Total pages: _____
Exhibit Index on page: ___
As filed with the Securities and Exchange Commission on
August ____, 1994
Registration No. 33-______
_________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
__________________
STERLING FINANCIAL CORPORATION
(Exact name of Registrant as Specified in its Charter)
Pennsylvania 23-2449551
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
525 Greenfield Road
P.O. 10608
Lancaster, Pennsylvania 17605-0608 (717) 295-7551
(Address, including zip code, and telephone number,
including area code of Registrant's principal executive offices)
John E. Stefan
Chairman of the Board, President and Chief Executive Officer
525 Greenfield Road
P.O. Box 10608
Lancaster, Pennsylvania 17605-0608 (717) 295-7551
(Name, address, including zip code, and
telephone number, including area code of agent for service)
With a copy to:
Clinton W. Kemp, Esquire
Stevens & Lee
One Penn Square
P.O. Box 1594
Lancaster, Pennsylvania 17608-1594
(717) 291-1031
Approximate date of commencement of proposed sale of the
securities to the public: as soon as practicable after the date
hereof.
If the only securities being registered on this Form are
being offered pursuant to dividend or interest reinvestment
plans, please check the following box. [X]
If any of the securities being registered on this Form are
to be offered on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933 other than securities
offered only in connection with dividend or interest reinvestment
plans, check the following box. [ ]
__________________
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
___________________________________________________________________________
Proposed Proposed
Title of Maximum Maximum
Each Class of Offering Aggregate Amount of
Securities Amount to be Price Offering Registration
to be Registered Registered(1) Per Unit(2) Price(2) Fee
<S> <C> <C> <C>
Common Stock, par 500,000 shares $52.75 $26,375,000 $9,094.83
value $5.00 per
share
___________________________________________________________________________
<FN>
(1) Based upon the maximum number of shares of the Registrant's
common stock issuable under the Sterling Financial
Corporation Dividend Reinvestment and Stock Purchase Plan.
(2) Estimated solely for purposes of calculating the
registration fee. Computed in accordance with Rule 457(c)
on the basis of the average of the bid and asked prices of
the Registrant's common stock on August 15, 1994.
</TABLE>
<PAGE>
PROSPECTUS
STERLING FINANCIAL CORPORATION
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
500,000 Shares of Common Stock
$5.00 Par Value
__________________________________________________
This Prospectus relates to 500,000 shares of the $5.00 par value
common stock of Sterling Financial Corporation to be issued under
the Sterling Financial Corporation Dividend Reinvestment and
Stock Purchase Plan, which was adopted by the Board of Directors
of Sterling Financial Corporation on June 29, 1987 and which was
amended and restated on July 27, 1994. The Plan provides
shareholders of Sterling Financial Corporation with a simple and
convenient method of investing cash dividends and voluntary cash
contributions in additional shares of the common stock of
Sterling Financial Corporation.
No person has been authorized to give any information or to make
any representations, other than those contained in this
Prospectus, in connection with the offer made by this Prospectus,
and, if given or made, such information or representations must
not be relied upon. This Prospectus shall not constitute an
offer to sell or the solicitation of an offer to buy nor shall
there be any sale of these securities in any jurisdiction in
which such offer, solicitation, or sale would be unlawful prior
to registration or qualification under the securities law of any
such jurisdiction. Neither the delivery of this Prospectus nor
any sale made hereunder shall, under any circumstances, create
any implication that there has been no change in the affairs of
Sterling Financial Corporation since 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.
_______________
The date of this Prospectus is August 18, 1994.
<PAGE>
AVAILABLE INFORMATION
Sterling Financial Corporation ("Sterling") is subject to the
informational requirements of the Securities Exchange Act of 1934
(the "Exchange Act"), and in accordance therewith files reports,
proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at
the public reference facilities maintained by the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's Regional Offices located at 500 West Madison Street,
Chicago, Illinois 60621-2511, and 75 Park Place, New York,
New York 10007. Copies of such material can be obtained from the
Public Reference Section of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates.
Sterling has filed with the Commission a Registration Statement
on Form S-3 (the "Registration Statement") under the Securities
Act of 1933 (the "Act") with respect to the common stock being
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. The
information so omitted may be obtained from the Commission as
described above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by Sterling with
the Commission are incorporated in this Prospectus by reference:
(a) Annual Report on Form 10-K for the year ended
December 31, 1993.
(b) Quarterly Report on Form 10-Q for the quarter
ended March 31, 1994.
(c) Quarterly Report on Form 10-Q for the quarter
ended June 30, 1994.
(d) Current Report on Form 8-K dated August 3, 1994.
In addition, all documents filed by Sterling pursuant to
Section 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.
Sterling 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: Ronald L.
Bowman, Vice President and Secretary, Sterling Financial
Corporation, 525 Greenfield Road, P.O. Box 10608, Lancaster,
Pennsylvania 17605-0608; telephone (717) 295-7551.<PAGE>
TABLE OF CONTENTS
Page
INFORMATION CONCERNING STERLING FINANCIAL
CORPORATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
STERLING FINANCIAL CORPORATION DIVIDEND
REINVESTMENT AND STOCK PURCHASE PLAN . . . . . . . . . . . . . . . . . . 5
PURPOSE . . . . . . . . . . . . . . . . . . . . . . .. . . . . . 5
ADVANTAGES. . . . . . . . . . . . . . . . . . . . . .. . . . . . 5
ADMINISTRATION. . . . . . . . . . . . . . . . . . . .. . . . . . 6
PARTICIPATION . . . . . . . . . . . . . . . . . . . .. . . . . . 6
PURCHASES . . . . . . . . . . . . . . . . . . . . . .. . . . . . 7
VOLUNTARY CASH PAYMENTS . . . . . . . . . . . . . . .. . . . . . 9
REPORTS TO PARTICIPANTS . . . . . . . . . . . . . . .. . . . . . 10
STOCK CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . 11
WITHDRAWAL FROM THE PLAN. . . . . . . . . . . . . . . . . . . . 12
FEDERAL TAX INFORMATION . . . . . . . . . . . . . . . . . . . . 12
OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 14
DESCRIPTION OF COMMON STOCK. . . . . . . . . . . . . . . . . . . . . . . 17
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Antitakeover Provision . . . . . . . . . . . . . . . . . . . . . 18
USE OF PROCEEDS. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
LEGAL MATTERS. . .. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
INDEMNIFICATION OF DIRECTORS AND OFFICERS. . . . . . . . . . . . . . . . . 19
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
EXHIBIT A -- STERLING FINANCIAL CORPORATION
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN . . . . . . 21
<PAGE>
INFORMATION CONCERNING STERLING FINANCIAL CORPORATION
Sterling Financial Corporation ("Sterling") is a
Pennsylvania business corporation and registered bank holding
company with headquarters in Lancaster, Pennsylvania. The
principal asset of Sterling is its bank subsidiary, Bank of
Lancaster County, N.A. ("Bank of Lancaster County"). As a bank
holding company, Sterling engages in general commercial and
retail banking business through its bank subsidiary and operates
20 banking offices in Lancaster County and Chester County,
Pennsylvania. As of June 30, 1994, Sterling had consolidated
total assets of approximately $602,000,000.
The principal executive office of Sterling is located at
525 Greenfield Road, P.O. Box 10608, Lancaster, Pennsylvania
17605-0608, and its telephone number is (717) 295-7551.
STERLING FINANCIAL CORPORATION
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
The following is a summary, in question and answer
format, of the terms of the Sterling Dividend Reinvestment and
Stock Purchase Plan (the "Plan"). This summary is qualified in
its entirety by reference to the Plan, a copy of which is
attached to this Prospectus as Exhibit A.
PURPOSE
1. What is the purpose of the Plan?
The purpose of the Plan is to provide record holders of
shares of the $5.00 par value common stock of Sterling (the
"Common Stock") with a simple and convenient method of investing
cash dividends and voluntary cash payments in Common Stock for
long-term investment.
ADVANTAGES
2. What are the advantages of the Plan?
An eligible shareholder who wishes to participate in
the Plan may avail himself of a number of attractive features
under the Plan. Among these features are the following:
- A participant may have cash dividends on the shares of
Common Stock registered in his name and on shares held
for his account under the Plan automatically
reinvested.
- Each participant's funds will be fully invested in
shares of common stock through the crediting of
fractional shares to his account under the Plan.
- Participants can make voluntary cash payments of up to
$1,000 per quarter, which will be used to purchase
additional shares of Common Stock under the Plan.
- Each participant will receive a detailed statement
showing transactions for his account under the Plan.
ADMINISTRATION
3. Who administers the Plan?
The Plan will be administered by a plan agent (the
"Plan Agent") appointed by Sterling. Sterling may appoint a new
Plan Agent at any time. The Plan Agent will receive dividends
and voluntary cash payments, purchase shares of Common Stock on
behalf of participants, prepare and forward statements of account
to participants, and perform other duties as set forth in the
Plan. Shares of Common Stock purchased under the Plan will be
held in the name of the Plan Agent or its nominee.
All correspondence or inquiries relating to the Plan
should include the participant's account number and should be
directed to the initial Plan Agent, as follows:
Sterling Financial Corporation
Dividend Reinvestment and Stock Purchase Plan
c/o Bank of Lancaster County, N.A.
25 North Duke Street
Lancaster, PA 17602
PARTICIPATION
4. Who is eligible to participate in the Plan?
Any holder of record of shares of Common Stock is
eligible to participate in the Plan; provided that, Sterling may
in its sole discretion and upon prior written notice to each
participant, require that any potential participant hold of
record not less than a specified minimum number of shares. Any
such requirement will not affect any shareholder who is a
participant in the Plan at the time the notice is given. A
shareholder whose shares of Common Stock are held by a bank,
broker or other nominee and who wishes to participate in the Plan
must first transfer all or a portion of such shares to his own
name in order to become a record holder of Common Stock 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, record
holders of Common Stock who reside in the following states are
eligible to participate in the Plan: Alabama, Arizona, Colorado,
Connecticut, Delaware, District of Columbia, Florida, Georgia,
Illinois, Indiana, Kansas, Kentucky, Maryland, Massachusetts,
Michigan, Missouri, New Jersey, New York, North Carolina, Ohio,
Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee,
Texas, Virginia, Washington, and Wisconsin. If a shareholder
residing in another state wishes to participate in the Plan, he
should contact Ronald L. Bowman, Vice President and Secretary,
Sterling Financial Corporation, 525 Greenfield Road, P.O. Box
10608, Lancaster, Pennsylvania 17605-0608, (717) 295-7551.
Sterling 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 Sterling
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 can an eligible shareholder enroll in the Plan?
An eligible shareholder may enroll in the Plan at any
time by completing and signing the authorization card that
accompanies this Prospectus and returning it to the Plan Agent at
the address shown in response to Question No. 3 above.
Additional authorization cards may be obtained from the Plan
Agent.
Authorization cards for a new participant must be
received by the Plan Agent prior to the period beginning five (5)
business days before a dividend record date in order for his
participation in the Plan to begin and for his dividends to be
reinvested on the corresponding Investment Date (as defined in
Question No. 10 below). Dividends paid on shares held by an
eligible participant whose authorization card is received on or
after the fifth business day prior to a dividend record date will
be paid directly to the shareholder. However, such shareholder's
participation in the Plan will begin on the next following
Investment Date and dividends paid on such shareholder's shares
of Common Stock will begin to be reinvested under the Plan on
that Investment Date.
6. May a shareholder enroll as to some, but not all,
shares of Common Stock held of record by him?
No. A shareholder who elects to enroll in the Plan
must participate with all shares of Common Stock registered in
his name.
PURCHASES
7. What is the source for shares of Common Stock purchased
under the Plan?
Plan shares will be purchased, at the discretion of
Sterling, either directly from Sterling or from third parties in
open market transactions or otherwise. Shares purchased directly
from Sterling will be treasury or authorized but unissued shares.
8. When will shares of Common Stock be purchased under the
Plan?
Purchases from Sterling of treasury or authorized but
unissued shares will be made as of the close of business on the
relevant Investment Date (as defined in Question No. 10 below).
Purchases of shares on the open market will be made and completed
as soon as reasonably possible after the relevant Investment
Date, but not more than thirty (30) days after such date, except
where completion at a later date is necessary or advisable under
applicable federal securities laws. Interest will not be paid on
dividends or voluntary cash payments held by the Plan Agent
pending investment.
9. At what price will shares of Common Stock be purchased
under the Plan?
In the case of purchases from Sterling of treasury or
authorized but unissued shares, the purchase price will be the
Market Price per Share, as defined in Section 1(b) of the Plan.
Generally, Market Price per Share is determined as of the
relevant Investment Date by reference to the price per share at
which the Common Stock is traded on the applicable exchange or
market on that date.
The purchase price of shares of Common Stock purchased
from third parties on the open market or otherwise will be the
weighted average purchase price per share of all shares purchased
in respect of the relevant Investment Date.
10. What is an Investment Date?
"Investment Date" means each of the quarterly dividend
payment dates of Sterling, which are normally the first business
day of January, April, July and October of each year.
11. How many shares of Common Stock will be purchased for a
participant?
The number of shares purchased for a participant will
depend upon the applicable purchase price (see Question No. 9
above) and the amount of the dividend and the amount of any
voluntary cash payment to be invested on the relevant Investment
Date. Each participant's account will be credited with that
number of shares, including any fractional interest computed to
three decimal places, equal to the total amount to be invested
divided by the applicable purchase price.
12. Will dividends on shares held in a participant's
account also be used to purchase shares of Common Stock
under the Plan?
Yes. All dividends paid on shares held by the Plan
Agent for a participant's account under the Plan (including
dividends paid on fractional shares) will be automatically
reinvested in additional shares of Common Stock.
13. What happens if a Special Dividend is declared?
A "special dividend" is defined under Section 14 of the
Plan as any cash dividend that is (i) paid in addition to,
whether simultaneously with or independently of, a regular
quarterly cash dividend, and (ii) designated as a special
dividend by the Board of Directors of Sterling. Unless
specifically authorized by the Board of Directors, any special
dividend paid by Sterling will not be reinvested under the Plan
and any such amounts paid on shares of Common Stock registered in
a participant's name and held by the Plan Agent under the Plan,
shall be paid by Sterling or by the Plan Agent, as the case may
be, in cash to such participant by mailing a check to such
participant at his last address of record.
COSTS
14. Are there any costs to a participant in connection with
purchases under the Plan?
No brokerage fees will be charged to participants in
connection with the purchase of Common Stock from Sterling.
Participants will be charged their pro rata share of the actual
cost (including brokerage fees and commissions and other costs
and expenses of purchase) in connection with shares purchased in
the open market. All other costs of administration of the Plan
will be borne by Sterling.
VOLUNTARY CASH PAYMENTS
15. Who is eligible to make voluntary cash payments?
Any participant may elect to make voluntary cash
payments under the Plan.
16. What are the limitations on voluntary cash payments?
Voluntary cash payments may be made in any amount not
less than $50.00 and not more than $1,000.00 per quarter.
Sterling may increase or decrease these minimum and maximum
amounts in its sole discretion upon prior written notice to each
participant.
17. How and when can voluntary cash payments be made?
A voluntary cash payment may be made by enclosing a
check or money order with the authorization card at the time of
enrollment in the Plan, except as noted below, or by forwarding a
check or money order to the Plan Agent with a payment form, a
copy of which will be sent to each participant by the Plan Agent
along with each statement of account (See Question No. 19 below).
Checks and money orders should be made payable to "Bank of
Lancaster County" and should include the participant's account
number under the Plan.
A voluntary cash payment can be made at the time of
enrollment in the Plan only if the authorization card is received
by the Plan Agent prior to the period beginning five (5) business
days before a dividend record date. Any voluntary cash payment
received by the Plan Agent before a shareholder begins
participation in the Plan (see Question No. 5) will be returned.
After participation in the Plan has begun, a voluntary
cash payment must be received by the Plan Agent on or before the
day prior to the next Investment Date in order to be invested on
that Investment Date. A check used to make a voluntary cash
payment must have cleared prior to the Investment Date in order
to be applied to the purchase of shares on that Investment Date.
A voluntary cash payment that is received by the Plan Agent on or
after an Investment Date will not be invested on the Investment
Date and, if received more than thirty (30) days prior to the
next scheduled Investment Date, will be returned. Voluntary cash
payments will not be accepted in connection with any special
dividend which is paid on a date other than the payment date of a
regular quarterly cash dividend.
Interest will not be paid on voluntary cash payments
prior to investment. Therefore, participants should forward
voluntary cash payments to the Plan Agent shortly before the day
prior to the next Investment Date.
18. May a participant request the return of a voluntary
cash payment?
Yes. A voluntary cash payment will be returned to a
participant prior to investment upon written request to the Plan
Agent, provided that the request is received by the Plan Agent no
later than the last business day prior to the next scheduled
Investment Date.
REPORTS TO PARTICIPANTS
19. What reports will be sent to Plan participants?
A statement of account will be mailed to each
participant by the Plan Agent within 30 days following the
completion of each investment made for his account under the
Plan. Each statement of account will include the amount of the
dividend and the voluntary cash payment (if any) applied toward
such investment, the net amount invested, the number of shares
purchased, the purchase price per share of the shares purchased,
and the total number of shares held for the participant's account
under the Plan. These statements of account will provide a
record of the cost of shares acquired under the Plan and should
be retained for tax purposes.
Each participant will also receive copies of Sterling's
annual and quarterly reports to shareholders, proxy statements
and information for income tax reporting purposes.
STOCK CERTIFICATES
20. How may a participant receive a stock certificate for
shares of Common Stock purchased under the Plan?
A participant may at any time request the issuance of a
stock certificate for all or any number of the whole shares of
Common Stock credited to his account under the Plan by notifying
the Plan Agent in writing and specifying in the notice the number
of shares for which a stock certificate is requested. A $5.00
service charge will be assessed each time a stock certificate is
requested by the participant and a check in that amount payable
to the Plan Agent must accompany the participant's request.
Sterling may increase or decrease this service charge at any time
upon prior written notice to each participant. Any request for
the issuance of a stock certificate received during the period
beginning five (5) business days prior to a record date for the
payment of a regular cash dividend and ending on the
corresponding Investment Date will not be effective until after
the reinvestment of that dividend. In no event will a
certificate be issued evidencing a fraction of a whole share of
Common Stock (See Question No. 23 relating to the payment of cash
in lieu of the issuance of a fractional share).
21. In whose name will certificates be registered when
issued to a participant?
Unless a participant directs otherwise, certificates
will be issued in the name in which the participant's account is
registered. If a participant requests that a certificate be
issued in a name other than that corresponding to his account
registration, the request must be signed by the participant. If
the account is registered in multiple names, all signatures must
appear on the request. In either case, the signature(s) must be
guaranteed. Upon a participant's death, Sterling will follow the
instructions of the decedent's personal representative upon
submission of appropriate proof of authority.
22. Will dividends paid on Plan shares for which a
certificate has been issued continue to be reinvested
under the Plan?
Yes. Cash dividends paid in respect of shares acquired
under the Plan for which a certificate has been issued will
continue to be reinvested under the Plan.
WITHDRAWAL FROM THE PLAN
23. How and when may a participant withdraw from the Plan?
A participant may withdraw from the Plan at any time by
sending written notice of withdrawal to the Plan Agent, together
with a check in payment of the $5.00 service charge for issuance
of a stock certificate as described in Question No. 20 above.
The Plan Agent will as soon as practicable following receipt of
such notice forward to the participant a certificate for the
number of whole shares held for his account under the Plan,
together with a check in the amount of the value of any
fractional share based upon the Market Price per Share on the
effective date of withdrawal. A notice of withdrawal received by
the Plan Agent during the period beginning five (5) business days
prior to a record date for the payment of a regular cash dividend
will not be effective until after the reinvestment of that
dividend.
24. If a participant withdraws from the Plan, will he be
able to participate again at a later date?
A shareholder who has withdrawn from the Plan may re-
enroll in the Plan at any time if he meets the eligibility
requirements described in the response to Question No. 5 above
and delivers a new authorization card to the Plan Agent.
25. Can a participant's right to participate in the Plan
otherwise be terminated?
Yes. Sterling reserves the right at any time upon
written notice to a participant to suspend or terminate his
participation in the Plan if it determines in its sole discretion
that such suspension or termination is appropriate because shares
of Sterling Common Stock may not lawfully be offered or sold in
the state in which the participant resides, that the participant
is using the Plan for purposes inconsistent with the intended
purpose of the Plan, or for any other reason.
If a participant's right to participate in the Plan is
terminated, the participant will be treated as though a notice of
withdrawal, as described in Question No. 23 above, had been
received.
FEDERAL TAX INFORMATION
26. What are the federal income tax consequences of
participation in the Plan?
Reinvested Dividends. In the case of reinvested
dividends, when shares are acquired for a participant's account
directly from Sterling, 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 Payments. In the case of shares
purchased directly from Sterling with voluntary cash payments, 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 payment. 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 payments, 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 Sterling 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
Sterling Common Stock on any relevant Investment Date may not
necessarily be equal to the Market Price per Share (as defined in
Section 1(b) of the Plan) of such share. The holding period for
shares of Sterling 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, Sterling 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 more than one year 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.
Certain tax information will be provided to participants by
Sterling (See Question No. 19 above).
OTHER INFORMATION
27. What happens if Sterling declares a stock dividend,
effects a stock split or has a rights offering with
respect to Common Stock?
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 under the Plan 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.
In the event of a rights offering, rights issued to
shareholders of Sterling to purchase additional shares of Common
Stock will be issued directly to each participant in respect of
the number of whole shares of Common Stock held by the Plan Agent
for the participant's account under the Plan. Rights issued in
respect of any fraction of a share held for a participant's
account by the Plan Agent will, at the option of Sterling, either
be redeemed by Sterling for cash or sold for the participant and
the net proceeds credited to his account and invested in
additional shares of Common Stock on the next Investment Date.
28. What happens if a participant sells or transfers all or
a portion of the shares of Common Stock registered in
his name?
If a participant disposes of all the shares of Common
Stock registered in his name, the Plan Agent will, unless and
until otherwise notified, continue to reinvest the dividends paid
on the shares of Common Stock held for the participant's account
under the Plan. However, if after disposing of all of the shares
of Common Stock registered in his name, fewer than ten (10) whole
shares of Common Stock are held by the Plan Agent for a
participant's account under the Plan, Sterling may in its
discretion elect to treat the participant as though he had
withdrawn from the Plan, as described in Question No. 23 above.
29. How will the shares credited to a participant's account
be voted at a meeting of the shareholders?
If on a record date for a meeting of shareholders there
are shares held by the Plan Agent for a participant's account
under the Plan, the participant will be sent proxy materials for
that meeting. A participant will be entitled to one vote for
each whole share of Common Stock held for his account under the
Plan. The participant may vote his Plan shares by proxy or in
person at any such meeting.
30. May the Plan be modified, suspended or terminated?
Sterling reserves the right to amend, supplement,
suspend or terminate the Plan at any time by mailing or causing
the Plan Agent to mail appropriate notice to each participant at
such participant's last address of record prior to the effective
date of such amendment, supplement, suspension or termination.
In the event of a suspension or termination of the
Plan, all uninvested voluntary cash payments then held by the
Plan Agent will be promptly returned to each participant. In the
event of a termination of the Plan, certificates for whole shares
of Sterling Common Stock will be issued to each participant and a
cash payment will be made for any fractional share based upon the
Market Price per Share on the effective date of termination.
Any question of interpretation arising under the Plan
will be determined by Sterling and any such determination will be
final and binding.
31. May a participant pledge shares purchased under the
Plan?
No. Shares held by the Plan Agent for a participant's
account under the Plan may not be pledged, assigned or otherwise
transferred. A participant who wishes to pledge, assign or
otherwise transfer shares held for his account under the Plan
must request the issuance of a share certificate in accordance
with the procedures outlined in response to Question No. 20
above.
32. Are there limitations on the liability of Sterling and
the Plan Agent under the Plan?
Yes. As more fully set forth in Section 14(c) of the
Plan, neither Sterling nor the Plan Agent shall, with respect to
the Plan, be liable for any act done in good faith or for any
good faith omission to act.
<PAGE>
DESCRIPTION OF COMMON STOCK
General
The authorized capital of Sterling consists exclusively of
10,000,000 shares of common stock of $5.00 par value per share.
As of August 1, 1994, there were issued and outstanding
2,927,412 shares of Sterling Common Stock, which shares were held
by approximately 2,056 owners of record. Sterling Common Stock
is traded on the over-the-counter market.
The holders of Sterling 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 Common
Stock have certain limited preemptive rights to subscribe to
purchase additional shares of Common Stock under certain
circumstances 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 nonassessable and
the holders thereof will not be subject to call or assessment
under state law. Bank of Lancaster County serves as the transfer
agent and registrar for Sterling Common Stock.
Dividends
The holders of Sterling Common Stock are entitled to receive
dividends when, as and if declared by the Board of Directors out
of funds legally available therefor. Sterling has historically
paid cash dividends on or about the first business day 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 Sterling to pay dividends to its shareholders
is primarily dependent upon the earnings and financial condition
of its wholly owned subsidiary Bank of Lancaster County. Funds
for the payment of such dividends are expected for the
foreseeable future to be obtained exclusively from dividends paid
to Sterling by Bank of Lancaster County.
Under applicable state and federal laws, the dividends that
may by paid by the Bank of Lancaster County 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 Sterling 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 over Sterling by
means of an unsolicited tender or exchange offer, proxy contest
or similar transaction. These provisions are intended to protect
the shareholders of Sterling 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 Sterling
which may be so considered include the following: (i) a
provision that provides for substantial authorized but unissued
capital stock, (ii) a provision that denies to shareholders the
right to cumulate their votes in the election of directors,
(iii) a provision that requires greater than majority shareholder
vote in order to approve certain mergers, consolidations and
other extraordinary corporate transactions, (iv) a provision that
requires under certain circumstances that, in the event that a
third party acquires beneficial ownership of 30% or more of the
outstanding Common Stock, Sterling extend to each other
shareholder an offer to redeem the shares held by him, (v) a
provision that establishes criteria to be applied by the Board of
Directors in evaluating an acquisition proposal, (vi) a provision
that requires a greater than majority shareholder vote in order
for the shareholders to remove a director from office without
cause, (vii) 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, (viii) a provision
that limits the right of the shareholders to amend the bylaws,
and (ix) a provision that requires, under certain circumstances,
greater than majority vote to amend the Articles of
Incorporation. The provisions of the bylaws of Sterling 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 advance 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, Sterling is
also subject to the Pennsylvania Business Corporation Law, which
includes provisions applicable to Sterling that may have similar
effects.
<PAGE>
USE OF PROCEEDS
Sterling is unable to predict the number of shares of Common
Stock that will be purchased from it under the Plan or the prices
at which such shares will be purchased. The net proceeds to
Sterling from the sale of Common Stock offered hereby will
provide additional equity capital to Sterling to support its
growth and the growth of its wholly-owned subsidiary, Bank of
Lancaster County.
LEGAL MATTERS
Legal matters relating to the shares of Common Stock offered
hereby will be passed upon for Sterling by Stevens & Lee, One
Penn Square, Lancaster, Pennsylvania 17602.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Pennsylvania law provides that a Pennsylvania corporation
such as Sterling 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 Sterling provide for the indemnification of
the directors and officers of Sterling 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 Sterling and its subsidiaries
are also insured against certain liabilities for their actions,
as such, by an insurance policy obtained by Sterling.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or
persons controlling Sterling pursuant to the foregoing
provisions, Sterling 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.
<PAGE>
EXPERTS
The consolidated financial statements of Sterling and its
subsidiaries incorporated by reference herein have been audited
by Trout, Ebersole & Groff, 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.
<PAGE>
EXHIBIT A
STERLING FINANCIAL CORPORATION
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
Adopted June 29, 1987
Amended June 6, 1988
Amended July 27, 1993
Amended and Restated July 26, 1994 (Effective September 1, 1994)
The following are the terms and conditions of the Sterling
Financial Corporation Dividend Reinvestment and Stock Purchase
Plan:
Section 1. Definitions.
The following words and phrases, when capitalized and used
herein, shall have the meanings set forth below, unless the
context clearly indicates otherwise:
(a) Investment Date: shall mean the dividend payment date
in any month in which a dividend is paid, except that if the
dividend payment date falls on a day which is not a trading day,
the Investment Date shall be the next preceding trading day.
(b) Market Price per Share: shall mean:
(i) in the event that Sterling Common Stock is listed
on an established stock exchange, Market Price per Share shall
mean the closing price of Sterling Common Stock on such exchange
on the relevant Investment Date, or, if no trade occurred on that
day, on the next preceding day on which a trade occurred;
(ii) in the event that Sterling Common Stock is not
listed on an established stock exchange but is then quoted on the
National Association of Securities Dealers Automated Quotation
System National Market ("NASDAQ/NMS"), Market Price per Share
shall mean the average of the high and low sale prices of
Sterling Common Stock as reported on NASDAQ/NMS on the relevant
Investment Date, except that if no trade is reported on that day,
Market Price per Share shall be determined by reference to the
next preceding trading day on which such prices were quoted;
(iii) in the event that Sterling Common Stock is not
listed on an established stock exchange and is not quoted on
NASDAQ/NMS, Market Price per Share shall mean the average of the
highest bid and lowest asked quotations for Sterling Common Stock
as reported by the National Quotation Bureau, Incorporated on the
NASD OTC Bulletin Board on the relevant Investment Date, except
that if no bid or asked quotation is reported on that day, Market
Price per Share shall be determined by reference to the next
preceding trading day on which bid and asked quotations were
reported; and
(iv) in the event that Sterling Common Stock is not
listed on an established stock exchange, is not quoted on
NASDAQ/NMS or on the NASD OTC Bulletin Board, then Market Price
per Share shall be determined in good faith by Sterling.
(c) Participant: shall mean any holder of record of shares
of Sterling Common Stock who meets the eligibility requirements
set forth in Section 3 of the Plan and who makes an election to
participate in the Plan in accordance with the provisions of
Section 4 of the Plan.
(d) Plan: shall mean the Sterling Financial Corporation
Dividend Reinvestment and Stock Purchase Plan, as it may
hereafter be amended, supplemented or modified.
(e) Plan Agent: shall mean the agent appointed by Sterling
pursuant to the provisions of Section 5 of the Plan.
(f) Record Date: shall mean the date for determining
shareholders of record in connection with the payment of
dividends on shares of Sterling Common Stock.
(g) Special Dividend: shall mean: (i) a cash dividend
which is paid independently of and in addition to the regular
quarterly cash dividends paid on shares of Sterling Common Stock,
or (ii) the incremental portion of a regular quarterly cash
dividend paid on shares of Sterling Common Stock which is paid
simultaneously with a regular quarterly cash dividend and which
is in excess of the amount of that regular quarterly cash
dividend, which is in the case of either (i) or (ii) above
designated as a Special Dividend by the Board of Directors of
Sterling.
(h) Sterling: shall mean Sterling Financial Corporation.
(i) Sterling Common Stock: shall mean the $5.00 par value
common stock of Sterling.
Section 2. Purpose.
The purpose of the Plan is to provide record holders of
shares of Sterling Common Stock with a simple and convenient
method of investing cash dividends and voluntary cash payments in
shares of Sterling Common Stock for long-term investment.
Section 3. Eligibility.
(a) General Rule: Any holder of record of shares of
Sterling Common Stock is eligible to participate in the Plan;
provided, however, that Sterling may in its sole discretion and
upon prior written notice to each Participant require as a
condition of eligibility to participate in the Plan that a
potential Participant hold of record not less than a specified
minimum number of shares of Sterling Common Stock; provided,
further, that any shareholder of Sterling who is a Participant at
the time of the institution of any such eligibility requirement
shall continue to be eligible to participate in the Plan.
(b) Compliance with State Securities Laws: An otherwise
eligible Sterling shareholder may participate in the Plan only if
shares of Sterling Common Stock may lawfully be offered and sold
under the Plan to residents of the state in which that
shareholder resides. Sterling 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 Sterling 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.
Section 4. Participation.
(a) Reinvestment of Dividends: In order to participate in
the Plan, a shareholder who meets the eligibility requirements
set forth in Section 3 must, on such form or forms and in such
manner as may from time to time be prescribed by Sterling,
designate and authorize the Plan Agent, on such shareholder's
behalf, to reinvest all of the dividends payable on all of such
shareholder's shares of Sterling Common Stock held of record in
additional shares of Sterling Common Stock pursuant to the
provisions of Section 6 or Section 7 of the Plan, as the case may
be. The Plan Agent must receive a shareholder's authorization
prior to the period beginning five (5) business days before a
Record Date for such shareholder's participation in the Plan to
commence on the corresponding Investment Date. If the
authorization is received later than five (5) business days
before a Record Date, such shareholder's participation in the
Plan will commence on the next following Investment Date.
Participation, once commenced, shall continue until a
Participant withdraws from the Plan in accordance with Section
12(a) of the Plan, until the Participant's right to participate
is terminated in accordance with Section 12(c) of the Plan, or
until the Plan terminates in accordance with Section 13(d) of the
Plan.
(b) Voluntary Cash Payments: A shareholder who meets the
eligibility requirements set forth in Section 3 of the Plan and
who elects to participate in the Plan by meeting the requirements
set forth in Section 4(a) of the Plan may elect each quarter to
invest cash in an amount not less than $50.00 and not more than
$1,000.00 (which minimum and maximum amounts may be increased or
decreased by Sterling in its sole discretion upon prior written
notice to each Participant) in additional shares of Sterling
Common Stock, by: (i) designating and authorizing the Plan Agent
on the form or forms described in Section 4(a), to apply all of
such cash to the purchase, on such Participant's behalf, of
additional shares of Sterling Common Stock, pursuant to the
provisions of Section 6 or Section 7 of the Plan, as the case may
be, and (ii) by transmitting such cash amount by check or other
draft to the Plan Agent so that it is received by the Plan Agent
on or before the day prior to the next Investment Date. Any
voluntary cash payment which is received by the Plan Agent on or
after an Investment Date and more than thirty (30) days prior to
the next scheduled Investment Date will be returned. Any
voluntary cash payment which is received by the Plan Agent more
than thirty (30) days before such shareholder's participation in
the Plan has commenced will also be returned. Notwithstanding
the foregoing, a voluntary cash payment will not be deemed to
have been received by the Plan Agent until the check or draft
involved has cleared and the funds represented thereby are
collected.
(c) No Interest: Under no circumstances will interest be
paid to a Participant on funds (whether dividends or voluntary
cash payments) held by the Plan Agent prior to investment.
Section 5. Plan Agent.
The Plan shall be administered by the Plan Agent. The Plan
Agent shall be appointed by Sterling, which appointment may be
revoked by Sterling and a successor Plan Agent appointed at any
time. Bank of Lancaster County, N.A., a wholly-owned subsidiary
of Sterling, shall be the initial Plan Agent. The Plan Agent
shall receive dividends and voluntary cash payments and shall
purchase shares of Sterling Common Stock on behalf of the
Participants and otherwise fulfill the duties of the Plan Agent
as set forth in this Plan.
Section 6. Dividend Reinvestment and Cash Purchases from
Sterling.
In the event and to the extent that Sterling has not elected
to, and is not required to, purchase shares of Sterling Common
Stock in market transactions or from third parties in accordance
with the provisions of Section 7 of the Plan, Sterling shall, for
each Participant, cause the Plan Agent to apply:
(a) Dividends on Registered Shares: the dividends
authorized to be reinvested pursuant to Section 4(a) of the Plan
that are attributable to shares registered in such Participant's
name on the books of Sterling as of the Record Date to the
purchase on the Investment Date, at the Market Price per Share,
of additional shares (including fractions of a whole share
computed to 3 decimal places) of Sterling Common Stock held in
treasury or authorized but unissued Sterling Common Stock;
(b) Dividends on Plan Shares: the dividends attributable
to shares (including fractions of a whole share computed to 3
decimal places) credited to such Participant's account pursuant
to Section 8(b) of the Plan as of the Record Date to the purchase
on the Investment Date, at the Market Price per Share, of
additional shares (including fractions of a whole share computed
to 3 decimal places) of Sterling Common Stock held in treasury or
authorized but unissued Sterling Common Stock; and
(c) Voluntary Cash Payments: the voluntary cash payments,
if any, duly made by such Participant pursuant to Section 4(b) of
the Plan to the purchase on the Investment Date, at the Market
Price per Share, of additional shares (including fractions of a
whole share computed to 3 decimal places) of Sterling Common
Stock held in treasury or authorized but unissued Sterling Common
Stock.
Section 7. Dividend Reinvestment and Cash Purchases Other
Than from Sterling.
(a) General Rule: Notwithstanding the provisions of
Section 6 of the Plan, Sterling may, at its election, and in the
event that the Purchase Price is less than the par value per
share of Sterling Common Stock, Sterling shall, following the
Investment Date, for each Participant, cause the Plan Agent to
apply:
(i) the quarterly dividends authorized to be
reinvested pursuant to Section 4(a) of the Plan that are
attributable to (A) shares registered in such Participant's name
on the books of Sterling as of the Record Date, and (B) shares
(including fractions of a whole share computed to 3 decimal
places) credited to such Participant's account pursuant to
Section 8(b) of the Plan as of the Record Date; and
(ii) the voluntary cash payments, if any, made by such
Participant pursuant to Section 4(b) of the Plan;
to the purchase of whole shares of Sterling Common Stock in
accordance with Section 7(b) below.
(b) Mechanics of Purchase: All purchases of Sterling
Common Stock pursuant to this Section 7 shall be made at such
times as the Plan Agent may determine within thirty (30) days
following the relevant Investment Date, or such later date as may
be necessary or advisable under any applicable federal securities
laws. Any such purchases shall be made through one or more
market makers or independent broker-dealers in the over-the-
counter market, on an exchange, or in negotiated transactions
upon such terms as to price, delivery, and related matters as the
market maker or broker-dealer deems advisable. In making
purchases on behalf of a Participant, the Plan Agent may
commingle such Participant's funds with those of other
Participants. The price at which the Plan Agent shall be deemed
to have acquired shares for each Participant's account shall be
the weighted average purchase price of all shares purchased in
respect of the relevant Investment Date with amounts applied in
accordance with Section 7(a)(i) above and with amounts applied in
accordance with Section 7(a)(ii) above, including any fees,
commissions, costs or expenses relating to such purchases.
Neither any market maker, broker-dealer, Sterling nor the Plan
Agent shall be liable for any loss, damage or expense resulting,
directly or indirectly, from the failure to make a purchase or
from the timing of any purchase made. Shares of Sterling Common
Stock purchased pursuant to this Section 7 shall be purchased in
the name of the Plan Agent or its nominee.
Section 8. Administration of the Plan.
(a) The Plan Agent: The Plan Agent shall administer the
Plan for all Participants.
(b) Books, Records and Reports: All shares of Sterling
Common Stock purchased by the Plan Agent pursuant to Section 6
and Section 7 of the Plan, including any fractions of a whole
share, shall be registered in the name of the Plan Agent or its
nominee as agent for each Participant and shall be credited to
such Participant's account on the books and records of the Plan,
which books and records shall be maintained at all times by or at
the direction of the Plan Agent. Within thirty (30) days
following the completion of each investment on behalf of a
Participant, the Plan Agent shall mail to such Participant a
statement setting forth the amount of the dividend and the
voluntary cash payment (if any) applied towards such investment,
the net amount invested, the number of shares purchased, the cost
per share of such shares purchased, and the total number of
shares held for the Participant's account under the Plan.
(c) Issuance of Stock Certificates: On written request
accompanied by payment of a $5.00 service charge (which service
charge may be increased or decreased by Sterling in its sole
discretion upon prior notice to each Participant), Sterling will
send a Participant a certificate for all or any number of whole
shares of Sterling Common Stock credited to his account as
specified in the Participant's Notice; provided that no such
request received during the period beginning five (5) trading
days prior to a Record Date and ending on the corresponding
dividend payment date shall be effective until after the
reinvestment of such dividend. No stock certificate shall be
issued to any Participant except pursuant to such a request, upon
such Participant's withdrawal or termination in accordance with
Section 12 of the Plan, or upon termination of the Plan in
accordance with Section 13(d) of the Plan. In no event shall any
certificate be issued evidencing a fraction of a whole share of
Sterling Common Stock.
(d) Costs of Administration: All costs of administering
the Plan shall be paid by Sterling.
Section 9. Voting of Shares Held Under the Plan.
(a) Voting of Plan Shares: All shares of Sterling Common
Stock held for a Participant's account under the Plan shall be
voted in accordance with the instructions of such Participant
given on any proxy executed by such Participant and returned to
Sterling with respect to such shares. A Participant desiring to
vote shares of Sterling Common Stock held for such Participant's
account under the Plan in person at a meeting of Sterling
shareholders may do so. Shares of Sterling Common Stock held for
such Participant's account under the Plan will not be voted at a
meeting of Sterling shareholders if voting instructions on a
proxy are not received by Sterling from such Participant, unless
such Participant elects to vote such shares in person at the
meeting.
(b) Tender and Exchange Offers: Each Participant shall
have the right to instruct the Plan Agent as to the manner in
which to respond to a tender or exchange offer for shares of
Sterling Common Stock, with respect to the shares held for such
Participant's account.
Section 10. Stock Dividends and Stock Splits on Shares Held
in Plan.
Shares of Sterling Common Stock (including any fraction of a
whole share) distributed as a result of the declaration of a
stock dividend or a stock split on shares credited to the account
of a Participant under the Plan shall be added to his account and
shall be shares subject to the Plan.
Section 11. Effect of Rights Offering on Shares Held in
Plan.
In the event that Sterling grants to its shareholders rights
to purchase additional shares of Sterling Common Stock or other
securities, rights shall be granted to each Participant on whole
shares of Sterling Common Stock credited to the account of such
Participant under the Plan. Rights based on any fraction of a
share credited to such Participant's account shall at the option
of Sterling be either redeemed by Sterling for cash or sold for
such Participant, and the net proceeds therefrom shall be
credited to his account and shall be invested as a voluntary cash
payment in accordance with the provisions of Section 6 or
Section 7 of the Plan, as the case may be.
Section 12. Voluntary Withdrawal from the Plan; Suspension
or Termination of Right to Participate.
(a) Voluntary Withdrawal: A Participant may withdraw from
the Plan at any time by giving the Plan Agent written notice
thereof (accompanied by payment of the service charge required
under Section 8(c) of the Plan in connection with a request for
the issuance of a stock certificate), but any such notice
received by the Plan Agent later than five (5) business days
prior to a Record Date shall not be effective until after the
reinvestment of the dividend paid in respect of such Record Date.
Upon withdrawal, a certificate for the number of whole shares, if
any, credited to a Participant's account under the Plan shall be
issued to such Participant and a cash payment shall be made for
any fraction of a whole share credited to such Participant's
account (based upon the Market Price per Share on the effective
date of withdrawal). Following withdrawal from the Plan,
dividends payable to the former Participant will no longer be
reinvested under the Plan. A Participant who withdraws from the
Plan in accordance with this Section 12(a) shall again have the
right to participate in the Plan, provided that such Participant
meets the eligibility requirements set forth in Section 3 of the
Plan and makes the designation and authorization required by
Section 4(a) of the Plan.
(b) Disposition of All Registered Shares: If a Participant
disposes of all the shares registered in such Participant's name,
the Plan Agent shall, unless and until otherwise notified,
continue to reinvest the dividends on the shares of Sterling
Common Stock held in such Participant's account. However, if
such Participant holds fewer than ten (10) whole shares of
Sterling Common Stock in the Plan (which number of shares may be
increased or decreased by Sterling in its sole discretion upon
prior written notice to each Participant), Sterling may in its
discretion elect to treat such Participant as though he had
withdrawn pursuant to Section 12(a) of the Plan.
(c) Suspension or Termination of Right to Participate:
Sterling shall have the right at any time upon written notice to
a Participant to suspend or terminate the participation by such
Participant in the Plan if it determines in its sole discretion
that such suspension or termination is appropriate because shares
of Sterling Common Stock may not lawfully be offered or sold in
the state in which the Participant resides, that the Participant
is using the Plan for purposes inconsistent with the intended
purposes of the Plan, or for any other reason. In the event that
a Participant's right to participate in the Plan is terminated,
the Participant shall be treated as though a notice to withdraw
from the Plan had been received pursuant to Section 12(a) of the
Plan on the effective date of such termination.
Section 13. Amendment, Supplementation, Waiver, Suspension,
Termination and Interpretation.
(a) Amendment of Plan: The Plan may be amended or
supplemented by Sterling at any time, from time to time, by
mailing (or causing the Plan Agent to mail) appropriate notice to
each Participant at such Participant's last address of record
prior to the effective date of such amendment or supplementation.
The amendment or supplement shall conclusively be deemed to be
accepted by each Participant unless the Plan Agent receives
written notice from a Participant of such Participant's
withdrawal from the Plan in accordance with Section 12(a) of the
Plan. Amendments or supplements may also be required from time
to time due to changes in existing rules and regulations or new
rules and regulations issued by a governing authority. In such
cases, Sterling may make such amendments or supplements as may in
its discretion be required and thereafter notify each Participant
thereof.
(b) Waivers: Any waiver of any provision of the Plan must
be made by Sterling in writing, and each such waiver, if any,
shall only apply to the specific instance involved.
(c) Suspension: The Plan may be suspended by Sterling at
any time, from time to time, by mailing appropriate notice to
each Participant at such Participant's last address of record
prior to the effective date of such suspension. In the event of
a suspension of the Plan, all uninvested voluntary cash payments
then held by the Plan Agent shall be promptly returned to the
Participants.
(d) Termination: The Plan may be terminated by Sterling at
any time by mailing appropriate notice to each Participant at
such Participant's last address of record prior to the effective
date of such termination. In the event of termination of the
Plan, certificates for whole shares of Sterling Common Stock
credited to a Participant's account under the Plan shall be
issued to such Participant and a cash payment shall be made for
any fractional share credited to such Participant's account
(based upon the Market Price per Share on the effective date of
termination).
(e) Interpretation: Any question of interpretation arising
under the Plan will be determined by Sterling in good faith and
any such determination will be final and binding.
Section 14. Special Dividends.
The Plan is intended primarily as a vehicle for the
reinvestment of regular quarterly cash dividends, if and to the
extent that such dividends are declared and paid, and for the
investment of voluntary cash payments received for investment at
the time of the payment of such regular quarterly cash dividends.
Notwithstanding anything to the contrary set forth in the Plan,
unless specifically authorized by the Board of Directors in the
resolution declaring a Special Dividend, the amount of any
Special Dividend attributable to shares registered in a
Participant's name as of the Record Date and the amount of any
Special Dividend attributable to shares credited to such
Participant's account under the Plan as of the Record Date shall
not be applied toward the purchase of additional shares of
Sterling Common Stock pursuant to the Plan, and such amounts
shall be paid by Sterling or by the Plan Agent, as the case may
be, in cash to such Participant by mailing a check to such
Participant at such Participant's last address of record. Unless
specifically authorized by the Board of Directors in the
resolution declaring a Special Dividend, no voluntary cash
payments will be accepted by the Plan Agent for investment in
conjunction with the payment of a Special Dividend of the kind
contemplated under Section 1(g)(i) of the Plan.
Section 15. Miscellaneous.
(a) Insufficient Authorized Shares: In the event that
Sterling shall, as of any dividend payment date, have
insufficient authorized shares of Sterling Common Stock available
for issuance pursuant to any purchase required to be made under
Section 6 of the Plan, all shares available shall be issued and
credited pro rata to the Participants' accounts. All uninvested
dividends shall be paid to Participants in cash.
(b) Shares Subject to Issuance Under the Plan: There shall
be 500,000 shares of Sterling Common Stock available for purchase
under the Plan, which number shall from and after the date of
adoption of the Plan be subject to automatic proportionate upward
adjustment in order to reflect any change in the number of issued
and outstanding shares of Sterling Common Stock which results
from a stock dividend, stock split or similar transaction.
(c) Limitation of Liability: Neither Sterling nor the Plan
Agent shall be liable for any loss, damage, or expense arising
out of or resulting from any act performed in good faith or any
good faith omission on the part of any of them including, but not
limited to: (i) any failure to terminate a Participant's account
upon such Participant's death or the transfer of such
Participant's shares prior to a reasonable length of time after
receipt of notice in writing of such death or such transfer; (ii)
any purchase or failure to purchase shares for a Participant's
account at a particular time or day or at a particular price; or
(iii) any suspension or termination of the Plan or of a
Participant's right to participate in the Plan.
(d) Notices: A Participant shall notify the Plan Agent
promptly in writing of any change of address. Notices to a
Participant may be given by letter addressed to such Participant
at such Participant's last address of record on file with the
Plan Agent.
(e) No Right of Transfer: No Participant shall have any
right to withdraw checks or drafts against his account or to give
instructions to Sterling or to the Plant Agent with respect to
any shares or cash held therein except as expressly provided
herein, nor shall a Participant have the right to sell, assign,
pledge, or otherwise transfer his account.
Section 16. Effective Date of Plan.
The effective date of the Plan shall be June 29, 1987.
Section 17. Governing Law.
The validity and enforceability of the Plan and the rights
and obligations set forth therein shall be governed by the law
(but not the law of conflicts of law) of the Commonwealth of
Pennsylvania.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The estimated expenses in connection with the offering of
the Common Stock, all of which will be paid by Sterling Financial
Corporation, are as follows:
SEC Registration Fee $
Blue Sky Fees and Expenses 1,500*
Accounting Services 1,000*
Legal Expenses 7,500*
Printing Costs 5,000*
Miscellaneous 1,000*
Total $ 16,000*
*Estimated
Item 15. Indemnification of Directors and Officers.
Pennsylvania law provides that a Pennsylvania corporation
may indemnify its directors, officers, employees and agents
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, with the approval of the 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 the director has breached or failed to perform the duties
of his office and the breach or failure to perform constitutes
self-dealing, willful misconduct or recklessness.
The bylaws of Sterling Financial Corporation provide for
indemnification of its directors and officers and those of its
subsidiaries and for the elimination of a director's liability
for monetary damages to the fullest extent permitted under
Pennsylvania law.
Directors and officers are also insured against certain
liabilities for their actions, as such, by an insurance policy
obtained by Sterling Financial Corporation.
Item 16. Exhibits.
The following exhibits are included with this Registration
Statement:
Exhibit 5 Opinion of Stevens & Lee regarding legality of
securities being registered.
Exhibit 23.1 Consent of Trout, Ebersole & Groff.
Exhibit 23.2 Consent of Stevens & Lee, included as part of
Exhibit 5.
Exhibit 24 Powers of Attorney of Directors and Officers
(included on signature page hereof).
_________________________
Item 17. Undertakings.
The undersigned Registrant hereby undertakes 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.
The undersigned Registrant undertakes that, for the purpose
of determining any liability under the Securities Act of 1933,
each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
The undersigned Registrant undertakes 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.
The undersigned Registrant hereby undertakes that, for
purposes 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 an employee benefit
plan's annual report pursuant to section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the
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.
<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-3 and has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Lancaster, Commonwealth of
Pennsylvania, on August 16, 1994.
STERLING FINANCIAL CORPORATION
By:/s/ John E. Stefan
John E. Stefan,
Chairman of the Board,
President and Chief
Executive Officer
KNOWN ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints John E. Stefan,
J. Roger Moyer, Jr., or Ronald L. Bowman, 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 such
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.
Pursuant to the requirements of the Securities Act of
1933, this Registration Statement has been signed by the
following persons in the capacities and on the dates indicated.
Signature Title Date
/s/ John E. Stefan Chairman of the Board, August 16, 1994
(John E. Stefan) President, Chief
Executive Officer,
and Director
/s/ Jere L. Obetz Vice President, August 16, 1994
(Jere L. Obetz) Treasurer and Chief
Financial Officer
(Principal Financial
Officer)
/s/ Ronald L. Bowman Vice President August 16, 1994
(Ronald L. Bowman) and Secretary
(Principal Accounting
Officer)
/s/Richard H. Albright, Jr. Director August 16, 1994
(Richard H. Albright, Jr.)
/s/ John E. Burkholder Director August 16, 1994
(John E. Burkholder)
Director
(Robert H. Caldwell)
/s/ Howard E. Groff, Jr. Director August 16, 1994
(Howard E. Groff, Jr.)
/s/ J. Robert Hess Director August 16, 1994
(J. Robert Hess)
/s/ Calvin G. High Director August 16, 1994
(Calvin G. High)
/s/ J. Roger Moyer, Jr. Director August 16, 1994
(J. Roger Moyer, Jr.)
/s/ E. Glenn Nauman Director August 16, 1994
(E. Glenn Nauman)
/s/ Glenn R. Walz Director August 16, 1994
(Glenn R. Walz)
<PAGE>
Exhibit Index
Sequentially
Numbered
Exhibit No. Description Page
5 Opinion of Stevens & Lee regarding
legality of securities being
registered.
23.1 Consent of Trout, Ebersole & Groff
23.2 Consent of Stevens & Lee, included as
part of Exhibit 5.1.
24 Powers of Attorney of Directors and
Officers (included on signature page
hereof).
August 18, 1994
Board of Directors
Sterling Financial Corporation
525 Greenfield Road
P.O. Box 10608
Lancaster, PA 17605-0608
Re: Registration Statement on Form S-3
Dividend Reinvestment and Stock Purchase Plan
Ladies and Gentlemen:
In connection with the proposed offering of 500,000 shares
of common stock, $5.00 par value per share (the "Common Stock"),
by Sterling Financial Corporation (the "Company") pursuant to the
Sterling Financial Corporation Dividend Reinvestment and Stock
Purchase Plan (the "Plan") as amended and restated effective
September 1, 1994, which offering is covered by the above-
captioned Registration Statement, we, as counsel to the Company,
have examined the following:
(1) the Articles of Incorporation of the Company;
(2) the Bylaws of the Company;
(3) a subsistence certificate issued by the Secretary of
the Commonwealth of Pennsylvania with respect to the
company dated August 15, 1994;
(4) the resolutions of the Company authorizing the issuance
of such securities; and
(5) the Registration Statement on Form S-3 (the
"Registration Statement"), including the exhibits
thereto, filed with the Securities and Exchange
Commission under the Securities Act of 1993, as
amended, with respect to such securities.
Based upon such examination, it is our opinion that:
(1) The Company is a Pennsylvania corporation duly
incorporated, validly existing and presently subsisting
under the laws of the Commonwealth of Pennsylvania.
(2) To the extent that shares of Common Stock registered
under the Registration Statement and sold pursuant to
the Plan will be original issue shares or treasury
shares, such shares have been duly authorized and, when
issued and sold in accordance with the terms of the
Plan, will be legally issued by the Company, fully paid
and nonassessable.
We consent to the filing of this opinion as an exhibit to
the Registration Statement. In giving this consent, we do not
thereby admit that we come within the category of persons whose
consent is required under Section 7 of the Act, or the Rules and
Regulations of the Securities and Exchange Commission promulgated
thereunder.
Sincerely,
STEVENS & LEE
/njw
[Letterhead of Trout, Ebersole & Groff]
Exhibit 23.1
Consent of Independent Certified Public Accountants
We hereby consent to the incorporation by reference in
Registration Statement No. 33-16049 on Form S-3 filed
August 18, 1994 of our opinion dated January 21, 1994, on the
consolidated financial statements of Sterling Financial
Corporation for the year ended December 31, 1993 as set forth in
this registration statement.
Lancaster, Pennsylvania TROUT, EBERSOLE & GROFF
August 11, 1994 Certified Public Accountants
