SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. 1)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropirate box:
[X] Preliminary Proxy Statement [ ] Confidential, For Use of
the Commission Only (as
permitted by Rule 14a-
6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Solicity Material Pursuant to Rule 14a-11(c) or Rule 14a-12
SOUTHWEST NATIONAL CORPORATION
______________________________________________________________________
(Name of Registrant as Specified in Its Charter)
______________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if Other Than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
______________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
______________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
______________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
______________________________________________________________________
(5) Total fee paid:
______________________________________________________________________
[ ] Fee paid previously with preliminary materials:
______________________________________________________________________
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
______________________________________________________________________
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______________________________________________________________________
(3) Filing Party:
______________________________________________________________________
(4) Date Filed:
______________________________________________________________________
<PAGE>
SOUTHWEST NATIONAL CORPORATION
GREENSBURG, PENNSYLVANIA
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 15, 1997
TO THE SHAREHOLDERS:
Notice is hereby given that the annual meeting of shareholders of
Southwest National Corporation (the "Corporation") will be held at its
main office, 111 South Main Street, Greensburg, Pennsylvania, on
Tuesday, April 15, 1997 at 1:00 p.m., for the purpose of considering and
voting upon the following:
1. ELECTION OF DIRECTORS: Fixing the number of Directors to be
elected at 11 and electing the 11 nominees listed in the Proxy Statement
accompanying the notice of the meeting.
2. To act on proposals to amend the Corporation's Articles of
Incorporation and Bylaws as follows:
a. To amend Article 5 to increase the number of authorized
shares of the common stock of the Corporation (from 5 million to 10
million);
b. To add Article 7(b) which describes the factors which may
be taken into account by the Board of Directors in considering the best
interests of the Corporation and make conforming changes to the Bylaws;
c. To add Article 8 and amend appropriate Bylaw provisions
which will (1) divide the Board of Directors into three classes, (2)
specify the required shareholder vote for removal of a Director, (3)
provide for Director vacancies, and (4) approve corresponding changes in
the Bylaws;
d. To add Article 9 and make corresponding Bylaw changes to
establish a procedure for nominating Directors;
e. To add Article 10 which sets forth procedures and required
votes for amending the Bylaws of the Corporation;
f. To add Article 11 which sets forth procedures for
presenting shareholder proposals at the annual meeting of shareholders;
g. To add Article 12 which sets forth procedures and required
votes for amending the Corporation's Articles of Incorporation.
3. To approve an amendment to the Bylaws setting forth
requirements for calling special meetings of shareholders of the
Corporation.
4. OTHER BUSINESS: To consider and act upon any other matter
which may properly be brought before the meeting or any adjournment
thereof.
Only those shareholders of record at the close of business on March
7, 1997 will be entitled to notice of and to vote at the meeting.
There are enclosed herewith a Proxy Statement and form of proxy.
It will be appreciated if you will date and sign the proxy and return it
promptly in the enclosed envelope.
By Order of the Board of Directors
Donald A. Lawry
Secretary and Treasurer
March 14, 1997
<PAGE>
- ------------------------------------------------------------------------
SOUTHWEST NATIONAL CORPORATION
111 South Main Street, P.O. Box 760
Greensburg, Pennsylvania 15601
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 15, 1997
The enclosed proxy is being solicited by the Board of Directors of
Southwest National Corporation (the "Corporation") for use at the annual
meeting of shareholders of the Corporation to be held April 15, 1997 at
1:00 p.m. at the main office of the Corporation, 111 South Main Street,
Greensburg, Pennsylvania. This Proxy Statement and the enclosed form of
proxy are being sent to shareholders of the Corporation on March 14,
1997.
The proxy may be revoked by a shareholder at any time before it is
exercised by sending a written notice of revocation to the Secretary,
Southwest National Corporation, P. O. Box 760 Greensburg, Pennsylvania
15601 or by attending the meeting and voting in person. Solicitations
of proxies may be made by personal interviews and telephone by Directors
and officers of the Corporation. Brokerage houses and other custodians,
nominees and fiduciaries will be requested to forward solicitation
material to the beneficial owners of the stock held of record by such
persons. Expenses for such solicitation will be borne by the
Corporation.
The only class of stock of the Corporation presently outstanding is
common stock. The total number of outstanding shares of common stock at
the close of business on March 7, 1997, the record date for the
determination of the shareholders entitled to vote at the meeting, was
3,131,882. In electing Directors of the Corporation, every shareholder
entitled to vote has cumulative voting rights; that is, the shareholder
has the right to multiply the number of shares that he or she may be
entitled to vote by the total number of Directors to be elected and may
cast the entire number of such votes for one candidate or may distribute
them among any two or more candidates. For all other purposes each
share is entitled to one vote.
At the meeting, the shareholders will (i) act upon a proposal to
fix the number of Directors at 11; (ii) vote on the election of the 11
nominees listed in the Proxy Statement as Directors; (iii) vote on
proposals to amend the Corporation s Articles of Incorporation and
Bylaws; and (iv) consider and act upon any other business that may be
properly brought before the meeting.
The following paragraphs are a discussion of the Board's reasoning
for the proposal to amend the Corporation's Articles of Incorporation
and Bylaws.
In light of the continuing consolidation within the banking
industry, the Board of Directors undertook a general review of the
Corporation s existing business opportunities to determine the best long
term strategy to enhance shareholder value. On the basis of that
review, the Corporation s Board of Directors believes that the best
strategy is to have the Bank remain an independent community bank
closely allied with the communities it serves and to have the Bank
expand its service territory through strategic acquisitions in
contiguous markets. The Board of Directors and the Corporation s senior
management subsequently undertook a review of the Corporation s Articles
of Incorporation and Bylaws to make sure that the Corporation s
corporate governance practices are structured in a manner to protect and
enhance shareholder value and to further the Corporation s purpose of
being an independent community bank holding company.
As part of that review, the Corporation s senior management has
reviewed the corporate governance practices of all publicly traded bank
holding companies headquartered in Pennsylvania with total assets of at
least $450,000,000 and not more than $2,000,000,000. As of December 31,
1996 there were seventeen such corporations including the Corporation.
As of such date, the Corporation s total assets were $755,358,000. Of
the sixteen other corporations surveyed (i) fourteen had no cumulative
voting, (ii) all sixteen had a classified board of directors, (iii) all
sixteen had, as a percentage of shares outstanding, more authorized but
unissued common shares than the Corporation (36% of the Corporation s
shares are authorized but unissued while the unissued but authorized
shares of the other sixteen companies ranged from a low of 39% [one
company] to a high of between 71% to 90% [seven companies] with another
seven companies in the range of 51% to 70%), (iv) eleven had notice and
information provisions relating to shareholder nominations for directors
and shareholder proposals in which the time limitation in each case was
at least 30 days and (v) thirteen required super-majority votes to alter
critical elements of their respective articles of incorporation and
bylaws.
To date, primarily because of the business climate in southwestern
Pennsylvania, there have been no unsolicited takeover attempts of bank
holding companies in the Bank's market area. However, as consolidation
within the banking industry continues, the Corporation, if nothing is
done, may become subject to certain tactics that could be highly
disruptive to the Corporation and could result in dissimilar and unfair
treatment of some of the Corporation s shareholders.
On the basis of the foregoing, the Board of Directors has adopted a
resolution proposing a series of amendments to the Corporation s
Articles of Incorporation and Bylaws, the purpose of which, taken as a
whole, is to provide a greater likelihood that the Corporation shall
remain independent or, in the alternative, allow the Board greater
flexibility in negotiating with an unsolicited bidder. The Board of
Directors believes that the provisions described below are prudent and
will reduce the Corporation s vulnerability to takeover attempts and
certain other transactions that are not negotiated with and approved by
the Board of Directors of the Corporation. The Board of Directors
believes that these provisions are in the best interests of the
Corporation and its shareholders.
In the Board of Directors' judgment, the Board of Directors is in
the best position to determine the true value of the Corporation and to
negotiate more effectively for what may be in the best interests of its
shareholders. Accordingly, the Board of Directors believes that it is
in the best interests of the Corporation and its shareholders to
encourage potential acquirors to negotiate directly with the Board of
Directors and that the proposed amendments will encourage such
negotiations and discourage hostile takeover attempts.
Despite the Board of Directors' belief as to the benefits to the
Corporation s shareholders of the proposed amendments, these provisions
also may have the effect of discouraging a future takeover attempt.
Such provisions will also render the removal of the current Board of
Directors or management of the Corporation more difficult. The Board of
Directors, however, has concluded that the potential benefits of these
provisions outweigh their possible disadvantages.
The Board of Directors of the Corporation and the Bank are not
aware of any effort that might be made to acquire control of the Bank or
the Corporation.
The Board of Directors of the Corporation recommends a vote FOR the
following proposals:
PROPOSAL 1 to fix the number of Directors at 11.
PROPOSAL 2 to elect as Directors the 11 nominees hereinafter
named.
PROPOSAL 3 to amend Article 5 to increase the number of
authorized shares of the common stock of the
Corporation (from 5 million to 10 million).
PROPOSAL 4 to add Article 7(b) which describes the factors
which may be taken into account by the Board of
Directors in considering the best interests of the
Corporation and make conforming changes to the
Bylaws.
PROPOSAL 5 to add Article 8 and amend appropriate Bylaw
provisions which will (1) divide the Board of
Directors into three classes, (2) specify the
required shareholder vote for removal of a Director,
(3) provide for Director vacancies, and (4) approve
corresponding changes in the Bylaws.
PROPOSAL 6 to add Article 9 and make corresponding Bylaw
changes to establish a procedure for nominating
Directors.
PROPOSAL 7 to add Article 10 which sets forth procedures and
required votes for amending the Bylaws of the
Corporation.
PROPOSAL 8 to add Article 11 which sets forth procedures for
presenting shareholder proposals at the annual
meeting of shareholders.
PROPOSAL 9 to add Article 12 which sets forth procedures and
required votes for amending the Corporation s
Articles of Incorporation.
PROPOSAL 10 to approve an amendment to the Bylaws setting forth
requirements for calling special meetings of
shareholders of the Corporation.
The 11 nominees receiving the highest number of votes cast,
including votes cast cumulatively, shall be elected Directors. To be
adopted, all of the proposals must be approved by a majority of the
votes cast at the meeting.
The Corporation's business is carried on primarily by its wholly-
owned subsidiary Southwest National Bank of Pennsylvania (the "Bank").
ELECTION OF DIRECTORS
INFORMATION CONCERNING NOMINEES
The Bylaws of the Corporation provide that the number of Directors
shall be not less than 5 nor more than 25, as from time to time shall be
determined by the shareholders at any meeting of the shareholders at
which Directors are elected or by a full majority of the Board of
Directors. Pursuant to the Bylaws, the full Board of Directors may add
additional persons to the Board during the year if it, in its
discretion, believes that the best interests of the Corporation would be
served by so doing. The Board of Directors has proposed that the
shareholders fix the number of Directors to be elected at the annual
meeting on April 15, 1997 at 11 Directors. Currently there are 11
Directors.
The eleven (11) nominees are listed below. If the shareholders
adopt the proposed amendment to classify the Board of Directors (see
proposal 5 below), the nominees will be elected to serve a term of
either one year (Class 1), two years (Class 2), or three years (Class
3), as indicated below. If the proposed amendment is not adopted, the
nominees will be elected for one year terms. In either event, the
Directors terms will continue until their successors are elected and
qualified. The proxies solicited hereby, unless directed to the contrary
therein, will vote for the nominees named below. All of the nominees
have expressed their willingness to serve. The Board of Directors has
no reason to believe that any nominee will be unavailable or unable to
serve as a Director, but if for any reason any of these nominees should
not be available or able to serve, the accompanying proxy will be voted
by the persons acting under the proxy according to the best judgment of
the persons named in the proxy. The names of the 11 nominees for
election as Directors of the Corporation, their principal occupations or
positions, if any, with the Corporation or the Bank for the past five
years, the year they first became Directors of the Corporation or the
Bank, their age and the number of shares of the Corporation's common
stock beneficially owned by them, as of February 3, 1997, are set forth
in the following table:
<TABLE>
<CAPTION>
Name and principal
occupation or Approximate
employment for Beneficial percentage of
the past five years Director ownership of outstanding
(1) (2) since Age shares (3) shares (4)
<S> <C> <C> <C> <C>
CLASS 1 - NOMINEES - SERVING A TERM OF ONE YEAR EXPIRING IN 1998
James A. Critchfield, Jr.
Attorney at Law 1983 71 384 -
Joseph V. Morford, Jr.
Retired, formerly
President, Moore and
Morford, Inc., steel
fabricators 1983 67 1,225 -
William W. Thomson
Managing Partner,
Thomson, Tomsey & Co.,
Certified Public
Accountants 1992 61 800 -
CLASS 2 - NOMINEES - SERVING A TERM OF TWO YEARS EXPIRING IN 1999
David S. Dahlmann
President and Chief
Executive Officer of the
Corporation and the Bank 1990 47 1,200 -
Charles E. Henry
President, Chas. M.
Henry Printing Co. 1989 66 3,921 -
Alexander H. Lindsay, Jr.
President, Lindsay,
Jackson, and Martin,
P.C., Attorneys 1986 50 760 -
John A. Robertshaw, Jr.
Chairman, Laurel Vending,
Inc., vending and food
service 1986 70 9,334 -
CLASS 3 - NOMINEES - SERVING A TERM OF THREE YEARS EXPIRING IN 2000
Ray T. Charley
President, Thomi Co.,
retail grocers 1989 45 18,560 -
A. Richard Kacin
President, A. Richard
Kacin, Inc., real estate
construction and
development and President,
Delmont Builders Supply,
Inc. 1994 56 2,430 -
James W. Newill
Certified Public Accountant,
formerly President,
J. W. Newill Company,
public accounting firm 1978 62 77,800 2.48%
Laurie Stern Singer
President, Allegheny
Valley Chamber of
Commerce and President,
Allegheny Valley
Development Corporation 1994 45 220 -
Directors, nominees and
officers of the
Corporation as a group
(14 persons) (5) 117,944 3.77%
<FN>
(1) All nominees held the position indicated or other senior executive
position with the same entity for the past five years.
(2) No Director of the Corporation is presently a Director of another
company filing reports with the Securities and Exchange Commission.
(3) The nominees identified in the table possess sole voting and
investment powers with respect to the shares shown opposite their names
except the following who hold shares jointly with their respective
wives: Mr. Charley, 480 shares; Mr. Dahlmann, 1,200 shares and Mr.
Henry, 2,529 shares. The following Directors were beneficial owners of
shares held by their respective wives: Mr. Morford, 495 shares and Mr.
Robertshaw, 840 shares. The shares listed for Mr. Thomson include 90 of
the 120 shares listed in the name of a partnership of which he is
managing partner and has a 75% interest. The shares listed for Mr.
Kacin include 600 shares held in the name of an employees retirement
plan of which he is a trustee. The total number of shares includes
1,000 shares owned by David M. Hanna, Vice President of the Corporation,
160 shares owned by Robert J. Stack, Vice President of the Corporation,
jointly with his wife, and 150 shares owned by Donald A. Lawry,
Secretary and Treasurer of the Corporation, jointly with his wife.
(4) Less than 1 percent unless otherwise indicated.
(5) Mr. Dahlmann listed above; David M. Hanna, Vice President, Robert
J. Stack, Vice President and Donald A. Lawry, Secretary and Treasurer
are the only officers of the Corporation.
</TABLE>
OTHER NOMINATIONS
The present Bylaws of the Corporation provide that other
nominations may be made at the meeting only after at least 14 days
notice has been given in writing according to the procedures set forth
in Article III, Section 3.3. However, proposed amendments will change
the number to at least 60 days notice (see Section entitled Proposed
Amendments to Articles of Incorporation and Bylaws for description).
BOARDS AND COMMITTEES
It is the policy of the Corporation that its Directors also serve
as Directors of its wholly-owned subsidiary, the Bank. The Board of the
Corporation met 12 times in 1996 and the Board of the Bank met 12 times
in 1996.
The Board of the Corporation has the following standing committees:
Examining Committee, Executive Committee and Nominating Committee. The
Board of the Bank has the following standing committees: Examining
Committee, Executive Committee, Personnel Committee and Trust Committee.
Directors appointed to the Examining Committee of the Corporation
also serve as members of the Examining Committee of the Bank. Both
Examining Committees met concurrently 4 times in 1996. The Examining
Committees perform the functions of an audit committee, and their
responsibilities include causing an examination of the affairs of the
Corporation and Bank to be made, reviewing reports of examinations of
the Corporation and the Bank made by the Federal Reserve Bank and the
Office of the Comptroller of the Currency, and reporting the findings
and recommendations to the respective Board. Appointment of the
independent public accountants is made by the Board of Directors upon
the recommendation of the Examining Committees. The Examining
Committees presently have as members Directors Henry, Lindsay, Morford,
Robertshaw, Singer and Thomson.
Directors appointed to the Executive Committee of the Corporation
also serve as members of the Executive Committee of the Bank. Both
Executive Committees met concurrently 12 times in 1996. Their
responsibilities include review of the loans and securities of the Bank
and the exercise of all the powers of the full Boards between regular
meetings of the Boards. The Executive Committees presently have as
members Directors Dahlmann, Henry, Lindsay, Morford, Robertshaw and
Thomson.
The Nominating Committee of the Corporation met 1 time in 1996. Its
responsibilities include selecting and recommending to the Board of
Directors nominees for election as Director. The Nominating Committee
presently has as members Directors Charley, Dahlmann, Kacin, Newill and
Singer.
The Personnel Committee of the Bank met 5 times in 1996. Its
responsibilities include reviewing and recommending to the Board the
salaries of certain senior officers of the Bank. The Personnel
Committee presently has as members Directors Charley, Critchfield,
Dahlmann, Kacin, Newill and Singer.
The Trust Committee of the Bank met 12 times in 1996. Its
responsibilities include the general review of the activities of the
trust department of the Bank in the administration of its fiduciary
relations. The Trust Committee presently has as members Directors
Charley, Critchfield, Dahlmann, Kacin and Newill.
COMPENSATION OF DIRECTORS
The Corporation paid for the year 1996 an annual retainer of $2,500
to Directors who are not officers. Directors who are not officers are
paid $400 by the Bank for each regularly scheduled Bank Board meeting
attended and $300 for attendance at each regularly scheduled Bank
Committee meeting. Officers of the Corporation or the Bank are not paid
for attendance at any meeting. Directors who are not officers will be
paid an additional $100 for attendance at special Bank Board meetings
and Bank Committee meetings.
All Directors of the Corporation and/or the Bank may defer all or a
portion of the receipt of their fees, according to the terms of a
Directors Deferred Compensation Plan, until they terminate their
election or cease to be a Director. Payment of interest on accumulated
balances under the plan is at market rates, but balances are accrued
rather than funded by the Corporation or the Bank.
TRANSACTIONS WITH DIRECTORS, OFFICERS AND ASSOCIATES
Certain Directors, officers of the Corporation and the Bank and
their associates were customers of the Bank during 1996. Transactions
that involved loans or commitments by the Bank were made in the ordinary
course of business and on substantially the same terms, including
interest rates and collateral requirements, as those prevailing at the
time for comparable transactions with other persons and did not involve
more than normal risk of collectibility or present other unfavorable
features.
During 1996, the Bank paid $81,841 to Chas. M. Henry Printing Co.
for services that were in the normal course of business and on
substantially the same terms as available from others. This firm has
provided printing services to the Bank for many years and is expected to
continue to do so in the future. Charles E. Henry is a Director and is
President of Chas. M. Henry Printing Co. Additionally, the Bank paid
$345,948 to A. Richard Kacin, Inc., as general contractor for the
construction of a new building and remodeling of an existing branch
office. The awarding of these contracts was in line with Bank policy and
procedures. A. Richard Kacin is a Director and is President of A.
Richard Kacin, Inc.
Under the securities laws of the United States, the Corporation's
Directors, executive officers and any persons holding more than ten
percent of the Corporation's stock are required to report their initial
ownership of the Corporation's common stock and any subsequent changes
in their ownership to the Securities and Exchange Commission. Specific
due dates for these reports have been established, and the Corporation
is required to disclose in this Proxy Statement, any failure to file by
these dates during 1996. In making such disclosures, the Corporation
has relied solely on written representations of its directors and
executive officers and copies of the reports they have filed with the
Securities and Exchange Commission. Based on such information, all of
such filings have been timely made.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1996, Directors Charley, Critchfield, Dahlmann, Kacin,
Newill and Singer served as members of the Bank s Personnel Committee
which determines the compensation of the executive officers of the Bank.
No compensation was paid to the executive officers by the Corporation
during 1996. Directors Charley, Critchfield, Kacin, Newill and Singer
are neither officers nor employees of the Corporation or the Bank and
are not members of any Board of Directors (other than of the Corporation
or Bank) which has as a member an officer, employee or Director of the
Corporation or Bank.
The Bank paid $345,948 to A. Richard Kacin, Inc. as general
contractor for the construction of a new building and remodeling of an
existing branch office. The awarding of these contracts was in line with
Bank policy and procedures. A. Richard Kacin is a Director and is
President of A. Richard Kacin, Inc.
Director Dahlmann, the President and Chief Executive Officer of the
Corporation and Bank, is a member of the Personnel Committee but does
not participate in conducting his own review or determining his own
salary.
PERSONNEL COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Decisions on compensation of the executive officers of the Bank are
made by a six-member Personnel Committee of the Bank's Board of
Directors. No compensation was paid to the executive officers by the
Corporation during 1996. All compensation was paid by the Bank. Five
of the members of the Personnel Committee are nonemployee Directors. The
sixth member of the Committee is Mr. Dahlmann. Although Mr. Dahlmann,
the President and Chief Executive Officer of the Corporation and Bank,
served on the Personnel Committee, he did not participate in any
decisions regarding his own compensation. All decisions by the Personnel
Committee relating to the compensation of the Bank's executive officers
are reviewed by the full Board and the Board votes on Mr. Dahlmann's
compensation. Pursuant to recently adopted rules designed to enhance
disclosure of the policies of the Corporation toward executive
compensation, set forth below is a report of the Board's Personnel
Committee, addressing the Bank's compensation policies for 1996 as they
affected Mr. Dahlmann and generally as to other executive officers.
The Personnel Committee's executive compensation policies are
designed to provide compensation to the executive officers based upon a
performance evaluation of each executive officer using a matrix provided
by a consultant to the Bank, Peter R. Johnson & Company, rating the
performance of each executive on a scale of 1 through 5. The Personnel
Committee applies this performance rating to all executive officers,
including Mr. Dahlmann. Mr. Dahlmann does not participate in his own
performance evaluation, but does participate in the evaluation of other
executive officers. Levels of base salary paid by the Bank to both Mr.
Dahlmann and the other executive officers are intended to be comparable
with other companies in the banking industry. The Bank uses the
services of Peter R. Johnson & Company to compile the executive
compensation of appropriate groupings of the banks that closely resemble
the Bank. The sources of information relied on by the consultant were
Watson Wyatt Data Services, Inc. (formerly Cole Surveys, Inc.), Bank
Administration Institute, L.R. Webber Associates, SNL Executive
Compensation Survey, William M. Mercer, Inc. and Johnson Salary Survey.
This information is reviewed against the job descriptions of Mr.
Dahlmann and the other executive officers and adjusted by utilization of
the performance evaluation referred to above. The Personnel Committee
does not consider corporate performance in its determination but only
compensation by comparable companies adjusted by an evaluation of the
officer's performance.
Personnel Committee Members
Ray T. Charley A. Richard Kacin
James A. Critchfield, Jr. James W. Newill
David S. Dahlmann Laurie Stern Singer
EXECUTIVE COMPENSATION
The Corporation paid no compensation to any of its officers during
1996. All compensation was paid by the Bank.
The annual compensation of the President and Chief Executive
Officer of the Bank consisted only of a base salary. "All other
compensation" listed in the table includes amounts established under the
401(k) Plan for eligible employees including the President and Chief
Executive Officer. Each year the Board of Directors of the Bank as a
whole determines the amount with which the Bank's 401(k) Plan should be
funded. The amount is allocated to all eligible employees in accordance
with Plan provisions. In 1996 the allocation was the equivalent of 8.0%
of total eligible salaries. The President and Chief Executive Officer
and other executive officers receive this compensation in the same
manner as other eligible employees of the Bank. Also, included in "All
other compensation" is the cost of life insurance premiums paid for the
President and Chief Executive Officer. The Bank carries such life
insurance for all employees based upon twice the annual compensation of
each full-time employee. The maximum amount of coverage provided is
$300,000.
The incremental cost of the 401(k) Plan and term life insurance
plan provided to Mr. Dahlmann equals approximately 6.95% of his salary.
The compensation shown in the following table is for the President
and Chief Executive Officer only, since no other executive officer
received salary and bonus of $100,000 or more for the last fiscal year.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
All other
Name and principal Year Salary compensation
position ($) ($) (1)
<S> <C> <C> <C>
David S. Dahlmann, 1996 200,000 13,948
President and Chief 1995 185,000 14,162
Executive Officer 1994 155,000 13,517
<FN>
(1) The amounts in the above table under "All other compensation"
include, for 1996, $12,904 contributed to the Bank's 401(k) Plan and
$1,044 as the cost of insurance premiums under the Bank's life insurance
plan. For 1995, such amounts are $13,118 and $1,044 respectively and
for 1994 is $12,543 and $974 respectively.
</TABLE>
The Bank's 401(k) Plan is qualified under Section 401(a) of the
Internal Revenue Code. Each eligible employee of the Bank becomes
eligible to participate at the next available entry date following one
year of employment. The plan is contributory on the part of employees.
The Bank may elect to match the employee contribution. The Board of
Directors determines the match amount annually. In addition, each year
the Bank has the discretion to make an annual contribution to eligible
Plan participants. This contribution is based on participants eligible
salary as defined under IRS Section 3401(a). All deferred amounts are
vested immediately and are payable to participants upon their
termination of employment.
It is not possible to determine the extent of the benefits that any
participant may be entitled to receive under the Plan upon termination
of employment since the amount of such benefits will be dependent, among
other things, upon the future earnings of the Bank, the future
compensation of the participants and the future net earnings of the
investments selected by the participants.
CORPORATION S EXECUTIVE OFFICERS
The following table sets forth certain information with respect to
the current executive officers of the Corporation.
<TABLE>
<CAPTION>
Name Age Term Position
<S> <C> <C> <C>
David S. Dahlmann 47 1992-1996 Director, President and
Chief Executive Officer
of the Corporation and
Bank
David M. Hanna 49 1997 Vice President of the
Corporation and Executive
Vice President of the
Bank
1992-1996 Senior Vice President of
the Bank
Donald A. Lawry 46 1992-1996 Secretary and Treasurer of
the Corporation and
Executive Vice President
of the Bank
Robert J. Stack 46 1993-1996 Vice President of the
Corporation
1992-1996 Executive Vice President
of the Bank
</TABLE>
DEFINED BENEFIT PENSION PLAN OF THE BANK
The Bank made a contribution of $258,395 to the Defined Benefit
Pension Plan for the Plan year ending June 30, 1996. Benefits are not
vested until the completion of five years of credited service, when they
become fully vested. Retirement benefits are based upon the average of
the annual compensation for the highest five consecutive years during
the last ten years of credited service, and are 1% of average
compensation multiplied by the number of years of credited service
(subject to a maximum of 44 years), plus 1/2 of 1% of average
compensation in excess of covered compensation, multiplied by the number
of years of credited service (subject to a maximum of 40 years). The
Plan is noncontributory on the part of employees. The Bank contributes
the entire actuarially determined amount necessary to fund total
benefits. The following table sets forth an estimate of the annual
benefits payable under the Plan for employees, including officers,
reaching the normal retirement date (age 65):
<TABLE>
<CAPTION>
Annual basic Estimated annual pension for years of credited service
compensation 10 years 20 years 30 years 40 years
<S> <C> <C> <C> <C>
$ 25,000 $ 2,500 $ 5,000 $ 7,500 $ 10,000
50,000 6,150 12,300 18,450 24,600
75,000 9,900 19,800 29,700 39,600
100,000 13,650 27,300 40,950 54,600
125,000 17,400 34,800 52,200 69,600
150,000 21,150 42,300 63,450 84,600
</TABLE>
The credited years of service for Mr. Dahlmann are 25. The
compensation used to determine pension benefits is approximately the
same as the salary set forth in the Summary Compensation Table.
The amounts in the above table represent the estimated annual
benefits payable to an employee for life. Other available optional forms
of payment of benefits would reduce the amount shown in the table. The
benefit amounts shown are not subject to any deduction for social
security or other amounts. Effective for retirements on or after January
1, 1994, annual basic compensation for Plan purposes may not exceed
$150,000.
PERFORMANCE REPORT
The following is a graph comparing the Corporation's cumulative
total shareholder returns with the performance of the NASDAQ Stock
Market index (US Companies) and with the NASDAQ Financial Stocks index
in which group the Corporation is included.
Comparison of Five Year Cumulative Total Returns
Performance Graph for
SOUTHWEST NATIONAL CORPORATION
PRINCIPAL SHAREHOLDERS
The following table lists any beneficial owner of more than 5% of
the outstanding common stock of the Corporation as of February 3, 1997:
<TABLE>
<CAPTION>
Amount and nature
Title of Name and address of beneficial Percent of
class of beneficial owner ownership (1) class
<S> <C> <C> <C>
Common stock Thomas, Heasley & Co., 346,221 11.1%
nominee of Southwest
National Bank of
Pennsylvania,
Greensburg,
Pennsylvania
<FN>
(1) The shares are listed of record in the name of the Bank's nominee
and are held by the Bank in its fiduciary capacity in 66 separate trust
accounts. The Bank has the power to dispose or direct the disposition
of a portion of the shares as follows: Sole - 184,699; Shared -
165,251. The Bank has the power to vote or direct the voting of a
portion of these shares as follows: Sole - 285,973; Shared - 87,234. In
every instance, another entity is entitled to the dividends or proceeds
of sale. No individual account holds an interest of 5% or more.
</TABLE>
PROPOSED AMENDMENTS TO ARTICLES OF INCORPORATION AND BYLAWS
The following discussion is a general summary of the proposed
amendments to the Corporation's Articles of Incorporation and Bylaws.
THE DESCRIPTION OF THE PROPOSED AMENDMENTS IS NECESSARILY GENERAL, AND
REFERENCE SHOULD BE MADE IN EACH CASE TO PROPOSED AMENDMENTS OF OR
ADDITIONS TO THE ARTICLES OF INCORPORATION AND BYLAWS, WHICH ARE
ATTACHED HERETO AS EXHIBIT A; HOWEVER, ALL MATERIAL ASPECTS OF THE
PROPOSED AMENDMENTS ARE DISCUSSED BELOW.
PROPOSAL 3 - INCREASE IN AUTHORIZED SHARES
The proposed amendment to Article 5 of the Articles of
Incorporation authorizes the issuance of 10 million shares of Common
Stock. The proposed increase in the number of authorized shares of
Common Stock is designed to provide the Corporation's Board of Directors
with flexibility to effect, among other transactions, financing,
acquisitions, stock dividends, stock splits and employee stock options.
In addition, the proposed increase in the number of authorized shares
gives the Corporation's Board the ability to: (i) reduce the risk of a
hostile takeover; (ii) potentially dilute the voting power of present
shareholders if the shares are issued other than on a pro-rata basis;
and (iii) potentially reduce the book value per share and earnings per
share of stock held by present shareholders. The Corporation's Board
currently has no plans for the issuance of additional shares.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSED
AMENDMENT TO ARTICLE 5 OF THE CORPORATION'S ARTICLES OF INCORPORATION.
PROPOSAL 4 - FACTORS THE BOARD OF DIRECTORS MAY CONSIDER
Proposed new Article 7(b) allows the Board of Directors of the
Corporation, when evaluating any offer of another person to (i) make a
tender or exchange offer for any equity security of the Corporation,
(ii) merge or consolidate the Corporation with another corporation or
entity or (iii) purchase or otherwise acquire all or substantially all
of the properties and assets of the Corporation, to give due
consideration to all relevant factors, in connection with the exercise
of its judgment in determining what is the best interest of the
Corporation and its shareholders, including, without limitation, those
factors that Directors of any subsidiary of the Corporation may consider
in evaluating any action that may result in a change or potential change
in the control of the subsidiary; the social and economic effect of
acceptance of such offer on the Corporation's present and future
customers and employees and those of its subsidiaries and on the
communities in which the Corporation and its subsidiaries operate or are
located; the Corporation's long term objectives, including the long term
strategy of remaining independent; the ability of the Corporation to
fulfill its corporate objective as a bank holding company under
applicable laws and regulations; and the ability of its subsidiaries to
fulfill their legitimate corporate objectives under applicable statutes
and regulations.
Proposed new Article 7(b) incorporates into the Corporation's
Articles of Incorporation language currently found in the Pennsylvania
Business Corporation Law (the "BCL"). The Board of Directors believes
that it is beneficial to have such language in the Articles of
Incorporation because the Bank's long-term success as a community bank
and thus the long-term success of the Corporation relies on the
Corporation and the Bank being closely identified with the communities
they serve.
Section 3.15(b) of the current Bylaws reflects a similar but not
identical concept. If proposed Section 7(b) of the Articles of
Incorporation is adopted a conforming change to Section 3.15(b) would
also be required. This change would require the deletion of the
language of existing Section 3.15(b) of the Bylaws and its replacement
with language identical to proposed Section 7(b) of the Articles of
Incorporation.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSED
ADDITION OF ARTICLE 7(B) TO THE ARTICLES OF INCORPORATION AND THE
CONCURRENT MODIFICATION OF SECTION 3.15(B) OF THE CORPORATION'S BYLAWS.
PROPOSAL 5 - CLASSIFIED BOARD
Section 3.2 of the current Bylaws provides that the Corporation's
Board of Directors be elected annually. Section 3.4 of the current
Bylaws provides that if a vacancy occurs on the Board of Directors, a
replacement is selected to serve until the next annual meeting. These
Sections of the Bylaws would be eliminated if the proposed addition of
Article 8 to the Corporation's Articles of Incorporation is approved.
Section 3.1 of the current Bylaws specifies the minimum and maximum
number of directors, the minimum requirements for holding the office of
director and the mechanism for determining the actual number of
directors. The last sentence of Section 3.1 relating to the
determination of the actual number of directors of the Corporation would
be deleted in its entirety if proposed Article 8 of the Corporation's
Articles of Incorporation is approved. Proposed new Article 8 of the
Corporation's Articles of Incorporation provides, among other things,
that the Board of Directors shall be divided into three classes as
nearly equal in number as possible with the term of office of one class
expiring each year. The classified Board of Directors is intended to
provide for continuity of the Board of Directors and to make it more
difficult and time-consuming for a shareholder group to fully use its
voting power to gain control of the Board of Directors without the
consent of the incumbent Board of Directors of the Corporation.
The proposed new Article 8 also provides that directors may be
removed only for cause at a duly constituted meeting of shareholders
called expressly for that purpose upon the vote of the holders of at
least a majority of the total votes eligible to be cast by shareholders.
Any vacancy occurring in the Board of Directors for any reason
(including an increase in the number of authorized directors) may be
filled by the affirmative vote of a majority of the remaining directors,
and a director appointed to fill a vacancy shall serve for a term
expiring at the annual meeting of shareholders at which the term of
office of the class to which the appointee has been chosen expires.
The proposed amendments to the provisions regarding election of
directors and other related provisions in the Articles of Incorporation
and the deletion of the existing provision of the Bylaws related thereto
discussed herein are generally designed to protect the ability of the
Board of Directors to negotiate with the proponent of an unfriendly or
unsolicited proposal to take over or restructure the Corporation. This
result is accomplished by making it more difficult and time-consuming to
change majority control of the Board of Directors, whether by proxy
contest or otherwise. The general effect of these provisions will be to
generally require two annual shareholders meetings, instead of one, to
effect a change in control of the Board of Directors of the Corporation.
Because a majority of the directors at any given time will have prior
experience as directors, these requirements will help to ensure
continuity and stability of the Corporation's management and policies
and facilitate long-range planning for the Corporation's business. The
provisions relating to removal of directors and filling of vacancies are
consistent with and supportive of a classified board of directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSED
ADDITION OF ARTICLE 8 TO THE CORPORATION'S ARTICLES OF INCORPORATION,
THE CONCURRENT DELETION OF SECTIONS 3.2 AND 3.4 FROM THE
CORPORATION'S BYLAWS AND THE CONCURRENT DELETION OF THE LAST FULL
SENTENCE OF SECTION 3.1 OF THE CORPORATION'S BYLAWS.
PROPOSAL 6 - NOMINATION OF DIRECTORS
Section 3.3 of the current Bylaws sets forth the manner in which
nominations for election to the Board of Directors may occur. That
Section of the Bylaws would be eliminated if the proposed addition of
Article 9 to the Corporation s Articles of Incorporation is approved.
Proposed Article 9 to the Articles of Incorporation governs nominations
for election to the Board of Directors and provides that nominations for
election to the Board of Directors may be made by, or at the direction
of, (i) a majority of the Board of Directors (or a Nominating Committee
designated by such majority) or (ii) by any shareholder entitled to vote
at such annual meeting who has complied with the notice provisions in
that section. Written notice of a stockholder nomination must be
delivered to, or mailed to and received at, the principal executive
offices of the Corporation not later than 60 days prior to the
anniversary date of the immediately preceding annual meeting. Each such
notice shall set forth: (a) as to each person whom the shareholder
proposes to nominate as a director, and as to the shareholder giving the
notice, (i) the name, age, business address and residence address of
such person; (ii) the principal occupation or employment of such person;
(iii) the class and number of shares of the Corporation's stock
beneficially owned by such person on the date of the stockholder notice;
and (iv) such other information regarding such person as would be
required to be included in a proxy statement filed pursuant to the proxy
rules of the SEC; and (b) to the extent known by the shareholder giving
the notice, (i) the name and address of any other shareholders
supporting such nominees; and (ii) the class and number of shares of the
Corporation's stock beneficially owned by any other shareholders
supporting such nominees on the date of such shareholder notice.
The proposed amendments to the procedures regarding shareholder
nominations will provide the Board of Directors with sufficient time and
information to evaluate a shareholder nominee to the Board of Directors
and other relevant information, such as existing shareholder support for
the nominee. The proposed procedures will provide incumbent directors
advance notice of a dissident slate of nominees for directors and will
make it easier for the Board of Directors to solicit proxies resisting
such nominees.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSED
ADDITION OF ARTICLE 9 TO THE CORPORATION'S ARTICLES OF INCORPORATION AND
THE CONCURRENT DELETION OF SECTION 3.3 FROM THE CORPORATION'S BYLAWS.
PROPOSAL 7 - AMENDMENT OF BYLAWS
The proposed new Article 10 to the Corporation s Articles of
Incorporation also sets forth that the Board of Directors is expressly
empowered to adopt, amend or repeal Bylaws of the Corporation to the
extent permitted by law. Any adoption, amendment or repeal of the
Bylaws of the Corporation by the Board of Directors shall require the
approval of a majority of the entire Board of Directors then in office.
The shareholders shall also have power to adopt, amend or repeal the
Bylaws of the Corporation; provided, however, that in addition to any
vote of the holders of any class or series of stock of this Corporation
required by law or by the Articles of Incorporation, the affirmative
vote of the holders of at least 75 percent of the voting power of all of
the then-outstanding shares of the common stock of the Corporation
entitled to vote generally in the election of Directors, voting together
as a single class, shall be required to adopt, amend or repeal any
provisions of the Bylaws of the Corporation.
The adoption of this proposal would also require the concurrent
deletion of Section 1.4 of the Bylaws as inconsistent with the Articles
of Incorporation as so amended.
The Board of Directors believes that if proposals relating to a
classified board, director's nominations, shareholder proposals, special
shareholders meetings and Bylaw changes are adopted, then it is equally
important to ensure that these provisions remain in place subsequent to
their adoption unless a very high percentage of shares are voted in
favor of their further modification.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSED ARTICLE
10 OF THE ARTICLES OF INCORPORATION AND THE CONCURRENT DELETION OF
SECTION 1.4 FROM THE CORPORATION'S BYLAWS.
PROPOSAL 8 - SHAREHOLDER PROPOSALS AT ANNUAL MEETING
The proposed addition of Article 11 of the Corporation's Articles
of Incorporation provides that only such business as shall have been
properly brought before an annual meeting of shareholders shall be
conducted at the annual meeting. In order to be properly brought before
an annual meeting if the proposed addition is adopted, business must be
(i) brought before the meeting by or at the direction of the Board of
Directors or (ii) otherwise properly brought before the meeting by a
shareholder who has given timely notice thereof in writing to the
Corporation. To be timely, a shareholder's notice must be delivered to
or mailed and received at the principal executive offices of the
Corporation not less than 60 days prior to the anniversary date of the
immediately preceding annual meeting. A shareholder's notice shall set
forth as to each matter the shareholder proposes to bring before the
annual meeting (i) a brief description of the business desired to be
brought before the annual meeting and the reasons for conducting such
business at the annual meeting, (ii) the name and address, as they
appear on the Corporation s books, of the shareholder proposing such
business and, to the extent known, any other shareholders known by such
shareholder to be supporting such proposal, (iii) the class and number
of shares of the Corporation that are beneficially owned by the
shareholder and, to the extent known, by any other shareholders known by
such shareholder to be supporting such proposal on the date of such
shareholder notice, and (iv) any financial interest of the shareholder
in such business other than interests that all shareholders would have.
The presiding officer of an annual meeting shall determine and declare
to the meeting whether the business was properly brought before the
meeting in accordance with the provisions of Article 11 and any such
business not properly brought before the meeting shall not be
transacted.
The procedures regarding shareholder proposals are designed to
provide the Board of Directors with sufficient time and information to
evaluate a shareholder proposal and other relevant information, such as
existing shareholder support for the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSED
ADDITION OF ARTICLE 11 TO THE CORPORATION'S ARTICLES OF INCORPORATION.
PROPOSAL 9 - AMENDMENT OF ARTICLES OF INCORPORATION
The proposed new Article 12 of the Corporation's Articles of
Incorporation generally provides that amendments to the Articles of
Incorporation must be first approved by a majority of the Board of
Directors and then by the holders of a majority of the shares of the
Corporation entitled to vote in an election of directors, voting as a
single class, as well as such additional vote of any preferred stock as
may be required by the terms thereof, except that the approval of 75% of
the shares of the Corporation entitled to vote in an election of
directors is required for any amendment to Articles 7, 8, 9, 10, 11 or
12 of the Articles of Incorporation.
The Board of Directors believes that if proposals relating to a
classified board, director's nominations, shareholder proposals, special
shareholders meetings and Bylaw changes are adopted then it is equally
important to ensure that these provisions remain in place subsequent to
their adoption unless a very high percentage of shares are voted in
favor of their further modification. If one or more of the above
mentioned proposals is not approved but the remaining proposals are
approved, the Board of Directors also seeks shareholder approval to
further modify the proposed amendment so that the super-majority
provisions relate to the amendments to the Articles of Incorporation
approved by the shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" FOR PROPOSED
AMENDMENT OF ARTICLE 12 OF THE ARTICLES OF INCORPORATION, AS THE SAME
MAY BE FURTHER MODIFIED OR AMENDED BY THE BOARD OF DIRECTORS CONSISTENT
WITH THE VOTE OF THE SHAREHOLDERS ON EACH OF THE OTHER SEVERAL
AMENDMENTS OF OR ADDITIONS TO THE CORPORATION'S ARTICLES OF
INCORPORATION.
PROPOSAL 10 - SPECIAL MEETINGS OF SHAREHOLDERS
Section 2.2 of the current Bylaws sets forth the manner in which a
special meeting of the shareholders may be called. Consistent with the
other changes proposed by the Board of Directors, the Board believes
that special meetings of the shareholders should only be called by the
president or a majority of the Board of Directors. The current Bylaws
permit at least 25% of the shareholders to call a meeting.
To implement this proposal it is necessary to modify Section 2.2 of
the current Bylaws by deleting the existing first sentence thereof and
replacing it with the following:
"Special meetings of the shareholders, for any purpose or
purposes, unless otherwise provided by Law or the Articles of
Incorporation, may only be called by the president or a majority
of the Board of Directors."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSED
AMENDMENT TO SECTION 2.2 OF THE BYLAWS.
Please see Exhibit A attached to this Proxy Statement for the full text
of the proposed resolutions and amendments
AUDITORS
The Board of Directors of the Bank approved the reappointment of
KPMG Peat Marwick LLP to audit its books and accounts for the year 1997.
The Board of Directors of the Corporation also approved the
reappointment of KPMG Peat Marwick LLP to audit its books and accounts
for the year 1997.
Audit services performed by KPMG Peat Marwick LLP during 1996
included examination of and reporting on the Corporation's consolidated
financial statements, review and consultation connected with filing
annual and periodic reports for the Bank and Corporation and auditing
the Bank's Defined Benefit Pension Plan and 401(k) Plan.
Representatives of the auditors will be present at the annual
meeting to make a statement, if they desire, and to respond to
appropriate questions.
PROPOSALS OF SHAREHOLDERS
Any proposal that a shareholder wishes to have included in the
proxy material relating to the annual meeting to be held in 1998 must be
received by the Secretary no later than November 14, 1997.
OTHER MATTERS
The Board of Directors knows of no other business to be presented
at the meeting. If, however, any other business should properly come
before the meeting, or any adjournment of it, it is intended that the
proxy will be voted with respect thereto in accordance with the best
judgment of the persons named in the proxy.
By Order of the Board of Directors
Donald A. Lawry
Secretary and Treasurer
EXHIBIT A
PROPOSAL 3
RESOLVED, that existing Article 5 of the Corporation's Articles of
Incorporation be deleted and the following language be substituted
therefor:
ARTICLE 5. COMMON STOCK.
AUTHORIZED AMOUNT. The total number of shares of all classes
of stock that the Corporation shall have authority to issue is ten
million (10,000,000) shares of common stock.
PROPOSAL 4
RESOLVED, that existing Article 7(b) of the Corporation's Articles
of Incorporation be deleted and that a new Article 7(b) to the
Corporation's Articles of Incorporation, as set forth below, be
substituted therefor:
ARTICLE 7(b). CONSIDERATION OF THE BOARD.
In discharging the duties of their respective positions, the
Board of Directors, committees of the Board of Directors and individual
Directors of the Corporation may, in considering the best interests of
the Corporation, consider to the extent they deem appropriate:
A. The effects of any action upon any or all groups affected
by such action, including shareholders, employees, suppliers, customers
and creditors of the corporation, and upon communities in which the
Corporation is located;
B. The short-term and long-term interests of the Corporation,
including benefits that may accrue to the Corporation from its long-term
plans and the possibility that these interests may be best served by the
continued independence of the Corporation;
C. The resources, intent and conduct (past, stated and
potential) of any person seeking to acquire control of the Corporation;
D. All other pertinent factors, including, but not limited to
the effect on the Corporation's ability to fulfill its corporate
objective as a bank holding company under applicable laws and
regulations and the effect on the ability of its subsidiaries to fulfill
their objectives under applicable law and regulations.
FURTHER RESOLVED, that existing Section 3.15(b) of the
Corporation's Bylaws be deleted and that amended Section 3.15(b),
containing language identical to amended Article 7(b) of the Articles of
Incorporation, be substituted therefor.
PROPOSAL 5
RESOLVED, that a new Article 8, as set forth below, be added to the
Corporation's Articles of Incorporation:
ARTICLE 8. DIRECTORS.
A. NUMBER, CLASSIFICATION AND TERM. The number of Directors
shall be fixed from time to time exclusively by the Board of Directors
pursuant to a resolution duly adopted by the Board of Directors. The
Directors shall be divided into three classes as nearly equal in number
as reasonably possible, with the term of office of the first class to
expire at the annual meeting of shareholders occurring in 1998, the term
of office of the second class to expire at the annual meeting of
shareholders one year thereafter and the term of office of the third
class to expire at the annual meeting of shareholders two years
thereafter with each Director to hold office until his or her successor
shall have been duly elected and qualified. At each annual meeting of
shareholders following such initial classification and election,
Directors elected to succeed those Directors whose terms expire shall be
elected for a term of office to expire at the third succeeding annual
meeting of shareholders after their election with each Director to hold
office until his or her successor shall have been duly elected and
qualified.
B. VACANCIES. The newly created directorships resulting from
any increase in the authorized number of Directors or any vacancies in
the Board of Directors resulting from death, resignation, retirement,
disqualification, removal from office or other cause may be filled only
by a majority vote of the Directors then in office, though less than a
quorum, and Directors so chosen shall hold office for a term expiring at
the annual meeting of shareholders at which the term of office of the
class to which they have been chosen expires. No decrease in the number
of Directors constituting the Board of Directors shall shorten the term
of any incumbent Director.
C. REMOVAL OF DIRECTORS. Any Director, or the entire Board
of Directors, may be removed from office at any time as follows: (i) for
cause by the vote of a majority of the shareholders of the Corporation
voting at a meeting of shareholders (cause for removal shall exist only
if the Director whose removal is proposed has been either declared of
unsound mind by an order of a court of competent jurisdiction, convicted
of a felony or of an offense punishable by imprisonment for a term of
more than one year by a court of competent jurisdiction, or deemed
liable by a court of competent jurisdiction for gross negligence or
misconduct in the performance of such Director's duties to the
Corporation) or (ii) by a vote of seventy-five percent (75%) of the
outstanding shares of the Corporation voting at a meeting of
shareholders. At least 30 days prior to such meeting of shareholders,
written notice shall be sent to the director whose removal will be
considered at the meeting. Directors may also be removed from office in
the manner provided in Sections 1726(b) and 1726(c) of the Pennsylvania
Business Corporation Law of 1988 or any successors to such sections.
FURTHER RESOLVED, that existing Sections 3.1 through 3.4 of the
Corporation's Bylaws be amended as provided below:
SECTION 3.1 NUMBER. This section is amended to delete the
last full sentence thereof which reads as follows:
"A full majority of the Board of Directors, or the
shareholders at an annual or special meeting will have the power to fix
the number of directors and, from time to time, to increase or decrease
the number thereof provided that the number so determined will not be
less than the number authorized by law."
Section 3.2 TERM. This section is deleted in its entirety
and replaced by the word "Reserved".
Section 3.3 NOMINATIONS. This section is deleted in its
entirety and replaced by the word "Reserved".
Section 3.4 VACANCIES. This section deleted in its entirety
and replaced by the word "Reserved".
PROPOSAL 6
RESOLVED, that Article 9, as set forth below, be added to the
Corporation's Articles of Incorporation:
ARTICLE 9. NOMINATIONS OF DIRECTORS.
A. GENERAL REQUIREMENTS. Nominations of candidates for
election as directors at any annual meeting of shareholders may be made
(i) by, or at the direction of, a majority of the Board of Directors (or
a Nominating Committee designated by such majority) or (ii) by any
shareholder entitled to vote at such annual meeting. Only persons
nominated in accordance with the procedures set forth in this Article
shall be eligible for election as directors at an annual meeting.
Ballots bearing the name of all the persons who have been nominated for
election as directors at an annual meeting in accordance with the
procedures set forth in this Article shall be provided for use at the
annual meeting.
B. NOTICE. Nominations, other than those made by or at the
direction of the Board of Directors, shall be made pursuant to timely
notice in writing to the Secretary of the Corporation as set forth in
this Article. To be timely, a shareholder's notice shall be delivered
to, or mailed and received at, the principal executive offices of the
Corporation not later than 60 days prior to the anniversary date of the
immediately preceding annual meeting of shareholders of the Corporation.
Such shareholder's notice shall set forth (a) as to each person whom the
shareholder proposes to nominate for election or reelection as a
Director and as to the shareholder giving the notice (i) the name, age,
business address and residence address of such person, (ii) the
principal occupation or employment of such person, (iii) the number of
shares of Corporation stock that are beneficially owned by such person
on the date of such shareholder s notice, and (iv) any other information
relating to such person that is required to be disclosed in
solicitations of proxies with respect to nominees for election as
directors, pursuant to Regulation 14A under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"); and (b) as to the shareholder
giving the notice (i) the name and address, as they appear on the
Corporation's books, of such shareholder and any other shareholders
known by such shareholder to be supporting such nominees and (ii) the
number of shares of Corporation stock that are beneficially owned by
such shareholder on the date of such shareholder s notice and, to the
extent known, by any other shareholders known by such shareholder to be
supporting such nominees as of the date of such shareholder s notice.
At the request of the Board of Directors, any person nominated by or at
its direction for election as a director at an annual meeting shall
furnish to the Secretary of the Corporation that information required to
be set forth in a shareholder's notice of nomination that pertains to
the nominee.
C. NONCOMPLIANCE WITH NOTICE REQUIREMENT. The Board of
Directors may reject any nomination by a shareholder not timely made in
accordance with the requirements of this Article. If the Board of
Directors, or a designated committee thereof, determines that the
information provided in a shareholder's notice does not satisfy the
informational requirements of this Article in any material respect, the
Secretary of the Corporation shall promptly notify such shareholder of
the deficiency in the notice. The shareholder shall have an opportunity
to cure the deficiency by providing additional information to the
Secretary of the Corporation within such period of time, not to exceed
five days from the date such deficiency notice is given to the
shareholder, as the Board of Directors or such committee shall
reasonably determine. If the deficiency is not cured within such
period, or if the Board of Directors or such committee reasonably
determines that the additional information provided by the shareholder,
together with information previously provided, does not satisfy the
requirements of this Article in any material respect, then the Board of
Directors may reject such shareholder's nomination. The Secretary of
the Corporation shall notify a shareholder in writing whether his
nomination has been made in accordance with the time and informational
requirements of this Article. Notwithstanding the procedures set forth
in this paragraph, if neither the Board of Directors nor such committee
makes a determination as to the validity of any nominations by a
shareholder, the presiding officer of the annual meeting shall determine
and declare at the annual meeting whether the nomination was made in
accordance with the terms of this Article. If the presiding officer
determines that a nomination was made in accordance with the terms of
this Article, he shall so declare at the annual meeting and ballots
shall be provided for use at the meeting with respect to such nominee.
If the presiding officer determines that a nomination was not made in
accordance with the terms of this Article, he shall so declare at the
annual meeting and the defective nomination shall be disregarded.
FURTHER RESOLVED, that the present language of Section 3.3 of the
Corporation's Bylaws be deleted in its entirety and replaced by the word
"Reserved".
PROPOSAL 7
RESOLVED, that a new Article 10, as set forth below, be added to
the Corporation's Articles of Incorporation:
ARTICLE 10. AMENDMENT OF BYLAWS. The Board of Directors is
expressly empowered to adopt, amend or repeal Bylaws of the Corporation
to the extent permitted by law. Any adoption, amendment or repeal of
the Bylaws of the Corporation by the Board of Directors shall require
the approval of a majority of the entire Board of Directors then in
office. The shareholders shall also have power to adopt, amend or
repeal the Bylaws of the Corporation; provided, however, that, in
addition to any vote of the holders of any class or series of stock of
this Corporation required by law, the affirmative vote of the holders of
at least seventy-five percent (75%) of the voting power of all of the
then outstanding shares of the common stock of the Corporation entitled
to vote generally in the election of directors shall be required to
adopt, amend or repeal any provisions of the Bylaws of the Corporation.
FURTHER RESOLVED, that Section 1.4 of the Corporation's Bylaws be
deleted in its entirety and replaced by the word "Reserved".
PROPOSAL 8
RESOLVED, that Article 11, as set forth below, be added to the
Corporation's Articles of Incorporation:
ARTICLE 11. SHAREHOLDER PROPOSALS.
A. GENERAL REQUIREMENTS. At an annual meeting of
shareholders, only such new business shall be conducted, and only such
proposals shall be acted upon, as shall have been brought before the
annual meeting by, or at the direction of (1) the Board of Directors or
(2) any shareholder of the Corporation who complies with all the
requirements set forth in this Article.
B. NOTICE. Proposals, other than those made by or at the
direction of the Board of Directors, shall be made pursuant to timely
notice in writing to the Secretary of the Corporation as set forth in
this Article. For shareholder proposals to be included in the
Corporation's proxy materials, the shareholder must comply with all the
timing and informational requirements of Rule 14a-8 of the Exchange Act
(or any successor regulation). With respect to shareholder proposals to
be considered at the annual meeting of shareholders but not included in
the Corporation's proxy materials, the shareholder notice shall be
delivered to, or mailed and received at, the principal executive offices
of the Corporation not later than 60 days prior to the anniversary date
of the immediately preceding annual meeting of shareholders of the
Corporation. Such shareholder's notice shall set forth as to each
matter the shareholder proposes to bring before the annual meeting (i) a
brief description of the proposal desired to be brought before the
annual meeting and the reasons for conducting such business at the
annual meeting, (ii) the name and address, as they appear on the
Corporation's books, of the shareholder proposing such business and, to
the extent known, any other shareholders known by such shareholder to be
supporting such proposal, (iii) the number of shares of the Corporation
stock that are beneficially owned by the shareholder on the date of such
shareholder s notice and, to the extent known, by any other shareholders
known by such shareholder to be supporting such proposal on the date of
such shareholder s notice, and (iv) any financial interest of the
shareholder in such proposal, other than interests that all shareholders
would have.
C. NONCOMPLIANCE WITH NOTICE REQUIREMENT. The Board of
Directors may reject any shareholder proposal not timely made in
accordance with the terms of this Article. If the Board of Directors,
or a designated committee thereof, determines that the information
provided in a shareholder's notice does not satisfy the information
requirements of this Article in any material respect, the Secretary of
the Corporation shall promptly notify such shareholder of the deficiency
in the notice. The shareholder shall have an opportunity to cure the
deficiency by providing additional information to the Secretary within
such period of time not to exceed five days from the date such
deficiency notice is given to the shareholder as the Board of Directors
or such committee shall reasonably determine. If the deficiency is not
cured within such period, or if the Board of Directors or such committee
determines that the additional information provided by the shareholder,
together with information previously provided, does not satisfy the
requirements of this Article in any material respect, then the Board of
Directors may reject such shareholder's proposal. The Secretary of the
Corporation shall notify a shareholder in writing whether his proposal
has been made in accordance with the time and informational requirements
of this Article. Notwithstanding the procedures set forth in this
paragraph, if neither the Board of Directors nor such committee makes a
determination as to the validity of any shareholder proposal, the
presiding officer of the annual meeting shall determine and declare at
the annual meeting whether the shareholder proposal was made in
accordance with the terms of this Article. If the presiding officer
determines that the shareholder proposal was made in accordance with the
terms of this Article, then he shall so declare at the annual meeting
and ballots shall be provided for use at the meeting with respect to any
such proposal. If the presiding officer determines that a shareholder
proposal was not made in accordance with the terms of this Article, then
he shall so declare at the annual meeting and any such proposal shall
not be acted upon at the annual meeting.
PROPOSAL 9
RESOLVED, that Article 12, as set forth below, be added to the
Corporation's Articles of Incorporation
ARTICLE 12. AMENDMENT OF ARTICLES. The Corporation reserves
the right to amend, alter, change or repeal any provision contained in
these Articles of Incorporation, in the manner now or hereafter
prescribed by law. All rights conferred upon shareholders herein are
granted subject to this reservation. No amendment, addition,
alteration, change or repeal of these Articles of Incorporation shall be
made unless it is first approved by the Board of Directors of the
Corporation pursuant to a resolution adopted by the affirmative vote of
a majority of the Directors then in office, and thereafter is approved
by the holders of a majority (except as provided below) of the shares of
the Corporation entitled to vote generally in an election of directors,
voting together as a single class. Notwithstanding anything contained
in these Articles of Incorporation to the contrary, the affirmative vote
of the holders of at least seventy-five percent (75%) of the shares of
the Corporation entitled to vote generally in an election of directors
shall be required to amend, adopt, alter, change or repeal any provision
inconsistent with this Article 12 and with Articles 7, 8, 9, 10 and 11
hereof, unless such change has been approved by a majority of Directors
then in office.
PROPOSAL 10
RESOLVED, that the first sentence of Section 2.2 of the
Corporation's Bylaws be hereby deleted and the following sentence be
substituted therefor:
"Special meetings of the shareholders, for any purpose or
purposes, unless otherwise provided by Law or the Articles of
Incorporation, may only be called by the president or a majority of the
Board of Directors."
<PAGE>
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SOUTHWEST NATIONAL CORPORATION
GREENSBURG, PENNSYLVANIA
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS - APRIL 15, 1997
The undersigned hereby constitutes and appoints David M. Hanna and
Donald A. Lawry, or either of them, as the attorneys and proxies of the
undersigned, with full power of substitution in each, to vote all shares
of the common stock of Southwest National Corporation (the
"Corporation") that the undersigned is entitled to vote at the annual
meeting of shareholders of the Corporation to be held April 15, 1997 at
1:00 p.m. at its main office in Greensburg, Pennsylvania, or any
adjournment thereof, notice of such adjournments being hereby waived, as
follows:
PROPOSAL 1 [ ] FOR To fix the number of Directors for the
ensuing year at 11.
[ ] AGAINST
[ ] ABSTAIN
PROPOSAL 2 To nominate and elect as Directors all
nominees listed below for one-, two- or
three-year terms (as specified in the Proxy
Statement) assuming that the Board
classification terms are adopted. If the
proposal is not adopted, all Directors
will be elected for a one-year term.
[ ] FOR ALL NOMINEES LISTED BELOW
(except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES LISTED
BELOW
Ray T. Charley, James A. Critchfield, Jr.,
David S. Dahlmann, Charles E. Henry, A.
Richard Kacin, Alexander H. Lindsay, Jr.,
Joseph V. Morford, Jr., James W. Newill,
John A. Robertshaw, Jr., Laurie Stern
Singer and William W. Thomson
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE, DRAW A LINE THROUGH
THAT NOMINEE'S NAME.
PROPOSAL 3 [ ] FOR Amend Articles to approve the increase of
[ ] AGAINST authorized shares of common stock
[ ] ABSTAIN
PROPOSAL 4 [ ] FOR Amend Articles and Bylaws describing the
[ ] AGAINST factors the Board of Directors may consider
[ ] ABSTAIN in rendering decisions
PROPOSAL 5 [ ] FOR Amend Articles and Bylaws to classify Board
[ ] AGAINST of Directors and provide for removal of
[ ] ABSTAIN Directors and vacancies of Directors
PROPOSAL 6 [ ] FOR Amend Articles and Bylaws to approve the
[ ] AGAINST procedures for nominating Directors
[ ] ABSTAIN
PROPOSAL 7 [ ] FOR Amend Articles to approve the procedures
[ ] AGAINST for amending the Bylaws
[ ] ABSTAIN
PROPOSAL 8 [ ] FOR Amend Articles to approve the procedures
[ ] AGAINST for presenting shareholder proposals at the
[ ] ABSTAIN annual meeting
PROPOSAL 9 [ ] FOR Amend Articles to approve the procedures
[ ] AGAINST for amending the Articles of Incorporation
[ ] ABSTAIN
PROPOSAL 10 [ ] FOR To approve an amendment to the Bylaws
[ ] AGAINST for calling special meetings of
[ ] ABSTAIN shareholders meetings of shareholders of
the Corporation.
OTHER To consider and act upon any other matter which may
BUSINESS: properly be brought before the meeting or any
adjournment thereof.
Shares represented by duly executed and returned proxies will be
voted in accordance with the choices specified.
EACH OF THE MATTERS TO BE ACTED UPON IS PROPOSED BY, AND THIS PROXY
IS SOLICITED ON BEHALF OF, THE BOARD OF DIRECTORS OF THE CORPORATION.
THIS PROXY CONFERS AUTHORITY TO VOTE FOR ALL PROPOSALS IF NO
DIRECTION IS GIVEN. IF ANY OTHER BUSINESS IS PRESENTED AT THE MEETING,
THIS PROXY SHALL BE VOTED IN THE DISCRETION OF THE PROXIES NAMED ABOVE.
IN WITNESS WHEREOF, THE UNDERSIGNED SHAREHOLDER HAS DULY EXECUTED
THE PROXY ON _________________, 1997.
__________________________________(L.S.)
__________________________________(L.S.)
When signing as attorney,
executor, administrator,
trustee or guardian, please
give full title. If more
than one trustee, all should
sign. All joint owners must
sign.
PLEASE DATE AND SIGN PROXY ABOVE AND RETURN IMMEDIATELY
<PAGE>
