Table of Contents
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THE COMPANY................................................
PENNROCK FINANCIAL SERVICES CORP. DIVIDEND REINVESTMENT
PLAN.....................................................
PURPOSE....................................................
ADVANTAGES.................................................
ADMINISTRATION.............................................
PARTICIPATION..............................................
VOLUNTARY CASH CONTRIBUTIONS...............................
PURCHASES..................................................
DIVIDENDS..................................................
COSTS......................................................
REPORTS TO PARTICIPANTS....................................
CERTIFICATES FOR SHARES AND OPTIONAL CUSTODIAL FEATURE.....
VOTING RIGHTS..............................................
STOCK DIVIDENDS; STOCK SPLITS; RIGHTS OFFERINGS............
WITHDRAWAL AND SALE OF SHARES..............................
TERMINATION OF PARTICIPATION...............................
AMENDMENT AND TERMINATION OF PLAN..........................
INQUIRIES CONCERNING THE PLAN..............................
INTERPRETATION OF THE PLAN.................................
RESPONSIBILITY OF THE COMPANY AND THE PLAN AGENT...........
FEDERAL INCOME TAX INFORMATION.............................
DESCRIPTION OF COMMON STOCK................................
GENERAL....................................................
DIVIDENDS..................................................
ANTITAKEOVER PROVISION.....................................
USE OF PROCEEDS............................................
LEGAL MATTERS..............................................
INDEMNIFICATION OF DIRECTORS AND OFFICERS..................
EXPERTS....................................................
ADDITIONAL INFORMATION.....................................
PROSPECTUS
PENNROCK FINANCIAL SERVICES CORP.
1060 Main Street
P.O. Box 580
Blue Ball, Pennsylvania 17506
(717) 354-4541
284,532 Shares of Common Stock
$2.50 Par Value
This Prospectus relates to 284,532 shares of the $2.50 par
value common stock of PennRock Financial Services Corp. (the
"Company") to be issued under the PennRock Financial Services
Corp. Dividend Reinvestment Plan (the "Plan"), as adopted by the
Board of Directors of the Company on November 25, 1986 and as
subsequently amended. The Plan provides shareholders of the
Company with a simple and convenient method of investing cash
dividends and voluntary cash contributions in additional shares
of the common stock of the Company.
No person has been authorized to give any information or to
make any representation not contained in this Prospectus, and if
given or made, such information or representation should not be
relied upon as having been authorized. This Prospectus does not
constitute an offer to sell or the solicitation of an offer to
purchase any of the securities to which this Prospectus relates,
in any jurisdiction, to or from any person to whom it is
unlawful to make such an offer or solicitation in such
jurisdiction. Neither delivery of this Prospectus nor any
distribution of the securities to which this Prospectus relates
shall, under any circumstances, create any implication that the
information contained herein is correct at any time subsequent
to the date hereof.
THESE SECURITIES HAVE NOT BEEN APPROVED
OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
1,019,334 shares of the $2.50 par value common stock of the
Company have been authorized for purchase under the Plan, as
adjusted to reflect stock dividends and stock splits. Of these
shares, 735,102 shares were purchased prior to the date of this
Prospectus. This Prospectus relates to the remaining 284,232
shares authorized for purchase under the Plan.
The date of this Prospectus is October 1, 2000.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and in accordance therewith files periodic reports, proxy
statements and other documents with the Securities and Exchange
Commission (the "Commission"). Such periodic reports, proxy
statements and other information may be inspected and copied at
the public reference facilities maintained by the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549 and also at the
Regional Offices of the Commission at 7 World Trade Center, New
York, New York 10048 and 500 West Madison Street, Chicago,
Illinois 60661. Copies of such material may also be obtained at
prescribed rates from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and
from the website that the Commission maintains at
http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by the Company
with the Commission are incorporated in this Prospectus by
reference:
Annual Report on Form 10-K for the year ended
December 31, 1999.
Quarterly Reports on Form 10-Q for the quarters ended
March 31, 2000 and June 30, 2000.
In addition, all documents filed by the Company pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act after
the date of this Prospectus and prior to the termination of the
offering of the shares of Common Stock offered hereby shall be
deemed to be incorporated by reference in this Prospectus and to
be a part hereof from the date of filing of each such document.
Any statement contained herein or in a document all or a portion
of which is incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except
as modified or superseded, to constitute a part of this
Prospectus.
The Company will provide without charge to each person to
whom this Prospectus is delivered, on the written or oral
request of such person, a copy of any and all of the documents
incorporated by reference in this Prospectus (other than
exhibits to such documents, unless such exhibits are
specifically incorporated by reference into the documents that
this Prospectus incorporates). Written or oral requests should
be directed to: Glenn H. Weaver, President, PennRock Financial
Services Corp., 1060 Main Street, P.O. Box 580, Blue Ball,
Pennsylvania 17506; telephone (717) 354-4541.
Prospectus
PennRock
Financial Services Corp.
[LOGO]
___________________________
Dividend
Reinvestment
Plan
___________________________
THE COMPANY
The Company is a Pennsylvania business corporation
organized in 1986 and a registered bank holding company with
headquarters in Blue Ball, Pennsylvania. The principal asset of
the Company is its wholly-owned bank subsidiary, Blue Ball
National Bank. As a bank holding company, the Company engages
in the general commercial and retail banking business through
the activities of Blue Ball National Bank, which operates 15
banking offices in Lancaster, Berks and Chester Counties,
Pennsylvania. As of June 30, 2000, the Company had consolidated
total assets of approximately $882,000,000.
The common stock of the Company is quoted on the Nasdaq
National Market under the symbol PRFS.
The principal executive offices of the Company are located
at 1060 Main Street, P.0. Box 580, Blue Ball, Pennsylvania
17506. The telephone number of the Company is (717) 354-4541.
PENNROCK FINANCIAL SERVICES CORP.
DIVIDEND REINVESTMENT PLAN
The following is a question and answer statement of the
provisions of the PennRock Financial Services Corp. Dividend
Reinvestment Plan (the "Plan").
PURPOSE
1. What is the purpose of the Plan?
The purpose of the Plan is to provide the shareholders
of the Company with a simple and convenient method of
investing cash dividends and voluntary cash
contributions in additional shares of the $2.50 par
value common stock of the Company (the "Common
Stock").
ADVANTAGES
2. What are the advantages of the Plan?
The Plan allows a participant to acquire additional
shares of Common Stock at no or reduced brokerage
commission costs by having the cash dividends payable
on all or a portion of the shares of Common Stock
registered in his name automatically reinvested. In
addition, a participant may increase the amount of his
quarterly investment by making voluntary cash
contributions of up to $10,000 per quarter. Under the
Plan, participants pay no fees for reinvestment
services and record keeping is simplified by the
issuance, after each quarterly investment, of a
detailed statement of each participant's account,
including the cost basis of the whole and fractional
shares purchased.
ADMINISTRATION
3. Who administers the Plan?
The Plan is administered by American Stock Transfer &
Trust Company (the "Plan Agent") as the agent for Plan
participants.
PARTICIPATION
4. Who is eligible to participate in the Plan?
All holders of record of 100 or more shares of Common
Stock are eligible to participate in the Plan. A
beneficial owner of Common Stock whose shares are held
by a bank, broker or other nominee and who wishes to
participate in the Plan must first transfer at least
100 of such shares to his own name in order to become
a shareholder of record of 100 or more shares and,
thus, eligible to participate in the Plan.
An otherwise eligible shareholder may participate in
the Plan only if shares of Common Stock may lawfully
be offered and sold under the Plan to residents of the
state in which that shareholder resides. As of the
date of this Prospectus, shares of Common Stock may be
offered and sold under the Plan to shareholders who
reside anywhere in the United States.
The Company shall use its reasonable best efforts to
take all steps necessary to permit shares to be
legally offered and sold under the Plan in all states
in which shareholders wishing to participate in the
Plan reside; provided, however, that the Company shall
not be required to take such steps in any state if it
determines in its sole discretion and in light of the
number of shareholders residing in that state who wish
to participate in the Plan, that to do so would be
burdensome or impracticable for reasons of cost or
otherwise.
5. How does an eligible shareholder enroll in the Plan?
Any eligible shareholder of the Company may enroll in
the Plan by completing and signing the authorization
card accompanying this Prospectus and returning it to
the Plan Agent. Additional authorization cards may be
obtained at any time by written or oral request to the
Plan Agent.
6. When may an eligible shareholder enroll in the Plan?
An eligible shareholder of the Company may enroll in
the Plan at any time. If the shareholder's
authorization card is received by the Plan Agent on or
before the record date established for a particular
dividend, reinvestment will commence with that
dividend. If an authorization card is received from a
shareholder after the record date established for a
particular dividend, the reinvestment of dividends
will begin on the Investment Date following the next
record date if the shareholder is still a holder of
record.
7. What investment options are available under the Plan?
The following investment options are available under
the Plan:
Full Dividend Reinvestment: A participant may in his
authorization card elect to reinvest all dividends
paid on all shares of Common Stock now or hereafter
registered in his name. A participant who elects the
full dividend reinvestment option may also make
voluntary cash contributions which will be applied
toward the purchase of additional shares of Common
Stock.
Partial Dividend Reinvestment: A participant may in
his authorization card elect to reinvest cash
dividends paid on a specified number of whole shares
registered in his name. A participant who elects the
partial dividend reinvestment option may also make
voluntary cash contributions which will be applied
toward the purchase of additional shares of Common
Stock.
Voluntary Cash Contributions Only: A participant may
in his authorization card elect to make voluntary cash
contributions only, in which case such voluntary cash
contributions will be applied toward the purchase of
additional shares of Common Stock.
Regardless of the option selected by a participant,
dividends paid on shares of Common Stock held by the
Plan Agent for a participant's account under the Plan
will be invested in additional shares of Common Stock.
VOLUNTARY CASH CONTRIBUTIONS
8. How may voluntary cash contributions to the Plan be made?
Each participant may make optional cash contributions
to the Plan of not less than $25 nor more than $10,000
per quarter. The same amount need not be invested in
each quarter. Participants are under no obligation
to make any voluntary cash contributions. A voluntary
cash contribution may be made by forwarding a check or
money order payable to the Plan Agent with a completed
authorization card at the time of enrollment in the
Plan or thereafter with the payment form attached to
each quarterly statement of account.
9. How will voluntary cash contributions be used?
The Plan Agent will apply each voluntary cash
contribution received from a participant before an
Investment Date to the purchase of shares of Common
Stock for the account of that participant. A
voluntary cash contribution will not be deemed to have
been made by a participant or received by the Plan
Agent until the funds so contributed are actually
collected. Interest will not be paid on voluntary
cash contributions and the Plan Agent will return any
cash contribution received later than the last
business day before the next Investment Date and more
than 30 days before the next Investment Date. For
this reason, it is to the participant's benefit to
mail payments so that they are received by the Plan
Agent immediately before the next Investment Date.
10. May a participant request the return of a voluntary cash
contribution?
Yes. A voluntary cash contribution will be returned
to a participant upon written request to the Plan
Agent, provided that the request is received no later
than the last business day before the next Investment
Date.
PURCHASES
11. What is the source of the shares of Common Stock purchased
under the Plan?
At the direction of the Company, the Plan Agent will
purchase shares of Common Stock directly from the
Company, in which event the shares purchased will be
either authorized but unissued shares or shares held
in the treasury of the Company, or on the open market,
or by a combination of the foregoing.
12. How will the price of shares purchased under the Plan be
determined?
The price of the shares purchased from the Company
will be the fair market value of the shares as of the
Investment Date. As defined in the Plan, "fair market
value" means the value so designated, in accordance
with the guidelines set forth in the Plan, by the
Pricing Committee appointed by the Board of Directors
of the Company. No shares will be sold at less than
par value.
The price of shares purchased on the open market will
be the average cost (including brokerage fees and
commissions) to the Plan Agent of such purchases.
13. What is an Investment Date?
"Investment Date" means each of the quarterly dividend
payment dates of the Company, which have historically
fallen early in the months of January, April, July and
October of each year.
14. How many shares of Common Stock will be purchased by the
Plan Agent for a participant?
The number of shares purchased for a participant will
depend upon the amount of the participant's dividend
and voluntary cash payment, if any, and the price of
the shares on the relevant Investment Date. Each
participant's account will be credited with the number
of whole and fractional shares equal to the amount to
be invested, divided by the applicable purchase price.
Fractional shares will be calculated to three decimal
places.
15. When will shares be purchased under the Plan?
Shares acquired from the Company will be purchased as
of the close of business on the applicable Investment
Date. Shares of common stock acquired on the open
market will be purchased promptly on or after each
Investment Date by the Plan Agent and in no event
later than 30 days after the Investment Date.
Dividend and voting rights will commence upon
settlement. For the purpose of making purchases, the
Plan Agent will commingle each participant's funds
with those of all other participants.
DIVIDENDS
16. How will dividends be paid on shares held by the Plan
Agent?
As record holder of the shares held in participants'
accounts under the Plan, the Plan Agent will receive
dividends on all such shares held on each dividend
record date, will credit such dividends to
participants' accounts on the basis of the number of
whole and fractional shares held in each account and
will automatically reinvest these dividends in shares
of Common Stock of the Company.
COSTS
17. What are the costs to a participant in the Plan?
No brokerage fees will be charged to participants in
connection with the purchase of shares of Common Stock
from the Company. Participants will be charged their
pro rata share of the actual cost (including brokerage
fees and commissions) of shares purchased in the open
market. All other costs of administration of the Plan
will be borne by the Company; however, the Company
has the right to deduct a $1.00 service charge from a
participant's account at the time of his withdrawal
from the Plan or at any time a share certificate is
requested by a participant.
REPORTS TO PARTICIPANTS
18. What reports will be sent to participants in the Plan?
As soon as practicable after completion of each
investment on behalf of a participant, the Plan Agent
will mail to such participant a statement showing:
(i) the amount of the dividend and the voluntary cash
contribution, if any, applied toward such investment,
(ii) the taxes withheld, if any, (iii) the net amount
invested, (iv) the number of shares purchased, (v) the
average cost per share, and (vi) the total number of
shares held for the participant's account under the
Plan computed to three decimal places. Each
participant will receive annually Internal Revenue
Service Form 1099 reporting dividend income received.
CERTIFICATES FOR SHARES AND OPTIONAL CUSTODIAL FEATURE
19. Will certificates be issued for shares purchased under the
Plan?
All shares purchased under the Plan will be registered
in the name of the Plan Agent or its nominee, as agent
for the participants. Certificates for such shares
will not be issued to participants unless requested in
writing (See Question No. 24 below).
20. How does the optional custodial feature work?
A participant may at any time deposit free of charge
with the Plan Agent for safekeeping certificates for
shares of Common Stock registered in his name. Such
shares will upon receipt be registered in the name of
the Plan Agent or its nominee and credited to the
participant's account under the Plan. Dividends paid
on shares deposited with the Plan Agent will be
reinvested under the Plan. A participant who wishes
to take advantage of the Plan's custodial feature
should contact the Plan Agent for further
instructions.
VOTING RIGHTS
21. How will shares held by the Plan Agent be voted?
For each meeting of shareholders, the Plan Agent will
forward a proxy to each participant and will vote the
shares held for a participant's account in accordance
with the instructions received from the participant.
Shares held for the account of a participant who does
not return a proxy will not be voted.
STOCK DIVIDENDS; STOCK SPLITS; RIGHTS OFFERINGS
22. What happens if the Company declares a stock dividend or a
stock split?
Any shares issued as a result of a stock dividend or
stock split on shares held by the Plan Agent for the
account of a participant will be credited to the
participant's account under the Plan and dividends
paid on such shares will be subject to reinvestment
under the Plan.
23. What happens if the Company makes a rights offering?
In the event of a rights offering by the Company, the
Plan Agent will sell rights received on shares held of
record by it and will on the next Investment Date
invest the proceeds of sale in additional shares of
Common Stock, which will be retained by the Plan Agent
and credited proportionately to the accounts of Plan
participants. A participant who wishes to exercise
such rights individually must request the issuance of
a stock certificate for the whole number of shares
held by the Plan Agent for his account under the Plan.
(See Question 24 below). Such request must be made
prior to the date for exercising such rights. Rights
on shares of Common Stock registered in the name of a
participant will be mailed directly to the
participant.
WITHDRAWAL AND SALE OF SHARES
24. May a participant withdraw shares purchased under the
Plan?
A participant may at any time request the issuance of
a certificate for all or any portion of the number of
whole shares of Common Stock held for his account
under the Plan by notifying the Plan Agent in writing
and specifying in the notice the number of shares to
be withdrawn. A certificate will be issued to the
participant within 15 days following the receipt by
the Plan Agent of the participant's signed request. A
$1.00 service charge may be assessed each time the
issuance of a stock certificate is requested by a
participant. Certificates for fractional shares will
not be issued under any circumstances.
25. May a participant elect to have withdrawn shares sold by
the Plan Agent?
Yes. A participant may request in writing that the
Plan Agent sell the shares of Common Stock being
withdrawn from his account under the Plan. The Plan
Agent will within 15 business days following receipt
for such a request sell the number of shares specified
in the request and will deliver to the participant a
check in the amount of the proceeds of sale, less
applicable brokerage fees and commissions, service
charges, applicable withholding taxes and transfer
taxes, and other costs, if any. The Plan Agent
currently charges a fee of $10.00 and $0.04 per share
for selling shares on behalf of a participant. All
such sales will be made in the open market at the then
current market price, except that the Company may
elect to purchase such shares at a price equal to
their fair market value (as defined in the Plan) on
the date that the request is received by the Plan
Agent. A request by a participant to sell shares
being withdrawn from his account under the Plan must
be in writing in such form as may from time to time be
specified by the Plan Agent.
TERMINATION OF PARTICIPATION
26. How and when may a participant terminate his participation
in the Plan?
Participation in the Plan may be terminated by a
participant at any time by giving written notice to
the Plan Agent. Unless a participant requests that
the shares held for his account under the Plan be sold
(See Question No. 25 above), within 15 days after the
date on which such notice is received by the Plan
Agent, the Plan Agent will deliver to the participant:
(i) a certificate for the number of whole shares held
for his account under the Plan, together with (ii) a
check representing any uninvested dividends and
voluntary cash contributions and the value of any
fractional share, based upon the fair market value per
share of the Common Stock on the effective date of
termination, less the $1.00 service charge for the
issuance of a stock certificate as described in
Question 24 above.
AMENDMENT AND TERMINATION OF PLAN
27. May the Plan be amended or terminated?
Yes. The Company may amend, supplement, suspend,
modify or terminate the Plan at any time without the
approval of the participants. Thirty days' notice of
any suspension or material amendment will be sent to
all participants, who shall in all events have the
right to withdraw from the Plan.
INQUIRIES CONCERNING THE PLAN
28. Who should be contacted with questions concerning the
Plan?
All inquiries concerning the Plan should be directed
to the administrative processor engaged by the Plan
Agent, as follows:
American Stock Transfer & Trust Company
Dividend Reinvestment Department
40 Wall Street
New York, NY 10005
(800) 937-5449
INTERPRETATION OF THE PLAN
29. Who will interpret the provisions of the Plan?
Any question of interpretation arising under the Plan
will be determined by the Board of Directors of the
Company pursuant to applicable federal and state law
and the rules and regulations of all regulatory
authorities, which determination shall be final and
binding on all participants.
RESPONSIBILITY OF THE COMPANY AND THE PLAN AGENT
30. What are the responsibilities of the Company and the Plan
Agent with respect to the Plan?
Neither the Company nor the Plan Agent will be liable
for any act done in good faith or for any good faith
omission to act, including, without limitation, any
claim or liability arising out of failure to terminate
a participant's account upon such participant's death,
the prices at which shares of Common Stock are
purchased, the times when purchases or sales are made
or fluctuations in the market value of the Common
Stock. The participants must realize that neither the
Company nor the Plan Agent can provide any assurance
of a profit or protection against loss on shares
purchased under the Plan.
FEDERAL INCOME TAX INFORMATION
The following is a general summary of the federal income
tax consequences of participating in the Plan:
Reinvested Dividends. In the case of reinvested dividends,
when shares are acquired for a participant's account directly
from the Company, the participant must include in gross income a
dividend equal to the number of shares purchased for the
participant's account with reinvested dividends multiplied by
the per share fair market value of the Common Stock on the
relevant Investment Date, plus the amount of any federal income
tax withheld in the case of a participant who is subject to
federal income tax withholding on dividend income. The
participant's basis in such shares will be equal to the fair
market value of the shares purchased for the participant's
account on the relevant Investment Date.
Alternatively, when shares are purchased for a
participant's account on the open market with reinvested
dividends, a participant must include in gross income a dividend
equal to the purchase price of the shares purchased for his
account, plus the amount of any federal income tax withheld in
the case of a participant who is subject to federal income tax
withholding on dividend income. The participant's basis in such
shares will be equal to the purchase price of the shares. For
purposes of this paragraph, the term "purchase price" will
include a participant's pro rata share of any brokerage fees,
commissions, and other costs and expenses of purchase.
Voluntary Cash Contributions. In the case of shares
purchased directly from the Company with voluntary cash
contributions, a participant will be treated as having received
a dividend equal to the excess, if any, of the fair market value
of the purchased shares on the Investment Date over the amount
of the voluntary cash contribution. A participant's basis in
such shares will be the amount of such excess, if any, plus the
amount of the voluntary cash payment.
Alternatively, when shares are purchased on the open market
with voluntary cash contributions, the participant's basis in
such shares will be equal to the purchase price of the shares.
For purposes of this paragraph, the term "purchase price" will
include a participant's pro rata share of any brokerage fees,
commissions, and other costs and expenses of purchase.
Additional Information. The foregoing discussion assumes
that the Company will, from time to time, have earnings and
profits for federal tax purposes in excess of its distributions
to shareholders, which is expected to be the case. A
prospective participant should also note that the Internal
Revenue Service could take the position that the fair market
value of a share of Common Stock on any relevant Investment Date
may not necessarily be equal to the fair market value per share
(as defined in Section 2(c) of the Plan). The holding period
for shares of Common Stock acquired pursuant to the Plan will
begin the day after the date the shares are credited to a
participant's account. In the case of any participant as to
whom federal income tax withholding on dividends is required and
in the case of a foreign shareholder whose taxable income under
the Plan is subject to federal income tax withholding, the
Company will reinvest dividends net of the amount of tax
withheld.
A participant will not realize taxable income upon the
issuance of a certificate for a whole number of shares held for
his account under the Plan. However, a participant who receives
a cash payment in lieu of the issuance of a fractional share
will realize gain or loss with respect to such fractional share.
Gain or loss will also be realized upon the sale or exchange of
shares of Common Stock acquired under the Plan. The amount of
such gain or loss will be the difference between the amount
received upon disposition and the tax basis of such shares or
fractional share. Any such gain or loss will be a capital gain
or loss if the shares sold were held as a capital asset. Such
capital gain or loss will be long-term if the shares sold were
held by the participant for the applicable holding period and
otherwise will be short-term.
The foregoing is only a brief summary of certain federal
income tax consequences of participating in the Plan and does
not constitute tax advice. The summary appearing above does not
discuss all of the tax consequences of participating in the Plan
and may not address the tax consequences to any given
participant in view of his individual circumstances.
Participants should consult their own tax advisors as to the
federal, state and local tax consequences of Plan transactions.
DESCRIPTION OF COMMON STOCK
GENERAL
The authorized capital of the Company consists exclusively
of 20,000,000 shares of common stock of $2.50 par value per
share. As of June 30, 2000, there were issued and outstanding
5,985,183 shares of the Company's Common Stock, which shares
were held by approximately 2,806 owners of record. The Common
Stock of the Company is quoted on the Nasdaq National Market
under the symbol PRFS.
The holders of Common Stock are entitled to one vote per
share on all matters submitted to a vote of the shareholders and
may not cumulate their votes for the election of directors.
Each share of Common Stock is entitled to share pro rata in
dividends and other distributions. The holders of the Common
Stock of the Company do not have preemptive rights to subscribe
to purchase additional stock and no share is entitled in any
manner to any preference over any other share. The shares of
Common Stock to be issued under the Plan will be fully paid and
non-assessable and the holders thereof will not be subject to
call or assessment under state law. American Stock Transfer &
Trust Company serves as the transfer agent for the Company.
DIVIDENDS
The holders of Common Stock are entitled to receive
dividends when, as and if declared by the Board of Directors out
of funds legally available therefor. The Company has
historically paid cash dividends early in the months of January,
April, July and October of each year. However, the timing and
amount of future dividends will depend upon earnings, capital
requirements, federal and state laws, regulations and policies,
and other factors deemed relevant by the Board of Directors.
The ability of the Company to pay dividends to its
shareholders is primarily dependent upon the earnings and
financial condition of its wholly owned subsidiary, Blue Ball
National Bank. Funds for the payment of such dividends are
expected for the foreseeable future to be obtained exclusively
from dividends paid to the Company by Blue Ball National Bank.
Under applicable state and federal laws, the dividends that
may by paid by Blue Ball National Bank without prior regulatory
approval are subject to prescribed limitations. State and
federal regulatory authorities have adopted standards for the
maintenance of adequate levels of capital by banks. Adherence
to such standards further limits the ability of a bank to pay
dividends. The payment of dividends by a bank may also be
affected by other regulatory requirements and policies. If, in
the opinion of the relevant regulatory authority, a bank under
its jurisdiction is engaged in, or is about to engage in, an
unsafe or unsound practice, the authority may require that the
bank cease and desist from that practice. The payment of a
dividend by a bank could, depending upon the financial condition
of the bank involved and other factors, be deemed to be such an
unsafe or unsound practice.
ANTITAKEOVER PROVISIONS
The Articles of Incorporation and bylaws of the Company
include certain provisions that may be considered to be
antitakeover in nature, in that they may have the effect of
discouraging or making more difficult the acquisition of control
of the Company by means of an unsolicited tender or exchange
offer, proxy contest or similar transaction. These provisions
are intended to protect the shareholders of the Company by
providing a measure of assurance that the shareholders will be
treated fairly in the event of an unsolicited takeover bid and
by preventing a successful takeover bidder from exercising its
control to the detriment of the shareholders.
The provisions in the Articles of Incorporation of the
Company that may be so considered include the following: (i) a
provision that provides for substantial authorized but unissued
shares of Common Stock, (ii) a provision that denies the
shareholders the right to cumulate their votes for the election
of directors, (iii) a provision that requires a greater than
majority shareholder vote in order to approve certain business
combinations and other extraordinary corporate transactions,
(iv) a provision that establishes criteria to be applied by the
Board of Directors in evaluating an acquisition proposal, (v) a
provision that requires a greater than majority shareholder vote
in order for the shareholders to remove a director from office
without cause, (vi) a provision that prohibits the taking of any
action by the shareholders without a meeting and eliminates the
right of the shareholders to call a special meeting, (vii) a
provision that limits the right of the shareholders to amend the
bylaws, and (viii) a provision that requires under certain
circumstances a greater than majority shareholder vote in order
to amend the Articles of Incorporation. The provisions of the
bylaws of the Company that may be so considered include the
following: (i) a provision that limits the permissible number
of directors, (ii) a provision that establishes a classified
Board of Directors, and (iii) a provision that requires advanced
written notice as a precondition to the nomination of any person
for election to the Board of Directors, other than in the case
of nominations made by existing management. As a Pennsylvania
business corporation, the Company is also subject to the
Pennsylvania Business Corporation Law, which includes provisions
applicable to the Company that may have similar effects.
USE OF PROCEEDS
The Company is unable to predict the number of shares of
Common Stock that will be purchased from the Company under the
Plan or the prices at which such shares will be purchased. The
net proceeds to the Company from the sale of Common Stock
offered hereby will provide additional equity capital to the
Company to support its growth and the growth of its wholly-owned
subsidiary, Blue Ball National Bank.
LEGAL MATTERS
Legal matters relating to the shares of Common Stock
offered hereby will be passed upon for the Company by Stevens &
Lee, One Penn Square, Lancaster, Pennsylvania 17602.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Pennsylvania law provides that a Pennsylvania corporation
such as the Company may indemnify its directors, officers,
employees and agents against liabilities they may incur in such
capacities for any action taken or 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, with the approval of the shareholders,
providing for the elimination of a director's liability for
monetary damages for any action taken or failure to take any
action unless the director has breached or failed to perform the
duties of his office and that breach or failure to perform
constitutes self dealing, willful misconduct or recklessness.
The bylaws of the Company provide for the indemnification
of the directors and officers of the Company and of its
subsidiaries and for the elimination of a director's liability
for monetary damages to the fullest extent permitted under
Pennsylvania law.
The directors and officers of the Company and its
subsidiaries are also insured against certain liabilities for
their actions, as such, by an insurance policy obtained by the
Company.
Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors,
officers or persons controlling the Company pursuant to the
foregoing provisions, the Company has been informed 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.
EXPERTS
The consolidated financial statements of the Company and
its subsidiaries incorporated by reference herein have been
audited by Simon Lever & Company, independent public
accountants, as indicated in their report with respect thereto
and are included herein in reliance upon the authority of that
firm as experts in accounting and auditing.
ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration
Statement under the Securities Act of 1933, as amended, with
respect to the shares of Common Stock offered pursuant to this
Prospectus. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain
portions of which have been omitted as permitted by the rules
and regulations of the Commission. In addition, certain
documents filed by the Company with the Commission have been
incorporated in this Prospectus by reference. For further
information with respect to the Company and the shares of Common
Stock offered hereby, reference is made to the Registration
Statement, including the exhibits thereto, and to the documents
incorporated herein by reference.
