As filed with the Securities and Exchange Commission on May 13, 1997
Registration No.
333-________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
LAKE ARIEL BANCORP, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 23-244948
(State or other jurisdiction of incorporation of organization)
(I.R.S. Employer Identification No.)
Post Office Box 67, Route 191
Lake Ariel, Pennsylvania 18436
Telephone: (717) 698-5695
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
_____________________________________________________________________
Lake Ariel Bancorp, Inc. 1997 Stock Option Plan
(Full title of the Plan)
_______________________________________________________
JOHN G. MARTINES, CHIEF EXECUTIVE OFFICER
LAKE ARIEL BANCORP, INC.
Post Office Box 67, Route 191
Lake Ariel, Pennsylvania 18436
Telephone: (717) 698-5695
(Name, address, including ZIP code, and telephone
number, including area code, of agent for service)
______________________________________________
With a Copy To:
JOHN B. LAMPI, ESQUIRE
SCHNADER HARRISON SEGAL & LEWIS
30 North Third Street, Suite 700
Harrisburg, Pennsylvania 17101
Telephone: (717) 231-4000
CALCULATION OF REGISTRATION FEE
Title of
securities to
be registered
Amount to
be
registered
Proposed
maximum
offering price
per share (1)
Proposed
maximum
aggregate
offering price
(1)
Amount of
registration fee (1)
Common Stock,
par value
$.42 per
share
50,000
shares
$20.875
$1,043,750
$316.29
(1) Estimated in accordance with Rule 457(h), based upon the average
of the bid and asked price of the Shares of Registrant's common
stock as of May 13, 1997.
In addition, pursuant to Rule 416(c) under the Securities Act of
1933, this registration statement also covers an indeterminate amount of
interests to be offered or sold pursuant to the employee benefit plans
described herein.
Index to Exhibits Found on Page R-20<PAGE>
LAKE ARIEL BANCORP, INC.
FORM S-8
CROSS REFERENCE SHEET TO PROSPECTUS
PART I.
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Form S-8
Item No. Item in Form S-8 Prospectus Caption or Location
Outside Front Cover Page of the Prospectus Cover Page
Inside Front and Outside Back Cover Pages
of the Prospectus . . . . . . . . . . . Inside Cover Page;
Outside Bank Cover
Page
Available Information . . . . . . . . . 1
The Company . . . . . . . . . . . . . . 2
Item 1 Plan Information. . . . . . . . . . . . Option Plan
Information
Item 1(a) General Plan Information. . . . . . . . Option Plan
Information
Item 1(b) Securities to be Offered. . . . . . . . Securities To Be
Offered
Item 1(c) Employees Who May Participate in the Plans Option Plan
Information - Eligibility
Item 1(d) Purchase of Securities Pursuant to the Plans
and Payment for Securities Offered. . . . Option Plan
Information - Form
and Provision of
Awards
Item 1(e) Resale Restrictions . . . . . . . . . . Option Plan
Information -
Conditions
Relating To
Exercise Of
Options
Item 1(f) Tax Effects of Plan Participation . . . Tax Effects of
Participation in
the Option Plan
Item 1(g) Investment of Funds . . . . . . . . . . N/A
Item 1(h) Withdrawal from Plan; Assignment of Interest
Option Plan Information
- Effect of
Termination
of Employment or Death
Item 1(i) Forfeitures and Penalties . . . . . . . N/A
Item 1(j) Charges and Deductions and Liens Therefor
Option Plan Information-Withholding Taxes
Item 2 Registrant Information and Employee
Plan Annual Information . . . . . . . . Company
Information
Incorporated By
Reference;
Available
Information
<PAGE>
PROSPECTUS
50,000 Shares
LAKE ARIEL BANCORP, INC.
Post Office Box 67, Route 191
Lake Ariel, Pennsylvania 18436
________________________________________________________
1997 STOCK OPTION PLAN
________________________________________________________
Common Stock, Par Value $.42 Per Share
________________________________________________________
This Prospectus relates to 50,000 shares of Common
Stock, issuable to officers and key employees of the Company and
its subsidiary under the Company's 1997 Stock Option Plan ("Option
Plan").
_____________________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION ("SEC"), NOR
HAS THE SEC PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE SHARES OF COMMON STOCK ARE NOT BANK DEPOSITS,
ARE NOT OBLIGATIONS OF, OR GUARANTEED BY ANY
BANK, ARE NOT INSURED OR GUARANTEED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR
ANY OTHER GOVERNMENT AGENCY, AND
INVOLVE INVESTMENT RISK, INCLUDING
THE POSSIBLE LOSS OF PRINCIPAL.
_____________________________________________
The date of this Prospectus is May 13, 1997<PAGE>
NO PERSON HAS BEEN
AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER
THAN THE SECURITIES TO WHICH THIS PROSPECTUS RELATES OR AN OFFER
TO OR SOLICITATION OF ANY PERSON IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION WOULD BE UNLAWFUL. THE DELIVERY OF THIS
PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT INFORMATION HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
TABLE OF CONTENTS
Page
AVAILABLE INFORMATION 1
THE COMPANY 2
OPTION PLAN INFORMATION 2
Eligibility 2
Shares Available 3
Administration of the Option Plan 3
Form and Provision of Awards 4
Conditions Relating to Exercise of Options 4
Effect of Termination of Employment or Death 5
Rights as a Shareholder 6
Anti-Dilution Provisions 6
Withholding Taxes 6
Term of Option Plan; Amendments; Termination 7
SECURITIES TO BE OFFERED 7
Description of Common Stock 7
General 7
Anti-takeover Provisions 8
MARKET FOR COMMON STOCK AND DIVIDENDS 12
Dividend Restrictions on the Bank 13
Dividend Restrictions on the Company 13
TAX EFFECTS OF PARTICIPATION IN THE OPTION PLAN 14
COMPANY INFORMATION INCORPORATED BY REFERENCE 14
LEGAL OPINION 15<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended
(the "1934 Act"), and in accordance therewith files reports, proxy
statements and other information with the SEC. Such reports,
proxy statements and other information can be inspected and copied
at the public reference facilities maintained by the SEC at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
SEC's Regional Offices located at Northwest Atrium Center, Suite
1400, 500 West Madison Street, Chicago, Illinois 60621-2511 and
75 Park Place, 14th Floor, New York, New York 10007. Copies of
such materials can be obtained from the Public Reference Section
of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. In addition, the Company files such material
electronically with the SEC. The SEC maintains a Website that
contains reports, proxy and information statements and other
information regarding companies that file electronically with the
SEC. The address of the SEC Website is http://www.sec.gov. The
Company's Common Stock is quoted on the NASDAQ National Market
System - Small Cap Issues under the symbols "LABN" or "LakeAriel",
and such reports, proxy statements, and other information can also
be inspected at the office of NASDAQ Operations, 1735 K Street,
N.W., Washington, D.C. 20006.
The Company has filed with the SEC a Registration
Statement on Form S-8 under the Securities Act of 1933, as amended
(the "1933 Act") with respect to the Common Stock being offered
pursuant to this Prospectus. This Prospectus omits certain
information contained in the Registration Statement pursuant to
the rules and regulations of the SEC, and reference is made to the
Registration Statement, including the exhibits thereto, for
further information with respect to the Company on the Common
Stock offered hereby. Statements contained in this Prospectus
concerning the provisions of such documents are necessarily
summaries of such documents and each such statement is qualified
in its entirety by reference to the copy of the applicable
document filed with the SEC. Copies of the Registration Statement
and the exhibits thereto may be inspected without charge at
offices of the SEC, and copies of all or any portion thereof may
be obtained from the SEC upon payment of the prescribed fees.
<PAGE>
THE COMPANY
The Company is a Pennsylvania business corporation
incorporated on May 23, 1983, and registered under the provisions
of the Bank Holding Company Act of 1956, as amended.
The Company's primary federal regulator is the Board
of Governors of the Federal Reserve System (the "FRB"). Under FRB
policy, the Company is expected to act as a source of financial
strength to its subsidiary bank and to commit resources to support
its subsidiary bank. This support may be required at times when,
absent such FRB policy, the Company may not find itself able to
provide such support.
The Company has one wholly-owned subsidiary bank, LA
Bank, N.A. (the "Bank"). The Company's and the Bank's principal
executive offices are located at 120 N. Keyser Avenue, Scranton,
Pennsylvania, telephone (717) 343-8200. The Company has limited
space requirements and, therefore, does not reimburse the Bank for
such use.
The Company functions primarily as the holder of all
the Bank's capital stock. Although the Company does not have any
acquisition plans, the Company may acquire or form additional
subsidiaries, including other banks to the extent provided by law.
In addition, the Bank may acquire or form additional branch
offices.
As of March 31, 1997, the Company and the Bank had
consolidated assets of approximately $328.5 million, total
consolidated stockholders equity of approximately $21.5 million,
and total consolidated liabilities of approximately $307 million.
As of March 31, 1997, the Company had approximately
1,174 shareholders of the Common Stock.
The Bank has approximately 136 employees as of
March 31, 1997. The Company does not own or have any property.
A description of the Company's Option Plan follows.
The description of the Option Plan contained in this Prospectus is
not complete and is qualified in its entirety by the actual terms
of the Option Plan which are attached as an Exhibit to the
Registration Statement, and any amendments or interpretations
thereof, to which reference is made.
OPTION PLAN INFORMATION
Eligibility
Officers and key employees of the Company and the Bank
shall be eligible for selection by the Benefits/Compensation
Committee (see discussion below on Administration of the Option
Plan) to be granted options. An employee who has been granted an
option may, if he or she is otherwise eligible, be granted an
additional option or options if the Benefits/Compensation
Committee shall so determine.
<PAGE>
Shares Available
The number of shares of the Common Stock which may be
issued pursuant to the Option Plan shall not exceed in the
aggregate 50,000 shares. If any outstanding option for any reason
expires or is terminated without the issuance of shares (whether
or not cash or other consideration is paid with respect to such
shares), such shares not issued as a result may again be subject
to an option under the Option Plan. In addition, the number of
shares available under the Option Plan is subject to adjustment in
the event of stock dividends, stock splits, merger and other
similar events.
Administration of the Option Plan
The Option Plan is administered by the
Benefits/Compensation Committee of the Board of Directors of the
Company (the "Benefits/Compensation Committee") currently
consisting of three outside directors. The Benefits/Compensation
Committee shall consist of two or more directors of the Company
each of whom shall not: be an employee or officer of the Company
or the Bank; receive compensation directly or indirectly in an
amount required to be disclosed under Item 404(a) of the SEC's
Regulation S-K; have an interest in a transaction requiring
disclosure thereunder; or be engaged in a business relationship
requiring disclosure under Item 404(b) of SEC Regulation S-K.
The Benefits/Compensation Committee shall have
authority to interpret the provisions of the Option Plan, to
construe the terms of any option, to prescribe, amend and rescind
rules and regulations relating to the Option Plan, to determine
the terms and provisions of options granted thereunder, and to
make all other determinations in the judgment of the
Benefits/Compensation Committee necessary or desirable for the
administration of the Option Plan. Without limiting the
foregoing, the Benefits/Compensation Committee shall, to the
extent and in the manner contemplated therein, exercise the
discretion granted to it to determine to whom options shall be
granted, how many shares shall be subject to each such option,
whether an optionee shall be required to surrender for
cancellation an outstanding option as a condition to the grant of
a new option, and the prices at which shares shall be sold to
optionees. The Benefits/Compensation Committee may correct any
defect or supply any omission or reconcile any inconsistency in
the Option Plan or in any option in the manner and to the extent
it shall deem expedient to effectuate the purposes and intent of
the Option Plan and shall be the sole and final judge of such
expediency.
The Option Plan constitutes an element of the 1997
Incentive Bonus Plan of the Company. Each year's cash bonus is
determined by the extent to which financial targets for the year
are achieved by the Company. The Benefits/Compensation Committee
shall grant to each participant in the Incentive Bonus Plan an
Option with an aggregate exercise price equal to the amount of
cash bonus for the year payable to the participant.
Any power granted to the Benefits/Compensation
Committee either in the Option Plan or by the Board of Directors,
except the timing and purchase price of and number of shares
covered by any option or the selection of individual employees to
participate in the Option Plan, may at any time be exercised by
the Board of Directors, and any determination by the
Benefits/Compensation Committee, other than with respect to the
timing and purchase price of and number of shares covered by any
option or the selection of individual employees to participate in
the Option Plan, shall be subject to review and reversal or
modification by the Board of Directors on its own motion, except
that the Board of Directors may not impair the rights of optionees
under options previously granted.
Form and Provision of Awards
The option price of stock options and the period
during which each option can be exercised is fixed by the
Benefits/Compensation Committee, but in no case can the exercise
price be less than 100% of the fair market value (as determined
under the Option Plan) of the shares at the time the option is
granted or awarded. Each option and all rights thereunder shall
expire and the option shall no longer be exercisable on a date not
later than ten years from the date such option was granted or
awarded. An option can generally be exercised only by the
optionee, and only while he is employed by the Company. However,
an option can be exercised up to one year after the optionee's
death, disability or retirement, up to 30 days after involuntary
termination of employment, and up to 90 days after any termination
of employment at the discretion of the Benefits/Compensation
Committee, but only to the extent the option was exercisable at
termination of employment and would have otherwise remained
exercisable. Transfer of employment between the Company and a
subsidiary or between two subsidiaries does not constitute
termination of employment for this purpose.
Conditions Relating to Exercise of Options
Except as otherwise provided for in cases of
termination or death (see discussion below), the shares subject to
any option may be purchased at any time during the term of the
option, unless, at the time an option is granted, the
Benefits/Compensation Committee shall have fixed a specific period
or periods in which exercise must take place. To the extent an
option is not exercised when it becomes initially exercisable, or
is exercised only in part, the option or remaining part thereof
shall not expire but shall be carried forward and shall be
exercisable until the expiration or termination of the option.
Partial exercise as to whole shares is permitted from time to
time, provided that no partial exercise of an option shall be for
a number of shares having a purchase price of less than $1000.
No option shall be transferable by the optionee other
than by will or by the laws of descent and distribution, and
options shall be exercisable during the lifetime of an optionee
only by such optionee or by his or her guardian or legal
representative.
Certificates for shares purchased upon exercise of
options shall be issued either in the name of the optionee or in
the name of the optionee and another person jointly with the right
of survivorship. Such certificates shall be delivered as soon as
practical following the date the option is exercised.
An option shall be exercised by the delivery to the
Company at its principal office, to the attention of its
Secretary, of written notice of the number of shares with respect
to which the option is being exercised, and of the name or names
in which the certificate for the shares is to be issued, and by
paying the purchase price for the shares and any withholding tax
required to be paid. The purchase price shall be paid in cash or
by certified check or bank cashier's check. Alternatively, to the
extent permitted by the Benefits/Compensation Committee at or
prior to the time of exercise and in its sole discretion, the
purchase price may be paid by delivering to the Company shares (in
proper form for transfer and accompanied by all requisite stock
transfer tax stamps or cash in lieu thereof) owned by the optionee
having a fair market value equal to the purchase price.
Any person exercising an option or transferring or
receiving shares shall comply with all regulations and
requirements of any governmental authority having jurisdiction
over the issuance, transfer or sale of securities of the Company
or over the extension of credit for the purposes of purchasing or
carrying any margin securities, or the requirements of any stock
exchange on which the shares may be listed, and as a condition to
receiving any shares, shall execute all such instruments as the
Benefits/Compensation Committee in its sole discretion may deem
necessary or advisable.
Each option shall be subject to the requirement that
if the Benefits/Compensation Committee shall determine that the
listing, registration or qualification of the shares subject to
such option upon any securities exchange or under any state or
Federal law, or the consent or approval of any governmental or
regulatory body, is necessary or desirable as a condition of, or
in connection with, the granting of such option or the issuance or
purchase of shares thereunder, such option may not be exercised in
whole or in part unless such listing, registration, qualification,
consent or approval shall have been effective or obtained free of
any conditions not acceptable to the Benefits/Compensation
Committee.
Effect of Termination of Employment or Death
In the event of termination of an optionee's
employment by reason of such optionee's death, disability, or
retirement with the consent of the Board of Directors of the
Company or in accordance with an applicable retirement plan, any
outstanding option held by such optionee shall remain exercisable,
only to the extent such option was exercisable immediately prior
to such termination of employment, at any time prior to its
expiration date or, if earlier, the first anniversary of such
termination of the optionee's employment.
If the Company terminates an optionee's employment,
any outstanding option held by such optionee shall remain
exercisable, only to the extent such option was exercisable
immediately prior to such termination of employment, at any time
prior to its expiration date or, if earlier, thirty (30) days
after such termination of the optionee's employment by the
Company, except that the Benefits/Compensation Committee may, in
its discretion, elect to permit exercise for a period ending on
the earlier of the expiration date of the option and a date
ninety (90) days after such termination of the optionee's
employment by the Company as to the total number of shares
purchasable under the option as of the date of termination.
In the event that an optionee's employment ceases for
any reason other than death, disability, retirement with the
consent of the Board of Directors of the Company or in accordance
with an applicable retirement plan or termination by the Company,
all rights of any kind under any outstanding option held by such
optionee shall immediately lapse and terminate, except that the
Benefits/Compensation Committee may, in its discretion, elect to
permit exercise for a period ending on the earlier of the
expiration date of the option and a date ninety (90) days after
the termination of employment as to the total number of shares
purchasable under the option as of the date of termination.
Whether an authorized leave of absence or absence in
military or government service shall constitute termination of
employment shall be determined by the Benefits/Compensation
Committee. Transfer of employment between the Company and a
subsidiary corporation or between one subsidiary corporation and
another shall not constitute termination of employment.
Rights as a Shareholder
An optionee shall have no rights as a shareholder with
respect to any shares covered by an option until the date of
issuance of a certificate to him or her for such shares. Except
as otherwise expressly provided in the Option Plan, no adjustment
shall be made for dividends or other rights for which the record
date occurs prior to the date of issuance of such certificate.
Anti-Dilution Provisions
In case the Company shall (i) declare a dividend or
dividends on its shares payable in shares of its capital stock,
(ii) subdivide its outstanding shares, (iii) combine its
outstanding shares into a smaller number of shares, or (iv) issue
any shares of capital stock by reclassification of its shares
(including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing
corporation), the number of shares authorized under the Option
Plan will be adjusted proportionately. Similarly, in any such
event, the Benefits/Compensation Committee may make such
adjustments in the number of shares subject to unexercised options
and the option prices as it deems equitable.
Each optionee will be notified of any such adjustment
and any such adjustment, or the failure to make such adjustment,
shall be binding on the optionee.
Withholding Taxes
Whenever an option is to be exercised under the Option
Plan, the Company shall have the right to require the optionee, as
a condition of exercise of the option, to remit to the Company an
amount sufficient to satisfy the Company's (or a subsidiary's)
Federal, state and local withholding tax obligation, if any, that
will, in the sole opinion of the Benefits/Compensation Committee,
result from the exercise. In addition, the Company shall, at the
election of the optionee, satisfy any such withholding tax
obligation by retention of shares issuable upon such exercise
having a fair market value on the date of exercise equal to the
amount to be withheld.
Term of Option Plan; Amendments; Termination
The Option Plan became effective on February 11, 1997,
and was approved by the shareholders of the Company on April 29,
1997, and will terminate on February 11, 2007. No grants or
awards may be made under the Option Plan after its expiration
date, but grants or awards made prior thereto may extend beyond
the termination date. The Board of Directors may at any time and
from time to time terminate or modify or amend the Option Plan in
any respect, except that, without shareholder approval, the Board
may not: (a) materially increase the benefits accruing to
participants under the Option Plan, (b) increase the number of
shares of the Common Stock which may be issued under the Option
Plan or (c) modify the requirements as to eligibility for
participation under the Option Plan. The termination or
modification or amendment of the Option Plan shall not, without
the consent of an optionee, affect his or her rights under an
option previously granted or awarded to him or her. With the
consent of the optionee, the Board of Directors may amend an
outstanding option in a manner not inconsistent with the Option
Plan.
SECURITIES TO BE OFFERED
Description of Common Stock
General
The Company is authorized to issue 5,000,000 shares of
common stock, par value $.42 per share (the "Common Stock"), of
which 1,771,328 shares were issued and outstanding at April 30,
1997. The remaining 3,228,672 authorized but unissued shares of
Common Stock may be issued by the Board of Directors without
further stockholder approval. Issuance of these shares could
cause a dilution of the book value of the Common Stock and of the
voting power of present stockholders. The holders of the Common
Stock are entitled to one vote per share on all matters presented
to them and do not have cumulative voting rights in the election
of directors.
The Common Stock has no preemptive, subscription or
conversion rights or redemption or repurchase provisions. These
shares are non-assessable and require no sinking fund. Each
stockholder 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.
Holders of Common Stock who are Pennsylvania residents
will not be subject to the Pennsylvania county personal property
tax on their shareholdings. However, in some jurisdictions,
shares of Common Stock of a general business corporation may be
treated differently from shares of stock of a bank and trust
company as subjects of personal property taxation.
<PAGE>
Anti-takeover Provisions
Under the Pennsylvania Business Corporation Law of
1988, as amended (the "BCL"), and the Amended Articles of
Incorporation and By-laws of the Company, there are nine
provisions that would be deemed to be "anti-takeover" in nature.
Four of these provisions are under the BCL and relate to
corporations that have their securities registered with the
Securities and Exchange Commission under Section 12 of the 1934
Act ("Registered Corporations"). The Company is a Registered
Corporation under the BCL.
Provisions Under the BCL. Two of these statutory
provisions eliminate the rights of the stockholders of Registered
Corporations to call a special meeting of stockholders and to
propose an amendment to the Amended Articles of Incorporation of
the Company. One effect of these provisions will be to prevent
the calling of a special meeting of stockholders 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 Company less attractive as a
potential takeover candidate by depriving stockholders of the
opportunity to initiate special meetings at which a possible
business combination might be proposed.
The elimination of these two rights under the BCL for
Registered Corporations will discourage attempts by stockholders
to disrupt the business of the Company between annual meetings of
the stockholders by calling a special meeting. Furthermore, these
provisions will provide a greater time for consideration of any
stockholder proposal to the extent that his, her or its proposal
must be deferred until the next annual meeting of stockholders 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 a majority of the
members of the Board of Directors if, in their judgment, there are
matters to be acted upon which are in the best interests of the
Company and its stockholders.
Another BCL provision to which the Company will be
subject, requires disgorgement to the Company of any profits from
the sale of the Company's Common Stock by a controlling person or
group. In general, a controlling person or group occurs when that
person or group makes: (1) any public disclosure that such person
or group may acquire control of the Company; or (2) any
acquisition (whether secret or disclosed) or public disclosure of
an offer or intent to acquire at least 20% of the voting shares of
the Company. The obligation to disgorge any profits may be
enforced by the Company or by any stockholder in an appropriate
legal action against such controlling person or group. This
provision is designed to reduce the exposure of the Company to
threats of "greenmail" and to discourage the manipulation of the
price of the Company's Common Stock by putting the Company "in
play."
Any profit realized by a controlling person or group
shall be recoverable by the Company where the profit is realized
by such person or group from the sale of the shares of the
Company's Common Stock within 18 months after such person or group
obtained the status of a controlling person or group and the
shares had been acquired by the controlling person or group within
24 months prior or 18 months subsequent to the obtaining by such
person or group of the status of a controlling person or group.
Acquisition and disposition of shares of the Company's Common
Stock under this provision may be made without the penalty of
profit disgorgement if first approved by the directors and the
stockholders of the Company.
The last 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 Stockholder:" (1) a merger or
consolidation of the Company with an Interested Stockholder or any
other corporation which is, or after the merger or consolidation
would be, an affiliate or associate of the Interested Stockholder;
(2) a sale, lease, exchange, mortgage, pledge, transfer or other
disposition to or with the Interested Stockholder or any affiliate
or associate of such Interested Stockholder of the assets of the
Company or any subsidiary of the 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 Company; (3) the
issuance or transfer by the Company or any subsidiary of any
shares of the 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
Stockholder or any affiliate or associate; (4) the adoption of any
plan for the litigation or dissolution of the Company proposed by,
or pursuant to any agreement with, the Interested Stockholder or
any affiliate or associate; (5) a reclassification of securities
or recapitalization of the Company or any merger or consolidation
of the Company with any subsidiary of the Company or any other
transaction proposed by, or pursuant to any agreement with, the
Interested Stockholder or any affiliate or associate, which has
the effect, directly or indirectly, of increasing the
proportionate share of the outstanding shares of the Company owned
by the Interested Stockholder; or (6) the receipt by the
Interested Stockholder 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
Company. An "Interested Stockholder" 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
stockholders would be entitled to cast in an election of directors
of the Company.
The Company shall not engage in a Business Combination
with an Interested Stockholder other than: (1) a Business
Combination approved by the Board of Directors prior to the date
on which the Interested Stockholder acquires at least twenty
percent (20%) of the shares ("Share Acquisition Date") or where
the purchase of shares by the Interested Stockholder has been
approved by the Board of Directors of the Company; (2) a Business
Combination approved by a majority of the votes that all
stockholders would be entitled to cast, not including those shares
held by the Interested Stockholder, at a meeting called for such
purpose, no earlier than three months after the Interested
Stockholder became, and if at the time of the meeting the
Interested Stockholder is, the beneficial owner, directly or
indirectly, of shares entitling the Interested Stockholder to cast
at least eighty percent (80%) of the votes that all stockholders
would be entitled to cast in an election of directors of the
Company and if the Business Combination satisfies certain minimum
conditions (see discussion below); (3) a Business Combination
approved by the affirmative vote of all of the stockholders of the
outstanding shares; (4) a Business Combination approved by a
majority of the votes that all stockholders would be entitled to
cast not including those shares beneficially owned by the
Interested Stockholder at a meeting called for such purpose no
earlier than five years after the Interested Stockholder's Share
Acquisition Date; and (5) a Business Combination approved at a
stockholders' meeting called for such purpose no earlier than five
years after the Interested Stockholder's Share Acquisition Date
and that meets certain minimum conditions (see discussion below).
The certain minimum conditions discussed in Business
Combinations under (2) and (5) 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 stockholders of the Company be at least
equal to the highest per share price paid by the Interested
Stockholder at a time when the Interested Stockholder was the
beneficial owner of shares entitling him to cast at least five
percent (5%) of the votes that all stockholders would be entitled
to cast in an election of directors: (A) within the 5-year period
immediately prior to the announcement date of the Business
Combination or (B) in the transaction in which the Interested
Stockholder became an Interested Stockholder, 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
Company's best efforts to remain independent, the Company is
nevertheless taken over, each stockholder will be treated fairly
vis-a-vis every other stockholder and that arbitragers and
professional investors will not profit at the expense of the
Company's long-term public stockholders. It should be noted that
while the Business Combination provision is designed to help
assure fair treatment of all stockholders vis-a-vis other
stockholders in the event of a takeover, it is not the purpose of
the Business Combination provision to assure that stockholders
will receive a 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 Company and its
stockholders, whether or not such a proposal satisfies the
requirements of the Business Combination provision or Fair Price
provision or both.
Provisions Under the Amended Articles of
Incorporation. Other provisions that could be considered "anti-takeover" are
the requirements in the Company's Amended Articles
of Incorporation that the affirmative vote of the holders of
sixty-six and two-thirds percent (66 2/3%) of the Company's Common
Stock is required to approve any merger, consolidation,
dissolution or liquidation of the Company or the sale of all or
substantially all of its assets. This provision ensures that any
extraordinary corporate transaction could be effected only if it
received a clear mandate from the stockholders. However, this
provision could give the 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 stockholders and
thereby assist management in retaining their present positions.
Also, this provision could give the holders of a minority of the
Company's outstanding shares a veto power over any merger,
consolidation, dissolution or liquidation of the Company, the sale
of all or substantially all of its assets even if management or a
majority of the stockholders believes such transaction to be
desirable and beneficial. Absent such provision in the Company's
Amended Articles of Incorporation, the affirmative vote of at
least a majority of the Company's Common Stock outstanding
entitled to vote thereon would be required to approve any merger,
consolidation, dissolution, liquidation, the sale of all of its
assets or an amendment to the By-laws. As of April 29, 1994, the
officers and directors of the Company control an aggregate of
approximately 403,651 shares or 24.7% of the Company's outstanding
Common Stock.
The Amended Articles of Incorporation also do not
provide for preemptive rights to stockholders to subscribe for
shares of the Common Stock in proportion to a stockholder's
percentage of ownership of the issued and outstanding shares in
any offering of such shares by the Company. Furthermore,
additional shares are authorized but as yet unissued. These
authorized but unissued shares, coupled with the lack of
preemptive rights for the stockholders, provide the Board of
Directors of the Company with as much flexibility as possible to
issue additional shares, without further stockholder 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 Company.
Another provision that could be considered "anti-takeover" in
nature is the lack of cumulative voting. Cumulative
voting entitles each stockholder to as many votes as equal the
number of shares owned by him or her multiplied by the number of
directors to be elected. A stockholder may cast all of these
votes for one candidate or distribute them among any two or more
candidates. The absence of cumulative voting means that a
majority of the outstanding shares can elect all the members of
the Board of Directors. The Board of Directors recognizes that
the absence of cumulative voting makes it more difficult to gain
representation on the Board of Directors.
Provisions for a Classified Board are included in the
Amended Articles of Incorporation of the Company. 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 stockholders to
change the composition of the Board of Directors even though this
may be considered desirable for them.
The final anti-takeover provision enables the Board of
Directors to oppose a tender offer on the basis of factors other
than economic benefit to stockholders, such as the impact the
acquisition of the Company would have on the community; the effect
of the acquisition upon stockholders, employees, depositors and
customers; and the reputation and business practices of the tender
offeror. This provision was included in the Amended Articles of
Incorporation of the Company to permit the Board of Directors to
recognize the responsibilities to these constituent groups and to
the Company and its direct or indirect subsidiaries and the
communities that they serve.
The overall effect of these provisions may be to deter
a future tender offer that a majority of the stockholders might
possibly view to be in their best interests as the offer might
include a substantial premium over the market price of the
Company's Common Stock at that time. In addition, these
provisions may have the effect of assisting the Company's current
management in retaining its position and placing it in a better
position to resist changes that the stockholders may want to make
if dissatisfied with the conduct of the Company's business.
MARKET FOR COMMON STOCK AND DIVIDEND POLICY
The Company's Common Stock is currently listed on the
NASDAQ Small-Cap Market and quotations of the bid and asked prices
per share are presented under the designation "LABN" or
"LakeAriel". The following table sets forth high and low closing
sales prices for the Company's Common Stock for the periods
indicated, in each case reported by NASDAQ, and the cash dividends
per share declared on the Company's Common Stock for such periods.
All amounts have been restated to reflect a 5% stock dividend,
declared on October 1, 1996.
Quarterly Closing Sales Cash
Price Range Dividends
High Low Declared
1995:
First quarter . . . . . . . . . $17.50 $16.50 .13
Second quarter. . . . . . . . . $17.00 $16.00 .13
Third quarter . . . . . . . . . $15.50 $14.50 .14
Fourth quarter. . . . . . . . . $16.25 $14.75 .19
1996:
First quarter . . . . . . . . . $16.50 $15.25 .15
Second quarter. . . . . . . . . $16.75 $15.75 .16
Third quarter . . . . . . . . . $17.25 $15.88 .17
Fourth quarter. . . . . . . . . $23.75 $22.75 .22
1997:
First quarter . . . . . . . . . $21.50 $20.50 .17
Second quarter. . . . . . . . . $21.50 $20.25 .17
Since its formation in 1983 as the parent holding
company of the Bank, the Company has paid cash dividends. It is
the present intention of the Company's Board of Directors to
continue the dividend payment policy, although the payment of
future dividends must necessarily depend upon earnings, financial
condition, appropriate restrictions under applicable law and other
factors relevant at the time the Board of Directors considers any
declaration of dividends. Cash available for the payment of
dividends must initially come from dividends paid by the Bank to
the Company. Therefore, the restrictions on the Bank's dividend
payments are directly applicable to the Company.
Dividend Restrictions on the Bank
The Office of the Comptroller of the Currency (the
"OCC") has issued rules governing the payment of dividends by
national banks. Consequently, the Bank (which is subject to these
rules) may not pay dividends from capital (unimpaired common and
preferred stock outstanding) but only from retained earnings after
deducting losses and bad debts therefrom. "Bad debts" are defined
as matured obligations in which interest is past due and unpaid
for ninety (90) days, but do not include well-secured obligations
that are in the process of collection.
Previously, the Bank was permitted to add the balances
in its allowance for possible credit and lease losses in
determining retained earnings, but the OCC's new regulations
prohibit that practice. However, to the extent that (1) the Bank
has capital surplus in an amount in excess of common capital and
(2) if the Bank can prove that such surplus resulted from prior
period earnings, the Bank, upon approval of the OCC, may transfer
earned surplus to retained earnings and thereby increase its
dividend paying capacity.
If, however, the Bank has insufficient retained
earnings to pay a dividend, the OCC's regulations allow the Bank
to reduce its capital to a specified level and to pay dividends
upon receipt of the approval of the OCC as well as that of the
holders of two thirds of the outstanding shares of the Common
Stock.
The Bank is allowed to pay dividends no more
frequently than quarterly. Moreover, the Bank must obtain the
OCC's approval before paying a dividend if the total of all
dividends declared by the Bank in any calendar year would exceed
the total of (1) the Bank's net profits for that year plus (2) its
retained net profits for the immediately preceding two years less
(3) any required transfers to surplus or a fund for the retirement
of preferred stock.
The Bank may not pay any dividends on its capital
stock during the period in which it may be in default in the
payment of its assessment for deposit insurance premium due to the
FDIC, nor may it pay dividends on Common Stock until any
cumulative dividends on the Bank's preferred stock (if any) have
been paid in full. The Bank has never been in default in the
payments of its assessments to the FDIC; and, moreover, the Bank
has no outstanding preferred stock. In addition, under the
Federal Deposit Insurance Act, 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.
As of March 31, 1997, there was $10 million in unrestricted
retained earnings and net income available at the Bank that could
be paid as a dividend to the Company under the current OCC
regulations.
Dividend Restrictions on the Company
Under the BCL, the Company may not pay a dividend if,
after giving effect thereto, either (a) the Company would be
unable to pay its debts as they become due in the usual course of
business or (b) the Company's total assets would be less than its
total liabilities. The determination of total assets and
liabilities may be based upon: (i) financial statements prepared
on the basis of generally accepted accounting principles, (ii)
financial statements that are prepared on the basis of other
accounting practices and principles that are reasonable under the
circumstances, or (iii) a fair valuation or other method that is
reasonable under the circumstances.
<PAGE>
TAX EFFECTS OF PARTICIPATION IN THE OPTION PLAN
The grant of a non-qualified stock option (which is
the type of option to be granted or awarded under the Option Plan)
does not result in income for the optionee or in a deduction for
the Company. However, the exercise of a non-qualified stock
option results in ordinary income for the optionee and a deduction
for the Company measured by the difference between the exercise
price and the fair market value of the shares received at the time
of exercise. The Company's income tax withholding obligation can
be satisfied by either payment of cash by the optionee, or
authorization to withhold Common Stock having a fair market value
equal to the withholding amount, at the choice of the optionee. A
sale of shares more than one year after their receipt will result
in long-term gain or loss to the holder.
BECAUSE OF THE COMPLEXITY OF THE FEDERAL TAX LAWS
RELATING TO EMPLOYEE STOCK PLANS AND THE APPLICATION OF STATE AND
LOCAL LAWS, EMPLOYEES ARE ADVISED TO CONSULT THEIR PERSONAL TAX
ADVISORS REGARDING THESE MATTERS.
COMPANY INFORMATION INCORPORATED BY REFERENCE
The Company hereby incorporates by reference in this
Prospectus the documents listed below and hereby further states
that all such documents subsequently filed by it pursuant to
Section 13(a), 13(c), 14 and 15(d) of the 1934 Act, prior to the
filing of a post-effective amendment which indicates that all
securities offered hereby have been sold or which deregisters all
such securities then remaining unsold, shall be deemed to be
incorporated by reference in this Prospectus and to be part
thereof from the date of filing of such documents:
(a) The Company's latest annual report filed
pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 or the latest
prospectus filed pursuant to Rule 424(b) under
the 1933 Act which contains audited financial
statements for the Company's latest fiscal year
for which such statements have been filed or the
Company's effective registration statement on
Form 10; and
(b) All other reports filed pursuant to
Section 13(a) or 15(d) of the 1934 Act since the
end of the fiscal year covered by the registrant
document referred to in (a) above.
The Company will provide to each person to whom a copy
of this Prospectus is delivered, upon request and without charge,
a copy of any information incorporated by reference (other than
exhibits thereto). Requests should be made to:
Joseph J. Earyes, CPA
Senior Vice President and Chief Financial Officer
LA Bank, N.A.
Telephone: (717) 343-8200
LEGAL OPINION
The validity of the Common Stock offered, pursuant to
the terms of the Option Plan, will be passed upon for the Company
by Schnader Harrison Segal & Lewis, 30 North Third Street, Suite
700, Harrisburg, Pennsylvania 17101.
<PAGE>
PART II.
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The Registrant hereby incorporates by reference in
this registration statement the documents listed below and hereby
further states that all such documents subsequently filed by it
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the 1934 Act,
prior to the filing of a post-effective amendment which indicates
that all securities offered hereby have been sold or which
deregisters all such securities then remaining unsold, shall be
deemed to be incorporated by reference in this registration
statement and to be part thereof from the date of filing of such
documents.
(a) The Registrant's latest annual report filed
pursuant to Section 13 or 15(d) of the 1934 Act
or the latest prospectus filed pursuant to Rule
424(b) under the 1933 Act which contains audited
financial statements for the Registrant's latest
fiscal year for which such statements have been
filed or the Registrant's effective registration
statement on Form 10.
(b) All other reports filed pursuant to Section
13(a) or 15(d) of the 1934 Act since the end of
the fiscal year covered by the registrant
document referred to in (a) above.
Item 4. DESCRIPTION OF SECURITIES
A. DESCRIPTION OF THE COMMON STOCK
General
The Company is authorized to issue 5,000,000 shares of
common stock, par value $.42 per share (the "Common Stock"), of
which 1,771,328 shares were issued and outstanding as of April 30,
1997. The remaining 3,228,672 authorized but unissued shares of
Common Stock may be issued by the Board of Directors without
further stockholder approval. Issuance of these shares could
cause a dilution of the book value of the Common Stock and of the
voting power of present stockholders. The holders of the Common
Stock are entitled to one vote per share on all matters presented
to them and do not have cumulative voting rights in the election
of directors.
The Common Stock has no preemptive, subscription or
conversion rights or redemption or repurchase provisions. These
shares are non-assessable and require no sinking fund. Each
stockholder 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.
<PAGE>
Holders of Common Stock who are Pennsylvania residents
will not be subject to the Pennsylvania county personal property
tax on their shareholdings. However, in some jurisdictions,
shares of Common Stock of a general business corporation may be
treated differently from shares of stock of a bank and trust
company as subjects of personal property taxation.
Anti-takeover Provisions
Under the BCL, and the Amended Articles of
Incorporation and By-laws of the Company, there are nine
provisions that would be deemed to be "anti-takeover" in nature.
Four of these provisions are under the BCL and relate to
corporations that have their securities registered with the
Securities and Exchange Commission under Section 12 of the 1934
Act ("Registered Corporations"). The Company is a Registered
Corporation under the BCL.
Provisions Under the BCL. Two of these statutory
provisions eliminate the rights of the stockholders of Registered
Corporations to call a special meeting of stockholders and to
propose an amendment to the Amended Articles of Incorporation of
the Company. One effect of these provisions will be to prevent
the calling of a special meeting of stockholders 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 Company less attractive as a
potential takeover candidate by depriving stockholders of the
opportunity to initiate special meetings at which a possible
business combination might be proposed.
The elimination of these two rights under the BCL for
Registered Corporations will discourage attempts by stockholders
to disrupt the business of the Company between annual meetings of
the stockholders by calling a special meeting. Furthermore, these
provisions will provide a greater time for consideration of any
stockholder proposal to the extent that his, her or its proposal
must be deferred until the next annual meeting of stockholders 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 a majority of the
members of the Board of Directors if, in their judgment, there are
matters to be acted upon which are in the best interests of the
Company and its stockholders.
Another BCL provision to which the Company will be
subject, requires disgorgement to the Company of any profits from
the sale of the Company's Common Stock by a controlling person or
group. In general, a controlling person or group occurs when that
person or group makes: (1) any public disclosure that such person
or group may acquire control of the Company or (2) any acquisition
(whether secret or disclosed) or public disclosure of an offer or
intent to acquire at least 20% of the voting shares of the
Company. The obligation to disgorge any profits may be enforced
by the Company or by any stockholder in an appropriate legal
action against such controlling person or group. This provision
is designed to reduce the exposure of the Company to threats of
"greenmail" and to discourage the manipulation of the price of the
Company's Common Stock by putting the Company "in play."
<PAGE>
Any profit realized by a controlling person or group
shall be recoverable by the Company where the profit is realized
by such person or group from the sale of the shares of the
Company's Common Stock within 18 months after such person or group
obtained the status of a controlling person or group and the
shares had been acquired by the controlling person or group within
24 months prior or 18 months subsequent to the obtaining by such
person or group of the status of a controlling person or group.
Acquisition and disposition of shares of the Company's Common
Stock under this provision may be made without the penalty of
profit disgorgement if first approved by the directors and the
stockholders of the Company.
The last 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 Stockholder:" (1) a merger or
consolidation of the Company with an Interested Stockholder or any
other corporation which is, or after the merger or consolidation
would be, an affiliate or associate of the Interested Stockholder;
(2) a sale, lease, exchange, mortgage, pledge, transfer or other
disposition to or with the Interested Stockholder or any affiliate
or associate of such Interested Stockholder of the assets of the
Company or any subsidiary of the 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 Company; (3) the
issuance or transfer by the Company or any subsidiary of any
shares of the 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
Stockholder or any affiliate or associate; (4) the adoption of any
plan for the litigation or dissolution of the Company proposed by,
or pursuant to any agreement with, the Interested Stockholder or
any affiliate or associate; (5) a reclassification of securities
or recapitalization of the Company or any merger or consolidation
of the Company with any subsidiary of the Company or any other
transaction proposed by, or pursuant to any agreement with, the
Interested Stockholder or any affiliate or associate, which has
the effect, directly or indirectly, of increasing the
proportionate share of the outstanding shares of the Company owned
by the Interested Stockholder; or (6) the receipt by the
Interested Stockholder 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
Company. An "Interested Stockholder" 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
stockholders would be entitled to cast in an election of directors
of the Company.
The Company shall not engage in a Business Combination
with an Interested Stockholder other than: (1) a Business
Combination approved by the Board of Directors prior to the date
on which the Interested Stockholder acquires at least twenty
percent (20%) of the shares ("Share Acquisition Date") or where
the purchase of shares by the Interested Stockholder has been
approved by the Board of Directors of the Company; (2) a Business
Combination approved by a majority of the votes that all
stockholders would be entitled to cast, not including those shares
held by the Interested Stockholder, at a meeting called for such
purpose, no earlier than three months after the Interested
Stockholder became, and if at the time of the meeting the
Interested Stockholder is, the beneficial owner, directly or
indirectly, of shares entitling the Interested Stockholder to cast
at least eighty percent (80%) of the votes that all stockholders
would be entitled to cast in an election of directors of the
Company and if the Business Combination satisfies certain minimum
conditions (see discussion below); (3) a Business Combination
approved by the affirmative vote of all of the stockholders of the
outstanding shares; (4) a Business Combination approved by a
majority of the votes that all stockholders would be entitled to
cast not including those shares beneficially owned by the
Interested Stockholder at a meeting called for such purpose no
earlier than five years after the Interested Stockholder's Share
Acquisition Date; and (5) a Business Combination approved at a
stockholders' meeting called for such purpose no earlier than five
years after the Interested Stockholder's Share Acquisition Date
and that meets certain minimum conditions (see discussion below).
The certain minimum conditions discussed in Business
Combinations under (2) and (5) 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 stockholders of the Company be at least
equal to the highest per share price paid by the Interested
Stockholder at a time when the Interested Stockholder was the
beneficial owner of shares entitling him to cast at least five
percent (5%) of the votes that all stockholders would be entitled
to cast in an election of directors: (A) within the 5-year period
immediately prior to the announcement date of the Business
Combination or (B) in the transaction in which the Interested
Stockholder became an Interested Stockholder, 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
Company's best efforts to remain independent, the Company is
nevertheless taken over, each stockholder will be treated fairly
vis-a-vis every other stockholder and that arbitragers and
professional investors will not profit at the expense of the
Company's long-term public stockholders. It should be noted that
while the Business Combination provision is designed to help
assure fair treatment of all stockholders vis-a-vis other
stockholders in the event of a takeover, it is not the purpose of
the Business Combination provision to assure that stockholders
will receive a 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 Company and its
stockholders, whether or not such a proposal satisfies the
requirements of the Business Combination provision or Fair Price
provision or both.
Provisions Under the Amended Articles of
Incorporation. Other provisions that could be considered "anti-takeover" are
the requirements in the Company's Amended Articles
of Incorporation that the affirmative vote of the holders of
sixty-six and two-thirds percent (66 2/3%) of the Company's Common
Stock is required to approve any merger, consolidation,
dissolution or liquidation of the Company or the sale of all or
substantially all of its assets. This provision ensures that any
extraordinary corporate transaction could be effected only if it
received a clear mandate from the stockholders. However, this
provision could give the 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 stockholders and
thereby assist management in retaining their present positions.
Also, this provision could give the holders of a minority of the
Company's outstanding shares a veto power over any merger,
consolidation, dissolution or liquidation of the Company, the sale
of all or substantially all of its assets even if management or a
majority of the stockholders believes such transaction to be
desirable and beneficial. Absent such provision in the Company's
Amended Articles of Incorporation, the affirmative vote of at
least a majority of the Company's Common Stock outstanding
entitled to vote thereon would be required to approve any merger,
consolidation, dissolution, liquidation, the sale of all of its
assets or an amendment to the By-laws. As of April 29, 1994, the
officers and directors of the Company control an aggregate of
approximately 403,651 shares or 24.7% of the Company's outstanding
Common Stock.
The Amended Articles of Incorporation also do not
provide for preemptive rights to stockholders to subscribe for
shares of the Common Stock in proportion to a stockholder's
percentage of ownership of the issued and outstanding shares in
any offering of such shares by the Company. Furthermore,
additional shares are authorized but as yet unissued. These
authorized but unissued shares, coupled with the lack of
preemptive rights for the stockholders, provide the Board of
Directors of the Company with as much flexibility as possible to
issue additional shares, without further stockholder 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 Company.
Another provision that could be considered "anti-takeover" in nature
is the lack of cumulative voting. Cumulative
voting entitles each stockholder to as many votes as equal the
number of shares owned by him or her multiplied by the number of
directors to be elected. A stockholder may cast all of these
votes for one candidate or distribute them among any two or more
candidates. The absence of cumulative voting means that a
majority of the outstanding shares can elect all the members of
the Board of Directors. The Board of Directors recognizes that
the absence of cumulative voting makes it more difficult to gain
representation on the Board of Directors.
Provisions for a Classified Board are included in the
Amended Articles of Incorporation of the Company. 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 stockholders to
change the composition of the Board of Directors even though this
may be considered desirable for them.
The final anti-takeover provision enables the Board of
Directors to oppose a tender offer on the basis of factors other
than economic benefit to stockholders, such as the impact the
acquisition of the Company would have on the community; the effect
of the acquisition upon stockholders, employees, depositors and
customers; and the reputation and business practices of the tender
offeror. This provision was included in the Amended Articles of
Incorporation of the Company to permit the Board of Directors to
recognize the responsibilities to these constituent groups and to
the Company and its direct or indirect subsidiaries and the
communities that they serve.
B. DIVIDENDS
Since its formation in 1983 as the parent holding
company of the Bank, the Company has paid cash dividends. It is
the present intention of the Company's Board of Directors to
continue the dividend payment policy, although the payment of
future dividends must necessarily depend upon earnings, financial
condition, appropriate restrictions under applicable law and other
factors relevant at the time the Board of Directors considers any
declaration of dividends. Cash available for the payment of
dividends must initially come from dividends paid by the Bank to
the Company. Therefore, the restrictions on the Bank's dividend
payments are directly applicable to the Company.
Dividend Restrictions on the Bank
The OCC has issued rules governing the payment of
dividends by national banks. Consequently, the Bank (which is
subject to these rules) may not pay dividends from capital
(unimpaired common and preferred stock outstanding) but only from
retained earnings after deducting losses and bad debts therefrom.
"Bad debts" are defined as matured obligations in which interest
is past due and unpaid for ninety (90) days, but do not include
well-secured obligations that are in the process of collection.
Previously, the Bank was permitted to add the balances
in its allowance for possible credit and lease losses in
determining retained earnings, but the OCC's new regulations
prohibit that practice. However, to the extent that (1) the Bank
has capital surplus in an amount in excess of common capital and
(2) if the Bank can prove that such surplus resulted from prior
period earnings, the Bank, upon approval of the OCC, may transfer
earned surplus to retained earnings and thereby increase its
dividend paying capacity.
If, however, the Bank has insufficient retained
earnings to pay a dividend, the OCC's regulations allow the Bank
to reduce its capital to a specified level and to pay dividends
upon receipt of the approval of the OCC as well as that of the
holders of two thirds of the outstanding shares of the Common
Stock.
The Bank is allowed to pay dividends no more
frequently than quarterly. Moreover, the Bank must obtain the
OCC's approval before paying a dividend if the total of all
dividends declared by the Bank in any calendar year would exceed
the total of (1) the Bank's net profits for that year plus (2) its
retained net profits for the immediately preceding two years less
(3) any required transfers to surplus or a fund for the retirement
of preferred stock.
The Bank may not pay any dividends on its capital
stock during the period in which it may be in default in the
payment of its assessment for deposit insurance premium due to the
FDIC, nor may it pay dividends on Common Stock until any
cumulative dividends on the Bank's preferred stock (if any) have
been paid in full. The Bank has never been in default in the
payments of its assessments to the FDIC; and, moreover, the Bank
has no outstanding preferred stock. In addition, under the
Federal Deposit Insurance Act, 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.
As of March 31, 1997, there was $10 million in unrestricted
retained earnings and net income available at the Bank that could
be paid as a dividend to the Company under the current OCC
regulations.
Dividend Restrictions on the Company
Under the BCL, the Company may not pay a dividend if,
after giving effect thereto, either (a) the Company would be
unable to pay its debts as they become due in the usual course of
business or (b) the Company's total assets would be less than its
total liabilities. The determination of total assets and
liabilities may be based upon: (i) financial statements prepared
on the basis of generally accepted accounting principles, (ii)
financial statements that are prepared on the basis of other
accounting practices and principles that are reasonable under the
circumstances, or (iii) a fair valuation or other method that is
reasonable under the circumstances.
Item 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not Applicable.
Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 1721 of the BCL (relating to the Board of
Directors) declares that unless otherwise provided by statute or
in a by-law adopted by the stockholders, all powers enumerated in
section 1502 (relating to general powers) and elsewhere in the BCL
or otherwise vested by law in a business corporation shall be
exercised by or under the authority of, and the business and
affairs of every business corporation shall be managed under the
direction of, a board of directors. If any such provision is made
in the by-laws, the powers and duties conferred or imposed upon
the board of directors under the BCL shall be exercised or
performed to such extent and by such person or persons as shall be
provided in the by-laws.
Section 1712 of the BCL further provides that 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 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 or 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.
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.
Furthermore, under Section 1712 of the BCL, except as
otherwise provided in a corporation's by-laws, an officer shall
perform his or her duties as an officer in good faith, in a manner
he or she 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 or her
duties shall not be liable by reason of having been an officer of
the corporation.
Section 1715 of the BCL states, in part, that in
discharging the duties of their respective positions, the board of
directors, committees of the board and individual directors may,
in considering the best interests of the corporation, consider, to
the extent they deem appropriate, the effects of any action upon
any or all groups affected by such action, including stockholders,
employees, suppliers, customers and creditors of the corporation
and upon communities in which offices or other establishments of
the corporation are located. In addition, the board of directors,
committees of the board and individual directors may consider, to
the extent they deem appropriate, the short-term and long-term
interests of the corporation, including benefits that may accrue
to the corporation from its long-term plans and the possibility
that these interests may be best served by the continued
independence of the corporation and the resources, intent and
conduct (past, stated and potential) of any person seeking to
acquire control of the corporation and all other pertinent
factors. The consideration of those factors shall not constitute
a violation of the preceding paragraph. Finally, in the
consideration of those factors or the effects of any action, the
board of directors, committees of the board and individual
directors shall not be required to regard corporate interest or
the interests of any particular group affected by such action as a
dominant or controlling interest or factor.
In exercising the above powers, the fiduciary duty of
directors shall not be deemed to require them:
(1) to redeem any rights under, or to modify or
render inapplicable, any stockholder rights plan, including, but
not limited to, a plan adopted pursuant or made subject to section
2513 of the BCL (relating to disparate treatment of certain
persons);
(2) to render inapplicable, or make determinations
under, the provisions of Subchapter E (relating to control
transactions), F (relating to business combinations), G (relating
to control-share acquisitions) or H (relating to disgorgement by
certain controlling stockholders following attempts to acquire
control) of Chapter 25 or under any other provision of the BCL
relating to or affecting acquisitions or potential or proposed
acquisitions of control; or
(3) to act as the board of directors, a committee of
the board or an individual director solely because of the effect
such action might have on an acquisition or potential or proposed
acquisition of control of the corporation or the consideration
that might be offered or paid to stockholders in such an
acquisition.
Absent breach of fiduciary duty, lack of good faith or
self-dealing, any act as the board of directors, a committee of
the board or an individual director shall be presumed to be in the
best interests of the corporation. In assessing whether the
standard set forth in section 1712 of the BCL 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. Notwithstanding the preceding provisions
of this section, any act as the board of directors, a committee of
the board or an individual director relating to or affecting an
acquisition or potential or proposed acquisition of control to
which a majority of the disinterested directors shall have
assented shall be presumed to satisfy the standard set forth in
section 1712, unless it is proven by clear and convincing evidence
that the disinterested directors did not assent to such act in
good faith after reasonable investigation.
The term "disinterested director" as used in the above
paragraph and for no other purpose means:
(1) A director of the corporation other than:
(i) A director who has a direct or indirect
financial or other interest in the person acquiring or
seeking to acquire control of the corporation or who is an
affiliate or associate, as defined in section 2552 of the
BCL (relating to definitions), of, or was nominated or
designated as a director by, a person acquiring or seeking
to acquire control of the corporation.
(ii) Depending on the specific facts
surrounding the director and the act under consideration, an
officer or employee or former officer or employee of the
corporation.
(2) A person shall not be deemed to be other than a
disinterested director solely by reason of any or all of the
following:
(i) The ownership by the director of shares of
the corporation.
(ii) The receipt as a holder of any class or
series of any distribution made to all owners of shares of
that class or series.
(iii) The receipt by the director of director's
fees or other consideration as a director.
(iv) Any interest the director may have in
retaining the status or position of director.
(v) The former business or employment
relationship of the director with the corporation.
(vi) Receiving or having the right to receive
retirement or deferred compensation from the corporation due
to service as a director, officer or employee.
Section 1717 of the BCL provides that the duty of the
board of directors, committees of the board and individual
directors under section 1712 of the BCL (relating to standard of
care and justifiable reliance) is solely to the business
corporation and may be enforced directly by the corporation or may
be enforced by a stockholder, as such, by an action in the right
of the corporation, and may not be enforced directly by a
stockholder or by any other person or group. Notwithstanding the
preceding sentence, certain other related sections of the BCL do
not impose upon the board of directors, committees of the board
and individual directors any legal or equitable duties,
obligations or liabilities or create any right or cause of action
against, or basis for standing to sue, the board of directors,
committees of the board and individual directors.
Moreover, Section 1713 of the BCL addresses the
personal liability of directors and states that if a by-law
adopted by the stockholders so provides, a director shall not be
personally liable, as such, for monetary damages for any action
taken unless:
(1) the director has breached or failed to perform
the duties of his office under this section; and
(2) the breach of 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.
Moreover, Section 1713 of the BCL provides that the
Articles of Incorporation of a corporation may not provide greater
exoneration from liability than that permitted under Section 1713.
Finally, Section 1714 of the BCL states that a
director of a 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
notified the secretary, in writing, of the asserted omission or
inaccuracy.
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 the 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.
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 stockholders.
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 stockholders
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. The articles of incorporation
may not provide for indemnification in the case of willful
misconduct or recklessness.
Section 1746 further declares that indemnification
under any by-law, agreement, vote of stockholders 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.
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.
Articles VII and VIII of the By-laws of the Registrant
provide for indemnification of the officers, employees and
directors to the full extent authorized by Pennsylvania law.
Insofar as indemnification for liabilities arising
under the Securities Act of 1933 (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 (the "SEC") 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 or 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 7. EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable.
Item 8. EXHIBITS
The Lake Ariel Bancorp, Inc. 1997 Stock Option Plan is
not subject to the requirements of the Employee Retirement Income
Security Act of 1974.
Exhibit Number Referred to
in Item 601 of Regulation S-K Description of
Exhibit
4 Lake Ariel Bancorp, Inc. 1997 Stock
Option Plan.
5 Opinion of Schnader Harrison Segal &
Lewis of Harrisburg, Pennsylvania,
Special Counsel to the Registrant, as
to the legality of the shares of the
Registrant's stock being registered.
15 Not Applicable.
23A Consent of Schnader Harrison Segal &
Lewis of Harrisburg, Pennsylvania,
Special Counsel to the Registrant.
23B Consent of Parente, Randolph,
Orlando, Carey & Associates,
Certified Public Accountants, of
Scranton, Pennsylvania.
24 Power of Attorney given by the
Officers and Directors of the
Registrant.
25 Not Applicable.
27 Not Applicable.
28 Not Applicable.
99 Not Applicable.
<PAGE>
Item 9. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(a)(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 1933 Act;
(ii) To reflect in the 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;
(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;
Provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) above do not apply if the information required to be
included in a post-effective amendment by these paragraphs is
contained in periodic reports filed by the Registrant pursuant to
section 13 or section 15(d) of the 1934 Act that are incorporated
by reference in this registration statement.
(2) That, for the purpose of determining any
liability under the 1933 Act, 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 this offering.
(b) The undersigned Registrant hereby undertakes
that, for purposes of determining any liability under the 1933
Act, each filing of the Registrant's annual report pursuant to
section 13(a) or section 15(d) of the 1934 Act (and, where
applicable, each filing of an employee benefit plan's annual
report pursuant to section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in this registration
statement 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.
(e) The undersigned Registrant hereby undertakes to
deliver or cause to be delivered with the prospectus, to each
person to whom the prospectus is sent or given, the latest annual
report to security holders that is incorporated by reference in
the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the 1934 Act; and,
where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus,
to deliver, or cause to be delivered to each person to whom the
prospectus is sent or given, the latest quarterly report that is
specifically incorporated by reference in the prospectus to
provide such interim financial information.
(h) 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 SEC such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant
of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its
counsel the matter 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 Act and will be governed by the final adjudication of such
issue.
<PAGE>
SIGNATURES
The Registrant: Pursuant to the requirements of the
Securities Act of 1933, the Registrant certifies that it has
reasonable grounds to believe that it meets all the requirements
for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Lake Ariel, Commonwealth of Pennsylvania, on
May 13, 1997.
LAKE ARIEL BANCORP, INC.
By: /s/ John G. Martines
John G. Martines,
Chief Executive Officer
The Plan: Pursuant to the requirements of the
Securities Act of 1933, the members of the below-named committees
have duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Lake
Ariel, Commonwealth of Pennsylvania, on May 13, 1997.
LAKE ARIEL BANCORP, INC.
BENEFITS/COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
By: /s/ Donald E. Chapman
Donald E. Chapman
By: /s/ William C. Gumble
William C. Gumble
By: /s/ Harry F. Schoenagel
Harry F. Schoenagel
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints John G. Martines
and Joseph J. Earyes, CPA, and each of them, his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any
and all capacities (including his capacity as a director or
officer of Lake Ariel Bancorp, Inc., as the case may be), 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 such
attorneys-in-fact and agents, and each of them full power and
authority to do and perform each and every act and thing requisite
and necessary to be done in and about the premises, as fully to
all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that such attorneys-in-fact and
agents or any of them, or their, or his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following
persons in the capacities and on the date indicated.
Signature Title Date
/s/ Bruce D. Howe Director and President May 13, 1997
Bruce D. Howe
/s/ John G. Martines Director and Chief May 13, 1997
John G. Martines Executive Officer
(Chief Executive Officer)
/s/ Peter O. Clauss Director May 13, 1997
Peter O. Clauss
/s/ Donald E. Chapman Director and Secretary May 13, 1997
Donald E. Chapman<PAGE>
/s/ Arthur M. Davis Director May 13, 1997
Arthur M. Davis
/s/ Harry F. Schoenagel Director May 13, 1997
Harry F. Schoenagel
/s/ William C. Gumble Director May 13, 1997
William C. Gumble
/s/ Joseph J. Earyes Vice President, Treasurer andMay 13, 1997
Joseph J. Earyes, CPA Chief Financial Officer
(Principal Financial and
Accounting Officer)
<PAGE>
Index to Exhibits
Item Number Description Page
4 Lake Ariel Bancorp, Inc. 1997 Stock Option Plan S-1
5 Opinion of Schnader Harrison Segal & Lewis of
Harrisburg, Pennsylvania, Special Counsel to the
Registrant, as to the Legality of the shares of the
Registrant's Stock Being Registered. . . . . . . . . S-9
23A Consent of Schnader Harrison Segal & Lewis of
Harrisburg, Pennsylvania, Special Counsel to
Registrant. . . . . . . . S-12
23B Consent of Parente, Randolph, Orlando, Carey &
Associates, Certified Public Accountants, of
Scranton, Pennsylvania . . . . . . . . . . . S-13
24 Power of Attorney Given by the Officers
and Directors of the Registrant. . . . . . . R-18
<PAGE>
EXHIBIT 4
Lake Ariel Bancorp, Inc. 1997 Stock Option Plan
<PAGE>
LAKE ARIEL BANCORP, INC.
1997 STOCK OPTION PLAN
1. Definitions
As used in this Plan, the following definitions apply
to the terms indicated below:
A. "Board" means the Board of Directors of the
Company.
B. "Committee" means the Benefits/Compensation
Committee of the Board. The Committee shall consist of two or
more directors of the Company each of whom shall not be an
employee or officer of the Company or of its Parent or Subsidiary,
receive compensation directly or indirectly in an amount required
to be disclosed under Item 404(a) of Securities and Exchange
Commission Regulation S-K or have an interest in a transaction
requiring disclosure thereunder, or be engaged in a business
relationship requiring disclosure under Item 404(b) thereof.
C. "Company" means Lake Ariel Bancorp, Inc., a
Pennsylvania corporation.
D. "Fair Market Value" of a Share on a given day
means
(I) if the Shares are listed on a national
securities exchange or traded in the over-the-counter market and
sales prices are regularly reported for the Shares, the average of
the closing or last prices of the Shares on the Composite Tape or
other comparable reporting system for the 10 consecutive trading
days immediately preceding such date;
(ii) if the Shares are traded on the over-the-counter market,
but sales prices are not regularly reported for
the Shares for the 10 days referred to in (a) above, and if bid
and asked prices for the Shares are regularly reported, the
average of the mean between the bid and the asked price for the
Shares at the close of trading in the over-the-counter market for
such 10 days; and
(iii) if the Shares are neither listed on a
national securities exchange nor traded on the over-the-counter
market, such value as the Committee, in good faith, shall deter-
mine.
E. "Option" means a right to purchase Shares under
the terms and conditions of this Plan as evidenced by an option
certificate or agreement for Shares in such form, not inconsistent
with this Plan, as the Committee may adopt for general use or for
specific cases from time to time. Options shall not be incentive
stock options within the meaning of Section 422 of the Internal
Revenue Code.
F. "Optionee" means a person to whom an option has
been granted under this Plan.
G. "Parent" means any corporation (other than the
Company) in an unbroken chain of corporations ending with the
Company if, at the time of granting an Option, each of the corpo-
rations in the unbroken chain (other than the Company) owns stock
possessing fifty percent (50%) or more of the total combined
voting power of all classes of stock in one of the other corpora-
tions in the chain.
H. "Plan" means this Lake Ariel Bancorp, Inc. 1997
Stock Option Plan, including any amendments to the Plan.
I. "Share" means a share of the Company's Common
Stock, par value $.42 per share, either now or hereafter owned by
the Company as treasury stock or authorized but unissued.
J. "Subsidiary" means any corporation (other than
the Company) in an unbroken chain of corporations beginning with
the Company if, at the time of granting an Option, each of the
corporations in the unbroken chain (other than the last corpora-
tion in the chain) owns stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock in
one of the other corporations in the chain.
K. Options shall be deemed "granted" under this
Plan on the date on which the Committee, by appropriate action,
approves the grant of an Option hereunder or on such subsequent
date as the Committee may designate.
L. As used herein, the masculine includes the femi-
nine, the plural includes the singular, and the singular includes
the plural.
2. Purpose
The purposes of the Plan are as follows.
A. To secure for the Company and its stockholders
the benefits arising from share ownership by those officers and
key employees of the Company and its Subsidiaries who will be
responsible for the Company's future growth and continued success.
The Plan is intended to provide an incentive to officers and key
employees by providing them with an opportunity to acquire an
equity interest or increase an existing equity interest in the
Company, thereby increasing their personal stake in its continued
success and progress.
B. To enable the Company and its Subsidiaries to
obtain and retain the services of key employees, by providing such
key employees with an opportunity to acquire Shares under the
terms and conditions and in the manner contemplated by this Plan.
3. Plan Adoption and Term
A. This Plan shall become effective upon its
adoption by the Board, and Options may be issued upon such
adoption and from time to time thereafter; provided, however, that
the Plan shall be submitted to the Company's stockholders for
their approval at the next annual meeting of stockholders. If the
Plan is not approved by the affirmative vote of the holders of a
majority of all securities present in person or by proxy and
entitled to vote at a duly called stockholders' meeting at which a
quorum representing a majority of all such securities is present
and voting on this Plan, then this Plan and all Options then out-
standing under it shall forthwith automatically terminate and be
of no force and effect.
B. Subject to the provisions hereinafter contained
relating to amendment or discontinuance, this Plan shall continue
to be in effect for ten (10) years from the date of adoption of
this Plan by the Board. No Options may be granted hereunder
except within such period of ten (10) years.
4. Administration of Plan
A. This Plan shall be administered by the
Committee. Except as otherwise expressly provided in this Plan,
the Committee shall have authority to interpret the provisions of
the Plan, to construe the terms of any Option, to prescribe, amend
and rescind rules and regulations relating to the Plan, to
determine the terms and provisions of Options granted hereunder,
and to make all other determinations in the judgment of the
Committee necessary or desirable for the administration of the
Plan. The Committee may correct any defect or supply any omission
or reconcile any inconsistency in the Plan or in any Option in the
manner and to the extent it shall deem expedient to effectuate the
purposes and intent of the Plan and shall be the sole and final
judge of such expediency.
B. The Plan constitutes an element of the 1997
Incentive Bonus Plan of the Corporation. Each year's cash bonus
is determined by the extent to which financial targets for the
year are achieved by the Company. The Committee shall grant to
each participant in the Incentive Bonus Plan an Option with an
aggregate exercise price equal to the amount of cash bonus for the
year payable to the participant.
C. No member of the Committee or the Board shall be
liable for any action taken or omitted or any determination made
by him in good faith relating to the Plan, and the Company shall
indemnify and hold harmless each member of the Committee and each
other director or employee of the Company to whom any duty or
power relating to the administration or interpretation of the Plan
has been delegated against any cost or expense (including counsel
fees) or liability (including any sum paid in settlement of a
claim with the approval of the Committee) arising out of any act
or omission in connection with the Plan, unless arising out of
such person's own fault or bad faith.
D. Any power granted to the Committee either in
this Plan or by the Board, may at any time be exercised by the
Board, and any determination by the Committee shall be subject to
review and reversal or modification by the Board on its own
motion, except that the Board may not impair the rights of
Optionees under Options previously granted.
5. Eligibility
Officers and key employees of the Company and its
Subsidiaries shall be eligible for selection by the Committee to
be granted Options. An employee who has been granted an Option
may, if he is otherwise eligible, be granted an additional Option
or Options if the Committee shall so determine.
6. Maximum Number of Shares
Subject to adjustment as provided in Paragraph 13
hereof, Options may be granted pursuant to the Plan for the
purchase of not more than 50,000 Shares; provided, however, that
if prior to the termination of the Plan, an Option shall expire or
terminate for any reason without having been exercised in full,
the unpurchased Shares subject thereto shall again be available
for the purposes of the Plan.
7. Option Price
The purchase price for each Share deliverable upon the
exercise of an Option shall be determined by the Committee, but
shall not be less than 100% of the Fair Market Value of such Share
on the date the Option is granted.
8. Duration of Options
Each Option and all rights thereunder shall expire and
the Option shall no longer be exercisable on a date not later than
ten (10) years from the date such Option was granted. Options may
expire and cease to be exercisable on such earlier date as the
Committee may determine at the time of grant. Options shall be
subject to termination before their expiration date as provided
herein.
9. Conditions Relating to Exercise of Options
A. Except as otherwise provided in paragraph 10
hereof, the Shares subject to any Option may be purchased at any
time during the term of the Option, unless, at the time an Option
is granted, the Committee shall have fixed a specific period or
periods in which exercise must take place. To the extent an
Option is not exercised when it becomes initially exercisable, or
is exercised only in part, the Option or remaining part thereof
shall not expire but shall be carried forward and shall be
exercisable until the expiration or termination of the Option.
Partial exercise as to whole Shares is permitted from time to
time, provided that no partial exercise of an Option shall be for
a number of Shares having a purchase price of less than $1000.
B. No Option shall be transferable by the Optionee
other than by will or by the laws of descent and distribution, and
Options shall be exercisable during the lifetime of an Optionee
only by such Optionee or by his guardian or legal representative.
C. Certificates for Shares purchased upon exercise
of Options shall be issued either in the name of the Optionee or
in the name of the Optionee and another person jointly with the
right of survivorship. Such certificates shall be delivered as
soon as practical following the date the Option is exercised.
D. An Option shall be exercised by the delivery to
the Company at its principal office, to the attention of its
Secretary, of written notice of the number of Shares with respect
to which the Option is being exercised, and of the name or names
in which the certificate for the Shares is to be issued, and by
paying the purchase price for the Shares and any withholding tax
required to be paid pursuant to paragraph 14 hereof. The purchase
price shall be paid in cash or by certified check or bank
cashier's check. Alternatively, to the extent permitted by the
Committee at or prior to the time of exercise and in its sole
discretion, the purchase price may be paid by delivering to the
Company Shares (in proper form for transfer and accompanied by all
requisite stock transfer tax stamps or cash in lieu thereof) owned
by the Optionee having a Fair Market Value equal to the purchase
price.
E. Notwithstanding any other provision in this
Plan, no Option may be exercised unless and until (i) this Plan
has been approved by the stockholders of the Company, and (ii) the
Shares to be issued upon the exercise thereof have been registered
under the Securities Act of 1933 and applicable state securities
laws, or are, in the opinion of counsel to the Company, exempt
from such registration. The Company shall not be under any
obligation to register under applicable Federal or state
securities laws any Shares to be issued upon the exercise of an
Option granted hereunder, or to comply with an appropriate
exemption from registration under such laws in order to permit the
exercise of an Option or the issuance and sale of Shares subject
to such Option. If the Company chooses to comply with such an
exemption from registration, the certificates for Shares issued
under the Plan may, at the direction of the Committee, bear an
appropriate restrictive legend restricting the transfer or pledge
of the Shares represented thereby, and the Committee may also give
appropriate stop-transfer instructions to the transfer agent of
the Company.
F. Any person exercising an Option or transferring
or receiving Shares shall comply with all regulations and require-
ments of any governmental authority having jurisdiction over the
issuance, transfer or sale of securities of the Company or over
the extension of credit for the purposes of purchasing or carrying
any margin securities, or the requirements of any stock exchange
on which the Shares may be listed, and as a condition to receiving
any Shares, shall execute all such instruments as the Committee in
its sole discretion may deem necessary or advisable.
G. Each Option shall be subject to the requirement
that if the Committee shall determine that the listing, registra-
tion or qualification of the Shares subject to such Option upon
any securities exchange or under any state or Federal law, or the
consent or approval of any governmental or regulatory body, is
necessary or desirable as a condition of, or in connection with,
the granting of such Option or the issuance or purchase of Shares
thereunder, such Option may not be exercised in whole or in part
unless such listing, registration, qualification, consent or
approval shall have been effective or obtained free of any condi-
tions not acceptable to the Committee.
10. Effect of Termination of Employment or Death
A. In the event of termination of an Optionee's
employment by reason of such Optionee's death, disability, or
retirement with the consent of the Board or in accordance with an
applicable retirement plan, any outstanding Option held by such
Optionee shall remain exercisable, only to the extent such Option
was exercisable immediately prior to such termination of
employment, at any time prior to its expiration date or, if
earlier, the first anniversary of such termination of the
Optionee's employment.
B. If the Company terminates an Optionee's employ-
ment, any outstanding Option held by such Optionee shall remain
exercisable, only to the extent such Option was exercisable
immediately prior to such termination of employment, at any time
prior to its expiration date or, if earlier, thirty (30) days
after such termination of the Optionee's employment by the Compa-
ny, except that the Committee may, in its discretion, elect to
permit exercise for a period ending on the earlier of the expira-
tion date of the Option and a date ninety (90) days after such
termination of the Optionee's employment by the Company as to the
total number of Shares purchasable under the Option as of the date
of termination.
C. In the event that an Optionee's employment
ceases for any reason other than death, disability, retirement
with the consent of the Board or in accordance with an applicable
retirement plan or termination by the Company, all rights of any
kind under any outstanding Option held by such Optionee shall
immediately lapse and terminate, except that the Committee may, in
its discretion, elect to permit exercise for a period ending on
the earlier of the expiration date of the Option and a date nine-
ty (90) days after the termination of employment as to the total
number of Shares purchasable under the Option as of the date of
termination.
D. Whether an authorized leave of absence or
absence in military or government service shall constitute
termination of employment shall be determined by the Committee.
Transfer of employment between the Company and a Subsidiary
corporation or between one Subsidiary corporation and another
shall not constitute termination of employment.
11. No Special Employment Rights
Nothing contained in the Plan or in any Option shall
confer upon any Optionee any right with respect to the continua-
tion of his or her employment by the Company or a Subsidiary or
interfere in any way with the right of the Company or a Subsid-
iary, subject to the terms of any separate employment agreement to
the contrary, at any time to terminate such employment or to
increase or decrease the compensation of the Optionee from the
rate in existence at the time of the grant of an Option.
12. Rights as a Shareholder
An Optionee shall have no rights as a shareholder with
respect to any Shares covered by an Option until the date of
issuance of a certificate to him for such Shares. Except as
otherwise expressly provided in the Plan, no adjustment shall be
made for dividends or other rights for which the record date
occurs prior to the date of issuance of such certificate.
13. Anti-Dilution Provisions
A. In case the Company shall (i) declare a dividend
or dividends on its Shares payable in shares of its capital stock,
(ii) subdivide its outstanding Shares, (iii) combine its
outstanding Shares into a smaller number of Shares, or (iv) issue
any shares of capital stock by reclassification of its Shares
(including any such reclassification in connection with a consol-
idation or merger in which the Company is the continuing corpora-
tion), the number of Shares authorized under the Plan will be
adjusted proportionately. Similarly, in any such event, the
Committee may make such adjustments in the number of Shares
subject to unexercised Options and the option prices as it deems
equitable.
B. Each Optionee will be notified of any such
adjustment and any such adjustment, or the failure to make such
adjustment, shall be binding on the Optionee.
14. Withholding Taxes
Whenever an Option is to be exercised under the Plan,
the Company shall have the right to require the Optionee, as a
condition of exercise of the Option, to remit to the Company an
amount sufficient to satisfy the Company's (or a Subsidiary's)
Federal, state and local withholding tax obligation, if any, that
will, in the sole opinion of the Committee, result from the
exercise. In addition, the Company shall, at the election of the
Optionee, satisfy any such withholding tax obligation by retention
of Shares issuable upon such exercise having a Fair Market Value
on the date of exercise equal to the amount to be withheld.
15. Amendment of the Plan
The Board may at any time and from time to time termi-
nate or modify or amend the Plan in any respect, except that,
without shareholder approval, the Board may not (a) materially
increase the benefits accruing to participants under the Plan, (b)
increase the number of Shares which may be issued under the Plan,
or (c) modify the requirements as to eligibility for participation
under the Plan. The termination or modification or amendment of
the Plan shall not, without the consent of an Optionee, affect his
rights under an Option previously granted to him. With the
consent of the Optionee, the Board may amend an outstanding Option
in a manner not inconsistent with the Plan.
16. Miscellaneous
A. It is expressly understood that this Plan grants
powers to the Committee but does not require their exercise; nor
shall any person, by reason of the adoption of this Plan, be
deemed to be entitled to the grant of any Option; nor shall any
rights begin to accrue under the Plan except as Options may be
granted hereunder.
B. All expenses of the Plan, including the cost of
maintaining records, shall be borne by the Company.
17. Governing Law
This Plan and all rights hereunder shall be governed
by and interpreted in accordance with the laws of the Commonwealth
of Pennsylvania.
<PAGE>
EXHIBIT 5
Opinion of Schnader Harrison Segal & Lewis of Harrisburg,
Pennsylvania, Special Counsel to the Registrant,
as to the Legality of the Shares of the Registrant's Stock Being
Registered
<PAGE>
May 13, 1997
Board of Directors
Lake Ariel Bancorp, Inc.
Route 191, Box 67
Lake Ariel, Pennsylvania 18436
Gentlemen:
We have been engaged as Special Counsel to Lake Ariel
Bancorp, Inc. (the "Corporation") in connection with the offer and
sale of 50,000 shares of its Common Stock, par value $.42 per
share (the "Common Stock") pursuant to the Corporation's 1997
Stock Option Plan (the "Option Plan").
We have prepared a Registration Statement on Form S-8
to be filed at the Securities and Exchange Commission in
Washington, D.C. under the provisions and regulations of the
Securities Act of 1933, as amended, relating to the offering of
the Corporation of 50,000 shares of Common Stock. As Special
Counsel to the Corporation, we have supervised all corporate
proceedings in connection with the preparation and filing of the
Registration Statement. We have reviewed the Corporation's
Amended Articles of Incorporation and By-laws, as presently in
effect. We have also reviewed copies of the Corporation'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, in accordance with the terms and conditions
of the offering as more fully described in the Prospectus,
included as part of the Registration Statement, each of the shares
of the 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 Pennsylvania law.
<PAGE>
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 Prospectus, included as part of the Registration
Statement.
Sincerely,
/s/ Schnader Harrison Segal & Lewis
SCHNADER HARRISON SEGAL & LEWIS
<PAGE>
EXHIBIT 23A
Consent of Schnader Harrison Segal & Lewis of
Harrisburg, Pennsylvania, Special Counsel to the Registrant
contained in the Opinion Letter at Exhibit 5
<PAGE>
EXHIBIT 23B
Consent of Parente, Randolph, Orlando,
Carey & Associates, Certified Public
Accountants, of Scranton, Pennsylvania
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Prospectus constituting part of this Registration Statement on
Form S-8 of our report dated January 24, 1997, appearing on page
44 of Lake Ariel Bancorp, Inc.'s Annual Report on Form 10-K for
the years ended December 31, 1996 and 1995.
/s/ Parente, Randolph, Orlando, Carey & Associates
PARENTE, RANDOLPH, ORLANDO, CAREY & ASSOCIATES
Scranton, Pennsylvania
May 13, 1997
<PAGE>
EXHIBIT 24
Power of Attorney given by the Officers and Directors
of the Registrant found on Pages R-18 and R-19
