As filed with the Securities and Exchange Commission on September 28, 1998
Registration No. __________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
FIRST PERRY BANCORP, INC.
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Pennsylvania
-------------------------------
(State or other jurisdiction of incorporation or organization)
6712
---------------------------
(Primary Standard Industrial Classification Code Number)
25-1817009
------------------
(I.R.S. Employer Identification No.)
FIRST PERRY BANCORP, INC.
101 Lincoln Street
Post Office Box B
Marysville, Pennsylvania 17053-0017
(717) 957-2196
-----------------------------------------
(Address, including ZIP Code, and telephone
number, including area code, of registrant's
principal executive offices)
William L. Hummel
President and Chief Executive Officer
FIRST PERRY BANCORP, INC.
101 Lincoln Street
Post Office Box B
Marysville, Pennsylvania 17053-0017
(717) 957-2196
----------------------------------------
(Name, address, including ZIP Code, and
telephone number, including area
code, of agent for service)
With a Copy to:
Nicholas Bybel, Jr., Esquire
Cheryl A. Zeman, Esquire
SHUMAKER WILLIAMS, P.C.
P.O. Box 88, Harrisburg, Pennsylvania 17108
(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]
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
Title of Each Class Amount Proposed Maximum
of Securities to to be Offering Price
be Registered Registered Per Share(1)
<S> <C> <C>
Common Stock, par value
$.25 per share 408,000 shares $ 20.935
<CAPTION>
Title of Each Class Proposed Maximum Amount of
of Securities to Aggregate Registration
be Registered Offering Price(1) Fee(1)
<S> <C> <C>
Common Stock, par value
$.25 per share $ 8,541,480 $ 2,519.74
<FN>
(1) 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 The First National Bank of Marysville ("Bank"), of
204,000 shares of common stock, par value $.50 per share, as of September
15, 1998, of $ 41.87 per share and a maximum of 204,000 shares of such
stock to be converted in the reorganization into common stock of the
Registrant with a par value of $.25 per share at an exchange ratio of two
shares of Registrant for each share of Bank.
</FN>
</TABLE>
1-1
<PAGE>
THE FIRST NATIONAL BANK OF MARYSVILLE
101 Lincoln Street
MARYSVILLE, PA 17053-0017
(717) 957-2196
------------------------------------------------------------------------------
October 26, 1998
TO OUR SHAREHOLDERS:
The Board of Directors of The First National Bank of Marysville (the
"Bank") cordially invites you to attend a Special Meeting of Shareholders which
will commence at 2:00 p.m., prevailing time on Wednesday, December 2, 1998, at
Bethany United Methodist Church, 400 Lansvale Street, Marysville, Pennsylvania
17053.
At this Special 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 that 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 will be converted into two (2) shares of Common
Stock of First Perry Bancorp, Inc. (the "Holding Company"), a bank holding
company whose only substantial asset will 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. The Holding Company will own all of the
outstanding shares of the Bank.
Therefore, your interest in the Bank after the reorganization will remain
essentially the same, except that it will be an indirect interest rather than a
direct interest. The conversion of Common Stock of the Bank into Common Stock of
the Holding Company will be tax free for federal income tax purposes.
The reorganization will be effectuated by the establishment of an interim
bank which is a subsidiary of the Holding Company and which will merge with the
Bank. The proposal does NOT involve a merger between the Bank and another bank
or company already in operation.
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
1-2
<PAGE>
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 SPECIAL 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/ William L. Hummel
----------------------------------
William L. Hummel, President
and Chief Executive Officer
1-3
<PAGE>
-----------------------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 2, 1998
-----------------------------------------
TO THE SHAREHOLDERS OF THE FIRST NATIONAL BANK OF MARYSVILLE:
Notice is hereby given that a Special Meeting of Shareholders of The First
National Bank of Marysville (the "Bank") will be held at 2:00 p.m., prevailing
time, on Wednesday, December 2, 1998, at Bethany United Methodist Church, 400
Lansvale Street, Marysville, Pennsylvania 17053, 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 September 10, 1998,
providing, among other things, for the merger of the Bank and The First
National Interim Bank of Marysville (the "Interim Bank"), a national
banking association organized under the laws of the United States, a
subsidiary of First Perry Bancorp, Inc. (the "Holding Company") and for the
automatic conversion of each share of the Common Stock of the Bank into two
(2) shares of the Common Stock of the Holding Company;
2. Adjournment of the Special Meeting to a later date, if necessary,
to permit further solicitation of proxies in the event there are not
sufficient votes at the time of the Special Meeting to constitute a quorum
or to approve the Plan of Reorganization and Plan of Merger; and
3. To transact such other business as may properly come before the
Special 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 October 19,
1998, will be entitled to notice of and to vote at the Special Meeting and any
adjournment or postponement thereof.
A copy of the Bank's Annual Report for the fiscal year ended December 31,
1997, December 31, 1996, and December 31, 1995, and of the Bank's Consolidated
Reports of Condition and Income for the quarter ended June 30, 1998, may be
obtained at no cost by contacting William L. Hummel, President, or Larry D.
Reich, Senior Vice President, The First National Bank of Marysville, 101
1-4
<PAGE>
Lincoln Street, Post Office Box B, Marysville, Pennsylvania 17053-0017;
telephone: (717) 957- 2196.
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 SPECIAL 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/ William L. Hummel
----------------------------------
William L. Hummel, President
and Chief Executive Officer
October 26, 1998
1-5
<PAGE>
PROXY STATEMENT/PROSPECTUS
FIRST PERRY BANCORP, INC.
408,000 Shares Common Stock
($.25 par value)
THE FIRST NATIONAL BANK OF MARYSVILLE
PROXY STATEMENT
Date of Proxy Statement: October 26, 1998
First Perry Bancorp, Inc., a newly formed Pennsylvania business corporation
(the "Holding Company"), proposes to issue 408,000 shares of its common stock to
shareholders of The First National Bank of Marysville (the "Bank") in a
reorganization, pursuant to which 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 a Special Meeting of
Shareholders to be held on Wednesday, December 2, 1998, at 2:00 p.m., prevailing
time. 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 two (2) shares of
Holding Company common stock in exchange for one (1) share of common stock of
the Bank held by shareholders as of October 19, 1998. 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 101
Lincoln Street, Marysville, Pennsylvania 17053-0017. The Holding Company's
telephone number is (717) 957- 2196.
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.
THE COMMON STOCK OF THE HOLDING COMPANY BEING OFFERED IN EXCHANGE FOR THE
BANK'S COMMON STOCK INVOLVE A DEGREE OF RISK. SUCH RISKS INCLUDE, BUT ARE NOT
LIMITED TO, THOSE RELATED TO INTENSE COMPETITION AND STRICT GOVERNMENTAL
REGULATION. See "Risk Factors" below on Page 3 of this Prospectus.
- - ---------------------------------
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 (telephone: 202-942-8090) and also at the regional
offices of the Securities and Exchange Commission located at 7 World Trade
Center, Suite 1300, New York, New York 10048 (telephone: 212-748-8000); The
Curtis Center, Independence Square West, 601 Walnut Street, Suite 1005E,
Philadelphia, Pennsylvania 19106 (telephone: 215-597-3100); and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661 (telephone:
312-353-7390). Copies of such material may be obtained from the public reference
section of the Securities and
ii
<PAGE>
Exchange Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. The Securities and Exchange Commission maintains a
Web site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Securities
and Exchange Commission. The address of the Securities and Exchange Commission
site is http://www.sec.gov.
The Bank is not subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Act"), and, accordingly, does not file
reports, proxy statements and other information with the Office of the
Comptroller of the Currency (the "OCC"). However, the Bank voluntarily makes
annual financial statements available to its shareholders, and the Holding
Company will continue this practice by making consolidated annual financial
reports available to shareholders after the reorganization.
-----------------------------------
The date of this Proxy Statement/Prospectus is October 26, 1998.
iii
<PAGE>
TABLE OF CONTENTS
Page
----
SUMMARY .............................................................. viii
Special Meeting of the First National Bank of Marysville ............ viii
Risk Factors ....................................................... ix
Proposed Reorganization ............................................ ix
INTRODUCTION ........................................................ 1
Date, Place and Time of Special Meeting ............................ 1
Purpose of the Special Meeting ..................................... 1
Record Date; Quorum; Voting Rights ................................. 2
Solicitation of Proxies ............................................ 2
Voting and Revocation of Proxies ................................... 3
RISK FACTORS ........................................................ 3
FORWARD LOOKING STATEMENTS .......................................... 6
PRINCIPAL BENEFICIAL OWNERS OF THE BANK'S COMMON STOCK .............. 7
Principal Owners ................................................... 7
Beneficial Ownership by Officers and Directors ..................... 8
PROPOSED REORGANIZATION ............................................. 10
Plan of Reorganization and Plan of Merger .......................... 10
Reasons for the Proposed Reorganization ............................ 11
Shareholder Approval ............................................... 12
Effective Date ..................................................... 12
Effect of Reorganization on Bank's Business and Shareholders ....... 13
Conversion of Stock ................................................ 13
Exchange of Stock Certificates ..................................... 13
Failure To Surrender Stock Certificates ............................ 14
Trading and Resale of Holding Company Common Stock ................. 14
Description of Property ............................................ 15
Accounting Treatment ............................................... 15
Tax Consequences ................................................... 15
Rights of Dissenting Shareholders .................................. 16
Regulatory Approvals ............................................... 17
DESCRIPTION OF THE HOLDING COMPANY .................................. 19
Organization ....................................................... 19
Management ......................................................... 19
iv
<PAGE>
Remuneration ....................................................... 20
Indemnification for Securities Act Liabilities ..................... 20
Supervision and Regulation of the Holding Company ................... 20
Permitted Activities ............................................... 21
Issuance of Additional Securities .................................. 24
Acquisition of Additional Banks .................................... 24
DESCRIPTION OF THE BANK ............................................. 24
History and Business ............................................... 24
Competition ........................................................ 25
Supervision and Regulation of the Bank ............................. 26
The Federal Reserve System ......................................... 27
Monetary Policy .................................................... 27
Deposit Insurance .................................................. 28
Legislation ........................................................ 28
Regulatory Capital ................................................. 32
Examinations and Audits.............................................. 33
Real Estate Loans .................................................. 34
Legal Proceedings .................................................. 35
Directors .......................................................... 35
Principal Officers of the Bank ..................................... 36
Executive Compensation ............................................. 37
Pension Plan ....................................................... 37
Compensation of Directors .......................................... 38
CERTAIN TRANSACTIONS ................................................ 38
DESCRIPTION OF THE BANK'S COMMON STOCK .............................. 38
The Bank's Common Stock ............................................ 38
Comparative Market Prices .......................................... 40
Capitalization ..................................................... 42
Year 2000 Computer Problem ......................................... 43
DESCRIPTION OF THE HOLDING COMPANY'S STOCK .......................... 44
Common Stock ....................................................... 44
Legal Opinion ...................................................... 45
Anti-Takeover Provisions ........................................... 45
Anti-Takeover Provisions Applicable to Registered Corporations....... 47
DIVIDENDS ........................................................... 51
COMPARISON OF SHAREHOLDER RIGHTS .................................... 53
v
<PAGE>
FINANCIAL STATEMENTS ................................................ 57
SHAREHOLDER PROPOSALS ............................................... 58
OTHER MATTERS ....................................................... 58
EXHIBIT A PLAN OF REORGANIZATION AMONG THE FIRST NATIONAL BANK OF
MARYSVILLE, THE FIRST NATIONAL INTERIM BANK OF MARYSVILLE,
AND FIRST PERRY BANCORP, INC.
EXHIBIT B PLAN OF MERGER BETWEEN THE FIRST NATIONAL BANK OF
MARYSVILLE AND THE FIRST NATIONAL INTERIM BANK OF
MARYSVILLE
EXHIBIT C ARTICLES OF INCORPORATION OF FIRST PERRY BANCORP, INC.
EXHIBIT D BY-LAWS OF FIRST PERRY BANCORP, INC.
EXHIBIT E EXCERPTS FROM SECTION 215a OF THE NATIONAL BANK ACT
CONCERNING DISSENTERS' RIGHTS
vi
<PAGE>
SUMMARY
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. The mailing address of the
principal executive offices of the Holding Company and the Bank is 101 Lincoln
Street, Post Office Box B, Marysville, Pennsylvania 17053-0017. (Telephone
Number of Holding Company and Bank: 717-957-2196) The Bank is a national banking
association organized under the laws of the United States of America. The
Holding Company is a Pennsylvania Corporation organized to effectuate the
proposed transaction and has no operating history.
SPECIAL MEETING OF THE FIRST NATIONAL BANK OF MARYSVILLE
Date:
- - ----
December 2, 1998
Time and Place:
- - --------------
2:00 p.m., prevailing time, at Bethany United Methodist Church, 400
Lansvale Street, Marysville, Pennsylvania 17053.
Record Date:
- - -----------
October 19, 1998
Securities Entitled to Vote:
- - ---------------------------
Each share of The First National Bank of Marysville (the "Bank") common
stock, par value Fifty Cents ($.50) per share, issued and outstanding on the
record date entitles its holders to one (1) vote with respect to all matters
presented at the meeting for shareholder action.
Shares Outstanding on the Record Date:
- - -------------------------------------
204,000 shares
Effects of Abstaining From Voting:
- - ---------------------------------
A Bank shareholder who abstains from voting does not perfect his or her
dissenter's rights. See, "PROPOSED REORGANIZATION - Rights of Dissenting
Shareholders." A shareholder who abstains from voting is not included in the
affirmative vote necessary to approve and adopt the Plan of Reorganization and
Plan of Merger. A Bank shareholder who abstains from voting, automatically
vii
<PAGE>
SUMMARY
without any action on his or her part, will receive two (2) shares of Holding
Company common stock, par value Twenty-five Cents ($.25) per share in exchange
for one (1) share of common stock of the Bank par value Fifty Cents ($.50) 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, The First National Interim Bank of Marysville (the "Interim Bank") and
First Perry 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) Adjournment of the Special Meeting to a later date, if
necessary, to permit further solicitation of proxies; and (3) To act on such
other matters as may properly come before the Special Meeting and any
adjournment or postponement thereof.
RISK FACTORS
Investment in the Common Stock of the Holding Company involves a degree of
risk, similar to the risk of investment in the Common Stock of the Bank. Money
invested in the Common Stock, unlike money deposited with the Bank, is not, and
will not, be insured by the Federal Deposit Insurance Corporation ("FDIC").
Funds invested in Common Stock will not earn interest. Intense competition,
government regulation, and economic uncertainties result in a degree of risk for
any investment in the Common Stock of the Holding Company.
PROPOSED REORGANIZATION
Brief Description of Transaction
The proposed transaction which is set forth in the Plan of Reorganization
and Plan of Merger will result in a shell one-bank holding company whereby the
Bank will merge with and into The First National Interim Bank of Marysville (the
"Interim Bank"), under the charter of the Interim Bank and charter number of the
Bank, and under the title of the Bank. Interim Bank has been organized as an
interim national banking association and subsidiary of the Holding Company in
order to facilitate the reorganization. It has no operating history. After the
merger, the resulting bank will be a fully owned subsidiary of the Holding
Company. The Holding Company will own 100% of the shares of the resulting bank.
viii
<PAGE>
SUMMARY
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 Plan of Merger require the approval of the Office of the
Comptroller of the Currency ("OCC"). On September 18, 1998, 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. Any approval,
when 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"). The
Holding Company shall file an application with the Federal Reserve Board for
approval to become a bank holding company as soon as practicable. See sections
entitled "PROPOSED REORGANIZATION - Shareholder Approval" and "PROPOSED
REORGANIZATION - Regulatory Approvals."
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 two (2)
shares 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 Fifty Cents ($.50) per share, will be converted into and
become two (2) shares of common stock, par value Twenty-five Cents ($.25) per
share, of the Holding Company. See section entitled "PROPOSED REORGANIZATION
Conversion of Stock."
Exchange of Stock Certificates
Shareholders of the Bank will be required to exchange their present stock
certificates (bearing the name "The First National Bank of Marysville") for new
stock certificates (bearing the name "First Perry Bancorp, Inc."). 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."
ix
<PAGE>
SUMMARY
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 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, shall be 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 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 August 14, 1998, the date the Articles of Incorporation
were filed with the Pennsylvania Department of State, Corporation Bureau and
September 10, 1998, the date that the By-laws were approved by the Holding
Company's Board of Directors, respectively. 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:
x
<PAGE>
SUMMARY
(1) the authorization of two million (2,000,000) 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 at least eighty percent (80%) of
all of the members of the Board 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 that any such change be approved by a majority 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, the
Executive Committee of the Holding Company or by one or more Shareholders
entitled to cast at least forty percent (40%) of the votes that all Shareholders
are entitled to cast at a particular meeting;
(8) the elimination of preemptive rights of Shareholders to subscribe for
additional shares on a pro rata basis; and
(9) the requirement that certain provisions in the Articles of
Incorporation (relating to Items 2, 4, 6, 7 and 8 above) may only be amended by
the affirmative vote of at least seventy-five percent (75%) of the outstanding
shares of the Holding Company's common stock.
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 Special Meeting that they dissent from the Plan of
Reorganization and Plan of Merger; and (2) comply with the
xi
<PAGE>
SUMMARY
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 Special Meeting will not perfect a shareholder's dissenters'
rights. Shareholders are urged to review carefully the section of 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.
Accounting Treatment
Management of the Holding Company and the Bank intend that the proposed
reorganization will be accounted for as a pooling of interest method of
accounting.
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."
END OF SUMMARY
xii
<PAGE>
FIRST PERRY BANCORP, INC.
AND
THE FIRST NATIONAL BANK OF MARYSVILLE
PROXY STATEMENT/PROSPECTUS
----------------------------------------------
INTRODUCTION
This Proxy Statement, which also constitutes a Prospectus (the "Proxy
Statement/ Prospectus") is furnished for the solicitation by the Board of
Directors of The First National Bank of Marysville (the "Bank"), a national
banking association organized under the laws of the United States of America, of
proxies to be voted at the Special Meeting of Shareholders of the Bank to be
held at Bethany United Methodist Church, 400 Lansvale Street, Marysville,
Pennsylvania 17053, on Wednesday, December 2, 1998, at 2:00 p.m., prevailing
time, and at any adjournment or postponement of the Special Meeting. This Proxy
Statement/Prospectus also constitutes the prospectus of First Perry 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 Articles of Incorporation of the Holding Company were filed with the
Pennsylvania Corporation Bureau on August 14, 1998. The Holding Company was
formed in order to effectuate the proposed reorganization. The principal
executive offices of the Bank and the Holding Company are located at 101 Lincoln
Street, Marysville, Pennsylvania 17053-0017. The telephone number for the Bank
and the Holding Company is (717) 957-2196. All inquiries should be directed to
William L. Hummel, 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 October 26, 1998.
Date, Place and Time of Special Meeting
The Special Meeting of Shareholders of The First National Bank of
Marysville will be held on Wednesday, December 2, 1998, at Bethany United
Methodist Church, 400 Lansvale Street, Marysville, Pennsylvania 17053, at 2:00
p.m., prevailing time.
Purpose of the Special Meeting
At the Special 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 September 10, 1998, providing, among other
things, for the merger of the Bank and The First National Interim Bank of
Marysville (the "Interim Bank"), a national banking association organized under
the laws of the United States of America and a subsidiary of First Perry
Bancorp, Inc. (the
1
<PAGE>
"Holding Company"), and for the automatic conversion of each share of common
stock of the Bank into two (2) shares of common stock of the Holding Company;
(2) to consider any adjournment of the Meeting to a later date, if necessary, to
permit further solicitation of proxies in the event there are not sufficient
votes at the time of the Meeting to constitute a quorum or to approve the Plan
of Reorganization and Plan of Merger; and (3) to transact such other business as
may properly come before the Special 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
October 19, 1998, as the record date for the determination of shareholders of
the Bank entitled to notice of and to vote at the Special Meeting (the "Record
Date"). On the Record Date, the Bank had outstanding 204,000 shares of common
stock, par value Fifty Cents ($.50) per share, the only authorized class of
stock, (the "Common Stock") which was held by approximately One Hundred Ten
(110) 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 Special 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 Special 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.
On all other matters to come before the Special 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 October 26, 1998.
The cost of preparing, assembling, printing, mailing and soliciting
proxies, and any additional material that the Bank may furnish shareholders in
connection with the Special Meeting, will be borne by the Bank. In addition to
solicitation by mail, directors, officers and employees of
2
<PAGE>
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 Special 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 Special Meeting and vote in
person, after giving notice to Larry D. Reich, Secretary and 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 notice of revocation to Larry D. Reich,
Secretary and Cashier of The First National Bank of Marysville, 101 Lincoln
Street, Post Office Box B, Marysville, Pennsylvania 17053-0017; (2) by executing
a later-dated proxy and giving notice thereof to Larry D. Reich, Secretary and
Cashier of the Bank; or (3) by voting in person after giving notice to Larry D.
Reich, Secretary and Cashier of the Bank. Attendance by a shareholder at the
Special Meeting will not itself be deemed or constitute a revocation of the
Proxy.
RISK FACTORS
Investment in the Common Stock of First Perry Bancorp, Inc. (the "Holding
Company") involves a degree of risk, similar to the risk of investment in the
Common Stock of The First National Bank of Marysville (the "Bank"). Money
invested in the Common Stock, unlike money deposited with the Bank, is not, and
will not, be insured by the Federal Deposit Insurance Corporation ("FDIC").
Funds invested in Common Stock will not earn interest. In considering the
proposed exchange of Common Stock of the Bank for Common Stock of the Holding
Company, you should consider carefully the following factors, among others,
described in this Prospectus:
Dependence on Key Personnel
----------------------------
The business success of the Holding Company depends and will continue to
depend, to a great extent, upon the services of the Board of Directors of the
Bank and of the Holding Company. The loss of key personnel by the Holding
Company or Bank would have a material adverse effect upon the future prospects
of the Holding Company.
Intense Competition
--------------------
The success of the Holding Company will depend greatly upon the success of
the Bank. The Bank operates in an extremely competitive banking environment. In
Pennsylvania, generally, and in the Perry County and Harrisburg areas,
specifically, larger banks dominate the
3
<PAGE>
commercial banking industry. By virtue of their larger capital bases, such
institutions have substantially greater lending limits than the Bank and can
perform certain functions for their customers, such as trust services, which the
Bank is not authorized to offer. In addition to commercial banks, the Bank also
competes with other financial institutions, such as savings and loan
associations, credit unions, money market funds, stock brokerage firms,
insurance companies and others, in obtaining lendable funds and in making loans.
Future competitors, including new commercial banks, may enter the Bank's market
area. The Bank's strategy is to attract customers by providing personalized
services and to use the directors' business and personal contacts within the
community. There can be no assurance that the Bank can successfully continue to
pursue this strategy. Neither the Bank nor the Holding Company can predict the
effect of competition on their ability to continue to gain market acceptance and
to operate profitably. See "DESCRIPTION OF THE BANK - Competition" below, page
25.
Economic Conditions and Related Uncertainties
-------------------------------------------------
Commercial banking is affected, directly and indirectly, by local, domestic
and international economic and political conditions, and by governmental
monetary and fiscal policies. Conditions such as inflation, recession,
unemployment, volatile interest rates, tight money supply, scarce natural
resources, real estate values, international conflicts and other factors beyond
the Holding Company's control can adversely affect the potential profitability
of the Holding Company. Future rising interest rates, while increasing the
income yield on the Bank's earning assets, can adversely affect loan demand and,
consequently, the profitability of the Bank and its Holding Company. Future
decreases in interest rates can adversely affect the Bank's and Holding
Company's profitability because any such decreases can reduce the return which
the Bank earns on its assets. Economic downturns could result in the delinquency
of outstanding loans. Management does not expect any one particular factor to
affect the Bank's, and hence the Holding Company's, success or failure.
Government Regulations
-----------------------
The Holding Company and the Bank are subject to extensive governmental
supervision, regulation and control, and future legislation and government
policy could adversely affect the commercial banking industry and the operations
of the Bank. See "DESCRIPTION OF THE HOLDING COMPANY - Supervision and
Regulation of the Holding Company", page 19, and "DESCRIPTION OF THE BANK
Supervision and Regulation of the Bank", page 26.
Possible Change of Regulations
----------------------------------
The Holding Company's and the Bank's organization and operations are
strictly regulated and supervised by various state and federal regulatory
bodies, in accordance with applicable statutes and regulations. Investors should
be aware that the statutes and regulations governing financial institutions, in
general, and the commercial banking industry, in particular, are in a state of
continuous change and have been modified substantially during recent years. Such
governing laws can be anticipated to continue to be the subject of modification,
and Management cannot predict what effect any such future modifications will
have on the operations of the Holding Company and the Bank.
4
<PAGE>
Dividend Restrictions
---------------------
Currently, the Bank's Management employs a policy of paying quarterly cash
dividends, and the Holding Company's Board of Directors presently intends to
retain the dividend policy of providing for a quarterly dividend; however, no
future assurance can be given that the Holding Company's results of operations
will permit the payment of dividends. The ability of the Holding Company to pay
cash dividends will be subject to the restrictions set forth in the Pennsylvania
Business Corporation Law, and because any dividends will be upstreamed from the
Bank (after its reorganization), the ability of the Holding Company to pay
dividents will also be subject to the Federal Reserve Act and National Bank Act.
See "DIVIDENDS", page 51.
Control; Market Liquidity
-------------------------
The directors, officers and substantial investors may have sufficient
beneficial ownership of the Common Stock to control the Holding Company. Their
percentage of ownership of the Holding Company immediately after the proposed
reorganization will remain the same as their percentage of ownership of the Bank
prior to the proposed reorganization, not taking into account the possible
exercise of dissenting shareholders' rights to surrender their shares for cash.
See "PRINCIPAL BENEFICIAL OWNERS OF THE BANK'S COMMON STOCK", page 7.
The ownership of a substantial percentage of the outstanding Common Stock
by a limited number of shareholders, as described above, can adversely affect
the liquidity of the market for the Common Stock because only a limited number
of shares are widely dispersed and likely to change hands. Stock prices in an
illiquid market tend to increase and decrease in a more volatile manner than
stock prices in a liquid market, because prices for a relatively small number of
shares can have a significant impact on the price quoted for the Common Stock.
The Holding Company is unable to estimate the number of shares of Common Stock
that may be sold in the future by any of its shareholders. Such sales will
depend upon a number of factors, including the market price for the shares of
Common Stock and the circumstances applicable to each shareholder. The sale of a
substantial block of shares of Common Stock in the public market is likely to
have an adverse impact on the market price of the shares of Common Stock.
Anti-Takeover Provisions
-------------------------
See "DESCRIPTION OF THE HOLDING COMPANY'S STOCK Anti-Takeover Provisions"
below, page 45.
Indemnification Provisions for Directors
-----------------------------------------
The Holding Company's bylaws (the "Bylaws") contain provisions limiting the
liability of directors of the Holding Company in connection with actions they
take as directors. Among other things, such provisions may prevent the Holding
Company and the shareholders from having a cause of action against the directors
for monetary damages. Causes of action for self-dealing, willful misconduct or
recklessness and claims for non-monetary relief, however, may be unaffected by
such provisions. The restriction on monetary liability may discourage derivative
litigation seeking such relief and, in the case of claims having merit, could
reduce the recovery of monetary damages by the Holding Company. One of the
significant effects of the indemnification provisions in the Bylaws is to
authorize indemnification against judgments and settlements in a derivative
suit. As a result, damages assessed against a director to be paid to the Holding
Company would be, at least, reduced by the indemnification
5
<PAGE>
amounts owed by the Holding Company to such persons. The Holding Company,
accordingly, will not receive any net benefit from such awards or settlement
amounts and could incur a loss after indemnification payments are made.
Management believes, however, that these provisions are appropriate because any
possible economic loss to the Holding Company could be offset by a reduction in
the cost to the Holding Company of defending baseless litigation, which also may
be discouraged by these provisions of the Bylaws. See Exhibit D, Article 23.
Absence of Public Trading Market
--------------------------------
The shares of Common Stock of the Bank are traded on a limited basis in the
local over-the-counter market, primarily in the Marysville area. The Holding
Company does not presently intend to make application with the National
Association of Securities Dealers ("NASD") to have the Common Stock of the
Holding Company listed for trading on the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") or to make application for listing
on any national securities exchange. While the Holding Company does intend to
comply with regulatory requirements necessary for brokerage firms to make an
active market in the Common Stock, no assurance can be given that a more liquid
market for the Common Stock will develop or, if developed, be maintained.
Loss on Dissolution and Termination
--------------------------------------
In the event of dissolution and termination of the Holding Company, the
proceeds, if any, realized from liquidation of the Holding Company's assets will
be distributed only after the satisfaction of all claims of creditors (including
depositors). Accordingly, the ability of a shareholder to recover all or any
portion of his or her investment under such circumstances will depend on the
amount of funds realized and the claims of creditors, depositors and others to
be satisfied therefrom.
Year 2000 Computer Problem
--------------------------
See "Description of the Bank's Common Stock - Year 2000 Computer Problem,"
page 43.
FORWARD-LOOKING STATEMENTS
This Proxy Statement/Prospectus contains and incorporates by reference
certain statements that constitute "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements include all statements regarding the intent, belief
or current expectations regarding the matters discussed or incorporated by
reference in this Proxy Statement/Prospectus (including statements as to
"beliefs," "expectations," "anticipations," "intentions" or similar words) and
all statements that are not statements of historical fact. Such statements are
subject to risks, uncertainties and assumptions, including, but not limited to,
trends for the continued growth of the business of the Bank and the Holding
Company. Should one or more of these risks or uncertainties materialize or
should underlying assumptions prove incorrect, actual results, performance or
achievements in 1999 and beyond could differ materially from those expressed in,
or implied by, such forward-looking statements.
6
<PAGE>
PRINCIPAL BENEFICIAL OWNERS OF THE BANK'S COMMON STOCK
Principal Owners
The following table sets forth, as of September 15, 1998, 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.
Percent of Outstanding
Common Stock
Name and Address Shares Beneficially Owned (1) Beneficially Owned
- - ---------------- ------------------------- ------------------
Arlene G. Deckard 22,300 10.93%
c/o The First National Bank of
Marysville
101 Lincoln Street
Post Office Box B
Marysville, Pennsylvania 17053
(1) The securities "beneficially owned" by an individual are determined in
accordance with the definitions of "beneficial ownership" set forth in the
regulations of the Office of the Comptroller of the Currency 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 September 15, 1998. Beneficial ownership may be disclaimed as to
certain of the securities.
7
<PAGE>
Beneficial Ownership by Officers and Directors
The following table sets forth as of September 15, 1998, 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
or Identity of Group(1) Beneficial Ownership(2) of Class(3)
<S> <C> <C>
H. Robert Asper 3,200(4) 1.57%
David M. Benfer 5,450(5) 2.67%
Arthur M. Feld 2,000(6) .98%
John L. Hocker(7) 6,464(8) 3.17%
William L. Hummel(9) 2,100(10) 1.03%
Larry D. Reich(11) 600 .29%
Keith A. Rohrer 2,300 1.13%
John M. Schrantz 2,373(12) 1.16%
Raymond A. Smith(13) 7,140 3.50%
Kenneth C. Toomey(14) 8,300(15) 4.07%
Robert K. Watts 5,400(16) 2.65%
All Officers and Directors
as a Group (11 persons) 45,327 22.22%
- - -----------
<FN>
1 The address of each individual listed below is c/o The First National Bank
of Marysville, 101 Lincoln Street, Post Office Box B, Marysville,
Pennsylvania 17053.
2 The securities "beneficially owned" by an individual are determined in
accordance with the definitions of "beneficial ownership" set forth in the
regulations of the Office of the Comptroller of the Currency 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 September 15, 1998. Beneficial
ownership may be disclaimed as to certain of the securities.
3 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.
4 Includes 1,200 shares owned jointly with spouse.
5 Includes 2,050 shares owned jointly with spouse.
6 Invested in Individual Retirement Acccount ("IRA").
7 Mr. Hocker is Vice-Chairman of the Board, in addition to being a director
of the Bank.
8 Includes 4,464 shares owned jointly with spouse.
9 Mr. Hummel is the President, Chief Executive Officer and Chief Financial
Officer of the Bank, in addition to being a director.
10 Includes 100 shares owned jointly with spouse.
11 Mr. Reich is the Senior Vice-President, Secretary and Cashier of the Bank.
He is not a director. All other persons listed in table are directors.
12 Includes 2,243 shares invested in IRA.
13 Mr. Smith is Assistant Secretary, in addition to being Director of the
Bank.
14 Mr. Toomey is Chairman of the Board, in addition to being a directors of
the Bank.
15 Includes 300 shares owned jointly with spouse.
16 Includes 700 shares owned jointly with spouse.
</FN>
</TABLE>
8
<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. In terms of the number of shares,
the affirmative votes of the holders of at least 136,000 shares of Common Stock
of the Bank are needed for the proposed reorganization to be approved. The
Officers and Directors, as a group, own 45,327 shares, or approximately 33.33%
(one-third) of the shares representing affirmative votes needed to approve the
reorganization.
9
<PAGE>
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 two (2) shares 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 "The First National Bank of Marysville."
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 September 10, 1998, 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.
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 Office of the
Comptroller of the Currency ("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 shall be filed with the Federal
Reserve Board as soon as practicable. An application was filed on September 18,
1998, with the OCC requesting approval of the Merger.
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
10
<PAGE>
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 two million (2,000,000) shares of Common Stock. If
the Plan of Reorganization is approved, approximately 408,000 shares of
Common Stock will be issued in connection with the consummation of the Plan
of Reorganization, leaving approximately 1,592,000 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 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".
11
<PAGE>
Interstate Banking and Branching.
---------------------------------
Under the Reigle-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 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.
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 Office of the Comptroller of
the Currency ("OCC"). Presently, the Bank plans to request that the OCC issue a
certificate no later than January 1, 1999 (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
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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 "The First National Bank of Marysville".
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.
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 twice the 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 Fifty Cents ($.50) per share, will
automatically be converted into and become two (2) shares of Common Stock, par
value Twenty-five Cents ($.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 two (2) shares of
the Holding Company's Common Stock. The shareholders of the Holding Company will
be required to exchange their present stock certificates (bearing the name "The
First National Bank of Marysville") for new stock certificates (bearing the name
"First Perry Bancorp, Inc."). 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.
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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 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 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, shall be sold.
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 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.
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Description of Property
The Holding Company does not currently own property as it has no operating
history. The Bank owns its Main Office at 101 Lincoln Street, Marysville,
Pennsylvania 17053, and its Ridgeview Office at 500 South State Road,
Marysville, Pennsylvania 17053.
Accounting Treatment
Management of the Holding Company and the Bank intend that the proposed
reorganization, pursuant to which the Bank will merge with and into the Interim
Bank and become a fully owned subsidiary of the Holding Company, will be
accounted for as a pooling of interest method of accounting. The pooling
- - -of-interest method of accounting for a business combination reflects the union
of ownership between the entities involved. The pooling is accomplished
primarily by the issuance of voting common stock of the acquiring company.
Results of operations are restated for prior periods as if the entities involved
had always been combined. Under the pooling-of-interests method, the cost of an
acquisition is the total par or stated value of the capital stock issued by the
acquiror to effectuate the combination. This amount is debited to an investment
account and the appropriate capital stock account is credited. Fair values are
ignored and goodwill is never recorded in a pooling of interests.
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;
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<PAGE>
(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 with respect to the reorganization.
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 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 Special
Meeting, or has given written notice at or prior to the Special 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 Office of the Comptroller of the Currency ("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 Special Meeting, or who gives notice in
writing at or prior to the Special 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.
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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 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. For more
information regarding the OCC's stock appraisal process, shareholders may
contact the Office of the Comptroller for the Currency, Corporate Activity
Division, 250 E Street , S.W., Washington, D.C. 20219 (Telephone: 202-874-5000).
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 Office of the Comptroller of
the Currency ("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 September 18, 1998, with
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<PAGE>
the OCC. The Holding Company shall file an application with the Federal Reserve
Bank of Philadelphia as soon as practicable. To date, the OCC has not approved
the proposed merger of the Bank with, into and under the Charter of the Interim
Bank, and the Federal Reserve has not approved the reorganization of the Bank
into a bank holding company.
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.
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 final 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.
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DESCRIPTION OF THE HOLDING COMPANY
Organization
The Holding Company was organized as a Pennsylvania business corporation
and incorporated under Pennsylvania law on August 14, 1998, 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 two million (2,000,000) shares of Common Stock, par value
Twenty-five Cents ($.25) per share. Currently, there are four (4) 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 may reimburse the Bank on a fair and reasonable basis for all
services furnished to it and for all expenses incurred on its behalf.
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, and incorporated herein by reference.
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.
See "DESCRIPTION OF THE BANK - Directors and Executive Officers", below, page
35. The directors of the Bank will be elected annually by the Holding Company.
The officers of the Holding Company are elected by the Board of Directors
for one-year terms. The current officers are as follows:
Name Age Position
---- --- --------
as of September 16, 1998
------------------------
William L. Hummel 50 President and Chief
Executive Officer
Larry D. Reich 56 Senior Vice President,
Secretary & Treasurer
Kenneth C. Toomey 78 Chairman of the Board
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Remuneration
Because the Holding Company was not in existence in 1997, it paid no
remuneration to its directors and officers for that year. Further, the Holding
Company has paid no remuneration to its directors or officers to date during
1998. 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 Commission, 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.
Supervision and Regulation of the Holding Company
The Holding Company will be subject to the jurisdiction of the Securities
and Exchange Commission 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
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<PAGE>
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.
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
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<PAGE>
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.
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
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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.
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.
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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.
Acquisition of Additional Banks
The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
permits adequately capitalized and managed bank holding companies to acquire
banks in any state. Concentration limits apply and "Community Reinvestment Act"
("CRA") evaluations by the Federal Reserve are required before acquisitions are
approved. The Act also permits interstate mergers between adequately capitalized
and managed banks, subject to concentration limits, state laws and CRA
evaluations. The Board of Directors of the Holding Company has no present plans
to acquire an additional bank but may consider such acquisitions in the future.
DESCRIPTION OF THE BANK
History and Business
The Bank was organized in 1903 as a national banking association,
commencing operations in 1904, and is under the supervision of the Office of the
Comptroller of the Currency ("OCC"). Its principal office is located at 101
Lincoln Street, Marysville, Pennsylvania 17053-0017, and its Ridgeview Office is
located at 500 South State Road, Marysville, Pennsylvania 17053-0017.
As of June 30, 1998, the Bank had total assets of approximately Seventy-six
Million Thirty-Eight Thousand Dollars ($76,038,000), total shareholders' equity
of approximately Eight Million Six
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Hundred Six Thousand Dollars ($8,606,000), total liabilities of approximately
Sixty-seven Million Four Hundred Thirty-Two Thousand Dollars ($67,432,000), of
which total deposits amounted to approximately Sixty-six Million Five Hundred
Eighty-Three Thousand Dollars ($66,583,000).
Major classifications of loans are summarized as follows:
In Thousands of Dollars
----------------------------------------------------------
June 30, December 31, December 31, December 31,
1998 1997 1996 1995
Loan Classifications:
Commercial and Industrial $ 104 $ 2,600 $ 2,530 $ 1,833
Agricultural 0 0 0 0
Real Estate Mortgages (1) 43,356 39,950 39,031 36,197
Loans to Individuals 6,468 5,215 4,513 4,662
Loans to Municipal
Governments 854 795 537 315
All Other Loans 78 10 5 3
Less Unearned Income (1,059) (1,024) (1,026) (999)
Less Allowance for
Loan Losses (423) (428) (432) (439)
----------- ------------ ------------ ---------
Net Loans $ 49,378 $ 47,118 $ 45,158 $ 41,572
========= ========== ========== =========
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.
On June 30, 1998, the Bank had approximately Thirty (30) employees:
Twenty-four (24) full-time employees and six (6) part-time 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 Perry, Cumberland and
Juniata Counties, Pennsylvania. Dauphin Deposit Bank and Trust Company has a
branch in Enola, Cumberland County; PNC Bank, N.A., has branches in Duncannon
and Loysville, Perry County, and Enola, Cumberland County; The First National
Bank of Newport has its main office in Newport and a branch in Duncannon, both
in Perry County; The Bank of Landisburg has its main office in Landisburg and
branches in Blain and Shermans Dale, all in Perry County; Financial Trust
Company has a branch in New Bloomfield, Perry County; The First National Bank of
Mifflintown has its main branch in Mifflintown, Juniata County and a branch in
Ickesburg, Perry County; First National Bank of Liverpool has its main branch in
Liverpool, Perry County; and The Juniata Valley Bank has its main branch in
Mifflintown, Juniata County and a
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branch in Millerstown, Perry County. 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. In terms of assets and
liabilities, the Bank is smaller than many of its major competitors.
Supervision and Regulation of the Bank
- - ---------------------------------------
(See also "Supervision and Regulation of the Holding Company", above.)
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 Federal Deposit Insurance Corporation ("FDIC"). Bank operations are also
subject to regulation of the Office of the Comptroller of the Currency ("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. The Bank's Common Stock is not registered under Section 12(g) of the
Securities Exchange Act of 1934, as amended, and therefore, the Bank does not
file periodic reports with the OCC. However, if the Plan of Reorganization
receives all of the required approvals, the Holding Company may be required to
file such periodic reports under Section 15(d) of the Securities Exchange Act of
1934, as amended, with the Securities and Exchange Commission. See, "Description
of the Holding Company -- Supervision and Regulation".
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
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".
26
<PAGE>
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.
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.
27
<PAGE>
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 Federal Deposit Insurance Act of 1950 embodies the basic authority for
the operation of the FDIC. The Depository Institutions Deregulation and
Monetary Control Act of 1980 began the phase-out of interest rate ceilings
on deposits and 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 riskrating. The Bank
is currently in the FDIC's lowest risk category.
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
28
<PAGE>
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 12 C.F.R. 303.4(a),
a person who owns at least ten percent (10%) of a class of voting
securities is presumed to meet the definition of "control" if (1) the bank
has issued any class of securities subject to the registration requirements
of section 12 of the Securities and Exchange Act of 1934; or (2)
immediately after the transaction, no other person will own a greater
proportion of that class of voting securities.
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 ("FIRIRCA") established limits and
reporting requirements for bank insider transactions and created major
statutory provisions regarding electronic fund transfers. It generally
expanded the circumstances under which officers or directors of a bank may
be removed by the bank's federal supervisory agency, restricts lending by a
bank to its executive officers, directors, principal shareholders or
related interests thereof, 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, FIRIRCA 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
FIRIRCA, 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 FIRIRCA.
The Garn-St. Germain Depository Institutions Act of 1982 ("Garn-St.
Germain"), expanded FDIC powers to assist troubled banks, removed certain
restrictions on a bank's lending powers and liberalized its depository
capabilities. Garn-St. Germain also amended FIRIRCA (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 FIRIRCA 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
29
<PAGE>
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 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) are 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
30
<PAGE>
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.
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
31
<PAGE>
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.
The Crime Control Act of 1990 expanded the authority of federal
regulators to combat financial fraud. This act prohibited undercapitalized
banks from making golden parachute and other indemnification payments to
institution-affiliated parties. It also increased the severity of
punishment for those convicted of bank crimes, provided regulators new
procedural powers to recover assets improperly diverted from financial
institutions, and expanded the FDIC's enforcement powers.
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, which greatly
increased the powers of the FDIC, 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).
32
<PAGE>
<TABLE>
<CAPTION>
Under a
Total Tier 1 Tier 1 Capital
Risk-Based Risk-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
-
*3.0 for those banks having the highest available regulatory rating.
</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.
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
-----------------------
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 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)
33
<PAGE>
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.
For a discussion of the Interstate Banking and Branching Act, see
section entitled "PROPOSED REORGANIZATION - Reasons for the Proposed
Organization - Interstate Banking and Branching".
The Riegle Community Development and Regulatory Improvement Act of
1994 contains provisions to encourage the private sector secondary market
for small business loans and to reduce bank regulatory burden. It also
established a Community Development Financial Institutions Fund to provide
financial and technical assistance to Community Development Financial
Institutions.
34
<PAGE>
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 and Executive Officers
The following table sets forth selected information about the directors and
executive officers of the Bank. The directors are elected annually by
shareholders.
<TABLE>
<CAPTION>
Age
as of
Name and Position September 16,
with Bank 1998 Principal Occupation for last Five Years
- - ------------------- ------- ------------------------------------------
<S> <C> <C>
H. Robert Asper, 63 President of Bank for 14 years before retiring
Director in 1997
David M. Benfer, 71 Retired owner of Benfer's Meat Market
Director
Arthur M. Feld, 56 Lawyer (Sole Proprietor)
Director
John L. Hocker, 79 Retired, former garage owner (Heisley and
Director and Vice- Hocker, Inc.)
Chairman
William L. Hummel, 50 President of Bank since 1997; Senior Vice-
Director, President and President prior to 1997
Chief Executive Officer
Larry D. Reich, 56 Employee of Bank since 1982; currently
Senior Vice President, Senior Vice President, Cashier and Treasurer
Secretary and Treasurer since 1995)
Keith A. Rohrer, 48 Owner of Ford dealership; Current President
Director and Director, Maguire's Ford, Inc. and
Maguire's Ford of Hershey, Inc.
John M. Schrantz, 48 Current President and Director, H. E. Rohrer,
Director Inc. and Rohrer Enterprises, Inc. (Rohrer Bus
Service)
Raymond A. Smith, 75 Retired, former insurance agent/broker 1976
Director and Assistant
Secretary
Kenneth C. Toomey, 78 Retired, former President of the Bank 1963
Director and Chairman
of the Board
Robert K. Watts, 78 Retired, former owner of local retail store 1983
Director
<CAPTION>
Name and Position Director of Bank
with Bank Since
- - ------------------ --------------
<S> <C>
H. Robert Asper,
Director 1973
David M. Benfer, 1983
Director
Arthur M. Feld, 1997
Director
John L. Hocker,
Director and Vice- 1973
Chairman
William L. Hummel,
Director, President and 1983
Chief Executive Officer
Larry D. Reich, (not director --
Senior Vice President, Executive Officer
Secretary and Treasurer since 1995)
Keith A. Rohrer, 1997
Director
John M. Schrantz, 1994
Director
Raymond A. Smith, 1976
Director and Assistant
Secretary
Kenneth C. Toomey, 1963
Director and Chairman
of the Board
Robert K. Watts, 1983
Director
</TABLE>
35
<PAGE>
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 for
one-year terms and each of whom holds office at the discretion of the Board of
Directors.
Number of Age as
Office and Bank Shares of
Position with Held Employee Beneficially September 16,
Name the Bank Since Since Owned (1) 1998
---- -------- ----- ----- ------------ ---------
William L. Hummel President, 1997 1967 2,100 50
Chief
Executive
Officer, Chief
Financial
Officer
Larry D. Reich Senior Vice 1995 1982 600 56
President,
Secretary and
Cashier
Kenneth C. Toomey Chairman of 1983 1953 8,300 78
the Board
- - --------------------------
(1) All shares are owned individually or jointly with a spouse unless otherwise
indicated.
36
<PAGE>
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, 1997, of
those persons who were, at December 31, 1997, (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 One Hundred
Thousand Dollars ($100,000):
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation
---------------------
(a) (b) (c) (d) (e)
Name Other
and Annual
Principal Compen-
Position Salary Bonus sation
----------- Year ($) ($) ($)
---- --- --- ---
<S> <C> <C> <C> <C>
William L. Hummel, 1997 69,000(2) 2,000 --
President and of Pension Plan below.)
Chief Executive Blue Cross/Blue Shield
Officer(1) Health Insurance
<CAPTION>
Long-Term Compensation
----------------------
Awards Payouts
(a) (f) (g) (h) (i)
Name
and Restricted All Other
Principal Stock Option/ LTIP Compen-
Position Award(s) SARs Payouts sation
----------- ($) (#) ($) ($)
--- --- --- ---
<S> <C> <C> <C> <C>
William L. Hummel, -- -- -- (See discussion
President and of Pension Plan below.)
Chief Executive Blue Cross/Blue Shield
Officer(1) Health Insurance
<FN>
(1) William L. Hummel was elected President on May 27, 1997.
(2) Includes $6,000 in board fees.
</FN>
</TABLE>
The total cash compensation received in 1997 by the Bank's executive
officers was approximately $124,200.00.
Pension Plan
- - -------------
The Bank has provided a funded Pension Plan to its full-time employees
since 1954. Eligibility requirements are as follows:
1.) Minimum months of service: 12
2.) Minimum age: 21
3.) Maximum age: none
4.) Participant enters plan on eligibility date nearest completion of
eligibility requirements.
5.) Entry date: October 15
The Pension Plan provides monthly benefits to eligible retired employees.
The monthly pension is calculated as 35% of monthly compensation and 20% of the
excess above $750. Employees will be 100% vested in their pension benefit after
seven (7) years of service. The total benefit is reduced for each year of
service less than 35 years. Normal retirement age is 65. Eligibility for early
retirement occurs at age 55 if employee has ten years of participation. The Plan
also provides for life insurance in the amount 100 times the monthly pension.
The asset balance of the Plan as of October 15, 1997, was $71,625.12. The asset
balance as of October 15, 1996, was $242,704.48.
37
<PAGE>
The two executive officers of the Bank, William L. Hummel and Larry D.
Reich, are participants in the Plan. As of the last valuation date, October 15,
1997, Mr. Hummel's estimated projected monthly benefit upon retirement at age 65
was $2,848.00. His retirement benefit accrued to date was $1,727.17 which was
100% vested. His insured death benefit was $284,800.
Compensation of Directors
The Board of Directors held twenty-four (24) meetings in 1997. The
Directors each receive Two Hundred and Fifty Dollars ($250.00), per meeting for
serving on the Board of Directors, plus health insurance (Blue Cross/Blue
Shield). However, two members receive Three Hundred and Fifty Dollars ($350.00)
each, per meeting, without health insurance. They do not receive additional
compensation for committee participation. The Secretary of the Board of
Directors, Mr. Larry D. Reich, receives One Thousand Two Hundred Dollars
($1,200) per year for performance of his duties as Secretary. In 1997, the Board
of Directors received an aggregate of approximately Sixty-One Thousand Six
Hundred Fifty Dollars ($61,650) for their service on the Board of Directors and
attendance at committee meetings.
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, 1997, 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 $511,978.54 or approximately 6.19% 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, July 20, 1998,
were $552,070.60 or approximately 6.41% of the Bank's total equity capital.
DESCRIPTION OF THE BANK'S COMMON STOCK
The Bank's Common Stock
As of September 15, 1998, the Bank's authorized Common Stock consisted of
two hundred twenty-five thousand (225,000) shares, par value Fifty Cents ($.50)
per share, of which 204,000 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
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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 September 15, 1998, the Bank
had approximately 110 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 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
Federal Deposit Insurance Corporation Improvement Act (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 January 1996.
AMOUNTS OF DIVIDENDS PAID
---------------------------------------------------------------------
Regular Cash Special Cash In the
Dividend Per Share Dividend Per Share Aggregate
-------------------- ------------------- -----------
Month/Year
March 1996 $ .30 $ $ 60,000
June 1996 .31 62,000
September 1996 .32 64,000
December 1996 .33 66,000
January 1997 .10 20,000
March 1997 .33 66,660
June 1997 .33 67,320
September 1997 .33 67,320
December 1997 .33 .09 85,680
March 1998 .34 69,360
June 1998 .35 71,400
- - -----------------------
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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 July 31, 1998, the highest trade price known to
management for transactions of the Bank's Common Stock was $39.00 per share on
January 5, 1998. 300 shares were sold in that transaction. This sale was the
most recent sale as of July 31, 1998. 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. Therefore, as of June 8, 1998, the date on which the public announcement
of the proposed transaction was made, it was unable to determine the actual
trading price of the Bank's stock.
The following table compares the market value of the Bank's and Holding
Company's Common Stock prior to the public announcement of the proposed
transaction. The Bank does not have information on bid quotes. Because the
Holding Company has no operating history and was only recently formed, its stock
had no market value prior to the public announcement:
Market Value on Date
Prior to Public Announcement
of Proposed Transaction (June 7, 1998)
Common Stock
of Bank (last known trade price: $39.00 per share)
Common Stock
of Holding Company (Holding Company not yet in existence -
no market value)
No amounts of the Bank's Common Stock are subject to outstanding options or
warrants to purchase, or securities convertible into, common equity of the Bank
or the Holding Company.
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Bid price information is not available. However, the Bank does have
information regarding the trade price at which shares are sold. The following
table shows the high and low trade prices, for the Bank's Common Stock:
Trade Prices: Bank's Common Stock
(Price per share)
High Low
For Quarter Ended:
- - ------------------
March 1996 $ 32 32
June 1996 35 35
Sept. 1996 35 35
Dec. 1996 35 35
March 1997 37 37
June 1997 37 37
Sept. 1997 37 37
Dec. 1997 37 37
March 1998 39 39
June 1998 none none
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Capitalization
Set forth below is the capitalization of the Bank at June 30, 1998, and of
the Interim Bank and the Holding Company at initial formation, and as adjusted
to reflect the consummation of the Merger.
The First The First National
National Bank Interim Bank First Perry
of Marysville of Marysville Bancorp, Inc.
-------------- -------------- -------------
Prior to Merger
- - ----------------
Number of Shares Authorized
or to be Authorized,
Common Stock, par value
$.50 for Bank, $.25 for Interim
Bank and for Holding Company 225,000 2,000,000 2,000,000
Number of Shares outstanding:
Common Stock 204,000 408,000 4(2)
Capital Accounts:
Common Stock 102,000 102,000(1) 1.00(2)
Capital Surplus 640,000 20,400(1)
Undivided Profits 7,695,000
Net Unrealized Holding Gains
(Losses) on Available-for-
Sale Securities 169,000 0 0
--------------- ------------ -----------
Total Equity Common 8,606,000 122,400 1.00
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After Merger
- - ------------
Number of Shares Outstanding:
Common Stock par value
$.50 for Bank, $.25 for Interim
Bank and for Holding Company -- 408,000(3) 408,000(4)
Capital Accounts:
Common Stock par value
$.25 for Interim Bank and for
Holding Company -- 102,000 102,000
Capital Surplus -- 640,000 640,000
Undivided Profits -- 7,695,000 7,695,000
Net Unrealized Holding Gains
(Losses) on Available-for-
Sale Securities -- 169,000 169,000
----------- ------------- ---------
Total Equity Common 0 8,606,000(5) 8,606,000(6)
=========== =============== ============
(1) Represents shares issued upon the initial capitalization of the Interim
Bank for Thirty Cents ($.30) per share. Forty thousand (40,000) shares were
subscribed by the organizers of the Interim Bank and three hundred
sixtyeight thousand (368,000) shares were subscribed by First Perry
Bancorp, Inc. At the Effective Date of the Merger, the forty thousand
(40,000) shares of the organizers will be assigned to First Perry Bancorp,
Inc. at the same purchase price, Thirty Cents ($.30) per share.
(2) Represents four (4) shares issued to the incorporators of the Holding
Company for Twenty-five Cents ($.25) per share. At the Effective Date of
the Merger, these shares will be repurchased and retired by First Perry
Bancorp, Inc. at the same purchase price, Twenty-five Cents ($.25) per
share.
(3) Represents the initial forty thousand (40,000) shares issued on formation
of the Interim Bank to the organizers for Thirty Cents ($.30) per share,
and 368,000 shares which will be purchased by the Holding Company on the
Effective Date of the Merger.
(4) Represents the maximum number of shares to be issued to the holders of
Common Stock of the Bank as the result of the Merger.
(5) Total equity capital reflects the capital accounts after payment of the One
Hundred Twenty-Two Thousand Four Hundred Dollars ($122,400) 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 Atlantic Central Bankers Bank, Camp Hill, Pennsylvania.
(6) Amounts after the Merger are on a consolidated basis.
Year 2000 Computer Problem
The following section contains forward-looking statements which involve
risks and uncertainties. The actual impact of the Year 2000 issue on the Bank
could materially differ from that which is anticipated in these forward-looking
statements as a result of certain factors identified below.
The "Year 2000 Issue" is the result of computer programs having been
written using two digits rather than four to define the applicable year. Any of
the Bank's computer systems that have
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date-sensitive software or date-sensitive hardware may recognize a date using
"00" as the Year 1900 rather than the Year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send statements, or
engage in similar normal business activities.
Based on an ongoing assessment by a committee consisting of management and
board members, the Bank has already modified or replaced portions of its
software and hardware so that its computer systems will properly use dates
beyond December 31, 1999. The Bank presently believes that as a result of
modifications to existing software and hardware and conversions to new software
and hardware, the Year 2000 Issue can be mitigated. The Bank will continue to
assess and test its computer software and hardware to ensure Year 2000
compliance. However, the Year 2000 Issue could have a material adverse impact on
the operations of the Bank because of the possibility of errors in the testing
process or because of a lack of compliance by other entities, such as public
utilities.
The Bank has initiated formal communications with all of its vendors and is
in the process of initiating communications with its large commercial customers
to determine the extent to which the Bank is vulnerable to those third parties'
failure to remediate their own Year 2000 Issue and will make any necessary
conversions as a result of such third parties' failures by no later than June
30, 1999. The costs for modifications and conversion projects, estimated at
approximately $30,000, are not expected to have a material effect on the results
of operations of the Bank.
The Bank is subject to the regulation and oversight of various banking
regulators, whose oversight includes the provision of specific timetables,
programs and guidance regarding Year 2000 issues. Regulatory examination of the
Bank's Year 2000 programs are conducted on a quarterly basis. Also, the
Independent Consultants Associates, located in Shrewsbury, Pennsylvania, have
made an independent audit of the Bank's hardware and determined that it is Year
2000 compliant.
DESCRIPTION OF THE HOLDING COMPANY'S STOCK
Common Stock
The Holding Company is authorized to issue Two Million (2,000,000) shares
of Common Stock, par value Twenty-five Cents ($.25) per share, of which
approximately 408,000 thousand shares would be outstanding if the reorganization
had been consummated as of June 30, 1998. The remaining 1,592,000 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
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<PAGE>
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
17011, 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 sixteen (16) provisions that may be deemed to be "anti-takeover" in nature
that will be immediately applicable. Two of these provisions are: the
authorization of two million (2,000,000) 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.
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 9.3 of the By-laws of the Holding Company provides that at the 1999
Annual Meeting of Shareholders of the Holding Company, the shareholders shall
elect ten (10) directors as follows: Four (4) Class A directors to serve until
the 2000 Annual Meeting of Shareholders, three (3) Class B directors to serve
until the 2001 Annual Meeting of Shareholders, and three (3) Class C directors
to serve until the 2002 Annual Meeting of Shareholders. Each class shall be
elected in a separate election. At each Annual Meeting of Shareholders
thereafter, successors to
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<PAGE>
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 110 shareholders, the
Board of Directors recognizes that the absence of cumulative voting makes it
more difficult to gain representation on the Board of Directors.
The Holding Company's By-laws may be amended by the affirmative vote of at
least seventy-five percent (75%) of the outstanding shares of Common Stock at
any regular or special meeting or 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 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.
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 eighty percent (80%) of the Board 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 90,654 shares, or 22.22% of the Holding
Company's outstanding stock.
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<PAGE>
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.
An additional anti-takeover provision is the requirement that only those
shareholders entitled to cast at least forty percent (40%) of the votes that all
shareholders are entitled to cast at a particular meeting shall be entitled to
call special meetings of the shareholders. This provision appears in both the
Articles of Incorporation and the By-laws of the Holding Company. Currently, the
Bank provides that three or more shareholders entitled to cast at least
twenty-five percent (25%) of the votes that all shareholders are entitled to
cast may call a special meeting. Increasing the threshold percentage makes it
more difficult for a hostile acquiror with a minority of shares to influence the
direction and management of the Holding Company and to disrupt the business of
the Holding Company between annual meetings and provides a greater time for
consideration of any shareholder proposal. The Board of Directors, the Chairman,
the President or the Executive Committee may, however, call a special meeting
pursuant to the Holding Company's By-laws.
A final anti-takeover provision in the Articles of Incorporation of the
Holding Company requires that certain anti-takeover provisions in the Articles,
i.e., the voting requirements for approval of mergers, the prohibition of
cumulative voting rights, the requirements for calling a special meeting, the
ability of the Board of Directors to consider non-economic factors in opposing a
tender offer, and the prohibition of shareholders' preemptive rights, may only
be amended by the affirmative vote of the holders of at least seventy-five
percent (75%) of the outstanding shares of Common Stock of the Holding Company.
Anti-takeover Provisions Applicable to Registered Corporations
In addition to the provisions already described, under the Pennsylvania
Business Corporation Law of 1988 ("BCL"), as amended, there are seven 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 is required to register its stock with the SEC, if at any calendar
year-end the Holding Company has five hundred (500) or more shareholders of
record and assets of at least Five Million Dollars ($5,000,000). It is not
anticipated that the Holding Company will have, at the Effective Date of the
Consummation of the Plan of Reorganization and Plan of Merger, five hundred
(500) or more shareholders of record. However, upon obtaining the five hundred
shareholder threshold, a Registration Statement will be filed with the SEC to
register the Holding Company's Common Stock under the Securities and Exchange
Act of 1934. On the Effective Date of that Registration Statement, the
Corporation will obtain Registered Corporation Status under the BCL and the
following statutory provisions will be applicable to the Holding Company.
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<PAGE>
Two of these statutory provisions eliminate the rights of the shareholders
of Registered Corporations to call a Meeting of shareholders and 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 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. (There is
an important exception, however, in that an interested shareholder who owns at
least twenty percent (20%) of the votes that all shareholders would be entitled
to cast in an election of directors of the corporation may generally call a
special meeting for the purpose of approving a business combination within five
years after the interested shareholder's acquisition date.)
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, upon
obtaining Registered Corporation status, 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
48
<PAGE>
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).
While the Fair Price provision in the BCL 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 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
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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 eighty percent
(80%) of the votes that all shareholders 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's'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
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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's. If they constitute control-shares for the transferee, this
subchapter must be applied to that person as well. If the acquiror's 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.
Finally, under the BCL, a Registered Corporation has the express authority
to treat shareholders on a disparate basis and therefore may take advantage of
"poison pills". "Poison pills" generally consist of a shareholder rights plan
whereby a corporation gives its shareholders the right to buy common stock upon
the occurrence of certain specified events, such as a merger, thereby decreasing
the value of the acquiror's holdings and the acquiror's percentage of ownership.
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 the anti-takeover provisions contained in the Holding Company's
Articles and By-laws and under the BCL.
DIVIDENDS
The Bank has paid continuous quarterly cash dividends since 1996, and
continuous semi-annual cash dividends for over fifteen 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
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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.
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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 Pennsylvania Business Corporation Law of
1988, as amended ("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 Two Hundred Twenty-Five Two million (2,000,000)
Outstanding Thousand (225,000) shares, shares, par value Twenty-
par value Fifty Cents($.50) five Cents ($.25) per
per share, authorized; of share authorized; of
which 204,000 were which 408,000 shares
outstanding on June 30, would be outstanding if
1998 the reorganization were
effected on June 30, 1998
Voting One (1) vote per share with One (1) vote per share
cumulative voting for with no cumulative
directors voting for directors
Preemptive Rights Limited Preemptive rights No preemptive rights to
to subscribe for additional subscribe for additional
shares on a pro rata basis shares on a pro rata basis
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Dividends As declared by the Board of As declared by the Board of
Directors; may be paid only Directors; the Bank's
if it would not impair the dividend restrictions apply
Bank's capital structure, if indirectly to the Holding
the Bank's surplus is at Company as cash available
least equal to its common capital for dividend distributions
and if the dividends declared will initially come from
in any year do not exceed the dividends paid to the
total of net profits in that Holding Company by the
year combined with Bank. In addition, the
undivided profits of the Holding Company may not
preceding two years less any pay a dividend if, after
required transfers to surplus, giving effect thereto: (1) the
if no losses have been Holding Company would be
sustained equal to or unable to pay its debts as
exceeding its undivided they become due or (2) the
profits, and if the Bank Holding Company's total
continues its operations at an assets would be less than the
amount greater than its net amount needed to satisfy any
profits deducting therefrom preferential rights of
its losses and bad debts shareholders
Amendment Approval by a majority vote Approval by the affirmative
of By-laws of the Board of Directors, vote of the holders of at least
subject to the power of seventy-five percent (75%)
shareholders to change such of the outstanding shares, or
action by the affirmative vote by a majority vote of the
of the holders of a majority Board of Directors subject to
of the outstanding shares; or the power of shareholders to
the affirmative vote of the change such action of the
holders of at least fifty Board of Directors by the
percent (50%) of the affirmative vote of the
outstanding shares holders of seventy-five
percent (75%) of the
outstanding shares
Shareholder
Action
(a) Mergers, Approval by a vote of at least Approval by vote of at least
Consoli- sixty-six and two-thirds seventy-five percent (75%)
dations percent (66-2/3%) of of outstanding shares; or
outstanding shares approval of at least fifty-one
percent (51%) of outstanding
shares if such transaction has
received the prior approval
of at least eighty percent (80%)
of the Board of Directors.
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(b) Approval by a vote of at least Approval by vote of at least
Liquida- sixty-six and two-thirds seventy-five percent (75%)
tion, percent (66-2/3%) of of outstanding shares; or
Sales of outstanding shares. approval of at least fifty-one
Substanti- percent (51%) of outstanding
ally All shares if such transaction has
Assets received the prior approval
of at least eighty percent
(80%) of Directors.
(c) Upon request by the Board of Upon request by the
Special Directors or three or more Chairman of the Board, the
Share- shareholders owning in the President, a majority of the
holder aggregate not less than Board of Directors, or of its
Meetings twenty-five percent (25%) of Executive Committee, or by
the outstanding shares one or more shareholders
owning in the aggregate not
less than forty percent (40%)
of the outstanding shares
Authori- Approval by vote of at least Approval by vote of a
zation sixty-six and two-thirds majority of the directors
of percent (66-2/3%) of
Addition- outstanding shares
al Shares
Amendment Approval by vote of at least Approval by vote of
of sixty-six and two-thirds majority of the votes cast
Articles percent (66-2/3%) of except for certain Anti
of outstanding shares takeover provisions, then 75%
Incorpor-
ation
Repurchase Cannot reduce or retire any Stock can be repurchased if,
of part of its stock without prior after giving effect thereto:
Shares regulatory approvals (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; no more than ten
percent (10%) of the outstanding
shares can be repurchased in any
twelve (12) month period without
prior regulatory approval
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Terms Directors serve one-year Directors serve staggered
of terms. Elections for entire terms; board is "classified".
Directors Board of Directors occur Eventually, all Directors
annually. shall serve three-year terms,
with approximately one-
third of the Directors coming
up for election each year.
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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 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
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.
FINANCIAL STATEMENTS
The Bank is not subject to the reporting requirements of the 1934 Act, and
accordingly, does not file 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, 1997, the financial statements
contained in the 1997 Annual Report would not be different in any material
respect.
The Bank's 1997, 1996 and 1995 Annual Reports, and the Bank's Consolidated
Reports of Condition and Income for the most recent fiscal quarter ended June
30, 1998, prepared in conformity with generally accepted accounting principles,
may be obtained at no cost by contacting William L. Hummel, President, or Larry
D. Reich, Senior Vice President, The First National Bank of Marysville, 101
Lincoln Street, Post Office Box B, Marysville, Pennsylvania 17053-0017;
telephone number: (717) 957-2196.
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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 1999 Annual Meeting of
Shareholders must deliver such proposal in writing to Larry D. Reich, Senior
Vice President, at the Holding Company's principal executive offices, 101
Lincoln Street, Marysville, Pennsylvania 17053-0017, no later than December 31,
1998.
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 1999 Annual Meeting of Shareholders, must submit the proposal
in writing to Larry D. Reich, Senior Vice President of the Bank, at the Bank's
principal office at 101 Lincoln Street, Post Office Box B, Marysville,
Pennsylvania 17053-0017, no later than December 31, 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.
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EXHIBIT A
PLAN OF REORGANIZATION
<PAGE>
PLAN OF REORGANIZATION
THIS AGREEMENT made as of this 10th day of September, 1998, among FIRST
PERRY BANCORP, INC., a Pennsylvania business corporation (the "Holding
Company"), THE FIRST NATIONAL BANK OF MARYSVILLE, Marysville, Pennsylvania, a
national banking association (the "Bank"), and THE FIRST NATIONAL INTERIM BANK
OF MARYSVILLE (In Organization), a national banking association and a subsidiary
of the Holding Company (the "Interim Bank"),
WITNESSETH:
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.
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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 Two Million
(2,000,000) shares of Common Stock, par value Twenty-five Cents ($.25)
per share, of which four (4) 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 Two Hundred
Twenty-Five Thousand (225,000) shares of Capital Stock, par value
Fifty Cents ($.50) per share, of which 204,000 shares are issued and
outstanding. There are no outstanding options, warrants, calls,
convertible securities, subscriptions or other commitments or rights
of any nature with respect to the Capital Stock of Bank.
4.3. Authority Relative to this Agreement. The execution, delivery and
performance of this Agreement and the Plan of Merger have been duly
authorized by the Board of Directors of the Bank. Subject to
appropriate shareholder and regulatory approvals, neither the
execution and delivery of this Agreement or the Plan of Merger nor the
consummation of the transactions provided for herein or therein will
violate any agreement to which the Bank is a party or by which it is
bound or any law, order, or decree or any provision of its Articles of
Association or By-laws.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE INTERIM BANK.
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The Interim Bank represents, warrants and agrees as follows:
5.1. Organization and Standing. The Interim Bank is a national banking
association in the process of formation under the National Bank Act.
5.2. Capitalization. Upon formation, the Interim Bank will be authorized to
issue 2,000,000 shares of Capital Stock, par value Twenty-five Cents
($.25) per share, of which 408,000 shares will be issued and
outstanding and owned by the Holding Company and ten organizers
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 368,000 shares of Capital Stock, par value Twenty-five
Cents ($.25) per share, of Interim Bank for Thirty Cents ($.30) 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 their 40,000 shares of Capital Stock prior to the Merger. Such
shares of the Organizers shall be purchased at Thirty Cents ($.30) per
share.
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.
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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 a meeting of shareholders to
be held as soon as practicable, 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. COVENANTS OF THE INTERIM BANK.
The Interim Bank agrees that between the date hereof and the effective time
of the Merger:
8.1. Shareholder Approval. The Interim Bank shall submit this Agreement and
the Plan of Merger to its shareholders (who shall be the Holding
Company and the Directors of the Interim Bank) for approval and
adoption as provided by the Bank Merger Act and other applicable laws.
8.2. Best Efforts. The Interim 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 9. 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:
9.1. Representations and Warranties: Performance of Covenants. The
representations and warranties and covenants contained in Sections 3,
4, 5, 6, 7 and 8 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.
9.2. Bank Shareholder Approval. The shareholders of Bank shall have duly
approved this Agreement and the Plan of Merger in accordance with
applicable laws.
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9.3. 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.
9.4. 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.
9.5. 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.
9.6. 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 9.6 may be
waived by the affirmative vote of a majority of the Board of Directors
of each of the parties hereto.
SECTION 10. TERMINATION, WAIVER AND AMENDMENT.
10.1.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.
10.2.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
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the part of any of the parties, their directors, officers or
shareholders, except as set forth in Section 10 hereof.
10.3.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.
10.4.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 11. EXPENSES.
11.1.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.
11.2.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 for the purchase shares of Capital
Stock of the Interim Bank as provided in Section 6.1 hereof.
SECTION 12. MISCELLANEOUS.
12.1.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
A-6
<PAGE>
stop-transfer orders to be entered with its transfer agent with
respect to any such certificates.
12.2.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.
12.3.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.
12.4.Failure to Surrender Certificates. Shareholders of the Holding Company
shall 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.
12.5.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.
12.6.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.
12.7.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.
12.8.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.
A-7
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed as of the day and year
first above mentioned.
(SEAL)
ATTEST: FIRST PERRY BANCORP, INC.
/s/ Larry D. Reich By: /s/ William L. Hummel
- - ------------------------- ----------------------------
Larry D. Reich, Secretary William L. Hummel, President
(SEAL)
ATTEST: THE FIRST NATIONAL BANK
OF MARYSVILLE
/s/ Larry D. Reich By: /s/ William L. Hummel
- - -------------------------- ----------------------------
Larry D. Reich, Cashier William L. Hummel, President
(SEAL)
ATTEST: THE FIRST NATIONAL INTERIM BANK
OF MARYSVILLE (In Organization)
By:
- - ------------------------- -------------------------------
Larry D. Reich, Cashier William L. Hummel, President
<PAGE>
EXHIBIT B
PLAN OF MERGER
<PAGE>
PLAN OF MERGER
THE FIRST NATIONAL BANK OF MARYSVILLE
with and into
THE FIRST NATIONAL INTERIM BANK OF MARYSVILLE
under the charter of
THE FIRST NATIONAL INTERIM BANK OF MARYSVILLE
under the title of
THE FIRST NATIONAL BANK OF MARYSVILLE
THIS AGREEMENT made between THE FIRST NATIONAL BANK OF MARYSVILLE
(hereinafter referred to as "Bank"), a banking association organized under the
laws of the United States, being located at 101 Lincoln Street, Marysville,
Pennsylvania 17053-0017, County of Perry, in the Commonwealth of Pennsylvania,
with a capital of One Hundred Two Thousand Dollars ($102,000) divided into Two
Hundred Four Thousand (204,000) shares of common stock each of Fifty Cents
($.50) par value, surplus of approximately $640,000, and undivided profits,
including capital reserves, of approximately $7,695,000, and unrealized holding
gains on available-for-sale securities of $169,000, as of June 30, 1998, and THE
FIRST NATIONAL INTERIM BANK OF MARYSVILLE (In Organization) (hereinafter
referred to as "Interim Bank"), a banking association organized under the laws
of the United States, being located at 101 Lincoln Street, Marysville, County of
Perry, in the Commonwealth of Pennsylvania, with aggregate capital stock of
$102,000 divided into 408,000 shares of common stock, each of Twenty-five Cents
($.25) par value, surplus of Twenty Thousand Four Hundred Dollars ($20,400), and
no undivided profits and capital reserves, as of the effective time of the
merger (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
B-1
<PAGE>
given by and in accordance with the provisions of the Act of November 7, 1918,
as amended (12 U.S.C. Section 215(a) (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 "The First National Bank of Marysville".
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 101 Lincoln Street, Marysville, County of Perry,
Pennsylvania 17053-0017, and at its legally established branches.
Section 4.
The aggregate amount of capital stock of the Association upon completion of the
transaction shall be $102,000, divided into 408,000 shares of common stock, each
of Twenty-five Cents ($.25) par value, and at the Effective Time, the
Association shall have a surplus of $640,000, 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 in the
preamble of this Agreement, adjusted, however, for normal earnings and expenses
between June 30, 1998, 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
B-2
<PAGE>
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 June 30, 1998,
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 $8,606,000,
and having an estimated fair value over and above its liability to its
creditors, of at least $8,606,000, or one hundred percent (100%) of the
estimated fair value of excess acceptable assets over and above liabilities to
creditors, to the Association, adjusted, however, for normal earnings and
expenses between June 30, 1998, and the Effective Time, and for allowance of
cash payments, if any, permitted under this Agreement.
Section 7.
The manner and basis of converting shares of common stock of the Bank and
Interim Bank shall be as follows:
7.1. Stock of the Interim Bank.
The shares of common stock, par value Twenty-five Cents ($.25) per share, of the
Interim Bank issued and outstanding immediately 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 Perry 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 Fifty Cents ($.50) per share, of the
Bank issued and outstanding immediately prior to the Effective Time (except for
B-3
<PAGE>
shares owned by shareholders who shall have duly perfected dissenters' rights in
accordance with this Plan of Merger and applicable law) shall, on the Effective
Time, by virtue of the merger and without any action on the part of the holder
thereof, be converted into and become two (2) shares of fully paid and
nonassessable common stock, par value Twenty-five Cents ($.25) per share, of
First Perry 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 Fifty Cents ($.50) per share, of the Bank
held as a treasury share immediately prior to the Effective Time, if any, shall
thereupon and without notice be canceled.
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 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
B-4
<PAGE>
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.
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 The First National Bank of
Marysville.
SECOND. The Main Office of the Association shall be in Marysville, County
of Perry, Commonwealth of Pennsylvania. The general business of the
Association shall be conducted at its main office and its branches.
B-5
<PAGE>
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 common or preferred
stock of the Association, or of a holding company owning the
Association, with an aggregate par, fair market, or equity value of
not less than One Thousand Dollars ($1,000), as of either (i) the date
of purchase, (ii) the date the person became a director, or (iii) the
date of that person's most recent election to the Board of Directors,
whichever is most recent. Any combination of common or preferred stock
of the Association or the holding company may be used. 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.
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 the day fixed, or in the event of a legal
holiday on the following banking day, an election may be held on any
subsequent day within sixty (60) days of the day fixed, to be
designated by the board of directors, or, if the directors fail to fix
the day, by the shareholders representing two-thirds of the shares
issued and outstanding. In all cases at least ten (10) days advance
notice of the meeting shall be given to the shareholders by first
class mail.
B-6
<PAGE>
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
shareholder. On all other questions, 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 stockholder 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. No
bylaw may unreasonably restrict the nomination of directors by
shareholders.
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
B-7
<PAGE>
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 Two Million (2,000,000) shares of common stock of the
par value of Twenty-five Cents ($.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. Unless otherwise specified in the
Articles of Association or required by law, all shares of voting
stock shall be voted together as a class, on any matters
requiring shareholder approval. Shares of the same class may be
issued as a dividend on a pro rata basis and without
consideration.
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:
(1) Define the duties of the officers, employees and agents of
the Association;
(2) Delegate the performance of its duties, but not the
responsibility for its duties, to the officers, employees,
and agents of the Association;
(3) Fix the compensation and enter into employment contracts
with its officers and employees upon reasonable terms and
conditions consistent with applicable law;
(4) Dismiss officers and employees;
(5) Require bonds from officers and employees and to fix the
penalty thereof;
(6) Ratify written policies authorized by the Association's
management or committees of the board;
(7) Regulate the manner in which any increase or decrease of the
capital of the Association shall be made, provided that
nothing herein shall restrict the power of shareholders to
increase or decrease the capital of the Association in
accordance with law, and nothing shall raise or lower from
two-thirds the percentage required for shareholders'
approval to increase or reduce the capital;
(8) Manage and administer the business and affairs of the
Association;
(9) Adopt initial Bylaws, not inconsistent with law or the
Articles of Association, for managing the business and
regulating the affairs of the Association;
(10) Amend or repeal Bylaws, except to the extent that the
Articles of Association reserve this power in whole or in
part to the shareholders;
(11) Make contracts; and
(12) Generally do and perform all acts that may be legal for a
Board of Directors to do and perform.
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 Marysville,
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, or any one or more shareholders owning, in the
aggregate, not less than twenty-five percent (25%) of the stock of
this Association, 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. Unless otherwise provided by the
Bylaws, any action requiring approval of shareholders must be effected
at a duly called annual or special meeting.
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.
B-8
<PAGE>
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.
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.
The Association's Board of Directors may propose one or more
amendments to the Articles of Association for submission to the
shareholders.
B-9
<PAGE>
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 June 30, 1999, 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.
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<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 10th day of
September , 1998, 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.
THE FIRST NATIONAL BANK OF MARYSVILLE
ATTEST:
/s/ Larry D. Reich By: /s/ William L. Hummel
- - -------------------------- ----------------------------------
Larry D. Reich, Cashier William L. Hummel, President
and Director
/s/ H. Robert Asper
- - --------------------------
H. Robert Asper
/s/ David M. Benfer
- - -------------------------
David M. Benfer
/s/ Arthur M. Feld
- - -------------------------
Arthur M. Feld
/s/ John L. Hocker
- - ------------------------
John L. Hocker
/s/ Keith A. Rohrer
- - ------------------------
Keith A. Rohrer
/s/ John M. Schrantz
- - ------------------------
John M. Schrantz
/s/ Raymond A. Smith
- - ------------------------
Raymond A. Smith
/s/ Kenneth C. Toomey
- - -----------------------
Kenneth C. Toomey
/s/ Robert K. Watts
- - -----------------------
Robert K. Watts
Directors of The First National Bank of Marysville Perry County, Pennsylvania
<PAGE>
THE FIRST NATIONAL INTERIM BANK OF MARYSVILLE
(In Organization)
ATTEST:
By:
- - ------------------------ -------------------------------------------
Larry D. Reich, Cashier William L. Hummel, President
and Director
- - ------------------------
H. Robert Asper
- - -----------------------
David M. Benfer
- - ----------------------
Arthur M. Feld
- - ---------------------
John L. Hocker
- - ---------------------
Keith A. Rohrer
- - --------------------
John M. Schrantz
- - --------------------
Raymond A. Smith
- - ---------------------
Kenneth C. Toomey
- - ---------------------
Robert K. Watts
Directors of The First National Interim Bank of Marysville, Perry County,
Pennsylvania
<PAGE>
COMMONWEALTH OF PENNSYLVANIA :
: SS.
COUNTY OF PERRY :
On this 10th day of September, 1998, before me, a Notary Public for the
State and County aforesaid, personally came William L. Hummel, as President, and
Larry D. Reich, as Cashier, of The First National Bank of Marysville, 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 H. Robert Asper, David M. Benfer, Arthur M. Feld, John L.
Hocker, William L. Hummel, Keith A. Rohrer, John M. Schrantz, Raymond A. Smith,
Kenneth C. Toomey and Robert K. Watts, 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/ Dorothy A. Taylor
-----------------------------------
Dorothy A. Taylor
(Seal of Notary) Notary Public, Perry County
My commission expires: May 27, 2000
COMMONWEALTH OF PENNSYLVANIA:
: SS.
COUNTY OF PERRY :
On this day of _________, 1998, before me, a Notary Public for the
Commonwealth and County aforesaid, personally came William L. Hummel, as
President, and Larry D. Reich, as Cashier, of The First National Interim Bank of
Marysville , 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 H. Robert Asper, David M. Benfer, Arthur
M. Feld, John L. Hocker, William L. Hummel, Keith A. Rohrer, John M. Schrantz,
Raymond A. Smith, Kenneth C. Toomey and Robert K. Watts, 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.
---------------------------------
(Seal of Notary) Notary Public, Perry County
My commission expires:
<PAGE>
EXHIBIT C
ARTICLES OF INCORPORATION
OF
FIRST PERRY BANCORP, INC.
<PAGE>
ARTICLES OF INCORPORATION
OF
FIRST PERRY BANCORP, INC.
In compliance with the requirements of 15 Pa.C.S. Section 1306 (relating to
Articles of Incorporation), the undersigned, desiring to be incorporated as a
business corporation, hereby state that:
1. The name of the Corporation is First Perry Bancorp, Inc.
2. The address, including street and number, if any, of this
Corporation's initial registered office in this Commonwealth is 101
Lincoln Street, P.O. Box B, Marysville, Pennsylvania 17053-0017, and
the county of venue is Perry.
3. The Corporation is incorporated under the provisions of the
Pennsylvania Business Corporation Law of 1988 (15 Pa.C.S. ss.1101 et
seq.), as the same may be amended.
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 the same may be
amended.
5. The aggregate number of shares that the Corporation shall have
authority to issue is Two Million (2,000,000) shares of Common Stock
having a par value of Twenty-Five Cents ($.25) per share. The holders
of Common Stock shall have one vote 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:
Number and
Name Address Class of Shares
------- ------- -----------------
William L. Hummel 506 Maple Avenue 1 share of
Marysville, PA 17053 common stock
Kenneth C. Toomey 209 Ridgeview Drive 1 share of
Marysville, PA 17053 common stock
Larry D. Reich 168 Wyoming Avenue 1 share of
Enola, PA 17025 common stock
H. Robert Asper 1020 Mountaindale Drive 1 share of
Marysville, PA 17053 common stock
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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 eighty percent
(80%) of all of the members of the Board of Directors.
8. Cumulative voting rights shall not exist with respect to the election
of directors.
9. Except as otherwise provided by law and unless Section 2521 of the
Pennsylvania Business Corporation Law of 1988, as it may be amended,
applies to the Corporation, only those shareholders entitled to cast
at least forty percent (40%) of the votes that all shareholders are
entitled to cast at a particular meeting shall be entitled to call
special meetings of the shareholders.
10. (a) The Corporation shall be governed by the provisions of Section
1715 of the Pennsylvania Business Corporation Law of 1988, as it may
be amended. 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, in considering the best
interests of the corporation, consider any relevant, germane or
pertinent issue to the extent they deem appropriate; 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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(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 effect 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 that 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.
11. The Corporation may issue shares, option rights or securities having
conversion or option rights, or obligations without first offering
them to shareholders of any class or classes.
12. Articles 7, 8, 9, 10, 11 and 12 shall not be amended unless first
approved by the affirmative vote of the holders of at least
seventy-five percent (75%) of the outstanding shares of Common Stock
of the Corporation.
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IN TESTIMONY WHEREOF, the incorporators have signed these Articles of
Incorporation this 31st day of July, 1998.
/s/ William L. Hummel /s/ Larry D. Reich
- - -------------------------- ------------------------
William L. Hummel, Larry D. Reich,
Incorporator Incorporator
/s/ Kenneth C. Toomey /s/ H. Robert Asper
- - ------------------------- ------------------------
Kenneth C. Toomey, H. Robert Asper,
Incorporator Incorporator
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EXHIBIT D
BY-LAWS OF FIRST PERRY BANCORP, INC.
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BY-LAWS
of
FIRST PERRY BANCORP, INC.
Article 1
CORPORATION OFFICE
Section 1.1 The Corporation shall have and continuously maintain in
Pennsylvania a registered office. The registered office shall be 101 Lincoln
Street, Marysville, Pennsylvania 17053. The principal place of business of the
Corporation may be, but need not be, the same as the registered office. The
address of the registered office may be changed 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 the
registered office of the Corporation or at such other place as may be fixed from
time to time by the Board of Directors, and such meetings shall be held at such
time 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 or by one or more Shareholders entitled
to cast at least forty percent (40%) of the votes which all Shareholders are
entitled to cast at a particular meeting. 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 refuses to fix the time of the
meeting or neglects to fix the time of the meeting within thirty (30) days after
the receipt of such a request, the person or persons making the request may
issue the call.
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 (10) 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.
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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.
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.
Section 3.2 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 those shareholders
entitled to vote who attend a meeting of shareholders:
(1) At which directors are to be elected that has been previously
adjourned for lack of a quorum, although less than a quorum, shall
nevertheless constitute a quorum for the purpose of electing
directors;
(2) That has been previously adjourned for one or more periods aggregating
at least fifteen (15) days because of an absence of a quorum, although
less than a quorum, shall nevertheless constitute a quorum for the
purpose of acting upon any matter set forth in the notice of the
meeting if the notice states that those shareholders who attend the
adjourned meeting shall nevertheless constitute a quorum for the
purpose of acting upon the matter.
Section 3.3 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.
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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.
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.
Section 5.2 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 (3) 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.
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Section 6.2 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.
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.
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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.
Article 9
DIRECTORS
Section 9.1 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 Corporation entitled to vote for the election of directors.
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.
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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.
Section 9.3 At the 1999 annual meeting of shareholders of the Corporation,
the shareholders shall elect ten (10) directors as follows: four (4) Class A
directors to serve until the 2000 annual meeting of shareholders, three (3)
Class B directors to serve until the 2001 annual meeting of shareholders, and
three (3) Class C directors to serve until the 2002 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.
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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, or by a sole
remaining director, 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.
In assessing whether the standard set forth herein has been satisfied,
there shall not be any greater obligation to justify, or higher burden of proof
with respect to, any act as the board of directors, any committee of the board
or any individual director relating to or affecting an acquisition or potential
or proposed acquisition of control of the corporation than is applied to any
other act as a board of directors, any committee of the board or any individual
director.
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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, upon creditors 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.
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:
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(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.
(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.
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Section 13.3 Special meetings of the Board of Directors may be called by
the President 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 President in like manner and on like notice upon the written request of
three (3) directors.
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 President, a Chairman
of the Board, a 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 Board of Directors shall appoint one of its members to be
the Chairman of the Board. He shall preside at all meetings of the shareholders
and directors; shall supervise the carrying out of the policies adopted or
approved by the Board; shall have general executory powers in addition to those
specific powers conferred by these By-laws; and 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 Board of Directors shall appoint one of its members to be
President. He 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
President 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 have general executory powers in
addition to those specific powers conferred by these By-laws. 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. 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 President. 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, shall attend to the giving of all
notices required by these By-laws to be given, 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 President.
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 President. 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 President, the Chairman of the Board 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 no 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.
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.
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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.
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.
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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.
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.
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Article 28
FINANCIAL REPORT TO SHAREHOLDERS
Section 28.1 The Chairman of the Board, the President 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.
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 President, the Treasurer, the Secretary and any Assistant
Treasurer or Assistant Secretary, or any other officer designated by the Board
of Directors, shall have the authority to affix the corporate seal to any
document requiring such seal and to attest the same. 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.
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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 answer-back 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.
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.
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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.
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 (75%) 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 (75%)
of the outstanding shares of Common Stock.
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EXHIBIT E
EXCERPTS FROM SECTION 215a
OF THE NATIONAL BANK ACT
CONCERNING DISSENTERS' RIGHTS
<PAGE>
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 a 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 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.
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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. Persons upon whom the liabilities of directors are imposed by this
section shall to that extent be entitled to the rights and immunities conferred
by or pursuant to this part and other provisions of law upon directors of a
corporation
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.
R-1
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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 1713 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 September 10, 1998, among
Registrant, The First National Bank of Marysville and The First
National Interim Bank of Marysville -- Filed as Exhibit A to the Proxy
Statement/Prospectus included in this Registration Statement.
2B Plan of Merger dated as of September 10, 1998, between The First
National Bank of Marysville and The First National Interim Bank of
Marysville -- Filed as Exhibit B to the Proxy Statement/Prospectus
included in this Registration Statement.
3(i) Articles of Incorporation of Registrant -- Filed as Exhibit C to the
Proxy Statement/Prospectus included in this Registration Statement.
3(ii)By-laws of Registrant -- 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.
8 Form of Opinion of Shumaker Williams, P.C. of Camp Hill, Pennsylvania,
Special Counsel to Registrant, as to the tax treatment of the proposed
transactions.
R-6
<PAGE>
23 Consent of Shumaker Williams, P.C. of Camp Hill, Pennsylvania, Special
Counsel to Registrant -- Contained in Opinion Letter as Exhibit 5.
24 Power of Attorney given by the Officers and Directors of the
Registrant -Located on Signature Page of the Registration Statement.
99A Definitive copy of Letter to Shareholders of The First National Bank
of Marysville -- Included in this Registration Statement immediately
preceding the Notice of Special Meeting of Shareholders and the Proxy
Statement/Prospectus.
99B Definitive copy of Notice of Annual Meeting of Shareholders of The
First National Bank of Marysville -- Included in this Registration
Statement immediately preceding the Proxy Statement/Prospectus.
99C Definitive copy of Form of Proxy for use by the Shareholders of The
First National Bank of Marysville.
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 -- Filed as Exhibit E to the Proxy
Statement/Prospectus included in this Registration Statement.
(b) Not Applicable.
(c) Not Applicable.
Item 22. Undertakings.
(a) Undertakings furnished pursuant to Item 512 of Reguation S-B:
(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
R-7
<PAGE>
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;
(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) The Registrant undertakes to supplement the prospectus, after the end
of the subscription period, to include the results of the subscription
offer, the transactions by the underwriters during the subscription
period, the amount of unsubscribed securities that the underwriters
will purchase and the terms of any later reoffering. If the
underwriters make any public offering of the securities on terms
different from those on the cover page of the prospectus, the
underwriter will file a post-effective amendment to state the terms of
such offering.
(c) Not applicable.
(d) Not applicable.
(e) 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
R-8
<PAGE>
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.
(f) Not applicable.
Undertakings furnished pursuant to Item 22(b) and (c):
(b) 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 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.
(c) 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, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Marysville, Commonwealth of
Pennsylvania, on the 16th day of September, 1998.
THE FIRST PERRY BANCORP, INC.
By: /s/ William L. Hummel
-----------------------------
William L. Hummel
President and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints William L. Hummel and Larry D. Reich, 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, to sign any and 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, 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 either of them, or their or his
substitutes, may lawfully do or cause to be done by virtue thereof.
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.
Signature and Capacity Date
/s/ William L. Hummel September 16, 1998
- - -------------------------------------------
William L. Hummel, President and CEO, Director
(Principal Executive Officer and Principal Financial officer)
/s/ Larry D. Reich September 16, 1998
- - -------------------------------------------------
Larry D. Reich, Senior Vice President, Secretary, Treasurer
(Principal Accounting Officer)
/s/ Kenneth C. Toomey September 16, 1998
- - -------------------------------------------
Kenneth C. Toomey, Chairman of the Board, Director
/s/ H. Robert Asper September 16, 1998
- - ----------------------------------------------
H. Robert Asper, Director
R-10
<PAGE>
/s/ David M. Benfer September 16, 1998
- - --------------------------------------------
David M. Benfer, Director
/s/ Arthur M. Feld September 16, 1998
- - ----------------------------------------------
Arthur M. Feld, Director
/s/ John L. Hocker September 16, 1998
- - ---------------------------------------------
John L. Hocker, Director
/s/ Keith A. Rohrer September 16, 1998
- - ---------------------------------------------
Keith A. Rohrer, Director
/s/ John M. Schrantz September 16, 1998
- - --------------------------------------------
John M. Schrantz, Director
/s/ Raymond A. Smith September 16, 1998
- - -----------------------------------------
Raymond A. Smith, Director
/s/ Robert K. Watts September 16, 1998
- - ---------------------------------------------
Robert K. Watts, Director
R-11
<PAGE>
INDEX TO EXHIBITS
Exhibit Index Page in Manually
Number Signed Original
- - ------------- -----------------
2A Plan of Reorganization dated as of September 10, 1998, A-1 among
Registrant, The First National Bank of Marysville and The First National
Bank of Marysville -- Filed as Exhibit A to the Proxy
Statement/Prospectus included
in this Registration Statement.
2B Plan of Merger dated as of September 10, 1998, between B-1 The First
National Bank of Marysville and The First National Interim Bank of
Marysville -- Filed as Exhibit B to the Proxy Statement/Prospectus
included in this Registration
Statement.
3(i) Articles of Incorporation of Registration -- Filed as C-1 Exhibit C to
the Proxy Statement/Prospectus included in this Registration Statement.
3(ii) By-laws of Registrant -- Filed as Exhibit D to the Proxy D-1
Statement/Prospectus included in this Registration Statement.
5 Opinion of Shumaker Williams, P.C. of Camp Hill, Pennsylvania, R-18
Special Counsel to Registrant, as to the legality of the shares of
Registrant's stock being registered.
8 Form of Opinion of Shumaker Williams, P.C. of Camp Hill, R-21
Pennsylvania, Special Counsel to Registrant, as to the tax treatment of
the proposed transactions.
23 Consent of Shumaker Williams, P.C. of Camp Hill, Pennsylvania, R-18
Special Counsel to Registrant -- Contained in Opinion Letter as
Exhibit 5.
24 Power of Attorney given by the Officers and Directors of the R-10
Registrant -- Located on Signature Page of the
Registration Statement.
99A Definitive copy of Letter to Shareholders of The First 1-2 National Bank
of Marysville -- Included in this Registration Statement immediately
preceding the Notice of Special Meeting of Shareholders and the Proxy
Statement/Prospectus.
99B Definitive copy of Notice of Annual Meeting of Shareholders 1-4 of The
First National Bank of Marysville -- Included in this Registration
Statement immediately preceding the Proxy Statement/Prospectus.
R-12
<PAGE>
99C Definitive copy of Form of Proxy for use by the Shareholders R-35 of The
First National Bank Marysville.
99D Subchapter D of Chapter 17 of the Pennsylvania Business R-38
Corporation Law of 1988, as amended, (15 Pa. C.S.
ss.1741-1750) relating to indemnification.
99E Excerpts from Section 215a of the National Bank Act Relating E-1 to
Dissenters' Rights -- Filed as Exhibit E to the Proxy Statement/
Prospectus included in this Registration Statement.
R-13
EXHIBIT 2A
PLAN OF REORGANIZATION DATED AS OF SEPTEMBER 10, 1998
AMONG REGISTRANT, THE FIRST NATIONAL BANK OF MARYSVILLE AND
THE FIRST NATIONAL INTERIM BANK OF MARYSVILLE -- FILED AS
EXHIBIT A TO THE PROXY STATEMENT/PROSPECTUS
INCLUDED IN THIS REGISTRATION STATEMENT
R-14
EXHIBIT 2B
PLAN OF MERGER DATED AS OF SEPTEMBER 10, 1998
BETWEEN THE FIRST NATIONAL BANK OF MARYSVILLE AND
THE FIRST NATIONAL INTERIM BANK OF MARYSVILLE --
FILED AS EXHIBIT B TO THE PROXY STATEMENT/PROSPECTUS
INCLUDED IN THIS REGISTRATION STATEMENT
R-15
EXHIBIT 3i
ARTICLES OF INCORPORATION OF REGISTRANT --
FILED AS EXHIBIT C TO THE PROXY STATEMENT/PROSPECTUS
INCLUDED IN THIS REGISTRATION STATEMENT
R-16
EXHIBIT 3ii
BY-LAWS OF REGISTRANT -- FILED AS EXHIBIT D
TO THE PROXY STATEMENT/PROSPECTUS INCLUDED
IN THIS REGISTRATION STATEMENT
R-17
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.
3425 SIMPSON FERRY ROAD
CAMP HILL, PENNSYLVANIA 17108
717-763-1121
September 28, 1998
Mr. William L. Hummel
President and Chief Executive Officer
THE FIRST NATIONAL BANK OF MARYSVILLE
101 Lincoln Street
P. O. Box B
Marysville, Pennsylvania 17053
RE: The First National Bank of Marysville
Formation of a One-Bank Holding Company
Dear Mr. Hummel:
We have been engaged as Special Counsel to The First National Bank of
Marysville (the "Bank") and First Perry 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 408,000 shares of its common stock, par value
$.25 per share (the "Common Stock"). The Common Stock will be issued pursuant to
the Plan of Reorganization dated September 10, 1998 (the "Plan of
Reorganization") among the Company, the Bank, and The First National Interim
Bank of Marysville (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 $.50 per share, (other than shares as to
which dissenters' rights have been perfected) will be converted into two (2)
shares of the Common Stock, par value $.25 per share, of the Company.
R-19
<PAGE>
Mr. William L. Hummel
THE FIRST NATIONAL BANK OF MARYSVILLE
September 28, 1998
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,
SHUMAKER WILLIAMS, P.C.
By /s/ Nicholas Bybel, Jr.
---------------------------------
Nicholas Bybel, Jr.
R-20
EXHIBIT 8
FORM OF OPINION OF SHUMAKER WILLIAMS, P.C.
OF CAMP HILL, PENNSYLVANIA
SPECIAL COUNSEL TO REGISTRANT AS TO THE
TAX TREATMENT OF PROPOSED TRANSACTIONS
R-21
<PAGE>
FORM OF TAX OPINION LETTER OF SHUMAKER WILLIAMS, P.C.
Board of Directors Board of Directors
FIRST PERRY BANCORP, INC. THE FIRST NATIONAL BANK
101 Lincoln Street OF MARYSVILLE
P. O. Box B 101 Lincoln Street
Marysville, Pennsylvania 17053-0017 P. O. Box B
Marysville, Pennsylvania 17053-0017
Re: Merger of The First National Bank of Marysville with and into The
First National Interim Bank of Marysville, a Subsidiary of First Perry
Bancorp, Inc.
Dear Members of the Boards:
You have asked for our opinion regarding certain federal income tax
consequences of the merger of The First National Bank of Marysville (the "Bank")
with and into The First National Interim Bank of Marysville (the "Surviving
Bank") pursuant to which the shareholders of the Bank will receive voting common
stock of the Surviving Bank's parent, First Perry Bancorp, Inc. (the "Holding
Company").
In rendering our opinion, we have examined and relied upon the accuracy and
completeness of the facts, information, covenants, and representations contained
in originals or copies, certified or otherwise identified to our satisfaction,
of the Plan of Reorganization, dated September 10, 1998, among the Holding
Company, the Surviving Bank and the Bank (the "Plan of Reorganization"), the
Plan of Merger, dated September 10, 1998, by and between the Bank and the
Surviving Bank (the "Plan of Merger"), the First Perry Bancorp, Inc.
Registration Statement, Form S-4, filed with the Securities and Exchange
Commission on September 28, 1998, and such other documents as we have deemed
necessary or appropriate as a basis for the opinion set forth below. In
addition, we have relied upon the facts contained in certain statements and
representations previously made by executives of the Holding Company and the
Bank, including facts contained in certain statements and representations made
in a First Perry Bancorp, Inc. Officer's Certificate dated ___________, 1998 .
The transactions under the Plan of Reorganization and the Plan of Merger are
hereinafter collectively referred to as the "merger transaction".
In rendering our opinion, we have assumed: (a) that all parties have the
legal right, power, capacity and authority to enter into and perform all
obligations under the Plan of Reorganization and
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the Plan of Merger; (b) the due and proper execution and delivery of all
relevant or necessary instruments and documents; (c) the receipt of all federal
and state regulatory approvals necessary to consummate the merger transaction;
and (d) the satisfaction or proper waiver of any other conditions under the Plan
of Reorganization and the Plan of Merger so that the merger transaction may be
consummated. All statements in this letter regarding the federal income tax
consequences of this merger transaction are based upon the Internal Revenue Code
of 1986, as amended (the "Code"), the Treasury Regulations promulgated by the
United States Department of Treasury (the "Regulations"), current positions of
the Internal Revenue Service (the "IRS") as contained in published Revenue
Rulings and Procedures, current published administrative positions of the IRS,
and existing court decisions, all as in effect as of this date and each of which
is subject to change at any time.
Our opinion is based upon and assumes the following Factual Background and
Assumptions relating to the merger transaction:
I. Factual Background
A. The Bank is a national banking association organized under the laws of
the United States of America. The Bank is a full-service commercial
bank which commenced operations in 1904. Its principal place of
business is located at 101 Lincoln Street, Marysville, Pennsylvania.
The Bank is authorized to issue 225,000 shares of common stock, par
value Fifty Cents ($.50) per share, of which on June 30, 1998, 204,000
shares were issued and outstanding (the "Bank Common Stock"). The Bank
Common Stock is the only class of security, authorized or outstanding,
of the Bank. The Bank has approximately 110 shareholders. The Bank
Common Stock is not publicly traded in any established market and,
therefore, no price quotes are readily available. Recent sales of the
Bank Common Stock have occurred solely between individuals in limited
over the counter transactions and in direct, privately negotiated
transactions. The most recent sale prior to the public announcement of
the merger on June 8, 1998, as to which management of the Bank is
aware of the sales price, occurred on January 5, 1998, at a price of
Thirty-Nine Dollars ($39.00) per share.
B. The Surviving Bank is also a national banking association organized
under the laws of the United States of America. The Surviving Bank is
being organized solely to engage in the merger transaction. The
Surviving Bank is authorized to issue 2,000,000 shares of common
stock, par value Twenty-Five Cents ($.25) per share (the "Surviving
Bank Common Stock"). The Surviving Bank Common Stock is the only class
of security, authorized or outstanding, of the Surviving Bank. In
accordance with 12 U.S.C.Sections 21 et seq. (The "National Bank
Act"), ten organizers of the Surviving Bank each have subscribed to
purchase 4,000 shares of Surviving Bank Common Stock for Thirty Cents
($.30) per share. The organizers have executed a Stock Repurchase
Agreement which requires that, at consummation of the merger
transaction, the Holding Company will purchase the 40,000 shares held
or to be purchased by these ten organizers for Thirty
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cents ($.30) per share. In addition, the Holding Company will purchase
368,000 shares of Surviving Bank Common Stock for Thirty Cents ($.30)
per share.
C. The Holding Company is a business corporation organized on August 14,
1998, under the laws of the Commonwealth of Pennsylvania. The Holding
Company is solely organized to engage in the business and activities
associated with bank holding companies. The Holding Company is
authorized to issue 2,000,000 shares of common stock, par value
Twenty-Five Cents ($.25) per share (the "Holding Company Common
Stock"). The Holding Company Common Stock is the only class of
security, authorized or outstanding, of the Holding Company. The
Holding Company will issue 408,000 shares of Holding Company Common
Stock to be exchanged for 204,000 shares of Bank Common Stock on a 2
to 1 basis in connection with the merger transaction pursuant to
Section 7.2 of the Plan of Merger. The four incorporators of the
Holding Company have each purchased one share of Holding Company
Common Stock for Twenty-Five Cents ($.25) per share. The four
incorporators have executed a Stock Repurchase Agreement which
requires that, at consummation of the merger transaction, the Holding
Company will purchase the 4 shares held by these four incorporators
for Twenty-Five Cents ($.25) per share. After the consummation of the
merger transaction, the Holding Company will have approximately 110
shareholders of record, less any dissenting shareholders who exercise
their rights of appraisal and payment in cash for their stock pursuant
to 12 U.S.C. Section 215 et seq. (the "National Bank Merger Act").
D. In order to comply with minimum capitalization requirements under
national banking laws, the Surviving Bank will be initially
capitalized as follows: One Hundred Two Thousand Dollars ($102,000.00)
in capital stock and Twenty Thousand Four Hundred Dollars ($20,400.00)
in surplus. In order to provide the Surviving Bank with this required
minimum capitalization at the time of the consummation of the merger
transaction, the Holding Company temporarily will borrow One Hundred
Twenty-Two Thousand Four Hundred Dollars ($122,400.00) from a
non-affiliated Pennsylvania bank. The Holding Company will then
purchase 368,000 shares of Surviving Bank Common Stock for One Hundred
Ten Thousand Four Hundred Dollars ($110,400.00), or Thirty Cents
($.30) per share. Under the Plan of Reorganization, the organizers of
the Surviving Bank may transfer their subscription rights for 40,000
shares of Surviving Bank Common Stock to the Holding Company
immediately prior to the effective date of the merger transaction so
that the Holding Company can purchase such shares for Twelve Thousand
Dollars ($12,000.00), or Thirty Cents ($.30) per share.
E. In accordance with the National Bank Merger Act, the Bank will merge
with and into the Surviving Bank. Upon the effective date of the
merger: (a) the separate corporate existence of the Bank will
terminate; (b) the Surviving Bank will acquire all of the assets and
assume all of the liabilities of the Bank; (c) the Surviving Bank will
change its name to that of the Bank; and (c) the Surviving Bank will
continue to carry on the banking
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business previously carried on by the Bank at the same principal
offices. The approval of shareholders owning at least two-thirds of
the outstanding stock of both the Bank and the Surviving Bank are
required by law to approve the merger.
F. The shareholders of the Bank will be entitled to receive two (2)
shares of Holding Company Common Stock in exchange for each share of
the Bank Common Stock held by the shareholder on the effective date of
the merger. Pursuant to Section 7.2 of the Plan of Merger, each
outstanding share of the Bank will be deemed to be converted into two
(2) shares of the Holding Company Common Stock without any action on
the part of the shareholder, and the outstanding certificates
representing shares of stock of the Bank will thereafter represent
shares of stock of the Holding Company at the one-to-two conversion
ratio.
G. Shareholders of the Bank who dissent to the merger, if any, will
receive cash for their shares of stock in the Bank, pursuant to the
National Bank Merger Act. After cash payment has been made to the
dissenting shareholders, the shares of the Holding Company to which
they would have been entitled must be sold at public auction or in
such other manner as is approved by the Comptroller of the Currency.
If these shares are sold at a price greater than the amount paid by
the Bank to the dissenting shareholders, the excess must be paid to
the dissenting shareholders.
I. After the consummation of the merger transaction, the Surviving Bank
and the Holding Company will file a consolidated return for federal
income tax purposes.
II. Assumptions
A. The operation of the Bank, via the merger into the Surviving Bank and
as a subsidiary of the Holding Company, 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.
B. The fair market value of the Holding Company Common Stock and other
consideration received by each shareholder of the Bank will be
approximately equal to the fair market value of the Bank Common Stock
surrendered in exchange.
C. There is no plan or intention by the shareholders of Bank to sell,
exchange or otherwise dispose of a number of shares of Holding Company
Common Stock received in the transaction that would reduce the Bank
shareholders' ownership of Holding Company Common Stock to a number of
shares having a value, as of the effective date of the merger
transaction, of less than fifty percent (50%) of the value of all of
the formerly outstanding Bank Common Stock as of the same date. In
addition, there were not any
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transfers of Bank Common Stock by any shareholders thereof prior to
the effective date of the merger transaction which were made in
contemplation of the merger transaction.
D. The Surviving Bank will acquire at least ninety percent (90%) of the
fair market value of the net assets and at least seventy percent (70%)
of the fair market value of the gross assets held by the Bank
immediately prior to the merger transaction. For the purposes of this
assumption, amounts paid by the Bank to shareholders who receive cash
or other property, assets of the Bank used to pay its reorganization
expenses, and all redemptions and distributions (except for regular,
normal dividends) made by the Bank immediately preceding the merger
transaction, are and will be included as assets of the Bank held
immediately prior to the merger transaction. The Bank has not redeemed
any Bank Common Stock, has not made any distribution with respect to
any Bank Common Stock, and has not disposed of any of its assets in
anticipation of or as a part of a plan for the acquisition of Bank by
Surviving Bank.
E. Prior to the merger transaction, the Holding Company will be in
control of the Surviving Bank within the meaning of Code Section
368(c).
F. Following the merger transaction, the Surviving Bank will not issue
additional shares of its stock that would result in the Holding
Company losing control of the Surviving Bank within the meaning of
Code Section 368(c).
G. The Holding Company has no plan or intention to redeem or otherwise
reacquire any of its stock to be issued in the merger transaction.
H. The Holding Company is the owner of all of the outstanding stock of
Surviving Bank. The Holding Company has no plan or intention to
liquidate the Surviving Bank; to merge the Surviving Bank with and
into another corporation, other than the Bank as hereinabove
described; to sell or otherwise dispose of the stock of the Surviving
Bank; or to cause the Surviving Bank to sell or otherwise dispose of
any of the assets of the Bank to be acquired in the merger
transaction, except for dispositions made in the ordinary course of
business, and transfers described in Code Section 368(a)(2)(C).
I. The assumption by Surviving Bank of the liabilities of Bank pursuant
to the merger transaction is for a bona fide business purpose and the
principal purpose of such assumption is not the avoidance of federal
income tax on the transfer of assets of Bank to Surviving Bank
pursuant to the merger transaction.
J. The liabilities of the Bank assumed by the Surviving Bank and the
liabilities to which the transferred assets of the Bank are subject
were incurred by the Bank in the ordinary course of its business, and
are associated with the assets to be transferred. No liabilities of
any person other than Bank will be assumed by Surviving Bank or
Holding Company
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in the merger transaction, and none of the shares of Bank to be
surrendered in exchange for Holding Company Common Stock in the merger
transaction will be subject to any liabilities.
K. Following the merger transaction, the Surviving Bank will continue the
historic business of the Bank or use a significant portion of the
Bank's business assets in a business.
L. The Holding Company, the Bank, the Surviving Bank and the shareholders
of the Bank will pay their respective expenses, if any, incurred in
connection with the merger transaction.
M. There is no intercorporate indebtedness existing between the Holding
Company and the Bank or between the Surviving Bank and the Bank that
was issued or acquired, or will be settled at a discount.
N. No two parties to the merger transaction are investment companies as
defined in Code Section 368(a)(2)(F).
O. The Bank is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Code Section 368(a)(3)(A).
P. The adjusted basis and fair market value of the Bank's assets to be
transferred to the Surviving Bank will, in each instance, equal or
exceed the sum of the Bank's liabilities to be assumed by the
Surviving Bank, plus the liabilities, if any, to which the transferred
assets are subject.
Q. No stock of the Surviving Bank will be issued to any of the
shareholders of the Bank in the merger transaction.
R. There is no larger integrated transaction of which the merger
transaction constitutes only one step.
S. The expenses of the merger transaction and the amount to be paid to
dissenters, if any, will not exceed ten percent (10%) of the fair
market value of the net assets of the Bank.
T. There are no fractional shares of the Bank Common Stock outstanding
and no fractional shares will be issued or redeemed in the merger
transaction.
U. The Surviving Bank has no plan or intention of disposing of the assets
of the Bank to be received by it in the merger transaction, other than
in the ordinary course of business.
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V. None of the compensation received by any shareholder-employees of the
Bank will be separate consideration for, or allocable to, any of their
shares of the Bank Common Stock; none of the shares of the Holding
Company Common Stock received by any shareholder-employees will be
separate consideration for, or allocable to, any employment agreement;
and the compensation paid to any shareholder-employees will be for
services actually rendered and will be commensurate with amounts paid
to third parties bargaining at arm's-length for similar services.
W. There is no present plan or intention to issue any of the authorized
common stock of the Holding Company in excess of the amounts described
in this letter in the merger transaction.
X. Prior to the effective date of the merger transaction, neither the
Holding Company nor the Surviving Bank held either directly or
indirectly any stock or securities in the Bank.
Y. The payment of cash in lieu of fractional shares of the Holding
Company Common Stock is solely for the purpose of avoiding the expense
and inconvenience to the Holding Company of issuing fractional shares
and does not represent separately bargained-for consideration.
Based on the foregoing and subject to and specifically relying upon the
aforesaid Factual Background and Assumptions and other matters herein referred
to, it is our opinion that:
1. Provided the merger of the Bank with and into the Surviving Bank
qualifies as a merger under the applicable federal and state laws, the
acquisition by the Surviving Bank of substantially all of the assets
of the Bank in exchange for the Holding Company Common Stock and the
assumption by the Surviving Bank of all of the liabilities of the Bank
plus liabilities to which the acquired assets of the Bank may be
subject, will qualify as a reorganization within the meaning of Code
Section 368(a). For purposes of this opinion, "substantially all"
means at least ninety percent (90%) of the fair market value of the
net assets and at least seventy percent (70%) of the fair market value
of the gross assets of the Bank. The Holding Company, the Surviving
Bank, and the Bank will each be "a party to a reorganization" within
the meaning of Code Section 368(b).
2. No gain or loss will be recognized to either the Holding Company, the
Surviving Bank or the Bank on the transfer of substantially all of the
Bank's assets to the Surviving Bank in exchange for the Holding
Company Common Stock and the assumption by the Surviving Bank of all
of the liabilities of the Bank plus the liabilities to which the
acquired assets of the Bank may be subject.
3. No gain or loss will be recognized to the shareholders of the Bank
upon the exchange of their Bank Common Stock solely for the Holding
Company Common Stock pursuant to
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the Plan of Reorganization and Plan of Merger, except for that gain or
loss which is recognized due to the receipt of cash which is received
in lieu of the issuance of fractional shares of the Holding Company
Common Stock.
4. In the case of cash received by any shareholder of the Bank in lieu of
the issuance of a fractional share of Holding Company Common Stock,
gain or loss will be recognized by such shareholder to the extent of
the difference between the amount the cash received and the adjusted
tax basis of such fractional share interest.
5. The shareholders of the Bank who dissent to the merger, if any, and
who receive cash for their shares of Bank Common Stock will recognize
gain or loss to the extent of the difference between the amount the
cash received and the adjusted tax basis of such shares.
6. The basis of the shares of the Holding Company Common Stock to be
received by the shareholders of the Bank will be the same as the basis
of the shares of Bank Common Stock exchanged therefor (reduced by any
amount allocable to fractional share interests for which cash is
received).
7. The holding period of the shares of the Holding Company Common Stock
to be received by the shareholders of the Bank will include the period
during which the Bank Common Stock, surrendered in exchange therefor,
was held by the shareholders of the Bank, provided the Bank Common
Stock was held as a capital asset in the hands of the shareholders of
the Bank at the time of the exchange.
8. Subject to limitations under Code Sections 381 and 382 and certain U.
S. Treasury Regulations promulgated under Code Section 1502, where
applicable, Surviving Bank, as the surviving bank to the merger, will
carry-over and take into account all accounting items and tax
attributes, and tax basis and holding periods of the assets of the
Bank.
The opinions set forth in this letter are given and based upon the factual
background and the existence of the assumed facts as hereinabove set forth, all
as of the date of this letter. Should any facts or assumptions be otherwise than
as hereinabove set forth or change after the date of this letter, no opinion is
made or expressed with respect thereto or as to the legal, tax or other
consequences thereof. We make no and disclaim any opinion as to any facts
occurring after the date of this letter or as to the legal, tax or other
consequences thereof. We assume no obligation to investigate, research or
determine any facts or laws, rules or regulations occurring, existing or in
effect after the date hereof, or to update or supplement any of the opinions
herein expressed to reflect any facts or circumstances or changes in law that
hereafter may occur or come to our attention.
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The Holding Company, the Bank and the Surviving Bank may rely upon this
opinion letter. No other person, whether natural or otherwise, may rely upon
this opinion letter, and it may not be disclosed to any other persons without
our prior written consent.
SHUMAKER WILLIAMS, P.C.
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EXHIBIT 23
CONSENT OF SHUMAKER WILLIAMS, P.C.
OF CAMP HILL, PENNSYLVANIA
SPECIAL COUNSEL TO REGISTRANT
CONTAINED IN OPINION LETTER AS EXHIBIT 5
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EXHIBIT 24
POWER OF ATTORNEY -- LOCATED ON
SIGNATURE PAGE OF THE REGISTRATION STATEMENT
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EXHIBIT 99A
DEFINITIVE COPY OF LETTER TO SHAREHOLDERS
OF THE FIRST NATIONAL BANK OF MARYSVILLE --
INCLUDED IN THIS REGISTRATION STATEMENT
IMMEDIATELY PRECEDING THE NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS AND
THE PROXY STATEMENT/PROSPECTUS
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EXHIBIT 99B
DEFINITIVE COPY OF NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
OF THE FIRST NATIONAL BANK OF MARYSVILLE --
INCLUDED IN THIS REGISTRATION STATEAMENT
IMMEDIATELY PRECEDING THE PROXY STATEMENT/PROSPECTUS
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EXHIBIT 99C
DEFINITIVE COPY OF FORM OF PROXY
FOR USE BY THE SHAREHOLDERS OF
THE FIRST NATIONAL BANK OF MARYSVILLE
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<PAGE>
THE FIRST NATIONAL BANK OF MARYSVILLE
PROXY
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON DECEMBER 2, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Pamela Ford and Sarah
Fitting and each or any of them, proxies of the undersigned, with full power of
substitution, to vote all of the shares of The First National Bank of Marysville
(the "Bank") that the undersigned may be entitled to vote at the Special Meeting
of Shareholders of the Bank to be held at Bethany United Methodist Church, 400
Lansvale Street, Marysville, Pennsylvania 17053 on Wednesday, December 2, 1998
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 SEPTEMBER 10, 1998, PROVIDING, AMONG OTHER THINGS, FOR THE
MERGER OF THE BANK AND THE FIRST NATIONAL INTERIM BANK OF MARYSVILLE (THE
"INTERIM BANK"), A NATIONAL BANKING ASSOCIATION ORGANIZED UNDER THE LAWS OF
THE UNITED STATES AND A SUBSIDIARY OF THE FIRST PERRY BANCORP, INC. (THE
"HOLDING COMPANY"), AND FOR THE AUTOMATIC CONVERSION OF EACH SHARE OF THE
COMMON STOCK OF THE BANK INTO TWO (2) SHARES OF THE COMMON STOCK OF THE
HOLDING COMPANY.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The Board of Directors recommends a vote FOR this proposal.
2. PROPOSAL TO ADJOURN THE SPECIAL MEETING OF SHAREHOLDERS TO PERMIT FURTHER
SOLICITATION OF PROXIES IN THE EVENT THERE ARE NOT SUFFICIENT VOTES AT THE
TIME OF THE MEETING TO CONSTITUTE A QUORUM OR TO APPROVE THE PLAN OF
REORGANIZATION AND PLAN OF MERGER.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The Board of Directors recommends a vote FOR this proposal.
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Special Meeting of Shareholders
and any adjournment or other postponement thereof.
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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 PROPOSALS 1 AND 2.
Dated: , 1998
Signature
Signature
Number of Shares Held of
Record on October 19, 1998
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.
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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).
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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
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 and corporate 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 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)
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<PAGE>
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 attorneys' 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 proceeding; (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 sections of this subchapter shall not be
deemed exclusive of any other rights to 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 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 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 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 this Commonwealth.
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<PAGE>
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 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 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.
Section 1749. Application to employee benefit plans.
For 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.
R-41
EXHIBIT 99E
EXCERPTS FROM SECTION 215a OF THE NATIONAL BANK
ACT RELATING TO DISSENTERS' RIGHTS -- FILED AS
EXHIBIT E TO THE PROXY STATEMENT/PROSPECTUS INCLUDED
IN THIS REGISTRATION STATEMENT
