSACTIONS 36
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE 36
DESCRIPTION OF THE BANK'S COMMON STOCK 36
The Bank's Common Stock 36
Comparative Market Prices 38
Capitalization 38
DESCRIPTION OF THE HOLDING COMPANY'S STOCK 40
Common Stock 40
Legal Opinion 40
Anti-Takeover Provisions 40
DIVIDENDS 46
COMPARISON OF SHAREHOLDER RIGHTS 47
INDEPENDENT AUDITORS 50
v
<PAGE>
FINANCIAL STATEMENTS 50
SHAREHOLDER PROPOSALS 51
OTHER MATTERS 51
EXHIBIT A PLAN OF REORGANIZATION AMONG FIRST NATIONAL
COMMUNITY BANK, FIRST NATIONAL COMMUNITY INTERIM
BANK, AND FIRST NATIONAL COMMUNITY BANCORP, INC.
EXHIBIT B PLAN OF MERGER BETWEEN FIRST NATIONAL COMMUNITY
BANK AND FIRST NATIONAL COMMUNITY INTERIM BANK
EXHIBIT C ARTICLES OF INCORPORATION OF FIRST NATIONAL
COMMUNITY BANCORP, INC.
EXHIBIT D BY-LAWS OF FIRST NATIONAL COMMUNITY BANCORP, INC.
EXHIBIT E EXCERPTS FROM SECTION 215a OF THE NATIONAL BANK ACT
CONCERNING DISSENTERS' RIGHTS
vi
<PAGE>
This Page Intentionally Left Blank
<PAGE>
SUMMARY
The following summary of this Proxy Statement/Prospectus is
provided for your convenience and is not intended to be complete.
This summary is qualified in its entirety by the detailed
information set forth elsewhere in this Proxy
Statement/Prospectus including the exhibits hereto.
ANNUAL MEETING OF FIRST NATIONAL COMMUNITY BANK
Date May 21, 1997
Time and Place 2:00 p.m., prevailing time,
at the Main Office of First
National Community Bank
(the "Bank"), 102 East
Drinker Street, Dunmore,
Pennsylvania 18512-2491
Record Date February 28, 1997
Securities Entitled to Vote Each share of First
National Community Bank
(the "Bank") common stock,
par value One Dollar and
Twenty-five Cents ($1.25)
per share, issued and
outstanding on the record
date entitles its holders
to one (1) vote with
respect to all matters
presented at the meeting
for shareholder action,
except with respect to the
election of directors in
which shareholders have
cumulative voting rights.
Shares Outstanding on the Record
Date 1,090,424 shares
Effects of Abstaining From
Voting A Bank shareholder who
abstains from voting does
not perfect his or her
dissenter's rights. See,
"Rights of Dissenting
Shareholders." A
shareholder who abstains
from voting is not included
in the affirmative vote
necessary to approve and
adopt the Plan
of Reorganization and Plan
of Merger. A Bank
Shareholder who abstains
from voting,
viii
<PAGE>
automatically
without any action on his
or her part, will receive
one(1) share of Holding
Company common stock, par
value One Dollar and
Twenty-five Cents($1.25)
per share in exchange for
one (1) share of common
stock of the Bank par value
One Dollar and Twenty-five
Cents ($1.25)per share
held on the Effective
Date if at least
two-thirds (2/3) of the
outstanding shares of Bank
common stock vote in favor
of the Plan of
Reorganization and Plan of
Merger. See section
entitled "PROPOSED
REORGANIZATION - Conversion
of Stock."
Matters to be Considered (1) A proposal to approve
and adopt the Plan of
Reorganization among the
Bank, First National
Community Interim Bank (the
"Interim Bank") and First
National Community Bancorp,
Inc., a Pennsylvania
business corporation (the
"Holding Company"), and to
approve and adopt the Plan
of Merger between the Bank
and Interim Bank whereby
the shareholders of the
Bank will become
shareholders of the Holding
Company, and the Bank will
become a wholly-owned
subsidiary of the Holding
Company; (2) The election
of eleven (11) Bank
Directors to serve for a
one year term; and (3) To
act on such other matters
as may properly come before
the Annual Meeting and any
adjournment or postponement
thereof.
PROPOSED REORGANIZATION
Conditions to the Consummation
of the Plan of Reorganization
and Plan of Merger The affirmative vote of the
holders of at least two-
thirds (2/3) of the
outstanding shares of the
Bank's common stock is
required to approve and
adopt the Plan of
Reorganization and Plan of
Merger. In addition, the
Plan of Reorganization and
ix
<PAGE>
Plan of Merger require the
approval of the Office of
the Comptroller of the
Currency ("OCC"). On
February 4, 1997, the
organizers of the Interim
Bank filed an application
with the OCC for approval
to charter the Interim Bank
and to merge the Bank with
and into the Interim Bank.
The Charter Application of
the Interim Bank was
preliminarily approved by
the OCC on February 10,
1997. The merger of the
Bank with and into the
Interim Bank was
conditionally approved by
the OCC on March 18, 1997.
Any approval granted by the
OCC reflects only the OCC's
view that the transaction
does not contravene the
competitive standards of
the law and is consistent
with regulatory concerns
relating to bank management
and to the safety and
soundness of the subject
banking organizations.
Such approval is not to be
interpreted as an opinion
by the OCC that the
reorganization is favorable
to the stockholders from a
financial point of view or
that the OCC has considered
the adequacy of the terms
of the exchange. THE OCC'S
APPROVAL IS NOT AN
ENDORSEMENT OR
RECOMMENDATION OF THE
REORGANIZATION AND MERGER.
The application of the
Holding Company to become a
bank holding company
requires the approval of
the Board of Governors of
the Federal Reserve System
(the "Federal Reserve
Board"). On
March 24,1997, an
application was filed by
the Holding Company with
the Federal Reserve Board
for approval to become a
bank holding company. See
sections entitled "PROPOSED
REORGANIZATION -
Shareholder Approval" and
"PROPOSED REORGANIZATION -
Regulatory Approvals."
x
<PAGE>
Conversion of Stock Upon the consummation of
the Plan of Reorganization
and Plan of Merger, all
shareholders of the Bank,
except those who exercise
dissenting shareholders'
rights, will become
shareholders of the Holding
Company and will own one
(1) share of the Holding
Company's common stock for
each share of common stock
of the Bank as he or she
theretofore owned. Each
outstanding share of the
Bank's common stock, par
value One Dollar and
Twenty-five Cents ($1.25)
per share, will be
converted into and become
one (1) share of common
stock, par value One Dollar
and Twenty-five Cents
($1.25) per share, of the
Holding Company. See
section entitled "PROPOSED
REORGANIZATION - Conversion
of Stock."
Exchange of Stock
Certificates Shareholders of the Bank
may, at the option of the
Holding Company, be
required to exchange their
present stock certificates
(bearing the name "First
National Community Bank")
for new stock certificates
(bearing the name "First
National Community Bancorp,
Inc."). In the event that
the Board of Directors
requires shareholders to
exchange their Bank stock
certificates for Holding
Company stock certificates,
the Board of Directors has
reserved the right to
withhold any dividends from
those shareholders who do
not exchange their
certificates within a
reasonable period of time
after notification of the
exchange. See section
entitled "PROPOSED
REORGANIZATION - Exchange
of Stock Certificates."
Failure to Surrender
Stock Certificates Shareholders of the Bank
must surrender their stock
certificates within two (2)
years of the date of
notification to do so. In
the event that any stock
certificates are not
surrendered
xi
<PAGE>
for exchange
within such two (2) year
period, shares represented
by appropriate certificates
of the Holding Company that
would otherwise have been
delivered in such exchange,
may be sold at the option
of the Holding Company. If
sold, the net proceeds of
the sale shall be held for
those shareholders of the
unsurrendered certificates
to be paid to them upon
surrender of their
outstanding certificates.
FROM AND AFTER SUCH SALE,
THE SOLE RIGHT OF THE
HOLDERS OF THE
UNSURRENDERED OUTSTANDING
CERTIFICATES SHALL BE THE
RIGHT TO COLLECT THE NET
SALES PROCEEDS HELD FOR
THEIR ACCOUNT. See section
entitled "PROPOSED
REORGANIZATION - Failure to
Surrender Stock
Certificates."
Amendment The Board of Directors of
the Bank, the Holding
Company and the Interim
Bank may amend the Plan of
Reorganization and Plan of
Merger by mutual consent
either before or after
approval by the Bank's
shareholders. However, no
amendments can be made to
the provisions relating to
the conversion of shares of
the Bank into shares of the
Holding Company without
proper shareholder
approval. See section
entitled "PROPOSED
REORGANIZATION - Plan of
Reorganization and Plan of
Merger."
Termination The Plan of Reorganization
and Plan of Merger may be
terminated by the mutual
consent of the Boards of
Directors of the Bank, the
Interim Bank and the
Holding Company, even
after the approval of such
plans by the Bank's
shareholders. The Bank's
Board of Directors may
terminate the Plan of
Reorganization at any time
before it is consummated if
the Board of Directors
believes the reorganization
would be inadvisable for
any other proper reason.
See
xii
<PAGE>
section entitled
"PROPOSED REORGANIZATION -
Plan of Reorganization and
Plan of Merger."
"Anti-Takeover" Provisions The Articles of
Incorporation and By-laws
of the Holding Company
establish or contain
certain provisions that may
be deemed to be "anti-
takeover" in nature. The
Articles of Incorporation
and the By-laws of the
Holding Company were
effective as of the date
the Articles of
Incorporation were filed
with the Pennsylvania
Department of State,
Corporation Bureau and the
date that the By-laws were
approved by the Holding
Company's Board of
Directors. These
provisions of the Articles
of Incorporation and By-
laws will apply to all
shareholders of the Holding
Company on the Effective
Date of the Holding Company
formation, the date on
which the Plan of
Reorganization and Plan of
Merger are consummated.
The anti-takeover
provisions are as follows:
(1) the authorization of
five million (5,000,000)
shares of common stock, all
of which may be issued
without shareholder
approval; (2) the
elimination of cumulative
voting in the election of
directors; (3)
three (3) year staggered
terms of office for
directors; (4) the
requirement that holders of
at least seventy-five
percent(75%)of the
outstanding shares of the
Holding Company's common
stock approve any merger,
consolidation, liquidation
or dissolution of the
Holding Company or
the sale of all or
substantially all of its
assets, unless a majority
of Directors has approved
the transaction, then the
transaction must be
approved by only fifty-
one percent(51%) of the
holders of outstanding
shares of the Holding
Company's common stock; (5)
the requirement that
holders of at least
seventy-five percent (75%)
of the outstanding shares
of the Holding Company's
common stock approve any
change in the By-laws or
change any amendment to the
By-laws, or by a majority
xiii
<PAGE>
vote of the members of the
Board of Directors subject
to the power of the
shareholders to change such
action of the Board of
Directors by the
affirmative vote of the
holders of seventy-five
percent (75%) of the
outstanding shares of
common stock; (6) the
authorization for the Board
of Directors to oppose a
tender offer on the basis
of factors other than
economic benefit to
shareholders;(7) the
requirement that a special
meeting of shareholders may
only be called by a
majority of the Board of
Directors, the Chairman,
the President, or the
Executive Committee of the
Holding Company. In
addition, as a registered
Corporation under
Pennsylvania Law, the
Holding Company will be
subject to certain anti-
takeover provisions
provided by the
Pennsylvania Business
Corporation Law of 1988, as
amended. THEREFORE, A VOTE
IN FAVOR OF THE PLAN OF
REORGANIZATION AND PLAN OF
MERGER IS A VOTE IN FAVOR
OF THESE ANTI-TAKEOVER
PROVISIONS. See section
entitled "DESCRIPTION OF
THE HOLDING COMPANY'S STOCK
- Anti-Takeover
Provisions."
Rights of Dissenting
Shareholders Shareholders of the Bank
who: (1) vote against the
Plan of Reorganization and
Plan of Merger at the
Annual Meeting or give
notice in writing to the
Bank prior to or at the
Annual Meeting that they
dissent from the Plan of
Reorganization and Plan of
Merger; and (2) comply with
the procedures described in
the section entitled
"PROPOSED REORGANIZATION -
Rights of Dissenting
Shareholders" will be
entitled to receive
cash for the fair value of
their shares. Merely
voting against the Plan of
Reorganization and Plan of
Merger at the Annual
Meeting will not perfect a
shareholder's dissenters'
rights. Shareholders are
urged to review carefully
the section of
xiv
<PAGE>
this Proxy
Statement/Prospectus
entitled "PROPOSED
REORGANIZATION - Rights of
Dissenting Shareholders"
and the statutory excerpts
concerning dissenters'
rights attached to this
Proxy Statement/Prospectus
as Exhibit E. FAILURE TO
FOLLOW THE PROCEDURES SET
FORTH IN 12 U.S.C. SECTION
215a, REGARDING DISSENTERS'
RIGHTS WILL CONSTITUTE A
WAIVER OF APPRAISAL RIGHTS.
Tax Consequences Under the current
provisions of the Internal
Revenue Code of 1986, as
amended (the "Code"), no
gain or loss is expected to
be recognized for federal
income tax purposes by the
shareholders of the Bank by
reason of the conversion of
their common stock of the
Bank into common stock of
the Holding Company in
connection with the
consummation of the Plan of
Reorganization and Plan of
Merger. See section
entitled "PROPOSED
REORGANIZATION - Rights of
Dissenting Shareholders."
xv
<PAGE>
This Page Intentionally Left Blank.
<PAGE>
FIRST NATIONAL COMMUNITY BANCORP, INC.
AND
FIRST NATIONAL COMMUNITY BANK
PROXY STATEMENT/PROSPECTUS
INTRODUCTION
This Proxy Statement which also constitutes a Prospectus
(the "Proxy Statement/Prospectus") is being furnished for the
solicitation by the Board of Directors of First National
Community Bank (the "Bank"), a national banking association
organized under the laws of the United States of America, of
proxies to be voted at the Annual Meeting of Shareholders of the
Bank to be held at the Main Office of the Bank, 102 East Drinker
Street, Dunmore, Pennsylvania 18512-2491 on Wednesday, May 21,
1997, at 2:00 p.m., prevailing time, and at any adjournment or
postponement of the Annual Meeting. This Proxy
Statement/Prospectus also constitutes a prospectus of First
National Community Bancorp, Inc. (the "Holding Company") in
offering its shares of common stock to the Bank's shareholders
in accordance with the Plan of Reorganization and Plan of Merger.
The principal executive offices of the Bank and the Holding
Company are located at 102 East Drinker Street, Dunmore,
Pennsylvania 18512-2491. The telephone number for the Bank and
the Holding Company is (717) 346-7667. All inquiries should be
directed to William S. Lance, Senior Vice President. This Proxy
Statement/Prospectus and the enclosed form of proxy (the "Proxy")
are first being sent to shareholders of the Bank on or about
April 22, 1997.
Date, Place and Time of Annual Meeting
The Annual Meeting of Shareholders of First National
Community Bank will be held on Wednesday, May 21, 1997, at the
Main Office of the Bank, 102 East Drinker Street, Dunmore,
Pennsylvania 18512-2491, at 2:00 p.m. prevailing time.
Purpose of the Annual Meeting
At the Annual Meeting, shareholders of the Bank will be
requested: (1) to consider and act upon a proposal to approve and
adopt the Plan of Reorganization and Plan of Merger dated as of
March 12, 1997, providing, among other things, for the merger of
the Bank and First National Community Interim Bank (the "Interim
Bank"), a national banking association organized under the laws
of the United States of America and a subsidiary of First
National Community Bancorp, Inc. (the "Holding Company"), and for
the automatic conversion of each share of common stock of the
Bank into one (1) share of common stock of the Holding Company;
(2) to elect eleven Bank Directors to serve for a one year term
and until their successors are duly
1
<PAGE>
elected and qualified; and (3) to transact such other business as
may properly come before the Annual Meeting and any adjournment
or postponement thereof.
Record Date; Quorum; Voting Rights
The Board of Directors of the Bank has fixed the close of
business on February 28, 1997, as the record date for the
determination of shareholders of the Bank entitled to notice of
and to vote at the Annual Meeting (the "Record Date"). On the
Record Date, the Bank had outstanding 1,090,424 shares of common
stock, par value One Dollar and Twenty-five Cents ($1.25) per
share, the only authorized class of stock, (the "Common Stock")
which was held by approximately Eight Hundred Eighty-four (884)
shareholders.
Under Pennsylvania law and the By-laws of the Bank, the
presence of a quorum, in person or by proxy, is required for each
matter to be acted upon at the Annual Meeting. The presence of a
quorum, in person or by proxy, of shareholders entitled to cast
at least a majority of the votes which all shareholders are
entitled to cast, shall constitute a quorum for the transaction
of business at the Annual Meeting. Votes withheld and
abstentions will be counted in determining the presence of a
quorum for the particular matter. Broker non-votes will not be
counted in determining the presence of a quorum for the
particular matter as to which the broker withheld authority.
Assuming the presence of a quorum, the affirmative vote of
at least two-thirds (2/3) of the outstanding shares of Common
Stock is required to approve and adopt the Plan of Reorganization
and Plan of Merger. Abstentions and broker non-votes are not
votes cast and therefore do not count either for or against such
approval and adoption. Although abstentions and broker non-votes
are not votes cast, and therefore do not count either for or
against such approval and adoption, abstentions and broker
non-votes have the practical effect of reducing the number of
affirmative votes received for each such matter.
Cumulative voting rights exist with respect to the election
of directors, which means that each shareholder has the right, in
person or by proxy, to multiply the number of votes to which he
is entitled by the number of directors to be elected, and to cast
the whole number of such votes for one candidate or to distribute
them among two or more candidates.
On all other matters to come before the Annual Meeting,
including the proposal to approve and adopt the Plan of
Reorganization and Plan of Merger, each share of Common Stock is
entitled to one (1) vote.
Solicitation of Proxies
This Proxy Statement/Prospectus and the enclosed form of
Proxy are first being sent to shareholders of the Bank on or
about April 22, 1997.
2
<PAGE>
The cost of preparing, assembling, printing, mailing and
soliciting proxies, and any additional material that the Bank may
furnish shareholders in connection with the Annual Meeting, will
be borne by the Bank. In addition to solicitation by mail,
directors, officers and employees of the Bank may solicit Proxies
from the shareholders of the Bank personally or by telephone,
telegram or telecopier. Arrangements will be made with brokerage
houses and other custodians, nominees and fiduciaries to forward
proxy solicitation materials to the beneficial owners of the
Common Stock held of record by these persons, and, upon request
therefor, the Bank will reimburse them for their reasonable
forwarding expenses.
Voting and Revocation of Proxies
Shares represented by Proxies properly signed, executed and
returned, unless subsequently revoked, will be voted at the
Annual Meeting in accordance with the instructions made thereon
by the shareholders. If a Proxy is signed, executed and returned
without indicating any voting instructions, the shares
represented by the Proxy will be voted FOR the approval and
adoption of the Plan of Reorganization and Plan of Merger.
Execution and return of the enclosed Proxy will not affect a
shareholder's right to attend the Annual Meeting and vote in
person, after giving notice to Robert J. Mancuso, Cashier of the
Bank.
A shareholder of the Bank who returns a Proxy may revoke the
Proxy prior to the time it is voted: (1) by giving written notice
of revocation to Robert J. Mancuso, Cashier of First National
Community Bank, 102 East Drinker Street, Dunmore, Pennsylvania
18512-2491; (2) by executing a later-dated proxy and giving
written notice thereof to the Cashier of the Bank; or (3) by
voting in person after giving written notice to the Cashier of
the Bank. Attendance by a shareholder at the Annual Meeting will
not itself be deemed or constitute a revocation of the Proxy.
PRINCIPAL BENEFICIAL OWNERS OF THE BANK'S COMMON STOCK
Principal Owners
The following table sets forth, as of February 28, 1997, the
name and address of each person who owns of record or who is
known by the Board of Directors to be the beneficial owner of
more than five percent (5%) of the Bank's outstanding Common
Stock, the number of shares beneficially owned by such person and
the percentage of the Bank's outstanding Common Stock so owned.
The footnote to the following table is set forth below under the
section entitled "Beneficial Ownership by Officers and
Directors."
3
<PAGE>
<TABLE>
<CAPTION>
Percent of
Outstanding
Common Stock
Shares Beneficially Beneficially
Name and Address Owned <F1> Owned
- ---------------- ------------------- --------------
<S> <C> <C>
Louis A. DeNaples
400 Mill Street
Dunmore, PA 18512 71,261 6.54%
Dominick L. DeNaples
400 Mill Street
Dunmore, PA 18512 69,397 6.36%
</TABLE>
Beneficial Ownership by Officers and Directors
The following table sets forth as of February 28, 1997, the
amount and percentage of the Common Stock of the Bank
beneficially owned by each director and all officers and
directors of the Bank as a group. This information has been
furnished by the reporting persons.
<TABLE>
<CAPTION>
Name of Individual Amount and Nature of Percent of
or Identity of Group Beneficial Ownership<F1> Class <F9>
- -------------------- ------------------------ ----------
<S> <C> <C>
Angelo F. Bistocchi 17,783<F3> 1.63%
Michael G. Cestone 4,539 .42%
Michael J. Cestone, Jr. 16,543<F4> 1.52%
Dominick L. DeNaples 69,397 6.36%
Louis A. DeNaples 71,261<F5> 6.54%
Joseph J. Gentile 52,220<F6> 4.79%
Martin F. Gibbons 9,343 .86%
Joseph O. Haggerty 1,760 .16%
J. David Lombardi 10,173<F7> .93%
George N. Juba 6,657 .61%
John R. Thomas 17,775<F8> 1.63%
All Officers and Directors 285,550 26.19%
as a Group (17 persons)
_______________________
<FN>
<F1> The securities "beneficially owned" by an individual are
determined in accordance with the definitions of "beneficial
ownership" set forth in the regulations of the OCC and the
Securities and Exchange Commission and may include securities
owned by or for the individual's spouse and minor children and
any other relative who has the same home, as well as securities
to which the individual has or shares voting or investment power
or has the right to acquire beneficial ownership within sixty
(60) days after February 28, 1997. Beneficial ownership may be
disclaimed as to certain of the securities.
<F2> Unless otherwise indicated, all shares are legally owned by
the reporting person individually or jointly with his spouse.
<F3> Includes 880 shares held jointly with a friend.
4
<PAGE>
<F4> Includes 3,678 shares held individually by his spouse.
<F5> Includes 1,038 shares held individually by his spouse.
<F6> Includes 10,458 shares held individually by his spouse.
<F7> Includes 66 shares held by his spouse as custodian for his
children.
<F8> Includes 2,455 shares held individually by his spouse.
<F9> Upon consummation of the Plan of Reorganization and Plan of
Merger, the percentage of present ownership of the named
individuals or all officers and directors as a group shall remain
unchanged.
</FN>
</TABLE>
PROPOSED REORGANIZATION
Plan of Reorganization and Plan of Merger
Under the terms of the Plan of Reorganization and Plan of
Merger, the Bank will merge with, into and under the Charter of
the Interim Bank, a subsidiary of the Holding Company, and each
outstanding share of the Bank's Common Stock (other than shares
as to which dissenters' rights have been perfected) will be
converted into the right to receive one (1) share of the Holding
Company's Common Stock (the "Merger").
The Interim Bank is a national banking association,
organized under the National Bank Act for the sole purpose of
merging with the Bank to effect the proposed reorganization. The
Interim Bank will conduct no banking business prior to the
Merger. After the Merger, the surviving bank will conduct
business under the name "First National Community Bank."
If the Plan of Reorganization is consummated, the Bank will
become a wholly-owned subsidiary of the Holding Company, and the
shareholders of the Bank will become shareholders of the Holding
Company. The Bank will continue its banking business
substantially unchanged, under the same management.
On March 12, 1997, the Boards of Directors of the Bank, the
Interim Bank and the Holding Company unanimously approved the
Plan of Reorganization and Plan of Merger. The Plan of
Reorganization and Plan of Merger may be amended by mutual
consent either before or after approval and adoption by the
Bank's shareholders except for provisions relating to the
conversion of shares of Common Stock of the Bank into shares of
common stock of the Holding Company.
5
<PAGE>
THE PLAN OF REORGANIZATION AND PLAN OF MERGER MUST BE
APPROVED AND ADOPTED BY THE AFFIRMATIVE VOTE OF THE HOLDERS OF AT
LEAST TWO-THIRDS (2/3) OF THE OUTSTANDING SHARES OF THE BANK'S
COMMON STOCK.
Consummation of the Plan of Reorganization and Plan of
Merger is also subject to the consent and approval of the
appropriate governmental authorities, including approval by the
Federal Reserve Board and by the OCC. The Holding Company is
required to register with the Federal Reserve Board as a bank
holding company under the Bank Holding Company Act of 1956, as
amended. An application for such registration was filed with the
Federal Reserve Board on March 24, 1997. An application was also
filed on February 4, 1997, with the OCC requesting approval of
the Merger. Such approval was conditionally granted on March 18,
1997.
The Plan of Reorganization and Plan of Merger may be
terminated by the mutual consent of the Boards of Directors of
the Bank, the Interim Bank and the Holding Company even after
they are approved by the Bank's shareholders. The Board of
Directors, however, may not amend any provisions relating to the
conversion of shares of the Bank into shares of the Holding
Company without shareholder approval. The Board of Directors of
the Bank may also terminate the Plan of Reorganization and Plan
of Merger at any time before the consummation of the Merger, if
the Board of Directors believes that the reorganization would be
inadvisable for any reason.
As required by generally accepted accounting principles, the
Merger may be accounted for as a pooling of interests.
For additional information, see the Plan of Reorganization
and Plan of Merger, attached as Exhibits A and B, respectively,
and incorporated by reference herein.
Reasons for the Proposed Reorganization
In the opinion of the Board of Directors of the Bank, the
formation of a bank holding company of which the Bank would
operate as a wholly-owned subsidiary, will provide greater
flexibility in financing, in engaging in non-banking activities,
in protecting against an unfriendly takeover, and in responding
to changes in Pennsylvania law that provide for expanded
branching and multi-bank holding companies.
Flexibility in Financing. Flexibility in financing by the
Holding Company is provided by the authorized capitalization of
the Holding Company, whose Articles of Incorporation authorize
five million (5,000,000) shares of Common Stock. If the Plan of
Reorganization is approved, approximately 1,090,424 shares of
Common Stock will be issued in connection with the consummation
of the Plan of Reorganization, leaving approximately 3,909,576
authorized but unissued shares of Common Stock. The authorized
but unissued shares of Common Stock would be available for
issuance from time to time by action of the Board of Directors to
raise additional
6
<PAGE>
capital, for acquisitions, or for other corporate purposes
without further action by the shareholders of the Holding Company
unless otherwise required by law. Such issuance could result in
a dilution of voting rights and book value per share as to the
Common Stock of the Holding Company. There are no present plans,
arrangements or commitments for the issuance of any such
shares. Flexibility would also be provided by the ability to
incur indebtedness at the Holding Company level and to contribute
the proceeds to the Bank as equity capital.
Non-Banking Activities. Under the Bank Holding Company Act
of 1956, as amended, with the prior approval of the Federal
Reserve Board, the Holding Company may organize or acquire other
financially oriented businesses without shareholder approval.
The Holding Company has no present plans for any such activity.
Subsidiaries of the Holding Company not engaged in banking, but
rather in activities related to banking, are not subject to
geographic restrictions. See section entitled, "Description of
the Holding Company - Permitted Activities".
Protection Against an Unfriendly Takeover. See section
entitled, "Description of the Holding Company's Stock -
Anti-Takeover Provisions".
Interstate Banking and Branching. Under the Riegle-Neal
Interstate Banking and Branching Efficiency Act of 1994 (the
"Interstate Banking and Branching Act"), bank holding companies,
pursuant to an amendment to the Bank Holding Company Act, can
acquire a bank located in any state, as long as the acquisition
does not result in the bank holding company controlling more than
ten percent (10%) of the deposits in the United States, or thirty
percent (30%) of deposits in the target bank's state. The
legislation permits states to waive the concentration limitations
and require that the target institution be in existence for up to
five (5) years before it can be acquired by an out-of-state bank
or bank holding company. Interstate branching and merging of
existing banks is permitted after three (3) years from the
enactment of the Interstate Banking and Branching Act, if the
bank is adequately capitalized and demonstrates good management.
Branch merging will be permitted earlier if a state undertakes to
enact a law which allows it and states may also enact a law to
permit banks to branch de novo. The Interstate Banking and
Branching Act also amends the International Banking Act to allow
a foreign bank to establish and operate a federal branch or
agency upon approval of the appropriate federal and state banking
regulator.
Section 1602 of the Pennsylvania Banking Code of 1965 has
been amended to allow interstate mergers upon compliance with
applicable requirements. Section 907 of the Pennsylvania Banking
Code has been amended to allow Pennsylvania state banks to
maintain branches in any other state, the District of Columbia,
or a territory or possession of the United States with prior
regulatory approval. Section 30 of the National Bank Act allows
national banks to engage in interstate banking to the extent
permissible for state banks within the subject state.
7
<PAGE>
Shareholder Approval
An affirmative vote of two-thirds (2/3) of the issued and
outstanding shares of Common Stock of the Bank is necessary to
approve and adopt the Plan of Reorganization and Plan of Merger.
Effective Date
The reorganization and the merger of the Bank with, into and
under the Charter of the Interim Bank shall be effective at the
time and on the date specified on the certificate to be issued by
the OCC. Presently, the Bank plans to request that the OCC issue
a certificate no later than July 1, 1997 (the "Effective Date").
The OCC will not issue a certificate until it approves the
proposed merger of the Bank with, into and under the Charter of
the Interim Bank. The final approval will not be considered and
given until the Holding Company and the Bank give notice to the
OCC that holders of at least two-thirds of the issued and
outstanding shares of Common Stock of the Bank have approved and
adopted the Plan of Reorganization and Plan of Merger.
The approval of the OCC reflects only the OCC's view that
the transaction does not contravene the competitive standards of
the law and is consistent with regulatory concerns relating to
bank management and to the safety and soundness of the subject
banking organizations. Such approval is not to be interpreted as
an opinion by the OCC that the reorganization is favorable to the
stockholders from a financial point of view or that the OCC has
considered the adequacy of the terms of the exchange. THE OCC'S
APPROVAL IS NOT AN ENDORSEMENT OR RECOMMENDATION OF THE
REORGANIZATION AND MERGER.
Effect of Reorganization on Bank's Business and Shareholders.
The Interim Bank is a national banking association,
organized by the Holding Company under the National Bank Act, for
the sole purpose of effecting the reorganization and holding
company formation. The Interim Bank is a subsidiary of the
Holding Company. The Interim Bank will conduct no banking
business prior to the proposed merger. On the Effective Date,
the Bank will merge with, into and under the Charter of the
Interim Bank. The Interim Bank will survive under the name
"First National Community Bank".
On the Effective Date, shareholders of the Bank will cease
to have any rights as shareholders of the Bank and their rights
will relate solely to the shares of the Holding Company Common
Stock, or, if demanded in accordance with Section 215a of the
National Bank Act, they will have the right to receive cash in
the amount of the appraised value of their shares of Bank Common
Stock. See "Rights of Dissenting Shareholders" and Exhibit E,
excerpts from Section 215a of the National Bank Act, relating to
Dissenters' Rights.
8
<PAGE>
Conversion of Stock
On the Effective Date, shareholders of the Bank who do not
perfect dissenters' rights will become shareholders of the
Holding Company by reason of the merger of the Bank with, into
and under the Charter of the Interim Bank. They will own the
same number of shares of the Holding Company's Common Stock as
they previously owned of the Bank's Common Stock. Each
outstanding share of the Bank's Common Stock, par value One
Dollar and Twenty-five Cents ($1.25) per share, will
automatically be converted into and become the right to receive
one (1)share of Common Stock, par value One Dollar and
Twenty-five Cents ($1.25) per share, of the Holding Company.
Exchange of Stock Certificates
The outstanding stock certificates that represent one (1)
share of the Bank's Common Stock will be deemed automatically to
represent one (1) share of the Holding Company's Common Stock.
The shareholders of the Holding Company may be required, at the
option of the Holding Company, to exchange their present stock
certificates (bearing the name "First National Community Bank")
for new stock certificates (bearing the name "First National
Community Bancorp, Inc."). In the event that the shareholders
are required to exchange their present stock certificates of the
Bank for stock certificates of the Holding Company, the Board of
Directors has reserved the right to withhold any dividends from
those shareholders who do not exchange their present stock
certificates for new stock certificates within a reasonable
period of time after being advised by the Board of Directors of
such exchange of share certificates.
Failure To Surrender Stock Certificates
In addition to the right of the Board of Directors of the
Holding Company to withhold dividends from those shareholders who
do not exchange their present stock certificates within a
reasonable period of time, shareholders may be required, at the
option of the Holding Company, to surrender their stock
certificates within two (2) years of the date of notification to
do so. In the event that any stock certificates are not
surrendered for exchange within such two (2) year period, the
shares represented by appropriate certificates of the Holding
Company that would otherwise have been delivered in exchange for
the unsurrendered certificates, may be sold at the option of the
Holding Company. The net proceeds of the sale shall be held for
the shareholders of the unsurrendered certificates and will be
paid to them upon surrender of their outstanding certificates.
FROM AND AFTER SUCH SALE, THE SOLE RIGHT OF THE HOLDERS OF THE
UNSURRENDERED OUTSTANDING CERTIFICATES SHALL BE THE RIGHT TO
COLLECT THE NET SALES PROCEEDS HELD FOR THEIR ACCOUNT.
Trading and Resale of Holding Company Common Stock
There is no regular trading market for the Bank's Common
Stock, although shares are sold from time to time in private
transactions. It is not expected that Holding Company Common
9
<PAGE>
Stock will be traded on a more established basis following the
Merger. Currently there are no plans to list shares of Holding
Company Common Stock on any stock exchange, although such action
may be taken in the future.
The shares of Holding Company Common Stock to be received in
connection with the Merger will not require registration under
the Securities Act of 1933, as amended (the "Securities Act"),
for their subsequent transfer, except that shares of the Holding
Company Common Stock to be received by persons who are deemed to
be "affiliates" of the Bank (directors, certain officers
and shareholders owning five percent (5%) or more of the
outstanding shares of Common Stock), within the meaning of Rule
145 under the Securities Act, may be resold by affiliates without
further registration only in transactions permitted under certain
sections of Rule 144 under the Securities Act or pursuant to
other exemptions under the Securities Act. Rule 144, among other
things, will operate generally to limit the number of shares of
Holding Company Common Stock that may be sold in any three-month
period by any one affiliate not acting in concert with others to
one percent (1%) of the outstanding shares of the Holding Company
Common Stock. This limitation will cease at the end of two (2)
years following the Effective Date as to former affiliates of the
Bank who are not affiliates of the Holding Company. Most
affiliates of the Bank, however, will at least initially also be
affiliates of the Holding Company and thus may only sell shares
of Holding Company Common Stock in transactions permitted under
Rule 144 or otherwise in compliance with the Securities Act.
Tax Consequences
Under the current provisions of the Internal Revenue Code of
1986, as amended (the "Code") it is anticipated that: (1) no
gain or loss will be recognized by the Bank, the Holding Company
or the Interim Bank by reason of the reorganization; (2) no gain
or loss will be recognized by the Bank's shareholders upon the
exchange of the Bank's Common Stock solely for the Holding
Company's Common Stock pursuant to the reorganization, except for
any shareholder of the Bank who receives payment in cash as a
dissenting shareholder; (3) the tax basis of the Holding
Company's Common Stock to be owned by each of the Bank's
shareholders will be the same as the tax basis of the Bank's
Common Stock theretofore owned by such shareholder; (4) the
holding period of the Holding Company's Common Stock into which
the Bank's Common Stock has been converted will include the
holding period of the Bank's Common Stock, provided that the
Common Stock of the Bank was held as a capital asset on the date
of the conversion; (5) the Interim Bank will carry-over and take
into account all accounting items of the Bank such as earnings
and profits, method of accounting, inventories, etc.; and (6) any
distribution by the Interim Bank to the Holding Company for the
repayment of the loan to charter the Interim Bank will be
disregarded as having any tax consequence.
In general, cash received by dissenting shareholders of the
Bank will be treated as amounts distributed in redemption of
their Bank Common Stock and will be taxable under Section 302(a)
of the Code, that is as a capital gain or loss, if the shares are
held as a capital asset and as ordinary income otherwise. It is
possible, however, that the provisions of Section 302(a) will not
10
<PAGE>
apply to a particular dissenting shareholder due to Code rules
that require that certain shareholders be treated as owning
shares actually owned by other individuals and entities (i.e.,
certain individuals related to the shareholder and certain
partnerships, estates, trusts and corporations in which the
shareholder has an interest); if so, the amounts paid to the
dissenting shareholder may be taxable as dividends because they
would be treated as distributions to which Code Section 301
applies and not as a redemption under Code Section 302(a).
Under the current Pennsylvania personal income tax law, no
gain or loss will be recognized by the shareholders on the
conversion of the Bank Common Stock into the Holding Company
Common Stock, except for shareholders exercising Dissenters'
Rights for Pennsylvania residents. The Holding Company's Common
Stock will be exempt from the personal property tax, as presently
in effect.
SHAREHOLDERS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS
IN ORDER TO MAKE AN INDIVIDUAL APPRAISAL OF THE FEDERAL, STATE
AND LOCAL INCOME TAX AND PERSONAL PROPERTY AND OTHER TAX
CONSEQUENCES OF THE CONSUMMATION OF THE REORGANIZATION AND MERGER
AND THE EXERCISE OF DISSENTERS' RIGHTS.
Rights of Dissenting Shareholders
As required by the national banking laws, any shareholder of
the Bank who has voted against the Plan of Reorganization and
Plan of Merger at the Annual Meeting, or has given written notice
at or prior to the Annual Meeting to the Cashier of the Bank or
presiding officer that he dissents from the Plan of
Reorganization and Plan of Merger, will be entitled to receive
the value of the shares of Common Stock of the Bank held by him
at the time the merger is approved by the OCC upon written
request made to the Bank at any time before thirty (30) days
after the date of consummation of the merger, accompanied by the
surrender of his share certificates. Any shareholder of the Bank
who votes against the Plan of Reorganization and Plan of Merger
at the Annual Meeting, or who gives notice in writing at or prior
to the Annual Meeting to the Cashier of the Bank or presiding
officer that he dissents, will be notified in writing of the date
of consummation of the merger.
The value of the shares of any dissenting shareholder will
be ascertained, as of the Effective Date, by an appraisal made by
a committee of three persons. The committee shall be comprised
of one person selected by the vote of the holders of the majority
of the shares whose owners are entitled to payment in cash (by
reason of such requests for appraisal), one person selected by
the Board of Directors of the Bank and one person selected by the
two so selected. The valuation agreed upon by any two of the
three appraisers will govern. If the value so fixed is not
satisfactory to any dissenting shareholder who has duly requested
payment, that shareholder may, within five (5) days after being
notified of the appraisal value of his shares, appeal to the OCC.
The OCC is required to cause a reappraisal to be made which will
be final and binding as to the value of the shares of the
dissenting shareholder. If, for any reason, one or more of the
11
<PAGE>
appraisers is not selected as provided above within ninety (90)
days from the Effective Date or, if the appraisers fail to
determine the value of such shares within the ninety (90) days,
the OCC is required, upon written request of any interested
party, to cause an appraisal to be made that will be final and
binding on all parties. The expenses of the OCC in making the
reappraisal or the appraisal, as the case may be, will be paid by
the Bank. The ascertained value of the shares must be paid
promptly to the dissenting shareholders, if any. The shares of
Holding Company Common Stock that would have been allocated to a
dissenting shareholder will be sold at public auction and any
excess received therefrom will be paid to the dissenting
shareholder in accordance with the requirements of the national
banking laws.
The foregoing summary does not purport to be a complete
statement of the appraisal rights of dissenting shareholders, and
such summary is qualified in its entirety by reference to the
Plan of Reorganization, attached hereto as Exhibit A and to the
applicable provisions of 12 U.S.C. Section 215a, which are
reproduced and attached hereto as Exhibit E. Moreover, a
shareholder will not be permitted to split his or her vote; if a
shareholder intends to vote, he or she must vote all of his or
her shares either for or against the Plan of Reorganization and
Plan of Merger.
FAILURE TO FOLLOW THE PROCEDURES SET FORTH IN 12 U.S.C.
Section 215a, REGARDING DISSENTERS' RIGHTS WILL CONSTITUTE A
WAIVER OF APPRAISAL RIGHTS. SHAREHOLDERS MAY WISH TO CONSULT
INDEPENDENT LEGAL COUNSEL BEFORE EXERCISING DISSENTERS' RIGHTS.
Except as set forth herein, notification of the beginning or
end of any statutory period will not be given by the Bank to any
dissenting shareholders.
Regulatory Approvals
Consummation of the Plan of Reorganization and Plan of
Merger is subject to the approval of the Federal Reserve Board
and the OCC, hereinafter collectively designated as the "Bank
Regulatory Authorities". An application to charter the Interim
Bank and to merge the Bank with and into the Interim Bank was
filed on February 4, 1997, with the OCC. The Holding Company has
filed an application with the Federal Reserve Bank of
Philadelphia on March 24, 1997. The OCC preliminarily approved
the Charter Application of the Interim Bank on February 10, 1997.
To date, the Federal Reserve has not and the OCC has
conditionally approved the proposed merger of the Bank with, into
and under the Charter of the Interim Bank.
In general, the Bank Regulatory Authorities may disapprove
this transaction if the reorganization and merger of the Bank
with and into the Interim Bank and the reorganization of the Bank
into a one-bank holding company would not be consistent with
adequate sound banking practices and would not be in the public
interest.
12
<PAGE>
In addition, the merger of the Bank with and into the
Interim Bank may not be consummated for fifteen (15) days from
the date of the later approval by the OCC or approval by the
Federal Reserve Board, if there has been no challenge issued by
the United States Department of Justice on anti-trust grounds in
which case the period of time before which consummation may occur
may be extended. The merger of the Bank with and into the
Interim Bank and the reorganization of the Bank into a one-bank
holding company cannot proceed in the absence of requisite
regulatory approvals. The approval of the OCC reflects only the
OCC's view that the transaction does not contravene the
competitive standards of the law and is consistent with
regulatory concerns relating to bank management and to the safety
and soundness of the subject banking organizations. Such
approval is not to be interpreted as an opinion by the OCC that
the reorganization is favorable to the stockholders from a
financial point of view or that the OCC has considered the
adequacy of the terms of the exchange. THE OCC'S APPROVAL IS NOT
AN ENDORSEMENT OR RECOMMENDATION OF THE REORGANIZATION AND
MERGER.
There can be no assurance that the Bank Regulatory
Authorities will approve the reorganization and the merger of the
Bank with and into the Interim Bank, and if approvals are
granted, there can be no assurance as to the grant date of such
approvals.
DESCRIPTION OF THE HOLDING COMPANY
Organization
The Holding Company was organized as a Pennsylvania business
corporation and incorporated under Pennsylvania law on February
4, 1997, at the direction of the Board of Directors of the Bank
for the purpose of becoming a bank holding company by acquiring
all of the Bank's outstanding Common Stock. The Holding Company
has authorized five million (5,000,000) shares of Common Stock,
par value One Dollar and Twenty-five Cents ($1.25) per share.
Currently, there are two (2) shares of the Common Stock
outstanding and held by the incorporators.
The Holding Company expects to function primarily as the
holder of all of the Bank's Common Stock. It may, in the future,
acquire or form additional subsidiaries, including other banks to
the extent permitted by law.
At present, the Holding Company does not own or lease any
property and has no paid employees. It will not actively engage
in business until after the consummation of the Plan of
Reorganization and Plan of Merger. Until then, the Holding
Company will use the Bank's space and employees without payment.
Thereafter, it will reimburse the Bank on a fair and reasonable
basis for all services furnished to it.
Copies of the Articles of Incorporation and By-laws of the
Holding Company are attached to this Proxy Statement/Prospectus
as Exhibits C and D, respectively.
13
<PAGE>
Management
On the Effective Date, the Board of Directors of the Holding
Company will consist of those persons who are members of the
Board of Directors of the Bank. The directors of the Bank will
be elected annually by the Holding Company.
The officers of the Holding Company are as follows:
Name Age Position
---- --- ---------
Louis A. DeNaples 56 Chairman of the Board
J. David Lombardi 48 President and Chief
Executive Officer
Michael J. Cestone, Jr. 65 Secretary
William S. Lance 37 Treasurer
Remuneration
Because the Holding Company was not in existence in 1996, it
paid no remuneration to its directors and officers for that year.
Further, the Holding Company has paid no remuneration to its
officers to date during 1997. In the future, the Holding Company
may pay a nominal sum to each of its directors for attendance at
meetings of the Board of Directors.
Indemnification for Securities Act Liabilities
The Bank expects to extend its present directors' and
officers' liability insurance policy to cover the Holding
Company's directors and officers without significant additional
cost. This liability policy would cover the typical errors and
omissions liability associated with the activities of the Holding
Company. The provisions of the insurance policy would probably
not indemnify any of the Holding Company's officers and directors
against liability arising under the 1933 Act.
Pennsylvania Law and the By-laws of the Holding Company and
of the Interim Bank provide for broad indemnification of officers
and directors against liabilities and expenses incurred in
legal proceedings. In addition, the By-laws of the Holding
Company and the Interim Bank limit the liability of directors for
monetary damages under certain conditions.
In the opinion of the SEC, indemnification of officers,
directors or persons controlling the Holding Company for
liabilities arising under the 1933 Act is against public policy
as expressed in the Act and is therefore unenforceable.
14
<PAGE>
Supervision and Regulation of the Holding Company
The Holding Company will be subject to the jurisdiction of
the SEC and of state securities commissions for matters relating
to the offering and sale of its securities. Presently, the Bank
is exempt from such registration requirements. Accordingly,
additional issuances of Holding Company stock to raise capital
and for dividend reinvestment, stock option and other plans will
be subject to such registration (absent any exemption from
registration). Registration will require the incursion of
additional costs by the Holding Company that the Bank does not
presently have to incur.
On the Effective Date, the Holding Company will become
subject to the provisions of the Bank Holding Company Act of
1956, as amended, and to supervision by the Federal Reserve
Board. The Bank Holding Company Act requires the Holding Company
to secure prior approval of the Federal Reserve Board before
acquiring control, directly or indirectly, of more than five
percent (5%) of the voting shares or substantially all of the
assets of any institution, including another bank.
A bank holding company is prohibited from engaging in or
acquiring, direct or indirect, control of more than five percent
(5%) of the voting shares of any company engaged in non-banking
activities unless the Federal Reserve Board, by order or
regulation, has found such activities to be so closely related to
banking, managing, or controlling banks as to be a proper
incident thereto. In making this determination, the Federal
Reserve Board considers whether these activities offer benefits
to the public that outweigh any possible adverse effects.
As a bank holding company, the Holding Company will be
required to file an annual report with the Federal Reserve Board
as well as any additional information that the Federal Reserve
Board may require pursuant to the Bank Holding Company Act. The
Federal Reserve Board may also make examinations of the Holding
Company and any or all of its subsidiaries. Further, under
Section 106 of the 1970 amendments to the Bank Holding Company
Act and the Federal Reserve Board's regulations, a bank holding
company and its subsidiaries are prohibited from engaging in
certain tie-in arrangements in connection with any extension of
credit or provision of credit or provision of any property or
services. The so-called "anti-tie-in" provisions state generally
that a bank may not extend credit, lease, sell property or
furnish any service to a customer on the condition that the
customer provide additional credit or service to the bank, to its
bank holding company or to any other subsidiary of its bank
holding company or on the condition that the customer not obtain
other credit or service from a competitor of the bank, its bank
holding company or any subsidiary of its bank holding company.
Subsidiary banks of a bank holding company are subject to
certain restrictions imposed by the Federal Reserve Act on any
extensions of credit to the bank holding company or any of its
subsidiaries, on investments in the stock or other securities of
the bank holding company and on taking of such stock or
securities as collateral for loans to any borrower.
15
<PAGE>
Permitted Activities
The Federal Reserve Board permits bank holding companies to
engage in activities so closely related to banking or managing or
controlling banks as to be a proper incident thereto. While the
types of permissible activities are subject to change by the
Federal Reserve Board, the following list comprises the principal
activities that presently may be conducted by a bank holding
company.
1. Making, acquiring or servicing loans and other
extensions of credit for its own account or for the account of
others, such as would be made by the following types of
companies: consumer finance, credit card, mortgage, commercial
finance and factoring.
2. Operating as an industrial bank, Morris Plan or
industrial loan company in the manner authorized by state law so
long as the institution does not both accept demand deposits and
make commercial loans.
3. Operating as a trust company in the manner authorized by
federal or state law so long as the institution does not make
certain types of loans or investments or accept deposits, except
as may be permitted by the Federal Reserve Board.
4. Subject to certain limitations, acting as an investment
or financial advisor to investment companies and other persons.
5. Leasing personal and real property or acting as agent,
broker, or advisor in leasing property, provided that it is
reasonably anticipated that the transaction will compensate the
lessor for not less than the lessor's full investment in the
property.
6. Making equity and debt investments in corporations or
projects designed primarily to promote community welfare.
7. Providing to others financially oriented data processing
or bookkeeping services.
8. Subject to certain limitations, acting as an insurance
agent or broker in relation to insurance for itself and its
subsidiaries or for insurance directly related to extensions of
credit by the bank holding company system.
16
<PAGE>
9. Subject to certain limitations, acting as underwriter
for credit life insurance and credit accident and health
insurance that is directly related to extensions of credit by the
bank holding company system.
10. Providing courier services of a limited character.
11. Subject to certain limitations, providing management
consulting advice to nonaffiliated banks and nonbank depository
institutions.
12. Selling money orders having a face value of One Thousand
Dollars ($1,000) or less, travelers' checks and United States
savings bonds.
13. Performing appraisals of real estate.
14. Subject to certain conditions, acting as intermediary
for the financing of commercial or industrial income-producing
real estate by arranging for the transfer of the title, control
and risk of such a real estate project to one or more investors.
15. Providing securities brokerage services, related
securities credit activities pursuant to Federal Reserve Board
Regulation T and incidental activities such as offering custodial
services, individual retirement accounts and cash management
services, if the securities brokerage services are restricted to
buying and selling securities solely as agent for the account of
customers and do not include securities underwriting or dealing
or investment advice or research services.
16. Underwriting and dealing in obligations of the United
States, general obligations of states and their political
subdivisions and other obligations such as bankers' acceptances
and certificates of deposit.
17. Subject to certain limitations, providing by any means,
general information and statistical forecasting with respect to
foreign exchange markets; advisory services designed to assist
customers in monitoring, evaluating and managing their foreign
exchange exposures; and certain transactional services with
respect to foreign exchange.
18. Subject to certain limitations, acting as a futures
commission merchant in the execution and clearance on major
commodity exchanges of futures contracts and options on futures
contracts for bullion, foreign exchange, government securities,
certificates of deposit and other money market instruments.
17
<PAGE>
19. Subject to certain limitations, providing commodity
trading and futures commission merchant advice.
20. Providing consumer financial counseling that involves
counseling, educational courses and distribution of instructional
materials to individuals on consumer-oriented financial
management matters, including debt consolidation, mortgage
applications, bankruptcy, budget management, real estate tax
shelters, tax planning, retirement and estate planning, insurance
and general investment management, so long as this activity does
not include the sale of specific products or investments.
21. Providing tax planning and preparation advice such as
strategies designed to minimize tax liabilities and includes, for
individuals, analysis of the tax implications of retirement
plans, estate planning and family trusts. For corporations, tax
planning includes the analysis of the tax implications of mergers
and acquisitions, portfolio mix, specific investments, previous
tax payments and year-end tax planning. Tax preparation involves
the preparation of tax forms and advice concerning liability
based on records and receipts supplied by the client.
22. Providing check guaranty services to subscribing
merchants.
23. Subject to certain limitations, operating a collection
agency and credit bureau.
24. Acquiring and operating thrift institutions, including
savings and loan associations, building and loan associations and
FDIC-insured savings banks.
25. Operating a credit bureau, subject to certain
limitations.
Issuance of Additional Securities
Because the Holding Company has authorized Common Stock
substantially in excess of the number of shares that will be
issued in connection with the Plan of Reorganization, the Board
of Directors of the Holding Company will have the flexibility to
raise additional capital and to make acquisitions through the
issuance of Holding Company Common Stock without further approval
by the Holding Company's shareholders. The Holding Company
shareholders will not have preemptive rights to subscribe for
additional shares. Therefore, such issuance could result in a
dilution of voting rights and book value per share as to the
Common Stock of the Holding Company. The Board of Directors of
the Holding Company has no present plans for issuing additional
shares of Holding Company Common Stock.
18
<PAGE>
ELECTION OF DIRECTORS
Eleven (11) directors of the Bank are to be elected at the
Annual Meeting of Shareholders. Each director will serve for a
term of one year, and until his successor is elected and
qualified. Unless otherwise instructed, the Proxyholders will
vote the Proxies received by them for the election of the eleven
nominees named below in equal amounts. If any nominee should
become unavailable for any reason, Proxies will be voted in favor
of a substitute nominee as the Board of Directors shall
determine. The Board of Directors has no reason to believe that
the nominees named will be unable to serve, if elected. Any
vacancy occurring on the Board of Directors of the Bank for any
reason may be filled by a majority of the directors then in
office until the expiration of term of the vacancy.
There is cumulative voting for the election of directors.
Cumulative voting entitles a shareholder to multiply the number
of votes to which a shareholder is entitled by the total number
of directors to be elected. A shareholder may cast the total
number of these votes for one candidate or may distribute the
votes among two or more candidates for director. Mr. Leonard A.
Verrasto and Mr. William P. Conaboy, Esq., the persons named as
proxies, will have the right to vote cumulatively and to
distribute their votes among nominees as they consider advisable,
unless a shareholder indicates on his or her Proxy how he or she
desires the votes to be cumulated for voting purposes.
Information as to Nominees and Directors
The following table contains certain information with
respect to the Nominees for Director and the Current Directors:
<TABLE>
<CAPTION>
Principal
Occupation For
Past Five Years
Age as of and Position Held
Name February 28, 1997 with the Bank
- ---- ----------------- ----------------
<S> <C> <C>
NOMINEES FOR DIRECTOR
(to serve until 1998)
AND CURRENT DIRECTORS
(to serve until 1997)
- ---------------------
Angelo F. Bistocchi 77 Retired
Restauranteur;
Vice President
of the Board of
the Bank since
1978
Michael G. Cestone<F1> 35 President, S.G.
Mastriani
Company (General
Contractor)
Michael J. Cestone, Jr.<F1> 65 President, M.R.
Company (Real
Estate
Corporation);
CEO, S.G.
Mastriani
Company;
Secretary of the
Board since 1971
Dominick L. DeNaples<F2> 59 President, F&L
Realty Corp.;
Vice President,
DeNaples Auto
Parts, Inc.; Vice
President,
Keystone
Landfill, Inc.
Louis A. DeNaples<F2> 56 President,
DeNaples Auto
Parts, Inc.;
President,
Keystone
Landfill, Inc.;
Vice President,
F&L Realty Corp;
Chairman of the
Board since 1988
Joseph J. Gentile 66 President,
Dunmore Oil Co.,
Inc.
Martin F. Gibbons 81 Partner, Gibbons
Ford
Joseph O. Haggerty 57 Retired
Superintendent,
Dunmore
School District
George N. Juba 71 Consultant to the
Bank since 1988;
President of the
Bank from 1978-
1988
J. David Lombardi 48 President and
Chief Executive
Officer of the
Bank since 1988
John R. Thomas 79 Chairman of the
Board, Wesel
Manufacturing
Company (design
and manufacturing
of precision
machinery)
<CAPTION>
Name Director Since
---- --------------
<S> <C>
NOMINEES FOR DIRECTOR
(to serve until 1998)
AND CURRENT DIRECTORS
(to serve until 1997)
- ---------------------
Angelo F. Bistocchi 1971
Michael G. Cestone 1988
Michael J. Cestone, Jr. 1969
19
<PAGE>
Dominick L. DeNaples 1987
Louis A. DeNaples 1972
Joseph J. Gentile 1989
Martin F. Gibbons 1979
Joseph O. Haggerty 1987
George N. Juba 1973
J. David Lombardi 1986
John R. Thomas 1967
<FN>
<F1> Michael G. Cestone is the son of Michael J. Cestone, Jr.
<F2> Louis A. DeNaples and Dominick L. DeNaples are brothers.
</FN>
</TABLE>
During 1996, the Bank's Board of Directors held twenty-three
(23) meetings. Each of the directors attended at least 75% of
the combined total number of meetings of the Bank's Board of
Directors and the committees of which he is a member, with the
exception of Mr. Martin F. Gibbons.
The directors generally function as a full board. In lieu
of a nominating committee, the full Board nominates the slate for
the election of the Board of Directors. In lieu of a
compensation committee, the full Board appoints and sets
compensation of officers and directors. In lieu of an audit
committee, the full Board appoints the independent outside
accountants to conduct external audits of the Bank's books,
records and procedures and meets with the outside accountants to
discuss the results of their audits. To assure maximum
independence and candor in the internal audit function,
management director Lombardi, who serves as President and Chief
Executive Officer of the Bank, does not participate in the
Board's deliberations when the Board
20
<PAGE>
receives reports from its internal auditor. During 1996 the
Board held 4 meetings of this type. All non-management members
attended at least 75% of these meetings except Mr. Martin F.
Gibbons.
In 1993, the Board of Directors established a Senior Loan
Committee to meet on alternating weeks as deemed necessary.
Membership on this committee shall consist of (a) the Chairman,
President and Chief Executive Officer will serve as permanent
members, and (b) other members of the Board of Directors will be
appointed on a rotating basis quarterly, with no more than three
members appointed from this group at any one time. In 1996,
there were 13 Meetings of the Senior Loan Committee. Each
appointed director was present for more than 75% of these
meetings, except Mr. Martin F. Gibbons.
Board of Directors Interlocks and Insider Participation
J. David Lombardi, President and Chief Executive Officer of
the Bank, is a member of the Board of Directors. Mr. Lombardi
makes recommendations to the Board of Directors regarding
compensation for employees. Mr. Lombardi does not participate in
conducting his own review. The entire Board of Directors votes
to establish and approve the Bank's compensation policies.
EXECUTIVE COMPENSATION
Shown below is information concerning the annual
compensation for services in all capacities to the Bank for the
fiscal years ended December 31, 1996, 1995 and 1994 of those
persons who were, at December 31, 1996, (i) the Chief Executive
Officer, and (ii) the four other most highly compensated
executive officers of the Bank to the extent such persons' total
annual salary and bonus exceeded $100,000:
21
<PAGE>
<TABLE>
Summary Compensation Table
<CAPTION>
Annual Compensation
--------------------
(a) (b) (c) (d) (e)
Other
Annual
Names and Comp-
Principal Salary Bonus ensation
Position Year ($)<F1> ($)<F2> ($)<F3>
- --------- ---- ------- ------- --------
<S> <C> <C> <C> <C>
J. David Lombardi 1996 159,000 175,000 --
President and Chief 1995 159,000 150,000 --
Executive Officer 1994 149,000 125,000 --
Thomas P. Tulaney 1996 78,000 25,000 --
Senior Vice 1995 75,000 22,000 --
President 1994 23,077 10,000 --
<CAPTION>
Long-Term Compensation
----------------------
Awards Payouts
------ -------
(a) (f) (g) (h) (i)
Restrict- All
ed Other
Names and Stock Option/ LTIP Comp-
Principal Award(s) SARs Pay- ensation
Position ($) (#) outs($) ($)(#)<F4>
- --------- ----- ------ ------- --------
<S> <C> <C> <C> <C>
J. David Lombardi -- -- -- 23,279
President and Chief -- -- -- 29,214
Officer -- -- -- 29,279
Thomas Tulaney -- -- -- 9,427
Senior Vice -- -- -- --
President -- -- -- --
____________________________
<FN>
<F1> Includes directors' fees of $24,000 in each of 1994, 1995
and 1996, for Mr. Lombardi.
<F2> Cash bonuses are awarded at the conclusion of a fiscal year
based upon the Board of Directors' subjective assessment of the
Bank's performance as compared to both budget and prior fiscal
year performance, and the individual contributions of the
officers involved.
<F3> The named executive officer did not receive perquisites or
other personal benefits during 1996 which, in the aggregate, cost
the Bank the lesser of $50,000 or 10% of the named executive
officers' salary and bonus earned during the year. Perquisites
and other personal benefits which were received by the named
executives were valued based on their cost to the Bank.
<F4> For Mr. Lombardi, includes $13,771, $13,706 and $14,133
contributed by the Bank pursuant to the Employees' Profit Sharing
Plan for 1996, 1995 and 1994, respectively and includes
director's bonus of $7,500, $13,500 and $13,500 for 1996, 1995
and 1994, respectively. Also includes $2,008 in premiums paid to
purchase additional life insurance in each of the years 1996,
1995 and 1994. For Mr. Tulaney, represents amount contributed by
the Bank to the Employees' Profit Sharing Plan in 1996 in the
amount shown.
</FN>
</TABLE>
Profit Sharing Plan
In 1969, the Bank adopted a Profit Sharing Plan (the "Plan")
which was subsequently amended to comply with the Employee
Retirement Income Security Act of 1974 and the Tax Equity and
Fiscal Responsibility Act of 1982. Under the Plan, any employee
who has attained the age of twenty-one (21) shall be eligible to
become a Plan Participant on the earlier of the first
22
<PAGE>
day of the seventh month or the first day of the Plan year
coinciding with or following the date on which he/she has met the
eligibility requirement. In no event shall participation
commence later than six (6) months after the date an employee
satisfies the service requirements. The Plan provides for
progressive vesting of an employee's interest in the amount
accrued to his/her respective account calculated by the
percentage portion of the value of the account which is
nonforfeitable based upon years of service. The vesting schedule
is as follows:
Years of Service Nonforfeitable Percentage
---------------- --------------------------
less than 3 0%
3 but less than 4 20%
4 but less than 5 40%
5 but less than 6 60%
6 but less than 7 80%
7 years and at Normal Retirement 100%
________________________________
Upon normal retirement, death prior to retirement, or
permanent disability, the employee is entitled to one hundred
percent (100%) of the amount credited to his/her account and,
except that, in the event of voluntary termination or termination
for cause prior to the end of three years of continuous
employment the amount credited to the employee's account is
forfeited. The maximum amount of the Bank's annual contribution
is fifteen percent (15%) of the aggregate salaries of all
participants under the Plan, or such other amount as determined
by the Board of Directors considering net profits of the Bank for
the year. In no event may such contribution exceed the amount
deductible by the Bank for federal income tax purposes. During
the year ended December 31, 1996, the Bank contributed $190,000
under the Plan for all participants. The following amount was
contributed on behalf of the individuals named in the summary
compensation table: Mr. Lombardi, $13,771, Mr. Tulaney, $9,427.
Directors who are not also officers or employees of the Bank are
not eligible to participate in this Plan.
Employment Agreement
The Bank entered into an employment agreement with Mr. J.
David Lombardi, President and Chief Executive Officer, effective
on January 1, 1990, and amended September 28, 1994. This
agreement is designed to assist the Bank in retaining a highly
qualified executive and to help ensure that if the Bank is faced
with an unsolicited tender offer proposal, Mr. Lombardi will
continue to manage the Bank without being unduly distracted by
the uncertainties of his personal affairs and thereby will be
better able to assist in evaluating such a proposal in an
objective manner.
23
<PAGE>
The agreement provided for a base annual salary of $135,000
in 1996. Additional compensation by way of salary increases,
bonuses or fringe benefits may be established from time to time
by appropriate Board action. The agreement does not preclude Mr.
Lombardi from serving as a director of the Bank and receiving
related fees.
The agreement may be terminated by the Bank with or without
"just cause" ("just cause" is defined in the agreement), or upon
death, permanent disability, or normal retirement of Mr.
Lombardi, or, upon the termination of Mr. Lombardi's employment
by resignation or otherwise. In the event employment is
terminated with "just cause", Mr. Lombardi shall receive a salary
payment at his then effective base salary as if his employment
had not been terminated for a period of three months, excluding
bonuses or fringe or supplemental payments theretofore authorized
by the Board of Directors. In the event that the termination of
employment is occasioned by the Bank without "just cause", Mr.
Lombardi shall continue to receive each month for a period of two
years from the effective date of termination: (1) his monthly
base salary payments from the Bank at the rate in effect on the
date of the termination; (2) his monthly Board of Directors fees;
and (3) one-twelfth of the average of the bonuses paid to him
over the preceding three years; all computed as if his employment
had not been terminated.
In the event that there is a "change in control" (as defined
in the agreement) and as a result thereof Mr. Lombardi's
employment is terminated or his duties or authority are
substantially diminished or he is removed from the office of
Chief Executive Officer of the reorganized employer, Mr. Lombardi
may terminate the employment by giving notice to the Bank within
sixty days of the occurrence of the "change in control." Upon
such termination, the Bank is obligated to pay Mr. Lombardi the
total sum of the following: (1) three times his then annual base
salary which was in effect as of the date of the change in
control; (2) three times his then annual Board of Director's fee;
and (3) three times the average of his bonuses for the prior
three years.
Subsequent to termination, Mr. Lombardi shall not accept
employment in any office or branch of any financial institution
or subsidiary thereof in Lackawanna County for a period of three
years, unless such severance was made by the Bank without "just
cause."
Compensation of Directors
Members of the Board of Directors are compensated at the
rate of $1,000 per Board meeting, including four (4) compensated
absences at full compensation, after which members are not paid
for any unexcused absence. Excused absences are limited to
non-attendance due to other bank business. The aggregate amount
of
such fees paid in 1996 was $275,000. In 1996, Michael J.
Cestone, Jr., George N. Juba and John R. Thomas were compensated
$30,381, in the aggregate, for special services (respectively
Secretary, Special Consultant and Investment Advisor)rendered to
the Bank. All directors of the Bank also received a bonus of
$7,500 in 1996. Members of the Bank's Senior Loan Committee do
not receive a fee for attendance at Senior Loan Committee
meetings.
24
<PAGE>
DESCRIPTION OF THE BANK
History and Business
The Bank was organized in 1910 as a national banking
association, and is under the supervision of the OCC. Its
principal office is located at 102 East Drinker Street, Dunmore,
Pennsylvania 18512-2491. The Bank has one wholly-owned
subsidiary, FNCB Realty, Inc., which was formed to manage,
operate and liquidate properties acquired by the Bank through
foreclosure.
As of December 31, 1996, the Bank had total assets of
approximately Three Hundred Seventy-two Million, Four Hundred
Sixty-four Thousand Dollars ($372,464,000), total shareholders'
equity of approximately Twenty-seven Million Six hundred
Thirty-one Thousand Dollars ($27,631,000), total liabilities of
approximately Three Hundred Forty-four Million Eight Hundred
Thirty-three Thousand Dollars ($344,833,000), of which total
deposits amounted to approximately Three Hundred Twenty Million
Nine Hundred Ninety-five Thousand Dollars ($320,995,000).
Major classifications of loans are summarized as follows:
<TABLE>
<CAPTION>
In Thousands of Dollars
-------------------------------------
Dec. 31, Dec. 31, Dec. 31,
1996 1995 1994
<S> <C> <C> <C>
Loan Classifications:
Commercial and
Industrial $ 29,625 $ 26,987 $ 21,915
Agricultural 0 0 0
Real Estate
Mortgages<F1> 181,455 165,362 153,248
Loans to Individuals 43,200 31,252 15,465
Loans to Municipal
Governments 8,049 8,588 4,743
All Other Loans 736 291 198
Less Unearned Income (18) (37) (65)
Less Allowance for
Loan Losses (3,167) (2,800) (2,250)
----------- --------- ---------
Net Loans $259,880 $229,643 $193,254
=========== ========= ========
<CAPTION>
In Thousands of Dollars
---------------------------
Dec. 31,
1993
<S> <C>
Loan Classifications:
Commercial and
Industrial $ 22,605
Agricultural 0
Real Estate
Mortgages<F1> 124,952
Loans to Individuals 9,479
Loans to Municipal
Governments 3,639
All Other Loans 449
Less Unearned Income (153)
Less Allowance for
Loan Losses (2,027)
---------
Net Loans $158,944
========
_______________________
<FN>
<F1> Includes commercial mortgages.
</FN>
</TABLE>
The Bank engages in a full-service commercial banking
business, including accepting time and demand deposits, and
making secured and unsecured commercial and consumer loans. The
Bank's business is not seasonal in nature. The Bank's deposits
are insured by the Federal Deposit Insurance Corporation (the
"FDIC") to the extent provided by law.
25
<PAGE>
On December 31, 1996, the Bank had One Hundred Fifty-five
(155) full-time equivalent employees. The Bank owns its Main
Office.
Competition
The Bank competes actively with other area commercial banks
and savings and loan associations, many of which are larger than
the Bank, as well as with major regional banking and financial
institutions headquartered in other areas of Pennsylvania. The
Bank's major competitors are located in Lackawanna and Luzerne
Counties, Pennsylvania. Specifically, the Bank is one of two
financial institutions with principal offices in Dunmore.
Primary competition in the Dunmore, Scranton and Lackawanna
County markets comes from several commercial banks and savings
and loan associations operating in these areas. The Bank's
Luzerne County offices share many of the same competitors as in
Lackawanna County as well as several banks and savings & loans
that are not in the Lackawanna County market. Deposit
deregulation has intensified the competition for deposits among
banks in recent years. The Bank, however, is generally
competitive with all financial institutions in its service area
with respect to interest rates paid on time and savings deposits,
service charges on deposit accounts and interest rates charged on
loans. Additional competition is derived from credit unions,
finance companies, brokerage firms, insurance companies and
retailers.
Supervision and Regulation of the Bank
(See also "Supervision and Regulation of the Holding Company",
supra.)
The operations of the Bank are subject to federal and state
statutes applicable to banks chartered under the banking laws of
the United States, to members of the Federal Reserve System and
to banks whose deposits are insured by the FDIC. Bank operations
are also subject to regulation of the OCC, the Federal Reserve
Board and the FDIC. The proposed reorganization will not affect
the authority of these agencies over the Bank.
The OCC has primary supervisory authority over the Bank and
regularly examines the Bank. The OCC has the authority to
prevent a national bank, such as the Bank, from engaging in an
unsafe or unsound practice in conducting its business.
Federal and state banking laws and regulations govern, among
other things, the scope of a bank's business, a bank's
investments, a bank's reserves against deposits, a bank's loans,
interest rates, the activities of a bank with respect to mergers
and consolidations and the establishment of branches. Under
Pennsylvania law, all banks in Pennsylvania are permitted to
establish or acquire branch offices in any county of the state.
National bank branches may be established within the permitted
area only after approval by the OCC. The OCC is required to
grant approval only if it finds that there is a need for banking
services or facilities such as those contemplated by the proposed
branch and may disapprove the application if the bank does not
have the capital and surplus deemed necessary by the OCC. The
OCC may also disapprove the application if it relates to the
establishment of a branch in a county contiguous to the county in
26
<PAGE>
which the applicant's principal place of business is located and
another banking institution that has its principal place of
business in the county of the proposed location has in good faith
notified the OCC of its intention to establish a branch in the
same municipal location of the proposed branch site.
Multi-bank holding companies are permitted in Pennsylvania
within certain limitations. See section entitled "Reasons for
the Proposed Reorganization - Multi-Bank Holding Companies and
Statewide Branching".
The Federal Reserve System
The Federal Reserve System is managed through a tripartite
hierarchy headed by the Federal Reserve Board, which oversees the
entire system. The second-level of the hierarchy is the twelve
Federal Reserve banks and their branches spread throughout the
nation's twelve Federal Reserve districts. The third level in
the Federal Reserve System's structure is the member banks of
each district. These banks act in concert with the Federal
Reserve banks to perform the actual operations of the Federal
Reserve System, including such functions as furnishing an elastic
currency and affording means of rediscounting commercial paper.
The Federal Reserve System is at the center of the nation's
stable financial and economic system. The Federal Reserve banks
are the means through which the Federal Reserve System
effectuates its goals of maintaining financial and economic
stability.
A subsidiary bank of a bank holding company (which the Bank
would become on the Effective Date,) is subject to certain
restrictions imposed by the Federal Reserve Act on any extensions
of credit to the bank holding company or its subsidiaries, on
investments in the stock or other securities of the bank holding
company or its subsidiaries and on taking such stock or
securities as collateral for loans. The Federal Reserve Act and
Federal Reserve Board regulations also place certain limitations
and reporting requirements on extensions of credit by a bank to
principal shareholders of its parent holding company, among
others, and to related interests of such principal shareholders.
In addition, legislation and regulations may affect the terms
upon which any person becoming a principal shareholder of a
holding company may obtain credit from banks with which the
subsidiary bank maintains a correspondent relationship.
Monetary Policy
The earnings of the Bank are affected by the policies of
regulatory authorities, including the OCC and the Federal Reserve
Board. An important function of the Federal Reserve System is to
regulate the money supply and interest rates. Among the
instruments used to implement these objectives are open market
operations in United States government securities, changes in
reserve requirements against member bank deposits and limitations
on interest rates that member banks may pay on time and savings
deposits. These instruments are used in varying combinations to
influence overall growth and distribution of bank loans,
investments and deposits, and their use may also affect rates
charged on loans or paid for deposits.
27
<PAGE>
The Bank is a member of the Federal Reserve System and,
therefore, the policies and regulations of the Federal Reserve
Board have had and will continue to have a significant effect on
deposits, loans and investment growth, as well as the rate of
interest earned and paid, and are expected to affect the Bank's
operations in the future. Neither the Holding Company nor the
Bank can predict the effect of such policies and regulations upon
the future business and earnings of the Bank.
From time to time, various types of federal and state
legislation are proposed that could result in additional
regulation of, and restrictions on, the business of the Bank.
The Bank cannot predict whether any such legislation will be
adopted or how such legislation would affect the business of the
Bank. As a consequence of the extensive regulation of commercial
banking activities in the United States, the Bank's business is
particularly susceptible to being affected by federal legislation
and regulations that may increase the cost of doing business.
Deposit Insurance
The Bank's deposits are insured by the FDIC pursuant to the
system of federal deposit insurance initially established by the
Banking Act of 1933. The Monetary Control Act of 1980 increased
the coverage of FDIC insurance from Forty Thousand Dollars
($40,000) to One Hundred Thousand Dollars ($100,000) per deposit
account. The Bank pays insurance premiums into the Bank
Insurance Fund ("BIF") according to rates established by the
FDIC. The FDIC Improvement Act of 1991 ("FDICIA"), enacted in
part to prevent the insolvency of the deposit insurance funds,
authorized the FDIC to raise insurance premium assessments in
order to achieve and maintain an adequate level of funds. The
depletion of the deposit insurance funds was due, in part, to the
failure of a large number of financial institutions in the 1980s,
and the requisite increased deposit account coverage.
Due to the health of the banking industry, the FDIC
established a new rate schedule in 1996. The new rate schedule
substantially reduces the cost of deposit insurance for BIF
insured institutions.
Although the FDIC reduced the assessment rate, the FDIC has
discretion to increase the assessment in the future in response
to changes in the economic climate of the banking industry. As a
result, the future cost of deposit insurance for the Bank is, in
large part, dependent upon the extent of future bank failures and
the amount of insurance coverage provided by the FDIC for each
deposit account, neither of which are within the Bank's control.
Moreover, because the current insurance premium assessment system
differentiates between higher and lower risk institutions, with
lower premiums assessed against institutions in a lower risk
category, the Bank's future cost of deposit insurance will depend
upon its risk-rating. The Bank is currently in the FDIC's lowest
risk category.
28
<PAGE>
Legislation
Federal law, including the Change in Bank Control Act of
1978 ("CBCA"), prohibits acquisitions of control of a bank
without prior notice to certain federal bank regulators.
"Control" is defined for this purpose as the power, directly or
indirectly, to direct the management or policies of the bank or
to vote twenty-five percent (25%) or more of any class of voting
securities of a bank.
Under the Federal Deposit Insurance Act ("FDIA"), the OCC
possesses the power to prohibit institutions, such as the Bank,
from engaging in any activity that would be an unsafe and unsound
banking practice and in violation of the law. Moreover, the
Financial Institutions Regulatory and Interest Rate Control Act
of 1978 ("FIRA") generally expanded the circumstances under which
officers or directors of a bank may be removed by the bank's
federal supervisory agency, restricted lending by a bank to its
executive officers, directors, principal shareholders or related
interests thereof and restricts management personnel of a bank
from serving as directors or in other management positions with
certain depository institutions whose assets exceed a specified
amount or which have an office within a specified geographic
area, and restricts management personnel from borrowing from
another institution that has a correspondent relationship with
their bank. Additionally, FIRA requires that no person may
acquire control of a bank unless the appropriate federal
supervisory agency has been given sixty (60) days prior written
notice and within that time has not disapproved the acquisition
or extended the period for disapproval.
Control for purposes of FIRA, means the power, directly or
indirectly, to direct the management or policies or to vote
twenty-five percent (25%) or more of any class of outstanding
stock of a financial institution or its respective holding
company. A person or group holding revocable proxies to vote
twenty-five percent (25%) or more of the outstanding stock of a
financial institution or bank holding company, such as the
Holding Company, would presumably be deemed to control the
institution for purposes of FIRA.
The Garn-St. Germain Depository Institutions Act of 1982
("Garn-St. Germain"), removed certain restrictions on a bank's
lending powers and liberalizes its depository capabilities.
Garn-St. Germain also strengthened FIRA (see above) by
eliminating the statutory limits on lending by a bank to its
executive officers, directors, principal shareholders or related
interests thereof and by relaxing certain reporting requirements.
Garn-St. Germain, however, also tightened FIRA provisions
respecting management interlocks and correspondent bank
relationships by management personnel.
Under the Community Reinvestment Act of 1977, as amended,
("CRA"), the OCC is required to assess the record of all
financial institutions regulated by it to determine if these
institutions are meeting the credit needs of the community
(including low and moderate-income neighborhoods) which they
serve and to take this record into account in its evaluation of
any application made by any such institutions for, among other
things, approval of a branch or other
29
<PAGE>
deposit facility, office relocation, a merger or an acquisition
of bank shares. The Financial Institutions Reform, Recovery and
Enforcement Act of 1989 ("FIRREA", see below) amended the CRA to
require, among other things, that the OCC make publicly available
the evaluation of a bank's record of meeting the credit needs of
its entire community, including low- and moderate-income
neighborhoods. This evaluation will include a descriptive rating
("outstanding," "satisfactory," "needs to improve," or
"substantial noncompliance") and a statement describing the basis
for the rating. These ratings are publicly disclosed.
In April, 1995, regulators revised CRA with an emphasis on
performance over process and documentation. Under the revised
rules, the five-point rating scale is still utilized; however,
the twelve (12) assessment factors have been replaced with a
three-prong test. A bank's compliance is determined by a
three-prong test whereby examiners assign a numerical score for a
bank's performance in each of three areas: lending, service and
investment. The area of lending is weighted to increase its
importance in the application of the test. The rule became
effective July 1, 1995.
When rating a bank in the area of lending, regulators
examine the number and amount of loan originations, the location
of where the loans were made, and the income levels of the
borrowers. Although banks, under the revised rules, are not
required to make loans in every area, if there are apparent
tracts in which there is little lending, examiners will focus
their investigations in that area.
The service prong evaluates how a bank delivers its products
to the community through branching. As with lending, banks are
not required to branch in every area, although conspicuous gaps
will be investigated.
The third prong, investment in community, examines how the
bank meets the investment needs in the community within which it
operates. Assessment of investment is accomplished using a
"performance context" pursuant to which regulators meet with
civic, community and bank officials in order to determine the
credit needs of the community.
Expanded Home Mortgage Disclosure Act reporting requirements
were also approved for large banks and thrifts which require
reporting of census tract data on mortgages made outside of the
delineated communities. In addition, effective March 1, 1997,
institutions with assets above Two Hundred Fifty Million Dollars
($250,000,000) will be required to report their aggregate small
business loans made by geographic region.
Independent banks with total assets of less than Two Hundred
Fifty Million Dollars ($250,000,000) and bank subsidiaries with
total assets of less than Two Hundred Fifty Million Dollars
($250,000,000) that have holding companies with total assets of
less than One Billion Dollars ($1,000,000,000) will be subjected
to less stringent CRA examinations.
30
<PAGE>
Under the new regulation, banks will enjoy a reduction in
compliance burden. Specifically, banks are not required to keep
extensive documentation to prove that directors have participated
in drafting and review of CRA policies. A formal CRA statement
does not have to be prepared. The efforts banks make to market
in low- and moderate-income communities do not have to be
documented, nor will banks have to justify the basis for their
community delineation or the methods utilized to determine the
credit needs of the community.
Under the Bank Secrecy Act ("BSA"), banks and other
financial institutions are required to report to the Internal
Revenue Service currency transactions of more than Ten Thousand
Dollars ($10,000) or multiple transactions of which the Bank is
aware in any one day that aggregate in excess of Ten Thousand
Dollars ($10,000). Civil and criminal penalties are provided
under the BSA for failure to file a required report, for failure
to supply information required by the BSA or for filing a false
or fraudulent report.
An omnibus federal banking bill, known as the Competitive
Equality Banking Act ("CEBA"), was signed into law on August 10,
1987. Included in the legislation were measures: (1) imposing
certain restrictions on transactions between banks and their
affiliates; (2) expanding the powers available to federal bank
regulators in assisting failed and failing banks; (3) limiting
the amount of time banks may hold certain deposits prior to
making such funds available for withdrawal and any interest
thereon; and (4) requiring that any adjustable rate mortgage loan
and secured by a lien on a one- to four-family dwelling include a
limitation on the maximum rate at which interest may accrue on
the principal balance during the term of such loan. This
legislation has not had a material adverse effect on the Bank's
anticipated operations or its competitive position.
The Financial Institutions Reform, Recovery and Enforcement
Act of 1989 ("FIRREA") was primarily enacted to improve the
supervision of savings associations by strengthening capital,
accounting and other supervisory standards. In addition, FIRREA
reorganized the FDIC by creating two deposit insurance funds to
be administered by the FDIC: the Savings Association Insurance
Fund and the Bank Insurance Fund.
FIRREA reformed real estate appraisal proceedings and the
existing supervisory/ enforcement powers and penalty provisions
in connection with the regulation of the Bank under FIRREA, civil
monetary penalties are classified into three levels, with amounts
increasing with the severity of the violation. The first tier
provides for civil penalties of up to Five Thousand Dollars
($5,000) per day for any violation of law or regulation. A civil
penalty of up to Twenty-five Thousand Dollars ($25,000) per day
may be assessed if more than a minimal loss or a pattern of
misconduct is involved. Finally, a civil penalty of up to One
Million Dollars ($1,000,000) per day may be assessed for
knowingly or recklessly causing a substantial loss to an
institution or taking action that results in a substantial
pecuniary gain or other benefit. Criminal penalties are
increased to One Million Dollars ($1,000,000) per violation, and
up to Five Million Dollars ($5,000,000) for continuing violations
or for the actual amount of gain or loss. These monetary
penalties may be combined with prison sentences for up to five
(5) years. Management is of the opinion that these additional
reforms have not materially impacted the results of operations of
the Bank.
31
<PAGE>
Regulatory Capital
The FDIC and other federal bank regulatory agencies have issued
risk-based capital guidelines which supplement leverage capital
requirements. As of December 31, 1992, the guidelines require
all United States banks and bank holding companies to maintain a
minimum risk-based capital ratio of eight percent (8%), of which
at least four percent (4%) must be in the form of common
stockholders' equity. Assets are assigned to categories with
higher levels of capital required for the categories perceived as
representing greater risk. The required capital ratios represent
equity, and to the extent permitted, non-equity capital as a
percentage of total risk-weighted assets. The risk-based capital
rules are designed to make regulatory capital requirements more
sensitive to differences in risk profiles among banks and bank
holding companies and to minimize disincentives for holding
liquid assets. The risk-based capital rules have not had a
material effect on the Bank's business and capital plans.
On December 19, 1991, the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA") became law. Under
FDICIA, institutions must be classified, based on their
risk-based capital ratios, into one of five defined categories,
as
illustrated below (well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized and critically
undercapitalized).
<TABLE>
<CAPTION>
Total Tier 1 Under a
Risk- Risk- Tier 1 Capital
Based Based Leverage Order or
Ratio Ratio Ratio Directive
----- ------ -------- ---------
<S> <C> <C> <C> <C>
CAPITAL CATEGORY
Well capitalized >10.0 >6.0 >5.0 No
- - -
Adequately
capitalized >8.0 >4.0 >4.0<*>
- - -
Undercapitalized <8.0 <4.0 <4.0<*>
Significantly
undercapitalized <6.0 <3.0 <3.0
Critically
undercapitalized <2.0
-
<FN>
<*> 3.0 for those banks having the highest available regulatory
rating.
</FN>
</TABLE>
In the event an institution's capital deteriorates to the
undercapitalized category or below, FDICIA prescribes an
increasing amount of regulatory intervention, including: (1) the
institution of a capital restoration plan and a guarantee of the
plan by a parent institution; and (2) the placement of a hold on
increases in assets, number of branches or lines of business. If
capital has reached the significantly or critically
undercapitalized levels, further material restrictions can be
imposed, including restrictions on interest payable on accounts,
dismissal of management and (in critically undercapitalized
situations) appointment of a receiver. For well capitalized
institutions, FDICIA provides authority for regulatory
intervention where the institution is deemed to be engaging in
unsafe or unsound practices or receives a less than satisfactory
examination report rating for asset quality, management, earnings
or liquidity. All but well capitalized institutions are
prohibited from accepting brokered deposits without prior
regulatory approval.
32
<PAGE>
Under FDICIA, financial institutions are subject to
increased regulatory scrutiny and must comply with certain
operational, managerial and compensation standards to be
developed by Federal Reserve Board regulations. FDICIA also
requires the regulators to issue new rules establishing certain
minimum standards to which an institution must adhere including
standards requiring a minimum ratio of classified assets to
capital, minimum earnings necessary to absorb losses and minimum
ratio of market value to book value for publicly held
institutions. Additional regulations are required to be
developed relating to internal controls, loan documentation,
credit underwriting, interest rate exposure, asset growth and
excessive compensation, fees and benefits.
Examinations and Audits
Annual full-scope, on site examinations are required for all
FDIC-insured institutions except institutions with assets under
Two Hundred Fifty Million Dollars ($250,000,000) which are well
capitalized, well-managed and not subject to a recent change in
control, in which case, the examination period is every eighteen
(18) months. Banks with total assets of Five Hundred Million
Dollars ($500,000,000) or more as of the beginning of a fiscal
year, are required to submit to their supervising federal and
state banking agencies a publicly available annual audit report.
The independent accountants of such bank shall attest to the
accuracy of management's report. The accountants shall also
monitor management's compliance with governing laws and
regulations. In addition, banks with assets of Five Hundred
Million Dollars ($500,000,000) or more as of the beginning of a
fiscal year are also required to select an independent audit
committee composed of outside directors who are independent of
management, to review with management and the independent
accountants the reports that must be submitted to the bank
regulatory agencies. If the independent accountants resign or
are dismissed, written notification thereof must be given to the
bank's supervising government banking agencies.
The OCC has issued new guidelines for identifying risks in
concentrated credit. In particular, the OCC now requires that
all full-scope safety and soundness examinations of national
banks will include a separate page (until now this page has been
optional) which details the types and levels of loan
concentrations issued by such banks. The OCC examiners will
examine excessive amounts of credit obligations endorsed or
co-signed by related parties. Banks found to have in excessive
of
twenty-five percent (25%) of their capital subject to risky loans
or non-traditional banking activities and that fail to adequately
manage these risks, could be ordered to set aside more than eight
percent (8%) of their total capital as a cushion against loss.
Real Estate Loans
FDICIA also requires that banking agencies reintroduce
loan-to-value ("LTV") ratio regulations which were previously
repealed by
the 1982 Act. LTV's will limit the amount of money a financial
institution may lend to a borrower, when the loan is secured by
real estate, to no more than a percentage to be set by regulation
of the value of the real estate.
A separate subtitle within FDICIA, called the "Bank
Enterprise Act of 1991", requires "Truth-In-Savings" on consumer
deposit accounts so that consumers can make meaningful
comparisons between the competing claims of banks with regard to
deposit accounts and products. Under this provision, the Bank
will be required to provide information to depositors concerning
the terms of their deposit accounts, and in particular, to
disclose the annual percentage yield. There are operational
costs involved in complying with the Truth-In-Savings law.
33
<PAGE>
For a discussion of the Interstate Banking and Branching
Act, see section entitled "PROPOSED REORGANIZATION - Reasons for
the Proposed Organization - Interstate Banking and Branching".
Legal Proceedings
The nature of the Bank's business generates a certain amount
of litigation involving matters arising in the ordinary course of
business. In the opinion of management of the Bank, however,
there are no proceedings pending to which the Bank is a party or
to which its property is subject, which, if determined adversely
to the Bank, would be material in relation to the Bank's
undivided profits or financial condition, nor are there any
proceedings pending other than ordinary routine litigation
incident to the business of the Bank. In addition, no material
proceedings are pending or are known to be threatened or
contemplated against the Bank by government authorities or
others.
Directors
The following table sets forth selected information about
the directors of the Bank.
<TABLE>
<CAPTION>
Principal
Occupation Age as of
For the Past Director February 28,
Name Five Years Since 1997
- ---- ------------ --------- ------------
<S> <C> <C> <C>
Angelo F.
Bistocchi Retired Restauranteur 1971 77
Michael G. President, S.G. 1988 34
Cestone<F1> Mastriani Company
Michael J. President, M. R. 1969 65
Cestone, Company; CEO, S. G.
Jr.<F1> Mastriani Company
Dominick L. President, F&L Realty 1987 59
DeNaples<F2> Corp; Vice President,
DeNaples Auto Parts,
Inc.; Vice President
Keystone Landfill, Inc.
Louis A. President, DeNaples Auto 1972 56
DeNaples<F2> Parts, Inc.; President,
Keystone Landfill, Inc.;
Vice President, F&L
Realty Corp.
Joseph J. President, Dunmore Oil 1989 66
Gentile Co., Inc.
Martin F. Partner, Gibbons Ford 1979 81
Gibbons
Joseph O. Retired Superintendent 1987 57
Haggerty Dunmore School District
34
<PAGE>
George N. Consultant to the Bank 1973 70
Juba
J. David President and CEO of 1986 48
Lombardi the Bank
John R. Thomas Chairman of the Board, 1967 79
Wesel Manufacturing
Company (design and
manufacturing of
precision machinery)
________________________
<FN>
<F1> Michael G. Cestone is the son of Michael J. Cestone, Jr.
<F2> Louis A. DeNaples and Dominick L. DeNaples are brothers.
</FN>
</TABLE>
Principal Officers of the Bank
The following table sets forth selected information about
the principal officers of the Bank, each of whom is elected by
the Board of Directors and each of whom holds office at the
discretion of the Board of Directors.
<TABLE>
<CAPTION>
Office and Bank
Position with Held Employee
Name the Bank Since Since
- ---- ------------- ----- --------
<S> <C> <C> <C>
J. David Lombardi President and CEO 1988 1981
Gerard A. Champi Senior Vice President 1993 1991
Stephen J. Kavulich Senior Vice President 1994 1991
William S. Lance Senior Vice President 1994 1991
and Comptroller
Robert J. Mancuso Senior Vice President 1991 1980
and Cashier
Richard F. Post, Jr. Senior Vice President 1988 1988
Thomas P. Tulaney Senior Vice President 1994 1994
<CAPTION>
Number of Shares Age as of
Beneficially February 28,
Name Owned <F1> 1997
- ---- ---------------- ------------
<S> <C> <C>
J. David Lombardi 10,173<F2> 48
Gerard A. Champi 660 36
Stephen J. Kavulich 3,018 51
William S. Lance 220 37
Robert J. Mancuso 3,400 39
Richard F. Post, Jr. 251 42
Thomas P. Tulaney 550 37
_________________________
<FN>
<F1> All shares are owned individually or jointly with a spouse
unless otherwise indicated.
<F2> For details on the shares beneficially owned, see
"Beneficial Ownership by Officers and Directors", supra at page
4.
</FN>
</TABLE>
35
<PAGE>
CERTAIN TRANSACTIONS
There have been no material transactions between the Bank,
nor any material transactions proposed, with any director or
executive officer of the Bank, or any associate of the foregoing
persons. The Bank has engaged in and intends to continue to
engage in banking and financial transactions in the ordinary
course of business with directors and officers of the Bank and
their associates on comparable terms and with similar interest
rates as those prevailing from time to time for other customers
of the Bank. Total loans outstanding from the Bank at December
31, 1996, to the Bank's officers and directors as a group and
members of their immediate families and companies in which they
had an ownership interest of ten percent (10%) or more were
$4,247,178 or approximately 15.37% of the Bank's total equity
capital. Loans to such persons were made in the ordinary course
of business, were made on substantially the same terms, including
interest rates and collateral, as those prevailing at the time
for comparable transactions with other persons, and did not
involve more than the normal risk of collectability or present
other unfavorable features. Total loans to the above described
group as of the most recent practicable date, February 28, 1997,
were $4,183,329 or approximately 14.84% of the Bank's total
equity capital.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires the Bank's directors, executive officers and
shareholders owning in excess of ten percent (10%) of the Bank's
outstanding equity stock to file initial reports of ownership and
reports of changes in ownership of Common Stock and other equity
securities of the Bank with the Securities and Exchange
Commission. Based on a review of copies of such reports received
by it, and on the statements of the reporting persons, the Bank
believes that all such Section 16(a) filing requirements were
complied with in a timely fashion.
DESCRIPTION OF THE BANK'S COMMON STOCK
The Bank's Common Stock
As of December 31, 1996, the Bank's authorized Common Stock
consisted of five million (5,000,000) shares, par value One
Dollar and Twenty-five Cents ($1.25) per share, of which
1,090,424 shares were issued and outstanding. Each share of
Common Stock is entitled to one (1) vote on all matters that may
be brought before shareholders' meetings, except that the holders
of Common Stock have cumulative voting rights in the election of
directors. Cumulative voting for the election of directors
entitles each shareholder to multiply the number of votes to
which the shareholder is entitled by the total number of
directors to be elected, and the shareholder may cast the whole
number of these votes for one candidate or may distribute them
among two or more candidates. As of December 31, 1996, the Bank
had approximately 884 shareholders. The Bank's Common Stock has
limited preemptive subscription rights. The Bank's shares are
non-assessable(except as provided under 12 U.S.C. Section 55,
relating to assessments upon shareholders for a
36
<PAGE>
deficiency in paid-up capital stock; 12 U.S.C. Section 55 has not
been used for many years) and requires no sinking fund. Each
shareholder is entitled to receive dividends that may be declared
by the Board of Directors, and, in the event of liquidation,
dissolution or merger, the holders will be entitled to share pro
rata according to their interests. See section entitled
"Comparison of Shareholder Rights" for a summary of the
differences between the rights of holders of the Bank's Common
Stock and the rights of holders of the Holding Company's Common
Stock.
Payment of dividends is subject to the restrictions set
forth in the National Bank Act, which provides that dividends may
be declared by the Board of Directors and paid from the net
profits of the Bank as the Board of Directors shall judge
expedient. Dividends may be paid only if: (1) the payment would
not impair the Bank's capital structure; (2) if the Bank's
surplus is at least equal to its common capital; (3) the
dividends declared in any year do not exceed the net profits in
that year and the net profits retained in the two (2) preceding
years; (4) no losses have been sustained equal to or exceeding
its undivided profits; and (5) the Bank continues its operations
at an amount greater than its net profits deducting therefrom its
losses and bad debts. In addition, under the FDIA (12 U.S.C.
Section 1818), dividends cannot be declared and paid if the OCC
obtains a cease and desist order because such payment would
constitute an
unsafe and unsound banking practice.
The following table sets forth the dividends paid by the
Bank to its shareholders since December 1992.
<TABLE>
AMOUNTS OF DIVIDENDS PAID
------------------------------------------------
Regular Cash Special Cash In the
Dividend Per Share Dividend Per Share Aggregate
------------------ ------------------ ---------
<S> <C> <C> <C>
Month/Year
- ----------
December 1992 $ .15 $ .11 $ .26
March 1993 .15 .15
June 1993 .15 .15
September 1993 .18 .18
December 1993 .18 .12 .30
March 1994 .18 .18
June 1994 .20 .20
September 1994 .20 .20
December 1994 .20 .14 .34
March 1995 .22 .22
June 1995 .22 .22
September 1995 .22 .22
December 1995 .22 .12 .34
March 1996 .22 .22
June 1996 .25 .25
September 1996 .25 .25
December 1996 $ .25 $ .13 $ .38
_______________________
</TABLE>
37
<PAGE>
Holders of Common Stock who are Pennsylvania residents are not
subject to the Pennsylvania county personal property tax on their
shareholdings.
Comparative Market Prices
There has never been an organized public trading market for
the Bank's outstanding Common Stock. The Bank's Common Stock is
traded over-the-counter from time to time; as of February 28,
1997, the highest bid price known to management for transactions
of the Bank's Common Stock was $32.25 which such price may
include retail markups, markdowns or commissions. As of October
23, 1996, the date on which the Board of Directors made the
decision to form a bank holding company and to submit the Plan of
Reorganization and Plan of Merger to the shareholders of the
Bank, the last known trade was $29.50 on October 1, 1996, which
such price may include retail markups, markdowns or commissions.
Due to the infrequency of such trading and the fact that such
trades are generally private transactions, the Board of Directors
of the Bank is unable to determine actual trading prices on any
given date.
Capitalization
Set forth below is the capitalization of the Bank at
December 31, 1996, and of the Interim Bank and the Holding
Company at initial formation, and as adjusted to reflect the
consummation of the Merger.
<TABLE>
First First First
National National National
Community Community Community
Bank Interim Bank Bancorp, Inc.
<CAPTION> ---- ------------ ------------
Prior to Merger
- ---------------
<S> <C> <C> <C>
Number of Shares
Authorized or to
be Authorized,
Common Stock, par
value $1.25 for Bank,
Interim Bank and for
Holding Company 5,000,000 5,000,000 5,000,000
Number of Shares
outstanding:
Common Stock 1,090,424 560,000<F1> 2<F2>
Capital Accounts:
Common Stock 1,363,000 700,000<F1> 2.50<F2>
Capital Surplus 6,267,000 140,000<F1>
Undivided Profits 19,617,000
Net Unrealized
Holding Gains
(Losses) on
Available-for-
Sale Securities 384,000 0 0
---------- ---------- -------
Total Equity Common 27,631,000 840,000 2.50
38
<PAGE>
<CAPTION>
After Merger
- ------------
<S> <C> <C> <C>
Number of Shares
Outstanding:
Common Stock par
value $1.25 for
Bank, Interim Bank
and for Holding
Company -- 560,000<F3> 1,090,424<F4>
Capital Accounts:
Common Stock par value
$1.25 for Interim Bank
and for Holding
Company -- 1,363,000 1,363,000
Capital Surplus -- 6,267,000 6,267,000
Undivided Profits -- 19,617,000 19,617,000
Net Unrealized Holding
Gains(Losses) on
Available-for-Sale
Securities -- 384,000 384,000
----- ---------- -----------
Total Equity Common 0 27,631,000<F5> 27,631,000<F6>
=== ========== ==========
<FN>
<F1> Represents shares issued upon the initial capitalization of
the Interim Bank for One Dollar and Fifty Cents ($1.50) per
share. Eight thousand eight hundred (8,800) shares were
subscribed by the organizers of the Interim Bank and five hundred
fifty-one thousand two hundred (551,200) shares were subscribed
by First National Community Bancorp, Inc. At the Effective Date
of the Merger, the eight thousand eight hundred (8,800) shares of
the organizers will be assigned to First National Community
Bancorp, Inc. at the same purchase price, One Dollar and Fifty
Cents ($1.50) per share.
<F2> Represents two (2) shares issued to the incorporators of the
Holding Company for One Dollar and Twenty-five Cents ($1.25) per
share. At the Effective Date of the Merger, these shares will be
repurchased and retired by First National Community Bancorp, Inc.
at the same purchase price, One Dollar and Twenty-five Cents
($1.25) per share.
<F3> Represents the initial eight thousand eight hundred (8,800)
shares issued on formation of the Interim Bank to the organizers
for One Dollar and Fifty Cents ($1.50) per share, and 551,200
shares which will be purchased by the Holding Company on the
Effective Date of the Merger.
<F4> Represents the maximum number of shares to be issued to the
holders of Common Stock of the Bank as the result of the Merger.
<F5> Total equity capital reflects the capital accounts after
payment of the Eight Hundred Forty Thousand Dollars ($840,000)
dividend to the Holding Company to repay a loan and purchase the
shares that provided the funds for the initial capitalization of
the Interim Bank. This borrowing will be through PNC Bank,
Pittsburgh, Pennsylvania at approximately 8%.
<F6> Amounts after the Merger are on a consolidated basis.
39
<PAGE>
DESCRIPTION OF THE HOLDING COMPANY'S STOCK
Common Stock
The Holding Company is authorized to issue five million
(5,000,000) shares of Common Stock, par value One Dollar and
Twenty-five Cents ($1.25) per share, of which approximately
1,090,424 thousand shares would be outstanding if the
reorganization had been consummated as of December 31, 1996. The
remaining 3,909,576 thousand authorized but unissued shares of
Common Stock may be issued by the Board of Directors without
further shareholder approval. Issuance of these shares could
cause a dilution of the book value of the stock and the voting
power of present shareholders. The holders are entitled to one
(1) vote per share on all matters presented to them and have no
cumulative voting rights in the election of directors.
The Common Stock has no preemptive, subscription, or
conversion rights, redemption or repurchase provisions. These
shares are non-assessable and require no sinking fund. Each
shareholder is entitled to receive dividends that may be declared
by the Board of Directors and to share pro rata in the event of
dissolution or liquidation. For information concerning dividend
restrictions, see sections entitled "Description of the Bank's
Stock - The Bank's Common Stock" and "Comparison of Shareholder
Rights".
In some jurisdictions, shares of common stock of a general
business corporation, such as the Holding Company, may be treated
differently from shares of stock of a bank, and therefore, may be
the subject of personal property taxation.
Legal Opinion
Shumaker Williams, P.C., 3425 Simpson Ferry Road, Camp Hill,
Pennsylvania, Special Counsel to the Bank and the Holding
Company, has delivered an opinion to the effect that the shares
of Common Stock of the Holding Company to be issued in connection
with the reorganization will be, when issued and delivered
pursuant to the Plan of Reorganization and Plan of Merger, fully
paid and non-assessable by the Holding Company.
Anti-Takeover Provisions
Under the Pennsylvania Business Corporation Law of 1988, as
amended ("BCL"), the Articles of Incorporation and By-laws of
the Holding Company, there are twelve (12) provisions that may be
deemed to be "anti-takeover" in nature that will be immediately
applicable. Two of these provisions are: the authorization of
five million (5,000,000) shares of Common Stock and the lack of
preemptive rights for shareholders to subscribe to purchase
additional shares of stock on a pro rata basis. The additional
shares of Common Stock and the elimination of preemptive rights
to such stock were authorized for the purpose of providing the
Board of Directors of the Holding Company with as much
flexibility as possible to issue additional shares, without
further shareholder approval for proper corporate purposes,
including financing, acquisitions, stock dividends, stock splits,
employee incentive plans and other similar purposes. However,
these additional shares may also be used by the Board of
Directors (if consistent with its fiduciary responsibilities) to
deter future attempts to gain control over the Holding Company.
40
<PAGE>
The Bank is not permitted by the national banking laws to
elect directors for staggered terms (a "Classified Board").
Provisions for a Classified Board, however, are included in the
By-Laws of the Holding Company. The Board of Directors believes
that a Classified Board will help to assure continuity and
stability of corporate leadership and policy. In addition, a
Classified Board will help to moderate the pace of any change in
control of the Board of Directors by extending the time required
to elect a majority of the directors to at least two successive
annual meetings. However, since this extension of time also
tends to discourage a tender offer or takeover bid, this
provision may also be deemed to be "anti-takeover" in nature. In
addition, a Classified Board makes it more difficult for a
majority of the shareholders to change the composition of the
Board of Directors even though this may be considered desirable
for them. Section 10.3 of the By-laws of the Holding Company
provides that at the 1998 Annual Meeting of Shareholders of the
Holding Company, the shareholders shall elect eleven (11) Bank
directors as follows: Four (4) Class A directors to serve until
the 1999 Annual Meeting of Shareholders, four (4) Class B
directors to serve until the 2000 Annual Meeting of Shareholders,
and three (3) Class C directors to serve until the 2001 Annual
Meeting of Shareholders. Each class shall be elected in a
separate election. At each Annual Meeting of Shareholders
thereafter, successors to the class of directors whose term shall
then expire shall be elected to hold office for a term of three
(3) years, so that the term of office of one class of directors
shall expire in each year.
Another provision that could be considered "anti-takeover"
in nature is the elimination of cumulative voting. Cumulative
voting entitles each shareholder to as many votes as equal the
number of shares owned by him multiplied by the number of
directors to be elected. A shareholder may cast all of these
votes for one candidate or distribute them among any two or more
candidates. Cumulative voting is required under the national
banking laws, but is optional under the Pennsylvania Business
Corporation Law. The Board of Directors did not provide for
cumulative voting in the Articles of Incorporation of the Holding
Company because it believes that each director should represent
and act in the interest of all shareholders and not any special
group of shareholders. The absence of cumulative voting means
that a majority of the outstanding shares can elect all the
members of the Board of Directors. Although the Bank has (and
the Holding Company after the reorganization will have)
approximately 884 shareholders, the Board of Directors recognizes
that the absence of cumulative voting makes it more difficult to
gain representation on the Board of Directors.
Provisions in the Holding Company's Articles of
Incorporation and By-laws require action by a majority of the
Board of Directors, the Chairman, the President or the Executive
Committee of the Holding Company to call a Special Meeting of
Shareholders. The Holding Company's By-laws may be amended by a
majority vote of the members of the Board of Directors, subject
to the affirmative vote of at least seventy-five percent (75%) of
the issued and outstanding shares to change any amendment to the
By-laws previously approved by the Board of Directors. These
provisions were included in the By-laws of the Holding Company in
order to ensure that any extraordinary corporate transaction
could be effected only if it received a clear mandate from the
shareholders and/or the directors.
41
<PAGE>
Other provisions that could be considered "anti-takeover"
are the requirements in the Holding Company's Articles of
Incorporation that the affirmative vote of the holders of at
least seventy-five percent (75%) of the outstanding shares of
Common Stock of the Holding Company is required to approve any
merger, consolidation, dissolution or liquidation of the Holding
Company or the sale of all or substantially all of its assets; or
the holders of at least fifty-one percent (51%) of the
outstanding shares of Common Stock of the Holding Company when at
least a majority of Directors have approved such transaction.
These provisions were included in the Articles of Incorporation
of the Holding Company in order to ensure that any extraordinary
corporate transaction could be effected only if it receives a
clear mandate from the shareholders. However, these provisions
could give the Holding Company's management a veto power over
certain acquisitions regardless of whether any such acquisition
is desired by or beneficial to a majority of the shareholders and
thereby assist management in retaining their present positions.
Also, these provisions could give the holders of a minority of
the Holding Company's outstanding shares a veto power over any
merger, consolidation, dissolution or liquidation of the Holding
Company, the sale of all or substantially all of its assets even
if management and/or a majority of the shareholders believes such
transaction to be desirable and beneficial. Absent such
provisions in the Holding Company's Articles of Incorporation,
the affirmative vote of at least a majority of the Holding
Company's shares outstanding and entitled to vote thereon would
be required to approve any merger, consolidation, dissolution,
liquidation, and the sale of all of its assets. Upon the
consummation of the reorganization, it is expected that the
executive officers and directors of the Holding Company will own
an aggregate of 285,550 shares, or 26.19% of the Holding
Company's outstanding stock.
Another anti-takeover provision in the Articles of
Incorporation enables the Board of Directors to oppose a tender
offer on the basis of factors other than economic benefit to
shareholders, such as the impact the acquisition of the Holding
Company would have on the community; the effect of the
acquisition upon shareholders, employees, depositors, suppliers
and customers; and the reputation and business practices of the
tender offeror. This provision was included in the Articles of
Incorporation of the Holding Company to permit the Board of
Directors to recognize the responsibilities to these constituent
groups and to the Holding Company and its subsidiaries and the
communities that they serve.
In addition to the provisions already described, under
Pennsylvania Business Corporation Law of 1988 ("BCL"), as
amended, there are four additional provisions that may be deemed
to be "anti-takeover" in nature. These provisions are related to
corporations that have their securities registered with the
Securities and Exchange Commission ("SEC") under Section 12 of
the Securities Exchange Act of 1934, as amended ("Registered
Corporations"). The Holding Company's Common Stock will be
registered with the SEC, because on the effective date of the
reorganization it will have five hundred (500) or more
shareholders of record and assets of at least five million
dollars ($5,000,000). Shareholders of Registered Corporations do
not have a right to call a Meeting of shareholders nor do they
have a right to propose an amendment to the Articles of
Incorporation of the Holding Company. One effect of these
provisions will be to prevent the calling of a special meeting of
shareholders for the purpose of considering a merger,
consolidation or other corporate combination which does not have
the approval of a majority of the members of the Board of
Directors. Therefore, such a provision may have the effect of
42
<PAGE>
making the Holding Company less attractive as a potential
takeover candidate by depriving shareholders of the opportunity
to initiate special meetings at which a possible business
combination might be proposed.
In the opinion of the Board of Directors, the elimination of
these two rights under the BCL for Registered Corporations will
discourage attempts by shareholders to disrupt the business of
the
Holding Company between annual meetings of the shareholders by
calling a special meeting. Furthermore, these provisions will
provide a greater time for consideration of any shareholder
proposal to the extent that his, her or its proposal must be
deferred until the next annual meeting of shareholders and must
comply with certain notice requirements and proxy solicitation
rules in advance thereof. These BCL provisions would not affect
the calling of a special meeting by the Chairman of the Board or
by a majority of the members of the Board of Directors or of its
Executive Committee if, in their judgment, there are matters to
be acted upon which are in the best interests of the Holding
Company and its shareholders.
Another BCL provision to which the Holding Company will be
subject, assures that all shareholders will receive the "fair
value" for their shares as the result of a "control transaction."
"Fair Value" means not less than the highest price paid per share
by a controlling person or group at any time during the 90-day
period ending on and including the date of the control
transaction plus an increment representing any value, including,
without limitation, any proportion of any value payable for
acquisition of control of the Holding Company, that may not be
reflected in such price. "Control Transaction" means the
acquisition by a person who has, or a group of persons acting in
concert that has, voting power over voting shares of the Holding
Company that would entitle the holders thereof to cast at least
twenty percent (20%) of the votes that all shareholders would be
entitled to cast in an election of directors of the Holding
Company. After the occurrence of a Control Transaction, any
shareholder may, within a specified time period, make written
demand on the person or group controlling at least twenty percent
(20%) of the voting power of the shares of the Holding Company
for payment in an amount equal to the Fair Value of each voting
share as of the date on which the Control Transaction occurs.
It has become a relatively common practice in corporate
takeovers to pay cash to acquire controlling equity in an company
and then to acquire the remaining equity interest in the company
by paying the balance of the shareholders a price for their
shares which is lower than the price paid to acquire control or
is in a less desirable form of consideration, frequently, in
securities of the purchaser that do not have an established
trading market at the time of issue. The Board of Directors
considers such "two-tier pricing" tactics to be unfair to the
Holding Company's shareholders. By their very nature, such
tactics tend (and are designed) to cause concern on the part of
shareholders that if they do not act promptly, they risk either
being relegated to the status of minority shareholders in a
controlled company or being forced to accept a lower price for
all of their shares. Thus, two-tier pricing unduly pressures
shareholders into selling as many of their shares as quickly as
possible, either to the purchaser or in the open market, without
having genuine opportunity to make a considered investment choice
between remaining a shareholder of the company or disposing of
their shares. Moreover, such sales in turn facilitate the
purchaser's acquisition of a sufficient interest in the company
and thereby enables the purchaser to force the exchange of
remaining shares for a lower price in a Business Combination.
(See discussion below).
43
<PAGE>
While the Fair Price provision in the BCL is designed to
help assure fair treatment of all shareholder vis-a-vis other
shareholders in the event of a takeover, it is not the purpose of
the Fair Price provision to assure that shareholders will receive
a premium price for their shares in a takeover. Accordingly, the
Fair Price provision would not preclude the Board of Directors'
opposition to any future takeover proposal which it believes not
to be in the best interests of the holding Company and its
shareholders, whether or not such a proposal satisfies the
minimum price, form of consideration and procedural requirements
of the Fair Price provision under the BCL.
Another provision under the BCL relates to a "Business
Combination" involving a Registered Corporation. Business
Combination means any one of the following transactions involving
an "Interested Shareholder": (1) a merger of consolidation of the
Holding Company with an Interested Shareholder or any other
corporation which is, or after the merger or consolidation would
be, an affiliate or associate of the Interested Shareholder; (2)
a sale, lease, exchange, mortgage, pledge, transfer or other
disposition to or with the Interested Shareholder or any
affiliate or associate of such Interested Shareholder of the
assets of the Holding company or any subsidiary of the Holding
Company having an aggregate market value equal to ten percent
(10%) or more of the consolidated assets, of all outstanding
shares or of the consolidated earning power and net income, of
the Holding Company; (3) the issuance or transfer by the Holding
company or any subsidiary of any shares of the Holding Company or
any subsidiary which has an aggregate market value at least equal
to five percent (5%) of the aggregate market value of all such
outstanding shares to an Interested Shareholder or any affiliate
or associate; (4) the adoption of any plan for the liquidation or
dissolution of the Holding company proposed by, or pursuant to
any agreement with, the Interested Shareholder or any affiliate
or associate; (5) a reclassification of securities or
recapitalization of the Holding Company or any merger of
consolidation of the Holding company with any subsidiary of the
Holding Company or any other transaction proposed by, or pursuant
to any agreement with, the Interested Shareholder or any
affiliate or associate, which has the effect, directly or
indirectly, of increasing the proportionate share of the
outstanding shares of the Holding Company owned by the Interested
Shareholder; or (6) the receipt by the Interested Shareholder or
any affiliate or associate of the benefit, directly or
indirectly, of any loans, advances, guarantees, pledges or other
financial assistance or any tax credits or other tax advantages
provided by or through the Holding Company. An "Interested
Shareholder" is any person that is the beneficial owner, directly
or indirectly of shares entitling that person to cast at least
twenty percent (20%) of the votes that all shareholders would be
entitled to cast in an election of directors of the Holding
company.
The Holding Company shall not engage in a Business
Combination with an Interested Shareholder other than: (1) a
Business Combination approved by the Board of Directors prior to
the date on which the Interested Shareholder acquires at least
twenty percent (20%) of the shares ("Share Acquisition Date") or
where the purchase of shares by the Interested Shareholder has
been approved by the Board of Directors of the Holding Company;
(2) a Business Combination approved by a majority of the votes
that all shareholders would be entitled to cast not including
those shares held by the Interested Shareholder, at a meeting
called for such purpose no earlier than three months after the
Interested Shareholder became, and if at the time of the meeting
the Interested Shareholder is, the beneficial owner, directly or
indirectly, of shares entitling the Interested Shareholder to
cast at least seventy percent (70%) of the votes that all
shareholders
44
<PAGE>
would be entitled to cast in an election of Directors of the
Holding Company if the Business Combination satisfies certain
minimum conditions (see discussion below); (3) a Business
Combination approved by the affirmative vote of all of the
shareholders of the outstanding shares; (4) a Business
Combination approved by a majority of the votes that all
shareholders would be entitled to cast not including those shares
beneficially owned by the Interested Shareholder at a meeting
called for such purpose no earlier than five years after the
Interested Shareholder's Share Acquisition date; and (5) a
Business Combination approved at a shareholders' meeting called
for such purpose no earlier than five years after the Interested
Shareholder's Share Acquisition Date and that meets certain
minimum conditions (see discussion below).
The certain minimum conditions discussed in Business
Combinations above generally require that the aggregate amount of
the cash and the market value of consideration other than cash
(such as stock, bonds or debentures) to be received per share by
the shareholders of the Holding Company be at least equal to the
highest per share price paid by the Interested shareholder at a
time when the Interested Shareholder was the beneficial owner of
shares entitling him to cast at least five percent (5%) of the
votes that all shareholders would be entitled to cast in an
election of directors: (A) Business Combination or (B) in the
transaction in which the Interested Shareholder became an
Interested Shareholder, whichever is higher; plus, in either
situation, interest compounded annually from the earlier date on
which the highest per-share acquisition price was paid through
the consummation date at the rate of 1-year United States
Treasury obligations from time to time in effect less the
aggregate amount of any cash dividends paid and the market value
of any dividends paid other than cash.
The above BCL provision relating to Business Combinations is
designed to help assure that if, despite the Holding Company's
best efforts to remain independent, the Holding Company is
nevertheless taken over, each shareholder will be treated fairly
vis-a-vis every other shareholder and that arbitrageurs and
professional investors will not profit at the expense of the
Holding Company's long-term public shareholders. It should be
noted that while the Business Combination provision is designed
to help assure fair treatment of all shareholders vis-a-vis other
shareholders in the event of a takeover, it is not the purpose of
the Business Combination provision to assure that shareholders
will receive premium price for their shares in a takeover.
Accordingly, the Board of Directors is of the view, that the
Business Combination provision would not preclude the Board of
Director's opposition to any future takeover proposal which it
believes not to be in the best interests of the Holding Company
and its shareholders, whether or not such a proposal satisfies
the requirements of the Business Combination provision or Fair
Price provision or both.
Subchapter G of Chapter 25 of the BCL also applies to
Registered Corporations. Under Subchapter G, the acquisition of
shares that increase the acquiror's control of the corporation
above 20%, 33 1/3% or 50% of the voting power able to elect the
Board of Directors cannot be voted until a majority of
disinterested shareholders approve the restoration of the voting
rights of those shares in two separate votes: (1) all
disinterested shares of the corporation and (2) all voting shares
of the corporation. Voting rights which are restored by
shareholder approval will lapse if any proposed
control-share-acquisition which is approved is not consummated
within 90 days after shareholder approval is obtained.
Furthermore,
control-shares that are not accorded voting rights or whose
rights lapse will regain such voting rights on transfer to
another person who
is not an affiliate of the acquiror. If they constitute
control-shares for the transferee, this
45
<PAGE>
subchapter must be applied to that person as well. If the
acquiror does not request a shareholder meeting to approve
restoration of voting rights within 30 days of the acquisition or
if voting rights are denied by the shareholders or if they lapse,
the corporation may redeem the control shares at the average of
the high and low price on the date of the notice of redemption.
Subchapter H of Chapter 25 of the BCL likewise applies to
Registered Corporations. Under Subchapter H, a control person (a
person who owns shares with 20% or more voting power) must
disgorge to the corporation any profits from the disposition of
any equity securities if the disposition occurs within 18 months
of becoming a control person, and the security was acquired 24
months before to 18 months after becoming a control person. This
provision seeks to prevent speculative takeover attempts.
THE OVERALL EFFECT OF THESE PROVISIONS MAY BE TO DETER A
FUTURE OFFER OR OTHER MERGER OR ACQUISITION PROPOSAL THAT A
MAJORITY OF THE SHAREHOLDERS MIGHT VIEW TO BE IN THEIR BEST
INTERESTS AS THE OFFER MIGHT INCLUDE A SUBSTANTIAL PREMIUM OVER
THE MARKET PRICE OF THE HOLDING COMPANY'S COMMON STOCK AT THAT
TIME. IN ADDITION, THESE PROVISIONS MAY HAVE THE EFFECT OF
ASSISTING THE HOLDING COMPANY'S CURRENT MANAGEMENT IN RETAINING
ITS POSITION AND PLACING IT IN A BETTER POSITION TO RESIST
CHANGES THAT THE SHAREHOLDERS MAY WANT TO MAKE IF DISSATISFIED
WITH THE CONDUCT OF THE HOLDING COMPANY'S BUSINESS.
A vote in favor of the Plan of Reorganization and Plan of
Merger is a vote in favor of these anti-takeover provisions
contained in the Holding Company's Articles and By-laws and under
the BCL.
DIVIDENDS
The Bank has paid continuous cash dividends for over ten
years. It is the present intention of the Holding Company's
Board of Directors to retain the dividend policy of providing for
a quarterly dividend; however, further dividends must necessarily
depend upon earnings, financial condition, appropriate legal
restrictions and other factors relevant at the time the Board of
Directors of the Holding Company considers dividend policy. Cash
available for dividend distribution to shareholders of the
Holding Company must initially come from dividends paid by the
Bank to the Holding Company. Therefore, the restrictions on the
Bank's dividend payments are directly applicable to the Holding
Company. See sections entitled "Description of the Bank's Stock
- - The Bank's Common Stock" and "Comparison of Shareholder
Rights".
Under the BCL, the Holding Company may not pay a dividend
if, after giving effect thereto: (1) the Holding Company would
be unable to pay its debts as they become due or (2) the Holding
Company's total assets would be less than its total liabilities
plus an amount needed to satisfy any preferential rights of
shareholders. Total assets and liabilities shall be determined
by the Board of Directors, which may base its determination on
such factors as it considers relevant, including without
limitation: (i) the book value of the assets and liabilities of
the Holding Company, as reflected on its books and records; and
(ii) unrealized appreciation and depreciation of the assets of
the Holding Company.
46
<PAGE>
COMPARISON OF SHAREHOLDER RIGHTS
One result of the consummation of the proposed
reorganization is that shareholders of the Bank, whose rights are
presently governed by the National Bank Act, will become
shareholders of the Holding Company, and their rights in the
future will be governed by the BCL. Another result is that the
Articles of Incorporation and By-laws of the Holding Company
differ in several aspects from those of the Bank.
The following table compares the rights of shareholders of
the Bank with the rights of shareholders of the Holding Company.
This table is qualified by the more detailed information
appearing elsewhere in this Proxy Statement/Prospectus and in the
exhibits hereto and is not intended to be an exhaustive
comparison.
The Holding Company's
The Bank's Common Stock Common Stock
----------------------- ---------------------
Authorized and
Outstanding Five million (5,000,000) Five million
shares, par value One Dollar (5,000,000) shares,
and Twenty-five Cents ($1.25) par value One
per share, authorized; of Dollar and Twenty-
which 1,090,424 were five Cents ($1.25)
outstanding on December 31, per share,
1996 authorized; of
which 1,090,424
shares would be
outstanding if the
reorganization were
effected on
December 31, 1996
Voting One (1) vote per share with One (1) vote per
cumulative voting for share with no
directors cumulative voting
for directors
Preemptive
Rights Limited Preemptive rights No preemptive
to subscribe for additional rights to subscribe
shares on a pro rata for additional
basis shares on a pro
rata basis
47
<PAGE>
Dividends As declared by the Board As declared by the
of Directors; may be paid Board of Directors;
only if it would not impair the Bank's dividend
the Bank's capital structure, restrictions apply
if the Bank's surplus is at indirectly to the
least equal to its common Holding Company as
capital and if the dividends cash available for
declared in any year do not dividend
exceed the total of net distributions will
profits in that year initially come from
combined with undivided dividends paid to
profits of the preceding the Holding Company
two years less any required by the Bank. In
transfers to surplus, addition, the
if no losses have been Holding Company may
sustained equal to or not pay a dividend
exceeding its undivided if, after giving
profits, and if the Bank effect thereto: (1)
continues its operations the Holding Company
at an amount greater than would be unable to
its net profits deducting pay its debts as
therefrom its losses and they become due or
bad debts (2) the Holding
Company's total
assets would be
less than the
amount needed to
satisfy any
preferential rights
of shareholders
Amendment of
By-laws Approval by a majority Approval by the
vote of the Board of affirmative vote
Directors, subject to the of the holders of
power of shareholders to at least seventy-
change such action by the five percent (75%)
affirmative vote of the of the outstand-
holders of a majority of ing shares, or by
the outstanding shares; or a majority vote of
the affirmative vote of the the Board of
holders of at least fifty Directors subject
percent (50%) of the to the power of
outstanding shares shareholders to
change such action
of the Board of
Directors by the
affirmative vote of
the holders of
seventy-five
percent(75%) of the
out-standing shares
Shareholder
Action
(a)Mergers, Approval by a vote of at Approval by vote of
Consolidations least sixty-six and two- at least seventy-
thirds (66-2/3%) of five (75%) of out-
outstanding shares standing shares; or
approval of at
least fifty-one
(51%) of outstand-
ing shares if such
transaction has
received the prior
approval of at
least a majority
of Directors.
48
<PAGE>
(b) Liquida- Approval by a vote of Approval by vote of
tion, Sales at least sixty-six and at least seventy-
of Sub- two-thirds percent five percent (75%)
stantially (66-2/3%) of outstand- of outstanding
All Assets ing shares shares; or approval
of at least fifty-
one percent (51%)
of outstanding
shares if such
transaction has
received the prior
approval of at
least a majority
of Directors.
(c)Special Upon request by the Upon request by
Shareholder Board of Directors or the Chairman of
Meetings one or more shareholders the Board, the
owning in the aggregate President, a
not less than ten percent majority of the
(10%) of the outstanding Board of Directors,
shares or of its Executive
Committee
Authorization Approval by vote of at Approval by vote of
of Additional least sixty-six and two- a majority of the
Shares thirds percent (66-2/3%) directors
of outstanding shares
Amendment of Approval by vote of at Approval by vote
Articles of least sixty-six and two- of majority of
Incorporation thirds percent (66-2/3%) the votes cast
(other than of outstanding shares except for the
for the Anti-takeover pro-
purposes visions, then 75%
named above)
Repurchase Cannot reduce or retire Stock can be re-
any part of its stock purchased if, after
without prior regulatory giving effect
approvals thereto: (1) the
Holding Company
would still be able
to pay its debts as
they become due or
(2) the Holding
Company's total
assets would still
be more than its
total liabilities
plus an amount
needed to satisfy
any preferential
rights of
shareholders and
that no more than
ten percent (10%)
of the outstanding
shares can be
repurchased in any
twelve (12) month
period without
prior regulatory
approval
49
<PAGE>
The Articles of Incorporation of the Holding Company and the
Bank authorize the Board of Directors to oppose a tender offer
for shares of the Holding Company on the basis of factors other
than economic benefit to shareholders such as: the impact of the
acquisition upon the
46
<PAGE>
community; the effect of the acquisition upon employees,
depositors, shareholders and customers; and the reputation and
business practices of the tender offeror. See section entitled
"Description of the Holding Company's Stock - Anti-Takeover
Provisions". Also, the By-laws of the Holding Company provide
for three (3) year staggered terms of office for directors (a
"Classified Board"). Under national banking laws, the Bank is
not permitted to have a Classified Board. See, section entitled
"Description of the Holding Company's Stock - Anti-Takeover
Provisions".
In some jurisdictions, shares of common stock of a business
corporation such as the Holding Company may be treated
differently from shares of stock of a state banking institution
for legal investments for institutions and fiduciaries, and as
the subject of personal property taxation. Thus, shareholders of
the Bank may desire to determine whether the status of their
shares under local or state laws applicable to them would be
changed upon the effective date of the Merger. Under
Pennsylvania law, a fiduciary will be subject to the same
standards for investments in stock of the Holding Company as for
investments in the stock of the Bank. Under Pennsylvania law,
the holders of the Common Stock of the Holding Company who are
Pennsylvania residents will not be subject to the Pennsylvania
county personal property tax on their shareholdings.
INDEPENDENT AUDITORS
Robert Rossi & Co., Certified Public Accountants, of
Olyphant, Pennsylvania, served as the Bank's independent auditors
for the 1996 fiscal year. In addition to performing customary
audit services, Robert Rossi & Co. assisted the Bank with the
preparation of its federal and state tax returns and provided
assistance in connection with regulatory matters, charging the
Bank for such services at its customary hourly billing rates.
These non-audit services were approved by the Bank's Board of
Directors after the Board of Directors reviewed the nature and
expense associated with such services and concluded that there
was no effect on the independence of the accountants. The Bank
has been advised by Robert Rossi & Co. that none of its members
has any financial interest in the Bank. Robert Rossi & Co. has
been engaged as the independent auditor for the fiscal year
ending December 31, 1997.
FINANCIAL STATEMENTS
The Bank is subject to the reporting requirements of the
1934 Act, and accordingly, files reports, proxy statements and
other information with the OCC.
The Board of Directors has not included any financial
statements of the Bank in this Proxy Statement/Prospectus. It is
the Board's position that financial statements would not be
material or relevant, in order for the shareholders to make an
informed prudent judgment to approve the Plan of Reorganization
and Plan of Merger. For example, if the reorganization into the
Holding Company would have occurred on January 1, 1996, the
financial statements contained in the 1996 Annual Report would
not be different in any material respect.
50
<PAGE>
A copy of the Bank's Annual Report for the fiscal year ended
December 31, 1996, is being mailed to Shareholders on or about
March 21, 1997. A copy of the Bank's 1995 and 1994 Annual
Reports, prepared in conformity with generally accepted
accounting principles, may be obtained at no cost by contacting
William S. Lance, Senior Vice President, First National Community
Bank, 102 East Drinker Street, Dunmore, Pennsylvania 18512. A
representative of Robert Rossi & Co., the Bank's independent
auditor, will attend the Annual Meeting and be available to
respond to any appropriate questions concerning the Annual Report
presented by the shareholders at the Annual Meeting.
SHAREHOLDER PROPOSALS
In the event of consummation of the Plan of Reorganization,
any shareholder who, in accordance with and subject to the
provisions of the proxy rules of the Securities and Exchange
Commission, wishes to submit a proposal for inclusion in the
Holding Company's proxy statement for its 1998 Annual Meeting of
Shareholders must deliver such proposal in writing to William S.
Lance, Senior Vice President, at the Holding Company's principal
executive offices, 102 East Drinker, Dunmore, Pennsylvania 18512,
no later than December 27, 1997.
If the Plan of Reorganization is not consummated, then any
shareholder of the Bank who wishes to submit a proposal for
inclusion in the Bank's proxy statement for its 1998 Annual
Meeting of Shareholders, must submit the proposal in writing to
William S. Lance, Senior Vice President of the Bank, at the
Bank's principal office at 102 Drinker Street, Dunmore,
Pennsylvania 18512, no later than January 26, 1998.
OTHER MATTERS
The Board of Directors does not know of any matters to be
presented for consideration other than the matters described in
the Proxy Statement/Prospectus, but if any matters are properly
presented, it is the intention of the persons named in the
accompanying Proxy to vote on such matters in accordance with
their best judgment.
51
<PAGE>
EXHIBIT A
PLAN OF REORGANIZATION
<PAGE>
EXHIBIT A
PLAN OF REORGANIZATION
THIS AGREEMENT made as of this March 12, 1997, among FIRST
NATIONAL COMMUNITY BANCORP, INC., a Pennsylvania business
corporation (the "Holding Company"), FIRST NATIONAL COMMUNITY
BANK, Dunmore, Pennsylvania, a national banking association (the
"Bank"), and FIRST NATIONAL COMMUNITY INTERIM BANK (In
Organization), a national banking association and a subsidiary of
the Holding Company (the "Interim Bank").
WHEREAS, the Holding Company, the Bank and the Interim Bank
desire to effect the formation of a bank holding company whereby
Bank and the Interim Bank will be merged, the surviving bank will
become a wholly-owned subsidiary of the Holding Company, and the
present shareholders of the Bank (except for those who perfect
dissenters' rights) will become shareholders of the Holding
Company, on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, and intending to be legally bound
hereby, the parties agree as follows:
SECTION 1. MERGER.
1.1. Agreement to Merge. Subject to the terms and
conditions hereinafter set forth, the parties hereto agree to
effect a merger of the Bank and the Interim Bank (the "Merger")
pursuant to the provisions of the Bank Merger Act of 1966, 12
U.S.C. Section 215a, (the "Bank Merger Act") in accordance with
the Plan
of Merger attached hereto as Exhibit A and made a part hereof
(the "Plan of Merger").
1.2. Holding Company Common Stock. The Holding Company
shall make available to the Bank and the Interim Bank a
sufficient number of shares of the Holding Company's Common Stock
to effect the Merger pursuant to the Plan of Merger.
SECTION 2. SHARES OF THE HOLDING COMPANY AND OF THE SURVIVING
BANK.
2.1. Conversion of Shares. The manner of converting the
shares of Capital Stock of the Bank into shares of Common Stock
of the Holding Company and the shares of Capital Stock of the
Interim Bank into shares of Capital Stock of the surviving bank
in the Merger shall be as set forth in Section 7 of the Plan of
Merger.
A-1
<PAGE>
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE HOLDING
COMPANY.
The Holding Company represents, warrants and agrees as
follows:
3.1. Organization and Standing. The Holding Company is
a corporation duly organized and validly existing under the
Pennsylvania Business Corporation Law of 1988, as amended.
3.2. Capitalization. The Holding Company is authorized
to issue Five Million (5,000,000) shares of Common Stock, par
value One Dollar and Twenty-five Cents ($1.25) per share, of
which two (2) shares are issued and outstanding. There are no
outstanding options, warrants, calls, convertible securities,
subscriptions or other commitments or rights of any nature with
respect to the Common Stock of the Holding Company.
3.3. Authority Relative to this Agreement. The
execution, delivery and performance of this Agreement have been
duly authorized by the Board of Directors of the Holding Company.
Subject to appropriate shareholder and regulatory approvals,
neither the execution and delivery of this Agreement nor the
consummation of the transactions provided for herein will violate
any agreement to which the Holding Company is a party or by which
it is bound or any law, order or decree or any provision of its
Articles of Incorporation or By-laws.
3.4. Absence of Liabilities. Prior to the effective
time of the Merger, the Holding Company will have engaged only in
the transactions contemplated by this Agreement and the Plan of
Merger, will have no material liabilities and will have incurred
no material obligations except in connection with its performance
of the transactions provided for in this Agreement and in the
Plan of Merger.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE BANK.
The Bank represents, warrants and agrees as follows:
4.1. Organization and Standing. The Bank is a national
banking association duly organized and validly existing under the
National Bank Act.
4.2. Capitalization. The Bank is authorized to issue
Five Million (5,000,000) shares of Capital Stock, par value One
Dollar and Twenty-five Cents ($1.25) per share, of which
1,090,424 shares are issued and outstanding. There are no
outstanding options, warrants, calls, convertible securities,
subscriptions or other commitments or rights of any nature with
respect to the Capital Stock of Bank.
4.3. Authority Relative to this Agreement. The
execution, delivery and performance of this Agreement and the
Plan of Merger have been duly authorized by the Board of
Directors of the Bank. Subject to appropriate shareholder and
regulatory approvals, neither the execution and delivery of this
Agreement or the Plan of Merger nor the consummation of the
transactions provided for herein or therein will violate any
agreement to which the Bank is a party or by which it is bound or
any law, order, or decree or any provision of its Articles of
Association or By-laws.
A-2
<PAGE>
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE INTERIM BANK.
The Interim Bank represents, warrants and agrees as follows:
5.1. Organization and Standing. The Interim Bank is a
national banking association in the process of formation under
the National Bank Act.
5.2. Capitalization. Upon formation, the Interim Bank
will be authorized to issue 5,000,000 shares of Capital Stock,
par value One Dollar and Twenty-five Cents ($1.25) per share, of
which 560,000 shares will be issued and outstanding and owned by
the Holding Company and eleven organizers immediately prior to
the Merger. Effective immediately after the Merger, the Interim
Bank will issue such additional shares of its capital stock so
that the Interim Bank's capital will equal that of the Bank
immediately prior to the Merger.
5.3. Authority Relative to this Agreement. The
execution, delivery and performance of this Agreement and the
Plan of Merger have been duly authorized by the Board of
Directors of the Interim Bank. Subject to appropriate
shareholder and regulatory approvals, neither the execution and
delivery of this Agreement or the Plan of Merger nor the
consummation of the transactions provided for herein or therein
will violate any agreement to which the Interim Bank is a party
or by which it is bound or any law, order, decree or any
provision of its Articles of Association or By-laws.
5.4. Absence of Liabilities. Prior to the effective
time of the Merger, the Interim Bank will have engaged only in
the transactions contemplated by this Agreement and the Plan of
Merger, will have no material liabilities and will have incurred
no material obligations except in connection with its performance
of the transactions provided for in this Agreement and in the
Plan of Merger.
SECTION 6. COVENANTS OF THE HOLDING COMPANY.
The Holding Company agrees that between the date hereof and
the effective time of the Merger:
6.1. Capitalization of the Interim Bank. The Holding
Company shall purchase a total of 551,200 shares of Capital
Stock, par value One Dollar and Twenty-five Cents ($1.25) per
share, of Interim Bank for One Dollar and Fifty Cents ($1.50) per
share, and shall cause the Interim Bank to do all things
necessary to obtain a charter as a national banking association
pursuant to the National Bank Act so as to permit the
consummation of the Merger provided for in the Plan of Merger.
The Holding Company may also purchase the subscription rights of
the organizers of the Interim Bank for the 8,800 shares of
Capital Stock issued to them in the aggregate. Such shares of
the organizers shall be purchased at One Dollar and Fifty-Cents
($1.50) per share. Effective immediately after the Merger, the
Holding Company shall purchase such additional shares of the
Capital Stock of Interim Bank so that the Interim Bank's capital
will equal the capital of the Bank immediately prior to the
Merger.
A-3
<PAGE>
6.2. Approval of Merger. The Holding Company, as a
shareholder of the Interim Bank, shall approve this Agreement and
the Plan of Merger in accordance with applicable law.
6.3. Best Efforts. The Holding Company will use its
best efforts to take, or cause to be taken, all actions or do, or
cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement and the Plan of
Merger, subject, however, to the requisite vote of the
shareholders of the Bank in accordance with the requirements of
the Bank Merger Act and applicable law.
SECTION 7. COVENANTS OF THE BANK.
The Bank agrees that between the date hereof and the
effective time of the Merger:
7.1. Shareholders Meeting. The Bank shall submit this
Agreement and the Plan of Merger to the vote of its shareholders
as provided by the Bank Merger Act and other applicable laws at
an Annual Meeting of Shareholders to be held on May 21, 1997, and
any adjournment or postponement thereof.
7.2. Best Efforts. The Bank will use its best efforts to
take, or cause to be taken, all actions or do, or cause to be
done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the
transactions contemplated by this Agreement and the Plan of
Merger, subject, however, to the requisite vote of the
shareholders of the Bank in accordance with the requirements of
the Bank Merger Act and applicable law.
SECTION 8. CONDITIONS TO OBLIGATIONS OF THE PARTIES.
The obligations of the parties to consummate this Agreement
and the Plan of Merger shall be subject to the following
conditions:
8.1. Representations and Warranties: Performance of
Covenants. The representations and warranties and covenants
contained in Sections 3, 4, 5, 6 and 7 hereof shall be true as of
and at the effective time of the Merger, and each party shall
have performed all obligations required hereby to be performed by
it prior to the effective time of the Merger.
8.2. Bank Shareholder Approval. The shareholders of
Bank shall have duly approved this Agreement and the Plan of
Merger in accordance with applicable laws.
8.3. Regulatory Approvals. Any federal or state
regulatory agency having jurisdiction (banking or otherwise), to
the extent that any consent or approval is required by applicable
laws or regulations for the consummation of this Agreement and
the Plan of Merger, shall have granted any necessary consent or
approval.
A-4
<PAGE>
8.4. Registration Statement. The registration statement
(the "Registration Statement") filed by the Holding Company, if
required pursuant to the Securities Act of 1933, as amended,
covering the shares of the Holding Company's Common Stock to be
issued pursuant to the Plan of Merger shall have been declared
effective by the Securities and Exchange Commission; and no stop
order suspending the effectiveness of the Registration Statement
shall have been issued and no proceeding for that purpose shall
have been initiated or, to the knowledge of the Holding Company,
shall be contemplated or threatened by the Securities and
Exchange Commission.
8.5. Litigation. There shall be no litigation or
proceeding pending or threatened for the purpose of enjoining,
restraining or preventing the consummation of the Merger, this
Agreement or the Plan of Merger or otherwise claiming that such
consummation is improper.
8.6. Tax Opinion. A tax opinion shall have been
obtained from Shumaker Williams, P.C. of Camp Hill, Pennsylvania,
Special Counsel to the Bank that the conversion of Bank's Capital
Stock into the Holding Company's Common Stock will be tax free
for federal income tax purposes; provided, however, that the
requirements of this Section 8.6 may be waived by the affirmative
vote of a majority of the Board of Directors of each of the
parties hereto.
SECTION 9. TERMINATION, WAIVER AND AMENDMENT.
9.1. Circumstances of Termination. Anything herein or
elsewhere to the contrary notwithstanding, this Agreement and the
Plan of Merger may be terminated at any time before the effective
time of the Merger (whether before or after action with respect
thereto by the Bank's shareholders) only:
(a) by the mutual consent of the Board of Directors
of the Bank, the Interim Bank and the Holding
Company evidenced by an instrument in writing
signed on behalf of each by any two of their
respective officers; or
(b) by the Board of Directors of the Bank if in its
sole judgment the Merger would be inadvisable
because of the number of shareholders of the Bank
who perfect their dissenter's rights in accordance
with applicable law and the Plan of Merger, or if,
in the sole judgment of such Board, the Merger
would not be in the best interests of the Bank or
its employees, depositors or shareholders for any
reason whatsoever.
9.2. Effect of Termination. In the event of the
termination and abandonment hereof, this Agreement and the Plan
of Merger shall become void and have no effect, without any
liability on the part of any of the parties, their directors,
officers or shareholders, except as set forth in Section 10
hereof.
A-5
<PAGE>
9.3. Waiver. Any of the terms or conditions of this
Agreement and the Plan of Merger may be waived in writing at any
time by the Bank by action taken by its Board of Directors,
whether before or after action by the Bank's shareholders;
provided, however, that such action shall be taken only if, in
the judgment of the Board of Directors, such waiver will not have
a materially adverse effect on the benefits intended to be
granted hereunder to the shareholders of the Bank.
9.4. Amendment. Anything herein or elsewhere to the
contrary notwithstanding, to the extent permitted by law, this
Agreement and the Plan of Merger may be amended at any time by
the affirmative vote of a majority of the Board of Directors of
each of the Bank, the Holding Company and the Interim Bank,
whether before or after action with respect thereto by the Bank's
shareholders and without further approval of such amendment by
the shareholders of the parties hereto; provided, however, that
Section 2.1 of this Agreement and Section 7 of the Plan of Merger
may not be amended after the meeting of the Bank's shareholders
referred to in Section 7.1 hereof except by the vote of Bank
shareholders required for the approval of the Merger by such
shareholders.
SECTION 10. EXPENSES.
10.1. General. Each party hereto will pay its own
expenses incurred in connection with this Agreement and the Plan
of Merger, whether or not the transactions contemplated herein
are effected.
10.2. Special Dividend. Upon the effective time of the
Merger, the surviving bank shall pay a special dividend to the
Holding Company in an amount equal to the sum of:
(a) the expenses of the Holding Company in connection
with the transactions contemplated herein, if any;
(b) the principal amount of any loan that the Holding
Company shall have obtained to purchase shares of
Capital Stock of the Interim Bank as provided in
6.1 hereof; and
(c) the amount of any interest incurred by the
holding Company on account of any loans obtained
by it in order to purchase shares of Capital
Stock of the Interim Bank as provided in Section
6.1 hereof.
SECTION 11. MISCELLANEOUS.
11.1. Restrictions on Affiliates. The Holding Company
may cause stock certificates representing any shares issued to
any shareholder who may be deemed to be an affiliate of the Bank,
within the meaning of Rule 145 under the Securities Act of 1933,
as amended, to bear a legend setting forth any applicable
restrictions on transfer thereof under Rule 145 and may cause
stop-transfer orders to be entered with its transfer agent with
respect to any such certificates.
A-6
<PAGE>
11.2. No Brokers. Each of the parties represents to the
other that it has not incurred and will not incur any liability
for brokerage fees or agents' commissions in connection with this
Agreement, the Plan of Merger and the transactions contemplated
hereby.
11.3. Right to Withhold Dividends. The Board of
Directors of the Holding Company reserves the right to withhold
dividends from any former shareholder of the Bank who fails to
exchange certificates representing the shares of the Bank for
certificates representing the shares of the Holding Company in
accordance with Section 7 of the Plan of Merger.
11.4. Failure to Surrender Certificates. Shareholders
of the Holding Company may be required, at the option of the
Holding Company, to surrender certificates representing the
shares of the Bank for certificates representing the shares of
the Holding Company within two (2) years of the date of the
letter of transmittal as provided in Section 7 of the Plan of
Merger. In the event that any certificates are not surrendered
for exchange within such two (2) year period, the shares,
represented by appropriate certificates of the Holding Company
that would otherwise have been delivered in exchange for the
unsurrendered certificates, may be sold and the net proceeds of
the sale shall be held for the shareholders of the unsurrendered
certificates to be paid to them upon surrender of their
outstanding certificates. From and after such sale, the sole
right of the holders of the unsurrendered outstanding
certificates shall be the right to collect the net sales proceeds
held for their account.
11.5. Entire Agreement. This Agreement (including the
Plan of Merger attached as an exhibit hereto) contains the entire
agreement among the parties with respect to the subject matter
hereof and supersedes all prior agreements, written or oral, with
respect thereto.
11.6. Captions. Descriptive headings are for
convenience only and shall not control or affect the meaning or
construction of any provisions of this Agreement or the Plan of
Merger.
11.7. Applicable Law. This Agreement and the Plan of
Merger shall be governed by the laws of the Commonwealth of
Pennsylvania applicable to contracts executed in and to be
performed exclusively within the Commonwealth of Pennsylvania,
regardless of where they are executed.
11.8. Counterparts. This Agreement may be executed in
any number of counterparts, and each such counterpart shall be
deemed to be an original instrument, but all such counterparts
together shall constitute but one agreement. IN WITNESS WHEREOF,
this Agreement has been executed as of the day and year first
above mentioned.
A-7
<PAGE>
(SEAL)
ATTEST: FIRST NATIONAL COMMUNITY
BANCORP, INC.
/s/ Dorothy Hoffman By: /s/ J. David Lombardi
- --------------------- ------------------------
Dorothy Hoffman, J. David Lombardi,
Assistant Secretary President
(SEAL)
ATTEST: FIRST NATIONAL COMMUNITY
BANK
/s/Robert J. Mancuso, By: /s/ J. David Lombardi
- --------------------------- ---------------------------
Robert J. Mancuso, Cashier J. David Lombardi,
President
(SEAL)
ATTEST: FIRST NATIONAL COMMUNITY
INTERIM BANK (In Organization)
/s/ Robert J. Mancuso By: /s/ J. David Lombardi
- --------------------------- ----------------------------
Robert J. Mancuso, Cashier J. David Lombardi, President
A-8
<PAGE>
EXHIBIT B
PLAN OF MERGER
<PAGE>
EXHIBIT B
PLAN OF MERGER
FIRST NATIONAL COMMUNITY BANK
with and into
FIRST NATIONAL COMMUNITY INTERIM BANK
under the charter
FIRST NATIONAL COMMUNITY INTERIM BANK
under the title of
FIRST NATIONAL COMMUNITY BANK
THIS AGREEMENT made between First National Community Bank
(hereinafter referred to as "Bank"), a banking association
organized under the laws of the United States, being located at
102 East Drinker Street, Dunmore, Pennsylvania 18512-2432,
County of Lackawanna, in the Commonwealth of Pennsylvania, with a
capital of Six Million Two Hundred Fifty Thousand Dollars
($6,250,000) divided into Five Million (5,000,000) shares of
common stock each of One Dollar and Twenty-five Cents ($1.25) par
value, surplus of approximately $6,267,000, and undivided
profits, including capital reserves of approximately $19,617,000,
and unrealized holding gains on available-for-sale securities of
$384,000, as of December 31, 1996 and First National Community
Interim Bank (hereinafter referred to as "Interim Bank"), a
banking association organized under the laws of the United
States, being located at 102 East Drinker Street, Dunmore,
County of Lackawanna, in the Commonwealth of Pennsylvania, with
aggregate capital stock of $700,000 divided into 560,000 shares
of common stock, each of One Dollar and Twenty-five cents ($1.25)
par value, surplus of One Hundred Forty Thousand Dollars
($140,000), and no undivided profits and capital reserves, as of
the effective time of the merger (the "Effective Time");
(provided, that Interim Bank shall issue such additional shares
of its common stock as is
B-1
<PAGE>
necessary so that immediately after the Effective Time, its
capital will be the same as the Bank's capital immediately prior
to the Effective Time), each acting pursuant to a resolution of
its board of directors, adopted by the vote of a majority of its
directors, pursuant to the authority given by and in accordance
with the provisions of the Act of November 7, 1918, as amended
(12 U.S.C. Section 215a) (the "Bank Merger Act"), witnesseth as
follows:
Section 1.
The Bank shall be merged into the Interim Bank under the
charter of the Interim Bank and with the charter number of the
Bank.
Section 2.
The Receiving Association (hereinafter referred to as the
"Association") shall be the Interim Bank, which upon completion
of this transaction, shall change its name to and be known as
"First National Community Bank".
Section 3.
The business of the Association shall be that of a national
banking association. This business shall be conducted by the
Association at its main office which shall be located at 102 East
Drinker Street, Dunmore, County of Lackawanna, Pennsylvania
18512-2432, and at its legally established branches.
Section 4.
The aggregate amount of capital stock of the Association
upon completion of the transaction shall be $700,000, divided
into 560,000 shares of common stock, each of One Dollar and
Twenty- Five Cents par value, and at the Effective Time, the
Association shall have a surplus of $140,000, and undivided
profits, including capital reserves, which when combined with the
capital and surplus will be equal to the combined capital
structures of the merging banks as stated
B-2
<PAGE>
in the preamble of this Agreement, adjusted, however, for normal
earnings and expenses between December 31, 1996, and the
Effective Time.
Section 5.
All assets of the Bank, as they exist at the Effective Time,
shall pass to and vest in the Association without any conveyance
or other transfer. The Association shall be responsible for all
of the liabilities of every kind and description of each of the
merging banks existing as of the Effective Time. A committee of
six, three to be appointed by the Board of Directors of each bank
at the Effective Time, shall have satisfied themselves that the
statement of condition of each bank as of December 31, 1996,
fairly presents its financial condition and since such date there
has been no material adverse change in the financial condition or
business of either bank.
Section 6.
The Bank shall contribute to the Association acceptable
assets having a book value, over and above its liability to its
creditors, of at least $27,631,000, and having an estimated fair
value over and above its liability to its creditors, of at least
$27,631,000 or one hundred percent (100%) of the estimated fair
value of excess acceptable assets over and above liabilities to
creditors, to the Association, adjusted, however, for normal
earnings and expenses between December 31, 1996, and the
Effective Time, and for allowance of cash payments, if any,
permitted under this Agreement.
Section 7.
The manner and basis of converting shares of common stock of
the Bank and Interim Bank shall be as follows:
7.1. Stock of the Interim Bank. The shares of common
stock, par value One Dollar and Twenty-five Cents ($1.25) per
share, of the Interim Bank issued and outstanding immediately
B-3
<PAGE>
prior to the Effective Time shall continue to be issued and
outstanding shares of the Association and shall be held by the
Holding Company, First National Community Bancorp, Inc. From and
after the Effective Time, each certificate that, prior to the
Effective Time represented shares of the Interim Bank, shall
evidence ownership of shares of the Association on the basis
hereinbefore set forth.
7.2. Stock of the Bank. Each share of Common Stock, par
value of One Dollar and Twenty-five Cents ($1.25) per share, of
the Bank issued and outstanding immediately prior to the
Effective Time (except for shares owned by shareholders who shall
have duly perfected dissenters' rights in accordance with this
Plan of Merger and applicable law) shall, on the Effective Time,
by virtue of the merger and without any action on the part of the
holder thereof, be converted into and become one (1) share of
fully paid and nonassessable common stock, par value One Dollar
and Twenty-five Cents ($1.25) per share, of First National
Community Bancorp, Inc., a Pennsylvania business corporation and
a bank holding company under the provisions of the Bank Holding
Company Act of 1956, as amended, (the "Holding Company"). From
and after the Effective Time, each certificate which, prior to
the Effective Time, represented shares of common stock of the
Bank shall evidence ownership of shares of common stock of the
Holding Company on the basis set forth herein.
7.3. Treasury Stock. Each share of common stock, par
value One Dollar and Twenty-five Cents ($1.25) per share, of the
Bank held as a treasury share immediately prior to the Effective
Time, if any, shall thereupon and without notice be cancelled.
7.4. Exchange Agent. If and when the Holding Company
determines, the Bank shall designate the Secretary or another
officer of the Holding Company or the Bank to act as exchange
agent to receive from the holders thereof certificates that
immediately prior to the Effective Time
B-4
<PAGE>
represented the Bank's common stock and to exchange such
certificates for common stock of the Holding Company as provided
herein.
7.5. Exchange Procedure. If appointed pursuant to
Section 7.4 hereof, the exchange agent shall promptly mail to
each record holder as of the date of exchange of an outstanding
certificate or certificates that prior to the Effective Time
represented shares of the Bank's common stock, a letter of
transmittal (which shall specify how delivery shall be effected,
and that risk of loss and title to such certificate or
certificates shall pass only upon proper delivery of such
certificate or certificates, together with a properly executed
letter of transmittal to the exchange agent at its address stated
therein) and instructions for use in effecting the surrender of
such certificate or certificates for exchange therefor. Upon
surrender to the exchange agent of such certificate or
certificates, together with such letter of transmittal, properly
executed, the exchange agent shall exchange such certificate or
certificates for shares of common stock of the Holding Company as
provided herein.
7.6. Dissenters' Rights. Shareholders of the Bank shall
be entitled to exercise the rights provided in the Bank Merger
Act with respect to this Plan of Merger.
Section 8.
Neither of the banks shall declare nor pay any dividend to
its shareholders between the date of this Agreement and the time
at which the merger shall become effective except for the
declaration and payment of any normal dividend, nor dispose of
any of its assets in any other manner except in the normal course
of business and for adequate value.
Section 9.
The present Board of Directors of the Bank shall continue to
serve as the Board of Directors of the Association until the next
annual meeting or until such time as their successors have been
elected and have qualified.
B-5
<PAGE>
Section 10.
Effective as of the time this merger shall become effective
as specified in the "Certificate Approving Merger" to be issued
by the Comptroller of the Currency, the articles of association
of the Association shall read in their entirety as follows:
FIRST. The title of this Association shall be First
National Community Bank.
SECOND. The Main Office of the Association shall be in
Dunmore, County of Lackawanna, Commonwealth of Pennsylvania. The
general business of the Association shall be conducted at its
main office and its branches.
THIRD. The Board of Directors of this Association shall
consist of not less than five nor more than twenty-five, the
exact number to be fixed and determined from time to time by
resolution of a majority of the full Board of Directors or by
resolution of a majority of the shareholders at any annual or
special meeting thereof. Each director, during the full term of
his or her directorship, shall own a minimum One Thousand Dollars
($1,000) aggregate par value in this association or One Thousand
Dollars ($1,000) par value or market value or equity interest in
a company that has control of the bank. Any amount of the
specified interest shall conform to the requirements of 12 U.S.C.
72, as amended. Any vacancy in the Board of Directors may be
filled by action of a majority of the remaining directors between
meetings of shareholders; provided however, that the Board of
Directors may not increase the number of directors between
meetings of shareholders to a number which: (1) exceeds by more
than two the number of directors last elected by shareholders
when the number was 15 or less; and (2) exceeds by more than four
the number of directors last elected by shareholders when the
number was 16 or more, but in no event shall the number of
directors exceed 25.
Terms of directors, including directors selected to fill
vacancies, shall expire at the next regular meeting of
shareholders at which directors are elected, unless the directors
resign or are removed from office. Despite the expiration of a
director's term, the director shall continue to serve until his
or her successor is elected and qualifies or until there is a
decrease in the number of directors and his or her position is
eliminated.
Honorary or advisory members of the Board of Directors,
without voting power or power of final decision in matters
concerning the business of the Association, may be appointed by
resolution of a majority of the full Board of Directors, or by
resolution of shareholders at any annual meeting or special
meeting. Honorary or advisory directors shall not be counted to
determine the number of directors of the Association or the
presence of a quorum in connection with any board action, and
shall not be required to own qualifying shares.
B-6
<PAGE>
FOURTH. There shall be an annual meeting of the
shareholders, the purpose of which shall be the election of
Directors and the transaction of whatever other business may be
brought before said meeting. It shall be held at the main office
or other convenient place as the Board of Directors may
designate, on the day of each year specified therefor in the
Bylaws, or if that day falls on a legal holiday in the state in
which the Association is located, on the next following banking
day. If no election is held on that day, it may be held on any
subsequent day according to such lawful rules as may be
prescribed by the Board of Directors.
In all elections of directors, the number of votes each
common shareholder may cast will be determined by multiplying the
number of shares he or she owns by the number of directors to be
elected. Those votes may be cumulated and cast for a single
candidate or may be distributed among two or more candidates in
the manner selected by the shareholders. On all other matters,
each common shareholder shall be entitled to one vote for each
share of stock held by him or her. If the issuance of preferred
stock with voting rights has been authorized by a vote of
shareholders owning a majority of the common stock of the
Association, preferred shareholders will not have cumulative
voting rights and will not be included within the same class as
common shareholders, for purposes of elections of directors.
Nominations for election to the Board of Directors may be
made by the Board of Directors or by any shareholder of any
outstanding class of capital stock of the Association entitled to
vote for election of directors. Nominations other than those
made by or on behalf of the existing management shall be made in
writing and be delivered or mailed to the President of the
Association not less than fourteen (14) days nor more than fifty
(50) days prior to any meeting of shareholders called for the
election of directors; provided, however, that if less than
twenty-one (21) days notice of the meeting is given to
shareholders, such nominations shall be mailed or delivered to
the President of the Association not later than the close of
business on the seventh (7th) day following the day on which the
notice of meeting was mailed. Such notification shall contain
the following information to the extent known to the notifying
shareholder:
(1) The name and address of each proposed nominee;
(2) The principal occupation of each proposed nominee;
(3) The total number of shares of capital stock of the
Association that will be voted for each proposed
nominee;
(4) The name and residential address of the notifying
shareholder; and
(5) The number of shares of capital stock of the
Association owned by the notifying shareholder.
Nominations not made in accordance herewith may, in his/her
discretion, be disregarded by the Chairman of the meeting, and
the vote tellers may disregard all votes cast for each such
nominee.
B-7
<PAGE>
A director may resign at any time by delivering written
notice to the Board of Directors, its Chairman, or to the
Association, which resignation shall be effective when the notice
is delivered unless the notice specifies a later effective date.
A director may be removed by shareholders at a meeting
called to remove him or her, when notice of the meeting stating
that the purpose or one of the purposes is to remove him or her
is provided, if there is a failure to fulfill one of the
affirmative requirements for qualification, or for cause,
provided, however, that a director may not be removed if the
number of votes sufficient to elect him or her under cumulative
voting is voted against his or her removal.
FIFTH. The authorized amount of capital stock of this
Association shall be Five Million (5,000,000) shares of common
stock of the par value of One Dollar and Twenty-five Cents
($1.25) each; but said capital stock may be increased or
decreased from time to time, in accordance with the provisions of
the laws of the United States.
No holder of shares of capital stock of any class of the
Association shall have any preemptive or preferential right of
subscription to any shares of any class of stock of the
Association, whether now or hereafter authorized, or to any
obligations convertible into stock of the Association, issued, or
sold, nor any right of subscription to any thereof other than
such, if any, as the Board of Directors, in its discretion may
from time to time determine and at such price as the Board of
Directors may from time to time fix.
Unless otherwise specified in the articles of association or
required by law, (i) all matters requiring shareholder action,
including amendments to the articles of association, must be
approved by shareholders owning a majority voting interest in the
outstanding voting stock, and (ii) each shareholder shall be
entitled to one vote per share.
SIXTH. The Board of Directors shall appoint one of its
members President of this Association and one of its members
Chairman of the Board of Directors of this Association. The
Board of Directors shall have the power to appoint one or more
Vice Presidents; a Secretary who shall keep the minutes of the
directors' and shareholders' meetings and be responsible for
authentication of the records of the Association; and a Cashier
and such other officers and employees as may be required to
transact the business of this Association. A duly appointed
officer may appoint one or more officers or assistant officers if
authorized by the Board of Directors in accordance with the
Bylaws.
The Board of Directors shall have the power: to define the
duties of the officers and employees and agents of the
Association; to delegate the performance of its duties, but not
the responsibility for its duties, to the officers, employees,
and agents of the Association; to fix the compensation to be paid
to them; to dismiss them; to require bonds from them and to fix
the penalty thereof; to ratify written policies authorized by the
Association's management or committees of the board; to regulate
the manner in which any increase of the capital of the
Association shall be made; to manage and administer the business
and affairs of the Association; to make all Bylaws that may be
lawful for them to make, and amend such Bylaws, not inconsistent
with law or Articles of Association; to make contracts; and
generally to do and perform all acts that may be legal for a
Board of Directors to do and perform.
B-8
<PAGE>
SEVENTH. The Board of Directors shall have the power to
change the location of the main office to any other place within
the limits of Dunmore, Pennsylvania, without the approval of the
shareholders but subject to the approval of the Comptroller of
the Currency; and shall have the power to establish or change the
location of any branch or branches of the Association to any
other location, without the approval of the shareholders but
subject to the approval of the Comptroller of the Currency.
EIGHTH. The corporate existence of this Association shall
continue until terminated in accordance with the laws of the
United States.
NINTH. The Board of Directors of this Association, or the
Chairman of the Board or the President may call a special meeting
of shareholders at any time. Unless otherwise provided by the
Bylaws or the laws of the United States or waived by
shareholders, a notice of the time, place, and purpose of every
annual and special meeting of the shareholders shall be given by
first-class mail, postage prepaid, mailed at least ten (10) days,
and no more than sixty (60) days, prior to the date of such
meeting to each shareholder of record at his/her address as shown
upon the books of this Association.
TENTH. This Association may, upon the affirmative vote
of a majority of its Board of Directors, purchase insurance for
the purpose of indemnifying its directors, officers, other
employees and agents, to the extent that such indemnification is
allowed in the following paragraph. Such insurance may, but need
not be, for the benefit of all directors, officers, employees or
agents.
This Association shall indemnify its officers and directors
and the officers and directors of its subsidiaries, if any, and
may indemnify the Association's employees and agents and the
employees and agents of its subsidiaries, if any, to the full
extent permitted by and under the terms and conditions of the
Pennsylvania Business Corporation Law of 1988, as amended, from
time to time, or such successor statute providing indemnification
for a Pennsylvania general business corporation or the relevant
provisions of the Model Business Corporation Act, and the
Association may, by action of its Board of Directors, indemnify
all other persons whom it may lawfully indemnify under the Act;
provided however, such indemnification provisions shall not allow
the indemnification of directors, officers, employees or agents
of the Association against expenses, penalties, or other payments
incurred in an administrative proceeding or action instituted by
an appropriate bank regulatory agency which proceeding or action
results in a final order assessing civil money penalties or
requiring affirmative action by an individual or individuals in
the form of payments to this Association.
The foregoing right of indemnification or reimbursement
shall not be exclusive of other rights to which such persons,
their heirs, executors, or administrators, may be entitled as a
matter of law.
B-9
<PAGE>
ELEVENTH. These Articles of Association may be amended at
any regular or special meeting of the shareholders by the
affirmative vote of the holders of a majority of the stock of
this Association, unless the vote of the holders of a greater
amount of stock is required by law, and in that case, by the vote
of the holders of such greater amount.
Section 11.
This Agreement may be terminated by the unilateral action of
the Board of Directors of any participant prior to the approval
of the stockholders of said participant or by the mutual consent
of the Board of all participants after any shareholder group has
taken affirmative action. Since time is of the essence to this
Agreement, if for any reason the transaction shall not have been
consummated by December 31, 1997, this Agreement shall terminate
automatically as of that date unless extended, in writing, prior
to said date by mutual action of the Boards of Directors of the
participants.
Section 12.
This Agreement shall be approved, adopted, ratified and
confirmed by the affirmative vote of the shareholders of each of
the banks owning at least two-thirds (2/3) of its capital stock
outstanding, at a meeting to be held on the call of the
Directors; and the merger shall become effective at the time
specified in a certificate to be issued by the Comptroller of the
Currency of the United States, under the seal of office,
approving the merger.
Section 13.
The obligations of the Bank and the Interim Bank to effect
the merger shall be subject to all of the terms and conditions
contained in the Plan of Reorganization.
B-10
<PAGE>
Section 14.
The persons who are executive or other officers of the Bank
immediately prior to the consummation of the merger shall serve
as the officers of the Association from and after the Effective
Time and until such time as the Board of Directors of the
Association shall otherwise determine. At the Effective Time,
all persons who are employees of the Bank and the Interim Bank
shall become employees of the Association.
B-11
<PAGE>
WITNESS the signatures and seals of said merging banks this
March 12, 1997, each hereunto set by its President or a Vice
President and attested by its Cashier or Secretary, pursuant to a
resolution of its Board of Directors, acting by a majority
thereof, and witness the signatures hereto of a majority of each
of said Boards of Directors.
ATTEST: FIRST NATIONAL COMMUNITY BANK
/s/ Robert J. Mancuso By: /s/ J. David Lombardi
- ------------------------- ----------------------------
Robert J. Mancuso J. David Lombardi
/s/ Angelo F. Bistocchi
----------------------------
Angelo F. Bistocchi
/s/ Michael G. Cestone
------------------------------
Michael G. Cestone
/s/ Michael J. Cestone, Jr.
------------------------------
Michael J. Cestone, Jr.
/s/ Dominick L. DeNaples
-------------------------------
Dominick L. DeNaples
/s/ Louis A. DeNaples
-------------------------------
Louis A. DeNaples
/s/ Joseph J. Gentile
-------------------------------
Joseph J. Gentile
/s/ Martin F. Gibbons
-------------------------------
Martin F. Gibbons
/s/ Jospeh O. Haggerty
-------------------------------
Joseph O. Haggerty
/s/ George N. Juba
-------------------------------
George N. Juba
/s/ J. David Lombardi
-------------------------------
J. David Lombardi
/s/ John R. Thomas
-------------------------------
John R. Thomas
Directors of First National Community Bank
Lackawanna County, Pennsylvania
B-12
<PAGE>
ATTEST: FIRST NATIONAL COMMUNITY
INTERIM BANK
/s/ Robert J. Mancuso By: /s/ J. David Lombardi
- ------------------------- ----------------------------
Robert J. Mancuso J. David Lombardi
/s/ Angelo F. Bistocchi
----------------------------
Angelo F. Bistocchi
/s/ Michael G. Cestone
------------------------------
Michael G. Cestone
/s/ Michael J. Cestone, Jr.
------------------------------
Michael J. Cestone, Jr.
/s/ Dominick L. DeNaples
-------------------------------
Dominick L. DeNaples
/s/ Louis A. DeNaples
-------------------------------
Louis A. DeNaples
/s/ Joseph J. Gentile
-------------------------------
Joseph J. Gentile
/s/ Martin F. Gibbons
-------------------------------
Martin F. Gibbons
/s/ Joseph O. Haggerty
-------------------------------
Joseph O. Haggerty
/s/ George N. Juba
-------------------------------
George N. Juba
/s/ J. David Lombardi
-------------------------------
J. David Lombardi
/s/ John R. Thomas
-------------------------------
John R. Thomas
Directors of First National Community
Interim Bank, Lackawanna County,
Pennsylvania
B-13
<PAGE>
COMMONWEALTH OF PENNSYLVANIA :
: SS.
COUNTY OF LACKAWANNA :
On this March 12, 1997, before me, a Notary Public for the
State and County aforesaid, personally came J. David Lombardi, as
President, and Robert J. Mancuso, as Cashier, of First National
Community Bank, and each in his/ her said capacity acknowledged
the foregoing instrument to be the act and deed of said national
banking association and the seal affixed thereto to be its seal;
and came also Angelo F. Bistocchi, Michael G. Cestone, Michael J.
Cestone, Jr., Dominick L. DeNaples, Louis A. DeNaples, Joseph J.
Gentile, Martin F. Gibbons, Joseph O. Haggerty, George N. Juba,
J. David Lombardi and John R. Thomas, being at least a majority
of the Board of Directors of said national banking association,
and each of them acknowledged said instrument to be the act and
deed of said national banking association and of himself as
director thereof.
WITNESS my official seal and signature this day and year
aforesaid.
/s/ Maria A. Sisco
(Seal of Notary) Notary Public, Lackawanna County
My commission expires:
COMMONWEALTH OF PENNSYLVANIA :
: SS.
COUNTY OF LACKAWANNA :
On this March 12, 1997, before me, a Notary Public for the
Commonwealth and County aforesaid, personally came J. David
Lombardi, as President, and Robert J. Mancuso, as Cashier, of
First National Community Interim Bank, and each in his/ her
capacity acknowledged the foregoing instrument to be the act and
deed of said national banking association and the seal affixed
thereto to be its seal; and came also Angelo F. Bistocchi,
Michael G. Cestone, Michael J. Cestone, Jr., Dominick L.
DeNaples, Louis A. DeNaples, Joseph J. Gentile, Martin F.
Gibbons, Joseph O. Haggerty, George N. Juba, J. David Lombardi
and John R. Thomas, being at least a majority of the Board of
Directors of said national banking association and each of them
acknowledged said instrument to be the act and deed of said
national banking association and of himself as a director
thereof.
WITNESS my official seal and signature this day and year
aforesaid.
/s/ Maria A. Sisco
(Seal of Notary) Notary Public, Lackawanna County
My commission expires:
B-14
<PAGE>
EXHIBIT C
ARTICLES OF INCORPORATION OF
FIRST NATIONAL COMMUNITY BANCORP, INC.
<PAGE>
EXHIBIT C
9713-347 Filed in the Department
of State on FEB 04 1997
/S/
-------------------------
Secretary of the
Commonwealth
2737205 ARTICLES OF INCORPORATION
OF
FIRST NATIONAL COMMUNITY BANCORP, INC.
In compliance with the requirements of 15 Pa.C.S. Section
1306 (relating to Articles of Incorporation), the undersigned,
desiring to incorporate a business corporation for profit, hereby
state(s) that:
1. The name of the Corporation is First National Community
Bancorp, Inc.
2. The address, including street and number, of this
Corporation's initial registered office in this
Commonwealth is 102 East Drinker Street, Dunmore,
Pennsylvania 18512-2491, Lackawanna County.
3. The Corporation is incorporated under the provisions of
the Pennsylvania Business Corporation Law of 1988, as
amended. (15 Pa. C.S. Sections 1101 et seq.)
4. The purpose or purposes of the Corporation are to have
unlimited power to engage in and to do any lawful act
concerning any or all business for which corporations
may be incorporated under the provisions of the
Pennsylvania Business Corporation Law of 1988, as
amended.
5. The aggregate number of shares that the Corporation
shall have authority to issue is five million
(5,000,000) shares of Common Stock having a par value
of One Dollar and Twenty-five Cents ($1.25) per share.
6. The name and address, including street and number, if
any, of each of the Incorporators, and the number and
class of shares subscribed to by each Incorporator is:
Name Address Number and Class of Shares
Louis A. DeNaples 400 Mill Street One Share of Common
Dunmore, PA 18512 Stock
J. David Lombardi P.O. Box 629 One Share of Common
Dunmore, PA 18512 Stock
C-1
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9713-347
7. No merger, consolidation, liquidation or dissolution of
the Corporation, nor any action that would result in
the sale or other disposition of all or substantially
all of the assets of the Corporation shall be valid
unless first approved by the affirmative vote of:
(a) the holders of at least seventy-five percent (75%) of
the outstanding shares of Common Stock of the
Corporation; or
(b) the holders of at least fifty-one percent (51%) of the
outstanding shares of Common Stock of the Corporation,
provided that such transaction has received the prior
approval of at least a majority of the Board of
Directors.
8. Cumulative voting rights shall not exist with respect
to the election of Directors.
9. (a) The Board of Directors may, if it deems advisable,
oppose a tender or other offer for the Corporation's securities,
whether the offer is in cash or in the securities of a
corporation or otherwise. When considering whether to oppose an
offer, the Board of Directors may, but is not legally obligated
to, consider any relevant, germane or pertinent issue; by way of
illustration, but not to be considered any limitation on the
power of the Board of Directors to oppose a tender or other offer
for this Corporation's securities, the Board of Directors may,
but shall not be legally obligated to, consider any or all of the
following:
(i) Whether the offer price is acceptable based on
the historical and present operating results or
financial condition of the Corporation;
(ii) Whether a more favorable price could be obtained
for this Corporation's securities in the future;
(iii) The social and economic effects of the offer or
transaction on this Corporation and any of its
subsidiaries, employees, depositors, loan and
other customers, creditors, shareholders and
other elements of the communities in which this
Corporation and any of its subsidiaries operate
or are located;
(iv) The reputation and business practice of the
offeror and its management and affiliates as they
would affect the shareholders, employees,
depositors and customers of the Corporation and
its subsidiaries and the future value of the
Corporation's stock;
(v) The value of the securities (if any) which the
offeror is offering in exchange for the
Corporation's securities, based on an analysis of
the worth of the corporation or other entity
whose securities are being offered;
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9713-349
(vi) The business and financial conditions and
earnings prospects of the offeror, including, but
not limited to, debt service and other existing
or likely financial obligations of the offeror,
and the possible affect of such conditions upon
this Corporation and any of its subsidiaries and
the other elements of the communities in which
this Corporation and any of its subsidiaries
operate or are located;
(vii) Any antitrust or other legal and regulatory
issues that are raised by the offer.
(b) If the Board of Directors determines that an
offer should be rejected, it may take any lawful
action to accomplish its purpose including, but
not limited to, any or all of the following:
advising shareholders not to accept the offer;
litigation against the offeror; filing complaints
with all governmental and regulatory authorities;
acquiring the offeror corporation's securities;
selling or otherwise issuing authorized but
unissued securities or treasury stock or granting
options with respect thereto; acquiring a company
to create an antitrust or other regulatory
problem for the offeror; and obtaining a more
favorable offer from another individual or
entity.
10. A majority of the Board of Directors of this
Corporation, or the Chairman of the Board, or the President of
the Corporation, or the Executive Committee may call a special
meeting of shareholders at any time.
11. Articles 7, 8, 9, 10 and 11 shall not be amended
unless first approved by the affirmative vote of the holders of
at least seventy-five (75%) of the outstanding shares of Common
Stock of the Corporation.
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<PAGE>
9713-350
IN TESTIMONY WHEREOF, the incorporators have signed these
Articles of Incorporation this 8th day of January, 1997.
/s/ Louis A. DeNaples /s/ J. David Lombardi
- ------------------------- -------------------------
Louis A. DeNaples J. David Lombardi
C-4
<PAGE>
EXHIBIT D
BY-LAWS OF FIRST NATIONAL
COMMUNITY BANCORP, INC.
<PAGE>
EXHIBIT D
BY-LAWS
of
FIRST NATIONAL COMMUNITY BANCORP, INC.
Article 1
CORPORATION OFFICE
Section 1.1 The Corporation shall have and continuously
maintain in Pennsylvania a registered office which may, but need
not, be the same as its place of business and at an address to be
designated from time to time by the Board of Directors.
Section 1.2 The Corporation may also have offices at such
other places as the Board of Directors may from time to time
designate or the business of the Corporation may require.
Article 2
SHAREHOLDERS MEETINGS
Section 2.1 All meetings of the shareholders shall be held
at such time and place as may be fixed from time to time by the
Board of Directors.
Section 2.2 The annual meeting of the shareholders shall be
held no later than the thirty-first day of May in each year, when
the shareholders shall elect members to the Board of Directors
and transact such other business as may properly be brought
before the meeting.
Section 2.3 Special meetings of the shareholders may be
called at any time by the Chairman of the Board, the President, a
majority of the Board of Directors or of its Executive Committee.
At any time, upon written request of any person who has called a
special meeting, it shall be the duty of the Secretary to fix the
time of the meeting which, if the meeting is called pursuant to a
statutory right, shall be held not more than sixty (60) days
after the receipt of the request. If the Secretary neglects or
refuses to fix the time of the meeting, the person or persons
calling the meeting may do so.
Section 2.4 Written notice of all shareholder meetings
(other than adjourned meetings of shareholders), shall state the
place, date, hour, the purpose thereof and shall be served upon,
or mailed, postage prepaid, or telegraphed, charges prepaid, at
least ten days before such meeting, unless a greater period of
notice is required by statute or by these By-laws, to each
shareholder entitled to vote thereat at such address as appears
on the transfer books for shares of the Corporation.
Section 2.5 When a meeting of shareholders is adjourned, it
shall not be necessary to give any notice of the adjourned
meeting or of the business to be transacted at an adjourned
meeting, other than by announcement at the meeting at which the
adjournment is taken, unless the Board of Directors fixes a new
record date for the adjourned meeting.
D-1
<PAGE>
Article 3
QUORUM OF SHAREHOLDERS
Section 3.1 The presence, in person or by proxy, of
shareholders entitled to cast at least a majority of the votes
which all shareholders are entitled to cast on the particular
matter shall constitute a quorum for purposes of considering such
matter, and unless otherwise provided by statute the acts of such
shareholders at a duly organized meeting shall be the acts of the
shareholders. If, however, any meeting of shareholders cannot be
organized because of lack of a quorum, those present, in person
or by proxy, shall have the power, except as otherwise provided
by statute, to adjourn the meeting to such time and place as they
may determine, without notice other than an announcement at the
meeting, until the requisite number of shareholders for a quorum
shall be present, in person or by proxy, except that in the case
of any meeting called for the election of directors such meeting
may be adjourned only for periods not exceeding fifteen (15) days
as the holders of a majority of the shares present, in person or
by proxy, shall direct, and those who attend the second of such
adjourned meetings, although less than a quorum, shall
nevertheless constitute a quorum for the purpose of electing
directors. At any adjourned meeting at which a quorum shall be
present or so represented, any business may be transacted which
might have been transacted at the original meeting if a quorum
had been present. The shareholders present, in person or by
proxy, at a duly organized meeting can continue to do business
until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
Article 4
VOTING RIGHTS
Section 4.1 Except as may be otherwise provided by statute
or by the Articles of Incorporation, at every shareholders
meeting, every shareholder entitled to vote thereat shall have
the right to one vote for every share having voting power
standing in his name on the transfer books for shares of the
Corporation on the record date fixed for the meeting.
Section 4.2 When a quorum is present at any meeting, the
voice vote of the holders of a majority of the stock having
voting power, present, in person or by proxy, shall decide any
question brought before such meeting except as provided
differently by statute or by the Articles of Incorporation.
Section 4.3 Upon demand made by a shareholder entitled to
vote at any election for directors before the voting begins, the
election shall be by ballot.
D-2
<PAGE>
Article 5
PROXIES
Section 5.1 Every shareholder entitled to vote at a meeting
of shareholders or to express consent or dissent to corporate
action in writing without a meeting may authorize another person
or persons to act for him by proxy. Every proxy shall be
executed in writing by the shareholder or his duly authorized
attorney in fact and filed with the Secretary of the Corporation.
A proxy, unless coupled with an interest, shall be revocable at
will, notwithstanding any other agreement or any provision in the
proxy to the contrary, but the revocation of a proxy shall not be
effective until notice thereof has been given to the Secretary of
the Corporation. No unrevoked proxy shall be valid after eleven
(11) months from the date of its execution, unless a longer time
is expressly provided therein, but in no event shall a proxy,
unless coupled with an interest, be voted after three years from
the date of its execution. A proxy shall not be revoked by the
death or incapacity of the maker, unless before the vote is
counted or the authority is exercised, written notice of such
death or incapacity is given to the Secretary of the Corporation.
Article 6
RECORD DATE
Section 6.1 The Board of Directors may fix a time, not more
than ninety (90) days prior to the date of any meeting of
shareholders, or the date fixed for the payment of any dividend
or distribution, or the date for the allotment of rights, or the
date when any change or conversion or exchange of shares will be
made or go into effect, as a record date for the determination of
the shareholders entitled to notice of, and to vote at, any such
meeting, or entitled to receive payment of any such dividend or
distribution, or to receive any such allotment of rights, or to
exercise the rights in respect to any such change, conversion or
exchange of shares. In such case, only such shareholders as
shall be shareholders of record on the date so fixed shall be
entitled to notice of, or to vote at, such meeting or to receive
payment of such dividend or distribution or to receive such
allotment of rights or to exercise such rights, as the case may
be, notwithstanding any transfer of any shares on the transfer
books for shares of the Corporation after any record date fixed
as aforesaid. The Board of Directors may close the transfer
books for shares of the Corporation against transfers of shares
during the whole or any part of such period, and in such case
written or printed notice thereof shall be mailed at least ten
(10) days before closing thereof to each shareholder of record at
the address appearing on the records of the Corporation or
supplied by him to the Corporation for the purpose of notice.
While the transfer books for shares of the Corporation are
closed, no transfer of shares shall be made thereon. If no
record date is fixed by the Board of Directors for the
determination of shareholders entitled to receive notice of, and
vote at, a shareholders meeting, transferees of shares which are
transferred on the books of the Corporation within ten (10) days
next preceding the date of such meeting shall not be entitled to
notice of or to vote at such meeting.
D-3
<PAGE>
Article 7
VOTING LISTS
Section 7.1 The Secretary shall have charge of the transfer
books for shares of the Corporation and shall make a complete
list of the shareholders entitled to vote at any meeting of
shareholders, arranged in alphabetical order, with the address of
and the number of shares held by each. The list shall be
produced and kept open at the time and place of the meeting and
shall be subject to the inspection of any shareholder during the
whole time of the meeting for the purposes thereof.
Section 7.2 Failure to comply with the requirements of
Section 7.1 shall not affect the validity of any action taken at
a meeting prior to a demand at the meeting by any shareholder
entitled to vote thereat to examine the list. The original share
register or transfer book, or a duplicate thereof kept in the
Commonwealth of Pennsylvania shall be prima facie evidence as to
who are the shareholders entitled to examine the list or share
register or transfer book or to vote an any meeting of
shareholders.
Article 8
JUDGES OF ELECTION
Section 8.1 In advance of any meeting of shareholders, the
Board of Directors may appoint judges of election, who need not
be shareholders, to act at the meeting or any adjournment
thereof. If judges of election are not so appointed, the
presiding officer of the meeting may, and on the request of any
shareholder shall, appoint judges of election at the meeting.
The number of judges shall be one or three. A person who is a
candidate for office to be filled at the meeting shall not act as
a judge.
Section 8.2 In case any person appointed as a judge fails
to appear or fails or refuses to act, the vacancy may be filled
by appointment made by the Board of Directors in advance of the
convening of the meeting or at the meeting by the presiding
officer thereof.
Section 8.3 The judges of election shall determine the
number of shares outstanding and the voting power of each, the
shares represented at the meeting, the existence of a quorum, the
authenticity, validity and effect of proxies, receive votes or
ballots, hear and determine all challenges and questions in any
way arising in connection with the right to vote, count and
tabulate all votes, determine the result and do such acts as may
be proper to conduct the election or vote with fairness to all
shareholders. The judges of election shall perform their duties
impartially, in good faith, to the best of their ability and as
expeditiously as is practical. If there are three judges of
election, the decision, act or certificate of a majority shall be
effective in all respects as the decision, act or certificate of
all.
Section 8.4 On request of the presiding officer of the
meeting, or of any shareholder, the judges of election shall make
a report in writing of any challenge or question or matter
determined by them, and execute a certificate of any fact found
by them. Any report or certificate made by them shall be prima
facie evidence of the facts stated therein.
D-4
<PAGE>
Article 9
DIRECTORS
Section 9.1 Any shareholder who intends to nominate or to
cause to have nominated any candidate for election to the Board
of Directors (other than any candidate proposed by the
Corporation's then existing Board of Directors) shall so notify
the Secretary of the Corporation in writing not less than sixty
(60) days prior to the date of any meeting of shareholders called
for the election of directors. Such notification shall contain
the following information to the extent known by the notifying
shareholder.
(a) the name and address of each proposed nominee;
(b) the age of each proposed nominee;
(c) the principal occupation of each proposed nominee;
(d) the number of shares of the Corporation owned by
each proposed nominee;
(e) the total number of shares that to the knowledge
of the notifying shareholder will be voted for
each proposed nominee;
(f) the name and residence address of the notifying
shareholder; and
(g) the number of shares of the Corporation owned by
the notifying shareholder.
Any nomination for director not made in accordance with this
Section shall be disregarded by the presiding officer of the
meeting, and votes cast for each such nominee shall be
disregarded by the judges of election. In the event that the
same person is nominated by more than one shareholder, if at
least one nomination for such person complies with this Section,
the nomination shall be honored and all votes cast for such
nominee shall be counted.
Section 9.2 The number of directors that shall constitute
the whole Board of Directors shall be not less than three (3).
The Board of Directors shall be classified into three (3)
classes, each class to be elected for a term of three (3) years.
The terms of the respective classes shall expire in successive
years as provided in Section 9.3 hereof. Within the foregoing
limits, the Board of Directors may from time to time fix the
number of directors and their respective classifications.
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<PAGE>
Section 9.3 At the 1998 annual meeting of shareholders of
the Corporation, the shareholders shall elect eleven (11)
directors as follows: four (4) Class A directors to serve until
the 1999 annual meeting of shareholders, four (4) Class B
directors to serve until the 2000 annual meeting of shareholders,
and three (3) Class C directors to serve until the 2001 annual
meeting of shareholders. Each class shall be elected in a
separate election. At each annual meeting of shareholders
thereafter, successors to the class of directors whose term shall
then expire shall be elected to hold office for a term of three
(3) years, so that the term of office of one class of directors
shall expire in each year. The Board of Directors shall have the
sole discretion to increase the number of Directors that shall
constitute the whole Board of Directors; provided however, that
the total number of Directors in each class remains relatively
proportionate to the others.
Section 9.4 The Board of Directors may declare vacant the
office of a director who has been judicially declared of unsound
mind or who has been convicted of an offense punishable by
imprisonment for a term of more than one year or for any other
proper cause which these By-laws may specify or if, within sixty
(60) days or such other time as these By-laws may specify after
notice of his selection, he does not accept the office either in
writing or by attending a meeting of the Board of Directors and
fulfill such other requirements of qualification as these By-laws
may specify.
Section 9.5 Upon application of any shareholder or
director, the court may remove from office any director in case
of fraudulent or dishonest acts, or gross abuse of authority or
discretion with reference to the Corporation, or for any other
proper cause, and may bar from office any director so removed for
a period prescribed by the court. The Corporation shall be made
a party to the action and, as a prerequisite to the maintenance
of an action under this Section 9.5, a shareholder shall comply
with Section 1782 of the Business Corporation Law of 1988, and
any amendments or supplements thereto.
Section 9.6 An act of the Board of Directors done during
the period when a director has been suspended or removed for
cause shall not be impugned or invalidated if the suspension or
removal is thereafter rescinded by the shareholders or by the
Board of Directors or by the final judgment of a court.
Section 9.7 The Board of Directors may appoint a person who
previously held the position of Director to be a Director
Emeritus. A Director Emeritus may attend meetings of the Board
of Directors and shall have such other rights and privileges as
may be determined from time to time by resolution of the Board of
Directors.
D-6
<PAGE>
Article 10
VACANCIES ON BOARD OF DIRECTORS
Article 10.1 Vacancies on the Board of Directors, including
vacancies resulting from an increase in the number of directors,
shall be filled by a majority of the remaining members of the
Board of Directors, though less than a quorum, and each person so
appointed shall be a director until the expiration of the term of
office of the class of directors to which he was appointed.
Article 11
POWERS OF BOARD OF DIRECTORS
Section 11.1 The business and affairs of the Corporation
shall be managed by its Board of Directors, which may exercise
all such powers of the Corporation and do all such lawful acts
and things as are not by statute or by the Articles of
Incorporation or by these By-laws directed or required to be
exercised and done by the shareholders.
Section 11.2 A director shall stand in a fiduciary relation
to the Corporation and shall perform his duties as a director,
including his duties as a member of any committee of the Board of
Directors upon which he may serve, in good faith, in a manner he
reasonably believes to be in the best interests of the
Corporation and with such care, including reasonable inquiry,
skill and diligence, as a person of ordinary prudence would use
under similar circumstances. In performing his duties, a
director shall be entitled to rely in good faith on information,
opinions, reports or statements, including financial statements
and other financial data, in each case prepared or presented by
any of the following:
(a) One or more officers or employees of the Corporation
whom the director reasonably believes to be reliable and
competent in the matters presented.
(b) Counsel, public accountants or other persons as to
matters which the director reasonably believes to be within the
professional or expert competence of such persons.
(c) A committee of the Board of Directors upon which he
does not serve, duly designated in accordance with law, as to
matters within its designated authority, which committee the
director reasonably believes to merit confidence.
A director shall not be considered to be acting in good
faith if he has knowledge concerning the matter in question that
would cause his reliance to be unwarranted.
Section 11.3 In discharging the duties of their respective
positions, the Board of Directors, committees of the Board of
Directors and individual directors may, in considering the best
interests of the Corporation, consider the effects of any action
upon employees, upon suppliers and customers of the Corporation
and upon communities in which offices or other establishments of
the Corporation are located, and all other pertinent factors.
The consideration of those factors shall not constitute a
violation of Section 11.2.
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Section 11.4 Absent breach of fiduciary duty, lack of good
faith or self-dealing, actions taken as a director or any failure
to take any action shall be presumed to be in the best interests
of the Corporation.
Section 11.5 A director shall not be personally liable, as
such, for monetary damages for any action taken, or any failure
to take any action, unless:
(a) the director has breached or failed to perform the
duties of his office under this Article 11; and
(b) the breach or failure to perform constitutes
self-dealing, willful misconduct or recklessness.
Section 11.6 The provisions of Section 11.5 shall not apply
to:
(a) the responsibility or liability of a director pursuant
to any criminal statute; or
(b) the liability of a director for the payment of taxes
pursuant to local, State or Federal law.
Section 11.7 A director of the Corporation who is present
at a meeting of the Board of Directors, or of a committee of the
Board of Directors, at which action on any corporate matter is
taken shall be presumed to have assented to the action taken
unless his dissent is entered in the minutes of the meeting or
unless he files his written dissent to the action with the
Secretary of the Corporation before the adjournment thereof or
transmits the dissent in writing to the Secretary of the
Corporation immediately after the adjournment of the meeting.
The right to dissent shall not apply to a director who voted in
favor of the action. Nothing in this Section 11.7 shall bar a
director from asserting that minutes of any meeting incorrectly
omitted his dissent if, promptly upon receipt of a copy of such
minutes, he notifies the Secretary of the Corporation, in
writing, of the asserted omission or inaccuracy.
Article 12
COMMITTEES OF THE BOARD OF DIRECTORS
Section 12.1 The Board of Directors may, by resolution
adopted by a majority of the directors in office, establish one
or more committees to consist of one or more directors of the
Corporation. Any committee, to the extent provided in the
resolution of the Board of Directors or in these By-laws, shall
have and may exercise all of the powers and authority of the
Board of Directors, except that a committee shall not have any
power or authority as to the following:
(a) The submission to shareholders of any action requiring
approval of shareholders under applicable law, the Articles of
Incorporation or these By-laws.
(b) The creation or filling of vacancies in the Board of
Directors.
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(c) The adoption, amendment or repeal of these By-laws.
(d) The amendment or repeal of any resolution of the Board
of Directors that by its terms is amendable or repealable only by
the Board of Directors.
(e) Action on matters committed by these By-laws or
resolution of the Board of Directors to another committee of the
Board of Directors.
Section 12.2 The Board of Directors may designate one or
more directors as alternate members of any committee who may
replace any absent or disqualified member at any meeting of the
committee or for the purposes of any written action by the
committee. In the absence or disqualification of a member and
alternate member or members of a committee, the member or members
thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously
appoint another director to act at the meeting in the place of
the absent or disqualified member.
Section 12.3 Each committee of the Board of Directors shall
serve at the pleasure of the Board of Directors. The term "Board
of Directors," when used in any provision of this Article 12
relating to the organization or procedures of or the manner of
taking action by the Board of Directors, shall be construed to
include and refer to any executive or other committee of the
Board of Directors. Any provision of this Article 12 relating or
referring to action to be taken by the Board of Directors or the
procedure required therefor shall be satisfied by the taking of
corresponding action by a committee of the Board of Directors to
the extent authority to take the action has been delegated to the
committee pursuant to this Article 12.
Article 13
MEETINGS OF THE BOARD OF DIRECTORS
Section 13.1 An organization meeting may be held
immediately following the annual shareholders meeting without the
necessity of notice to the directors to constitute a legally
convened meeting, or the directors may meet at such time and
place as may be fixed by either a notice or waiver of notice or
consent signed by all of such directors.
Section 13.2 Regular meetings of the Board of Directors
shall be held not less often than semi-annually at a time and
place determined by the Board of Directors at the preceding
meeting. One or more directors may participate in any meeting of
the Board of Directors, or of any committee thereof, by means of
a conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear
one another.
Section 13.3 Special meetings of the Board of Directors may
be called by the Chairman of the Board on one (1) day's notice to
each director, either personally or in the manner set forth under
Article 32 hereof; special meetings shall be called by the
Chairman of the Board in like manner and on like notice upon the
written request of three (3) directors.
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Section 13.4 At all meetings of the Board of Directors, a
majority of the directors shall constitute a quorum for the
transaction of business, and the acts of a majority of the
directors present at a meeting in person or by conference
telephone or similar communications equipment at which a quorum
is present in person or by such communications equipment shall be
the acts of the Board of Directors, except as may be otherwise
specifically provided by statute or by the Articles of
Incorporation or by these By-laws. If a quorum shall not be
present in person or by communications equipment at any meeting
of the directors, the directors present may adjourn the meeting
from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or as permitted herein.
Article 14
INFORMAL ACTION BY THE BOARD OF DIRECTORS
Section 14.1 Any action required or permitted to be taken
at a meeting of the directors may be taken without a meeting if,
prior or subsequent to the action, a consent or consents thereto
by all of the directors in office is filed with the Secretary of
the Corporation.
Article 15
COMPENSATION OF DIRECTORS
Section 15.1 Directors, as such, may receive a stated
salary for their services or a fixed sum and expenses for
attendance at regular and special meetings, or any combination of
the foregoing as may be determined from time to time by
resolution of the Board of Directors, and nothing contained
herein shall be construed to preclude any director from serving
the Corporation in any other capacity and receiving compensation
therefor.
Article 16
OFFICERS
Section 16.1 The officers of the Corporation shall be
elected by the Board of Directors at its organizational meeting
and shall be a Chairman of the Board, a President, a Secretary
and Treasurer and an Assistant Secretary and Treasurer. The
Board of Directors may elect one or more Vice Presidents and such
other officers and appoint such agents as it shall deem
necessary, who shall hold their offices for such terms, have such
authority and perform such duties as may from time to time be
prescribed by the Board of Directors. Any number of offices may
be held by the same person, except that the offices of Chairman,
President, Treasurer and Chief Financial Officer, if any, shall
not be held by the same person or persons.
Section 16.2 The compensation of all officers of the
Corporation shall be fixed by the Board of Directors.
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Section 16.3 Each officer shall hold office for a term of
one year and until his successor has been selected and qualified
or until his earlier death, resignation or removal. Any officer
may resign at any time upon written notice to the Corporation.
The resignation shall be effective upon receipt thereof by the
Corporation or at such subsequent time as may be specified in the
notice of resignation. The Corporation may secure the fidelity
of any or all of the officers by bond or otherwise.
Section 16.4 Any officer or agent of the Corporation may be
removed by the Board of Directors with or without cause. The
removal shall be without prejudice to the contract rights, if
any, of any person so removed. Election or appointment of an
officer or agent shall not of itself create contract rights.
Section 16.5 An officer shall perform his duties as an
officer in good faith, in a manner he reasonably believes to be
in the best interests of the Corporation and with such care,
including reasonable inquiry, skill and diligence, as a person of
ordinary prudence would use under similar circumstances. A
person who so performs his duties shall not be liable by reason
of having been an officer of the Corporation.
Article 17
THE CHAIRMAN OF THE BOARD
Section 17.1 The Chairman of the Board shall preside at all
meetings of the shareholders and directors and shall be the chief
executive officer of the Corporation. He shall supervise the
carrying out of the policies adopted or approved by the Board of
Directors; shall have general and active management of the
business of the Corporation; shall see that all orders and
resolutions of the Board of Directors are put into effect,
subject, however, to the right of the Board of Directors to
delegate any specific powers, except such as may be by statute
exclusively conferred on any particular officer or officers of
the Corporation. The Chairman of the Board shall execute bonds,
mortgages and other contracts requiring a seal under the seal of
the Corporation, except where required or permitted by law to be
otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the Board of
Directors to some other officer or agent of the Corporation. He
shall also have and may exercise such further powers and duties
as from time to time may be conferred upon or assigned to him by
the Board of Directors.
Article 18
THE PRESIDENT
Section 18.1 The President shall be the chief operating
officer of the Corporation. The President shall also have and
may exercise such further powers and duties as from time to time
may be conferred upon or assigned to him by the Board of
Directors. In the absence or incapacity of the Chairman of the
Board, the President shall preside at meetings of the
shareholders and the directors.
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Article 19
THE VICE PRESIDENT
Section 19.1 The Vice President or, if more than one, the
Vice Presidents in the order established by the Board of
Directors shall, in the absence or incapacity of the President,
exercise all powers and perform the duties of the President. The
Vice Presidents, respectively, shall also have such other
authority and perform such other duties as may be provided in
these By-laws or as shall be determined by the Board of Directors
or the Chairman of the Board. Any Vice President may, in the
discretion of the Board of Directors, be designated as
"executive," "senior," or by departmental or functional
classification.
Article 20
THE SECRETARY
Section 20.1 The Secretary shall attend all meetings of the
Board of Directors and of the shareholders and keep accurate
records thereof in one or more minute books kept for that purpose
and shall perform the duties customarily performed by the
secretary of a corporation and such other duties as may be
assigned to him by the Board of Directors or the Chairman of the
Board.
Article 21
THE TREASURER
Section 21.1 The Treasurer shall have the custody of the
corporate funds and securities; shall keep full and accurate
accounts of receipts and disbursements in books belonging to the
Corporation and shall perform such other duties as may be
assigned to him by the Board of Directors or the Chairman of the
Board. He shall give bond in such sum and with such surety as
the Board of Directors may from time to time direct.
Article 22
ASSISTANT OFFICERS
Section 22.1 Each assistant officer shall assist in the
performance of the duties of the officer to whom he is assistant
and shall perform such duties in the absence of the officer. He
shall perform such additional duties as the Board of Directors,
the Chairman of the Board, the President or the officer to whom
he is assistant may from time to time assign him. Such officers
may be given such functional titles as the Board of Directors
shall from time to time determine.
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Article 23
INDEMNIFICATION
Section 23.1 (Third Party Actions) The Corporation shall
have power to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or
completed action or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in
the right of the corporation), by reason of the fact that he is
or was a representative of the Corporation, or is or was serving
at the request of the Corporation as a representative of another
domestic or foreign corporation for profit or not-for-profit,
partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by
him in connection with the action or proceeding if he acted in
good faith and in a manner he reasonably believed to be in, or
not opposed to, the best interests of the Corporation and, with
respect to any criminal proceeding, had no reasonable cause to
believe his conduct was unlawful. The termination of any action
or proceeding by judgment, order, settlement or conviction or
upon a plea of nolo contendere or its equivalent shall not of
itself create a presumption that the person did not act in good
faith and in a manner that he reasonably believed to be in, or
not opposed to, the best interests of the Corporation and, with
respect to any criminal proceeding, had reasonable cause to
believe that his conduct was unlawful.
Section 23.2 (Derivative Actions) The Corporation shall
have power to indemnify any person who was or is a party, or is
threatened to be made a party, to any threatened, pending or
completed action by or in the right of the Corporation to procure
a judgment in its favor by reason of the fact that he is or was a
representative of the Corporation or is or was serving at the
request of the Corporation as a representative of another
domestic or foreign corporation for profit or not-for-profit,
partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of
the action if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best
interests of the Corporation. Indemnification shall not be made
under this section in respect of any claim, issue or matter as to
which the person has been adjudged to be liable to the
Corporation unless and only to the extent that the court of
common pleas of the judicial district embracing the county in
which the registered office of the Corporation is located or the
court in which the action was brought determines upon application
that, despite the adjudication of liability but in view of all
the circumstances of the case, the person is fairly and
reasonably entitled to indemnity for the expenses that the court
of common pleas or other court deems proper.
Section 23.3 (Mandatory Indemnification) To the extent
that a representative of the Corporation has been successful on
the merits or otherwise in defense of any action or proceeding
referred to in Sections 23.1 (relating to third party actions) or
23.2 (relating to derivative actions) or in defense of any claim,
issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by
him in connection therewith.
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Section 23.4 (Procedure for Effecting Indemnification)
Unless ordered by a court, any indemnification under Sections
23.1 (relating to third party actions) or 23.2 (relating to
derivative actions) shall be made by the Corporation only as
authorized in the specific case upon a determination that
indemnification of the person is proper in the circumstances
because he has met the applicable standard of conduct set forth
in those sections. The determination shall be made:
(a) by the Board of Directors by a majority vote of a
quorum consisting of directors who were not parties to the action
or proceeding;
(b) if such a quorum is not obtainable or if obtainable and
a majority vote of a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion; or
(c) by the shareholders.
Section 23.5 (Advancing Expenses) Expenses (including
attorneys' fees) incurred in defending any action or proceeding
referred to in this Article 23 may be paid by the Corporation in
advance of the final disposition of the action or proceeding upon
receipt of an undertaking by or on behalf of the person to repay
the amount if it is ultimately determined that he is not entitled
to be indemnified by the Corporation as authorized in this
Article 23 or otherwise.
Section 23.6 (Supplementary Coverage) (a) The
indemnification and advancement of expenses provided by, or
granted pursuant to, the other sections of this Article 23 shall
not be deemed exclusive of any other rights to which a person
seeking indemnification or advancement of expenses may be
entitled under any By-law, agreement, vote of shareholders or
disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while
holding that office. The Corporation may create a fund of any
nature, which may, but need not be, under the control of a
trustee, or otherwise secure or insure in any manner its
indemnification obligations, whether arising under or pursuant to
this Section 23.6 or otherwise.
(b) Indemnification pursuant to subsection (a) of this
Section 23.6 shall not be made in any case where the act or
failure to act giving rise to the claim for indemnification is
determined by a court to have constituted willful misconduct or
recklessness.
(c) Indemnification pursuant to subsection (a) of this
Section 23.6 under any By-law, agreement, vote of shareholders or
directors or otherwise, may be granted for any action taken or
any failure to take any action and may be made whether or not the
Corporation would have the power to indemnify the person under
any other provision of law except as provided in this Section
23.6 and whether or not the indemnified liability arises or arose
from any threatened, pending or completed action by or in the
right of the Corporation.
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Section 23.7 (Power to Purchase Insurance) The Corporation
shall have power to purchase and maintain insurance on behalf of
any person who is or was a representative of the Corporation or
is or was serving at the request of the Corporation as a
representative of another domestic or foreign corporation for
profit or not-for-profit, partnership, joint venture, trust or
other enterprise against any liability asserted against him and
incurred by him in any such capacity, or arising out of his
status as such, whether or not the Corporation would have the
power to indemnify him against that liability under the
provisions of this Article 23.
Section 23.8 (Application to Surviving or New Corporations)
For the purpose of this Article 23, references to "the
Corporation" include all constituent corporations absorbed in a
consolidation, merger or division, as well as the surviving or
new corporations surviving or resulting therefrom, so that any
person who is or was a representative of the constituent,
surviving or new corporation, or is or was serving at the request
of the constituent, surviving or new corporation as a
representative of another domestic or foreign corporation for
profit or not-for-profit, partnership, joint venture, trust or
other enterprise, shall stand in the same position under the
provisions of this Article 23 with respect to the surviving or
new corporation as he would if he had served the surviving or new
corporation in the same capacity.
Section 23.9 (Application to Employee Benefit Plans) For
purposes of this Article 23:
(a) References to "other enterprises" shall include
employee benefit plans and references to "serving at the request
of the Corporation" shall include any service as a representative
of the Corporation that imposes duties on, or involves services
by, the representative with respect to an employee benefit plan,
its participants or beneficiaries.
(b) Excise taxes assessed on a person with respect to an
employee benefit plan pursuant to applicable law shall be deemed
"fines."
(c) Action with respect to an employee benefit plan taken
or omitted in good faith by a representative of the Corporation
in a manner he reasonably believed to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be
action in a manner that is not opposed to the best interests of
the Corporation.
Section 23.10 (Duration and Extent of Coverage) The
indemnification and advancement of expenses provided by, or
granted pursuant to, this Article 23 shall, unless otherwise
provided when authorized or ratified, continue as to a person who
has ceased to be a representative of the Corporation and shall
inure to the benefit of the heirs and personal representative of
that person.
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Article 24
SHARE CERTIFICATES
Section 24.1 The share certificates of the Corporation
shall be numbered and registered in a share register as they are
issued; shall bear the name of the registered holder, the number
and class of shares represented thereby, the par value of each
share or a statement that such shares are without par value, as
the case may be; shall be signed by the Chairman of the Board or
the President and the Secretary or the Treasurer or any other
person properly authorized by the Board of Directors, and shall
bear the corporate seal, which seal may be a facsimile engraved
or printed. Where the certificate is signed by a transfer agent
or a registrar, the signature of any corporate officer on such
certificate may be a facsimile engraved or printed. In case any
officer who has signed, or whose facsimile signature has been
placed upon, any share certificate shall have ceased to be such
officer because of death, resignation or otherwise before the
certificate is issued, it may be issued by the Corporation with
the same effect as if the officer had not ceased to be such at
the date of its issue.
Article 25
TRANSFER OF SHARES
Section 25.1 Upon surrender to the Corporation of a share
certificate duly endorsed by the person named in the certificate
or by attorney duly appointed in writing and accompanied where
necessary by proper evidence of succession, assignment or
authority to transfer, a new certificate shall be issued to the
person entitled thereto and the old certificate cancelled and the
transfer recorded upon the transfer books for shares of the
Corporation. No transfer shall be made if it would be
inconsistent with the provisions of Article 8 of the Pennsylvania
Uniform Commercial Code.
Article 26
LOST CERTIFICATES
Section 26.1 Where a shareholder of the Corporation alleges
the loss, theft or destruction of one or more certificates for
shares of the Corporation and requests the issuance of a
substitute certificate therefor, the Board of Directors may
direct a new certificate of the same tenor and for the same
number of shares to be issued to such person upon such person's
making of an affidavit in form satisfactory to the Board of
Directors setting forth the facts in connection therewith,
provided that prior to the receipt of such request the
Corporation shall not have either registered a transfer of such
certificate or received notice that such certificate has been
acquired by a bona fide purchaser. When authorizing such issue
of a new certificate the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof,
require the owner of such lost, stolen or destroyed certificate,
or his heirs or legal representatives, as the case may be, to
advertise the same in such manner as it shall require and/or give
the Corporation a bond in such form and with surety or sureties,
with fixed or open penalty, as shall be satisfactory to the Board
of Directors, as indemnity for any liability or expense which it
may incur by reason of the original certificate remaining
outstanding.
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Article 27
DIVIDENDS
Section 27.1 The Board of Directors may, from time to time,
at any duly convened regular or special meeting or by unanimous
consent in writing, declare and pay dividends upon the
outstanding shares of capital stock of the Corporation in cash,
property or shares of the Corporation, so long as any dividend
shall not be in violation of law and the Articles of
Incorporation.
Section 27.2 Before payment of any dividend, there may be
set aside out of any funds of the Corporation available for
dividends such sum or sums as the Board of Directors from time to
time, in their absolute discretion, think proper as a reserve
fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for
such other purposes as the Board of Directors shall believe to be
for the best interests of the Corporation, and the Board of
Directors may reduce or abolish any such reserve in the manner in
which it was created.
Article 28
FINANCIAL REPORT TO SHAREHOLDERS
Section 28.1 The Chairman of the Board and the Board of
Directors shall present prior to each annual meeting of the
shareholders a full and complete statement of the business and
affairs of the Corporation for the preceding year.
Article 29
INSTRUMENTS
Section 29.1 Any note, mortgage, evidence of indebtedness,
contract or other document, or any assignment or endorsement
thereof, executed or entered into between the Corporation and any
other person, when signed by one or more officers or agents
having actual or apparent authority to sign it, or by the
Chairman of the Board, the President or the Vice President and
Secretary or Assistant Secretary or Treasurer or Assistant
Treasurer of the Corporation, shall be held to have been properly
executed for and in behalf of the Corporation.
Section 29.2 The affixation of the corporate seal shall not
be necessary to the valid execution, assignment or endorsement by
the Corporation of any instrument or other document.
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Article 30
FISCAL YEAR
Section 30.1 The fiscal year of the Corporation shall be
the calendar year.
Article 31
SEAL
Section 31.1 The corporate seal shall have inscribed
thereon the name of the Corporation, the year of its organization
and the words "Corporate Seal, Pennsylvania." Such seal may be
used by causing it or a facsimile thereof to be impressed or
affixed in any manner reproduced.
Article 32
NOTICES AND WAIVERS THEREOF
Section 32.1 Whenever written notice is required to be
given to any person under the provisions of applicable law, by
the Articles of Incorporation or of these By-laws, it may be
given to the person either personally or by sending a copy
thereof by first class or express mail, postage prepaid, or by
telegram (with messenger service specified), telex or TWX (with
answerback received) or courier service, charges prepaid, or by
telecopier, to his address (or to his telex, TWX, telecopier or
telephone number) appearing on the books of the Corporation or,
in the case of directors, supplied by him to the Corporation for
the purpose of notice. If the notice if sent by mail, telegraph
or courier service, it shall be deemed to have been given to the
person entitled thereto when deposited in the United States mail
or with a telegraph office or courier service for delivery to
that person or, in the case of telex or TWX, when dispatched. A
notice of meeting shall specify the place, day and hour of the
meeting and any other information required by any other provision
of these By-laws.
Section 32.2 Whenever any written notice is required to be
given under the provisions of applicable law, the Articles of
Incorporation or of these By-laws, a waiver thereof in writing,
signed by the person or persons entitled to the notice, whether
before or after the time stated therein, shall be deemed
equivalent to the giving of the notice. Except as otherwise
required by these By-laws, neither the business to be transacted
at, nor the purpose of, a meeting need be specified in the waiver
of notice of the meeting. In the case of a special meeting of
shareholders, the waiver of notice shall specify the general
nature of the business to be transacted.
Section 32.3 Attendance of a person at any meeting shall
constitute a waiver of notice of the meeting except where a
person attends a meeting for the express purpose of objecting, at
the beginning of the meeting, to the transaction of any business
because the meeting was not lawfully called or convened.
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Section 32.4 Whenever any notice or communication is
required to be given to any person under the provisions of
applicable law, the Articles of Incorporation, these By-laws, the
terms of any agreement and any other instrument or as a condition
precedent to taking any corporate action, and communication with
that person is then unlawful, the giving of the notice or
communication to that person shall not be required and there
shall be no duty to apply for a license or other permission to do
so. Any action or meeting that is taken or held without notice
or communication to that person shall have the same validity as
if the notice or communication had been duly given. If the
action taken is such as to require the filing of any document
with respect thereto under any provision of law or any agreement
or other instrument, it shall be sufficient, if such is the fact
and if notice or communication in required, to state therein that
notice or communication was given to all persons entitled to
receive notice or communication except persons with whom
communication was unlawful.
Section 32.5 Section 32.4 shall also be applicable to any
shareholder with whom the Corporation has been unable to
communicate for more than twenty-four (24) consecutive months
because communications to the shareholder are returned unclaimed
or the shareholder has otherwise failed to provide the
Corporation with a current address. Whenever the shareholder
provides the Corporation with a current address, Section 32.4
shall cease to be applicable to the shareholder under this
Section 32.5.
Article 33
EMERGENCIES
Section 33.1 The Board of Directors may adopt emergency
By-laws, subject to repeal or change by action of the
shareholders, which shall, notwithstanding any different
provisions of law, of the Articles of Incorporation or of these
By-laws, be effective during any emergency resulting from an
attack on the United States, a nuclear disaster or another
catastrophe as a result of which a quorum of the Board of
Directors cannot readily be assembled. The emergency By-laws may
make any provision that may be appropriate for the circumstances
of the emergency including, procedures for calling meetings of
the Board of Directors, quorum requirements for meetings and
procedures for designating additional or substitute directors.
Section 33.2 The Board of Directors, either before or
during any emergency, may provide, and from time to time modify,
lines of succession in the event that during the emergency any or
all officers or agents of the Corporation shall for any reason be
rendered incapable of discharging their duties and may, effective
in the emergency, change the head offices or designate several
alternative head offices or regional offices of the Corporation
or authorize the officers to do so.
Section 33.3 A representative of the Corporation acting in
accordance with any emergency By-laws shall not be liable except
for willful misconduct and shall not be liable for any action
taken by him in good faith in an emergency in furtherance of the
ordinary business affairs of the Corporation even though not
authorized by the emergency or other By-laws then in effect.
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Section 33.4 To the extent not inconsistent with any
emergency By-laws so adopted, the By-laws of the Corporation
shall remain in effect during any emergency and, upon its
termination, the emergency By-laws shall cease to be effective.
Section 33.5 Unless otherwise provided in emergency
By-laws, notice of any meeting of the Board of Directors during
an emergency shall be given only to those directors to whom it is
feasible to reach at the time and by such means as are feasible
at the time, including publication, radio or television. To the
extent required to constitute a quorum at any meeting of the
Board of Directors during any emergency, the officers of the
Corporation who are present shall, unless otherwise provided in
emergency By-laws, be deemed, in order of rank and within the
same rank in order of seniority, directors for the meeting.
Article 34
AMENDMENTS
Section 34.1 These By-laws may be altered, amended or
repealed by the affirmative vote of the holders of at least
seventy-five percent (51%) of the outstanding shares of Common
Stock at any regular or special meeting duly convened after
notice to the shareholders of that purpose, or by a majority vote
of the members of the Board of Directors at any regular or
special meeting thereof duly convened after notice to the
directors of that purpose, subject always to the power of the
shareholders to change such action of the Board of Directors by
the affirmative vote of the holders of seventy-five percent (51%)
of the outstanding shares of Common Stock.
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EXHIBIT E
EXCERPTS FROM SECTION 215a OF
THE NATIONAL BANK ACT
RELATING TO DISSENTER'S RIGHTS
<PAGE>
EXHIBIT E
EXCERPTS FROM, SECTION 215a OF THE
NATIONAL BANK ACT RELATING TO DISSENTERS' RIGHTS
(b) If a merger shall be voted for at the called meetings by
the necessary majorities of the shareholders of each association
or State bank participating in the plan of merger, and thereafter
the merger shall be approved by the Comptroller, any shareholder
of any association or State bank to be merged into the receiving
association who has voted against such merger at the meeting of
the association or bank of which he is stockholder, or has given
notice in writing at or prior to such meeting to the presiding
officer that he dissents from the plan of merger, shall be
entitled to receive the value of the shares so held by him when
such merger shall be approved by the Comptroller upon written
request made to the receiving association at any time before
thirty days after the date of consummation of the merger,
accompanied by the surrender of his stock certificates.
(c) The value of the shares of any dissenting shareholder
shall be ascertained, as of the effective date of the merger, by
an appraisal made by a committee of three persons, composed of
(1) one selected by the vote of the holders of the majority of
the stock, the owners of which are entitled to payment in cash;
(2) one selected by the directors of the receiving association;
and (3) one selected by the two so selected. The valuation
agreed upon by any two of the three appraisers shall govern. If
the value so fixed shall not be satisfactory to any dissenting
shareholder who has requested payment, that shareholder may,
within five days after being notified of the appraised value of
his shares, appeal to the Comptroller, who shall cause a
reappraisal to be made which shall be final and binding as to the
value of the shares of the appellant.
(d) If, within ninety days from the date of consummation of
the merger, for any reason one or more of the appraisers is not
selected as herein provided, or the appraisers fail to determine
the value of such shares, the Comptroller shall upon written
request of any interested party cause an appraisal to be made
which shall be final and binding on all parties. The expenses of
the Comptroller in making the reappraisal or the appraisal, as
the case may be, shall be paid by the receiving association. The
value of the shares ascertained shall be promptly paid to the
dissenting shareholders by the receiving association. The shares
of stock of the receiving association which would have been
delivered to such dissenting shareholders had they not requested
payment shall be sold by the receiving association at an
advertised public auction, and the receiving association shall
have the right to purchase any of such shares at such public
auction, if it is the highest bidder therefor, for the purpose of
reselling such shares within thirty days thereafter to such
person or persons and at such price not less than par as its
board of directors by resolution may determine. If the shares
are sold at public auction at a price greater than the amount
paid to the dissenting shareholders, the excess in such sale
price shall be paid to such dissenting shareholders. The
appraisal of such shares of stock in any State bank shall be
determined in the manner prescribed by the law of the State in
such cases, rather than as provided in this section, if such
provision is made in the State law; and no such merger shall be
in contravention of the law of the State under which such bank is
incorporated. The provisions of this subsection shall apply only
to shareholders of (and stock owned by them in) a bank or
association being merged into the receiving association.
--------------------------------
Section 215(b)(4) of the National Bank Act defines the term
"receiving association," as used in Section 215a, to mean the
national banking association into which one or more national
banking associations or one or more State banks, located within
the same State, merge.
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PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Subchapter D of Chapter 17 of the Pennsylvania Business
Corporation Law of 1988, as amended (15 Pa. C.S. Sections
1741-1750) provides that a business corporation shall have the
power under certain circumstances to indemnify directors,
officers, employees and agents against certain expenses incurred
by them in connection with any threatened, pending or completed
action, suit or proceeding. The following discussion is
qualified, in its entirety, by the full text of Subchapter D of
Chapter 17 of the Pennsylvania Business Corporation Law of 1988,
as amended, attached as Exhibit 99D.
Section 1721 of the Pennsylvania Business Corporation Law of
1988, as amended (the "BCL") (relating to the Board of Directors)
declares that unless otherwise provided by statute or in a bylaw
adopted by the shareholders, all powers enumerated in section
1502 (relating to general powers) and elsewhere in the BCL or
otherwise vested by law in a business corporation shall be
exercised by or under the authority of, and the business and
affairs of every business corporation shall be managed under the
direction of, a board of directors. If any such provision is
made in the by-laws, the powers and duties conferred or imposed
upon the board of directors under the BCL shall be exercised or
performed to such extent and by such person or persons as shall
be provided in the by-laws.
Section 1712 of the BCL provides that a director of a
business corporation shall stand in a fiduciary relation to the
corporation and shall perform his duties as a director, including
his duties as a member of any committee of the board upon which
he may serve, in good faith, in a manner he reasonably believes
to be in the best interests of the corporation and with such
care, including reasonable inquiry, skill and diligence, as a
person of ordinary prudence would use under similar
circumstances. In performing his duties, a director shall be
entitled to rely in good faith on information, opinions, reports
or statements, including financial statements and other financial
data, in each case prepared or presented by any of the following:
1. one or more officers or employees of the
corporation whom the director reasonably believes to be
reliable and competent in the matters presented;
2. counsel, public accountants or other persons as to
matters which the director reasonably believes to be within
the professional or expert competence of such person; or
3. a committee of the board upon which he does not
serve, duly designated in accordance with law, as to matters
within its designated authority, which committee the
director reasonably believes to merit confidence.
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A director shall not be considered to be acting in good faith, if
he has knowledge concerning the matter in question that would
cause his reliance to be unwarranted.
Section 1716 of the BCL states that in discharging the
duties of their respective positions, the board of directors,
committees of the board and individual directors of a business
corporation may, in considering the best interests of the
corporation, consider the effects of any action upon employees,
upon suppliers and customers of the corporation and upon
communities in which offices or other establishments of the
corporation are located, and all other pertinent factors. The
consideration of those factors shall not constitute a violation
of the preceding paragraph. In addition, absent breach of
fiduciary duty, lack of good faith or self-dealing, actions taken
as a director or any failure to take any action shall be presumed
to be in the best interests of the corporation.
Moreover, Section 1721 addresses the personal liability of
directors and states that if a bylaw adopted by the shareholders
so provides, a director shall not be personally liable, as such,
for monetary damages for any action taken, or any failure to take
any action, unless:
1. the director has breached or failed to perform the
duties of his office under this section; and
2. the breach or failure to perform constitutes
self-dealing, willful misconduct or recklessness.
The provisions discussed above shall not apply to:
1. the responsibility or liability of a director
pursuant to any criminal statute; or
2. the liability of a director for the payment of
taxes pursuant to local, state or federal law.
Section 1714 of the BCL states that a director of a business
corporation who is present at a meeting of its board of
directors, or of a committee of the board, at which action on any
corporate matter is taken on which the director is generally
competent to act, shall be presumed to have assented to the
action taken unless his dissent is entered in the minutes of the
meeting or unless he files his written dissent to the action with
the secretary of the meeting before the adjournment thereof or
transmits the dissent in writing to the secretary of the
corporation immediately after the adjournment of the meeting.
The right to dissent shall not apply to a director who voted in
favor of the action. Nothing in this Section 1714 shall bar a
director from asserting that minutes of the meeting incorrectly
omitted his dissent if, promptly upon receipt of a copy of such
minutes, he notifies the secretary, in writing, of the asserted
omission or inaccuracy.
R-2
<PAGE>
Section 1741 of the BCL (relating to third party actions)
provides that unless otherwise restricted in its by-laws, a
business corporation shall have the power to indemnify any person
who was or is a party, or is threatened to be made a party to any
threatened, pending or completed action or proceeding, whether
civil, criminal, administrative or investigative (other than an
action by or in the right of the corporation), by reason of the
fact that such person is or was a representative of the
corporation, or is or was serving at the request of the
corporation as a representative of another domestic or foreign
corporation for profit or not-for-profit, partnership, joint
venture, trust or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection
with the action or proceeding if such person acted in good faith
and in a manner he reasonably believed to be in, or not opposed
to, the best interests of the corporation, and, with respect to
any criminal proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action or
proceeding by judgment, order, settlement or conviction or upon a
plea of nolo contendere or its equivalent shall not of itself
create a presumption that the person did not act in good faith
and in a manner that he reasonably believed to be in, or not
opposed to, the best interests of the corporation, and with
respect to any criminal proceeding, had reasonable cause to
believe that his conduct was not unlawful.
Section 1742 of the BCL (relating to derivative actions)
provides that unless otherwise restricted in its by-laws, a
business corporation shall have the power to indemnify any person
who was or is a party, or is threatened to be made a party, to
any threatened, pending or completed action by or in the right of
the corporation to procure a judgment in its favor by reason of
the fact that such person is or was a representative of the
corporation, or is or was serving at the request of the
corporation as a representative of another domestic or foreign
corporation for profit or not-for-profit, partnership, joint
venture, trust or other enterprise, against expenses (including
attorneys' fees) actually and reasonably incurred by such person
in connection with the defense or settlement of the action if
such person acted in good faith and in a manner he reasonably
believed to be in, or not opposed to the best interests of the
corporation. Indemnification shall not be made under this
section in respect of any claim, issue or matter as to which such
person has been adjudged to be liable to the corporation unless,
and only to the extent that, the court of common pleas of the
judicial district embracing the county in which the registered
office of the corporation is located or the court in which such
action was brought determines upon application that, despite the
adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the court of common pleas or
such other court shall deem proper.
Section 1743 of the BCL (relating to mandatory
indemnification) provides for mandatory indemnification of
directors and officers such that to the extent that a
representative of the business corporation has been successful on
the merits or otherwise in defense of any action or proceeding
referred to in Sections 1741 (relating to third party actions) or
1742 (relating to derivative actions), or in defense of any
claim, issue or matter therein, such person shall be indemnified
against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection therewith.
R-3
<PAGE>
Section 1744 of the BCL (relating to procedure for effecting
indemnification) provides the procedure for effecting
indemnification. Under this section unless ordered by a court,
any indemnification under Section 1741 (relating to third party
actions) or 1742 (relating to derivative actions) shall be made
by the business corporation only as authorized in the specific
case upon a determination that indemnification of the
representative is proper in the circumstances because such person
has met the applicable standard of conduct set forth in those
sections. The determination shall be made:
1. by the Board of Directors by a majority vote of a
quorum consisting of directors who were not parties to the
action or proceeding;
2. if such quorum is not obtainable, or, if
obtainable and a majority vote of a quorum of disinterested
directors so directs, by independent legal counsel in a
written opinion; or
3. by the shareholders.
Section 1745 of the BCL (relating to advancing expenses)
provides that expenses (including attorneys' fees) incurred in
defending any action or proceeding referred to above may be paid
by the business corporation in advance of the final disposition
of the action or proceeding upon receipt of an undertaking by or
on behalf of the representative to repay such amount if it is
ultimately determined that such person is not entitled to be
indemnified by the corporation as authorized by the BCL or
otherwise.
Section 1746 of the BCL (relating to supplementary coverage)
provides that the indemnification and advancement of expenses
provided by or granted pursuant to the other sections of the BCL
shall not be deemed exclusive of any other rights to which a
person seeking indemnification or advancement of expenses may be
entitled under any other by-law, agreement, vote of shareholders
or disinterested directors or otherwise, both as to action in
such person's official capacity and as to action in another
capacity while holding such office.
Section 1746 of the BCL also provides that indemnification
referred to above shall not be made in any case where the act or
failure to act giving rise to the claim for indemnification is
determined by a court to have constituted willful misconduct or
recklessness.
Section 1746 further declares that indemnification under any
bylaw, agreement, vote of shareholders or directors or otherwise,
may be granted for any action taken or any failure to take any
action and may be made whether or not the corporation would have
the power to indemnify the person under any other provision of
law except as provided in this section and whether or not the
indemnified liability arises or arose from any threatened,
pending or completed action by or in the right of the
corporation. Such indemnification is declared to be consistent
with the public policy of the Commonwealth of Pennsylvania.
R-4
<PAGE>
Section 1747 of the BCL (relating to the power to purchase
insurance) provides that unless otherwise restricted in its
by-laws, a business corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a
representative of the corporation or is or was serving at the
request of the corporation as a representative of another
domestic or foreign corporation for profit or not-for-profit,
partnership, joint venture, trust or other enterprise against any
liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not
the corporation would have the power to indemnify him against
that liability under the provisions of the BCL. Such insurance
is declared to be consistent with the public policy of the
Commonwealth of Pennsylvania.
Section 1748 of the BCL (relating to application to
surviving or new corporations) provides that for the purposes of
the BCL, references to "the corporation" include all constituent
corporations absorbed in a consolidation, merger or division, as
well as the surviving or new corporations surviving or resulting
therefrom, so that any person who is or was a representative of
the constituent, surviving or new corporation, or is or was
serving at the request of the constituent, surviving or new
corporation as a representative of another domestic or foreign
corporation for profit or not-for-profit, partnership, joint
venture, trust or other enterprise, shall stand in the same
position under the provisions of the BCL with respect to the
surviving or new corporation as he would if he had served the
surviving or new corporation in the same capacity.
Section 1749 of the BCL (referring to application to
employee benefit plans) states that for the purposes of the BCL:
1. references to "other enterprises" shall include
employee benefit plans and references to "serving at the
request of the corporation" shall include any service as a
representative of the business corporation that imposes
duties on, or involves services by, the representative with
respect to an employee benefit plan, its participants or
beneficiaries;
2. excise taxes assessed on a person with respect to
an employee benefit plan pursuant to applicable law shall be
deemed "fines"; and
3. action with respect to an employee benefit plan
taken or omitted in good faith by a representative of the
corporation in a manner he reasonably believed to be in the
interest of the participants and beneficiaries of the plan
shall be deemed to be action in a manner that is not opposed
to the best interests of the corporation.
Section 1750 of the BCL (relating to duration and extent of
coverage) declares that the indemnification and advancement of
expenses provided by, or granted pursuant to, the BCL shall,
unless otherwise provided when authorized or ratified, continue
as to a person who has ceased to be a representative of the
corporation and shall inure to the benefit of the heirs and
personal representative of that person.
R-5
<PAGE>
Article 23 of the By-laws of the Registrant provides for
indemnification to the full extent authorized by Pennsylvania
law.
Insofar as indemnification for liabilities arising under the
1933 Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions or
otherwise, the Registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is
against public policy as expressed in the 1933 Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by Registrant of expenses incurred or paid by a director, officer
of controlling person of the Registrant in the successful defense
of any action, suit or proceeding) is asserted by a director,
officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of
its counsel the manner has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
Item 21. Exhibits and Financial Statement Schedules.
(a) Exhibits.
2A Plan of Reorganization dated as of March 12, 1997 among
Registrant, First National Community Bank and First
National Community Interim Bank -- incorporated herein
by reference and filed as Exhibit A to the Proxy
Statement/Prospectus included in this
Registration Statement.
2B Plan of Merger dated as of March 12, 1997 between First
National Community Bank and First National Community
Interim Bank -- incorporated herein by reference and
filed as Exhibit B to the Proxy Statement/Prospectus
included in this Registration Statement.
3i Articles of Incorporation of Registrant -- incorporated
herein by reference and filed as Exhibit C to the
Proxy Statement/Prospectus included in
this Registration Statement.
3ii By-laws of Registrant -- incorporated herein by
reference and filed as Exhibit D to the Proxy
Statement/Prospectus included in this
Registration Statement.
5 Opinion of Shumaker Williams, P.C. of Camp Hill,
Pennsylvania, Special Counsel to Registrant, as to the
legality of the shares of Registrant's stock being
registered.
23 Consent of Shumaker Williams, P.C. of Camp Hill,
Pennsylvania, Special Counsel to Registrant.
24 Power of Attorney given by the Officers and Directors
of the Registrant.
R-6
<PAGE>
99A Definitive copy of Letter to Shareholders of First
National Community Bank.
99B Definitive copy of Notice of Annual Meeting of
Shareholders of First National Community Bank.
99C Definitive copy of Form of Proxy for use by the
Shareholders of First National Community Bank.
99D Subchapter D of Chapter 17 of the Pennsylvania Business
Corporation Law of 1988, as amended, (15 Pa. C.S.
Sections 1741-1750) relating to indemnification.
99E Excerpts from Section 215a of the National Bank Act
relating to Dissenters' Rights--incorporated herein by
reference and filed as Exhibit E to the Proxy
Statement/Prospectus included in this
Registration Statement.
(b) Not Applicable.
(c) Not Applicable.
Item 22. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the Proxy Statement/Prospectus
any facts or events arising after the effective date of the
registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered
would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) (Section
230.424(b) of this chapter) if, in the aggregate, the
changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
registration statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the registration statement or any material change to such
information in the registration statement;
R-7
<PAGE>
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of the
offering.
(b) (1) The undersigned Registrant hereby undertakes as
follows: that prior to any public reoffering of the
securities registered hereunder through use of a
prospectus which is a part of this registration statement,
by any person or party who is deemed to be an underwriter
within the meaning of Rule 145(c), the issuer undertakes
that such reoffering prospectus will contain the information
called for by the applicable registration form with respect
to reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other Items of
the applicable form.
(2) The Registrant undertakes that every prospectus
(i) that is filed pursuant to paragraph (b)(1) immediately
preceding, or (ii) that purports to meet the requirements of
section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed
as a part of an amendment to the registration statement and
will not be used until such amendment is effective, and
that, for purposes of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating
to the securities offered therein, and
the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under
the 1933 Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the
foregoing provisions or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the 1933 Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by Registrant of
expenses incurred or paid by a director, officer of
controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by a
director, officer or controlling person in connection with
the securities being registered, the Registrant will, unless
in the opinion of its counsel the manner has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it
is against public policy as expressed in the 1933 Act and
will be governed by the final adjudication of such issue.
(d) The undersigned Registrant hereby undertakes to respond
to requests for information that is incorporated by
reference into the Proxy Statement/Prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business
day of receipt of
R-8
<PAGE>
such request, and to send the incorporated documents by
first class mail or other equally prompt means. This
includes information contained in documents filed
subsequent to the effective date of the registration
statement through the date of responding to the request.
(e) The undersigned Registrant hereby undertakes to supply
by means of a post-effective amendment all information
concerning a transaction, and the company being acquired
involved therein, that was not the subject of and included
in the registration statement when it became effective.
R-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dunmore, Commonwealth of Pennsylvania,
on the 12th day of March, 1997.
FIRST NATIONAL COMMUNITY
BANCORP, INC.
By: /s/ J. David Lombardi
----------------------------
J. David Lombardi,
President and Chief
Executive Officer
R-10
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that as of March 12,
1997, each person whose signature appears below constitutes and
appoints Mr. William S. Lance and Mr. J. David Lombardi, and each
of them, his true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities (including his
capacity as a director and/ or officer of First National
Community Bancorp), to sign any or all amendments (including
post-effective amendments) to this registration statement, and to
file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
/s/ Louis A. DeNaples /s/ J. David Lombardi
- --------------------------- -----------------------
Louis A. DeNaples J. David Lombardi
Chairman/ Director President/ CEO/ Director
March 12, 1997 March 12, 1997
/s/ Michael J. Cestone, Jr. /s/ Angelo F. Bistocchi
- --------------------------- -----------------------
Michael J. Cestone, Jr. Angelo F. Bistocchi
Secretary/Director Director
March 12, 1997 March 12, 1997
/s/ Michael G. Cestone /s/ Dominick L. DeNaples
- -------------------------- ------------------------
Michael G. Cestone Dominick L. DeNaples
Director Director
March 12, 1997 March 12, 1997
/s/ Joseph J. Gentile /s/ Martin F. Gibbons
- ------------------------- ------------------------
Joseph J. Gentile Martin F. Gibbons
Director Director
March 12, 1997 March 12, 1997
/s/ Joseph O. Haggerty /s/ George N. Juba
- ------------------------- ------------------------
Joseph O. Haggerty George N. Juba
Director Director
March 12, 1997 March 12, 1997
/s/ John R. Thomas /s/ William S. Lance
- ------------------------- -------------------------
John R. Thomas William S. Lance
Director Senior Vice President/
March 12, 1997 Chief Accounting &
Financial Officer
March 12, 1997
R-11
<PAGE>
INDEX TO EXHIBITS
Exhibit Index
Number Page
2A Plan of Reorganization dated as of A-1
March 12, 1997 among Registrant,
First National Community Bank and
First National Community Interim Bank
-- incorporated herein by reference and
filed as Exhibit A to the Proxy
Statement/Prospectus included in this
Registration Statement.
2B Plan of Merger dated as of B-1
March 12, 1997 between First National
Community Bank and First National Community
Interim Bank -- incorporated herein by
reference and filed as Exhibit B to the
Proxy Statement/Prospectus included in this
Registration Statement.
3i Articles of Incorporation of Registration C-1
-- incorporated herein by reference and
filed as Exhibit C to the Proxy
Statement/Prospectus included in this
Registration Statement.
3ii By-laws of Registrant -- incorporated D-1
herein by reference and filed as Exhibit D
to the Proxy Statement/Prospectus included
in this Registration Statement
5 Opinion of Shumaker Williams, P.C. of S-1
Camp Hill, Pennsylvania, Special Counsel
to Registrant, as to the legality of the
shares of Registrant's stock being
registered.
23 Consent of Shumaker Williams, P.C. of S-1
Camp Hill, Pennsylvania, Special Counsel
to Registrant, contained in Opinion Letter as
Exhibit 5.
24 Power of Attorney given by the Officers S-3
and Directors of the Registrant
99A Definitive copy of Letter to Shareholders S-4
of First National Community Bank.
99B Definitive copy of Notice of Annual S-6
Meeting of Shareholders of First National
Community Bank.
99C Definitive copy of Form of Proxy for use S-7
by the Shareholders of First National
Community Bank.
99D Subchapter D of Chapter 17 of the S-9
Pennsylvania Business Corporation Law of
1988, as amended, (15 Pa. C.S. Sections
1741-1750) relating to indemnification.
99E Excerpts from Section 215a of the National E-1
Bank Act Relating to Dissenters' Rights--
incorporated herein by reference and filed
as Exhibit E to the Proxy Statement/Prospectus
included in this Registration Statement.
</TABLE>
EXHIBIT 2A
PLAN OF REORGANIZATION DATED AS OF MARCH 12, 1997
AMONG REGISTRANT, FIRST NATIONAL COMMUNITY BANK AND
FIRST NATIONAL COMMUNITY INTERIM BANK -- INCORPORATED
HEREIN BY REFERENCE AND FILED AS EXHIBIT A TO
THE PROXY STATEMENT/PROSPECTUS INCLUDED
IN THIS REGISTRATION STATEMENT
EXHIBIT 2B
PLAN OF MERGER DATED AS OF MARCH 12, 1997
BETWEEN FIRST NATIONAL COMMUNITY BANK AND
FIRST NATIONAL COMMUNITY INTERIM BANK --
INCORPORATED HEREIN BY REFERENCE AND FILED
AS EXHIBIT B TO THE PROXY STATEMENT/PROSPECTUS
INCLUDED IN THIS REGISTRATION STATEMENT.
EXHIBIT 3i
ARTICLES OF INCORPORATION OF REGISTRATION
-- INCORPORATED HEREIN BY REFERENCE AND
FILED AS EXHIBIT C TO THE PROXY STATEMENT/PROSPECTUS
INCLUDED IN THIS REGISTRATION STATEMENT
EXHIBIT 3ii
BY-LAWS OF REGISTRANT -- INCORPORATED HEREIN
BY REFERENCE AND FILED AS EXHIBIT D TO THE PROXY
STATEMENT/PROSPECTUS INCLUDED IN THIS
REGISTRATION STATEMENT
EXHIBIT 5
OPINION OF SHUMAKER WILLIAMS, P.C.
OF CAMP HILL, PENNSYLVANIA
SPECIAL COUNSEL TO REGISTRANT AS TO THE
LEGALITY OF THE SHARES OF REGISTRANT'S
STOCK BEING REGISTERED
<PAGE>
SHUMAKER WILLIAMS, P.C.
ATTORNEYS AT LAW
P.O. BOX 88
3425 SIMPSON FERRY ROAD
CAMP HILL, PA 17011
(717) 763-1121
March 27, 1997
Mr. J. David Lombardi
President and Chief Executive Officer
FIRST NATIONAL COMMUNITY BANK
102 East Drinker Street
Dunmore, PA 18512
RE: First National Community Bank
Formation of a One-Bank Holding Company
Dear Mr. Lombardi:
We have been engaged as Special Counsel to First National
Community Bank (the "Bank") and First National Community Bancorp,
Inc., a Pennsylvania business corporation (the "Company"), in
connection with the organization of the Company as a bank holding
company and the preparation and filing of all relevant documents
with the Federal Reserve Board, the Comptroller of the Currency,
applicable state securities law administrators, and the
Securities and Exchange Commission ("SEC").
We have prepared a Registration Statement on Form S-4 to be
filed with the SEC, that includes a Proxy Statement/Prospectus,
under the provisions and regulations of the Securities Act of
1933, as amended, relating to the offering by the Company of a
maximum of 1,090,424 shares of its common stock, par value $1.25
per share (the "Common Stock"). The Common Stock will be issued
pursuant to the Plan of Reorganization dated March 12,1997 (the
"Plan of Reorganization") among the Company, the Bank, and First
National Community Interim Bank (the "Interim Bank"). Under the
Plan of Reorganization, the Bank will merge with and into Interim
Bank and each share of the Bank's outstanding common stock, par
value $1.25 per share, (other than shares as to which dissenters'
rights have been perfected) will be converted into one (1) share
of the Common Stock, par value $1.25 per share, of the Company.
S-1
<PAGE>
Mr. J. David Lombardi
FIRST NATIONAL COMMUNITY BANK
March 27, 1997
Page 2
As Special Counsel to the Company and the Bank, we have
supervised all corporate proceedings in connection with the
preparation and filing of the Registration Statement, including
the Proxy Statement/Prospectus with the SEC and with the
appropriate state securities administrators. We have reviewed
the Company's Articles of Incorporation and By-laws, as presently
in effect. We have prepared and reviewed an executed copy of the
Plan of Reorganization, copies of the Company's corporate minutes
and other proceedings and records relating to the authorization
and issuance of the Common Stock, and such other documents and
matters of law as we have deemed necessary in order to render
this opinion.
Based upon the foregoing, and in reliance thereon, it is our
opinion that, upon the consummation of the Plan of Reorganization
and the Plan of Merger in accordance with their respective terms,
each of the shares of Common Stock issued pursuant to the
Registration Statement will be duly authorized, legally and
validly issued and outstanding, and fully paid and non-assessable
on the basis of present legislation.
We hereby consent to the use of this opinion in the
Registration Statement, and we further consent to the reference
to our name in the Proxy Statement/Prospectus included in the
Registration Statement under the caption "Description of the
Holding Company's Stock - Legal Opinion".
Sincerely yours,
/s/ Shumaker Williams, P.C.
SHUMAKER WILLIAMS, P.C.
KJK/cmc
S-2
EXHIBIT 23
CONSENT OF SHUMAKER WILLIAMS, P.C.
OF CAMP HILL, PENNSYLVANIA
SPECIAL COUNSEL TO REGISTRANT
Contained in Opinion Letter as Exhibit 5
EXHIBIT 24
POWER OF ATTORNEY
GIVEN BY THE
OFFICERS AND DIRECTORS
OF THE REGISTRANT
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that as of March 12,
1997, each person whose signature appears below constitutes and
appoints Mr. William S. Lance and Mr. J. David Lombardi, and each
of them, his true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities (including his
capacity as a director and/ or officer of First National
Community Bancorp), to sign any or all amendments (including
post-effective amendments) to this registration statement, and to
file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
/s/ Louis A. DeNaples /s/ J. David Lombardi
- --------------------------- -----------------------
Louis A. DeNaples J. David Lombardi
Chairman/ Director President/ CEO/ Director
March 12, 1997 March 12, 1997
/s/ Michael J. Cestone, Jr. /s/ Angelo F. Bistocchi
- --------------------------- -----------------------
Michael J. Cestone, Jr. Angelo F. Bistocchi
Secretary/Director Director
March 12, 1997 March 12, 1997
/s/ Michael G. Cestone /s/ Dominick L. DeNaples
- -------------------------- ------------------------
Michael G. Cestone Dominick L. DeNaples
Director Director
March 12, 1997 March 12, 1997
/s/ Joseph J. Gentile /s/ Martin F. Gibbons
- ------------------------- ------------------------
Joseph J. Gentile Martin F. Gibbons
Director Director
March 12, 1997 March 12, 1997
/s/ Joseph O. Haggerty /s/ George N. Juba
- ------------------------- ------------------------
Joseph O. Haggerty George N. Juba
Director Director
March 12, 1997 March 12, 1997
/s/ John R. Thomas /s/ William S. Lance
- ------------------------- -------------------------
John R. Thomas William S. Lance
Director Senior Vice President/
March 12, 1997 Chief Accounting &
Financial Officer
March 12, 1997
S-3
EXHIBIT 99A
DEFINITIVE COPY OF LETTER TO SHAREHOLDERS
OF FIRST NATIONAL COMMUNITY BANK
<PAGE>
FIRST NATIONAL COMMUNITY BANK
102 EAST DRINKER STREET
DUNMORE, PA 18512-2491
(717) 346-7667
- ----------------------------------------------------------------
April 22, 1997
TO OUR SHAREHOLDERS:
The Board of Directors of First National Community Bank (the
"Bank") cordially invites you to attend the Annual Meeting of
Shareholders which will commence at 2:00 p.m., prevailing time on
Wednesday, May 21, 1997, at the Main Office of the Bank, 102 East
Drinker Street, Dunmore, Pennsylvania 18512-2491.
The Notice of Annual Meeting and the Proxy Statement on the
following pages address the formal business of the meeting. The
formal business schedule includes a proposal to approve and adopt
a Plan of Reorganization and a Plan of Merger, and the election
of eleven Bank Directors to serve for a one year term.
At the Annual Meeting of Shareholders, the Board of
Directors recommends that you vote in favor of the proposal to
approve and adopt a Plan of Reorganization and Plan of Merger
which will have the effect of reorganizing the Bank into a bank
holding company. The Board of Directors believes that the
formation of bank holding company at this time is an important
and necessary part of the Bank's plans for the future.
Under the proposed Plan of Reorganization, each share of
Common Stock of the Bank presently held by you would be converted
into one (1) share of Common Stock of First National Community
Bancorp, Inc. (the "Holding Company"), a bank holding company
whose only substantial asset would be all of the Common Stock of
the Bank. If the Plan of Reorganization is approved and adopted,
the Bank's shareholders (other than dissenting shareholders) will
automatically become shareholders of the Holding Company. Since
the Holding Company will own all of the outstanding shares of the
Bank, your interest in the Bank at the time of the reorganization
will remain essentially the same, except that it will be indirect
rather than direct. The conversion of Common Stock of the Bank
into Common Stock of the Holding Company will be tax free for
federal income tax purposes.
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<PAGE>
THE BOARD OF DIRECTORS BELIEVES THAT THE PLAN OF
REORGANIZATION AND PLAN OF MERGER ARE IN THE BEST INTERESTS OF
THE BANK AND ITS SHAREHOLDERS AND URGES YOU TO VOTE IN FAVOR OF
THE PLAN OF REORGANIZATION AND PLAN OF MERGER. THE APPROVAL AND
ADOPTION OF THE PLAN OF REORGANIZATION AND PLAN OF MERGER
REQUIRES AN AFFIRMATIVE VOTE OF THE HOLDERS OF AT LEAST
TWO-THIRDS (2/3) OF THE OUTSTANDING SHARES OF THE BANK'S COMMON
STOCK. IT IS, THEREFORE, EXTREMELY IMPORTANT FOR YOU TO SIGN,
DATE AND RETURN YOUR ENCLOSED PROXY AS SOON AS POSSIBLE IN THE
PRE-ADDRESSED AND STAMPED ENVELOPE SUPPLIED FOR YOUR CONVENIENCE,
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING.
We urge you to carefully review the enclosed Proxy
Statement/Prospectus that describes the Plan of Reorganization
and the Plan of Merger proposal in detail. Again, your Board of
Directors strongly recommends that you vote FOR the proposal.
On behalf of the Board of Directors, thank you for your
cooperation and continued support.
Very truly yours,
J. David Lombardi, President
and CEO
S-5
EXHIBIT 99B
DEFINITIVE COPY OF NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
OF FIRST NATIONAL COMMUNITY BANK
<PAGE>
------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 21, 1997
------------------------------------------------
TO THE SHAREHOLDERS OF FIRST NATIONAL COMMUNITY BANK:
Notice is hereby given that the Annual Meeting of
Shareholders of First National Community Bank (the "Bank") will
be held at 2:00 p.m., prevailing time, on Wednesday, May 21,
1997, at the Main Office of First National Community Bank, 102
East Drinker Street, Dunmore, Pennsylvania 18512-2491, for the
following purposes:
1. To consider and act upon a proposal to approve and
adopt the Plan of Reorganization and Plan of Merger dated as
of March 12, 1997, providing, among other things, for the
merger of the Bank and First National Community Interim Bank
(the "Interim Bank"), a national banking association
organized under the laws of the United States, a subsidiary
of First National Community Bancorp, Inc. (the "Holding
Company") and for the automatic conversion of each share of
the Common Stock of the Bank into one (1) share of the
Common Stock of the Holding Company;
2. To elect eleven (11) Bank Directors to serve for a
one year term; and
3. To transact such other business as may properly
come before the Annual Meeting and any adjournment or
postponement thereof.
You are urged to mark, sign, date and promptly return your
Proxy in the enclosed envelope so that your shares may be voted
in accordance with your wishes and in order that the presence of
a quorum may be assured. The prompt return of your signed Proxy,
regardless of the number of shares you hold, will aid the Bank in
reducing the expense of additional proxy solicitation. The
giving of such Proxy does not affect your right to vote in person
if you attend the meeting and give notice to the Cashier of the
Bank.
Only those shareholders of record at the close of business
on February 28, 1997, will be entitled to notice of and to vote
at the Annual Meeting and any adjournment or postponement
thereof.
A copy of the Bank's Annual Report for the fiscal year ended
December 31, 1996, is being mailed to Shareholders on or about
March 21, 1997. Additional copies of the Bank's Annual Report
for the 1995 fiscal year and 1994 fiscal year may be obtained at
no cost by contacting William S. Lance, Senior Vice President,
First National Community Bank, 102 East Drinker Street, Dunmore,
Pennsylvania 18512-2491; telephone: (717) 346-7667.
AN AFFIRMATIVE VOTE OF THE HOLDERS OF AT LEAST TWO-THIRDS
(2/3) OF THE OUTSTANDING SHARES IS REQUIRED FOR APPROVAL AND
ADOPTION OF THE PLAN OF REORGANIZATION AND PLAN OF MERGER.
THEREFORE, WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING
IN PERSON, YOU ARE URGED TO SIGN, DATE AND PROMPTLY RETURN THE
ENCLOSED PROXY. A SELF-ADDRESSED STAMPED ENVELOPE IS ENCLOSED
FOR YOUR CONVENIENCE.
By Order of the Board of Directors,
J. David Lombardi, President and
CEO
April 22, 1997
S-6
EXHIBIT 99C
DEFINITIVE COPY OF FORM OF PROXY
FOR USE BY THE SHAREHOLDERS OF
FIRST NATIONAL COMMUNITY BANK
<PAGE>
FIRST NATIONAL COMMUNITY BANK
PROXY
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 21, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Mr. Leonard
A. Verrasto and Mr. William P. Conaboy, Esq. and each or any of
them, proxies of the undersigned, with full power of
substitution, to vote all of the shares of First National
Community Bank (the "Bank") that the undersigned may be entitled
to vote at the Annual Meeting of Shareholders of the Bank to be
held at the Main Office of First National Community Bank, 102
East Drinker Street, Dunmore, Pennsylvania 18512-2491 on
Wednesday, May 21, 1997 at 2:00 p.m., prevailing time, and at any
adjournment or postponement thereof as follows:
1. PROPOSAL TO APPROVE AND ADOPT THE PLAN OF REORGANIZATION
AND PLAN OF MERGER DATED AS OF MARCH 12, 1997,
PROVIDING, AMONG OTHER THINGS, FOR THE MERGER OF THE BANK
AND FIRST NATIONAL COMMUNITY INTERIM BANK (THE "INTERIM
BANK"), A NATIONAL BANKING ASSOCIATION ORGANIZED UNDER THE
LAWS OF THE UNITED STATES AND A SUBSIDIARY OF FIRST
NATIONAL COMMUNITY BANCORP, INC. (THE "HOLDING COMPANY"),
AND FOR THE AUTOMATIC CONVERSION OF EACH SHARE OF THE
COMMON STOCK OF THE BANK INTO ONE (1) SHARE OF THE COMMON
STOCK OF THE HOLDING COMPANY.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The Board of Directors recommends a vote FOR this proposal.
- -----------------------------------------------------------------
2. ELECTION OF DIRECTORS TO SERVE FOR A ONE-YEAR TERM.
J. David Lombardi Louis A. DeNaples
Angelo F. Bistocchi Michael G. Cestone
Michael J. Cestone, Jr. Dominick L. DeNaples
Joseph J. Gentile Martin F. Gibbons
Joseph O. Haggerty John R. Thomas
George N. Juba
[ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY
above (except as marked to vote for all
to the contrary below) nominees
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, WRITE THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
S-7
- -----------------------------------------------------------------
<PAGE>
3. In their discretion, the proxies are authorized to vote upon
such other business as may properly come before the Annual
Meeting and any adjournment or other postponement thereof.
THIS PROXY, WHEN PROPERLY SIGNED, WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE NOMINEES
LISTED ABOVE AND FOR PROPOSAL 1.
Dated: ----------------------, 1997
-----------------------------
Signature
-----------------------------
Signature
Number of Shares Held of
Record on February 28, 1997
THIS PROXY MUST BE DATED, SIGNED BY THE SHAREHOLDERS AND
RETURNED PROMPTLY TO THE BANK IN THE ENCLOSED ENVELOPE. WHEN
SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR
GUARDIAN, PLEASE GIVE FULL TITLE. IF MORE THAN ONE TRUSTEE, ALL
SHOULD SIGN. IF STOCK IS HELD JOINTLY, EACH OWNER SHOULD SIGN.
THE PERSONS NAMED AS PROXIES WILL HAVE THE RIGHT TO VOTE
CUMULATIVELY AND TO DISTRIBUTE THEIR VOTES AMONG NOMINEES AS THEY
CONSIDER ADVISABLE UNLESS A SHAREHOLDER INDICATES ON THE PROXY
HOW HE OR SHE DESIRES THE VOTES TO BE CUMULATED FOR VOTING
PURPOSES.
S-8
EXHIBIT 99D
STATUTES RELATING TO INDEMNIFICATION
Subchapter D of Chapter 17 of the Pennsylvania
Business Corporation Law of 1988, (15 Pa. C.S.
Sections 1741-1750), as amended
<PAGE>
Subchapter D. - Indemnification
Section 1741. Third party actions.
Unless otherwise restricted in its bylaws, a business
corporation shall have power to indemnify any person who was or
is a party or is threatened to be made a party to any threatened,
pending or completed action or proceeding, whether civil,
criminal, administrative or investigative (other than an action
by or in the right of the corporation), by reason of the fact
that he is or was a representative of the corporation, or is or
was serving at the request of the corporation as a representative
of another domestic or foreign corporation for profit or
not-for-profit, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with the action or
proceeding if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best
interests of the corporation and, with respect to any criminal
proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action or proceeding by
judgment, order, settlement or conviction or upon a plea of nolo
contendere or its equivalent shall not of itself create a
presumption that the person did not act in good faith and in a
manner that he reasonably believed to be in, or not opposed to,
the best interests of the corporation and, with respect to any
criminal proceeding, had reasonable cause to believe that his
conduct was unlawful.
Section 1742. Derivative actions.
Unless otherwise restricted in its bylaws, a business
corporation shall have power to indemnify any person who was or
is a party, or is threatened to be made a party, to any
threatened, pending or completed action by or in the right of the
corporation to procure a judgment in its favor by reason of the
fact that he is or was a representative of the corporation or is
or was serving at the request of the corporation as a
representative of another domestic or foreign corporation for
profit or not-for-profit, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the
defense or settlement of the action if he acted in good faith and
in a manner he reasonably believed to be in, or not opposed to,
the best interests of the corporation. Indemnification shall not
be made under this section in respect of any claim, issue or
matter as to which the person has been adjudged to be liable to
the corporation unless and only to the extent that the court of
common pleas of the judicial district embracing the county in
which the registered office of the corporation is located or the
court in which the
S-9
<PAGE>
action was brought determines upon application that, despite the
adjudication of liability but in view of all the circumstances of
the case, the person is fairly and reasonably entitled to
indemnity for the expenses that the court of common pleas or
other court deems proper.
Section 1743. Mandatory indemnification.
To the extent that a representative of a business
corporation has been successful on the merits or otherwise in
defense of any action or proceeding referred to in section 1741
(relating to third-party actions) or 1742 (relating to derivative
and corporate actions) or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses
(including attorney fees) actually and reasonably incurred by him
in connection therewith.
Section 1744. Procedure for effecting indemnification.
Unless ordered by a court, any indemnification under section
1741 (relating to third-party actions) or 1742 (relating to
derivative and corporate actions) shall be made by the business
corporation only as authorized in the specific case upon a
determination that indemnification of the representative is
proper in the circumstances because he has met the applicable
standard of conduct set forth in those sections. The
determination shall be made:
(1) by the board of directors by a majority vote of a
quorum consisting of directors who were not parties to the action
or proceedings;
(2) if such a quorum is not obtainable or if obtainable and
a majority vote of a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion; or
(3) by the shareholders.
Section 1745. Advancing expenses.
Expenses (including attorneys' fees) incurred in defending
any action or proceeding referred to in this subchapter may be
paid by a business corporation in advance of the final
disposition of the action or proceeding upon receipt of an
undertaking by or on behalf of the representative to repay the
amount if it is ultimately determined that he is not entitled to
be indemnified by the corporation as authorized in this
subchapter or otherwise.
Section 1746. Supplementary coverage.
(a) General rule - The indemnification and advancement of
expenses provided by, or granted pursuant to, the other section
of this subchapter shall not be deemed exclusive of any other
rights which a person seeking indemnification or advancement of
expenses may be entitled under any bylaw, agreement, vote of
shareholders or disinterested directors or otherwise, both as to
action in his official capacity and as to action in another
capacity while
S-10
<PAGE>
holding that office. Section 1728 (relating to interested
directors or officers; quorum) and, in the case of a registered
corporation, section 2538 relating to approval of transactions
with interested shareholders) shall be applicable to any bylaw,
contract or transaction authorized by the directors under this
section. A corporation may create a fund of any nature, which
may, but need not be, under the control of a trustee, or to
otherwise secure or insure in any manner its indemnification
obligations, whether arising under or pursuant to this section or
otherwise.
(b) When indemnification is not to be made - Indemnification
pursuant to subsection (a) shall not be made in any case where
the act or failure to act giving rise to the claim for
indemnification is determined by a court to have constituted
willful misconduct or recklessness. The articles may not provide
for indemnification in the case of willful misconduct or
recklessness.
(c) Grounds - Indemnification pursuant to subsection (a)
under any bylaw, agreement, vote of shareholders or directors or
otherwise may be granted for any action taken and may be made
whether or not the corporation would have the power to indemnify
the person under any other provision of law except as provided in
this section and whether or not the indemnified liability arises
or arose from any threatened, pending or completed action by or
in the right of the corporation. Such indemnification is
declared to be consistent with the public policy of this
Commonwealth.
Section 1747. Power to purchase insurance.
Unless otherwise restricted in its bylaws, a business
corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a representative of the
corporation or is or was serving at the request of the
corporation as a representative of another domestic or foreign
corporation for profit or not-for-profit, partnership, joint
venture, trust or other enterprise against any liability asserted
against him and incurred by him in any such capacity, or arising
out of his status as such, whether or not the corporation would
have the power to indemnify him against that liability under the
provisions of this subchapter. Such insurance is declared to be
consistent with the public policy of this Commonwealth.
Section 1748. Application to surviving or new corporations.
For the purposes of this subchapter, references to the
"corporation" include all constituent corporations absorbed in a
consolidation, merger or division, as well as the surviving or
new corporations surviving or resulting therefrom, so that any
person who is or was a representative f the constituent,
surviving or new corporation ,or is or was serving at the request
of the constituent, surviving or new corporation as a
representative of another domestic or foreign corporation for
profit or not-for-profit, partnership, joint venture, trust or
other enterprise, shall stand in the same position under the
provisions of this subchapter with respect to the surviving or
new corporation as he would if he had served the surviving or new
corporation in the same capacity.
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<PAGE>
Section 1749. Application to employee benefit plans.
For the purposes of this subchapter:
(1) References to "other enterprises" shall include
employee benefit plans and references to "serving at the request
of the corporation" shall include any service as a representative
of the business corporation that imposes duties on, or involves
services by, the representative with respect to an employee
benefit plan, its participants or beneficiaries
(2) Excise taxes assessed on a person with respect to an
employee benefit plan pursuant to applicable law shall be deemed
"fines".
(3) Action with respect to an employee benefit plan taken
or omitted in good faith by a representative of the corporation
in a manner he reasonably believed to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be
action in a manner that is not opposed to the best interests of
the corporation.
Section 1750. Duration and extent of coverage.
The indemnification and advancement of expenses provided by,
or granted pursuant to, this subchapter shall, unless otherwise
provided when authorized or ratified, continue as to a person who
has ceased to be a representative of the corporation and shall
inure to the benefit of the heirs and personal representative of
that person.
:68937
EXHIBIT 99E
EXCERPTS FROM SECTION 215a OF THE NATIONAL BANK
ACT RELATING TO DISSENTERS' RIGHTS -- INCORPORATED
HEREIN BY REFERENCE AND FILED AS EXHIBIT E TO
THE PROXY STATEMENT/PROSPECTUS INCLUDED IN
THIS REGISTRATION STATEMENT
