FIRST LIBERTY BANK CORP
S-8, 1998-09-04
NATIONAL COMMERCIAL BANKS
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As filed with the Securities and Exchange Commission on
September 4, 1998.
                                        Registration No. 333-____
_________________________________________________________________
_________________________________________________________________
               SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C. 20549
                                
                            FORM S-8
     REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

                     FIRST LIBERTY BANK CORP.
     (Exact name of registrant as specified in its charter)

      Pennsylvania                       23-2275242
(State of Incorporation)    (I.R.S. Employer Identification No.)
                                
                    645 Washington Avenue
                 Jermyn, Pennsylvania  18433
                        (717) 876-6500
  (Address and telephone number of principal executive offices)
                                
     Upper Valley Bancorp, Inc. 1995 Employee Stock Option Plan
                    (Full Title of the Plan)

                                   With a copy to:
William M. Davis                   David W. Swartz, Esquire
President and Chief                Stevens & Lee
Executive Officer                  111 N. Sixth Street
645 Washington Avenue              Reading, Pennsylvania 19601
Jermyn, Pennsylvania  18433        (610) 478-2000
(717) 876-6500                     

(Name, address and telephone 
number of agent for service)
=================================================================
                 CALCULATION OF REGISTRATION FEE
================================================================= 
                             Proposed    Proposed
                              Maximum     Maximum
   Title of       Amount      Offering   Aggregate     Amount of
Securities to      to be     Price Per    Offering   Registration
be Registered   Registered    Share(1)    Price(1)        Fee

Common Stock,             
 par value
 $1.25 per share   40,000    $35.99      $1,439,600  $424.68
=================================================================
(1)  Estimated solely for the purpose of calculating the
     registration fee pursuant to Rule 457(h).  Price per share
     represents the book value for a share of Registrant's Common
     Stock on July 31, 1998.
  PAGE 1
<PAGE>
                             PART II

       INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3.   Incorporation of Documents by Reference.

     The following documents are incorporated by reference in
this Registration Statement:

     (a)  Registrant's Annual Report on Form 10-K for the year
          ended December 31, 1997 (as amended by the Form 10-K/A
          filed on May 1, 1998 and the Form 10-K/A No. 2 filed on
          May 15, 1998).

     (b)  All other reports filed by the Company pursuant to
          Section 13(a) or 15(d) of the Exchange Act of 1934, as
          amended (the "Exchange Act") since December 31, 1997.

     All documents subsequently filed by the Registrant pursuant
to sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior
to the filing of a post-effective amendment that indicates that
all securities offered have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be
incorporated by reference in this Registration Statement and to
be a part hereof from the date of filing of such documents.

     Any statements contained herein or in a document
incorporated or deemed incorporated by reference herein shall be
deemed to be modified or superseded, for purposes of this
Registration Statement, to the extent that a statement contained
herein or in any subsequently filed document that also is or is
deemed incorporated by reference herein modifies or supersedes
such statement.  Any such statement so modified or superseded
shall not be deemed, except as so modified or superseded, to
constitute a part of this Registration Statement.

Item 4.   Description of Securities.

     The authorized capital stock of Registrant consists of
10,000,000 shares of common stock, par value $1.25 per share (the
"Common Stock").  As of June 30, 1998, there were 1,574,350
shares of Common Stock issued and outstanding, and no shares held
by Registrant as treasury stock.  There are no other shares of
capital stock of Registrant authorized, issued, or outstanding.

     Common Stock

     The holders of Common Stock are entitled to share ratably in
dividends when and if declared by Registrant's Board of Directors
from funds legally available therefor.  Declaration and payment
of cash dividends by Registrant depends primarily upon dividend
payments by The First National Bank of Jermyn ("FNBJ") and NBO
National Bank ("NBO"), the Registrant's wholly-owned banking
subsidiaries, which are Registrant's primary source of revenue
and cash flow.  Registrant is a legal entity separate and
distinct from its subsidiaries.  Accordingly, the right of 
<PAGE 2> Registrant, and consequently the right of creditors and
shareholders of Registrant, to participate in any distribution of
the assets or earnings of any subsidiary is necessarily subject
to the prior claims of creditors of the subsidiary, except to the
extent that claims of Registrant in its capacity as a creditor
may be recognized.

     FNBJ and NBO will be permitted to pay cash dividends
sufficient to fund any dividend by Registrant subject to
applicable regulatory restrictions.

     The holders of shares of Common Stock possess exclusive
voting rights in Registrant.  Each holder of shares of Common
Stock will be entitled to one vote for each share held on matters
upon which shareholders have the right to vote.  Registrant's
shareholders are not entitled to cumulate votes in the election
of directors.

     Registrant's Board of Directors is divided into three
classes, each serving three-year terms, so that approximately
one-third of the directors of Registrant are elected at each
annual meeting of shareholders of Registrant.  Classification of
the Registrant's Board of Directors has the effect of decreasing
the number of directors that could be elected in a single year by
any person who seeks to elect its designees to a majority of the
seats on the Registrant's Board of Directors and thereby could
impede a change in control of Registrant.

     The holders of Common Stock have no preemptive rights to
acquire any additional shares of Registrant.  In addition, the
Common Stock is not subject to redemption.

     Registrant's Restated Articles of Incorporation authorize
the Registrant's Board of Directors to issue authorized shares of
Common Stock without shareholder approval.  The Common Stock is
not listed or traded on a recognized securities exchange and is
inactively traded.

     In the event of liquidation, dissolution, or winding-up of
Registrant, whether voluntary or involuntary, holders of Common
Stock will be entitled to share ratably in any of its assets or
funds that are available for distribution to its shareholders
after the satisfaction of its liabilities (or after adequate
provision is made therefor).

     Special Charter and Pennsylvania Corporate Law Provisions

     Registrant's Restated Articles of Incorporation and Restated
Bylaws contain certain provisions which may have the effect of
deterring or discouraging, among other things, a non-negotiated
tender or exchange offer for Registrant stock, a proxy contest
for control of Registrant, the assumption of control of
Registrant by a holder of a large block of Registrant stock and
the removal of Registrant's management.  These provisions: 
(1) divide  Registrant's Board of Directors into three classes
serving staggered three-year terms; (2) require a supermajority
vote of directors (80% until January 1, 2004 and 66-2/3% 
<PAGE 3> thereafter to increase the size of any class of the
Board of Directors); (3) require a supermajority vote of
directors and shareholders (80% of directors and 80% of
shareholders until January 1, 2004 and 66-23/% of directors and
66-2/3% of shareholders thereafter) to approve certain mergers,
asset sales and similar transactions if the transaction is not
approved, in advance, unanimously by Registrant's Board or if the
transaction is not approved, in advance, unanimously by the
Registrant Board of Directors; (4) prohibit shareholders' actions
without a meeting; (5) require any person or group who or which
becomes the beneficial owner of 25% or more of the outstanding
shares of the Common Stock to offer to purchase all other
outstanding shares of such Common Stock for cash at a price equal
to the highest price paid by such person or group for any such
shares of Common Stock or, if the Board of Directors so elects,
at fair market value determined by an investment banking firm
selected by the Board of Directors; (6) require a supermajority
vote of shareholders and directors to approve the repeal of
amendment of certain provisions of the Restated Articles of
Incorporation and Restated Bylaws; (7) eliminate cumulative
voting in elections of directors; (8) require a supermajority
vote of directors to take certain actions which might result in a
change in control of Registrant; and (8) require advance notice
of nominations for the election of directors and the presentation
of shareholder proposals at meetings of shareholders.

     The Pennsylvania Business Corporation law of 1988, as
amended (the "Pennsylvania BCL"), also contains certain
provisions applicable to Registrant which may have the effect of
impeding a change in control of Registrant.  These provisions,
among other things:  (1) prohibit for five years, subject to
certain exceptions, a "business combination" (which includes a
merger or consolidation of the corporation or a sale, lease, or
exchange of assets) with a shareholder or group of shareholders
beneficially owning 20% or more of a public corporation's voting
power; (2) require disgorgement by any person or group who or
which has acquired or publicly disclosed an intent to acquire 20%
or more of a public corporation's voting power of any profit
realized from the sale of any shares acquired within specified
time periods of such acquisition or disclosure if the shares are
sold within eighteen months thereafter; and (3) generally
prohibit a person or group who or which exceeds certain stock
ownership thresholds (20%, 33-1/3% and 50%) for the first time
from voting the "control shares" (i.e., the shares owned in
excess of the applicable threshold) unless voting rights are
restored by a vote of disinterested shareholders.

     In 1990, Pennsylvania adopted legislation further amending
the Pennsylvania BCL.  To the extent applicable to Registrant at
the present time, this legislation generally:  (1) expands the
factors and groups (including shareholders) which Registrant's
Board of Directors can consider in determining whether a certain
action is in the best interests of the corporation; (2) provides
that Registrant's Board of Directors need not consider the
interests of any particular group as dominant or controlling;
(3) provides that Registrant's directors, in order to satisfy the
presumption that they have acted in the best interests of the 
<PAGE 4> corporation, need not satisfy any greater obligation or
higher burden of proof with respect to actions relating to an
acquisition or potential acquisition of control; (4) provides
that actions relating to acquisitions of control that are
approved by a majority of "disinterested directors" are presumed
to satisfy the directors' standard, unless it is proven by clear
and convincing evidence that the directors did not assent to such
action in good faith after reasonable investigation; and
(5) provides that the fiduciary duty of Registrant's directors is
solely to the corporation and may be enforced by the corporation
or by a shareholder in a derivative action, but not by a
shareholder directly.

     The 1990 amendments to the Pennsylvania BCL explicitly
provide that the fiduciary duty of directors shall not be deemed
to require directors (1) to redeem any rights under, or to modify
or render inapplicable, any shareholder rights plan; (2) to
render inapplicable, or make determinations under, provisions of
the Pennsylvania BCL relating to control transactions, business
combinations, control-share acquisitions, or disgorgement by
certain controlling shareholders following attempts to acquire
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 shareholders in such an
acquisition.  One of the effects of the 1990 fiduciary duty
statutory provisions may be to make it more difficult for a
shareholder to successfully challenge the actions of Registrant's
Board of Directors in a potential change in control context. 
Pennsylvania case law appears to provide that the fiduciary duty
standard under the 1990 amendments to the Pennsylvania BCL grants
directors the statutory authority to reject or refuse to consider
any potential or proposed acquisition of the corporation.

Item 5.   Interests of Named Experts and Counsel.

     Not applicable.

Item 6.   Indemnification of Directors and Officers.

     Pennsylvania law provides that a Pennsylvania corporation
may indemnify directors, officers, employees and agents of the
corporation against liabilities they may incur in such capacities
for any action taken or any failure to act, whether or not the
corporation would have the power to indemnify the person under
any provision of law, unless such action or failure to act is
determined by a court to have constituted recklessness or willful
misconduct.  Pennsylvania law also permits the adoption of a
bylaw amendment, approved by shareholders, providing for the
elimination of a director's liability for monetary damages for
any action taken or any failure to take any action unless (1) the
director has breached or failed to perform the duties of his
office and (2) the breach of failure to perform constitutes self-
dealing, willful misconduct or recklessness.
  <PAGE 5>
     Registrant's Restated Bylaws provide for (1) indemnification
of directors, officers, employees and agents of the registrant
and its subsidiaries and (2) the elimination of a director's
liability for monetary damages, to the fullest extent permitted
by Pennsylvania law.

     Directors and officers are also insured against certain
liabilities for their actions, as such, by an insurance policy
obtained by the Registrant.

Item 7.   Exemption from Registration Claimed.

     Not applicable.

Item 8.   Exhibits.

     4.1       Restated Articles of Incorporation of Registrant. 
               (Incorporated by reference to Exhibit 99.1 to
               Registrant's Current Report on Form 8-K dated
               July 9, 1998.)

     4.2       Restated Bylaws of Registrant.  (Incorporated by
               reference to Exhibit 99.2 to Registrant's Current
               Report on Form 8-K dated July 9, 1998.)

     4.3       Upper Valley Bancorp, Inc. 1995 Employee Stock
               Option Plan.

     5.        Opinion of Stevens & Lee.

     23.1      Consent of KPMG Peat Marwick, LLP, independent
               auditors.

     23.2      Consent of Stevens & Lee.  (contained in Exhibit 5
               of this Registration Statement.)

     24.       Power of Attorney of certain directors and
               officers (included on signature page).

Item 9.   Undertakings.

     (a)  The undersigned Registrant hereby undertakes:

          (1)  To file, during any period in which offers or
sales are being made, a post-effective amendment to this
Registration Statement to include any material information with
respect to the plan of distribution not previously disclosed in
the Registration Statement or any material change to such
information in the Registration Statement.

          (2)  That, for the purpose of determining liability
under the Securities Act of 1933, to treat each post-effective
amendment as a new registration statement of the securities
offered, and the offering of such securities at that time to be
the initial bona fide offering thereof.
  <PAGE 6>
          (3)  To remove from registration by means of a post-
effective amendment any of the securities being registered which
remain unsold at the termination of the offering.

     (b)  The undersigned Registrant hereby undertakes that, for
the purpose of determining any liability under the Securities Act
of 1933, each filing of the Registrant's annual report pursuant
to Section 13(a) or Section 15(d) of the Securities Exchange Act
of 1934 (and, where applicable, each filing of a 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.

     (c)  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 Securities Act of 1934;
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.

     (d)  Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the Registrant pursuant to
the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the 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 7
<PAGE>
                           SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to
believe that it meets all of 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 Jermyn, Pennsylvania, on August 18, 1998.

                              FIRST LIBERTY BANK CORP.

                              By/s/ William M. Davis          
                                   William M. Davis, President
                                   and Chief Executive Officer


     KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints William M.
Davis, Steven R. Tokach, Donald R. Gibbs, and David W. Swartz,
Esquire, and each of them, his true and lawful attorney-in-fact,
as agent with full power of substitution and resubstitution for
him and in his name, place and stead, in any and all capacity, to
sign any or all amendments to this Registration Statement and to
file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agents 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 and to all intents and purposes as they might
or could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents, or their substitute or
substitutes, may lawfully do or cause to be done by virtue
hereof.
  PAGE 8
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons
in the capacities indicated and on the dates indicated.

    Signature                     Title               Date

/s/ William M. Davis           President          August 18, 1998
William M. Davis               and Chief Executive
                               Officer (Principal
                               Executive Officer)

                               Chief Financial    August __, 1998
Donald J. Gibbs                and Accounting Officer

                               Director           August __, 1998
Michael A. Barbetti

/s/ Edmund J. Biancarelli      Director           August 26, 1998
Edmund J. Biancarelli

/s/ Joseph P. Coviello         Director           August 26, 1998
Joseph P. Coviello

/s/ David M. Epstein           Director           August 25, 1998
David M. Epstein

                               Director           August __, 1998
Fred J. Gentile

/s/ Harold S. Kaplan           Director           August 25, 1998
Harold S. Kaplan

/s/ Robert T. Kelly            Director           August 26, 1998
Robert T. Kelly

/s/ Kuzma Leschak, Jr.         Director           August 26, 1998
Kuzma Leschak, Jr.

/s/ Harold T. McGovern         Director           August 26, 1998
Harold T. McGovern

/s/ I. Leo Moskowvitz          Director           August 26, 1998
I. Leo Moskowvitz

/s/William K. Nasser, Jr.      Director           August 25, 1998
William K. Nasser, Jr.

/s/ Peter A. Sabia             Director           August 26, 1998
Peter A. Sabia

/s/ Thomas G. Speicher         Director           August 26, 1998
Thomas G. Speicher

/s/ Garfield G. Thomas         Director           August 26, 1998
Garfield G. Thomas
  <PAGE 9>
/s/ Steven R. Tokach           Director           August 26, 1998
Steven R. Tokach

                               Director           August __, 1998
Norman E. Woodworth
  PAGE 10
<PAGE>
                          EXHIBIT INDEX

     4.1       Restated Articles of Incorporation of Registrant. 
               (Incorporated by reference to Exhibit 99.1 to
               Registrant's Current Report on Form 8-K dated
               July 9, 1998.)

     4.2       Restated Bylaws of Registrant.  (Incorporated by
               reference to Exhibit 99.2 to Registrant's Current
               Report on Form 8-K dated July 9, 1998.)

     4.3       Upper Valley Bancorp, Inc. 1995 Employee Stock
               Option Plan.

     5.        Opinion of Stevens & Lee.

     23.1      Consent of KPMG Peat Marwick, LLP, independent
               auditors.

     23.2      Consent of Stevens & Lee.  (contained in Exhibit 5
               of this Registration Statement.)

     24.       Power of Attorney of certain directors and
               officers (included on signature page).
  <PAGE 11>

                                                        Exhibit 5

                  [Letterhead of Stevens & Lee]




                        September 4, 1998



Board of Directors
First Liberty Bank Corp.
645 Washington Avenue
P.O. Box 39
Jerymyn, NC  18433-0039

Re:  Upper Valley Bancorp, Inc.
     1995 Employee Stock Option Plan

Gentlemen:

     You have asked us to provide you with our opinion whether
the 40,000 shares of common stock, par value $1.25 per share (the
"Common Stock"), of Upper Valley Bancorp, Inc. (the "Company")
that may be issued from time to time pursuant to the exercise of
options issued under the Upper Valley Bancorp, Inc. 1995 Employee
Stock Option Plan (the "Plan"), when and if such shares are
issued pursuant to and in accordance with the Plan, will be duly
and validly issued, fully paid and nonassessable.  We, as counsel
to the Company, have reviewed:

     1.   The Pennsylvania Business Corporation Law of 1988, as
          amended;

     2.   The Articles of Incorporation of the Company;

     3.   The Bylaws of the Company; and

     4.   The Resolutions of the Board of Directors of the
          Company adopted on August 26, 1998.

     Based on our review of such documents, it is our opinion
that the Common Stock issuable upon the exercise of options
granted under the Plan, when and as issued and paid for in
accordance with the provisions of the Plan, will be duly and
validly issued, fully paid and nonassessable.  In giving the
foregoing opinion, we have assumed that the Company will have, at
the time of the issuance of such Common Stock, a sufficient
number of authorized shares available for issue.

     We consent to the filing of this opinion as an exhibit to
the registration statement the Company is filing today in
connection with the registration of 40,000 shares of the
Company's Common Stock, and to the reference to us under the
heading "legal matters" in the related Prospectus.  In giving
this consent, we do not thereby admit that we come within the 
<PAGE 1> category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended, or the Rules
and Regulations of the Securities and Exchange Commission
thereunder.

                              Very truly yours

                              STEVENS & LEE

                              /s/ Stevens & Lee
  <PAGE 2>


                                                     Exhibit 23.1



The Board of Directors
First Liberty Bank Corp.


We consent to the use of our reports incorporated herein by
reference.

/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP


Philadelphia, Pennsylvania
September 4, 1998


                                                      Exhibit 4.3

                   UPPER VALLEY BANCORP, INC.

                 1995 EMPLOYEE STOCK OPTION PLAN

     1.   Purpose of Plan

          The purpose of this 1995 Employee Stock Option Plan
(the "Plan") is to provide additional incentive to officers and
other key employees of Upper Valley Bancorp, Inc. (the "Company")
and each present or future parent or subsidiary corporation by
encouraging them to invest in shares of the Company's common
stock, $1.00 par value ("Common Stock"), and thereby acquire a
proprietary interest in the Company and an increased personal
interest in the Company's continued success and progress, to the
mutual benefit of officers, employees and shareholders.

     2.   Aggregate Number of Shares

          25,000 shares of the Company's Common Stock shall be
the aggregate number of shares which may be issued under this
Plan.  Notwithstanding the foregoing, in the event of any change
in the outstanding shares of the Common Stock of the Company by
reason of a stock dividend, stock split (other than the 20 for 1
stock split effective March 1, 1995 for which no adjustment shall
be made), combination of shares, recapitalization, merger,
consolidation, transfer of assets, reorganization, conversion or
what the Option Committee (defined in Section 4(a)), deems in its
sole discretion to be similar circumstances, the aggregate number
and kind of shares which may be issued under this Plan shall be
appropriately adjusted in a manner determined in the sole
discretion of the Option Committee.  Reacquired shares of the
Company's Common Stock, as well as unissued shares, may be used
for the purpose of this Plan.  Common Stock of the Company
subject to options which have terminated unexercised, either in
whole or in part, shall be available for future options granted
under this Plan.

     3.   Class of Persons Eligible to Receive Options

          All officers and key employees of the Company and of
any present or future Company parent or subsidiary corporation
are eligible to receive an option or options under this Plan, but
excluding directors who are eligible for options under the 1995
Stock Option Plan for Non-Employee Directors.  The individuals
who shall, in fact, receive an option or options shall be
selected by the Option Committee, in its sole discretion, except
as otherwise specified in Section 4 hereof.

     4.   Administration of Plan

          (a)  This Plan shall be administered by the Option
Committee ("Committee") appointed by the Company's Board of
Directors.  The Committee shall consist of a minimum of three and
a maximum of the entire Board of Directors.  The Committee shall,
in addition to its other authority and subject to the provisions 
<PAGE 1> of this Plan, determine which individuals shall in fact
be granted an option or options, whether the option shall be an
Incentive Stock Option or a Non-Qualified Stock Option (as such
terms are defined in Section 5(a)), the number of shares to be
subject to each of the options, the time or times at which the
options shall be granted, the rate of option exercisability, and,
subject to Section 5 hereof, the price at which each of the
options is exercisable and the duration of the option.

          (b)  The Committee shall adopt such rules for the
conduct of its business and administration of this Plan as it
considers desirable.  A majority of the members of the Committee
shall constitute a quorum for all purposes.  The vote or written
consent of a majority of the members of the Committee on a
particular matter shall constitute the act of the Committee on
such matter.  The Committee shall have the right to construe the
Plan and the options issued pursuant to it, to correct defects
and omissions and to reconcile inconsistencies to the extent
necessary to effectuate the Plan and the options issued pursuant
to it, and such action shall be final, binding and conclusive
upon all parties concerned.  No member of the Committee or the
Board of Directors shall be liable for any act or omission
(whether or not negligent) taken or omitted in good faith, or for
the exercise of an authority or discretion granted in connection
with the Plan to a Committee or the Board of Directors, or for
the acts or omissions of any other members of a Committee or the
Board of Directors.  Subject to the numerical limitations on
Committee membership set forth in Section 4(a) hereof, the Board
of Directors may at any time appoint additional members of the
Committee and may at any time remove any member of the Committee
with or without cause.  Vacancies in the Committee, however
caused, may be filled by the Board of Directors, if it so
desires.

     5.   Incentive Stock Options and Non-Qualified Stock Options

          (a)  Options issued pursuant to this Plan may be either
Incentive Stock Options granted pursuant to Section 5(b) hereof
or Non-Qualified Stock Options granted pursuant to Section 5(c)
hereof, as determined by the Committee.  An "Incentive Stock
Option" is an option which satisfies all of the requirements of
Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code") and the regulations thereunder, and a "Non-Qualified
Stock Option" is an option which either does not satisfy all of
those requirements or the terms of the option provide that it
will not be treated as an Incentive Stock Option.  The Committee
may grant both an Incentive Stock Option and a Non-Qualified
Stock Option to the same person, or more than one of each type of
option to the same person.  The option price for Incentive Stock
Options issued under this Plan shall be equal at least to the
fair market value (as defined below) of the Company's Common
Stock on the date of the grant of the option.  The option price
for Non-Qualified Stock Options issued under this Plan may, in
the sole discretion of the Committee, be less than the fair
market value of the Common Stock on the date of the grant of the
option.  The fair market value of the Company's Common Stock on
any particular date shall mean the last reported sale price of a 
<PAGE 2> share of the Company's Common Stock on any stock
exchange on which such stock is then listed or admitted to
trading, or on the NASDAQ National Market System or Small Cap
NASDAQ, on such date, or if no sale took place on such day, the
last such date on which a sale took place, or if the Common Stock
is not then quoted on the NASDAQ National Market System or Small
Cap NASDAQ, or listed or admitted to trading on any stock
exchange, the average of the bid and asked prices in the over-
the-counter market on such date, or if none of the foregoing, a
price determined by the Committee.

          (b)  Subject to the authority of the Committee set
forth in Section 4(a) hereof, Incentive Stock Options issued
pursuant to this Plan shall be issued substantially in the form
set forth in Appendix I hereof, which form is hereby incorporated
by reference and made a part hereof, and shall contain
substantially the terms and conditions set forth therein. 
Incentive Stock Options shall not be exercisable after the
expiration of ten years from the date such options are granted,
unless terminated earlier under the terms of the option.  At the
time of the grant of an Incentive Stock Option hereunder, the
Committee may, in its discretion, modify or amend any of the
option terms contained in Appendix I for any particular optionee,
provided that the options modified or amended satisfies the
requirements of Section 422 of the Code and the regulations
thereunder.  Each of the options granted pursuant to this
Section 5(b) is intended, if possible, to be an "Incentive Stock
Option" as that term is defined in Section 422 of the Code and
the regulations thereunder.  In the event this Plan or any option
granted pursuant to this Section 5(b) is in any way inconsistent
with the applicable legal requirements of the Code or the
regulations thereunder for an Incentive Stock Option, this Plan
and such option shall be deemed automatically amended as of the
date hereof to conform to such legal requirements, if such
conformity may be achieved by amendment.

          (c)  Subject to the authority of the Committee set
forth in Section 4(a) hereof, Non-Qualified Stock Options issued
pursuant to this Plan shall be issued substantially in the form
set forth in Appendix II hereof, which form is hereby
incorporated by reference and made a part hereof, and shall
contain substantially the terms and conditions set forth therein. 
Non-Qualified Stock Options shall expire ten years and 30 days
after the date they are granted, unless terminated earlier under
the option terms.  At the time of granting a Non-Qualified Stock
Option hereunder, the Committee may, in its discretion, modify or
amend any of the option terms contained in Appendix II for any
particular optionee.

          (d)  Neither the Company nor any of its current or
future parent, subsidiaries or affiliates, nor their officers,
directors, shareholders, stock option plan committees, employees
or agents shall have any liability to any optionee in the event
(i) an option granted pursuant to Section 5(b) hereof does not
qualify as an "Incentive Stock Option" as that term is used in
Section 422 of the Code and the regulations thereunder; (ii) any
optionee does not obtain the tax treatment pertaining to an 
<PAGE 3> Incentive Stock Option; or (iii) any option granted
pursuant to Section 5(c) hereof is an "Incentive Stock Option."

     6.   Modification, Amendment, Suspension and Termination

          Options shall not be granted pursuant to this Plan
after the expiration of ten years from the date the Plan is
adopted by the Board of Directors of the Company.  The Board of
Directors reserves the right at any time, and from time to time,
to modify or amend this Plan in any way, or to suspend or
terminate it, effective as of such date, which date may be either
before or after the taking of such action, as may be specified by
the Board of Directors; provided, however, that such action shall
not affect options granted under the Plan prior to the actual
date on which such action occurred.  If a modification or
amendment of this Plan is required by the Code or the regulations
thereunder to be a approved by the shareholders of the Company in
order to permit the granting of "Incentive Stock Options" (as
that term is defined in Section 422 of the Code and regulations
thereunder) pursuant to the modified or amended Plan, such
modification or amendment shall also be approved by the
shareholders of the Company in such manner as is prescribed by
the Code and the regulations thereunder.  If the Board of
Directors voluntarily submits a proposed modification, amendment,
suspension or termination for shareholder approval, such
submission shall not require any future modifications,
amendments, suspensions or terminations (whether or not relating
to the same provision or subject matter) to be similarly
submitted for shareholder approval.

     7.   Effectiveness of Plan

          This Plan shall become effective on the date of its
adoption by the Company's Board of Directors' subject however to
approval by the holders of the Company's Common Stock in the
manner as prescribed in the Code and the regulations thereunder. 
Options may be granted under this Plan prior to obtaining
shareholder approval, provided such options shall not be
exercisable until shareholder approval is obtained.

     8.   General Conditions

          (a)  Nothing contained in this Plan or any option
granted pursuant to this Plan shall confer upon any employee the
right to continue in the employ of the Company or any affiliated
or subsidiary corporation or interfere in any way with the rights
of the Company or any affiliated or subsidiary corporation to
terminate his employment in any way.

          (b)  Corporate action constituting an offer of stock
for sale to any employee under the terms of the options to be
granted hereunder shall be deemed complete as of the date when
the Committee authorizes the grant of the option to the employee,
regardless of when the option is actually delivered to the
employee or acknowledged or agreed to by him.
  <PAGE 4>
          (c)  The terms "parent corporation" and "subsidiary
corporation" as used throughout this Plan, and the options
granted pursuant to this Plan, shall (except as otherwise
provided in the option form) have the meaning that is ascribed to
that term when contained in Section 422(b) of the Code and the
regulations thereunder, and the Company shall be deemed to be the
grantor corporation for purposes of applying such meaning.

          (d)  References in this Plan to the Code shall be
deemed to also refer to the corresponding provisions of any
future United States revenue law.

          (e)  The use of the masculine pronoun shall include the
feminine gender whenever appropriate.
  PAGE 5
<PAGE>
                           APPENDIX I

                     INCENTIVE STOCK OPTION

To:                                Name                         

                                   Address                      

Date of Grant:_____________________________


     You are hereby granted an option, effective as of the date
hereof, to purchase ___________ shares of common stock, $1.00 par
value ("Common Stock"), of Upper Valley Bancorp, Inc. (the
"Company") at a price of $______ per share pursuant to the
Company's 1995 Employee Stock Option Plan (the "Plan").

     Your option may first be exercised on and after one year
from the date of grant, but not before that time.  On and after
one year and prior to two years from the date of grant, your
option may be exercised for up to 33 1/3% of the total number of
shares subject to the option minus the number of shares
previously purchased by exercise of the option (as adjusted for
any change in the outstanding shares of the Common Stock of the
Company by reason of a stock dividend, stock split, combination
of shares, recapitalization, merger, consolidation, transfer of
assets, reorganization, conversion or what the Option Committee
deems in its sole discretion to be similar circumstances).  Each
succeeding year thereafter, your option may be exercised for up
to an additional 33 1/3% of the total number of shares subject to
the option minus the number of shares previously purchased by
exercise of the option (as adjusted for any change in the
outstanding shares of the Common Stock of the Company by reason
of a stock dividend, stock split, combination of shares,
recapitalization, merger, consolidation, transfer of assets,
reorganization, conversion or what the Option Committee deems in
its sole discretion to be similar circumstances).  Thus, this
option is fully exercisable on and after three years after the
date of grant, except if terminated earlier as provided herein. 
No fractional shares shall be issued or delivered.  This option
shall terminate and is not exercisable after ten years from the
date of its grant (the "Scheduled Termination Date"), except if
terminated earlier as hereafter provided.

     In the event of a "change of control" (as hereafter defined)
of the Company, your option may, from and after the date of the
change of control, and notwithstanding the foregoing paragraph,
be exercised for up to 100% of the total number of shares then
subject to the option minus the number of shares previously
purchased upon exercise of the option (as adjusted for stock
dividends, stock splits, combinations of shares and what the
Option Committee deems in its sole discretion to be similar
circumstances).  A "change of control" shall be deemed to have
occurred upon the happening of any of the following events:

     1.   A change within a twelve-month period in a majority of
the members of the board of directors of the Company;  <PAGE 6>

     2.   A change within a twelve-month period in the holders of
more than 50% of the outstanding voting stock of the Company; or

     3.   Any other event deemed to constitute a "change of
control" by the Option Committee.

     You may exercise your option by giving written notice to the
Secretary of the Company on forms supplied by the Company at its
then principal executive office, accompanied by payment of the
option price for the total number of shares you specify that you
wish to purchase.  The payment may be in any of the following
forms:  (a) cash, which may be evidenced by check; (b) (unless
prohibited by the Option Committee) certificates representing
shares of Common Stock of the Company, which will be valued by
the Secretary of the Company at the fair market value per share
of the Company's Common Stock (as determined in accordance with
the Plan) on the date of delivery of such certificates to the
Company, accompanied by an assignment of the stock to the
Company; or (c) (unless prohibited by the Option Committee) any
combination of cash and Common Stock of the Company valued as
provided in clause (b).  Any assignment of stock shall be in a
form and substance satisfactory to the Secretary of the Company,
including guarantees of signature(s) and payment of all transfer
taxes if the Secretary deems such guarantees necessary or
desirable.

     Your option will, to the extent not previously exercised by
you, terminate three months after the date on which your
employment by the Company or a Company subsidiary corporation is
terminated (whether such termination be voluntary or involuntary)
other than by reason of disability as defined in Section 22(e)(3)
of the Internal Revenue Code of 1986, as amended (the "Code"),
and the regulations thereunder, or death, in which case your
option will terminate one year from the date of termination of
employment due to disability or death (but in no event later than
the Scheduled Termination Date).  After the date your employment
is terminated, as aforesaid, you may exercise this option only
for the number of shares which you had a right to purchase and
did not purchase on the date your employment terminated.  If you
are employed by a Company subsidiary corporation, your employment
shall be deemed to have terminated on the date your employer
ceases to be a Company subsidiary corporation, unless you are on
that date transferred to the Company or another Company
subsidiary corporation.  Your employment shall not be deemed to
have terminated if you are transferred from the Company to a
Company subsidiary corporation, or vice versa, or from one
Company subsidiary corporation to another Company subsidiary
corporation.

     If you die while employed by the Company or a Company
subsidiary corporation, your executor or administrator, as the
case may be, may, at any time within one year after the date of
your death (but in no event later than the Scheduled Termination
Date), exercise the option as to any shares which you had a right
to purchase and did not purchase during your lifetime.  If your
employment with the Company or a Company parent or subsidiary
corporation is terminated by reason of your becoming disabled 
<PAGE 7> (within the meaning of Section 22(e)(3) of the Code and
the regulations thereunder), you or your legal guardian or
custodian may at any time within one year after the date of such
termination (but in no event later than the Scheduled Termination
Date), exercise the option as to any shares which you had a right
to purchase and did not purchase prior to such termination.  Your
executor, administrator, guardian or custodian must present proof
of his authority satisfactory to the Company prior to being
allowed to exercise this option.

     In the event of any change in the outstanding shares of the
Common Stock of the Company by reason of a stock dividend, stock
split, combination of shares, recapitalization, merger,
consolidation, transfer of assets, reorganization, conversion or
what the Option Committee deems in its sole discretion to be
similar circumstances, the number and kind of shares subject to
this option and the option price of such shares shall be
appropriately adjusted in a manner to be determined in the sole
discretion of the Option Committee.  Notwithstanding the
foregoing, there shall be no adjustment made to the number of
shares subject to this option and the option price with respect
to the stock split effective March 1, 1995.

     This option is not transferable otherwise than by will or
the laws of descent and distribution, and is exercisable during
your lifetime only by you, including, for this purpose, your
legal guardian or custodian in the event of disability.  Until
the option price has been paid in full pursuant to due exercise
of this option and the purchased shares are delivered to you, you
do not have any rights as a shareholder of the Company.  The
Company reserves the right not to deliver to you the shares
purchased by virtue of the exercise of this option during any
period of time in which the Company deems, in its sole
discretion, that such delivery would violate a federal, state,
local or securities exchange rule, regulation or law.

     Notwithstanding anything to the contrary contained herein,
this option is not exercisable until all the following events
occur and during the following periods of time:

          (a)  Until the Plan pursuant to which this option is
granted is approved by the shareholders of the Company in the
manner prescribed by the Code and the regulations thereunder;

          (b)  Until this option and the optioned shares are
approved and/or registered with such federal, state and local
regulatory bodies or agencies and securities exchange as the
Company may deem necessary or desirable; or

          (c)  During any period of time in which the Company
deems that the exercisability of this option, the offer to sell
the shares optioned hereunder, or the sale thereof, may violate a
federal, state, local or securities exchange rule, regulation or
law, or may cause the Company to be legally obligated to issue or
sell more shares than the Company is legally entitled to issue or
sell.
  <PAGE 8>
     The following two paragraphs shall be applicable if, on the
date of exercise of this option, the Common Stock to be purchased
pursuant to such exercise has not been registered under the
Securities Act of 1933, as amended, and under applicable state
securities laws, and shall continue to be applicable for so long
as such registration has not occurred:

          (a)  The optionee hereby agrees, warrants and
represents that he will acquire the Common Stock to be issued
hereunder for his own account for investment purposes only, and
not with a view to, or in connection with, any resale or other
distribution of any of such shares, except as hereafter
permitted.  The optionee further agrees that he will not at any
time make any offer, sale, transfer, pledge or other disposition
of such Common Stock to be issued hereunder without an effective
registration statement under the Securities Act of 1933, as
amended, and under any applicable state securities laws or an
opinion of counsel acceptable to the Company to the effect that
the proposed transaction will be exempt from such registration. 
The optionee shall execute such instruments, representations,
acknowledgements and agreements as the Company may, in its sole
discretion, deem advisable to avoid any violation of federal,
state, local or securities exchange rule, regulation or law.

          (b)  The certificates for Common Stock to be issued to
the optionee hereunder shall bear the following legend:

          "The shares represented by this certificate have
          not been registered under the Securities Act of
          1933, as amended, or under applicable state
          securities laws.  The shares have been acquired
          for investment and may not be offered, sold,
          transferred, pledged or otherwise disposed of
          without an effective registration statement under
          the Securities Act of 1933, as amended, and under
          any applicable state securities laws or an opinion
          of counsel acceptable to the Company that the
          proposed transaction will be exempt from such
          registration."

The foregoing legend shall be removed upon registration of the
legended shares under the Securities Act of 1933, as amended, and
under any applicable state laws or upon receipt of any opinion of
counsel acceptable to the Company that said registration is no
longer required.

     The sole purpose of the agreements, warranties,
representations and legend set forth in the two immediately
preceding paragraphs is to prevent violations of the Securities
Act of 1933, as amended, and any applicable state securities
laws.

     It is the intention of the Company and you that this option
shall, if possible, be an "Incentive Stock Option" as that term
is used in Section 422 of the Code and the regulations
thereunder.  In the event this option is in any way inconsistent
with the legal requirements of the Code or the regulations 
<PAGE 9> thereunder for an "Incentive Stock Option," this option
shall be deemed automatically amended as of the date hereof to
conform to such legal requirements, if such conformity may be
achieved by amendment.

     This option shall be subject to the terms of the Plan in
effect on the date this option is granted, which terms are hereby
incorporated herein by reference and made apart hereof.  In the
event of any conflict between the terms of this option and the
terms of the Plan in effect on the date of this option, the terms
of the Plan shall govern.  This option constitutes the entire
understanding between the Company and you with respect to the
subject matter hereof and no amendment, modification or waiver of
this option, in whole or in part, shall be binding upon the
Company unless in writing and signed by the President of the
Company.  This option and the performances of the parties
hereunder shall be construed in accordance with and governed by
the laws of the Commonwealth of Pennsylvania.

     Please sign the copy of this option and return it to the
Company's Secretary, thereby indicating your understanding of and
agreement with its terms and conditions.

                              UPPER VALLEY BANCORP, INC.



                              By:_______________________________


     I hereby acknowledge receipt of a copy of the foregoing
stock option and, having read it hereby signify my understanding
of, and my agreement with, its terms and conditions.


__________________________    __________________________________
(Signature)                   (Date)
  PAGE 10
<PAGE>
                           APPENDIX II

                   NON-QUALIFIED STOCK OPTION

To:                                Name                         

                                   Address                      

Date of Grant:_____________________________


     You are hereby granted an option, effective as of the date
hereof, to purchase _______ shares of common stock, $1.00 par
value ("Common Stock"), of Upper Valley Bancorp, Inc. (the
"Company") at a price of $______ per share pursuant to the
Company's 1995 Employee Stock Option Plan (the "Plan").

     Your option may first be exercised on and after one year
from the date of grant, but not before that time.  On and after
one year and prior to two years from the date of grant, your
option may be exercised for up to 33 1/3% of the total number of
shares subject to the option minus the number of shares
previously purchased by exercise of the option (as adjusted for
any change in the outstanding shares of the Common Stock of the
Company by reason of a stock dividend, stock split, combination
of shares, recapitalization, merger, consolidation, transfer of
assets, reorganization, conversion or what the Option Committee
deems in its sole discretion to be similar circumstances).  Each
succeeding year thereafter, your option may be exercised for up
to an additional 33 1/3% of the total number of shares subject to
the option minus the number of shares previously purchased by
exercise of the option (as adjusted for any change in the
outstanding shares of the Common Stock of the Company by reason
of a stock dividend, stock split, combination of shares,
recapitalization, merger, consolidation, transfer of assets,
reorganization, conversion or what the Option Committee deems in
its sole discretion to be similar circumstances).  Thus, this
option is fully exercisable on and after three years after the
date of grant, except if terminated earlier as provided herein. 
No fractional shares shall be issued or delivered.  This option
shall terminate and is not exercisable after ten years and 30
days from the date of its grant (the "Scheduled Termination
Date"), except if terminated earlier as hereafter provided.

     In the event of a "change of control" (as hereafter defined)
of the Company, your option may, from and after the date of the
change of control, and notwithstanding the foregoing paragraph,
be exercised for up to 100% of the total number of shares then
subject to the option minus the number of shares previously
purchased upon exercise of the option (as adjusted for stock
dividends, stock splits, combinations of shares and what the
Option Committee deems in its sole discretion to be similar
circumstances).  A "change of control" shall be deemed to have
occurred upon the happening of any of the following event:
  <PAGE 11>
     1.   A change within a twelve-month period in a majority of
the members of the board of directors of the Company;

          2.   A change within a twelve-month period in the
holders of more than 50% of the outstanding voting stock of the
Company; or

          3.   Any other event deemed to constitute a "change of
control" by the Option Committee.

     You may exercise your option by giving written notice to the
Secretary of the Company on forms supplied by the Company at its
then principal executive office, accompanied by payment of the
option price for the total number of shares you specify that you
wish to purchase.  The payment may be in any of the following
forms:  (a) cash, which may be evidenced by a check; (b) (unless
prohibited by the Option Committee) certificates representing,
shares of Common Stock of the Company, which will be valued by
the Secretary of the Company at the fair market value per share
of the Company's Common Stock (as determined in accordance with
the Plan) on the date of delivery of such certificates to the
Company, accompanied by an assignment of the stock to the
Company; or (c) (unless prohibited by the Option Committee) any
combination of cash and Common Stock of the Company valued as
provided in Clause (b).  Any assignment of stock shall be in a
form and substance satisfactory to the Secretary of the Company,
including guarantees of signature(s) and payment of all transfer
taxes if the Secretary deems such guarantees necessary or
desirable.

     Your option will, to the extent not previously exercised by
you, terminate three months after the date on which your
employment by the Company or a Company subsidiary corporation is
terminated (whether such termination be voluntary or involuntary)
other than by reason of disability as defined in Section 22(e)(3)
of the Internal Revenue Code of 1986, as amended (the "Code"),
and the regulations thereunder, or death, in which case your
option will terminate one year from the date of termination of
employment due to disability or death (but in no event later than
the Scheduled Termination Date).  After the date your employment
is terminated, as aforesaid, you may exercise this option only
for the number of shares which you had a right to purchase and
did not purchase on the date your employment terminated.  If you
are employed by a Company subsidiary corporation, your employment
shall be deemed to have terminated on the date your employer
ceases to be a Company subsidiary corporation, unless you are on
that date transferred to the Company or another Company
subsidiary corporation.  Your employment shall not be deemed to
have terminated if you are transferred from the Company to a
Company subsidiary corporation, or vice versa, or from one
Company subsidiary corporation to another Company subsidiary
corporation.

     If you die while employed by the Company or a Company
subsidiary corporation, your executor or administrator, as the
case may be, may, at any time within one year after the date of
your death (but in no event later than the Scheduled Termination 
<PAGE 12> Date), exercise the option as to any shares which you
had a right to purchase and did not purchase during your
lifetime.  If your employment with the Company or a Company
parent or subsidiary corporation is terminated by reason of your
becoming disabled (within the meaning of Section 22(e)(3) of the
Code and the regulations thereunder), you or your legal guardian
or custodian may at any time within one year after the date of
such termination (but in no event later than the Scheduled
Termination Date), exercise the option as to any shares which you
had a right to purchase and did not purchase prior to such
termination.  Your executor, administrator, guardian or custodian
must present proof of his authority satisfactory to the Company
prior to being allowed to exercise this option.

     In the event of any change in the outstanding shares of the
Common Stock of the Company by reason of a stock dividend, stock
split, combination of shares, recapitalization, merger,
consolidation, transfer of assets, reorganization, conversion or
what the Option Committee deems in its sole discretion to be
similar circumstances, the number and kind of shares subject to
this option and the option price of such shares shall be
appropriately adjusted in a manner to be determined in the sole
discretion of the Option Committee.  Notwithstanding the
foregoing, there shall be no adjustment made to the number of
shares subject to this option and the option price with respect
to the stock split effective March 1, 1995.

     This option is not transferable otherwise than by will or
the laws of descent and distribution, and is exercisable during
your lifetime only by you, including, for this purpose, your
legal guardian or custodian in the event of disability.  Until
the option price has been paid in full pursuant to due exercise
of this option and the purchased shares are delivered to you, you
do not have any rights as a shareholder of the Company.  The
Company reserves the right not to deliver to you the shares
purchased by virtue of the exercise of this option during any
period of time in which the Company deems, in its sole
discretion, that such would violate a federal, state, local or
securities exchange rule, regulation or law.

     Notwithstanding anything to the contrary contained herein,
this option is not exercisable until all the following events
occur and during the following periods of time:

          (a)  Until the Plan pursuant to which this option is
granted is approved by the shareholders of the Company, in the
manner prescribed by the Code and the regulations thereunder;

          (b)  Until this option and the optioned shares are
approved and/or registered with such federal, state and local
regulatory bodies or agencies and securities exchanges as the
Company may deem necessary or desirable; or

          (c)  During any period of time in which the Company
deems that the exercisability of this option, the offer to sell
the shares optioned hereunder, or the sale thereof, may violate a
federal, state, local or securities exchange rule, regulation or 
<PAGE 13> law, or may cause the Company to be legally obligated
to issue or sell more shares than the Company is legally entitled
to issue or sell.

     The following two paragraphs shall be applicable if, on the
date of exercise of this option, the Common Stock to be purchased
pursuant to such exercise has not been registered under the
Securities Act of 1933, as amended, and under applicable state
securities laws, and shall continue to be applicable for so long
as such registration has not occurred:

          (a)  The optionee hereby agrees, warrants and
represents that he will acquire the Common Stock to be issued
hereunder for his own account for investment purposes only, and
not with a view to, or in connection with, any resale or other
distribution of any of such shares, except as hereafter
permitted.  The optionee further agrees that he will not at any
time make any offer, sale, transfer, pledge or other disposition
of such Common Stock to be issued hereunder without an effective
registration statement under the Securities Act of 1933, as
amended, and under any applicable state securities laws or an
opinion of counsel acceptable to the Company to the effect that
the proposed transaction will be exempt from such registration. 
The optionee shall execute such instruments, representations,
acknowledgements and agreements as the Company may, in its sole
discretion, deem advisable to avoid any violation of federal,
state, local or securities exchange rule, regulation or law

          (b)  The certificates for Common Stock to be issued to
the optionee hereunder shall bear the following legend:

          "The shares represented by this certificate have
          not been registered under the Securities Act of
          1933, as amended, or under applicable state
          securities laws.  The shares have been acquired
          for investment and may not be offered, sold,
          transferred, pledged or otherwise disposed of
          without an effective registration statement under
          the Securities Act of 1933, as amended, and under
          any applicable state securities laws or an opinion
          of counsel acceptable to the Company that the
          proposed transaction will be exempt from such
          registration."

The foregoing legend shall be removed upon registration of the
legended shares under the Securities Act of 1933, as amended, and
under any applicable state laws or upon receipt of any opinion of
counsel acceptable to the Company that said registration is no
longer required.

     The sole purpose of the agreements, warranties,
representations and legend set forth in the two immediately
preceding paragraphs is to prevent violations of the Securities
Act of 1933, as amended, and any applicable state securities
laws.
  <PAGE 14>
     It is the intention of the Company and you that this option
shall not be an "Incentive Stock Option" as that term is used in
Section 422 of the Code and the regulations thereunder.

     This option shall be subject to the terms of the Plan in
effect on the date this option is granted, which terms are hereby
incorporated herein by reference and made a part hereof.  In the
event of any conflict between the terms of this option and the
terms of the Plan in effect on the date of this option, the terms
of the Plan shall govern.  This option constitutes the entire
understanding between the Company and you with respect to the
subject matter hereof and no amendment, modification or waiver of
this option, in whole or in part, shall be binding upon the
Company unless in writing and signed by the President of the
Company.  This option and the performances of the parties
hereunder shall be construed in accordance with and governed by
the laws of the Commonwealth of Pennsylvania.

     Please sign the copy of this option and return it to the
Company's Secretary, thereby indicating your understanding of and
agreement with its terms and conditions.

                              UPPER VALLEY BANCORP, INC.



                              By:_______________________________


     I hereby acknowledge receipt of a copy of the foregoing
stock option and, having read it hereby signify my understanding
of, and my agreement with, its terms and conditions.


__________________________    __________________________________
(Signature)                   (Date)
  <PAGE 15>



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