-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CaVNZq/2n3rdODnFB+jkF/8DK1I0XsXyiUYWGy0yLB4/KR015PUQjTYSe3nKrEbR R79KtDI8gTegUWWI9q0Tqw== 0000950109-95-005256.txt : 19951214 0000950109-95-005256.hdr.sgml : 19951214 ACCESSION NUMBER: 0000950109-95-005256 CONFORMED SUBMISSION TYPE: S-4 PUBLIC DOCUMENT COUNT: 14 FILED AS OF DATE: 19951213 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FULTON FINANCIAL CORP CENTRAL INDEX KEY: 0000700564 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 232195389 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 033-64981 FILM NUMBER: 95601368 BUSINESS ADDRESS: STREET 1: ONE PENN SQ STREET 2: PO BOX 4887 CITY: LANCASTER STATE: PA ZIP: 17604 BUSINESS PHONE: 7172912411 MAIL ADDRESS: STREET 1: ONE PENN SQ STREET 2: PO BOX 4887 CITY: LANCASTER STATE: PA ZIP: 17604 S-4 1 FORM S-4 Total Number of Pages: _____ Exhibit Index Located on Page: _____ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 FULTON FINANCIAL CORPORATION ------------------------------------------------------ (Exact name of registrant as specified in its charter) Pennsylvania --------------------------------- (State or other jurisdiction of incorporation or organization) 6711 23-2195389 -------------------------- ---------------------- (Primary SIC Code Number) (I.R.S. Employer Identification Number) One Penn Square P.O. Box 4887 Lancaster, Pennsylvania 17604 (717) 291-2411 -------------------------------------------------------------------------- (Address and telephone number of registrant's principal executive offices) Rufus A. Fulton, Jr., President and Chief Executive Officer Fulton Financial Corporation One Penn Square P.O. Box 4887 Lancaster, Pennsylvania 17604 --------------------------------------------------------- (Name, address and telephone number of agent for service) Copy To: Copy To: Paul G. Mattaini, Esq. James J. Winn, Jr., Esq. Barley, Snyder, Senft & Cohen Piper & Marbury L.L.P. 126 East King Street 36 South Charles Street Lancaster, Pennsylvania 17602-2893 Baltimore, Maryland 21201-3010 (717) 299-5201 (410)576-1675 Calculation of Registration Fee -------------------------------
============================================================================================= Proposed Proposed Amount Title of each Amount maximum offering maximum of class of securities to be price per aggregate registration to be registered registered unit* offering price* fee - -------------------------------------------------------------------------------------------- Common Stock 1,678,582 $28.00 $27,167,812 $9,368 $2.50 par value per share ============================================================================================
*Determined, in accordance with Rule 457(c) and (f)(1), upon the basis of the last sale reported over-the-counter as of November 29, of the 970,279 shares of common stock, $5.00 par value per share, of Gloucester County Bankshares, Inc., to be received in exchange for the securities hereby registered. Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after the effective date of this Registration Statement. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. CROSS REFERENCE SHEET PURSUANT TO ITEM 501 OF REGULATION S-K ------------------------------
ITEM OF FORM S-4 LOCATION IN PROSPECTUS - ---------------- ---------------------- 1. Forepart of Registration Facing Page of Registration Statement and Outside Front Statement; Cross Reference Sheet; Cover Page of Prospectus and Outside Front Cover Page 2. Inside Front and Outside AVAILABLE INFORMATION; Back Cover Pages of Prospectus TABLE OF CONTENTS 3. Risk Factors, Ratio of Earnings SUMMARY to Fixed Charges and Other Information 4. Terms of the Transaction THE FFC/GCB MERGER; INFORMATION CONCERNING FULTON FINANCIAL CORPORATION AND DESCRIPTION OF FFC COMMON STOCK; INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 5. Pro Forma Financial Information PRO FORMA COMBINED FINANCIAL INFORMATION 6. Material Contacts with the GENERAL INFORMATION--SPECIAL Company Being Acquired MEETING OF GCB SHAREHOLDERS--Interests of Certain Persons in Matters To Be Acted Upon; THE FFC/GCB MERGER 7. Additional Information Required Not Applicable for Reoffering by Persons and Parties Deemed to be Underwriters 8. Interests of Named Experts and EXPERTS; LEGAL MATTERS Counsel 9. Disclosure of Commission Position INFORMATION CONCERNING FULTON on Indemnification for Securities FINANCIAL CORPORATION AND Act Liabilities DESCRIPTION OF FFC COMMON STOCK --Indemnification 10. Information with Respect to S-3 INCORPORATION OF CERTAIN Registrants DOCUMENTS BY REFERENCE; PRO FORMA COMBINED FINANCIAL INFORMATION; INFORMATION CONCERNING FULTON FINANCIAL CORPORATION AND DESCRIPTION OF FFC COMMON STOCK 11. Incorporation of Certain INCORPORATION OF CERTAIN Information by Reference DOCUMENTS BY REFERENCE 12. Information with Respect to S-2 Not Applicable or S-3 Registrants 13. Incorporation of Certain Not Applicable Information by Reference
ITEM OF FORM S-4 LOCATION IN PROSPECTUS - ---------------- ---------------------- 14. Information with Respect to Not Applicable Registrants Other Than S-3 or S-2 Registrants 15. Information with Respect to Not Applicable S-3 Companies 16. Information with Respect to S-2 INCORPORATION OF CERTAIN or S-3 Companies DOCUMENTS BY REFERENCE; COMPARATIVE STOCK PRICES AND DIVIDENDS AND RELATED SHAREHOLDER MATTERS; PRO FORMA COMBINED FINANCIAL INFORMATION; INFORMATION CONCERNING GLOUCESTER COUNTY BANKSHARES, INC. 17. Information with Respect to Not Applicable Companies Other Than S-3 or S-2 Companies 18. Information if Proxies, Consents SUMMARY; GENERAL INFORMATION-- or Authorizations are to be SPECIAL MEETING OF GCB Solicited SHAREHOLDERS; THE FFC/GCB MERGER; INFORMATION CONCERNING GLOUCESTER COUNTY BANKSHARES, INC.; INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 19. Information if Proxies, Consents Not Applicable or Authorizations are not to be Solicited or in an Exchange Offer
[GLOUCESTER COUNTY BANKSHARES, INC. LETTERHEAD] December ___, 1995 Dear Shareholder: You are cordially invited to a Special Meeting of Shareholders of Gloucester County Bankshares, Inc. ("GCB") to be held on January 24, 1996, at 10:30 a.m. at Ron Jaworski's Eagle's Nest Country Club, Woodbury-Glassboro Road, Deptford, New Jersey. At this Special Meeting, holders of all outstanding shares of Common Stock, par value $5.00 per share (the "Shares"), of GCB will be asked to consider and vote upon a proposal to approve the merger of GCB with and into Fulton Financial Corporation ("FFC") (the "Merger"), in accordance with the terms of the Merger Agreement dated October 25, 1995, between GCB and FFC (the "Merger Agreement"). Pursuant to the Merger Agreement, each Share outstanding at the effective date of the Merger will automatically be converted into the right to receive a specified number of shares of FFC's Common Stock. Cash will be paid in lieu of fractional shares. FFC will survive the Merger and become the parent company of GCB's banking subsidiary, The Bank of Gloucester County. The Board of Directors of GCB, by a unanimous vote of all directors, has approved and declared the Merger advisable and recommends that the shareholders of GCB vote in favor of the Merger Agreement. Sincerely yours, Warner A. Knobe Donald S. Carter President and Chief Chairman of the Executive Officer Board GLOUCESTER COUNTY BANKSHARES, INC. 1100 Old Broadway Woodbury, New Jersey 08096 NOTICE OF SPECIAL MEETING OF SHAREHOLDERS To be Held January 24, 1996 To the Shareholders of Gloucester County Bankshares, Inc.: NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of Gloucester County Bankshares, Inc. ("GCB") will be held at Ron Jaworski's Eagle's Nest Country Club, Woodbury-Glassboro Road, Deptford, New Jersey, on January 24, 1996, at 10:30 a.m. local time, for the following purposes: (1) To consider and vote upon a proposal to approve the merger (the "Merger") of GCB with and into Fulton Financial Corporation ("FFC"), a Pennsylvania bank holding company, in accordance with the terms of the Merger Agreement dated October 25, 1995, between GCB and FFC (a copy of which, without exhibits or schedules, is attached to the accompanying Proxy Statement/Prospectus as Exhibit A). In the Merger, each of the outstanding shares of Common Stock, par value $5.00 per share (the "Shares"), of GCB will automatically be converted into the right to receive a specified number of shares of FCC's Common Stock, all as more fully described in the accompanying Proxy Statement. Approval of the Merger will also constitute approval of an amendment to The Gloucester County Bankshares, Inc. 1992 Stock Option Plan, which extends the term during which members of the Board of Directors of GCB may hold stock options granted to them (a copy of which amendment is attached to the accompanying Proxy Statement/Prospectus as Exhibit D); and (2) To transact such other business as may properly come before the Special Meeting or any adjournments thereof. The Board of Directors has fixed the close of business on December 11, 1995, as the record date for the Special Meeting. Only those persons who are record holders of GCB Common Stock at such date will be entitled to notice of, and to vote at, the Special Meeting and any adjournment thereof. The attached Proxy Statement/Prospectus forms a part of this Notice and is incorporated herein by reference. THE AFFIRMATIVE VOTE OF THE HOLDERS OF TWO-THIRDS OF THE OUTSTANDING SHARES OF COMMON STOCK OF GCB ENTITLED TO VOTE THEREON WILL BE REQUIRED TO ADOPT THE MERGER AGREEMENT PROVIDING FOR THE MERGER OF GCB WITH AND INTO FFC. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, THE BOARD OF DIRECTORS URGES YOU TO MARK, SIGN, DATE AND RETURN AS SOON AS POSSIBLE THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE. GIVING THE PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING. Under Section 14A:11-1(1)(a)(i)(B) of the Business Corporation Act of the State of New Jersey, shareholders of GCB will not be entitled to dissent from the Merger and receive appraisal rights for payment of the "fair value" of their Shares. A summary of the provisions of Section 14A:11-1(1)(a)(i)(B) of the New Jersey Business Corporation Act is included in the accompanying Proxy Statement/Prospectus. By order of the Board of Directors Dale T. Taylor, Secretary Woodbury, New Jersey December ____, 1995 PROXY STATEMENT/PROSPECTUS -------------------------- FULTON FINANCIAL CORPORATION ONE PENN SQUARE P.O. BOX 4887 LANCASTER, PENNSYLVANIA 17604 (717) 291-2411 ---------------------------------- GLOUCESTER COUNTY BANKSHARES, INC. 1100 OLD BROADWAY WOODBURY, NEW JERSEY 08096 (609) 845-0700 ---------------------------------- This Proxy Statement/Prospectus relates to (i) the Special Meeting of Shareholders (the "Special Meeting") of Gloucester County Bankshares, Inc. ("GCB") to be held on January 24, 1996, and (ii) the issuance of up to 1,678,582 shares of the $2.50 par value common stock of Fulton Financial Corporation ("FFC") to be issued in connection with, and conditioned upon, the effectiveness of the merger of GCB with and into FFC (the "Merger"). The Merger is described more fully in this Proxy Statement/Prospectus. ---------------------------------- No person has been authorized to give any information or to make any representation not contained in this Proxy Statement/Prospectus and, if given or made, such information or representation must not be relied upon as having been authorized. This Proxy Statement/Prospectus does not constitute an offer to any person to exchange or sell, or a solicitation from any person of an offer to exchange or purchase, the securities offered by this Proxy Statement/Prospectus, or the solicitation of a proxy from any person, in any jurisdiction in which it is unlawful to make such an offer or solicitation. Neither the delivery of this Proxy Statement/Prospectus nor any distribution of the securities to which this Proxy Statement/Prospectus relates shall under any circumstances create any implication that the information contained herein is correct at any time subsequent to the date hereof. ---------------------------------- This Proxy Statement/Prospectus does not cover resales of shares of FFC Common Stock issued to affiliates of GCB in connection with the Merger described herein. No such person is authorized to make use of this Proxy Statement/Prospectus in connection with any such resale. ---------------------------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ---------------------------------- The date of this Proxy Statement/Prospectus is December ___, 1995. AVAILABLE INFORMATION --------------------- FFC and GCB are subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "1934 Act"), and in accordance therewith FFC and GCB file periodic reports, proxy statements and other information with the Securities and Exchange Commission (the "SEC"). Such periodic reports, proxy statements and other information may be inspected and copied at the public reference facilities maintained by the SEC at Judicial Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and also at the Regional Offices of the SEC located at 75 Park Place, 14th Floor, New York, New York 10007; Curtis Center, Independence Square West, 601 Walnut Street, Suite 1005E, Philadelphia, Pennsylvania 19106; and Northwestern Atrium Center, 500 West Madison Street, Suite 400, Chicago, Illinois 60661. Copies of such material may be obtained, at prescribed rates, by delivering a request to the Public Reference Section of the SEC at Judicial Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. THIS PROXY STATEMENT/PROSPECTUS DOES NOT CONTAIN ALL OF THE INFORMATION SET FORTH IN THE REGISTRATION STATEMENT AND THE RELATED EXHIBITS THAT FFC HAS FILED WITH THE SEC (CERTAIN PARTS OF WHICH ARE OMITTED IN ACCORDANCE WITH THE RULES AND REGULATIONS OF THE SEC), AND TO WHICH REFERENCE IS HEREBY MADE. THIS PROXY STATEMENT/PROSPECTUS IS PART OF THE REGISTRATION STATEMENT AND SUCH REGISTRATION STATEMENT, INCLUDING EXHIBITS, CAN BE INSPECTED AND COPIED AT THE PUBLIC REFERENCE FACILITIES MAINTAINED BY THE SEC LISTED ABOVE. THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. FFC WILL PROVIDE WITHOUT CHARGE, UPON THE WRITTEN OR ORAL REQUEST OF ANY PERSON TO WHOM THIS PROXY STATEMENT/ PROSPECTUS IS DELIVERED, A COPY OF ANY AND ALL DOCUMENTS (OTHER THAN EXHIBITS TO SUCH DOCUMENTS, UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO SUCH DOCUMENTS) WHICH HAVE BEEN INCORPORATED BY REFERENCE HEREIN. SUCH REQUESTS SHOULD BE DIRECTED TO KENNETH E. SHENENBERGER, SECRETARY, FULTON FINANCIAL CORPORATION, ONE PENN SQUARE, P.0. BOX 4887, LANCASTER, PENNSYLVANIA 17604, TELEPHONE: (717) 291-2427. IN ORDER TO INSURE TIMELY DELIVERY OF SUCH DOCUMENTS, ANY SUCH REQUEST SHOULD BE MADE BY JANUARY 10, 1996. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE ----------------------------------------------- The following documents and information are hereby incorporated by reference into this Proxy Statement/Prospectus: 1. FFC's Annual Report on Form 10-K for the year ended December 31, 1994. 2. FFC's Quarterly Reports on Form 10-Q for the quarters ended March 31, 1995, June 30, 1995, and September 30, 1995. 3. FFC's Current Report on Form 8-K dated November 9, 1995. 4. GCB's Annual Report on Form 10-K for the year ended December 31, 1994. 5. GCB's 1994 Annual Report to Shareholders (the "Annual Report"), a copy of which is attached as Exhibit E to this Proxy Statement/Prospectus, including without limitation the following portions: (a) "Selected Consolidated Financial Data," at pages 2-6 of the Annual Report; (b) "Management's Discussion and Analysis of Financial Condition and Results of Operations," at pages 7-10 of the Annual Report; and (c) "Market for the Company's Common Equity and Related Shareholder Matters," at page 23 of the Annual Report. 6. GCB's Quarterly Reports on Form 10-Q for the quarters ended March 31, 1995, and June 30, 1995. 7. GCB's Quarterly Report on Form 10-Q for the quarter ended September 30, 1995, a copy of which is attached as Exhibit F to this Proxy Statement/Prospectus. 8. GCB's Current Report on Form 8-K, dated November 3, 1995. All documents filed by FFC and by GCB pursuant to Sections 13(a), 13(c), 14, or 15(d) of the 1934 Act after the date of this Proxy Statement/Prospectus and prior to the Annual Meeting are hereby incorporated by reference into this Proxy Statement/Prospectus and shall be deemed a part hereof from the date of filing of each such document. Any statement contained in a document incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Proxy Statement/Prospectus to the extent that a statement contained herein or in any other subsequently filed document which is also incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Proxy Statement/Prospectus. TABLE OF CONTENTS Page SUMMARY...................................................................... The GCB Special Meeting................................................ Purpose of the Meeting................................................. The Parties............................................................ Required Vote.......................................................... Terms of the Merger.................................................... Conversion and Exchange of Shares of GCB Common Stock.................. Reasons for the Merger................................................. Opinion of GCB's Financial Advisor..................................... Management and Operations Following the Merger......................... Effective Date......................................................... Termination of the Merger Agreement.................................... Comparison of Shareholder Rights....................................... Restrictions on Resales by Affiliates.................................. Federal Income Tax Consequences........................................ Accounting Treatment................................................... Dissenters' Rights..................................................... Limitations on Negotiations; Warrant Granted to FFC.................... Conditions and Amendment............................................... Comparative Stock Prices............................................... Selected Historical and Pro Forma Combined Per Share Data.............. Selected Historical Financial Data..................................... GENERAL INFORMATION--SPECIAL MEETING OF GCB SHAREHOLDERS..................... Introduction........................................................... Date, Time and Place of Special Meeting................................ Shareholders Entitled to Vote.......................................... Purpose of Meeting..................................................... Solicitation of Proxies................................................ Quorum and Required Vote............................................... Revocation and Voting of Proxies....................................... Shares Outstanding and Principal Holders Thereof....................... Interests of Certain Persons in Matters To Be Acted Upon............... Recommendation of the Board of Directors of GCB........................ THE FFC/GCB MERGER General Information.................................................... Background of the Merger............................................... Reasons for the Merger; Recommendations of the GCB Board............... Additional Reasons for the Merger...................................... Opinion of Financial Advisor........................................... Conversion and Exchange of Shares...................................... Treatment of Outstanding Options....................................... Business Pending The Effective Date.................................... Conditions, Amendment and Termination.................................. Effective Date of the Merger........................................... Management and Operations Following the Merger......................... Federal Income Tax Consequences........................................ Accounting Treatment................................................... Amendment of The Gloucester County Bankshares, Inc. 1992 Stock Option Plan.................................................... Rights of Dissenting Shareholders...................................... Restrictions on Resale of FFC Common Stock Held By Affiliates of GCB.................................................................. Warrant Agreement...................................................... Comparative Stock Prices and Dividends and Related Shareholder Matters.......................................... Common Stock of FFC.................................................... i Common Stock of GCB.................................................... PRO FORMA COMBINED FINANCIAL INFORMATION..................................... INFORMATION CONCERNING FULTON FINANCIAL CORPORATION AND DESCRIPTION OF FFC COMMON STOCK.......................................... General................................................................ Loan Policies and Portfolio Quality.................................... Legal Proceedings...................................................... General Description of FFC Common Stock................................ Dividends.............................................................. Dividend Reinvestment Plan............................................. Securities Laws........................................................ Antitakeover Provisions................................................ Indemnification........................................................ Comparison of Shareholder Rights....................................... INFORMATION CONCERNING GLOUCESTER COUNTY BANKSHARES, INC..................... Description of Business and Property................................... GCB Common Stock Market Price and Dividends............................ Information About Directors and Executive Officers..................... Selected Historical Financial Data..................................... EXPERTS...................................................................... LEGAL MATTERS................................................................ ADDITIONAL INFORMATION....................................................... OTHER MATTERS................................................................ EXHIBITS Exhibit A - Merger Agreement........................................ A-1 Exhibit B - Opinion of Berwind Financial Group, L.P................. B-1 Exhibit C - Warrant Agreement and Warrant........................... C-1 Exhibit D - Amendment No. 1 to The Gloucester County Bankshares, Inc. 1992 Stock Option Plan.................... D-1 * Exhibit E - 1994 Annual Report to Shareholders of Gloucester County Bankshares, Inc................................. E-1 * Exhibit F - Quarterly Report on Form 10-Q of Gloucester County Bankshares, Inc. for the Quarter Ended September 30, 1995.................................. F-1 * Filed with the Securities and Exchange Commission under Form SE ii SUMMARY ------- The following is a summary of certain information set forth in this Proxy Statement/Prospectus regarding the Merger between GCB and FFC. This summary is provided for convenience only and does not set forth completely all material features of the Merger. This summary should be read in conjunction with and is qualified in its entirety by the more detailed information which is set forth elsewhere in this Proxy Statement/Prospectus and the attached Exhibits or which is incorporated herein by reference. The GCB Special Meeting ----------------------- A Special Meeting of the shareholders of GCB will be held on January 24, 1996, at 10:30 a.m., local time, at Ron Jaworski's Eagle's Nest Country Club, Woodbury-Glassboro Road, Deptford, New Jersey. Only those shareholders of record at the close of business on December 11, 1995, will be entitled to receive notice of and to vote at the meeting. As of the record date, there were outstanding 970,279 shares of the common stock, par value $5.00 per share, of GCB ("GCB Common Stock"), each of which is entitled to one vote. See GENERAL INFORMATION--SPECIAL MEETING OF GCB SHAREHOLDERS. Purpose of the Meeting ---------------------- The shareholders of GCB will be asked at the Special Meeting to consider and vote upon a proposal to approve and adopt the Merger Agreement, dated October 25, 1995, between FFC and GCB, under the terms of which (i) GCB will merge with and into FFC (the "Merger"), (ii) FFC will survive the Merger, and (iii) each of the issued and outstanding shares of GCB Common Stock will be converted into the right to receive a specified number of shares of the common stock, par value $2.50 per share, of FFC ("FFC Common Stock"). GCB's shareholders will receive cash in lieu of fractional shares of FFC Common Stock. The Bank of Gloucester County (the "Bank"), a wholly-owned subsidiary of GCB, will become a wholly-owned subsidiary of FFC as a result of the Merger. Approval of the Merger will also constitute approval of an amendment to The Gloucester County Bankshares, Inc. 1992 Stock Option Plan, which extends the term during which members of the Board of Directors of GCB may hold stock options granted to them. See THE FFC/GCB MERGER; the Merger Agreement, dated October 25, 1995, between FFC and GCB, without exhibits or schedules (the "Merger Agreement"), a copy of which is attached as Exhibit A to this Proxy Statement/Prospectus; and Amendment No. 1 to The Gloucester County Bankshares, Inc. 1992 Stock Option Plan, a copy of which is attached as Exhibit D to this Proxy Statement/Prospectus. The Parties ----------- Fulton Financial Corporation: Fulton Financial Corporation ("FFC") is a ---------------------------- Pennsylvania business corporation and a registered bank holding company that maintains its headquarters in Lancaster, Pennsylvania. As a bank holding company, FFC engages in a general commercial and retail banking and trust business, and also in related financial businesses, through its bank and nonbank subsidiaries. FFC's bank subsidiaries currently operate eighty-four banking offices in Pennsylvania, fourteen banking offices in Maryland, and six banking offices in Delaware. As of September 30, 1995, FFC had consolidated total assets of approximately $3.3 billion. The principal assets of FFC are the following eight wholly-owned bank subsidiaries, each of which is a bank whose deposits are insured by the Federal Deposit Insurance Corporation ("FDIC"): (i) Fulton Bank, a Pennsylvania bank and trust company which is not a member of the Federal Reserve System, (ii) Farmers Trust Bank, a Pennsylvania bank and trust company which is a member of the Federal Reserve System, (iii) Swineford National 1 Bank, a national banking association which is a member of the Federal Reserve System, (iv) Lafayette Bank, a Pennsylvania bank and trust company which is not a member of the Federal Reserve System, (v) FNB Bank, National Association, a national banking association which is a member of the Federal Reserve System, (vi) Great Valley Savings Bank, a Pennsylvania stock savings bank which is not a member of the Federal Reserve System, (vii) Hagerstown Trust Company, a Maryland trust company which is not a member of the Federal Reserve System, and (viii) Delaware National Bank, a national banking association which is a member of the Federal Reserve System. In addition, FFC has three wholly-owned nonbank direct subsidiaries: (1) Fulton Financial Realty Company, which holds title to or leases certain properties on which Fulton Bank and Farmers Trust Bank maintain branch offices or other facilities, (2) Fulton Life Insurance Company, which engages in the business of reinsuring credit life, accident and health insurance that is directly related to extensions of credit by FFC's bank subsidiaries, and (3) Central Pennsylvania Financial Corp., which owns certain non-banking subsidiaries holding interests in real estate and a non-banking subsidiary which issued a collateralized mortgage obligation. The principal executive offices of FFC are located at One Penn Square, P.O. Box 4887, Lancaster, Pennsylvania 17604, and FFC's telephone number is (717) 291-2411. Gloucester County Bankshares, Inc.: Gloucester County Bankshares, Inc. ---------------------------------- ("GCB") is a New Jersey business corporation and a registered bank holding company that maintains its headquarters in Woodbury, New Jersey. GCB is the parent company of The Bank of Gloucester County (the "Bank"), which operates six banking offices in Gloucester County, New Jersey. The Bank is a New Jersey bank which is an FDIC-insured bank, but is not a member of the Federal Reserve System. As of September 30, 1995, GCB had total consolidated assets of approximately $192 million, and the Bank held total deposits of approximately $177 million. TBGC Investment Corp. is a Delaware business corporation which is a wholly-owned subsidiary of the Bank. The principal executive offices of GCB are located at 1100 Old Broadway, Woodbury, New Jersey 08096, and GCB's telephone number is (609) 845-0700. Required Vote ------------- The affirmative vote of shareholders holding at least two-thirds of the issued and outstanding shares of GCB Common Stock given at a duly convened meeting of the shareholders of GCB is required by GCB's Certificate of Incorporation in order to approve the Merger Agreement. As of October 25, 1995, the directors and executive officers of GCB and their affiliates owned beneficially approximately 19.83 percent of the outstanding shares of GCB Common Stock, and GCB understands that the directors and executive officers of GCB presently intend to vote (in their respective capacities as shareholders of GCB) their shares of GCB Common Stock in favor of the proposal to adopt the Merger Agreement. As of October 25, 1995, the directors and executive officers of FFC and their affiliates did not own any shares of GCB Common Stock. See GENERAL INFORMATION--SPECIAL MEETING OF GCB SHAREHOLDERS--Shares Outstanding and Principal Holders Thereof; and INFORMATION CONCERNING GLOUCESTER COUNTY BANKSHARES, INC. Terms of the Merger ------------------- Under the terms of the Merger Agreement: (i) GCB will be merged with and into FFC, (ii) FFC will survive the Merger, and (iii) each of the issued and outstanding shares of GCB Common Stock will be converted into the right to receive a specified number of shares of FFC Common Stock. GCB's shareholders 2 will receive cash in lieu of fractional shares of FFC Common Stock. In addition, the Bank will become a wholly-owned subsidiary of FFC as a result of the Merger. See THE FFC/GCB MERGER. Conversion and Exchange of Shares of GCB Common Stock ----------------------------------------------------- On the effective date of the Merger (the "Effective Date"), which is expected to occur during the first or second quarter of 1996, each share of GCB Common Stock then issued and outstanding will be converted into the right to receive a specified number of shares (the "Conversion Ratio") of FFC Common Stock, based on the Closing Market Price (defined below), as set forth below:
Conversion Closing Market Price Ratio -------------------- ---------- $20.000 and below 1.730 $20.125 1.718 $20.250 1.705 $20.375 1.693 $20.500 1.680 $20.625 1.668 $20.750 1.655 $20.875 1.642 $21.000 1.630 $21.125 1.617 $21.250 1.605 $21.375 1.592 $21.500 1.580 $21.625 1.567 $21.750 1.555 $21.875 1.542 $22.000 and above 1.530
The Conversion Ratio is subject to adjustment in the event of a stock dividend or similar transaction involving FFC Common Stock prior to the Effective Date. The Closing Market Price is defined in the Merger Agreement as the average of the average of the per share closing bid prices for FFC Common Stock, rounded up to the nearest $.125, for the ten (10) trading days immediately preceding the date which is two (2) business days before the Effective Date of the Merger, as reported on the NASDAQ National Market . No fractional shares of FFC Common Stock will be issued in connection with the Merger. In lieu of the issuance of any fractional share to which any former GCB shareholder would otherwise be entitled, each such former shareholder of GCB will receive in cash an amount equal to the fair market value of his or her fractional interest, which shall be determined by multiplying such fraction by the Closing Market Price. See THE FFC/GCB MERGER. Each former shareholder of GCB will be required to surrender to FFC the certificates representing GCB Common Stock held by him or her in accordance with the instructions which will be sent to him or her immediately following the Effective Date. Upon proper surrender of his or her GCB Common Stock certificates, each such former shareholder of GCB will be promptly issued a stock certificate representing the whole number of shares of FFC Common Stock into which such shareholder's shares of GCB Common Stock shall have been converted, together with a check in the amount of any cash, without interest, to which he or she is entitled in lieu of the issuance of a fractional share. FFC will withhold dividends payable after the Effective Date to any former sharehlder of GCB who has received written insructions from FFC but has not at that time surrendered his or her GCB Common Stock certificates. Any dividends so withheld will be paid, without interest, to any such former shareholder of GCB upon the proper surrender of his or her GCB Common Stock certificates. See THE FFC/GCB MERGER--Conversion and Exchange of Shares, and the Merger 3 Agreement attached as Exhibit A to this Proxy Statement/Prospectus. PLEASE DO NOT SEND ANY STOCK CERTIFICATES AT THIS TIME. Reasons for the Merger ---------------------- The Boards of Directors of FFC and GCB have determined that the Merger is in the best interests of both organizations. In the case of FFC, the acquisition of GCB will enable FFC to extend its operations into New Jersey. FFC considers New Jersey to be an attractive area for expansion of its business and believes that the acquisition of GCB will result in a favorable diversification of FFC's assets and earnings. FFC believes the Bank's market is similar to many of the markets that FFC's subsidiary banks currently serve, i.e., markets with a strong small business component. GCB's Board of Directors has concluded that, in the rapidly changing and increasingly competitive market for financial services, it can compete more effectively as part of a larger banking organization with more resources and a wider range of products and services than those which GCB's subsidiary, the Bank, currently offers. Through the Merger, the Bank can expand its resources and its range of products and services much sooner than it could through internal growth. The Bank has grown rapidly since its inception; additional capital will be required if such growth continues. In general, therefore, GCB is entering into the Merger because it can better maximize its shareholders' return through an affiliation with a larger, more diversified financial institution. GCB's Board of Directors believes that FFC's greater resources will enable the Bank to remain competitive and to offer expanded services to its customers and the communities it serves. In particular, FFC's strong small business services will further enhance the Bank's reputation in this area. In addition, the Merger with FFC will increase the liquidity of the stock held by GCB's shareholders by exchanging it for stock in a larger banking organization that is listed on the NASDAQ National Market. FFC anticipates that the Bank will retain a strong degree of autonomy which will enable it to preserve its commitment to community-oriented banking. See THE FFC/GCB MERGER--Background of the Merger; Reasons for the Merger; Recommendations of the GCB Board; and Additional Reasons for the Merger. Opinion of GCB's Financial Advisor ---------------------------------- GCB engaged Berwind Financial Group, L.P. ("Berwind") to act as its financial advisor for the purpose of evaluating the financial terms of the Merger. Berwind has delivered to GCB's Board of Directors an opinion stating that the Merger is fair to the shareholders of GCB from a financial point of view. A copy of Berwind's opinion is attached to this Proxy Statement/Prospectus as Exhibit B and should be read in its entirety with respect to the assumptions made and the other matters considered by Berwind in rendering its opinion. See THE FFC/GCB MERGER--Opinion of Financial Advisor. Management and Operations Following the Merger ---------------------------------------------- Under the terms of the Merger Agreement, GCB will merge with and into FFC, FFC will survive the Merger, the separate corporate existence of GCB will terminate on the Effective Date, and the Bank will become a wholly-owned banking subsidiary of FFC. Following the Merger, the Board of Directors of FFC will consist of (i) the same persons who are members of the Board of Directors of FFC immediately before the Merger, each of whom will serve until his or her successor is elected and has qualified, and (ii) Jeffrey G. Albertson, a director of GCB. Under the terms of the Merger Agreement, for a period of five years after the Effective Date of the Merger, the FFC Board of Directors shall nominate Mr. Albertson for election, and support his election, 4 at each annual meeting of shareholders of FFC at which Mr. Albertson's term expires. During such period, if Mr. Albertson ceases to serve as a director of FFC, the Board of Directors of the Bank shall have the right to designate one person to serve as a director of FFC, subject to the concurrence of FFC as to the person designated. Immediately following the Merger, the Board of Directors of the Bank will consist of the same persons who are members of the Board of Directors of the Bank immediately before the Merger, each of whom will serve until his or her successor is elected and has qualified. Effective Date -------------- The Merger will become effective upon the date specified in the Articles and Certificate of Merger filed with the Pennsylvania Department of State and the Secretary of State of the State of New Jersey, which will occur as soon as reasonably practicable after all applicable conditions to the consummation of the Merger have been met or waived. FFC and GCB presently intend to consummate the Merger during the first or second quarter of 1996, assuming that GCB's shareholders adopt the Merger Agreement, all required regulatory approvals are obtained, all applicable waiting periods have expired, and all other conditions have been met or waived as of the closing of the Merger. See THE FFC/GCB MERGER--Effective Date. Termination of the Merger Agreement ----------------------------------- Either FFC or GCB may terminate the Merger Agreement and cancel the Merger if (i) the other party has committed a material breach of any representation, warranty or covenant contained in the Merger Agreement and has not cured such breach within thirty (30) days after receiving written notice thereof, or (ii) all applicable conditions have not been satisfied by October 31, 1996. FFC and GCB may also terminate the Merger Agreement and cancel the Merger by mutual consent in writing. See THE FFC/GCB MERGER--Conditions, Amendment and Termination. Comparison of Shareholder Rights -------------------------------- Upon consummation of the Merger, the shareholders of GCB will become shareholders of FFC. There are differences between the rights of holders of GCB Common Stock and FFC Common Stock. These differences arise from (i) differences between the respective state laws applicable to GCB and FFC, and (ii) differences between the Certificate of Incorporation and Bylaws of GCB and the Articles of Incorporation and Bylaws of FFC. The most significant difference is that FFC has adopted a Shareholder Rights Plan, which provides FFC's shareholders with certain stock-related rights in the event of a hostile takeover, but may also have the effect of discouraging such a takeover, while GCB has not adopted any such plan. See INFORMATION CONCERNING FULTON FINANCIAL CORPORATION AND DESCRIPTION OF FFC COMMON STOCK--Antitakeover Provisions; Comparison of Shareholder Rights. Restrictions on Resales by Affiliates ------------------------------------- The resale of shares of FFC Common Stock received in connection with the Merger by persons who are executive officers, directors or ten percent shareholders of GCB will be subject to certain restrictions. See THE FFC/GCB MERGER--Restrictions on Resale of FFC Common Stock Held by Affiliates of GCB. Federal Income Tax Consequences ------------------------------- The Merger is structured to qualify as a tax-free reorganization under Section 368 of the Internal Revenue Code of 1986, as amended. Accordingly, no taxable gain or loss will be recognized by the shareholders of GCB upon their 5 receipt of FFC Common Stock in exchange for GCB Common Stock, except to the extent that any shareholders of GCB receive cash in lieu of the issuance of fractional shares of FFC Common Stock. An opinion has been provided by Piper & Marbury L.L.P., counsel for GCB, confirming these and certain other federal income tax consequences of the Merger. However, each shareholder of GCB is urged to consult his or her own tax advisor concerning the particular tax consequences of the Merger as they affect his or her individual circumstances. See THE FFC/GCB MERGER--Federal Income Tax Consequences. Accounting Treatment -------------------- Consummation of the Merger is subject to the condition that the Merger can be treated as a pooling-of-interests for financial accounting purposes. FFC currently intends to exercise its right to cancel the Merger if such condition could not be satisfied. See THE FFC/GCB MERGER--Accounting Treatment. Dissenters' Rights ------------------ The shareholders of GCB are not entitled to exercise dissenters' rights, in accordance with the provisions of Section 14A:11-1 of the New Jersey Business Corporation Act. See THE FFC/GCB MERGER--Rights of Dissenting Shareholders. Limitations on Negotiations; Warrant Granted to FFC --------------------------------------------------- The Merger Agreement provides that GCB shall not, nor shall it permit any officer, director, employee, agent, consultant or representative to: (a) solicit, initiate or encourage any proposal for a merger with or other acquisition of GCB, the Bank or TBGC Investment Corp. or any material portion of their assets or properties, with or by any person other than FFC; or (b) cooperate with, or furnish any non-public information concerning GCB, the Bank or TBGC Investment to, any person in connection with such a proposal; provided, however, that the GCB Board of Directors shall be free to take such action as Board of Directors determines, in good faith, that in the exercise of its fiduciary duties, after receipt of a written opinion of outside counsel, is required in the best interests of GCB and its shareholders. Simultaneously with the execution of the Merger Agreement, GCB and FFC entered into a Warrant Agreement, dated October 25, 1995 (the "Warrant Agreement"), a copy of which is attached hereto as Exhibit C. Pursuant to the Warrant Agreement, GCB has issued to FFC a warrant (the "Warrant") to purchase an aggregate of up to 241,056 fully paid and non-assessable shares of GCB Common Stock at a price per share equal to $17.00, the price at which GCB Common Stock had recently traded prior to the date of execution of the Warrant Agreement, subject to adjustment as provided for in the Warrant Agreement and the Warrant. The Warrant is exercisable only upon the occurrence of specified events relating generally to the support by GCB or the Bank of a proposal to acquire GCB or the Bank by a party other than FFC, an acquisition by a third party or group of 25% or more of the outstanding shares of GCB Common Stock, or the failure of GCB's shareholders to approve the Merger following the announcement by any party other than FFC of an offer or proposal to acquire 25% or more of the outstanding shares of GCB Common Stock. To the knowledge of GCB, no event giving rise to the right to exercise the Warrant has occurred as of the date of this Proxy Statement/Prospectus. The execution of the Warrant Agreement was required by FFC as a condition to its execution of the Merger Agreement, and the effect of the Warrant Agreement is to increase the likelihood that the Merger will occur by making it more difficult and expensive for another party to acquire GCB. See THE FFC-GCB MERGER--Warrant Agreement. The foregoing provisions may have the effect of discouraging competing offers to acquire or merge with GCB. 6 Conditions and Amendment ------------------------ Consummation of the Merger is subject to various conditions and contingencies, including, among others, approval by the shareholders of GCB, approval by the Federal Reserve Board, approval by the New Jersey Department of Banking, notice to the Maryland State Bank Commissioner, and the absence of an injunction issued by a court of competent jurisdiction enjoining the performance by FFC or GCB of any of their obligations under the Merger Agreement. To the extent permitted by law, the Merger Agreement may be amended at any time before the Effective Date by a written instrument duly authorized, executed and delivered by FFC and GCB; provided, however, that any amendment to the ratio at which shares of GCB Common Stock will be converted into shares of FFC Common Stock shall not take effect until such amendment has been approved, adopted or ratified by the shareholders of GCB in accordance with applicable New Jersey law. See THE FFC/GCB MERGER--Conditions, Amendment and Termination. Comparative Stock Prices ------------------------ On October 24, 1995, the last trading day before public announcement of the Merger Agreement, the per share closing bid and asked quotations for FFC Common Stock were $21.75 and $22.50, respectively, as reported on the NASDAQ National Market ("NASDAQ"). The pro forma equivalent per share closing bid and asked quotations for such date, based on an assumed exchange ratio of 1.555 shares of FFC Common Stock for each share of GCB Common Stock, were $33.82 and $34.99, respectively. The foregoing historical and pro forma equivalent per share market information is summarized in the following table:
Pro Forma Historical Equivalent Price Per Share Price Per Share --------------- --------------- FFC Common Stock ---------------- 10/24/95 Bid Price $21.75 $33.82 10/24/95 Asked Price $22.50 $34.99 GCB Common Stock ---------------- 10/24/95 Bid Price $20.00 10/24/95 Asked Price $20.00
The high and low quotations on NASDAQ for FFC Common Stock on December 4, 1995, were $22.25 and $21.25, respectively, per share. The local over-the- counter market price for GCB Common Stock on October 24, 1995, was $20.00 per share. More detailed information concerning comparative stock prices is set forth elsewhere in this Proxy Statement/Prospectus. See THE FFC/GCB MERGER-- Comparative Stock Prices and Dividends and Related Shareholder Matters. Selected Historical and Pro Forma Combined Per Share Data --------------------------------------------------------- The following tables set forth, at the dates and for the periods indicated, financial information relating to FFC Common Stock and GCB Common Stock on a per share historical and pro forma combined basis. The pro forma and equivalent per share information is presented on the 7 basis of an assumed exchange ratio of 1.555 shares of FFC Common Stock for each share of GCB Common Stock. The information set forth in the tables below should be read in conjunction with the pro forma combined financial information, including the notes thereto, set forth elsewhere in this Proxy Statement/Prospectus, the financial statements of FFC, including the notes thereto, which are incorporated herein by reference, and the financial statements of GCB, including the notes thereto, which are incorporated by reference in this Proxy Statement/Prospectus. See PRO FORMA COMBINED FINANCIAL INFORMATION; INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE. 8 Selected Historical and Pro Forma Combined Per Share Data
As of and for the Year Ended December 31 ----------------------------------------------------- FULTON FINANCIAL CORPORATION (FFC) 1994 1993 1992 1991 1990 - --------------------------------- --------- ---------- -------- -------- -------- Historical Per Common Share: Average Shares Outstanding (B) 28,192,160 28,001,613 27,945,947 27,785,559 27,584,146 Book Value $10.85 $ 10.28 $ 9.32 $ 8.79 $ 8.05 Cash Dividends $0.587 $ 0.527 $0.431 $0.407 $0.388 Income From Operations: Income Before Cumulative Effect of $ 1.44 $ 1.30 $ 0.96 $ 1.08 $ 1.06 Changes in Accounting Principles Cumulative Effect of Changes in -- ($0.12) -- -- -- Accounting Principles --------- ---------- ----------- --------- ---------- Net Income $ 1.47 $ 1.18 $ 0.96 $ 1.13 $ 1.08 FFC, GCB Combined Pro Forma Per Common Share (A): Average Shares Outstanding 29,700,944 29,510,397 29,454,731 29,294,343 29,092,930 Book Value $10.68 $ 10.11 $ 9.15 $ 8.61 $ 7.91 Cash Dividends $0.557 $ 0.500 $0.409 $0.386 $0.367 Income From Operations: Income Before Cumulative Effect of Changes in Accounting Principles $ 1.43 $ 1.28 $ 0.93 $ 1.05 $ 1.01 Cumulative Effect of Changes in Accounting Principles -- ($0.11) -- -- -- --------- ---------- ----------- --------- ---------- Net Income $ 1.43 $ 1.17 $ 0.93 $ 1.05 $ 1.01
(A) The above combined pro forma per share information is based on average shares outstanding during the period except for the book value per share which is based on period end shares outstanding. The number of shares in each case has been adjusted for stock dividends by each institution through the periods. (B) Average shares outstanding is presented for primary per share data only. There is no fully diluted per share data. 9 Selected Historical and Pro Forma Combined Per Share Data
As of and For Nine Months Ended September 30 -------------------------------------------- FULTON FINANCIAL CORPORATION (FFC) - ---------------------------------- 1995 1994 -------------------------- Historical Per Common Share: Average Shares Outstanding (B) 28,405,454 28,100,151 Book Value $11.73 $10.75 Cash Dividends $0.486 $0.438 Net Income $1.18 $1.06 FFC, GCB Combined Pro Forma Per Common Share (A): Average Shares Outstanding 29,914,238 29,608,935 Book Value $11.61 $10.58 Cash Dividends $0.461 $0.416 Net Income $1.19 $1.06
(A) The above combined pro forma per share information is based on average shares outstanding during the period except for the book value per share which is based on period end shares outstanding. The number of shares in each case has been adjusted for stock dividends by each institution through the periods. (B) Average shares outstanding is presented for primary per share data only. There is no fully diluted per share data. 10 Selected Historical and Pro Forma Combined Per Share Data
As of and for the Year Ended December 31 ------------------------------------------------- GLOUCESTER COUNTY BANKSHARES CORP. (GCB) 1994 1993 1992 1991 1990 -------- --------- -------- -------- -------- Historical Per Common Share: Average Shares Outstanding (B) 970,279 970,279 970,279 970,279 970,279 Book Value $11.62 $10.59 $9.16 $8.64 $8.12 Cash Dividends -- -- -- -- -- Income From Operations: Income Before Extraordinary Item $2.10 $1.44 $0.52 $0.49 $0.09 Extraordinary Item--Tax Benefit of Net Operating Loss Carry Forwards -- -- -- $0.03 $0.04 Net Income $2.10 $1.44 $0.52 $0.52 $0.13 GCB, FFC Combined Pro Forma Equivalent Per Common Share:(A) Book Value $16.61 $15.72 $14.23 $13.41 $12.30 Cash Dividends $0.87 $0.78 $0.64 $0.60 $0.57 Income From Operations: Income Before Extraordinary Item $2.23 $2.00 $1.45 $1.63 $1.57 Extraordinary Item-Tax Benefit of Net Operating Loss Carry Forwards -- -- -- -- -- Net Income $2.23 $1.82 $1.45 $1.63 $1.57
(A) The above combined pro forma per share equivalent information is based on average shares outstanding during the period except for the book value per share which is based on period end shares outstanding. The number of shares in each case has been adjusted for stock dividends by each institution through the periods. (B) Average shares outstanding is presented for primary per share data only. There is no fully diluted per share data. 11 Selected Historical and Pro Forma Combined Per Share Data
As of and For Nine Months Ended September 30 -------------------------------------------- GLOUCESTER COUNTY BANKSHARES, INC.(GCB) 1995 1994 - -------------------------------------- --------------------- Historical Per Common Share: Average Shares Outstanding Primary 970,279 970,279 Fully Diluted 1,041,280 -- Book Value $14.61 $11.27 Cash Dividends -- -- Net Income: Primary $2.11 $1.62 Fully Diluted $1.99 -- GCB, FFC Combined Pro Forma Equivalent Per Common Share (A): Book Value $18.05 $16.46 Cash Dividends $0.72 $0.65 Net Income: Primary $1.85 $1.64 Fully Diluted $1.99 --
(A) The above combined pro forma per share equivalent information is based on average shares outstanding during the period except for the book value per share which is based on period end shares outstanding. The number of shares in each case has been adjusted for stock dividends by each institution through the periods. 12 Selected Historical Financial Data ---------------------------------- The following tables present selected unaudited historical financial data for FFC and GCB. The following information should be read in conjunction with the pro forma combined financial information, including the notes thereto, set forth elsewhere in this Proxy Statement/Prospectus, the financial statements of FFC, including the notes thereto, which are incorporated herein by reference, and the financial statements of GCB, including the notes thereto, which are included in the documents attached as Exhibits E and F to this Proxy Statement/Prospectus. See PRO FORMA COMBINED FINANCIAL INFORMATION; INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE; Exhibit E--1994 Annual Report to Shareholders of Gloucester County Bankshares, Inc.; and Exhibit F--Quarterly Report on Form 10-Q of Gloucester County Bankshares, Inc. for the Quarter ended September 30, 1995. 13 Fulton Financial Corporation Selected Historical Financial Data (In Thousands) ---------------------------------- As of and For Nine Months Ended September 30 --------------------------------------------
Summary of Operations 1995 1994 - --------------------- ----------------------- Net interest income $99,793 $91,003 Provision for loan losses 1,572 1,570 ----------------------- Net interest income after provision for loan losses 98,221 89,433 Other operating income 20,603 19,808 Other operating expense 74,341 70,052 Income tax expense 10,861 9,462 ----------------------- Net Income $33,622 $29,727 ======================= Average Balance Sheet Totals - ---------------------------- Total assets $3,176,223 $2,873,922 Investment securities and money market investments 684,578 763,797 Loans and leases (net of unearned income) 2,248,023 1,884,431 Total deposits 2,639,059 2,384,972 Long-term debt and lease obligations 29,524 14,211 Shareholders' equity 318,489 294,424 Period End - ---------- Total assets $3,266,812 $2,915,299 Long-term debt and lease obligations 35,912 8,060
14 Fulton Financial Corporation Selected Historical Financial Data (In Thousands) ----------------------------------
As of and For the Year Ended December 31 ------------------------------------------------------------ Summary of Operations 1994 1993 1992 1991 1990 - --------------------- ------------------------------------------------------------ Net interest income $ 124,171 $115,083 $107,564 $101,024 $90,113 Provision for loan losses 2,255 4,926 14,852 6,091 5,446 ------------------------------------------------------------ Net interest income after provision for loan losses 121,916 110,157 92,712 94,933 84,667 Other operating income 25,801 28,432 24,671 19,381 16,806 Other operating expense 94,004 91,782 84,435 76,862 65,647 Income tax expense 13,233 10,285 6,077 7,334 6,508 ------------------------------------------------------------ Income before cumulative effect of changes in accounting principles 40,480 36,522 26,871 30,118 29,318 Cumulative effects of changes in accounting principles: Income Taxes -- 1,764 72 -- -- Non-pension post-retirement benefits, net of taxes -- (5,221) -- -- -- ------------------------------------------------------------ Net Income $40,480 $33,065 $26,943 $30,118 $29,318 ============================================================ Average Balance Sheet Totals - ---------------------------- Total assets $2,949,643 $2,770,701 $2,687,869 $2,561,855 $2,313,069 Investment securities and money market investments 750,381 762,528 657,596 607,256 548,731 Loans and leases (net of unearned income) 1,964,970 1,792,632 1,737,712 1,678,592 1,519,786 Total deposits 2,440,819 2,383,286 2,352,687 2,221,798 1,976,106 Long-term debt and lease obligations 17,758 11,545 15,636 15,763 16,646 Shareholders' equity 297,784 268,303 252,395 233,212 213,738 Period End - ---------- Total assets $3,178,696 $2,824,312 $2,791,039 $2,654,209 $2,382,466 Long-term debt and lease obligations 27,283 13,051 16,764 15,199 16,230
15 Gloucester County Bankshares, Inc. Selected Historical Financial Data (In Thousands) ---------------------------------- As of and For Nine Months Ended September 30 --------------------------------------------
Summary of Operations 1995 1994 - --------------------- ----------------- Net interest income $7,275 $5,555 Provision for loan losses 450 248 ----------------- Net interest income after provision for loan losses 6,825 5,307 Other operating income 681 554 Other operating expense 4,228 3,475 Income tax expense 1,230 815 ------------------ Net Income $2,048 $1,571 ================== Average Balance Sheet Totals - ---------------------------- Total assets $178,045 $139,149 Investment securities and money market investments 44,887 38,206 Loans and leases (net of unearned income) 122,000 92,572 Total deposits 164,226 128,013 Long-term debt and lease obligations -- -- Shareholders' equity 12,818 10,616 Actual Balance at Period End - ---------------------------- Total assets $192,248 $151,171 Long-term debt and lease obligations -- --
16 Gloucester County Bankshares, Inc. Selected Historical Financial Data (In Thousands) ----------------------------------
As of and for the Year Ended December 31 ---------------------------------------------------- Summary of Operations 1994 1993 1992 1991 1990 - --------------------- ------------------------------------------- Net interest income $7,759 $5,619 $3,775 $2,223 $1,600 Provision for loan losses 460 750 585 386 340 --------------------------------------------- Net interest income after provision for loan losses 7,299 4,869 3,190 1,837 1,260 Other operating income 596 1,507 893 1,151 253 Other operating expense 4,801 4,264 3,302 2,277 1,388 Income tax expense 1,056 7 18 275 240 40 --------------------------------------------- Income before extraordinary item 2,038 1,394 506 471 85 Extraordinary item--tax benefit of net operating loss carry forwards -- -- -- 30 40 --------------------------------------------- Net Income $2,038 $1,394 $506 $501 $125 ============================================= Average Balance Sheet Totals - -------------------------------- Total assets $143,600 $114,137 $ 82,569 $47,260 $26,373 Investment securities and money market investments 38,747 37,951 33,047 16,656 10,119 Loans and leases (net of unearned income) 96,097 68,846 44,497 27,793 15,032 Total deposits 132,627 103,617 73,895 39,065 18,582 Long term debt and lease obligations -- -- -- -- -- Shareholders' equity 10,779 9,723 8,224 7,926 7,537 Period End - ---------- Total assets $159,731 $130,596 $104,971 $68,179 $37,695 Long term debt and lease obligations -- -- -- -- --
17 GENERAL INFORMATION--SPECIAL MEETING OF GCB SHAREHOLDERS -------------------------------------------------------- Introduction - ------------ This Proxy Statement/Prospectus is being furnished to the holders of GCB Common Stock in connection with the solicitation by GCB's Board of Directors of proxies to be voted at the Special Meeting to be held on January 24, 1996. The purpose of the meeting is to consider and vote upon a proposal adopted by the Board of Directors of GCB to approve and adopt the Merger Agreement between FFC and GCB, the terms of which are described herein. All information set forth in this Proxy Statement/Prospectus which relates to FFC has been provided or verified by FFC, and all information which relates to GCB has been provided or verified by GCB. Date, Time and Place of Special Meeting - --------------------------------------- The Special Meeting of the shareholders of GCB will be held on January 24, 1996, at 10:30 a.m., local time, at Ron Jaworski's Eagle's Nest Country Club, Woodbury-Glassboro Road, Deptford, New Jersey. Shareholders Entitled to Vote - ----------------------------- The Board of Directors of GCB has fixed the close of business on December 11, 1995 as the record date (the "Record Date") for the determination of holders of GCB Common Stock entitled to receive notice of and to vote at the Special Meeting. Purpose of Meeting - ------------------ The shareholders of GCB will be asked at the Special Meeting to consider and vote upon: (i) a proposal to approve and adopt the Merger Agreement and Amendment No. 1 to The Gloucester County Bankshares, Inc. 1992 Stock Option Plan, and (ii) such other matters as may properly be brought before the meeting and any adjournments thereof. Solicitation of Proxies - ----------------------- This Proxy Statement/Prospectus is furnished in connection with the solicitation of proxies, in the accompanying form, by the Board of Directors of GCB for use at the Special Meeting and at any adjournments thereof. The expenses to be incurred in soliciting proxies will be borne by GCB. In addition to the use of the mails, the directors, officers and employees of GCB may, without additional compensation, solicit proxies personally or by telephone or telegram. Quorum and Required Vote - ------------------------ Each share of GCB Common Stock is entitled to one vote on all matters submitted to a vote of the shareholders. The holders of a majority of the outstanding shares of GCB Common Stock, present either in person or by proxy, will constitute a quorum for the transaction of business at the Special Meeting. The judges of election will treat shares of GCB Common Stock represented by a properly signed and returned proxy as present at the Special Meeting for purposes of determining a quorum, without regard to whether the proxy is marked as casting a vote or abstaining. Likewise, the judges of election will treat shares of GCB Common Stock represented by "broker non-votes" (i.e., shares of --- GCB Common Stock held in record name by brokers or nominees as to which (i) instructions have not been received from the beneficial owners or 18 persons entitled to vote, (ii) the broker or nominee does not have discretionary voting power under applicable rules of the National Association of Securities Dealers, Inc. or the instrument under which it serves in such capacity, and (iii) over which the record holder has indicated on the proxy card or otherwise notified GCB that it does not have authority to vote such shares on that matter) as present for purposes of determining a quorum. The affirmative vote of shareholders holding at least two-thirds of the issued and outstanding shares of GCB Common Stock at the Special Meeting is required by GCB's Charter in order to approve the Merger Agreement. Abstentions and broker non-votes will be counted as shares of GCB Common Stock that are outstanding, but will not be counted as votes in favor of adoption of the Merger Agreement. Consequently, abstentions and broker non-votes will have the same effect as a vote against adoption of the Merger Agreement. Revocation and Voting of Proxies - -------------------------------- The execution and return of the enclosed proxy form will not affect a shareholder's right to attend the Special Meeting and to vote in person. Any proxy given pursuant to this solicitation may be revoked at any time before the proxy is voted at the Special Meeting, by (i) delivering notice of revocation or a later-dated proxy to Dale T. Taylor, Secretary, Gloucester County Bankshares, Inc., 1100 Old Broadway, Woodbury, New Jersey 08096, or (ii) appearing at the meeting and notifying the person in charge thereof that the shareholder wishes to vote his or her shares of GCB Common Stock in person. Unless revoked, any proxy given pursuant to this solicitation will be voted at the Special Meeting in accordance with the instructions thereon of the shareholder giving the proxy. In the absence of instructions, all proxies will be voted FOR the proposal to approve the Merger Agreement between GCB and FFC, which also constitutes a vote FOR the proposal to approve Amendment No. 1 to The Gloucester County Bankshares, Inc. 1992 Stock Option Plan. Although the Board of Directors knows of no other business to be presented at the Special Meeting, in the event that any other matters are properly brought before the meeting and in the absence of instructions to the contrary, any proxy given pursuant to this solicitation will be voted in accordance with the recommendations of the management of GCB. Shares Outstanding and Principal Holders Thereof - ------------------------------------------------ As of the close of business on December 11, 1995, GCB had outstanding 970,279 shares of $5.00 par value per share Common Stock, which shares were held by approximately 680 holders of record. GCB has no other stock issued or outstanding. There are 136,001 shares of GCB Common Stock reserved for issuance upon the exercise of outstanding stock options granted under GCB's Stock Option Plan and 241,056 shares of GCB Common Stock reserved for issuance upon exercise of the Warrant. As of November 8, 1995, the directors and executive officers of GCB and their affiliates owned beneficially a total of 192,426 shares of GCB Common Stock (representing approximately 19.83 percent of such shares issued and outstanding) and intend to vote these shares of GCB Common Stock in favor of the proposal to approve the Merger Agreement. To the knowledge of GCB's management, as of December 11, 1995, no person owned of record or beneficially more than five percent of the outstanding shares of GCB Common Stock. 19 Interests of Certain Persons in Matters To Be Acted Upon - -------------------------------------------------------- Except as described in this section, the directors and executive officers of GCB have no substantial interest in the Merger, other than in their capacity as shareholders of GCB. As shareholders, the directors and executive officers of GCB will be entitled to receive FFC Common Stock in exchange for their GCB Common Stock in the same proportion and on the same terms and conditions as all other shareholders of GCB. Directors of GCB and the Bank who are not also executive officers of the Bank currently receive $300 for each Board meeting attended, $300 for each Loan Committee meeting attended, and $125 for each other Committee (other than the Loan Committee) meeting attended. The director who chairs a Board or committee meeting receives an additional $50 per meeting attended. Additionally, the Chairman, Vice Chairman and Secretary of the Bank's Board of Directors receive annual stipends of $7,200, $6,000 and $4,800, respectively. Upon completion of the Merger, FFC has agreed for a period of five years following the Merger to continue in office the present directors and advisory directors of the Bank who indicate their desire to serve in their respective capacities. In lieu of the current fee structure, each non-employee director of the Bank who is serving in such capacity as of the Effective Date shall receive director's fees from the Bank of $10,000 annually. For a period of two years after the Effective Date, the Chairman of the Board, the Vice Chairman of the Board, the Secretary of the Board, and the Chairman of the Loan Committee shall be entitled to receive additional annual directors' fees not to exceed $2,000, $1,500, $1,000 and $1,000, respectively. Each director or advisory director of the Bank who has reached age 70 as of the Effective Date, or within three years thereafter, shall be permitted to serve for a period of at least three years after the Effective Date before becoming subject to FFC's mandatory retirement rules for directors. On or promptly after the Effective Date of the Merger, FFC will appoint Jeffrey G. Albertson to its Board of Directors. Mr. Albertson will receive the same annual fees and other benefits (including life insurance benefits) that are provided generally to non-employee directors of FFC. Non-employee directors of FFC currently receive an annual fee of $7,500. The Merger Agreement provides that, prior to the Effective Date, GCB and the Bank may enter into severance agreements with the following senior executives of the Bank: Warner A. Knobe, Scott H. Kintzing, Thomas J. Lobosco, Stephen R. Miller, Stephen F. Levitt, and Mary C. Traum (the "Senior Executives"). The Bank has entered into a Severance Agreement with each of the Senior Executives. The Severance Agreements provide that if the Senior Executive's employment is terminated involuntarily or constructively, for Messrs. Knobe and Kintzing, prior to the close of business on December 31, 1999, and, for Messrs. Levitt, Lobosco and Miller and Ms. Traum, prior to December 31, 1997 (the "Applicable Term"), the Bank is to continue to pay the Senior Executive his or her salary (subject to certain minimum salaries) in effect immediately prior to the date of termination until the end of the Applicable Term (but not less than one year following termination). The Severance Agreements also provide that Senior Executives may not, prior to the end of the Applicable Term, compete with the Bank in, for Messrs. Knobe and Kintzing, Gloucester County, New Jersey, and all contiguous counties in New Jersey, and for Messrs. Levitt, Lobosco and Miller and Ms. Traum, in Gloucester and Camden Counties, New Jersey. FFC has agreed, following the Merger, to cause the Bank to satisfy its obligations under such severance agreements with the Senior Executives. 20 In addition, GCB and the Bank have entered into indemnity agreements with each of their directors and executive officers. These indemnity agreements provide the respective indemnitees with contractual assurance of protection against certain personal liability (in addition to that provided by GCB or the Bank's Charter or By-Laws) arising out of the indemnitee's performance of his or her duties as an officer or director of GCB or of the Bank. FFC has agreed, in the Merger Agreement, to preserve the indemnity agreements for a period of five years after the Effective Date of the Merger. A condition precedent to FFC's obligation to consummate the Merger is the execution and delivery by each non-employee director of GCB of a Covenant Not to Compete restricting the ability of such directors to compete with the Bank in Gloucester County, New Jersey and all contiguous counties in New Jersey for a period of five years after the Effective Date. FFC has agreed, following the Merger, to cause the Bank to employ all officers and employees who were employed by GCB or the Bank as of the Effective Date; provided, that (i) such persons shall be employed after the Effective Date as employees "at will" subject to the continued satisfactory performance of their respective duties, (ii) except with respect to the Bank's Senior Executives (who will be offered individual compensation arrangements), the Bank shall pay compensation to each such person, on and after the Effective Date, that is at least equal to the aggregate compensation that such person was receiving from GCB or the Bank prior to the Effective Date, (iii) the Bank shall provide employee benefits to each such person who is a full-time employee, on and after the Effective Date, that are substantially equivalent in the aggregate to the employee benefits that such person was receiving as a full-time employee from GCB or the Bank prior to the Effective Date, and (iv) the Bank shall provide employee benefits to each such person who is a part-time employee, on or after the Effective Date, that are the same as the employee benefits that are being received at the applicable time by part-time employees of other banking subsidiaries owned by FFC. In addition, FFC has agreed to cause the Bank to satisfy the Bank's obligations under GCB's benefit plans. The Bank leases its principal office from 1100 Old Broadway Partnership. The partners of the latter include all of the members of the Board of Directors of GCB, except Warner A. Knobe, and two other individuals who are not affiliated with GCB or the Bank. The lease grants the Bank an option to purchase the office building from 1100 Old Broadway Partnership for a price determined in an appraisal process. The Bank intends to exercise this option before the Effective Date of the Merger, but has agreed in the Merger Agreement not to exercise the option without the prior written consent of FCC with respect to the appraiser chosen by the Bank. FFC has agreed not to unreasonably withhold its consent. GCB has granted options to purchase shares of GCB Common Stock ("GCB Options") to certain directors, officers and employees of GCB pursuant to its 1992 Stock Option Plan (the "Plan"). As of October 25, 1995, there were GCB Options outstanding to purchase 136,001 shares of GCB Common Stock. Under the terms of the Merger Agreement, each holder of a GCB Option that is outstanding on the Effective Date shall be entitled to receive from FFC an option (an "FFC Option") to acquire shares of FFC Common Stock. The number of shares of FFC Common Stock which may be acquired pursuant to such FFC Option shall be equal to the product of the number of shares of GCB Common Stock covered by the GCB Option multiplied by the Conversion Ratio, provided that any fractional share of FFC Common Stock resulting from such multiplication shall be 21 rounded to the nearest whole share. The exercise price per share of FFC Common Stock shall be equal to the exercise price per share of GCB Common Stock of such GCB Option, divided by the Conversion Ratio, provided that such exercise price shall be rounded to the nearest whole cent. The duration and other terms of such GCB Option shall be unchanged except that all references to GCB shall be deemed references to FFC, and each such FFC Option shall be exercisable at least until the stated expiration date of the corresponding GCB Option. FFC shall assume such stock options as contemplated by Section 424(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and to the extent GCB Options qualify as incentive stock options under Section 422 of the Code, the FFC Options exchanged therefor shall also so qualify. FFC shall not issue or pay for any fractional shares otherwise issuable upon exercise of a FFC Option. Prior to the Effective Date of the Merger, FFC shall reserve for issuance and, if not previously registered pursuant to the Securities Act of 1933, as amended, register the number of shares of FFC Common Stock necessary to satisfy FFC's obligations with respect to the issuance of FFC Common Stock pursuant to the exercise of FFC Options. Each holder of a GCB Option will be required to execute and deliver to FFC an agreement in which he or she agrees to accept the FFC Options in cancellation of his or her GCB Options. The directors and officers of FFC do not have any special interest in the Merger (other than in their capacity as shareholders of FFC) and will not receive any special consideration or compensation in connection with its consummation. Recommendation of the Board of Directors of GCB ----------------------------------------------- For the reasons stated in this Proxy Statement/Prospectus, the Board of Directors of GCB has approved the Merger Agreement and believes the Merger is in the best interests of the shareholders of GCB. Accordingly, the Board of Directors recommends that the shareholders vote in favor of the proposal to approve the Merger Agreement. See THE FCC/GCB MERGER--Background of the Merger, Reasons for the Merger; Recommendation of the Board of Directors of GCB, and Additional Reasons for the Merger. Certain of the directors and officers of GCB have personal interests in the consummation of the Merger in addition to their interests as shareholders of GCB. See GENERAL INFORMATION--SPECIAL MEETING OF GCB SHAREHOLDERS--Interests of Certain Persons in Matters To Be Acted Upon. 22 THE FFC/GCB MERGER ------------------ General Information - ------------------- The shareholders of GCB will be asked at the Special Meeting to consider and vote upon a proposal to approve the Merger Agreement between FFC and GCB. Under the Merger Agreement: (i) GCB will be merged with and into FFC, (ii) FFC will survive the Merger, and (iii) all of the outstanding shares of GCB Common Stock will be acquired by FFC and converted into the right to receive shares of FFC Common Stock. GCB is a New Jersey bank holding company with one banking subsidiary, The Bank of Gloucester County (the "Bank"). FFC is a Pennsylvania bank holding company. Following the Merger, the Bank will be a wholly-owned subsidiary of FFC without any change in its present corporate form, management, or board of directors; however, GCB will no longer exist as an independent corporate entity. FFC will be the new parent company of the Bank, and will continue to be a registered bank holding company that is regulated by the Federal Reserve Board. The precise terms and conditions of the Merger are set forth in the Merger Agreement, which is attached as Exhibit A to this Proxy Statement/Prospectus and is incorporated herein by reference. THE DISCUSSION WHICH FOLLOWS IS INTENDED ONLY AS A SUMMARY OF CERTAIN TERMS OF THE MERGER AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE MERGER AGREEMENT ATTACHED AS EXHIBIT A TO THIS PROXY STATEMENT/PROSPECTUS. The Board of Directors of GCB, by a unanimous vote of those directors present at its meeting on October 25, 1995, adopted the following resolutions approving the Merger Agreement: RESOLVED, that the Merger of [GCB] with and into [FFC] is approved on substantially the terms and conditions set forth in the Merger Agreement and Plan of Merger, subject to approval by bank supervisory authorities and to approval by [GCB's] shareholders; and that in reference to Article 11 of [GCB's] Certificate of Incorporation and having given due consideration to all relevant factors as contemplated thereby, the Board of Directors recommends to the shareholders the proposed Merger of [GCB] with and into [FFC]. RESOLVED, that the proper officers of [GCB] are hereby authorized and directed to execute, by and on behalf of [GCB], the Merger Agreement (and the Schedules thereto) and Plan of Merger, with such changes therein and modifications thereof as the officers signing the same shall approve (their signatures being conclusive evidence of their approval of the changes or modifications); and to deliver the Merger Agreement (and the Schedules thereto) and Plan of Merger to [FFC]. RESOLVED, that the Merger of [GCB] with and into [FFC] is declared advisable on substantially the terms and conditions set forth in the Merger Agreement and Plan of Merger and upon appropriate notice shall be submitted for consideration at the annual meeting of shareholders or a special meeting of shareholders to be called. RESOLVED, that appropriate officers of [GCB] (with the assistance of counsel and accountants for [GCB]) are authorized and directed to prepare (or to cooperate with [FFC] in the preparation of) proxy material for the meeting of shareholders and 23 to file the proxy material with the Securities and Exchange Commission for clearance. RESOLVED, that if the Merger Agreement and Plan of Merger is approved at the meeting of shareholders, the proper officers of [GCB] are authorized and directed to file an appropriate Certificate of Merger with the Secretary of State of the State of New Jersey. RESOLVED, that [GCB] issue to [FFC] a Warrant to purchase up to 241,056 shares of Common Stock, par value $5.00 per share, of [GCB], pursuant to the terms of a Warrant Agreement dated October 25, 1995 by and between [FFC] and [GCB] and the related Warrant attached as Exhibit A thereto, which Warrant and Warrant Agreement are hereby approved; that the issuance of 241,056 shares of Common Stock, pursuant to the Warrant against payment of the exercise price of at least $17.00 per share provided therein, is authorized; that a total of 241,056 shares of authorized but unissued shares of Common Stock are hereby reserved, so that the Warrant may be exercised. RESOLVED, that [GCB] will cause The Bank of Gloucester County (the "Bank") to exercise its option to purchase its principal office, located at 1100 Old Broadway, Woodbury, New Jersey, pursuant to Section 6 of the Lease Agreement dated April 5, 1989 by and between 1100 Old Broadway Partnership and the Bank, for a purchase price to be determined through procedures established in the Lease (provided, that [FFC] shall determine the appraiser for the Bank from among a list of approved appraisers provided by the President of the Bank); and that the closing of the purchase of the Bank's principal office shall occur on or before the effective date of the Merger. RESOLVED, that [GCB] adopt the amendment to the Gloucester County Bankshares, Inc. 1992 Stock Option Plan, attached hereto as Exhibit A, in order to permit the Merger to become effective without causing options granted to directors of [GCB] under the 1992 Stock Option Plan to terminate one year after the effective date of the Merger (so long as such persons are directors of the Bank), and submit the amendment for consideration at the annual meeting of shareholders or a special meeting of shareholders to be called; and that the amendment (and related amended option agreements) shall become effective upon the approval of the shareholders of [GCB]. RESOLVED, that [GCB] cause the Bank to enter into a Severance Agreement (in substantially the form attached hereto as Exhibit B) with each of Warner A. Knobe, Scott H. Kintzing, Thomas J. Lobosco, Stephen R. Miller, Stephen F. Levitt, and Mary C. Traum, with such changes therein and modifications thereof as the officers of the Bank signing the same shall approve (their signatures being conclusive evidence of their approval of the changes or modifications on behalf of the Bank); and that [GCB] cause the Bank to deliver an executed Severance Agreement to each of the respective employees of the Bank named above. RESOLVED, that [GCB] enter into an Indemnity Agreement (in substantially the form attached hereto as Exhibit C) with each of the directors of [GCB] and will cause the Bank to enter into an Indemnity Agreement (in substantially the form attached hereto as Exhibit C) with each of the directors of the Bank and with each of Warner A. Knobe, Scott H. Kintzing, Thomas J. Lobosco, Stephen R. 24 Miller, Stephen F. Levitt, and Mary C. Traum, with such changes therein and modifications thereof as the officers of [GCB] and the Bank signing the same shall approve (their signatures being conclusive evidence of their approval of the changes or modifications on behalf of [GCB] and the Bank); and that [GCB] will deliver, and will cause the Bank to deliver, an executed Indemnity Agreement to each of the respective directors of [GCB] and the Bank and to each of the respective employees the Bank named above. RESOLVED, that the proper officers of [GCB] are authorized and directed to take such additional action and execute such additional documents on behalf of [GCB] as they shall deem necessary or appropriate to consummate the Merger, the Merger Agreement and Plan of Merger, the Warrant Agreement, the Warrant, the transactions contemplated thereunder, the purchase of the Bank's principal office, the amendment to the Gloucester County Bankshares, Inc. 1992 Stock Option Plan, and the execution and delivery of the Severance Agreements and Indemnity Agreement. The Board of Directors of GCB believes that the Merger is in the best interests of the shareholders of GCB, and recommends that the shareholders vote for the following resolutions, which will be presented at the special meeting. RESOLVED, that the Merger of [GCB] with and into [FFC] is approved on substantially the terms and conditions set forth in the Merger Agreement, the Plan of Merger and the Articles and Certificate of Merger, subject to approval by bank supervisory authorities. RESOLVED, that the proper officers of [GCB] are authorized and directed to file the Articles and Certificate of Merger with the Secretary of State of the State of New Jersey and the Department of State of the Commonwealth of Pennsylvania. RESOLVED, that the proper officers of [GCB] are authorized and directed to take such additional actions and execute such additional documents on behalf of [GCB] as they shall deem necessary or appropriate to consummate the Merger, the Merger Agreement, the Plan of Merger, the Articles and Certificate of Merger and the transactions contemplated thereunder. RESOLVED, that Amendment No. 1 to The Gloucester County Bankshares, Inc. 1992 Stock Option Plan is approved as adopted by the Board of Directors of [GCB] on October 25, 1995. Background of the Merger - ------------------------ In August 1994, the Board of Directors of GCB decided to engage Berwind Financial Group, L.P. (then known as Berwind Financial Group, Inc.), an investment banking firm located in Philadelphia, Pennsylvania ("Berwind") to undertake a valuation of the Common Stock of GCB. GCB and Berwind executed an engagement letter dated September 15, 1994, pursuant to which Berwind agreed to provide, in addition to a valuation of GCB's stock, certain financial advisory services in connection with exploring strategic expansion opportunities. Berwind assembled financial and other information regarding GCB and the Bank; conducted a due diligence review of information regarding GCB; reviewed GCB's financial performance in relation to a peer group of similarly situated banks and bank holding companies; prepared a study summarizing its findings, which included GCB's anticipated capital needs, the types and 25 expected pricing levels of securities which it could offer, trading activity in GCB's Common Stock and the impact on it of capital offerings. In a second engagement letter dated September 28, 1994, Berwind agreed to perform additional financial advisory services for GCB and the Bank. The first phase of these additional services included an analysis of the current merger and acquisition market involving banks similar to the Bank; the formulation of a valuation range for GCB ; and the preparation of a study to be presented to the Executive Committee of GCB's Board of Directors summarizing the results of its analysis. Berwind would then perform the second phase of its additional services if GCB's Board of Directors then decided to pursue confidential merger discussions with other financial institutions. This second phase included a wide range of services, including developing selection criteria for potential merger partners; preparation of a list of potential merger partners; participating in and facilitating meetings and negotiations with potential merger partners; preparation of reports, analyses and updates; performance of necessary due diligence; and preparation of preliminary and final fairness opinions and any necessary legal and regulatory documents. In the following months, Berwind performed the advisory and valuation services called for in the engagement letters, including presentations on GCB's prospects for a merger or acquisition. Berwind provided the Board with a review of bank and thrift activity in the Middle Atlantic states during 1994, which included a discussion of overall stock price and valuation performances, and merger and acquisition activity among banks and thrifts in the region. On December 16, 1994, Berwind presented a report which analyzed GCB's prospects for a possible sale, merger or other combination transaction with another financial institution and included a valuation of GCB's Common Stock. This report contained a historical and current comparison of GCB with a peer group of 24 banks or bank holding companies of similar size which operate in the same regulatory and geographic environment, a valuation of GCB's Common Stock using a peer group comparison and a discounted dividend analysis, and a discussion of GCB's potential merger value to a list of the most likely regional combination partners. On December 21, 1994, Berwind presented a further analysis of GCB's merger prospects. This also included a historical and current comparison of GCB with a peer group of similarly situated banks and a valuation of GCB's Common Stock using a peer group comparison and a discounted dividend analysis, but added discussions of GCB's capital adequacy (as reflected in certain capital ratios) and expected future capital needs, of the different methods for raising capital, of the impact a capital offering would have on GCB's financial condition, and of the advantages of listing GCB's Common Stock on a national securities exchange or quotation system. In April 1995, representatives of Berwind met with members of GCB's Board of Directors to discuss the prospects for a merger involving GCB. At this meeting, the members of GCB's Board arrived at the decision to pursue a merger. On June 21, 1995, GCB's Board of Directors established a Special Committee through which it would continue to consider possibilities for a merger with another financial institution. At this time Berwind also began its efforts to explore acquisition possibilities. Berwind compiled a list of approximately ten financial institutions which might be interested in acquiring GCB and provided this list to the Executive Committee for its review. Berwind called each institution and provided a general description of GCB using broad, 26 non-identifying characteristics (without naming GCB). No written material describing GCB was distributed at this time. All institutions indicated an interest in GCB. Berwind then sent each institution an agreement requiring it to maintain the confidentiality of GCB's identity if disclosed to them. The institutions signed the agreement and returned it to Berwind. In further telephone calls, Berwind then disclosed GCB's identity to each potential acquiror, and provided more specific information regarding GCB. The institutions indicated an interest in reviewing written material prepared by Berwind concerning GCB. Together with a further agreement regarding the confidentiality of GCB's identity, Berwind distributed to them for their further consideration a memorandum containing financial, market and other information concerning GCB. GCB continued to conduct its own efforts to explore the potential for an acquisition. For instance, during June 1995, GCB's Board of Directors discussed the possibility of acquiring either of two local savings and loan institutions, and authorized a Board member to contact each institution on an informal basis and make preliminary inquiries as to the possibilities for an acquisition of either. Berwind arranged for representatives of other financial institutions to contact and meet with Berwind and members of the Board to discuss the possibility of acquiring GCB. For instance, in mid-July 1995, the Board had made arrangements to meet with representatives of FFC, and on August 2, August 9, and August 14, 1995, the Special Committee met with representatives of three other financial institutions which expressed interest in a possible affiliation with GCB. In its discussions of these meetings, the Board was periodically reminded of its obligation to maintain confidentiality regarding any possible merger. Berwind solicited indications of interest from all four institutions, and the substance of these four proposals was presented to the full Board of Directors of GCB. On August 30, 1995, a special meeting of GCB's Board of Directors was held to meet with Berwind. At this meeting, the Board first received an update of Berwind's efforts to explore the possibilities for an acquisition by, or merger with, another financial institution. Five of the ten institutions which had received Berwind's evaluation of GCB were prepared to make an informal proposal to acquire GCB. One withdrew its expression of interest after it had itself become an acquisition target. By the time of the August 30 meeting of GCB's Board, the Special Committee had met with representatives of each of the four interested institutions, and Berwind discussed the results of these meetings with GCB's Board. Berwind then presented the Board with an analysis of the merger proposals of each of these remaining four potential combination partners. For each potential partner, this presentation included a summary of certain financial information, a five-year (where available) and one-year review of its stock price and trading volume history, a pro forma impact analysis for each potential combination, a recent earnings release, a map showing the combined market area of the two institutions after the proposed combination, and the potential partner's recent acquisition history. The final portion of the analysis summarized and compared the terms, price multiples, and pro forma equivalents of the four different expressions of interest, compared selected financial data and financial ratios of the four potential partners, and summarized acquisition activity since August 15, 1994 involving banks of size comparable to GCB. After a lengthy and detailed discussion, the Board decided that the proposal being offered by FFC had the most merit, and appeared to 27 offer terms and to provide a strategic fit that were in the best interests of the shareholders, employees and customers of GCB. The Board directed Berwind to contact FFC and to express a number of issues that the Board had raised regarding price and other terms. Berwind was also directed to indicate that, assuming that these issues could be resolved in a manner satisfactory to its Board, GCB was prepared to move forward with the negotiation of an agreement with FFC. At a meeting on September 13, 1995, GCB's Board discussed the retention of Piper & Marbury L.L.P. as special counsel to GCB in connection with the proposed acquisition by FFC. Negotiations regarding the merger price and the other terms of the Merger Agreement, as well as certain other terms and agreements necessary for the transaction, continued during the ensuing weeks. These negotiations involved representatives of GCB, FFC, and Berwind, and lawyers from Piper & Marbury L.L.P. and Barley, Snyder, Senft & Cohen, counsel to FFC, and were completed by late October 1995. The entire Board of Directors of GCB then held a special meeting on October 25, 1995, to discuss the negotiated terms and, if appropriate, to provide its final approval for the execution of the Merger Agreement and the other related agreements. At this special meeting, GCB's Board was presented with and considered the texts of the proposed Merger Agreement and of the several other agreements and documents related to the proposed transaction. Also at this meeting, Berwind presented its report on the fairness of the terms of the proposed transaction. This report contained a review of the pricing statistics of the proposed combination with FFC, a comparison of the terms of the proposed combination with other recently announced transactions involving acquiree banks similar to GCB, a summary of recently announced transactions across the United States involving acquiree banks similar to GCB, a comparison of the recent performances of GCB and certain similarly situated banks, several valuations of GCB's Common Stock by discounted dividend analysis utilizing differing dividend and earnings per share growth rate assumptions, selected financial data of FFC and a comparative review of selected financial ratios of FFC, one-year and five-year reviews of FFC's stock price and trading volume history, comparisons of FFC's financial and market data with a peer group of similar bank holding companies, a summary of the pricing terms of the proposed combination with FFC, a pro forma analysis of the impact of the proposed combination, and an unsigned draft of the text of Berwind's fairness opinion. After an extensive discussion, the Boards of Directors of GCB and of the Bank unanimously approved the proposed combination with FFC. The text of the Board's resolutions from the October 25, 1995 meeting appears earlier in this Proxy Statement/Prospectus after the caption "THE FFC/GCB MERGER -- General Information." The text of the Merger Agreement is appended to this Proxy Statement/Prospectus as Exhibit A. Reasons for the Merger; Recommendation of the GCB Board - ------------------------------------------------------- GCB's decision to explore merger or acquisition opportunities resulted from its initial engagement of Berwind to provide a valuation of its Common Stock. By the time the initial engagement letter of September 15, 1994 was executed, GCB's Board of Directors had decided also to ask Berwind to provide financial advisory services in connection with exploring strategic expansion opportunities. The second engagement letter of September 28, 1994 expanded the scope of Berwind's responsibilities with respect to evaluating GCB's prospects for a merger. 28 The fundamental issue which confronted GCB's Board of Directors was the need to discover the best means of enabling GCB to continue the expansion of its operation. Before 1994, GCB had shown rapid growth which was nevertheless stable. The Bank was established de novo in 1989 and experienced growth in its assets from $12.3 million at December 31, 1989, to $151.2 million at September 30, 1994, without being adversely affected by asset quality problems. The Bank and GCB achieved this rapid rate of growth by successfully implementinga strategy of offering superior service and a consistent, flexible and reliable source of borrowings to small businesses, professionals and high net worth individuals in Woodbury, New Jersey and the surrounding areas of Gloucester County. Despite its successful growth in the first five or six years of its existence, it appeared that GCB would need to grow further to continue to prosper. Certain structural changes in the banking industry have made larger banks more competitive. For instance, banks increasingly desire to have (or be part of an organization which has) a certain critical mass, or market share leadership. Banks of a certain size are able to offer their customers a range of financial services that smaller banks cannot. Another reason has been the transfer of depositors' funds into mutual funds and other financial intermediaries, which has decreased the liquidity of bank operations and required banks to seek broader deposit bases to support their loan activities. These factors have caused banking institutions to engage in unprecedented merger activity in recent years. Recent changes in interstate bank merger laws have contributed to this trend by allowing banks to engage more easily in cross- border combinations. Berwind's analysis found that an infusion of additional capital was not necessary for GCB. Berwind found that (assuming a continuation of GCB's no-cash- dividend policy) GCB's retained earnings should be sufficient to maintain the capital ratios typical of a well-capitalized bank for the next several years. Despite its strong performance since its formation, as a newly formed bank, GCB would lack a long-term history of strong core earnings, which could negatively affect the pricing terms of a proposed securities offering. Finally, an issuance of common equity without a corresponding need to support immediate loan growth would have negative effect on GCB's pro forma earnings per share and return on average equity ratio which could cause investors to perceive GCB as overcapitalized and negatively affect the market value of its Common Stock. In addition, Berwind's analysis found that GCB could present potential acquirors with an attractive acquisition candidate. GCB has a growing market share in a state with an attractive banking market and offers strong profitability projections. It also has a high quality asset structure, having had limited experience with problem loans. A merger would also result in a larger institution that would be able to achieve economies of scale. The GCB Board of Directors believes that the terms of the Merger and the Merger Agreement are fair to, and in the best interests of, GCB and its shareholders. As explained below, this conclusion is supported by the opinion of its independent financial advisor that the consideration to be received in the Merger is fair to GCB's shareholders from a financial point of view. In considering the terms and conditions of the Merger Agreement, the Board of Directors of GCB considered a number of factors. The GCB Board did not assign any relative or specific weights to the factors considered. The material factors considered were: 29 The Financial Terms and Structure of the Merger. GCB's Board of Directors was of the view that, based on historical and anticipated trading ranges for FFC Common Stock, the value of the consideration to be received by GCB shareholders resulting from the Conversion Ratio represented a fair multiple of GCB's per share book value and earnings. The GCB Board of Directors also considered that, under the proposed Conversion Ratio and based on the GCB Board's belief that FFC would continue to pay dividends at its current rate, the Merger would result in a substantial increase in dividend income to GCB shareholders, although there can be no assurance that current dividends are indicative of future dividends. See SUMMARY--Selected Historical and Pro Forma Combined Per Share Data. The GCB Board of Directors also considered that the Merger would qualify as a tax-free reorganization under the Internal Revenue Code. See THE FFC/GCB MERGER--Federal Income Tax Consequences. The Non-Financial Terms of the Merger. The GCB Board of Directors considered the social and economic effect on the employees, depositors and customers of, and others dealing with GCB and on the communities in which GCB's offices are located or operate. Certain Financial and Other Information Concerning FFC. The GCB Board of Directors considered, among other things, the favorable position of FFC among its peer group of national and regional financial institutions in terms of profitability, capital adequacy and asset quality. The GCB Board also considered that the historical dividends per share, net income per share and book value per share of FFC to be received by GCB shareholders, after giving effect to the Conversion Ratio, would represent a substantial increase in the historical dividends per share, net income per share and book value per share of GCB Common Stock, although there can be no assurance that pro forma amounts are indicative of future dividends, income per share or book value per share of FFC. The GCB Board of Directors also considered the liquidity of FFC Common Stock, which is publicly traded and quoted on the NASDAQ National Market. The GCB Board further considered the reputation and business practices of FFC and its management as they would affect the employees of GCB and the Bank after the proposed Merger had been consummated. Other Possible Alternatives. The GCB Board considered, based in part on the advice of Berwind, possible alternatives to the transaction with FFC. These alternatives included remaining an independent institution, possible acquisitions by other institutions, and additional equity capital infusions. After weighing the financial and non-financial aspects of a transaction with FFC or other possible acquirors, and of remaining independent or pursuing an additional equity capital infusion, the GCB Board of Directors decided to pursue a combination with FFC. Opinion of Financial Advisor. The GCB Board of Directors also considered the opinion of Berwind as to the fairness of the consideration to be received in the Merger to the GCB shareholders from a financial point of view. See THE FFC/GCB MERGER -- Opinion of Financial Advisor. Certain Other Considerations. The GCB Board of Directors further determined that the addition of resources resulting from the Merger will enable the Bank to provide a wider and improved array of financial services to consumers and businesses and to 30 achieve added flexibility in dealing with the changing competitive environment in its market area. In addition, the GCB Board of Directors concluded that the Merger will help provide the Bank with the financial resources needed to meet the competitive challenges arising from recent and anticipated changes in the banking and financial services industry. The GCB Board of Directors believes that the Merger and the Merger Agreement are fair to, and in the best interest of, GCB and its shareholders. The GCB Board of Directors unanimously recommends that GCB's shareholders vote for the Merger Agreement and the Merger contemplated thereby. Additional Reasons for the Merger - --------------------------------- Recent changes in federal and state banking laws and regulations have had a major impact upon the banking industry in Pennsylvania, New Jersey and throughout the United States. For example, due to changes in Pennsylvania law that became effective in March, 1990, Pennsylvania banks may establish banking offices throughout the state, and bank holding companies located in a number of other states may acquire Pennsylvania banks. Similarly, New Jersey law permits statewide branching by New Jersey banks and also permits bank holding companies located in other states to acquire New Jersey banks under specified conditions. In response to these and other recent changes, many mergers and consolidations involving Pennsylvania and New Jersey banks and bank holding companies have occurred. GCB and FFC believe that further merger activity within Pennsylvania and New Jersey is likely to occur in the future, resulting in increased concentration levels in banking markets within Pennsylvania and New Jersey and other significant changes in the competitive environment. The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the "Act") allows adequately capitalized and managed bank holding companies to acquire banks in any state starting one year after enactment (September 29, 1995). Another provision of the Act allows interstate merger transactions beginning June 1, 1997. States are permitted, however, to pass legislation providing for either earlier approval of mergers with out-of-state banks, or "opting-out" of interstate mergers entirely. Through interstate merger transactions, banks will be able to acquire branches of out-of-state banks by converting their offices into branches of the resulting bank. The Act provides that it will be the exclusive means for bank holding companies to obtain interstate branches. Under the Act, banks may establish and operate a "de novo branch" in any state that "opts-in" to de novo branching. Foreign banks are allowed to operate branches, either de novo or by merger. These branches can operate to the same extent that the establishment and operation of such branches would be permitted if the foreign bank were a national bank or State bank. All these changes are expected to intensify competition in local, regional and national banking markets. In addition, recent changes in federal banking laws have significantly increased the severity and complexity of federal banking regulations, as well as the costs that banks must incur in complying with those regulations. For example, pursuant to the Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"), the federal banking agencies have established guidelines for real estate lending by FDIC-insured banks, including maximum loan-to-value ratios for various types of real estate loans. FDICIA also contains "Truth in Savings" provisions that require extensive disclosures regarding the rates of interest paid and the fees charged by FDIC-insured banks with respect to 31 their deposit accounts. FDICIA further provides greatly expanded authority to the federal banking agencies to impose administrative enforcement sanctions (including cease-and-desist orders, civil money penalties, and officer removal or suspension orders) against FDIC-insured banks that fail to maintain adequate capital levels or that engage in unsafe or unsound banking practices. These changes in federal law have added significantly to the cost and complexity of operating a bank and have made it more difficult for smaller independent banks like the Bank to compete with large banking organizations. From the standpoint of GCB, the Merger presents an attractive opportunity for the Bank to gain access to the managerial expertise and specialized services offered by FFC, thereby permitting the Bank's banking offices to provide a broader range of services to their customers in the face of increasing competition from larger financial institutions. FFC will operate the Bank, following the proposed Merger, as a separate subsidiary bank and expects to retain the Bank's current executive officers. While FFC will exercise an oversight role and provide financial backing, administrative support services and other resources to the Bank, it is expected that the Bank, like FFC's other subsidiary banks, will operate as a semi-autonomous community bank. Accordingly, it is not anticipated, following the Merger, that the Bank will change the interest rates and other terms and conditions of its deposits or loans in any significant respect. FFC believes that the Bank is already satisfactorily meeting the banking needs of the community which it serves. The Bank will continue to operate as a community bank in a market which has experienced considerable consolidation. However, FFC expects that the Bank will be able to expand its banking activities as a result of the acquisition. The Bank will be encouraged to offer such new products and services as bank-by-phone and debit cards. In addition, FFC expects that the Bank will be able to offer additional cash management services for its business customers. The Bank will also have the opportunity to make more commercial loans in its market area by being able to extend larger loans, in which it will be able to grant participation interests to other subsidiary banks of FFC. Because FFC shares GCB's philosophy of community banking, the Bank's offices will maintain their community orientation after GCB merges into FFC. Thus, the Merger will enhance the ability of the Bank's offices to remain competitive and to satisfy local customers' financial needs. The Merger will benefit FFC by establishing a market presence in Gloucester County, New Jersey, which will be its third banking operation outside of Pennsylvania. FFC's senior management has selected New Jersey as a strategic area for expansion of its business and believes that the Merger will result in a favorable diversification of FFC's banking operations. FFC believes the Bank's market is similar to many of the markets that FFC's subsidiary banks currently serve, i.e., markets with a strong small business component. In sum, the Merger will benefit both parties by GCB becoming affiliated with a larger multi-bank holding company that has a significant presence in central and northeastern Pennsylvania, western Maryland and southern Delaware, and will place GCB in a better position to compete effectively in the rapidly changing market for financial services. As described above, the Boards of Directors of FFC and GCB have unanimously approved the terms of the Merger Agreement. The Board of Directors of GCB believes that the terms of the Merger are fair to and in the best interests of GCB and its shareholders. GCB's Board of 32 Directors also believes that the Merger will enhance the ability of the Bank's offices to satisfy the financial needs of their customers and the communities which they serve. Opinion of Financial Advisor - ---------------------------- As described above in THE FFC/GCB MERGER--Background of the Merger, GCB retained Berwind to act as its financial advisor and to render a fairness opinion in connection with the Merger. Berwind has rendered an opinion to the Board of Directors of GCB that, based upon and subject to the various considerations set forth therein, as of October 25, 1995, and updated as of the date of this Proxy Statement/Prospectus, the Merger is fair, from a financial point of view, to the holders of GCB Common Stock. The full text of Berwind's opinion dated as of December ___, 1995 (the "Proxy Opinion"), which sets forth the assumptions made, matters considered and limitations of the review undertaken, is attached as Exhibit B to this Proxy Statement/Prospectus and is incorporated herein by reference. GCB's shareholders are urged to read the Proxy Opinion in its entirety in connection with this Proxy Statement/Prospectus. Berwind's Proxy Opinion is directed only to the consideration to be received by GCB's shareholders in the Merger and does not constitute a recommendation to any holder of GCB Common Stock as to how such holder should vote at the Meeting. This section of the Proxy Statement/Prospectus sets forth the material terms of Berwind's Proxy Opinion; however, the summary of the Proxy Opinion set forth herein is qualified in its entirety by reference to the full text of the Proxy Opinion attached as Exhibit B to this Proxy Statement/Prospectus. GCB retained Berwind to act as its financial advisor in connection with the Merger. Berwind has knowledge of, and experience with, New Jersey banking markets and banking organizations operating in those markets and was selected by GCB because of its knowledge of, experience with, and reputation in the financial services industry. In such capacity, Berwind participated in the negotiations with respect to the pricing and other terms of the Merger, but the decision with respect to the Merger was determined by GCB's Board of Directors following negotiations with FFC. On October 25, 1995, the Board approved and executed the Merger Agreement. Berwind delivered an opinion (the "October Opinion") to GCB's Board stating that, as of such date, the Merger was fair to the shareholders of GCB from a financial point of view. Berwind reached the same conclusion as of the date of this Proxy Statement/Prospectus in the Proxy Opinion. No limitations were imposed by GCB's Board of Directors upon Berwind with respect to the investigations made or procedures followed by Berwind in rendering either the October Opinion or the Proxy Opinion. In rendering its Proxy Opinion, Berwind: (i) reviewed the historical financial performances, current financial positions and general prospects of GCB and FFC, (ii) reviewed the Merger Agreement and this Proxy Statement/Prospectus, (iii) reviewed and analyzed the stock market performance of FFC, (iv) studied and analyzed the consolidated financial and operating data of GCB and FFC, (v) considered the terms and conditions of comparable bank and bank holding company mergers and acquisitions, (vi) met and/or communicated with certain members of GCB's and FFC's senior management to discuss their respective operations, historical financial statements, and future prospects, and (vii) conducted such other financial analyses, studies and investigations as it deemed appropriate. 33 Berwind relied without independent verification upon the accuracy and completeness of all of the financial and other information reviewed by and discussed with it for purposes of Berwind's opinion. With respect to GCB's financial forecasts reviewed by Berwind in rendering its opinion, Berwind assumed that such financial forecasts were reasonably prepared on bases reflecting the best currently available estimates and judgments of the management of GCB as to the future financial performance of GCB. Berwind did not make an independent evaluation or appraisal of the assets (including loans) or liabilities of GCB or FFC, nor was it furnished with any such appraisal. Berwind also did not independently verify and has relied on and assumed that all allowances for loan and lease losses set forth in the balance sheets of GCB and FFC were adequate and complied fully with applicable law, regulatory policy and sound banking practice as of the date of such financial statements. The following is a summary of selected analyses prepared by Berwind and presented to GCB's Board in connection with the October Opinion and analyzed by Berwind in connection with the October Opinion and Proxy Opinion. Comparable Companies and Comparable Acquisition Transaction Analyses. -------------------------------------------------------------------- Berwind compared selected financial and operating data for GCB with those of a peer group of selected banks and bank holding companies with assets between $100 million and $300 million, as of the most recent financial period publicly available, located in Atlantic, Camden, Cumberland, Gloucester and Salem Counties, in New Jersey, and Bucks, Delaware, Philadelphia and Montgomery Counties, in Pennsylvania. Financial data and operating ratios compared in the analysis of the GCB peer group included but were not limited to: return on average assets, return on average equity, net interest margin, capital ratios and certain asset quality ratios. The analysis showed GCB's return on average assets was ___% compared to the peer group median of ___%, its return on average shareholders' equity was ___% compared to the peer group median of ___%, its shareholders' equity as a percentage of assets was ___% compared to the peer group median of ___%, its non performing assets as a percentage of loans and other real estate owned was ___% compared to the peer group median of ___%, its non performing assets and loans past due 90 days or more as a percentage of shareholders' equity and loan loss reserve was ___% compared to the peer group median of ___% and its loan loss reserve as a percentage of non performing loans was ___% versus the median of ___% for the peer group. Berwind also compared selected financial, operating and stock market data for FFC with those of a peer group of selected commercial banks with assets between $____ and $____ billion, as of the most recent period publicly available, located in Maryland, New Jersey, Ohio and Pennsylvania. Financial, operating and stock market data, ratios and multiples compared in the analysis of the FFC peer group included but were not limited to: return on average assets, return on average equity, net interest margin, capital ratios, certain asset quality ratios, price to book value, price to tangible book value, price to earnings (latest twelve months) and cash dividend yield. The analysis showed FFC's return on average assets was ___% compared to the peer group median of ___%, its return on average shareholders' equity was ___% compared to the peer group median of ___%, its shareholders' equity as a percentage of assets was ___% versus the peer group median of ___%, its non performing assets as a percentage of total assets was ___% compared to the peer group median of ___%, its non performing assets and loans past due 90 days or more as a percentage of shareholders' equity and loan loss reserve was ___% compared to the peer group median of ___% and its loan loss reserve as a percentage of non performing assets and 34 loan past due 90 days or more was ___% versus the median of ___% for the peer group. In addition, the analysis showed that FFC's common stock price per share ($_____ on the date of the Proxy Opinion) as a percentage of book value and tangible book value per share was ___% and ___%, respectively, compared to the peer group medians of ___% and ___%, respectively, and its common stock price per share as a multiple of latest twelve months' earning per share of ___ times compared to the peer group median of ___ times. Berwind also compared the multiples of book value, tangible book value and latest twelve months' earnings inherent to the Merger with the multiples paid in recent acquisitions of banks and bank holding companies that Berwind deemed reasonably comparable. The transactions deemed reasonably comparable by Berwind included both interstate and intrastate acquisitions announced since ___________, 1995, in which the selling institution's assets were between $___ million and $____ million as of the most recently available period preceding the announced transaction. Berwind compared transactions located throughout the country and analyzed those transactions in three groups: a national group (___ banks), a regional group (___ banks) and a performance group (___ banks). The national group included commercial banking institution transactions throughout the United States; the regional group included transactions involving commercial banking institutions located in _____________________; and the performance group included transactions involving commercial banking institutions with _____________________. The median values calculated for price as a percentage of book value were ___%, ___%, and ___% for the national, regional and performance group, respectively; the median of price as a percentage of tangible book value was ___%, ___% and ___% for the national, regional and performance group, respectively; and the median of the price as a multiple of latest twelve months' earnings per share was ___, ___, and ___ times for the national, regional and performance group, respectively. These medians compare to the Merger price per share as a percentage of book value, price per share as a percentage of tangible book value and price per share as a multiple of the latest twelve months' earnings of ___%, ___% and ___% times, respectively. No company or transaction used in this analysis is identical to GCB, FFC or the Merger. Accordingly, an analysis of the result of the foregoing is not mathematical; rather, it involved complex considerations and judgments concerning differences in financial and operating characteristics of the companies and other factors that would affect the public trading values of the companies or company to which they are being compared. Discounted Dividend Analyses. Using discounted dividend analyses, ---------------------------- Berwind estimated the present value of the future dividend streams that GCB could produce over a five year period under different assumptions as to dividend pay out levels, if GCB performed in accordance with various earnings growth forecasts. Berwind also estimated the terminal value for GCB's Common Stock after the five year period by applying a range of earnings multiples to GCB's terminal year earnings. The range of multiples used reflected a variety of scenarios regarding the growth and profitability prospects of GCB. The dividend streams and terminal values were then discounted to present value using discount rates reflecting different assumptions regarding the rates of return required by holders or prospective buyers of GCB's Common Stock. Pro Forma Contribution Analysis. Berwind analyzed the changes in ------------------------------- the amount of earnings, book value, and dividends represented by one 35 share of GCB Common Stock prior to the Merger and the shares of FFC Common Stock to be received after the Merger based on application of the Conversion Ratio as determined in conformity with Conversion Ratio per the Merger Agreement. The analysis considered, among other things, the changes that the Merger would cause to GCB's earnings per share, book value per share, and indicated dividends. On a per share equivalent basis, GCB's earnings per share [increase] ___% from $____ to $____, its book value per share [increases] ___% from $____ to $____ and its dividend per share [increases] ___% from $____ to $____. In reviewing the pro forma combined earnings, equity and assets of FFC based on the Merger with GCB, Berwind analyzed the contribution that GCB would have made to the combined company's earnings, equity and assets as of and for the latest twelve month period ended June 30, 1995. Berwind also reviewed the percentage ownership that GCB's shareholders would hold in the combined company. In connection with rendering its October Opinion and Proxy Opinion, Berwind performed a variety of financial analyses. Although the evaluation of the fairness, from a financial point of view, of the consideration to be paid in the Merger was to some extent a subjective one based on the experience and judgment of Berwind and not merely the result of mathematical analysis of financial data, Berwind principally relied on the previously discussed financial valuation methodologies in its determinations. Berwind believes its analyses must be considered as a whole and that selecting portions of such analyses and factors considered by Berwind without considering all such analyses and factors could create an incomplete view of the process underlying Berwind's opinion. In its analysis, Berwind made numerous assumptions with respect to business, market, monetary and economic conditions, industry performance and other matters, many of which are beyond GCB's and FFC's control. Any estimates contained in Berwind's analyses are not necessarily indicative of future results or values, which may be significantly more or less favorable than such estimates. In reaching its opinion as to fairness, none of the analyses performed by Berwind was assigned a greater significance by Berwind than any other. As a result of its consideration of the aggregate of all factors present and analyses performed, Berwind reached the conclusion and opinion that the terms of the Merger, as set forth in the Merger Agreement, are fair from a financial point of view to GCB and its shareholders. In connection with delivering its Proxy Opinion, Berwind updated certain analyses described above to reflect current market conditions and events occurring since the date of the Merger Agreement. Such reviews and updates led Berwind to conclude that it was not necessary to change the conclusions it had reached in connection with rendering the October Opinion. Berwind, as part of its investment banking business, is regularly engaged in the valuation of assets, securities and companies in connection with various types of asset and security transactions, including mergers, acquisitions, private placements and valuations for various other purposes and in the determination of adequate consideration in such transactions. Berwind's Proxy Opinion was based solely upon the information available to it and the economic, market and other circumstances as they existed as of the date its Proxy Opinion was delivered; events occurring after the date of its Proxy Opinion could materially affect the assumptions used in preparing its Proxy Opinion. Berwind has not undertaken to reaffirm and revise its Proxy Opinion or otherwise comment upon any events occurring after the date thereof. 36 In delivering its October Opinion and Proxy Opinion, Berwind assumed that in the course of obtaining the necessary regulatory and governmental approvals for the Merger, no restriction will be imposed on FFC that would have a material adverse effect on the contemplated benefits of the Merger. Berwind also assumed that there would not occur any change in applicable law or regulation that would cause a material adverse change in the prospects or operations of FFC after the Merger. Pursuant to the terms of the engagement letters dated September 15, 1994 and September 28, 1994, GCB has agreed to pay Berwind $15,000 plus a fee equal to approximately $327,000 for acting as financial advisor in connection with the Merger, including delivering the October Opinion and Proxy Opinion, and to reimburse Berwind for its reasonable out-of-pocket expenses. Whether or not the Merger is consummated, GCB has agreed to indemnify Berwind and certain related persons against certain liabilities relating to or arising out of its engagement. THE FOREGOING PROVIDES ONLY A SUMMARY OF THE PROXY OPINION OF BERWIND AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THAT OPINION, WHICH IS SET FORTH IN EXHIBIT B TO THIS PROXY STATEMENT/PROSPECTUS. THE OPINION OF BERWIND IS DIRECTED ONLY TO THE FAIRNESS, FROM A FINANCIAL POINT OF VIEW, OF THE CONSIDERATION TO BE PAID IN THE MERGER AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY GCB SHAREHOLDER AS TO HOW SUCH SHAREHOLDER SHOULD VOTE AT THE MEETING. Conversion and Exchange of Shares - --------------------------------- On the Effective Date of the Merger, each share of GCB Common Stock then issued and outstanding will automatically be converted into and become the right to receive the number (subject to adjustment for stock dividends, stock splits and similar transactions) of shares of FFC Common Stock, based on the Closing Market Price (defined below), as set forth below:
Closing Market Price Conversion -------------------- Ratio ---------- $20.000 and below 1.730 $20.125 1.718 $20.250 1.705 $20.375 1.693 $20.500 1.680 $20.625 1.668 $20.750 1.655 $20.875 1.642 $21.000 1.630 $21.125 1.617 $21.250 1.605 $21.375 1.592 $21.500 1.580 $21.625 1.567 $21.750 1.555 $21.875 1.542 $22.000 and above 1.530
The Closing Market Price is defined in the Merger Agreement as the average of the average of the per share closing bid prices for FFC Common Stock, rounded up to the nearest $.125, for the ten (10) trading days immediately preceding the date which is two (2) business days 37 before the Effective Date (the "Price Determination Period"), as reported on NASDAQ National Market. If NASDAQ fails to report a closing bid price for FFC Common Stock for any trading day during the Price Determination Period, the closing bid prices for that day shall be equal to the average of the closing bid prices and the average of the closing asked prices as quoted by F.J. Morrissey & Company, Inc. and by Ryan, Beck & Co., or if these two firms are not then making a market in FFC Common Stock, by two brokerage firms who are then making a market in FFC Common Stock to be selected by FFC and approved by GCB. No fractional shares of FFC Common Stock will be issued in connection with the Merger. In lieu of the issuance of any fractional share to which he or she would otherwise be entitled, each former shareholder of GCB will receive cash in an amount equal to the fair market value of his or her fractional interest, determined by multiplying such fractional interest by the Closing Market Price of FFC Common Stock. Following the Effective Date, GCB shareholders will exchange their GCB Common Stock certificates for FFC Common Stock certificates in accordance with the procedures described below in this section. FFC and GCB anticipate that the Effective Date will occur during the first or second quarter of 1996, assuming no difficulties are encountered in obtaining the required regulatory approvals and all other conditions to closing are satisfied without unexpected delay. Following the Effective Date, each former shareholder of GCB will be obliged to surrender to FFC the GCB Common Stock certificates held by him or her. Detailed instructions concerning the procedure for surrendering GCB Common Stock certificates will be sent by FFC to each former shareholder of GCB on or promptly after the Effective Date. Upon proper surrender of his or her GCB Common Stock certificates, each former shareholder of GCB will be issued a stock certificate representing the number of whole shares of FFC Common Stock into which his or her shares of GCB Common Stock have been converted, together with a check in the amount of any cash, without interest, to which he or she is entitled in lieu of the issuance of any fractional share of FFC Common Stock. SHAREHOLDERS OF GCB SHOULD NOT SURRENDER THEIR GCB COMMON STOCK CERTIFICATES FOR EXCHANGE UNTIL THEY RECEIVE WRITTEN INSTRUCTIONS TO DO SO FROM FFC. PLEASE DO NOT SEND ANY STOCK CERTIFICATES AT THIS TIME. Following the Effective Date, and until properly surrendered, each GCB Common Stock certificate will be deemed for all corporate purposes to represent the number of whole shares of FFC Common Stock which the holder would be entitled to receive upon its surrender, except that FFC will withhold dividends payable after the Effective Date to any former shareholder of GCB who has received written instructions from FFC but has not at that time surrendered his or her GCB Common Stock certificates. Any dividends so withheld will be paid, without interest, to any such former shareholder of GCB upon the proper surrender of his or her GCB Common Stock certificates. All GCB Common Stock certificates must be surrendered to FFC within two years after the Effective Date. In the event that any former shareholder of GCB does not properly surrender his or her GCB Common Stock certificates within that time, the shares of FFC Common Stock that would otherwise have been issued to him or her may, at the option of FFC, be sold and the net proceeds of such sale, together with the cash (if any) to which he or she is entitled in lieu of the issuance of a fractional share and any previously accrued and unpaid dividends, will be held in a non-interest bearing account for his or her benefit. From and after any such sale, the sole right of such former shareholder of 38 GCB will be the right to collect such net proceeds, cash and accumulated dividends. Subject to all applicable laws of escheat, such net proceeds, cash and accumulated dividends will be paid to such former shareholder of GCB, without interest, upon proper surrender of his or her GCB Common Stock certificates. In the event that a former GCB shareholder is unable to surrender his or her GCB Common Stock certificates due to loss or mutilation thereof, he or she may make a constructive surrender by following procedures comparable to those customarily followed by FFC in issuing replacement certificates to FFC shareholders who have lost or mutilated their FFC Common Stock certificates. Instructions for making a constructive surrender of lost or mutilated GCB Common Stock certificates will be included in the written instructions to be sent by FFC to former GCB shareholders after the effective date of the Merger. THE FOREGOING DISCUSSION RELATING TO THE CONVERSION AND EXCHANGE OF GCB COMMON STOCK IS ONLY A SUMMARY WHICH IS PROVIDED FOR CONVENIENCE. THE FOREGOING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH, AND IS QUALIFIED IN ITS ENTIRETY BY, THE TERMS OF ARTICLE II OF THE MERGER AGREEMENT. Treatment of Outstanding Options -------------------------------- As of October 25, 1995, there were GCB Options outstanding to purchase 136,001 shares of GCB Common Stock. Under the terms of the Merger Agreement, each holder of a GCB Option that is outstanding at the Effective Date will receive from FFC an option (an "FFC Option") to acquire shares of FFC Common Stock. The number of shares of FFC Common Stock which may be acquired pursuant to such FFC Option shall be equal to the product of the number of shares of GCB Common Stock covered by the GCB Option multiplied by the Conversion Ratio, provided that any fractional share of FFC Common Stock resulting from such multiplication shall be rounded to the nearest whole share. The exercise price per share of FFC Common Stock shall be equal to the exercise price per share of GCB Common Stock of such GCB Option, divided by the Conversion Ratio, provided that such exercise price shall be rounded to the nearest whole cent. The duration and other terms of such GCB Option shall be unchanged except that all references to GCB shall be deemed references to FFC, and each such FFC Option shall be exercisable at least until the stated expiration date of the corresponding GCB Option. FFC shall assume such stock options as contemplated by Section 424(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and to the extent GCB Options qualify as incentive stock options under Section 422 of the Code, the FFC Options exchanged therefor shall also so qualify. Business Pending The Effective Date ----------------------------------- Pursuant to the Merger Agreement, GCB and the Bank are required, pending the Effective Date, to conduct their respective businesses in the usual, regular and ordinary manner and consistent with past practice. GCB and the Bank are also required to use their best efforts to preserve their present business organizations, retain the services of their present officers and employees, and maintain existing relationships with persons having business dealings with them. In general, GCB and the Bank may not take any action outside the ordinary course of business without the prior written consent of FFC. Pending the Effective Date, GCB is not permitted to declare or pay a cash dividend on the GCB Common Stock. If, however, the Effective Date of the Merger does not occur on or before March 31, 1996, GCB may declare and pay a dividend or dividends which do not exceed, in the 39 aggregate, the amount of the per share cash dividends on FFC Common Stock paid on or after March 31, 1996, multiplied by the Conversion Ratio. GCB has agreed that, pending the Effective Date, it shall not take or cause the Bank to take, among other things, any of the following actions without the prior written consent of FFC: (i) amending its Charter or Bylaws, (ii) entering into or assuming any material contract, incurring any material liability or obligation, or making any other material commitment, except in the ordinary course of business, (iii) authorizing, purchasing, redeeming, issuing or selling shares of GCB Common Stock or any other equity or debt securities, (iv) increasing the compensation or paying a bonus or severance benefit to any officer, director, employee or consultant of GCB or the Bank (except for reasonable salary increases and bonuses consistent with past practice, (v) making any material acquisition or disposition of properties or assets, (vi) except as required in connection with the real estate at Washington Township, New Jersey owned or leased by the Bank, making any capital expenditures other than in the ordinary course of business or as necessary to maintain existing assets in good repair, (vii) opening or closing, or making application therefor, any branches or automated banking facilities, (viii) making any equity investment or commitment to make such investment in real estate or any real estate development project, other than in connection with foreclosures, settlements in lieu of foreclosure or troubled loan or debt restructuring in the ordinary course of business consistent with customary banking practice; or (ix) exercising its option to acquire its principal office at 1100 Old Broadway, Woodbury, New Jersey pursuant to the Lease Agreement dated April 5, 1989, between 1100 Old Broadway Partnership and the Bank unless such option is exercised in accordance with such Lease Agreement, and FFC provides its written consent of the Bank's appraiser thereunder. There have been no material contracts or other transactions between GCB or the Bank and FFC since the execution of the Merger Agreement, nor have there been any material contracts, arrangements, relationships or transactions between GCB or the Bank and FFC during the past five years. Conditions, Amendment and Termination ------------------------------------- The obligations of FFC and GCB to consummate the Merger are subject to the following conditions and contingencies set forth in the Merger Agreement: (i) approval of the Merger by the shareholders of GCB, (ii) approval of the Merger by the Federal Reserve Board, (iii) approval of the Merger by the New Jersey Department of Banking, (iv) the absence of an injunction issued by a court of competent jurisdiction enjoining the performance by FFC or GCB of any of their obligations under the Merger Agreement, (v) the receipt of a favorable opinion of counsel with respect to certain federal income tax consequences relating to the Merger, which are discussed below under THE FFC/GCB MERGER--Federal Income Tax Consequences, (vi) the continuing accuracy in all material respects of the representations, warranties and covenants made by FFC and GCB in the Merger Agreement, (vii) the receipt by FFC of satisfactory agreements from shareholders of GCB who are affiliates of GCB or FFC regarding certain actions which could affect pooling-of-interests accounting for the Merger, (viii) the receipt of opinions from counsel for GCB and counsel for FCC regarding certain legal matters, (ix) effectiveness of a registration statement relating to the FFC Common Stock with the SEC and listing of such FFC Common Stock on NASDAQ; (x) confirmation by FFC and its accountants that the Merger can be accounted for as a pooling-of- interests for financial reporting purposes, (xi) the delivery to FFC of satisfactory documentation 40 canceling the GCB Options in exchange for the FFC Options as provided in the Merger Agreement, (xii) the delivery to FFC of non-compete agreements from each of the directors of GCB and the Bank, and (xii) the delivery of certificates at the closing by officers of FFC and GCB confirming satisfaction of the foregoing conditions. The conditions in items ____, ____, and ____ have been satisfied. To the extent permitted by law, the Merger Agreement may be amended by mutual consent and any term or condition thereof may be waived by the party entitled to its benefit at any time before the Effective Date, whether before or after the approval of the Merger Agreement by GCB's shareholders and without seeking further shareholder approval; provided, however, that the ratio at which shares of GCB Common Stock will be converted into shares of FFC Common Stock may not be waived or amended until such amendment has been approved, adopted or ratified by the shareholders of GCB in accordance with applicable New Jersey law. The Merger Agreement may be terminated at any time prior to the Effective Date by the mutual written consent of FFC and GCB. In addition, the Merger Agreement may be terminated unilaterally by either FFC or GCB if (A) any condition to the Merger has not been satisfied by October 31, 1996, or (B) the other party has committed a material breach of any representation, warranty or covenant contained in the Merger Agreement and has not cured such breach within thirty (30) days after receiving written notice thereof. Effective Date of the Merger ---------------------------- The Merger will become effective on the date specified in the Articles and Certificate of Merger as filed with the Pennsylvania Department of State and the Secretary of State of the State of New Jersey. The filing of the Articles and Certificate of Merger will occur as soon as reasonably practicable after all applicable conditions in the Merger Agreement have been satisfied or waived. FFC and GCB presently intend to consummate the Merger during the first or second quarter of 1996, assuming that the Merger has been approved by GCB's shareholders, all required regulatory approvals have been obtained, and all other conditions to closing have been satisfied or waived by that time. The Merger Agreement provides that the closing of the Merger shall be held within thirty (30) days after the receipt of all required regulatory approvals and the expiration of all applicable waiting periods. See THE FFC/GCB MERGER--Conditions, Amendment and Termination. Management and Operations Following the Merger ---------------------------------------------- On the Effective Date, GCB will merge with and into FFC, FFC will survive the Merger, and the shareholders of GCB will become shareholders of FFC. In addition, the Bank will become a wholly-owned subsidiary of FFC as a result of the Merger. The Merger Agreement provides that, for a period of five years after the Effective Date, FFC shall preserve the business structure of FFC as a bank holding company with the Bank as one of its wholly-owned banking subsidiaries and shall preserve the present name of the Bank. FFC has the right to terminate these obligations, however, if an acquisition of FFC occurs at any time after the date two (2) years after the Effective Date. The Board of Directors of FFC following the Merger will consist of the same persons who are members of the Board of Directors immediately before the Merger, each of whom shall serve until his or her successor 41 is elected and has qualified, and Jeffrey G. Albertson. Under the terms of the Merger Agreement, for a period of five years after the Effective Date of the Merger, the FFC Board of Directors shall nominate Mr. Albertson for election, and support his election, at each annual meeting of shareholders of FFC at which Mr. Albertson's term expires. During such period, if Mr. Albertson ceases to serve as a director of FFC, the Board of Directors of the Bank shall have the right to designate one person to serve as a director of FFC, subject to the concurrence of FFC as to the person designated. The Board of Directors of the Bank immediately following the Merger will consist of the same persons who are members of the Board of Directors of the Bank immediately before the Merger who indicate their desire to serve in such capacity, each of whom shall serve until his or her successor is elected and has qualified. FFC has agreed, following the Merger, to cause the Bank to employ the persons who are officers and employees of GCB or the Bank as of the Effective Date as "at will" employees subject to the continued satisfactory performance of their respective duties. FFC has also agreed to cause the Bank to satisfy the Bank's obligations under GCB's benefit plans. The Merger Agreement provides that, prior to the Effective Date, GCB and the Bank may enter into severance agreements with the following senior executives of the Bank: Warner A. Knobe, Scott H. Kintzing, Thomas J. Lobosco, Stephen R. Miller, Stephen F. Levitt, and Mary C. Traum (the "Senior Executives"). The Bank has entered into a Severance Agreement with each of the Senior Executives. The Severance Agreements provide that if the Senior Executive's employment is terminated involuntarily or constructively, for Messrs. Knobe and Kintzing, prior to the close of business on December 31, 1999, and, for Messrs. Levitt, Lobosco and Miller and Ms. Traum, prior to December 31, 1997 (the "Applicable Term"), the Bank is to continue to pay the Senior Executive his or her salary (subject to certain minimum salaries) in effect immediately prior to the date of termination until the end of the Applicable Term (but not less than one year following termination). The Severance Agreements also provide that Senior Executives may not, prior to the end of the Applicable Term, compete with the Bank in, for Messrs. Knobe and Kintzing, Gloucester County, New Jersey, and all contiguous counties in New Jersey, and for Messrs. Levitt, Lobosco and Miller and Ms. Traum, in Gloucester and Camden Counties, New Jersey. FFC has agreed, following the Merger, to cause the Bank to satisfy its obligations under such severance agreements with the Senior Executives. See GENERAL INFORMATION--SPECIAL MEETING OF GCB SHAREHOLDERS--Interests of Certain Persons in Matters To Be Acted Upon. Federal Income Tax Consequences ------------------------------- Pursuant to the Merger Agreement, an opinion has been provided to GCB and FFC by Piper & Marbury L.L.P., counsel for GCB, which states that, for federal income tax purposes: 1. The Merger will constitute a reorganization within the meaning of Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as amended; 2. A holder of GCB Common Stock who receives shares of FFC Common Stock in exchange for his or her GCB Common Stock pursuant to the Merger (including fractional shares of FFC Common Stock deemed issued as described below) will not recognize any gain or loss upon the exchange; 3. A holder of GCB Common Stock who receives cash in lieu of a fractional share of FFC Common Stock will be treated as if he or she 42 received a fractional share of FFC Common Stock pursuant to the Merger and FFC then redeemed such fractional share for the cash and will recognize capital gain or loss on the constructive redemption of the fractional share in an amount equal to the difference between the cash received and the adjusted basis of the fractional share; 4. The tax basis of the shares of FFC Common Stock to be received by GCB shareholders (including fractional shares deemed issued as described above) will be the same as the basis of the shares of GCB Common Stock surrendered in exchange therefor; 5. The holding period of the shares of FFC Common Stock to be received by the shareholders of GCB will include the period during which they held the shares of GCB Common Stock surrendered, provided the shares of GCB Common Stock are held as a capital asset on the date of the exchange; 6. No gain or loss will be recognized by FFC, GCB or the Bank by reason of the Merger; 7. The bases of the assets of GCB in the hands of FFC will be the same as the bases of such assets in the hands of GCB immediately prior to the Merger; and 8. The holding period of the assets of GCB in the hands of FFC will include the period during which such assets were held by GCB prior to the Merger. THE FOREGOING IS INTENDED ONLY AS A GENERAL SUMMARY OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER UNDER PRESENT LAW. EACH SHAREHOLDER OF GCB IS URGED TO CONSULT HIS OR HER OWN TAX ADVISOR CONCERNING THE PARTICULAR TAX CONSEQUENCES OF THE MERGER AS THEY AFFECT HIS OR HER INDIVIDUAL CIRCUMSTANCES, INCLUDING THE IMPACT OF ANY APPLICABLE ESTATE, GIFT, STATE, LOCAL, FOREIGN OR OTHER TAX. Accounting Treatment -------------------- The Merger Agreement contemplates that the Merger will be treated as a pooling-of-interests for financial accounting purposes. If FFC would be required to purchase more than ten percent of the outstanding shares of GCB Common Stock for cash (due to the purchase of fractional shares), or if other conditions arise which would prevent the Merger from being treated as a pooling-of-interests for financial accounting purposes, FFC has the right to terminate the Merger Agreement and to cancel the Merger. FFC presently intends to exercise its right of termination if the Merger could not be treated as a pooling-of-interests for financial accounting purposes. Amendment of The Gloucester County Bankshares, Inc. 1992 Stock Option --------------------------------------------------------------------- Plan ---- At the meeting on October 25, 1995 at which it approved the Merger, the Board of Directors of GCB also adopted Amendment No. 1 to The Gloucester County Bankshares, Inc. 1992 Stock Option Plan (the "Stock Option Plan"). This amendment extends the term during which members of the Board of Directors of GCB may hold stock options granted under the Stock Option Plan ("GCB Options"). Previously the Stock Option Plan had required that GCB Options granted to a member of the Board of Directors of GCB terminate one year after that person ceased to be a member of the Board of Directors of GCB. Under the terms of the Merger Agreement, GCB would not survive the merger with FFC, causing all members of GCB's Board of Directors to cease to be members on the 43 Effective Date. This would cause GCB Options granted to them to expire one year after the Effective Date, even though they would continue in their capacities as directors of the Bank. Amendment No. 1 to the Stock Option Plan addresses this problem by causing GCB Options granted under the Stock Option Plan to terminate one year after the grantee has ceased to be a member of the Board of Directors of GCB or any of its subsidiaries, including the Bank. Thus, members of the Board of Directors of GCB will be allowed to continue to hold GCB Options (which will be exchanged for FFC Options) despite the merger of GCB with and into FFC. A copy of Amendment No. 1 to the Stock Option Plan is attached as Exhibit D to this Proxy Statement/Prospectus. Rights of Dissenting Shareholders --------------------------------- Under New Jersey law, a shareholder of a corporation generally has the right to dissent from any plan of merger to which the New Jersey corporation is a party and receive in cash the fair value (based upon an appraisal) of his or her shares in the corporation. An exception to the law provides that such shareholder has no right to dissent from any plan of merger in which, upon consummation of the merger, he or she will receive (i) cash, (ii) shares which are held of record by not less than 1,000 holders unless the charter of the corporation provides otherwise, or (iii) both cash and such shares. GCB's Charter does not contain a provision granting the shareholders of GCB the right to dissent. In the Merger, the holders of GCB Common Stock will receive shares of FFC Common Stock and cash for fractions of a share. The shares of FFC Common Stock which shareholders of GCB are to receive in the Merger will be held of record by more than 1,000 holders. As a result, holders of GCB Common Stock will not have the right to dissent from the Merger and receive the fair value of their shares in cash. Restrictions on Resale of FFC Common Stock Held By Affiliates of GCB -------------------------------------------------------------------- The shares of FFC Common Stock to be issued upon consummation of the Merger have been registered with the Securities and Exchange Commission (the "SEC") under the Securities Act of 1933 (the "1933 Act") and, following the Merger, may be freely resold or otherwise transferred by all former shareholders of GCB, except those former shareholders who are deemed to be "affiliates" of GCB within the meaning of SEC Rules 144 and 145. In general terms, any person who is an executive officer, director or ten percent shareholder of GCB at the time of the Special Meeting may be deemed to be an affiliate of GCB for purposes of SEC Rules 144 and 145. FFC Common Stock received by persons who are deemed to be affiliates of GCB may be resold only: (i) in compliance with the provisions of SEC Rule 145(d), (ii) in compliance with the provisions of another applicable exemption from the registration requirements of the 1933 Act, or (iii) pursuant to an effective registration statement filed with the SEC. In very general terms, SEC Rule 145(d) would permit an affiliate of GCB to sell shares of FFC Common Stock received by him or her in connection with the Merger in ordinary brokerage transactions, subject to certain limitations on the number of shares of FFC Common Stock which may be sold during any consecutive three-month period. Notwithstanding the foregoing, an affiliate of GCB (as a general rule and subject to an exception in the case of certain de minimis sales) may not sell any -- ------- shares of FFC Common Stock received by him or her in exchange for his or her shares of GCB Common Stock until after the 44 publication of financial results covering at least thirty days of post- Merger combined operations of FFC. Under the terms of the Merger Agreement, each person who may be deemed to be an affiliate of GCB is required, prior to the closing of the Merger, to deliver to FFC an agreement, in form and substance satisfactory to FFC, acknowledging and agreeing to abide by the limitations imposed by the 1933 Act and the rules of the SEC thereunder regarding the sale or other disposition of the shares of FFC Common Stock to be received by him or her pursuant to the Merger. FFC has already received such an agreement signed by each person who may be deemed to be an affiliate of GCB. Warrant Agreement ----------------- Simultaneously with the execution of the Merger Agreement, GCB and FFC executed a Warrant Agreement, dated October 25, 1995 (the "Warrant Agreement"). A copy of the Warrant Agreement is attached as Exhibit C to this Proxy Statement. The following description of the Warrant Agreement does not purport to be complete and is qualified in its entirety by reference to the Warrant Agreement, which is incorporated herein in its entirety. Pursuant to the Warrant Agreement, GCB issued to FFC a warrant (the "Warrant") to purchase from GBC up to 241,056 fully paid and non- assessable shares of GCB Common Stock at a price per share equal to $17.00, subject to adjustment as provided for in the Warrant Agreement (such exercise price, as so adjusted, is referred to herein as the "Exercise Price"). The Exercise Price is equal to the price per share at which shares of GCB Common Stock had been recently traded prior to the execution of the Warrant Agreement on October 25, 1995. The execution of the Warrant Agreement was required by FFC as a condition to its execution of the Merger Agreement, and the effect of the Warrant Agreement is to increase the likelihood that the Merger will occur by making it more difficult and expensive for another party to acquire GBC. The Warrant may be exercised in whole or in part at any time or from time to time on or after the occurrence of an Exercise Event (as defined below) until termination of the Warrant Agreement. So long as the Warrant is owned by FFC, it may be exercised for no more than the number of shares of GCB Common Stock equal to 241,056 (subject to adjustment as described below) less the number of shares of GCB Common Stock at the time owned by FFC. FFC may not sell, assign, transfer or exercise the Warrant, in whole or in part, without the prior written consent of GCB, except upon or after the occurrence of any of the following events (each of which constitutes an Exercise Event): (i) a knowing breach by GCB of any representation, warranty or covenant set forth in the Merger Agreement which would permit FFC to terminate the Merger Agreement; (ii) the failure of GCB's shareholders to approve the Merger Agreement at a meeting called for such purpose if, at the time of such meeting, there has been an announcement by any person other than FFC of an offer or proposal to acquire 25% or more of the outstanding shares of GCB Common Stock (before giving effect to any exercise of the Warrant), or to acquire, merge or consolidate with GCB, or to purchase all or substantially all of GCB's assets (including without limitation any shares of the Bank or all or substantially all of the Bank's assets); (iii) the acquisition by any person of beneficial ownership of 25% or more of the outstanding shares of GCB Common Stock (before giving effect to any exercise of the Warrant); (iv) any person other than FFC shall have commenced a tender or exchange offer, or shall have filed an 45 application with an appropriate bank regulatory authority with respect to a publicly announced offer, to purchase or acquire securities of GCB such that, upon consummation of such offer, such person would have beneficial ownership of 25% or more of the outstanding shares of GCB Common Stock (before giving effect to any exercise of the Warrant); (v) GCB shall have entered into an agreement, letter of intent or other understanding with any person other than FFC providing for such person (A) to acquire, merge, consolidate or enter into a statutory share exchange with GCB or to purchase all or substantially all of GCB's assets (including without limitation any shares of the Bank or all or substantially all of the Bank's assets), or (B) to negotiate with GCB with respect to any of the events or transactions mentioned in the preceding clause (A); or (vi) termination or attempted termination of the Merger Agreement by GCB. The Warrant may be exercised by presentation and surrender thereof to GCB at its principal office accompanied by (i) a written notice of exercise, (ii) payment of the Exercise Price for the number of shares of Common Stock specified in such notice, and (iii) a certificate of the holder of the Warrant (the Holder) specifying the event or events which have occurred and which entitle the Holder to exercise the Warrant. Upon such presentation and surrender, GCB shall issue promptly to the Holder the number of shares of Common Stock to which the Holder is entitled. If the Warrant is exercised in part, GCB will, upon surrender of the Warrant for cancellation, execute and deliver a new Warrant entitling the Holder to purchase the balance of the shares of Common Stock issuable thereunder. Generally, in the event of any change in the outstanding shares of GCB's Common Stock by reason of a stock dividend, stock split or stock reclassification, the number and kind of shares or securities subject to the Warrant and the Exercise Price shall be appropriately and equitably adjusted so that the Holder shall receive upon exercise of the Warrant the number and class of shares or other securities or property that the Holder would have received in respect of the shares of GCB Common Stock that could have been purchased upon exercise of the Warrant if the Warrant could have been and had been exercised immediately prior to such event. If, at any time after the Warrant may be exercised or sold by FFC, GCB has received a written request from FFC, GCB shall prepare, file and keep effective and current a registration statement under the Securities Act of 1933, as amended, covering the Warrant and/or the shares of GCB Common Stock issued or issuable upon exercise of the Warrant. All expenses incurred by GCB in complying with such registration requirements will be paid by GCB. FFC will pay all expenses incurred by FFC in connection with such registration requirements, including fees and disbursements of its counsel and accountants, underwriting discounts and commissions, and transfer taxes payable by FFC. The Warrant and the rights conferred thereby will terminate (i) upon the Effective Date, (ii) upon a valid termination of the Merger Agreement prior to the occurrence of an Exercise Event, or (iii) to the extent the Warrant has not previously been exercised, sixty (60) days after the occurrence of an Exercise Event. Comparative Stock Prices and Dividends and - ------------------------------------------ Related Shareholder Matters --------------------------- Common Stock of FFC. FFC Common Stock is traded in the over-the-counter - ------------------- market and is listed on the NASDAQ National Market ("NASDAQ") under the symbol "FULT." The following table sets forth, for the periods indicated, the high and low closing sale price for FFC Common Stock as 46 reported on NASDAQ and cash dividends paid per share. The quotations set forth in the table represent quotations between dealers, do not include retail markups, markdowns or commissions, and may not represent actual transactions.
Cash Dividends 1994 High Low Paid Per Share - ---- ------ ------ -------------- First Quarter $18.18 $15.80 0.137 Second Quarter 20.23 18.36 0.146 Third Quarter 20.68 16.87 0.155 Fourth Quarter 17.95 15.23 0.155 1995 - ---- First Quarter 18.64 17.27 0.17 Second Quarter 19.25 17.95 0.17 Third Quarter 20.13 17.72 0.17
On October 24, 1995, the last trading day before public announcement of the Merger Agreement, the high and low quotations for FFC Common Stock were $21.75 and $22.50, respectively, as reported on NASDAQ. On December 4, the high and low quotations for FFC Common Stock as reported on NASDAQ were $22.25 and $21.25, respectively, per share. As of September 30, 1995, FFC Common Stock was held by 10,181 holders of record. FFC has in the past paid regular quarterly cash dividends to its shareholders on or about the 15th day of January, April, July and October of each year. Common Stock of GCB. GCB's Common Stock is traded in the over-the- - ------------------- counter market. Trading activity historically has been light. There has never been an organized public trading market for GCB's outstanding Common Stock. The table below reports the highest and lowest per share sales prices known to GCB's management at which GCB's Common Stock has actually been transferred in private transactions during the periods indicated.
Price Range Number of ---------------- Cash Dividends Shares Traded High Low Paid Per Share ------------- ---- --- -------------- 1993 - ---- First Quarter 2,000 11.50 $11.50 None Second Quarter 2,352 12.00 11.00 None Third Quarter 1,205 12.00 11.00 None Fourth Quarter 1,260 13.00 13.00 None 1994 ---- First Quarter 625 13.00 13.00 None Second Quarter 200 14.00 14.00 None Third Quarter 2,272 14.00 13.00 None Fourth Quarter 6,000 15.00 13.75 None
47
Price Range Number of ---------------- Cash Dividends Shares Traded High Low Paid Per Share ------------- ---- --- -------------- 1995 ---- First Quarter 3,332 14.50 13.75 None Second Quarter 121 17.00 17.00 None Third Quarter 4,264 20.00 17.00 None Fourth Quarter (through November 15, 1995) 700 25.00 25.00 None
The closing bid and asked quotations for GCB Common Stock on November 29, 1995, were $28 and $28, respectively, per share. As of the close of business on December 11, 1995, GCB's Common Stock was held by approximately 680 holders of record. GCB has paid no cash dividends since its inception. It paid a 5% stock dividend in 1994 and a 10% stock dividend in 1995. GCB's ability to declare or pay cash dividends prior to the Effective Date of the Merger is restricted by the Merger Agreement. See THE FFC/GCB MERGER -- Business Pending the Effective Date. PRO FORMA COMBINED FINANCIAL INFORMATION ---------------------------------------- The unaudited pro forma combined condensed balance sheet and the unaudited pro forma combined condensed statements of income of FFC set forth below give effect, using the pooling-of-interests method of accounting, to the proposed acquisition of GCB (based upon an exchange ratio of 1.555 shares of FFC Common Stock for each share of GCB Common Stock). The unaudited pro forma combined condensed financial statements are presented as though the Merger between FFC and GCB had occurred on January 1, 1995. The unaudited pro forma financial information, including the notes thereto set forth below, is not necessarily indicative of the financial condition or results of operations of FFC as they would have been had the proposed acquisition of GCB occurred during the periods presented or as they may be in the future. The unaudited pro forma financial information set forth below should be read in conjunction with the financial statements of FFC, including the notes thereto, which are incorporated herein by reference, and the financial statements of GCB, including the notes thereto, which are included in the documents attached as Exhibits E and F to this Proxy Statement/Prospectus. See INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE; Exhibit E--1994 Annual Report to Shareholders of Gloucester County Bankshares, Inc.; and Exhibit F--Quarterly Report on Form 10-Q of Gloucester County Bankshares, Inc. for the Quarter ended September 30, 1995. 48 Fulton Financial Corporation Pro Forma Combined Balance Sheet (Unaudited) September 30, 1995 (Dollars in Thousands) --------------------------------------------
Fulton Gloucester Financial County Pro Forma Corporation Bankshares, Inc. Adjustments Combined --------------------------------------------------------------- Assets Cash and Due from Banks $ 151,279 $ 11,163 $ 162,442 Interest Bearing Deposits 4,432 18 4,450 Federal Funds Sold and Securities Under Agreements to Resell -- 6,525 6,525 Mortgage Loans Held for Sale 994 -- 994 Investment Securities: Securities Held to Maturity 546,790 3,680 550,470 Securities Available for Sale 165,244 33,180 198,424 Loans 2,297,305 133,876 2,431,181 Less: Allowance for Loan Losses (36,162) (1,881) (38,043) Unearned Income (5,432) (791) (6,223) --------------------------------------------------------------- Net Loans 2,255,711 131,204 2,386,915 --------------------------------------------------------------- Premises and Equipment 42,275 3,988 46,263 Accrued Interest Receivable 22,676 1,001 23,677 Other Assets 77,411 1,489 78,900 --------------------------------------------------------------- TOTAL ASSETS $3,266,812 $192,248 $3,459,060 --------------------------------------------------------------- Liabilities Deposits: Non-Interest Bearing $ 368,791 $ 26,935 $ 395,726 Interest Bearing 2,335,054 150,438 2,485,492 =============================================================== Total Deposits 2,703,845 177,373 2,881,218 --------------------------------------------------------------- Short-Term Borrowings: Federal Funds Purchased and Securities Sold Under Agreements to Repurchase 110,583 -- 110,583 Demand Notes of U.S. Treasury 5,000 -- 5,000 --------------------------------------------------------------- Total Short-Term Borrowings 115,583 -- 115,583 --------------------------------------------------------------- Accrued Interest Payable 23,332 241 23,573 Other Liabilities 55,201 458 55,659 Long-Term Debt 35,912 -- 35,912 --------------------------------------------------------------- Total Liabilities 2,933,873 178,072 3,111,945 ---------------------------------------------------------------
49
Fulton Gloucester Financial County Pro Forma Corporation Bankshares, Inc. Adjustments Combined --------------------------------------------------------------- Shareholders' Equity Common Stock 71,060 4,851 (1,079)(A) 74,832 Capital Surplus 167,628 5,404 1,079 (A) 174,111 Retained Earnings 87,977 4,110 92,087 Less: Treasury Stock (563) -- (563) Net Unrealized Holding Gain (Loss) on Securities 6,837 (189) 6,648 --------------------------------------------------------------- Total Shareholders' Equity 332,939 14,176 347,115 --------------------------------------------------------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $3,266,812 $192,248 $3,459,060 ===============================================================
Notes to Pro Forma Combined Balance Sheets: (A) These Adjustments to the capital accounts reflect the issuance of FFC Common Stock, $2.50 par value per share, for 100% of the GCB Common Stock, $5.00 par value per share, issued and outstanding. An exchange ratio of 1.555 shares of FFC Common Stock (representing the exchange ratio corresponding to FFC's stock price immediately prior to the announcement of the transaction) for each share of GCB's Common Stock was utilized in this illustration. 50 Fulton Financial Corporation Pro Forma Combined Balance Sheet (Unaudited) December 31, 1994 (Dollars in Thousands) --------------------------------------------
Fulton Gloucester Financial County Pro Forma Corporation Bankshares, Inc. Adjustments Combined (Audited) --------------------------------------------------------------- Assets Cash and Due from Banks $ 148,241 $ 8,445 $ 156,686 Interest Bearing Deposits 2,539 19 2,558 Federal Funds Sold and Securities Under Agreements to Resell 6,075 7,600 13,675 Mortgage Loans Held for Sale 650 -- 650 Investment Securities: Securities Held to Maturity 507,486 7,577 515,063 Securities Available for Sale 174,211 20,996 195,207 Loans 2,244,846 112,154 2,357,000 Less: Allowance for Loan Losses (35,775) (1,504) (37,279) Unearned Income (10,952) (708) (11,660 --------------------------------------------------------------- Net Loans 2,198,119 109,942 2,308,061 --------------------------------------------------------------- Premises and Equipment 42,452 3,075 45,527 Accrued Interest Receivable 20,727 1,047 21,774 Other Assets 78,196 1,030 79,226 --------------------------------------------------------------- TOTAL ASSETS $3,178,696 $159,731 $3,338,427 =============================================================== Liabilities Deposits: Non-Interest Bearing $ 359,895 $ 22,158 $ 382,053 Interest Bearing 2,231,153 125,691 2,356,844 --------------------------------------------------------------- Total Deposits 2,591,048 147,849 2,738,897 --------------------------------------------------------------- Short-Term Borrowings: Federal Funds Purchased and Securities Sold Under Agreements to Repurchase 191,523 -- 191,523 Demand Notes of U.S. Treasury 5,000 -- 5,000 --------------------------------------------------------------- Total Short-Term Borrowings 196,523 -- 196,523 --------------------------------------------------------------- Accrued Interest Payable 12,857 160 13,017 Other Liabilities 42,653 446 43,099 Long-Term Debt 27,283 -- 27,283 --------------------------------------------------------------- Total Liabilities 2,870,364 148,455 3,018,819 ---------------------------------------------------------------
51
Fulton Gloucester Financial County Pro Forma Corporation Bankshares,Inc. Adjustments Combined --------------------------------------------------------------- Shareholders' Equity Common Stock 65,240 4,410 (638)(A) 69,012 Capital Surplus 132,588 4,567 638 (A) 137,793 Retained Earnings 113,401 3,340 116,741 Less: Treasury Stock (4,474) -- (4,474) Net Unrealized Holding Gain (Loss) on Securities 1,577 (1,041) 536 --------------------------------------------------------------- Total Shareholders' Equity 308,332 11,276 319,608 --------------------------------------------------------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $3,178,696 $159,731 $3,338,427 ===============================================================
Notes to Pro Forma Combined Balance Sheets: (A) These Adjustments to the capital accounts reflect the issuance of FFC Common Stock, $2.50 par value per share, for 100% of the GCB Common Stock, $5.00 par value per share, issued and outstanding. An exchange ratio of 1.555 shares of FFC Common Stock (representing the exchange ratio corresponding to FFC's stock price immediately prior to the announcement of the transaction) for each share of GCB's Common Stock was utilized in this illustration. 52 Fulton Financial Corporation Pro Forma Combined Balance Sheet (Unaudited) December 31, 1993 (Dollars in Thousands) --------------------------------------------
Fulton Gloucester Financial County Pro Forma Corporation Bankshares,Inc. Adjustments Combined --------------------------------------------------------------- Assets Cash and Due from Banks $ 134,571 $ 5,364 $ 139,935 Interest Bearing Deposits 4,696 -- 4,696 Federal Funds Sold and Securities Under Agreements to Resell 19,873 7,875 27,748 Mortgage Loans Held for Sale 10,399 -- 10,399 Investment Securities: Securities Held to Maturity 518,798 31,878 550,676 Securities Available for Sale 218,000 -- 218,000 Securities Held for Sale -- 754 754 Loans 1,852,989 82,607 1,935,596 Less: Allowance for Loan Losses (28,678) (1,253) (29,931) Unearned Income (10,998) (222) (11,220) --------------------------------------------------------------- Net Loans 1,813,313 81,132 1,894,445 --------------------------------------------------------------- Premises and Equipment 38,549 1,911 40,460 Accrued Interest Receivable 16,355 730 17,085 Other Assets 49,758 952 50,710 --------------------------------------------------------------- TOTAL ASSETS $2,824,312 $ 130,596 $2,954,908 =============================================================== Liabilities Deposits: Non-Interest Bearing $ 327,953 $ 16,581 $ 344,534 Interest Bearing 2,050,367 101,680 2,152,047 --------------------------------------------------------------- Total Deposits 2,378,320 118,261 2,496,581 --------------------------------------------------------------- Short-Term Borrowings: Federal Funds Purchased and Securities Sold Under Agreements to Repurchase 76,189 -- 76,189 Demand Notes of U.S. Treasury 4,998 -- 4,998 --------------------------------------------------------------- Total Short-Term Borrowings 81,187 -- 81,187 --------------------------------------------------------------- Accrued Interest Payable 10,618 101 10,719 Other Liabilities 52,834 1,955 54,789 Long-Term Debt 13,051 -- 13,051 --------------------------------------------------------------- Total Liabilities 2,536,010 120,317 2,656,327 ---------------------------------------------------------------
53
Fulton Gloucester Financial County Pro Forma Corporation Bankshares,Inc. Adjustments Combined (Audited) --------------------------------------------------------------- Shareholders' Equity Common Stock 63,800 4,200 (428)(A) 67,572 Capital Surplus 127,114 4,230 428 (A) 131,772 Retained Earnings 89,473 1,849 91,322 Less: Treasury Stock (496) -- (496) Net Unrealized Holding Gain on Securities 8,411 -- 8,411 --------------------------------------------------------------- Total Shareholders' Equity 288,302 10,279 298,581 --------------------------------------------------------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,824,312 $130,596 $2,954,908 ===============================================================
Notes to Pro Forma Combined Balance Sheets: (A) These adjustments to the capital accounts reflect the issuance of FFC Common Stock, $2.50 par value per share, for 100% of the GCB Common Stock, $5.00 par value per share, issued and outstanding. An exchange ratio of 1.555 shares of FFC Common Stock (representing the exchange ratio corresponding to FFC's stock price immediately prior to the announcement of the transaction) for each share of GCB's Common Stock was utilized in this illustration. 54 Fulton Financial Corporation Pro Forma Combined Condensed Statement of Income (Unaudited) For the Nine Months Ended September 30, 1995 (Dollars in Thousands) ------------------------------------------------------------
Fulton Gloucester Financial County Pro Forma Corporation Bankshares,Inc. Adjustments Combined --------------------------------------------------------------- Interest Income Loans, Including Fees $146,725 $ 9,579 $156,304 Investment Securities: Taxable 21,930 1,375 23,305 Tax-Exempt 3,632 98 3,730 Dividends 1,466 26 1,492 Federal Funds Sold and Repos 1,124 416 1,540 Interest-Bearing Deposits in Other Banks 195 1 196 --------------------------------------------------------------- Total Interest Income 175,072 11,495 186,567 Interest Expense Deposits 69,076 4,169 73,245 Short-Term Borrowings 4,750 51 4,801 Long-Term Debt 1,453 -- 1,453 --------------------------------------------------------------- Total Interest Expense 75,279 4,220 79,499 --------------------------------------------------------------- Net Interest Income 99,793 7,275 107,068 Provision for Loan Losses 1,572 450 2,022 --------------------------------------------------------------- Net Interest Income After Provision for Loan Losses 98,221 6,825 105,046 Other Income Trust Department 5,568 -- 5,568 Service Charges on Deposit Accounts 7,231 603 7,834 Other Service Charges and Fees 5,584 78 5,662 Gain on Sale of Mortgage Loans 811 -- 811 Investment Securities Gains 1,409 -- 1,409 --------------------------------------------------------------- 20,603 681 21,284 --------------------------------------------------------------- Other Expenses Salaries and Employee Benefits 38,402 1,825 40,227 Net Occupancy Expenses 7,552 436 7,988 Equipment Expense 4,264 268 4,532 FDIC Assessment Expense 2,919 152 3,071 Special Services 3,967 291 4,258 Other 17,237 1,256 18,493 --------------------------------------------------------------- 74,341 4,228 78,569 ---------------------------------------------------------------
55
Fulton Gloucester Financial County Pro Forma Corporation Bankshares, Inc. Combined - ---------------------------------------------------------------------------------------------------------------------- Income Before Income Taxes 44,483 3,278 47,761 Income Taxes 10,861 1,230 12,091 --------------------------------------------------------------- NET INCOME $33,622 $2,048 $35,670 --------------------------------------------------------------- Per Share Data: Net Income: Primary $ 1.18 $2.11 $1.19 Fully Diluted -- $1.99 -- Cash Dividends $0.486 -- $0.461 Weighted Average Shares Outstanding Primary 28,405,454 970,279 29,914,238 Fully Diluted -- 1,041,280 --
56 Fulton Financial Corporation Pro Forma Combined Condensed Statement of Income (Unaudited) For the Nine Months Ended September 30, 1994 (Dollars in Thousands) ------------------------------------------------------------
Fulton Gloucester Financial County Pro Forma Corporation Bankshares, Inc. Adjustments Combined --------------------------------------------------------------- Interest Income Loans, Including Fees $114,240 $6,450 $120,690 Investment Securities: Taxable 23,707 1,107 24,814 Tax-Exempt 4,238 22 4,260 Dividends 1,017 10 1,027 Federal Funds Sold and Repos 289 240 529 Interest-Bearing Deposits in Other Banks 139 -- 139 --------------------------------------------------------------- Total Interest Income 143,630 7,829 151,459 Interest Expense Deposits 48,711 2,274 50,985 Short-Term Borrowings 3,233 -- 3,233 Long-Term Debt 683 -- 683 --------------------------------------------------------------- Total Interest Expense 52,627 2,274 54,901 --------------------------------------------------------------- Net Interest Income 91,003 5,555 96,558 Provision for Loan Losses 1,570 248 1,818 --------------------------------------------------------------- Net Interest Income After Provision for Loan Losses 89,433 5,307 94,740 Other Income Trust Department 5,387 -- 5,387 Service Charges on Deposit Accounts 6,925 479 7,404 Other Service Charges and Fees 4,441 88 4,529 Gain on Sale of Mortgage Loans 1,143 -- 1,143 Investment Securities Gains (Losses) 1,912 (13) 1,899 --------------------------------------------------------------- 19,808 554 20,362 --------------------------------------------------------------- Other Expenses Salaries and Employee Benefits 36,400 1,510 37,910 Net Occupancy Expenses 6,604 344 6,948 Equipment Expense 4,319 210 4,529 FDIC Assessment Expense 4,039 196 4,235 Special Services 3,553 200 3,753 Other 15,137 1,015 16,152 --------------------------------------------------------------- 70,052 3,475 73,527 ---------------------------------------------------------------
57
Fulton Gloucester Financial County Pro Forma Corporation Bankshares,Inc. Adjustments Combined --------------------------------------------------------------- Income Before Income Taxes 39,189 2,386 41,575 Income Taxes 9,462 815 10,277 --------------------------------------------------------------- NET INCOME $29,727 $1,571 $31,298 --------------------------------------------------------------- Per Share Data: Net Income $ 1.06 $1.62 $ 1.06 Cash Dividends $ 0.438 -- $ 0.416 Weighted Average Shares Outstanding 28,100,151 970,279 29,608,935
58 Fulton Financial Corporation Pro Forma Combined Condensed Statement of Income (Unaudited) Year Ended December 31, 1994 (Dollars in Thousands) ------------------------------------------------------------
Fulton Gloucester Financial County Pro Forma Corporation Bankshares,Inc. Adjustments Combined (Audited) --------------------------------------------------------------- Interest Income Loans, Including Fees $160,743 $9,151 $169,894 Investment Securities: Taxable 31,194 1,457 32,651 Tax-Exempt 5,588 41 5,629 Dividends 1,398 15 1,413 Federal Funds Sold and Repos 389 404 793 Interest-Bearing Deposits in Other Banks 170 -- 170 --------------------------------------------------------------- Total Interest Income 199,482 11,068 210,550 Interest Expense Deposits 68,907 3,309 72,216 Short-Term Borrowings 5,288 -- 5,288 Long-Term Debt 1,116 -- 1,116 --------------------------------------------------------------- Total Interest Expense 75,311 3,309 78,620 --------------------------------------------------------------- Net Interest Income 124,171 7,759 131,930 Provision for Loan Losses 2,255 460 2,715 --------------------------------------------------------------- Net Interest Income After Provision for Loan Losses 121,916 7,299 129,215 Other Income Trust Department 6,944 -- 6,944 Service Charges on Deposit Accounts 9,368 674 10,042 Other Service Charges and Fees 5,974 115 6,089 Gain on Sale of Mortgage Loans 1,189 -- 1,189 Investment Securities Gains (Losses) 2,326 (193) 2,133 --------------------------------------------------------------- 25,801 596 26,397 --------------------------------------------------------------- Other Expenses Salaries and Employee Benefits 48,464 2,069 50,533 Net Occupancy Expenses 7,251 466 7,717 Equipment Expense 5,143 283 5,426 FDIC Assessment Expense 5,495 265 5,760 Special Services 4,841 270 5,111 Other 22,810 1,448 24,258 --------------------------------------------------------------- 94,004 4,801 98,805 ---------------------------------------------------------------
59
Fulton Gloucester Financial County Pro Forma Corporation Bankshares, Inc. Adjustments Combined (Audited) - ---------------------------------------------------------------------------------------------------------------------- Income Before Income Tax 53,713 3,094 56,807 Income Taxes 13,233 1,056 14,289 --------------------------------------------------------------- NET INCOME $40,480 $2,038 $42,518 --------------------------------------------------------------- Per Share Data: Net Income $ 1.44 $ 2.10 $ 1.43 Cash Dividends $ 0.587 -- $ 0.557 Weighted Average Shares Outstanding 28,192,160 970,279 29,700,944
60 Fulton Financial Corporation Pro Forma Combined Condensed Statement of Income (Unaudited) Year Ended December 31, 1993 (Dollars in Thousands) ------------------------------------------------------------
Fulton Gloucester Financial County Pro Forma Corporation Bankshares,Inc. Adjustments Combined (Audited) --------------------------------------------------------------- Interest Income Loans, Including Fees $149,303 $6,401 $155,704 Investment Securities: Taxable 30,266 1,521 31,787 Tax-Exempt 6,893 6 6,899 Dividends 1,304 -- 1,304 Federal Funds Sold and Repos 1,696 214 1,910 Interest-Bearing Deposits in Other Banks 597 -- 597 --------------------------------------------------------------- Total Interest Income 190,059 8,142 198,201 Interest Expense Deposits 72,474 2,523 74,997 Short-Term Borrowings 1,612 -- 1,612 Long-Term Debt 890 -- 890 --------------------------------------------------------------- Total Interest Expense 74,976 2,523 77,499 --------------------------------------------------------------- Net Interest Income 115,083 5,619 120,702 Provision for Loan Losses 4,926 750 5,676 --------------------------------------------------------------- Net Interest Income After Provision for Loan Losses 110,157 4,869 115,026 Other Income Trust Department 6,812 -- 6,812 Service Charges on Deposit Accounts 9,508 506 10,014 Other Service Charges and Fees 5,979 111 6,090 Gain on Sale of Mortgage Loans 4,265 -- 4,265 Investment Securities Gains 1,868 890 2,758 --------------------------------------------------------------- 28,432 1,507 29,939 --------------------------------------------------------------- Other Expenses Salaries and Employee Benefits 45,971 1,750 47,721 Net Occupancy Expenses 7,542 429 7,971 Equipment Expense 4,984 258 5,242 FDIC Assessment Expense 5,482 251 5,733 Special Services 5,098 261 5,359 Other 22,705 1,315 24,020 --------------------------------------------------------------- 91,782 4,264 96,046 ---------------------------------------------------------------
61
Fulton Gloucester Financial County Pro Forma Corporation Bankshares, Inc. Adjustments Combined (Audited) --------------------------------------------------------------- Income Before Income Taxes and Accounting Changes 46,807 2,112 48,919 Income Taxes 10,285 718 11,003 --------------------------------------------------------------- Income Before Accounting Changes 36,522 1,394 37,916 Cumulative Effect of Changes in Accounting Principles: Income Taxes 1,764 -- 1,764 Post-retirement benefits, net (5,221) -- (5,221) --------------------------------------------------------------- NET INCOME $33,065 $1,394 $34,459 --------------------------------------------------------------- Per Share Data: Income Before Changes in Accounting Principles $ 1.30 $ 1.44 $ 1.28 Effect of Changes in Accounting Principles: Income Taxes 0.07 -- 0.06 Post-retirement benefits, net (0.21) -- (0.17) --------------------------------------------------------------- NET INCOME $ 1.18 $ 1.44 $ 1.17 --------------------------------------------------------------- Cash Dividends $ 0.527 -- $ 0.500 Weighted Average Shares Outstanding 28,001,613 970,279 29,510,397
62 Fulton Financial Corporation Pro Forma Combined Condensed Statement of Income (Unaudited) Year Ended December 31, 1992 (Dollars in Thousands) ------------------------------------------------------------
Fulton Gloucester Financial County Pro Forma Corporation Bankshares, Inc. Adjustments Combined (Audited) --------------------------------------------------------------- Interest Income Loans, Including Fees $156,697 $4,386 $161,083 Investment Securities: Taxable 31,774 1,596 33,370 Tax-Exempt 9,158 -- 9,158 Dividends 1,334 -- 1,334 Federal Funds Sold and Repos 3,594 242 3,836 Interest-Bearing Deposits in Other Bank 1,394 -- 1,394 --------------------------------------------------------------- Total Interest Income 203,951 6,224 210,175 Interest Expense Deposits 94,217 2,449 96,666 Short-Term Borrowings 983 -- 983 Long-Term Debt 1,187 -- 1,187 --------------------------------------------------------------- Total Interest Expense 96,387 2,449 98,836 --------------------------------------------------------------- Net Interest Income 107,564 3,775 111,339 Provision for Loan Losses 14,852 585 15,437 --------------------------------------------------------------- Net Interest Income After Provision for Loan Losses 92,712 3,190 95,902 Other Income Trust Department 5,828 -- 5,828 Service Charges on Deposit Accounts 8,753 302 9,055 Other Service Charges and Fees 5,165 80 5,245 Gain on Sale of Mortgage Loans 3,144 -- 3,144 Investment Securities Gains 1,781 511 2,292 --------------------------------------------------------------- 24,671 893 25,564 --------------------------------------------------------------- Other Expenses Salaries and Employee Benefits 42,661 1,355 44,016 Net Occupancy Expenses 5,916 421 6,337 Equipment Expense 4,588 220 4,808 FDIC Assessment Expense 5,266 135 5,401 Special Services 5,127 184 5,311 Other 20,877 987 21,864 --------------------------------------------------------------- 84,435 3,302 87,737 ---------------------------------------------------------------
63
Fulton Gloucester Financial County Pro Forma Corporation Bankshares,Inc. Adjustments Combined (Audited) --------------------------------------------------------------- Income Before Income Taxes and Accounting Changes 32,948 781 33,729 Income Taxes 6,077 275 6,352 --------------------------------------------------------------- Income Before Accounting Changes 26,871 506 27,377 Cumulative Effect of Changes in Accounting Principles: 72 -- 72 Income Taxes --------------------------------------------------------------- NET INCOME $26,943 $ 506 $27,449 --------------------------------------------------------------- Per Share Data: Income Before Changes in Accounting Principles $ 0.96 $0.52 $ 0.93 Effect of Changes in Accounting Principles -- -- -- --------------------------------------------------------------- NET INCOME $ 0.96 $0.52 $ 0.93 --------------------------------------------------------------- Cash Dividends $ 0.431 -- $ 0.409 Weighted Average Shares Outstanding 27,945,947 970,279 29,454,731
64 INFORMATION CONCERNING FULTON FINANCIAL CORPORATION --------------------------------------------------- AND DESCRIPTION OF FFC COMMON STOCK ----------------------------------- General ------- FFC is a Pennsylvania business corporation and a registered bank holding company with its headquarters in Lancaster, Pennsylvania. As a bank holding company, FFC engages in a general commercial and retail banking and trust business, and also in related financial businesses, through its bank and nonbank subsidiaries. FFC's subsidiary banks currently operate eighty-four banking offices in Pennsylvania, fourteen banking offices in Maryland and six banking offices in Delaware. As of September 30, 1995, FFC had consolidated total assets of approximately $3.3 billion. The principal assets of FFC are the following eight wholly-owned bank subsidiaries, each of which is insured by the FDIC: (i) Fulton Bank ("Fulton"), a Pennsylvania bank and trust company which is not a member of the Federal Reserve System, (ii) Farmers Trust Bank ("Farmers Trust"), a Pennsylvania bank and trust company which is a member of the Federal Reserve System, (iii) Swineford National Bank ("Swineford"), a national banking association which is a member of the Federal Reserve System, (iv) Lafayette Bank ("Lafayette"), a Pennsylvania bank and trust company which is not a member of the Federal Reserve System, (v) FNB Bank, National Association ("FNB"), a national banking association which is a member of the Federal Reserve System, (vi) Great Valley Savings Bank ("Great Valley"), a Pennsylvania-chartered savings bank which is not a member of the Federal Reserve System, (vii) Hagerstown Trust Company ("Hagerstown"), a Maryland trust company which is not a member of the Federal Reserve System, and (viii) Delaware National Bank ("Delaware National"), a national banking association which is a member of the Federal Reserve System. In addition, FFC has the following wholly-owned direct nonbank subsidiaries: (i) Fulton Financial Realty Company, which holds title to or leases certain properties on which Fulton and Farmers Trust maintain branch offices or other facilities; (ii) Fulton Life Insurance Company, which engages in the business of reinsuring credit life, accident and health insurance that is directly related to extensions of credit by certain of FFC's bank subsidiaries; and (iii) Central Pennsylvania Financial Corp., which owns certain non-banking subsidiaries holding interests in real estate. As a registered bank holding company, FFC is subject to regulation under the federal Bank Holding Company Act of 1956, as amended, and the rules adopted by the Board of Governors of the Federal Reserve System ("FRB") thereunder. Under applicable FRB policies, a bank holding company such as FFC is expected to act as a source of financial strength for each of its subsidiary banks and to commit resources to support each subsidiary bank in circumstances when it might not do so absent such a policy. Any capital loans made by a bank holding company to any of its subsidiary banks would be subordinate in right of payment to the claims of depositors and certain other creditors of such subsidiary banks. FFC has a resignation policy for directors of FFC and its subsidiaries. Under this policy, a director is required to tender his or her resignation upon reaching the age of seventy. However, under the Merger Agreement, FFC has agreed that each director or advisory director of the Bank who has reached age seventy as of the Effective Date, or within three years thereafter, shall be permitted to serve for a period of at least three years after the Effective Date before becoming subject to this policy. 65 The principal executive offices of FFC are located at One Penn Square, P.0. Box 4887, Lancaster, Pennsylvania 17604, and its telephone number is (717) 291-2411. Loan Policies and Portfolio Quality ----------------------------------- FFC, through its bank subsidiaries, grants loans and makes other credit facilities available to the general public. These extensions of credit are structured to meet the varying needs of business, individual, and institutional customers and include mortgages, lines of credit, term loans, leases and letters of credit. This activity serves as a major source of revenue for FFC. However, it also exposes FFC to potential losses upon borrower default. In order to minimize the occurrence of loss, FFC's bank subsidiaries follow strict loan underwriting and risk assessment policies. These policies emphasize the financial strength and cash flow of the borrower rather than collateral value. Although collateral continues to play an important part in lending decisions, it is not a substitute for a borrower's underlying ability to pay. FFC's bank subsidiaries confine their lending to customers who live, or which are based, in their respective market areas. By geographically restricting the lending activities of each bank subsidiary, their respective staffs can become more knowledgeable about local market conditions and can thereby make better credit risk assessments and, therefore, more prudent lending decisions. This superior knowledge of local economic conditions, when combined with prudent underwriting standards, offsets and often surmounts the potential risks arising from a geographic concentration of credits. Management believes that FFC's loan customer base is reasonably diversified, because FFC's subsidiary banks are located in and do business within a broad spectrum of local communities and regional economies located in central and northeastern Pennsylvania, western Maryland, and southern Delaware. To counteract any problems with credit quality which do arise, FFC maintains a proactive loan review function. This function, in combination with the lending staff, attempts to identify deteriorating loans before they reach a critical stage. This loan review policy not only protects FFC and its subsidiaries from realizing greater loan losses but also, in many cases, assists the borrower as well. Due to their underwriting criteria, FFC and its bank subsidiaries have not made a determination to limit the availability of credit to any segment of their customer base due to changes in general economic conditions. FFC and its bank subsidiaries do take these conditions into consideration when assessing individual credit risk, but each loan request is evaluated individually. Prudent lending practices cannot completely insulate a financial institution from adverse economic trends. The economic recession experienced during the early 1990's in the market areas served by FFC caused a slight deterioration in the quality of the loan portfolios of FFC's banking subsidiaries. In addition, FFC acquired approximately $5.0 million in non-performing assets as part of its acquisition of Central Pennsylvania Financial Corp. in 1994. The total non-performing assets of FFC totalled $22.1 million or 0.68% of total assets at September 30, 1995, and $22.3 million or 0.73% of total assets at December 31, 1994. Additionally, FFC and its bank subsidiaries have certain loans on which payments are presently current, but where the borrowers are currently experiencing considerable financial difficulties. Loans under this classification totaled $8.4 million at September 30, 1995. As of September 30, 1995, FFC's allowance for loan losses was $36.2 million and equalled 177% of total non-performing loans and 164% of non- performing assets. FFC believes that this allowance is adequate to absorb any losses inherent in FFC's balance sheet. 66 Legal Proceedings ----------------- From time to time FFC and its subsidiaries are involved in routine litigation matters that are incidental to the businesses carried on by such entities. None of these matters is expected to have a material effect on FFC's financial condition or operating results. General Description of FFC Common Stock --------------------------------------- The authorized capital of FFC consists exclusively of 100 million shares of Common Stock, par value $2.50 per share, and 10 million shares of preferred stock without par value. As of September 30, 1995, there were issued and outstanding 28,394,380 shares of FFC Common Stock, which shares were held by 10,181 owners of record, and there were 677,631 shares issuable upon the exercise of options and warrants. No shares of preferred stock have been issued by FFC. FFC Common Stock is listed for quotation on the over-the-counter NASDAQ National Market under the symbol "FULT." The holders of FFC 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 FFC Common Stock is entitled to participate on an equal pro rata basis in dividends and other distributions. The holders of FFC Common Stock do not have preemptive rights to subscribe for additional shares that may be issued by FFC, and no share is entitled in any manner to any preference over any other share. The shares of FFC Common Stock to be issued to the shareholders of GCB pursuant to the Merger will be fully paid and non- assessable and the holders thereof will not be subject to call or assessment under Pennsylvania law. Fulton Bank serves as the transfer agent for FFC. Dividends --------- The holders of FFC Common Stock are entitled to receive dividends when, as and if declared by the Board of Directors out of funds legally available therefor. FFC has in the past paid quarterly cash dividends to its shareholders on or about the 15th day of January, April, July and October of each year. The ability of FFC to pay dividends to its shareholders is dependent primarily upon the earnings and financial condition of Fulton, Farmers Trust, Swineford, Lafayette, FNB, Great Valley, Hagerstown and Delaware National. Funds for the payment of dividends on FFC Common Stock are expected for the foreseeable future to be obtained primarily from dividends paid to FFC by these eight bank subsidiaries, and by the Bank if the Merger is consummated, which dividends are subject to certain statutory limitations. Under applicable state and federal laws, the dividends that may be paid by the bank subsidiaries of FFC without prior regulatory approval are subject to certain prescribed limitations. As state banks chartered under the Pennsylvania Banking Code of 1965, as amended, Fulton, Farmers Trust, Lafayette and Great Valley may pay dividends only out of accumulated net earnings and may not declare or pay any dividend requiring a reduction of the statutorily required surplus of the institution. In the case of national banks such as Swineford, FNB and Delaware National, the approval of the Office of the Comptroller of the Currency ("OCC") is required under federal law if the total of all dividends declared during any calendar year would exceed the net profits (as defined) of the bank for the year, combined with its retained net profits (as defined) for the two preceding calendar years. As a commercial bank organized under the laws of the state of Maryland, Hagerstown may only declare a cash dividend from its undivided profits 67 or (with the prior approval of the Maryland Bank Commissioner) from its surplus in excess of 100% of its required capital stock, in each case after providing for due or accrued expenses, losses, interest and taxes. In addition, if Hagerstown's surplus becomes less than 100% of its required capital stock, Hagerstown may not declare or pay any cash dividends that exceed 90% of its net earnings until its surplus becomes 100% of its required capital stock. In addition to the foregoing statutory restrictions on dividends, the Pennsylvania Department of Banking (with respect to all Pennsylvania state-chartered banks), the FDIC (with respect to Pennsylvania state-chartered banks that are not members of the Federal Reserve System, such as Fulton, Lafayette and Great Valley), the FRB (with respect to Pennsylvania state-chartered banks that are members of the Federal Reserve System, such as Farmers Trust), and the OCC (with respect to national banks such as Swineford, FNB and Delaware National), also have adopted minimum capital standards and have broad authority to prohibit a bank from engaging in unsafe or unsound banking practices. The payment of a dividend by a bank could, depending upon the financial condition of the bank involved and other factors, be deemed to impair its capital or to be such an unsafe or unsound practice. Under the restrictions set forth above, the aggregate amount available for the payment of dividends by the eight bank subsidiaries of FFC was approximately $120.7 million as of September 30, 1995. Dividend Reinvestment Plan -------------------------- The holders of FFC Common Stock may elect to participate in the Fulton Financial Corporation Dividend Reinvestment Plan (the "Dividend Reinvestment Plan"), which is a plan administered by Fulton as the Plan Agent. Under the Dividend Reinvestment Plan, dividends payable to participating shareholders are paid to the Plan Agent and are used to purchase, on behalf of the participating shareholders, additional shares of FFC Common Stock. Participating shareholders may make additional voluntary cash payments, which are also used by the Plan Agent to purchase, on behalf of such shareholders, additional shares of FFC Common Stock. Shares of FFC Common Stock held for the account of participating shareholders are voted by the Plan Agent in accordance with the instructions of each participating shareholder as set forth in his or her proxy. Securities Laws --------------- FFC, as a business corporation, is subject to the registration and prospectus delivery requirements of the 1933 Act and is also subject to similar requirements under state securities laws. FFC Common Stock is registered with the SEC under Section 12(g) of the 1934 Act, and FFC is subject to the periodic reporting, proxy solicitation and insider trading requirements of the 1934 Act. The executive officers, directors and ten percent shareholders of FFC are subject to certain restrictions affecting their right to sell shares of FFC Common Stock owned beneficially by them. Specifically, each such person is subject to the beneficial ownership reporting requirements and to the short-swing profit recapture provisions of Section 16 of the 1934 Act and may sell shares of FFC Common Stock only: (i) in compliance with the provisions of SEC Rule 144, (ii) in compliance with the provisions of another applicable exemption from the registration requirements of the 1933 Act, or (iii) pursuant to an effective registration statement filed with the SEC under the 1933 Act. Antitakeover Provisions ----------------------- The Articles of Incorporation and Bylaws of FFC include certain provisions which may be considered to be "antitakeover" in nature, 68 because they may have the effect of discouraging or making more difficult the acquisition of control over FFC by means of a hostile tender offer, exchange offer, proxy contest or similar transaction. These provisions are intended to protect the shareholders of FFC (including the present shareholders of GCB, who will become shareholders of FFC following the Merger) by providing a measure of assurance that FFC's shareholders will be treated fairly in the event of an unsolicited takeover bid and by preventing a successful takeover bidder from exercising its voting control to the detriment of the other shareholders. However, the antitakeover provisions set forth in the Articles of Incorporation and Bylaws of FFC, taken as a whole, may discourage a hostile tender offer, exchange offer, proxy solicitation or similar transaction relating to FFC Common Stock. To the extent that these provisions actually discourage such a transaction, holders of FFC Common Stock may not have an opportunity to dispose of part or all of their stock at a higher price than that prevailing in the market. In addition, these provisions make it more difficult to remove, and thereby may serve to entrench, incumbent directors and officers of FFC, even if their removal would be regarded by some shareholders as desirable. The provisions in the Articles of Incorporation of FFC which may be considered to be "antitakeover" in nature include the following: (i) a provision that provides for substantial amounts of authorized but unissued capital stock, including a class of preferred stock whose rights and privileges may be determined prior to issuance by FFC's Board of Directors, (ii) a provision that does not permit shareholders to cumulate their votes for the election of directors, (iii) a provision that requires a greater than majority shareholder vote in order to approve certain business combinations and other extraordinary corporate transactions, (iv) a provision that establishes criteria to be applied by the Board of Directors in evaluating an acquisition proposal, (v) a provision that requires a greater than majority shareholder vote in order for the shareholders to remove a director from office without cause, (vi) a provision that prohibits the taking of any action by the shareholders without a meeting and eliminates the right of shareholders to call a annual meeting, (vii) a provision that limits the right of the shareholders to amend the Bylaws, and (viii) a provision that requires, under certain circumstances, a greater than majority shareholder vote in order to amend the Articles of Incorporation. The provisions of the Bylaws of FFC which may be considered to be "antitakeover" in nature include the following: (i) a provision that limits the permissible number of directors, (ii) a provision that establishes a Board of Directors divided into three classes, with members of each class elected for a three-year term that is staggered with the terms of the members of the other two classes, 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. On June 20, 1989, FFC adopted a Shareholder Rights Plan (the "Rights Plan"). The Rights Plan is intended to discourage unfair or financially inadequate takeover proposals and abusive takeover practices and to encourage third parties who may in the future be interested in acquiring FFC to negotiate with FFC's Board of Directors. The Rights Plan may have the effect of discouraging or making more difficult the acquisition of FFC by means of a hostile tender offer, exchange offer or similar transaction. The Rights Plan is similar to shareholder rights plans which have been adopted by many other bank holding companies and business corporations and contains "flip-in" and "flip-over" provisions which are typically included in plans of this kind. Each share of FFC Common Stock to be issued in connection with the Merger will be accompanied by one right issued pursuant to the terms of the Rights Plan, which right will initially, and until it becomes exercisable, 69 trade with and be represented by the FFC Common Stock certificates to be received by the shareholders of GCB. The management of FFC does not presently contemplate recommending to the shareholders the adoption of any additional antitakeover provisions. Indemnification --------------- The Bylaws of FFC provide for indemnification of its directors, officers, employees and agents to the fullest extent permitted under the laws of the Commonwealth of Pennsylvania, provided that the person seeking indemnification acted in good faith, in a manner he or she reasonably believed to be in the best interests of FFC, and without willful misconduct or recklessness. FFC has purchased insurance to indemnify its directors, officers, employees and agents under certain circumstances. Insofar as indemnification for liabilities arising under the 1933 Act may be permitted to directors, officers or persons controlling FFC pursuant to the foregoing provisions of FFC's Bylaws, FFC has been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the 1933 Act and is therefore unenforceable. Comparison of Shareholder Rights -------------------------------- Upon consummation of the Merger, the shareholders of GCB will become shareholders of FFC. There are differences between the rights of holders of GCB Common Stock and FFC Common Stock. These differences arise out of (i) differences between the Certificate of Incorporation and Bylaws of GCB and the Articles of Incorporation and Bylaws of FFC, and (ii) differences between the respective state laws applicable to GCB and FFC. The most significant differences are: (1) FFC has adopted a Shareholder Rights Plan, which provides FFC's shareholders with certain stock-related rights in the event of a hostile takeover but may have the effect of discouraging such a takeover (see the section above entitled "Antitakeover Provisions"), while GCB has not adopted any such plan; and (2) FFC's Articles of Incorporation authorize the issuance of shares of preferred stock with such rights and privileges as may be determined by FFC's Board of Directors (although FFC currently has no plans to issue preferred stock), while GCB's Certificate of Incorporation does not authorize the issuance of any class of preferred stock. The Articles of Incorporation and Bylaws of FFC also include a number of other provisions which are intended to protect the shareholders of FFC (including the present shareholders of GCB, who will become shareholders of FFC following the Merger) from abusive takeover practices and inadequate takeover proposals, but which may be considered to be "antitakeover" in nature and may serve to entrench the current management of FFC. See INFORMATION CONCERNING FULTON FINANCIAL CORPORATION AND DESCRIPTION OF FFC COMMON STOCK--Antitakeover Provisions. The material differences between GCB Common Stock and FFC Common Stock and the rights of their respective holders, as of October 25, 1995 are summarized in the following table: 70
GCB FFC --- --- Title Common Stock, $5.00 par Common Stock, $2.50 par value per share value per share Shares Authorized 5,000,000 100,000,000 Shares Issued and 970,279 28,382,179 Outstanding Preemptive Rights No No Classification of Board Board of Directors Board of Directors of Directors divided into 3 classes divided into 3 classes with 3 year terms; with 3 year terms; one-third of directors one-third of directors elected each year elected each year Voting: Election of Non-cumulative Non-cumulative Directors Voting: Other Matters One vote for each share One vote for each share owned of record owned of record Shareholder Rights Plan None Yes Dissenters' Rights No Not generally available, except by resolution of the Board of Directors Dividend Reinvestment None Open market plan Plan administered by Fulton Bank as Plan Agent Market Over-the-counter market Listed for quotation on NASDAQ National Market Registered Under 1934 Act Yes Yes Limitation of Liability of Yes Yes Directors for Monetary Damages Indemnification of Yes Yes Directors, Officers and Employees
71
GCB FFC --- --- Authorized Class of No Yes, which can be Preferred Stock issued under terms and conditions to be determined by the Board of Directors Control Share Statute None Yes Business Combination Yes Yes Statute Right of Shareholders to Yes No call an Special Meeting Shareholder Inspection Limited General Rights Right of Shareholders to Yes (if unanimous) No Act by Written Consent
INFORMATION CONCERNING GLOUCESTER COUNTY BANKSHARES, INC. --------------------------------------------------------- Description of Business and Property ------------------------------------ GCB is a New Jersey business corporation which was formed for the purpose of acquiring and owning all the stock of The Bank of Gloucester County (the "Bank"). GCB was incorporated on October 25, 1991, and acquired all of the outstanding shares of common stock of the Bank on December 31, 1993, through a one-for-one exchange of shares of common stock of the Bank for shares of GCB Common Stock. As a result, the Bank now operates within a bank holding company structure. At September 30, 1995, GCB had consolidated total assets of $192.3 million, total deposits of $177.4 million and shareholders' equity of $14.2 million. The principal activities of GCB are the owning and supervising of the Bank. As a bank holding company, GCB's operations must be confined to the ownership and operation of banks and activities deemed by the Federal Reserve Board to be so closely related to banking as to be a proper incident thereto. The Bank is engaged in a general banking business, including commercial and retail banking operations, in Gloucester County, New Jersey. The Bank was organized under the banking laws of the State of New Jersey in March 1989. It currently conducts its business through six banking offices located in Gloucester County, New Jersey, consisting of its main office and five branch locations. At September 30, 1995, the Bank had total deposits of approximately $177.4 million, total assets of approximately $192.2 million, total net loans of approximately $131.2 million and employed sixty-eight persons on a full-time basis and sixteen persons on a part-time basis. The broad range of retail and commercial banking services which the Bank offers include checking accounts, savings programs, money-market accounts, certificates of deposit, safe deposit facilities, consumer loans programs, revolving lines of credit, overdraft checking and extended banking hours. These services are primarily provided to consumers and small- to mid-sized companies within the Bank's market area. The Bank focuses its lending services on commercial, consumer and real estate lending to local borrowers. The Bank attempts to establish a total borrowing relationship with its customers, which may 72 typically include a commercial real estate loan, a business line of credit for working capital needs, a mortgage loan for the borrower's residence, a consumer loan or a revolving personal credit line. The Bank's service area consists of greater Gloucester County, New Jersey, with the larger part of its activities concentrated in the northwestern part of the county. The Bank encounters vigorous competition for market share in the communities it serves from bank holding companies, other community banks, thrift institutions and other non-bank financial organizations. The Bank competes with banking and financial branching systems, some from out of state, which are substantially larger and have greater financial resources than the Bank. There are approximately sixty banks, savings and loan and credit union locations, including the Bank, in the general market area serviced by the Bank. The largest of these institutions had assets of over $20 billion and the smallest had assets of less than $50 million. In addition to banks and other financial institutions, the Bank competes for deposits with various investment and depositary funds offered by non- banking firms in the securities industry. There is also competition from major retail-oriented firms who offer financial services similar to traditional services through commercial banks without being subject to the same degree of regulation. GCB Common Stock Market Price and Dividends - ------------------------------------------- GCB Common Stock is traded on the over-the-counter market. GCB has paid no cash dividends since its inception. It paid a 5% stock dividend in 1994 and a 10% stock dividend in 1995, which had no effect on its shareholders' equity. See THE FFC/GCB MERGER--Comparative Stock Prices and Dividends and Related Shareholder Matters--Common Stock of GCB. The Merger Agreement restricts the ability of GCB to declare or pay cash dividends. However, if the Merger does not become effective on or before March 31, 1996, the Merger Agreement permits GCB to declare and pay a dividend or dividends which do not exceed, in the aggregate, the amount of the per share cash dividends paid by FFC on its Common Stock on or after March 31, 1996 multiplied by the Conversion Ratio. See THE FFC/GCB MERGER--Business Pending the Effective Date. Information About Directors and Executive Officers - -------------------------------------------------- Certain information concerning shares of GCB Common Stock owned beneficially by each director of GCB and by all directors and executive officers of GCB as a group, as of October 25, 1995, is set forth below:
Shares of GCB Common Stock Percent Beneficially Owned, Directly of Shares Name of Director and Indirectly, as of October 25, 1995 Outstanding - ---------------- -------------------------------------- ----------- Jeffrey G. Albertson 29,501 3.04 Donald S. Carter 35,900 3.70 Dennis N. DeSimone 16,978 1.75 Warner A. Knobe 1,026 * Eugene J. McCaffrey, Sr. 13,298 1.37 Daniel A. Monaco, D.D.S. 16,979 1.76 Dale T. Taylor 44,578 4.59 Daniel G. Timms, D.D.S. 20,117 2.07 Paul J. Tully 12,535 1.29
73
Shares of GCB Common Stock Percent Beneficially Owned, Directly of Shares Name of Director and Indirectly, as of October 25, 1995 Outstanding - ---------------- -------------------------------------- ----------- All directors and 192,426 19.83 executive officers as a group
* Less than one percent. Selected Historical Financial Data ---------------------------------- The following table sets forth certain selected historical financial data for GCB for each of the five years in the period ended December 31, 1994, and for the nine-month periods ended September 30, 1994 and September 30, 1995. The table should be read in conjunction with the financial statements, footnotes and other financial information relating to GCB, which is included in the documents attached as Exhibits E and F to this Proxy Statement/Prospectus. See Exhibit E--1994 Annual Report to Shareholders of Gloucester County Bankshares, Inc.; and Exhibit F--Quarterly Report on Form 10-Q of Gloucester County Bankshares, Inc. for the Quarter Ended September 30, 1995. 74 Gloucester County Bankshares, Inc. Selected Historical Financial Data (In Thousands) ----------------------------------
Summary of Operation As of and For Nine Months Ended September 30 1995 1994 -------------------------------------------- Net interest income $ 7,275 $ 5,555 Provision for loan losses 450 248 Net interest income after provision for loan losses 6,825 5,307 Other operating income 681 554 Other operating expense 4,228 3,475 Income tax expense 1,230 815 -------------------------------------------- Net Income (loss) $ 2,048 $ 1,571 ============================================ Average Balance Sheet Totals - ---------------------------- Total assets $178,045 $139,149 Investment securities and money market investments 44,887 38,206 Loans and leases (net of unearned income) 122,000 92,572 Total deposits 164,226 128,013 Long term debt and lease obligations -- -- Shareholders' equity 12,818 10,616 Actual Balance at Period End - ---------------------------- Total assets $192,248 $151,171 Long term debt and lease obligations -- --
75 Gloucester County Bankshares, Inc. Selected Historical Financial Data (In Thousands) ----------------------------------
As of and for the Year Ended December 31 ------------------------------------------------ Summary of Operations 1994 1993 1992 1991 1990 - --------------------- ------------------------------------------------ Net interest income $7,759 $5,619 $3,775 $2,223 $1,600 Provision for loan losses 460 750 575 386 340 ------------------------------------------------ Net interest income after provision for loan losses 7,299 4,869 3,190 1,837 1,260 Other operating income 596 1,507 893 1,151 253 Other operating expense 4,801 4,264 3,302 2,277 1,388 Income tax expense 1,056 718 275 240 40 ------------------------------------------------ Income before extraordinary item 2,038 1,394 506 471 85 Extraordinary item--tax benefit of net loss carry forwards -- -- -- 30 40 ------------------------------------------------ Net Income $2,038 $1,394 $506 $501 $125 ================================================ Average Balance Sheet Totals - ---------------------------- Total assets $143,600 $114,137 $82,569 $47,260 $26,373 Investment securities and money market investments 38,747 37,951 33,047 16,656 10,119 Loans and leases (net of unearned income) 96,097 68,846 44,497 27,793 15,032 Total deposits 132,627 103,617 73,895 39,065 18,582 Long term debt and lease obligations -- -- -- -- -- Shareholders' equity 10,779 9,723 8,224 7,926 7,537 Period End - ---------- Total assets $159,731 $130,596 $104,971 $68,971 $37,695 Long term debt and lease obligations -- -- -- -- --
76 EXPERTS ------- The financial statements of FFC as of December 31, 1994 and 1993 and for the three years ended December 31, 1994, which are included in FFC's Annual Report on Form 10-K for the year ended December 31, 1994 and are incorporated by reference in this Proxy Statement/Prospectus, have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their reports with respect thereto, and are included herein in reliance upon the authority of said firm as experts in giving said reports. The consolidated financial statements of GCB as of December 31, 1994 and 1993 and for each of the three years in the period ended December 31, 1994, which are included in GCB's 1994 Annual Report to shareholders, attached as Exhibit E to this Proxy Statement/Prospectus, have been audited by Grant Thornton LLP, independent certified public accountants, as indicated in their reports with respect thereto, and are included herein in reliance upon the authority of said firm as experts in accounting and auditing. LEGAL MATTERS ------------- The legality of the shares of FFC Common Stock to be issued in connection with the Merger and certain other legal matters relating to the Merger will be passed upon by the law firm of Barley, Snyder, Senft & Cohen, located in Harrisburg, Lancaster and York, Pennsylvania, which is acting as counsel for FFC. John O. Shirk is a partner in the firm and is a member of the Board of Directors of FFC. As of November 15, 1995, the partners and associates of Barley, Snyder, Senft & Cohen owned beneficially and in the aggregate approximately 19,241 shares of FFC Common Stock. The law firm of Piper & Marbury L.L.P., located in Baltimore, Maryland, has acted as counsel to GCB in connection with the Merger. ADDITIONAL INFORMATION ---------------------- FFC has filed with the SEC a Registration Statement (No. 33-_______) with respect to the shares of FFC Common Stock to be issued in connection with the Merger. The Registration Statement contains certain additional information which has been omitted from this Proxy Statement/Prospectus in accordance with the rules and regulations of the SEC and may be examined at the offices of the SEC at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of the Registration Statement may be obtained from the SEC upon payment of the prescribed fee. OTHER MATTERS ------------- The Board of Directors of GCB knows of no other matters other than those discussed in this Proxy Statement/Prospectus which will be presented at the Special Meeting. However, if any other matters are properly brought before the Special Meeting or any postponement or adjournment thereof, any proxy given pursuant to this solicitation will be voted in accordance with the recommendations of the Board of Directors of GCB. 77 EXHIBIT A MERGER AGREEMENT ---------------- EXHIBIT B OPINION OF BERWIND FINANCIAL GROUP, L.P. ---------------------------------------- Form of Fairness Opinion ------------------------ [Date] Board of Directors Gloucester County Bankshares, Inc. 1100 Old Broadway Woodbury, NJ 08096 Directors: You have requested our opinion as to the fairness, from a financial point of view, to the shareholders of Gloucester County Bankshares, Inc. ("GCB") of the financial terms of the proposed merger whereby GCB will be merged with and into Fulton Financial Corporation ("FFC"). The terms of the proposed merger (the "Proposed Merger") between GCB and FFC are set forth in the Merger Agreement and Plan of Merger (collectively, the "Agreement") dated October 25, 1995, and provide that each outstanding share of GCB common stock will be converted into shares of the common stock of FFC par value $2.50, subject to certain terms and conditions as provided in the Agreement, with cash to be paid in lieu of any fractional shares. Berwind Financial Group, L.P., as part of its investment banking business, regularly is engaged in the valuation of assets, securities and companies in connection with various types of asset and security transactions, including mergers, acquisitions, private placements and valuations for various other purposes, and in the determination of adequate consideration in such transactions. In arriving at our opinion, we have, among other things: (i) reviewed the historical financial performances, current financial positions and general prospects of GCB and FFC, (ii) reviewed the Agreement, (iii) reviewed the Proxy Statement/Prospectus, (iv) reviewed and analyzed stock market performance of FFC, (v) studied and analyzed the consolidated financial and operating data of GCB and FFC, (vi) considered the terms and conditions of the Proposed Merger between GCB and FFC as compared with the terms and conditions of comparable bank mergers and acquisitions, (vii) met and/or communicated with certain members of GCB's and FFC's senior management to discuss their respective operations, historical financial statements, and future prospects, and (viii) conducted such other financial analyses, studies and investigations as we deemed appropriate. Our opinion is given in reliance on information and representations made or given by GCB and FFC, and their respective officers, directors, auditors, counsel and other agents, and on filings, releases and other information issued by GCB and FFC including financial statements, financial projections, and stock price data as well as certain information from recognized independent sources. We have not independently verified the information concerning GCB and FFC nor other data which we have considered in our review and, for purposes of the opinion set forth below, we have assumed and relied upon the accuracy and completeness of all such information and data. Additionally, we assume that the Proposed Merger is, in all respects, lawful under applicable law. With regard to financial and other information relating to the general prospects of GCB and FFC, we have assumed that such information has been reasonably prepared and reflects the best currently available estimates and Board of Directors [Date] Page 2 judgments of the managements of GCB and FFC as to GCB's and FFC's most likely future performance. In rendering our opinion, we have assumed that in the course of obtaining the necessary regulatory approvals for the Proposed Merger, and in preparation of the final proxy statement, no conditions will be imposed that will have a material adverse effect on the contemplated benefits of the Proposed Merger to GCB. Our opinion is based upon information provided to us by the managements of GCB and FFC, as well as market, economic, financial, and other conditions as they exist and can be evaluated only as of the date hereof and speaks to no other period. Our opinion pertains only to the financial consideration of the Proposed Merger and does not constitute a recommendation to the Board of GCB and does not constitute a recommendation to GCB's shareholders as to how such shareholders should vote on the Agreement. Based on the foregoing, it is our opinion that, as of the date hereof, the Proposed Merger between GCB and FFC is fair, from a financial point of view, to the shareholders of GCB. Sincerely, BERWIND FINANCIAL GROUP, L.P. EXHIBIT C WARRANT AGREEMENT AND WARRANT ----------------------------- WARRANT AGREEMENT ----------------- THIS WARRANT AGREEMENT is made as of October 25, 1995 by and between Fulton Financial Corporation, a Pennsylvania business corporation ("FFC") and Gloucester County Bankshares, Inc., a New Jersey business corporation ("GCB"). W I T N E S S E T H: - - - - - - - - - - WHEREAS, FFC and GCB are, simultaneously with the execution of this Agreement, entering into a Merger Agreement dated as of the date hereof (the "Merger Agreement"); and WHEREAS, as a condition to FFC's entry into the Merger Agreement and in consideration of such entry, GCB has agreed to issue to FFC, on the terms and conditions set forth herein, a warrant entitling FFC to purchase up to an aggregate of 241,056 shares of GCB's common stock, par value $5.00 per share (the "Common Stock"); NOW, THEREFORE, in consideration of the execution of the Merger Agreement and the premises herein contained, and intending to be legally bound, FFC and GCB agree as follows: 1. Issuance of Warrant. Concurrently with the execution of the Merger ------------------- Agreement and this Agreement, GCB shall issue to FFC a warrant in the form attached as Exhibit A hereto (the "Warrant", which term as used herein shall include any warrant or warrants issued upon transfer or exchange of the original Warrant) to purchase up to 241,056 shares of Common Stock, subject to adjustment as provided in this Agreement and in the Warrant. The Warrant shall be exercisable at a purchase price of $17.00 per share, subject to adjustment as provided in this Agreement and the Warrant (the "Exercise Price"). So long as the Warrant is outstanding and unexercised, GCB shall at all times maintain and reserve, free from preemptive rights, such number of authorized but unissued shares of Common Stock as may be necessary so that the Warrant may be exercised, without any additional authorization of Common Stock, after giving effect to all other options, warrants, convertible securities and other rights to acquire shares of Common Stock. GCB represents and warrants that it has duly authorized the execution and delivery of the Warrant and this Agreement and the issuance of Common Stock upon exercise of the Warrant. GCB covenants that the shares of Common Stock issuable upon exercise of the Warrant shall be, when so issued, duly authorized, validly issued, fully paid and nonassessable and subject to no preemptive rights. The Warrant and the shares of Common Stock to be issued upon exercise of the Warrant are hereinafter collectively referred to, from time to time, as the "Securities." So long as the Warrant is owned by FFC, the Warrant will in no event be exercised for more than that number of shares of Common Stock equal to 241,056 (subject to adjustment as provided in this Agreement and in the Warrant) less the number of shares of Common Stock at the time owned by FFC. 2. Assignment, Transfer, or Exercise of Warrant. FFC will not sell, -------------------------------------------- assign, transfer or exercise the Warrant, in whole or in part, without the prior written consent of GCB except upon or after the occurrence of any of the following: (i) a knowing breach of any representation, warranty, or covenant set forth in the Merger Agreement by GCB which would permit a termination of the Merger Agreement by FFC pursuant to Section 8.1(b)(i) thereof; (ii) the failure of GCB's shareholders to approve the Merger Agreement at a meeting called for such purpose if at the time of such meeting there has been an announcement by any Person (other than FFC) of an offer or proposal to acquire 25% or more of the Common Stock (before giving effect to any exercise of the Warrant), or to acquire, merge or consolidate with GCB, or to purchase all or substantially all of GCB's assets (including without limitation any shares of Bank of Gloucester County ("TBGC") or all or substantially all of TBGC's assets); (iii) the acquisition by any Person of Beneficial Ownership of 25% or more of the Common Stock (before giving effect to any exercise of the Warrant); (iv) any Person (other than FFC) shall have commenced a tender or exchange offer, or shall have filed an application with an appropriate bank regulatory authority with respect to a publicly announced offer, to purchase or acquire securities of GCB such that, upon consummation of such offer, such Person would have Beneficial Ownership of 25% or more of the Common Stock (before giving effect to any exercise of the Warrant); (v) GCB shall have entered into an agreement, letter of intent, or other understanding with any Person (other than FFC) providing for such Person (A) to acquire, merge, consolidate or enter into a statutory share exchange with GCB or to purchase all or substantially all of GCB's assets (including without limitation any shares of TBGC or all or substantially all of TBGC's assets), or (B) to negotiate with GCB with respect to any of the events or transactions mentioned in the preceding clause (A) or (vi) termination, or attempted termination, of the Merger Agreement by GCB under Section 5.7 of the Merger Agreement. As used in this Paragraph 2, the terms "Beneficial Ownership" and "Person" shall have the respective meanings set forth in Paragraph 7(f). 3. Registration Rights. If, at any time after the Warrant may be ------------------- exercised or sold, GCB shall receive a written request therefor from FFC, GCB shall prepare, file and keep effective and current a shelf registration statement (the "Registration Statement") under the Securities Act of 1933, as amended (the "Securities Act"), 2 covering the Warrant and/or the Common Stock issued or issuable upon exercise of the Warrant, and shall use its best efforts to cause the Registration Statement to become effective and remain current. Without the prior written consent of FFC, neither GCB nor any other holder of securities of GCB may include such securities in the Registration Statement. 4. Duties of GCB upon Registration. If and whenever GCB is required by ------------------------------- the provisions of Paragraph 3 of this Agreement to effect the registration of any of the Securities under the Securities Act, GCB shall: (a) prepare and file with the Securities and Exchange Commission (the "SEC") such amendments to the Registration Statement and supplements to the prospectus contained therein as may be necessary to keep the Registration Statement effective and current; (b) furnish to FFC and to the underwriters of the Securities being registered such reasonable number of copies of the Registration Statement, the preliminary prospectus and final prospectus contained therein, and such other documents as FFC or such underwriters may reasonably request in order to facilitate the public offering of the Securities; (c) use its best efforts to register or qualify the Securities covered by the Registration Statement under the state securities or blue sky laws of such jurisdictions as FFC or such underwriters may reasonably request; (d) notify FFC, promptly after GCB shall receive notice thereof, of the time when the Registration Statement has become effective or any supplement or amendment to any prospectus forming a part of the Registration Statement has been filed; (e) notify FFC promptly of any request by the SEC for the amending or supplementing of the Registration Statement or the prospectus contained therein, or for additional information; (f) prepare and file with the SEC, promptly upon the request of FFC, any amendments or supplements to the Registration Statement or the prospectus contained therein which, in the opinion of counsel for FFC, are required under the Securities Act or the rules and regulations promulgated by the SEC thereunder in connection with the public offering of the Securities; (g) prepare and promptly file with the SEC such amendments of or supplements to the Registration Statement or the prospectus contained 3 therein as may be necessary to correct any statements or omissions if, at the time when a prospectus relating to such Securities is required to be delivered under the Securities Act, any event shall have occurred as the result of which such prospectus as then in effect would include an untrue statement of a material fact or would omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; (h) advise FFC, promptly after GCB shall receive notice or obtain knowledge of the issuance of any stop order by the SEC suspending the effectiveness of the Registration Statement, or the initiation or threatening of any proceeding for that purpose, and promptly use its best efforts to prevent the issuance of any stop order or to obtain its withdrawal if such stop order should be issued; and (i) at the request of FFC, furnish on the date or dates provided for in the underwriting agreement: (i) an opinion or opinions of counsel for GCB for the purposes of such registration, addressed to the underwriters and to FFC, covering such matters as such underwriters and FFC may reasonably request and as are customarily covered by issuer's counsel at that time; and (ii) a letter or letters from the independent certified public accountants for GCB, addressed to the underwriters and to FFC, covering such matters as such underwriters or FFC may reasonably request, in which letters such accountants shall state (without limiting the generality of the foregoing) that they are independent certified public accountants within the meaning of the Securities Act and that, in the opinion of such accountants, the financial statements and other financial data of GCB included in the Registration Statement or any amendment or supplement thereto comply in all material respects with the applicable accounting requirements of the Securities Act. 5. Expenses of Registration. With respect to the registration requested ------------------------ pursuant to Paragraph 3 of this Agreement, (a) GCB shall bear all registration, filing and NASD fees, printing and engraving expenses, fees and disbursements of its counsel and accountants and all legal fees and disbursements and other expenses of GCB to comply with state securities or blue sky laws of any jurisdictions in which the Securities to be offered are to be registered or qualified; and (b) FFC shall bear all fees and disbursements of its counsel and accountants, underwriting discounts and commissions, transfer taxes for FFC and any other expenses incurred by FFC. 6. Indemnification. In connection with any Registration Statement or any --------------- amendment or supplement thereto: 4 (a) GCB shall indemnify and hold harmless FFC, any underwriter (as defined in the Securities Act) for FFC, and each person, if any, who controls FFC or such underwriter (within the meaning of the Securities Act) from and against any and all loss, damage, liability, cost or expense to which FFC or any such underwriter or controlling person may become subject under the Securities Act or otherwise, insofar as such loss, damage, liability, cost or expense arises out of or is caused by any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, any prospectus or preliminary prospectus contained therein or any amendment or supplement thereto, or arises out of or is based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that GCB will not be liable in any -------- ------- such case to the extent that any such loss, damage, liability, cost or expense arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by FFC, such underwriter or such controlling person in writing specifically for use in the preparation thereof. (b) FFC shall indemnify and hold harmless GCB, any underwriter (as defined in the Securities Act), and each person, if any, who controls GCB or such underwriter (within the meaning of the Securities Act) from and against any and all loss, damage, liability, cost or expense to which GCB or any such underwriter or controlling person may become subject under the Securities Act or otherwise, insofar as such loss, damage, liability, cost or expense arises out of or is caused by any untrue or alleged untrue statement of any material fact contained in the Registration Statement, any prospectus or preliminary prospectus contained therein or any amendment or supplement thereto, or arises out of or is based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances in which they were made, not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was so made in reliance upon and in conformity with written information furnished by FFC specifically for use in the preparation thereof. (c) Promptly after receipt by any party which is entitled to be indemnified, pursuant to the provisions of subparagraph (a) or (b) of this Paragraph 6, of any claim in writing or of notice of the commencement of any action involving the subject matter of the foregoing indemnity 5 provisions, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party pursuant to the provisions of subparagraph (a) or (b) of this Paragraph 6, promptly notify the indemnifying party of the receipt of such claim or notice of the commencement of such action, but the omission to so notify the indemnifying party will not relieve it from any liability which it may otherwise have to any indemnified party hereunder. In case any such action is brought against any indemnified party and it notifies the indemnifying party of the commencement thereof, the indemnifying party shall have the right to participate in and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party; provided, however, that if -------- ------- the defendants in any action include both the indemnified party or parties and the indemnifying party and there is a conflict of interest which would prevent counsel for the indemnifying party from also representing any indemnified party, such indemnified party shall have the right to select separate counsel to participate in the defense of such indemnified party. After notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party, pursuant to the provisions of subparagraph (a) or (b) of this Paragraph 6, for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof, other than reasonable costs of investigation, unless (i) such indemnified party shall have employed separate counsel in accordance with the provisions of the preceding sentence, (ii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after the notice of the commencement of the action, or (iii) the indemnifying party has authorized the employment of counsel for the indemnified party at the expense of the indemnifying party. (d) If recovery is not available under the foregoing indemnification provisions, for any reason other than as specified therein, any party entitled to indemnification by the terms thereof shall be entitled to obtain contribution with respect to its liabilities and expenses, except to the extent that contribution is not permitted under Section 11(f) of the Securities Act. In determining the amount of contribution to which the respective parties are entitled there shall be considered the parties' relative knowledge and access to information concerning the matter with respect to which the claim was asserted, the opportunity to correct and/or prevent any statement or omission, and any other equitable considerations appropriate under the circumstances. FFC and GCB agree that it would not be equitable if the amount of such contribution were determined by pro rata or per capita 6 allocation even if the underwriters and FFC as a group were considered a single entity for such purpose. 7. Redemption and Repurchase Rights. -------------------------------- (a) From and after the date on which any event described in Paragraph 2 of this Agreement occurs, the Holder as defined in the Warrant (which shall include a former Holder), who has exercised the Warrant in whole or in part shall have the right to require GCB to redeem some or all of the shares of Common Stock for which the Warrant was exercised at a redemption price per share (the "Redemption Price") equal to the highest of: (i) the Exercise Price, (ii) the highest price paid or agreed to be paid for any share of Common Stock by an Acquiring Person (as defined below) during the one year period immediately preceding the date of redemption, and (iii) in the event of a sale of all or substantially all of GCB's assets or all or substantially all of TBGC's assets: (x) the sum of the price paid in such sale for such assets and the current market value of the remaining assets of GCB as determined by a recognized investment banking firm selected by such Holder, divided by (y) the number of shares of Common Stock then outstanding. If the price paid consists in whole or in part of securities or assets other than cash, the value of such securities or assets shall be their then current market value as determined by a recognized investment banking firm selected by the Holder. (b) From and after the date on which any event described in Paragraph 2 of this Agreement occurs, the Holder as defined in the Warrant (which shall include a former Holder), shall have the right to require GCB to repurchase all or any portion of the Warrant at a price (the "Warrant Repurchase Price") equal to the product obtained by multiplying: (i) the number of shares of Common Stock represented by the portion of the Warrant that the Holder is requiring GCB to repurchase, times (ii) the excess of the Redemption Price over the Exercise Price. (c) The Holder's right, pursuant to this Paragraph 7, to require GCB to repurchase a portion or all of the Warrant, and/or to require GCB to redeem some or all of the shares of Common Stock for which the Warrant was exercised, shall expire on the close of business on the 60th day following the occurrence of any event described in Paragraph 2. (d) The Holder may exercise its right, pursuant to this Paragraph 7, to require GCB to repurchase all or a portion of the Warrant, and/or to require GCB to redeem some or all of the shares of Common Stock for which the 7 Warrant was exercised, by surrendering for such purpose to GCB, at its principal office within the time period specified in the preceding subparagraph, the Warrant and/or a certificate or certificates representing the number of shares to be redeemed accompanied by a written notice stating that it elects to require GCB to repurchase the Warrant or a portion thereof and/or to redeem all or a specified number of such shares in accordance with the provisions of this Paragraph 7. As promptly as practicable, and in any event within five business days after the surrender of the Warrant and/or such certificates and the receipt of such notice relating thereto, GCB shall deliver or cause to be delivered to the Holder: (i) the applicable Redemption Price (in immediately available funds) for the shares of Common Stock which it is not then prohibited under applicable law or regulation from redeeming, and/or (ii) the applicable Warrant Repurchase Price, and/or (iii) if the Holder has given GCB notice that less than the whole Warrant is to be repurchased and/or less than the full number of shares of Common Stock evidenced by the surrendered certificate or certificates are to be redeemed, a new certificate or certificates, of like tenor, for the number of shares of Common Stock evidenced by such surrendered certificate or certificates less the number shares of Common Stock redeemed and/or a new Warrant reflecting the fact that only a portion of the Warrant was repurchased. (e) To the extent that GCB is prohibited under applicable law or regulation, or as a result of administrative or judicial action, from repurchasing the Warrant and/or redeeming the Common Stock as to which the Holder has given notice of repurchase and/or redemption, GCB shall immediately so notify the Holder and thereafter deliver or cause to be delivered, from time to time to the Holder, the portion of the Warrant Repurchase Price and/or the Redemption Price which it is no longer prohibited from delivering, within five business days after the date on which GCB is no longer so prohibited; provided, however, that to the extent -------- ------- that GCB is at the time and after the expiration of 25 months, so prohibited from delivering the Warrant Repurchase Price and/or the Redemption Price, in full (and GCB hereby undertakes to use its best efforts to obtain all required regulatory and legal approvals as promptly as practicable), GCB shall deliver to the Holder a new Warrant (expiring one year after delivery) evidencing the right of the Holder to purchase that number of shares of Common Stock representing the portion of the Warrant which GCB is then so prohibited from repurchasing, and/or GCB shall deliver to the Holder a certificate for the shares of Common Stock which GCB is then so prohibited from redeeming, and GCB shall have no further obligation to repurchase such new Warrant or redeem such Common Stock; and --- provided further, that upon receipt of such -------- ------- 8 notice and until five days thereafter the Holder may revoke its notice of repurchase of the Warrant and/or redemption of Common Stock by written notice to GCB at its principal office stating that the Holder elects to revoke its election to exercise its right to require GCB to repurchase the Warrant and/or redeem the Common Stock, whereupon GCB will promptly redeliver to the Holder the Warrant and/or the certificates representing shares of Common Stock surrendered to GCB for purposes of such repurchase and/or redemption, and GCB shall have no further obligation to repurchase such Warrant and/or redeem such Common Stock. (f) As used in this Agreement the following terms have the meanings indicated: (1) "Acquiring Person" shall mean any "Person" (hereinafter defined) who or which is the "Beneficial Owner" (hereinafter defined) of 25% or more of the Common Stock; (2) A "Person" shall mean any individual, firm, corporation or other entity and shall also include any syndicate or group deemed to be a "Person" by operation of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended; (3) A Person shall be a "Beneficial Owner", and shall have "Beneficial Ownership," of all securities: (i) which such Person or any of its Affiliates (as hereinafter defined) beneficially owns, directly or indirectly; and (ii) which such Person or any of its Affiliates or Associates has (1) the right to acquire (whether such right is exercisable immediately or only after the passage of time or otherwise) pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise, or (2) the right to vote pursuant to any proxy, power of attorney, voting trust, agreement, arrangement or understanding; and (4) "Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the regulations promulgated by the SEC under the Securities and Exchange Act of 1934, as amended. 9 8. Remedies. Without limiting the foregoing or any remedies available to -------- FFC, it is specifically acknowledged that FFC would not have an adequate remedy at law for any breach of this Warrant Agreement and shall be entitled to specific performance of GCB's obligations under, and injunctive relief against any actual or threatened violation of the obligations of any Person subject to, this Agreement. 9. Miscellaneous. ------------- (a) The representations, warranties, and covenants of GCB set forth in the Merger Agreement are hereby incorporated by reference in and made a part of this Agreement, as if set forth in full herein. (b) This Agreement, the Warrant and the Merger Agreement set forth the entire understanding and agreement of the parties hereto and supersede any and all prior agreements, arrangements and understandings, whether written or oral, relating to the subject matter hereof and thereof. No amendment, supplement, modification, waiver, or termination of this Agreement shall be valid and binding unless executed in writing by both parties. (c) This Agreement shall be deemed to have been made in, and shall be governed by and interpreted in accordance with the substantive laws of, the Commonwealth of Pennsylvania. 10 IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their duly authorized officers as of the day and year first above written. FULTON FINANCIAL CORPORATION By:________________________________ Rufus A. Fulton, Jr., Chief Executive Officer Attest: ___________________________________ K. E. Shenenberger, Secretary GLOUCESTER COUNTY BANKSHARES, INC. By:_______________________________ Warner A. Knobe, President and Chief Executive Officer Attest: __________________________________ Dale T. Taylor, Secretary 11 WARRANT to Purchase up to 241,056 Shares of the Common Stock, Par Value $5.00 Per Share, of GLOUCESTER COUNTY BANKSHARES, INC. This is to certify that, for value received, Fulton Financial Corporation ("FFC") or any permitted transferee (FFC or such transferee being hereinafter called the "Holder") is entitled to purchase, subject to the provisions of this Warrant, from Gloucester County Bankshares, Inc., a New Jersey business corporation ("GCB"), at any time on or after the date hereof, an aggregate of up to 241,056 fully paid and non-assessable shares of common stock, par value $5.00 per share (the "Common Stock"), of GCB at a price per share equal to $17.00, subject to adjustment as herein provided (the "Exercise Price"). 1. Exercise of Warrant. Subject to the provisions hereof and the ------------------- limitations set forth in Paragraph 2 of a Warrant Agreement of even date herewith by and between FFC and GCB (the "Warrant Agreement"), which Warrant Agreement was entered into simultaneously with a Merger Agreement of even date herewith between FFC and GCB (the "Merger Agreement"), this Warrant may be exercised in whole or in part at any time or from time to time on or after the date hereof. This Warrant shall be exercised by presentation and surrender hereof to GCB at the principal office of GCB, accompanied by (i) a written notice of exercise, (ii) payment to GCB, for the account of GCB, of the Exercise Price for the number of shares of Common Stock specified in such notice, and (iii) a certificate of the Holder specifying the event or events which have occurred and entitle the Holder to exercise this Warrant. The Exercise Price for the number of shares of Common Stock specified in the notice shall be payable in immediately available funds. Upon such presentation and surrender, GCB shall issue promptly (and within one business day if requested by the Holder) to the Holder or its assignee, transferee or designee the number of shares of Common Stock to which the Holder is entitled hereunder. GCB covenants and warrants that such shares of Common Stock, when so issued, will be duly authorized, validly issued, fully paid and non-assessable, and free and clear of all liens and encumbrances. If this Warrant should be exercised in part only, GCB shall, upon surrender of this Warrant for cancellation, execute and deliver a new Warrant evidencing the rights of the Holder thereof to purchase the balance of the shares of Common Stock issuable hereunder. Upon receipt by GCB of this Warrant, in proper form for exercise, the Holder shall be deemed to be the holder of record of the shares of Common Stock issuable upon such exercise, notwithstanding that the stock transfer books of GCB may then be closed or that certificates representing such shares of Common Stock shall not then be actually delivered to the Holder. GCB shall pay all expenses, and any and all United States federal, state and local taxes and other charges, that may be payable in connection with the preparation, issue and delivery of stock certificates pursuant to this Paragraph 1 in the name of the Holder or its assignee, transferee or designee. 2. Reservation of Shares; Preservation of Rights of Holder. ------------------------------------------------------- GCB shall at all times, while this Warrant is outstanding and unexercised, maintain and reserve, free from preemptive rights, such number of authorized but unissued shares of Common Stock as may be necessary so that this Warrant may be exercised without any additional authorization of Common Stock after giving effect to all other options, warrants, convertible securities and other rights to acquire shares of Common Stock at the time outstanding. GCB further agrees that (i) it will not, by charter amendment or through reorganization, consolidation, merger, dissolution or sale of assets, or by any other voluntary act or omission, avoid or seek to avoid the observance or performance of any of the covenants, stipulations or conditions to be observed or performed hereunder or under the Warrant Agreement by GCB, (ii) it will promptly take all action (including (A) complying with all premerger notification, reporting and waiting period requirements specified in 15 U.S.C. (S)18a and the regulations promulgated thereunder and (B) in the event that, under the Bank Holding Company Act of 1956, as amended, or the Change in Bank Control Act of 1978, as amended, prior approval of the Board of Governors of the Federal Reserve System (the "Board") is necessary before this Warrant may be exercised, cooperating fully with the Holder in preparing any and all such applications and providing such information to the Board as the Board may require) in order to permit the Holder to exercise this Warrant and GCB duly and effectively to issue shares of its Common Stock hereunder, and (iii) it will promptly take all action necessary to protect the rights of the Holder against dilution as provided herein. 2 3. Fractional Shares. GCB shall not be required to issue fractional ----------------- shares of Common Stock upon exercise of this Warrant but shall pay for any fractional shares in cash or by certified or official bank check at the Exercise Price. 4. Exchange or Loss of Warrant. This Warrant is exchangeable, without --------------------------- expense, at the option of the Holder, upon presentation and surrender hereof at the principal office of GCB for other warrants of different denominations entitling the Holder to purchase in the aggregate the same number of shares of Common Stock issuable hereunder. The term "Warrant" as used herein includes any warrants for which this Warrant may be exchanged. Upon receipt by GCB of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Warrant, if mutilated, GCB will execute and deliver a new Warrant of like tenor and date. 5. Repurchase. (A) From and after the date on which any event described ---------- in Paragraph 2 of the Warrant Agreement occurs, the Holder shall have the right to require GCB to repurchase all or any portion of this Warrant at the Warrant Repurchase Price (as defined in Paragraph 7(b) of the Warrant Agreement). The Holder's right to require GCB to repurchase this Warrant under this Paragraph 5 shall expire at the close of business on the 60th day following the occurrence of any event described in Paragraph 2 of the Warrant Agreement. (B) The Holder of this Warrant may exercise its right to require GCB to repurchase this Warrant or a portion thereof pursuant to this Paragraph 5 by surrendering for such purpose to GCB, at its principal office, within the 60 day period specified above, this Warrant accompanied by a written notice stating that the Holder elects to require GCB to repurchase this Warrant or a portion thereof in accordance with the provisions of this Paragraph 5. As promptly as practicable, and in any event within five business days after the surrender of this Warrant and the receipt of such notice relating thereto, GCB shall deliver or cause to be delivered to the Holder the Warrant Repurchase Price in immediately available funds therefor or the portion thereof which it is not then prohibited under applicable law and regulation from delivering to the Holder. (C) To the extent that GCB is prohibited under applicable law or regulation, or as a result of administrative or judicial action, from repurchasing the Warrant, GCB shall immediately so notify the Holder and thereafter deliver or cause to be delivered, from time to time to the Holder, the portion of the Warrant Repurchase Price which it is no longer prohibited from delivering, within five 3 business days after the date on which GCB is no longer so prohibited; provided, -------- however, that to the extent that GCB is at the time and after the expiration of - ------- 25 months so prohibited from delivering the Warrant Repurchase Price in full (and GCB hereby undertakes to use its best efforts to obtain all required regulatory and legal approvals as promptly as practicable), GCB shall deliver to the Holder a new Warrant (expiring one year after delivery) evidencing the right of the Holder to purchase that number of shares of Common Stock representing the portion of the Warrant which GCB is then so prohibited from repurchasing, and GCB shall have no further obligation to repurchase such new Warrant; and --- provided further, that upon receipt of such notice and until five days - -------- ------- thereafter the Holder may revoke its notice of repurchase of the Warrant by written notice to GCB at its principal office stating that the Holder elects to revoke its election to exercise its right to require GCB to repurchase the Warrant, whereupon GCB will promptly redeliver to the Holder the Warrant surrendered to GCB for purposes of such repurchase and GCB shall have no further obligation to repurchase such Warrant. 6. Adjustment. The number of shares of Common Stock issuable upon the ---------- exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time as provided in this Paragraph 6. (A) Stock Dividends, etc. --------------------- (1) Stock Dividends. In case GCB shall pay or make a dividend or --------------- other distribution on any class of capital stock of GCB in Common Stock, the number of shares of Common Stock issuable upon exercise of this Warrant shall be increased by multiplying such number of shares by a fraction of which the denominator shall be the number of shares of Common Stock outstanding at the close of business on the day immediately preceding the date of such distribution and the numerator shall be the sum of such number of shares and the total number of shares of Common Stock constituting such dividend or other distribution, such increase to become effective immediately after the opening of business on the day following such distribution. (2) Subdivisions. In case outstanding shares of Common Stock shall ------------ be subdivided into a greater number of shares of Common Stock, the number of shares of Common Stock issuable upon exercise of this Warrant at the opening of business on the day following the day upon which such subdivision becomes effective shall be proportionately increased, and, conversely, in case outstanding shares of Common Stock shall each be combined into a smaller number of shares of Common Stock, the number of shares of Common Stock 4 issuable upon exercise of this Warrant at the opening of business on the day following the day upon which such combination becomes effective shall be proportionately decreased, such increase or decrease, as the case may be, to become effective immediately after the opening of business on the day following the date upon which such subdivision or combination becomes effective. (3) Reclassifications. The reclassification of Common Stock into ----------------- securities (other than Common Stock) and/or cash and/or other consideration shall be deemed to involve a subdivision or combination, as the case may be, of the number of shares of Common Stock outstanding immediately prior to such reclassification into the number or amount of securities and/or cash and/or other consideration outstanding immediately thereafter and the effective date of such reclassification shall be deemed to be "the day upon which such subdivision becomes effective," or "the day upon which such combination becomes effective," as the case may be, within the meaning of clause (2) above. (4) Optional Adjustments. GCB may make such increases in the -------------------- number of shares of Common Stock issuable upon exercise of this Warrant, in addition to those required by this subparagraph (A), as shall be determined by its Board of Directors to be advisable in order to avoid taxation so far as practicable of any dividend of stock or stock rights or any event treated as such for federal income tax purposes to the recipients. (5) Adjustment to Exercise Price. Whenever the number of shares of ---------------------------- Common Stock issuable upon exercise of this Warrant is adjusted as provided in this Paragraph 6(A), the Exercise Price shall be adjusted by a fraction in which the numerator is equal to the number of shares of Common Stock issuable prior to the adjustment and the denominator is equal to the number of shares of Common Stock issuable after the adjustment. (B) Certain Sales of Common Stock. ----------------------------- (1) Adjustment to Shares Issuable. If and whenever GCB sells or ----------------------------- otherwise issues (other than under circumstances in which Paragraph 6(A) applies) any shares of Common Stock, the number of shares of Common Stock issuable upon exercise of this Warrant shall be increased by multiplying such number of shares by a fraction, the denominator of which shall be the number shares of Common Stock outstanding at the close of business on the day immediately preceding the date of such sale or issuance and the numerator of which shall be the sum of such number of shares and the total number of shares 5 constituting such sale or other issuance, such increase to become effective immediately after the opening of business on the day following such sale or issuance. (2) Adjustment to Exercise Price. If and whenever GCB sells or ---------------------------- otherwise issues any shares of Common Stock (excluding any stock dividend or other issuance not for consideration to which Paragraph 6(A) applies) for a consideration per share which is less than the Exercise Price at the time of such sale or other issuance, then in each such case the Exercise Price shall be forthwith changed (but only if a reduction would result) to the price (calculated to the nearest cent) determined by dividing: (i) an amount equal to the sum of (aa) the number of shares of Common Stock outstanding immediately prior to such issue or sale, multiplied by the then effective Exercise Price, plus (bb) the total consideration, if any, received and deemed received by GCB upon such issue or sale, by (ii) the total number of shares of Common Stock outstanding immediately after such issue or sale. (C) Definition. For purposes of this Paragraph 6, the term "Common ---------- Stock" shall include (1) any shares of GCB of any class or series which has no preference or priority in the payment of dividends or in the distribution of assets upon any voluntary or involuntary liquidation, dissolution or winding up of GCB and which is not subject to redemption by GCB, and (2) any rights or options to subscribe for or to purchase shares of Common Stock or any stock or securities convertible into or exchangeable for shares of Common Stock (such convertible or exchangeable stock or securities being hereinafter called "Convertible Securities"), whether or not such rights or options or the right to convert or exchange any such Convertible Securities are immediately exercisable. For purposes of any adjustments made under Paragraph 6(A) or 6(B) as a result of the distribution, sale or other issuance of rights or options or Convertible Securities, the number of Shares of Common Stock outstanding after or as a result of the occurrence of events described in Paragraph 6(A)(1) or 6(B)(1) shall be calculated by assuming that all such rights, options or Convertible Securities have been exercised for the maximum number of shares issuable thereunder. 7. Notice. (A) Whenever the number of shares of Common Stock for which ------ this Warrant is exercisable is adjusted as provided in Paragraph 6, GCB shall promptly compute such adjustment and mail to the Holder a certificate, signed by the principal financial officer of GCB, setting forth the number of shares of Common Stock for which this Warrant is exercisable as a result of such adjustment having become effective. 6 (B) Upon the occurrence of any event which results in the Holder having the right to require GCB to repurchase this Warrant, as provided in Paragraph 5, GCB shall promptly notify the Holder of such event; and GCB shall promptly compute the Warrant Repurchase Price and furnish to the Holder a certificate, signed by the principal financial officer of GCB, setting forth the Warrant Repurchase Price and the basis and computation thereof. 8. Rights of the Holder. (A) Without limiting the foregoing or any -------------------- remedies available to the Holder, it is specifically acknowledged that the Holder would not have an adequate remedy at law for any breach of the provisions of this Warrant and shall be entitled to specific performance of GCB's obligations under, and injunctive relief against any actual or threatened violation of the obligations of any Person (as defined in Paragraph 7 of the Warrant Agreement) subject to, this Warrant. (B) The Holder shall not, by virtue of its status as Holder, be entitled to any rights of a shareholder in GCB. 9. Termination. This Warrant and the rights conferred hereby shall ----------- terminate (i) upon the Effective Date of the merger provided for in the Merger Agreement, (ii) upon a valid termination of the Merger Agreement prior to the occurrence of an event described in Paragraph 2 of the Warrant Agreement, or (iii) to the extent this Warrant has not previously been exercised, 60 days after the occurrence of an event described in Paragraph 2 of the Warrant Agreement. 10. Governing Law. This Warrant shall be deemed to have been delivered ------------- in, and shall be governed by and interpreted in accordance with the substantive laws of, the Commonwealth of Pennsylvania. Dated: October 25, 1995 GLOUCESTER COUNTY BANKSHARES, INC. By:__________________________________ Warner A. Knobe, President and Chief Executive Officer Attest:______________________________ Dale T. Taylor, Secretary RLG/236848.1 7 EXHIBIT D AMENDMENT NO. 1 TO THE GLOUCESTER COUNTY BANKSHARES, INC. 1992 STOCK OPTION PLAN ---------------------------------- EXHIBIT _____ Amendment No. 1 to THE GLOUCESTER COUNTY BANKSHARES, INC. 1992 STOCK OPTION PLAN Gloucester County Bankshares, Inc. adopts the following amendment to The Gloucester County Bankshares, Inc. 1992 Stock Option Plan (the "Plan") pursuant to Section 18 of the Plan, authorization of the Board of Directors, and approval of its shareholders. This amendment is to become effective upon the approval of the shareholders of the Corporation. Sections 2.1 (b), (d) and (e) of the Plan are amended and restated to read as follows: (b) "Board" shall mean the Board of Directors of the Company, any of its subsidiaries, or any successor corporation to the Company or any of its subsidiaries. (d) "Company" shall mean Gloucester County Bankshares, Inc., a corporation organized under the laws of the State of New Jersey, or any of its subsidiaries, or any successor corporation to Gloucester County Bankshares, Inc. or any of its subsidiaries. (e) "Director" shall mean an individual duly elected to serve as a member of the Board of Directors of the Company or of any of its subsidiaries, or any successor corporation to the Company or any of its subsidiaries. Adopted as of October 25, 1995 by the Board of Directors of Gloucester County Bankshares, Inc. ---------------------------------- Donald S. Carter Chairman of the Board EXHIBIT E 1994 ANNUAL REPORT TO SHAREHOLDERS OF GLOUCESTER COUNTY BANKSHARES, INC. ------------------------------------- (Filed under Form SE) EXHIBIT F QUARTERLY REPORT ON FORM 10-Q OF GLOUCESTER COUNTY BANKSHARES, INC. FOR THE QUARTER ENDED SEPTEMBER 30, 1995 ------------------------------------------- (Filed under Form SE) PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 20. Indemnification of Directors and Officers. ----------------------------------------- Subchapter D of Chapter 17 of the Pennsylvania Business Corporation Law of 1988, as amended (BCL), 15 Pa. C.S. (S)(S) 1741-50, provides that a business corporation shall have the power under certain circumstances to indemnify its directors, officers, employees and agents against certain expenses incurred by them in connection with any threatened, pending or completed action, suit or proceeding. A copy of Subchapter D of Chapter 17 of the BCL is attached as Exhibit 99(e) to this Registration Statement. Article V of the Bylaws of Fulton Financial Corporation provides for the indemnification of its directors, officers, employees and agents in accordance with, and to the maximum extent permitted by, the provisions of Subchapter D of Chapter 17 of the BCL. Article V of the Bylaws of Fulton Financial Corporation, as set forth in Exhibit 3(b) to this Registration Statement, is hereby incorporated by reference in response to this Item 20. Fulton Financial Corporation has purchased insurance to indemnify its directors, officers, employees and agents under certain circumstances. For disclosure concerning the position of the Securities and Exchange Commission on indemnification for liabilities arising under the Securities Act of 1933, see the Section in the Proxy Statement/Prospectus (which is included in Part I of this Registration Statement) entitled INFORMATION CONCERNING FULTON FINANCIAL CORPORATION AND DESCRIPTION OF FFC COMMON STOCK --Indemnification. Item 21. Exhibits and Financial Statement Schedules. ------------------------------------------ (a) Exhibits: -------- Number Title ------ ----- 2 Merger Agreement dated October 25, 1995, between Fulton Financial Corporation and Gloucester County Bankshares, Inc.-- Furnished as Exhibit A to the Proxy Statement/Prospectus which is included in Part I of this Registration Statement 3(a) Articles of Incorporation of Fulton Financial Corporation -- Incorporated by reference to Exhibit (a)(i) of the Fulton Financial Corporation Quarterly Report on Form 10-Q for the Quarter Ended June 30, 1987 Number Title ------ ----- 3(b) Bylaws of Fulton Financial Corporation -- Incorporated by reference to Exhibit (a)(i) of the Fulton Financial Corporation Quarterly Report on Form 10-Q for the Quarter Ended June 30, 1989 4 Rights Agreement dated June 20, 1989, between Fulton Financial Corporation and Fulton Bank -- Incorporated by reference to Exhibit 1 of the Fulton Financial Corporation Current Report on Form 8-K dated June 21, 1989 5 Opinion of Barley, Snyder, Senft & Cohen 8 Opinion of Piper & Marbury L.L.P. re: tax matters 13 Annual Report on Form 10-K of Fulton Financial Corporation for the Year Ending December 31, 1994 -- Incorporated by reference in the Proxy Statement/ Prospectus which is included in Part I of this Registration Statement 21 Subsidiaries of Fulton Financial Corporation 23(a) Consent of Barley, Snyder, Senft & Cohen 23(b) Consent of Arthur Andersen LLP 23(c) Consent of Piper & Marbury L.L.P. 23(d) Consent of Grant Thornton LLP 23(e) Consent of Berwind Financial Group, L.P. 24 Power of Attorney 99(a) Form of Proxy 99(b) Letter to Shareholders of Gloucester County Bankshares, Inc. 99(c) Notice of Special Meeting of Shareholders of Gloucester County Bankshares, Inc. 99(d) Statute Relating to Indemnification (b) Financial Statement Schedules: ----------------------------- None required. (c) Opinion of Financial Advisor: ---------------------------- Furnished as Exhibit B to the Proxy Statement/Prospectus which is included in Part I of this Registration Statement. Item 22. Undertakings. ------------ (a) 1. The undersigned registrant hereby undertakes as follows: (A) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; (iii) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; Provided, however, that paragraphs (1)(A)(i) and (1)(A)(ii) above do not apply if the registration statement is on Form S-3, Form S-8 or Form F-3, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (B) 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. (C) 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. 2. 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. 3. The undersigned registrant hereby undertakes as follows: that prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form. The registrant undertakes that every prospectus (i) that is filed pursuant to the preceding paragraph, or (ii) that purports to meet the requirements of Section 10(a)(3) of the Act and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes 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. (b) The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. (c) The undersigned registrant hereby undertakes to supplement by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. SIGNATURES ---------- Pursuant to the requirements of the Securities Act of 1933, the registrant 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 December 11, 1995. FULTON FINANCIAL CORPORATION Attest: /s/William R. Colmery By: /s/Rufus A. Fulton, Jr. ------------------------- --------------------------------- William R. Colmery, Rufus A. Fulton, Jr., President Assistant Secretary and Chief Executive Officer (Corporate Seal) 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 Capacity Date --------- -------- ---- /s/James R. Argires - ---------------------------- Director December 11, 1995 (James R. Argires) /s/Donald M. Bowman, Jr. Director December 11, 1995 - ---------------------------- (Donald M. Bowman, Jr.) /s/Thomas D. Caldwell, Jr. Director December 11, 1995 - ---------------------------- (Thomas D. Caldwell, Jr.) Vice President December 11, 1995 /s/Beth Ann L. Chivinski and Controller - ---------------------------- (Principal Accounting (Beth Ann L. Chivinski) Officer) /s/Harold D. Chubb Director December 11, 1995 - ---------------------------- (Harold D. Chubb) /s/William H. Clark, Jr. Director December 11, 1995 - ---------------------------- (William H. Clark, Jr.) Signature Capacity Date --------- -------- ---- /s/Richard F. Erdley Director December 11, 1995 - ---------------------------- (Richard F. Erdley) /s/David S. Etter Director December 11, 1995 - ---------------------------- (David S. Etter) /s/Frederick B. Fichthorn Director December 11, 1995 - ---------------------------- (Frederick B. Fichthorn) /s/Rufus A. Fulton, Jr. President, Chief December 11, 1995 - ---------------------------- Executive Officer and (Rufus A. Fulton, Jr.) Director (Principal Executive Officer) /s/Henry N. Funk Director December 11, 1995 - ---------------------------- (Henry N. Funk) /s/John F. Garber, Jr. Director December 11, 1995 - ---------------------------- (John F. Garber, Jr.) /s/Eugene H. Gardner Director December 11, 1995 - ---------------------------- (Eugene H. Gardner) Chairman of the Board December 11, 1995 /s/Robert D. Garner and Director - ---------------------------- (Robert D. Garner) /s/Daniel M. Heisey Director December 11, 1995 - ---------------------------- (Daniel M. Heisey) /s/J. Robert Hess Director December 11, 1995 - ---------------------------- (J. Robert Hess) /s/Carolyn R. Holleran Director December 11, 1995 - ---------------------------- (Carolyn R. Holleran) /s/Clyde W. Horst Director December 11, 1995 - ---------------------------- (Clyde W. Horst) Signature Capacity Date --------- -------- ---- /s/Bernard J. Metz, Sr. Director December 11, 1995 - ---------------------------- (Bernard J. Metz, Sr.) Executive Vice December 11, 1995 /s/Charles J. Nugent President and Chief - ---------------------------- Financial Officer (Charles J. Nugent) (Principal Financial Officer) /s/Arthur M. Peters, Jr. Director December 11, 1995 - ---------------------------- (Arthur M. Peters, Jr.) /s/Stuart H. Raub, Jr. Director December 11, 1995 - ---------------------------- (Stuart H. Raub, Jr.) /s/Donald E. Ruhl Director December 11, 1995 - ---------------------------- (Donald E. Ruhl) /s/William E. Rusling Director December 11, 1995 - ---------------------------- (William E. Rusling) /s/Mary Ann Russell Director December 11, 1995 - ---------------------------- (Mary Ann Russell) /s/John O. Shirk Director December 11, 1995 - ---------------------------- (John O. Shirk) Executive Vice December 11, 1995 /s/R. Scott Smith President - ---------------------------- (R. Scott Smith) /s/James K. Sperry Executive Vice December 11, 1995 - ---------------------------- President and (James K. Sperry) Director /s/Kenneth G. Stoudt Director December 11, 1995 - ---------------------------- (Kenneth G. Stoudt) EXHIBIT INDEX Required Exhibits -----------------
Number Title Page ------ ----- (in accordance with sequential numbering system) -------------------- 2 Merger Agreement dated October 25, 1995, between Fulton Financial Corporation and Gloucester County Bankshares, Inc.-- Furnished as Exhibit A to the Proxy Statement/Prospectus which is included in Part I of this Registration Statement 3(a) Articles of Incorporation of Fulton Financial Corporation -- Incorporated by reference to Exhibit (a)(i) of the Fulton Financial Corporation Quarterly Report on Form 10-Q for the Quarter Ended June 30, 1987 3(b) Bylaws of Fulton Financial Corporation -- Incorporated by reference to Exhibit (a)(i) of the Fulton Financial Corporation Quarterly Report on Form 10-Q for the Quarter Ended June 30, 1989 4 Rights Agreement dated June 20, 1989, between Fulton Financial Corporation and Fulton Bank -- Incorporated by reference to Exhibit 1 of the Fulton Financial Corporation Current Report on Form 8-K dated June 21, 1989 5 Opinion of Barley, Snyder, Senft & Cohen 8 Opinion of Piper & Marbury L.L.P. re: tax matters 13 Annual Report on Form 10-K for Fulton Financial Corporation for the Year Ending December 31, 1994 -- Incorporated by reference in the Proxy Statement/Prospectus which is included in Part I of this Registration Statement
Number Title Page ------ ----- (in accordance with sequential numbering system) -------------------- 21 Subsidiaries of Fulton Financial Corporation 23(a) Consent of Barley, Snyder, Senft & Cohen 23(b) Consent of Arthur Andersen LLP 23(c) Consent of Piper & Marbury L.L.P. 23(d) Consent of Grant Thornton LLP 23(e) Consent of Berwind Financial Group, L.P. 24 Power of Attorney 99(a) Form of Proxy 99(b) Letter to Shareholders of Gloucester County Bankshares, Inc. 99(c) Notice of Special Meeting of Shareholders of Gloucester County Bankshares, Inc. 99(d) Statute Relating to Indemnification
EX-5 2 OPINION OF BARLEY, SNYDER, SENFT AND COHEN EXHIBIT 5 OPINION OF BARLEY, SNYDER, SENFT & COHEN ---------------------------------------- December ___, 1995 1519 Fulton Financial Corporation Gloucester County Bankshares, Inc. One Penn Square 1100 Old Broadway P.O. Box 4887 Woodbury, NJ 08096 Lancaster, PA 17604 Re: Merger of Fulton Financial Corporation and Gloucester County Bankshares, Inc. -------------------------------------- Dear Ladies and Gentlemen: We have acted as counsel to Fulton Financial Corporation ("FFC") in connection with the registration under the Securities Act of 1933, as amended, by means of a registration statement on Form S-4 (the "Registration Statement"), of 1,678,582 shares of the $2.50 par value common stock of FFC, which is the maximum number of shares to be issued pursuant to the terms of the Merger Agreement dated October 25, 1995 (the "Merger Agreement"), entered into between FFC and Gloucester County Bankshares, Inc. ("GCB"). The following transactions will occur upon consummation of the Merger Agreement: (i) GCB will merge with FFC pursuant to the Pennsylvania Business Corporation Law of 1988 and the New Jersey Business Corporation Act (the "Merger"), (ii) FFC will survive the Merger, and (iii) each issued and outstanding share of the $5.00 par value common stock of GCB (the "GCB Common Stock") will be converted into a specified number of shares of the $2.50 par value common stock of FFC (the "FFC Common Stock"). This Opinion Letter is provided pursuant to the requirements of Item 601(b)(5)(i) of Regulation S-K of the Securities and Exchange Commission for inclusion as an exhibit to the Registration Statement. This Opinion Letter is governed by, and shall be interpreted in accordance with, the Legal Opinion Accord (the "Accord") of the American Bar Association's Section of Business Fulton Financial Corporation Gloucester County Bankshares, Inc. December __, 1995 Page 2 Law (1991), as supplemented or modified by the Pennsylvania Third-Party Legal Opinion Supplement (the "Pennsylvania Supplement") of the Pennsylvania Bar Association's Section of Corporation, Banking and Business Law (1992). As a consequence, this Opinion Letter is subject to a number of qualifications, exceptions, definitions, limitations on coverage and other limitations, all as more particularly described in the Accord and the Pennsylvania Supplement, and this Opinion Letter shall be read in conjunction therewith. The Law covered by the opinions expressed herein is limited to the federal law of the United States of America and the law of the Commonwealth of Pennsylvania. Except as otherwise indicated herein, capitalized terms used in this Opinion Letter are defined and set forth in the Merger Agreement, the Accord or the Pennsylvania Supplement. Our opinions herein are subject to the following conditions and assumptions, in addition to those set forth in the Accord and the Pennsylvania Supplement: (1) All of the shares of GCB Common Stock that are issued and outstanding at the time of the Merger will be duly authorized, validly issued, fully paid and nonassessable; (2) All conditions precedent to the obligations of FFC and GCB as set forth in the Merger Agreement will have been satisfied at the time of the Merger; (3) All covenants required to be performed by FFC and GCB on or before the date of consummation of the Merger, as set forth in the Merger Agreement, will have been performed by them as of such date; and (4) The shares of FFC Common Stock will be issued, and the Merger will be consummated, in strict accordance with the terms of the Merger Agreement and the statutory laws of the Commonwealth of Pennsylvania and the State of New Jersey. Based upon and subject to the foregoing, we are of the opinion that the shares of FFC Common Stock to be issued in connection with the Merger have been duly authorized and, when issued, will be legally issued, fully paid and nonassessable. Very truly yours, BARLEY, SNYDER, SENFT & COHEN By: ____________________________ Paul G. Mattaini EX-8 3 OPINION OF PIPER & MARBURY, L.L.P. TAX MATTERS EXHIBIT 8 OPINION OF PIPER & MARBURY L.L.P. RE: TAX MATTERS ------------------------------------------------- PIPER & MARBURY L.L.P. CHARLES CENTER SOUTH WASHINGTON 36 SOUTH CHARLES STREET NEW YORK Baltimore, Maryland 21201-3018 PHILADELPHIA 410-539-2530 EASTON FAX: 410-539-0489 LONDON DRAFT ______________, 1995 Fulton Financial Corporation One Penn Square P.O. Box 4887 Lancaster, Pennsylvania 17604 Gloucester County Bankshares, Inc. 1100 Old Broadway Woodbury, New Jersey 08096 RE: Merger Agreement by and between Gloucester County Bankshares, Inc. and Fulton Financial Corporation ---------------------------------- Gentlemen: We have acted as counsel for Gloucester County Bankshares, Inc., a New Jersey business corporation (the "Company"), in connection with the Merger Agreement, dated as of October 25, 1995 (the "Merger Agreement"), by and between the Company and Fulton Financial Corporation, a Pennsylvania business corporation (the "Acquirer"), providing, among other things, for the merger of the Company with and into the Acquirer (the "Merger"). You have requested our opinion as to the tax-free nature of the Merger. Unless otherwise defined herein, capitalized terms used herein shall have the same meanings assigned to them in the Merger Agreement. In connection with the Merger Agreement, a registration statement under the Securities Act of 1933, as amended (the "Registration Statement"), has been filed with the Securities and Exchange Commission. DRAFT Piper & Marbury L.L.P. Fulton Financial Corporation Gloucester County Bankshares, Inc. ____________, 1995 Page 2 The Acquirer, a bank holding company, is the common parent of an affiliated group of corporations filing a consolidated return for federal income tax purposes on a calendar year. The Acquirer has authorized 100,000,000 shares of common stock, par value $2.50 per share ("Acquirer Common Stock") and 10,000,000 shares of no par value preferred stock. As of the date hereof, there were approximately 28,382,179 shares of Acquirer Common Stock and no shares of preferred stock issued and outstanding. Acquirer Common Stock is publicly traded over-the-counter and is listed on the Nasdaq National Market System. As of the date hereof, no shareholders owned more than five percent of Acquirer Common Stock. The Acquirer's principal assets consist of all of the outstanding capital stock of Fulton Bank, a Pennsylvania commercial bank engaged in the commercial banking business in the Commonwealth of Pennsylvania, and all of the outstanding capital stock of other financial institutions engaged in banking and related activities in Pennsylvania, Maryland and Delaware. The Company, a bank holding company, is the common parent of an affiliated group of corporations filing a consolidated return for federal income tax purposes on a calendar year. The Company has authorized 5,000,000 shares of common stock, par value $5.00 per share ("Company Common Stock"). As of the date hereof, the Company had issued and outstanding 970,279 shares of Company Common Stock owned by approximately 680 shareholders. As of the date hereof, no shareholders owned more than five percent of Company Common Stock outstanding. Company Common Stock is publicly traded, but is traded in the pink sheets only and is not listed on a national securities exchange or quoted on an automated quotation system. The Company's principal asset is of all of the outstanding capital stock of The Bank of Gloucester County, a New Jersey commercial bank, engaged in the commercial banking business in Gloucester County in the State of New Jersey. There are currently outstanding options (the "Employee Options") to purchase 136,001 shares of Company Common Stock that were granted to employees under the Company's Stock Option Plan. At the time the parties entered into the Merger Agreement, they also entered into a Warrant Agreement pursuant to which the Company granted to the Acquirer a warrant to purchase 241,056 shares of Company Common Stock at $17.00 per share exercisable only in the event that: (i) there occurs a knowing breach of representation, warranty, or covenant set forth in the Merger Agreement that would permit the Acquirer to terminate the Merger Agreement; DRAFT Piper & Marbury L.L.P. Fulton Financial Corporation Gloucester County Bankshares, Inc. ____________, 1995 Page 3 (ii) the Company's shareholders fail to approve the Merger at a meeting called for that purpose after some other person has manifested an intent to acquire 25% or more of Company Common Stock, to acquire, merge or consolidate with the Company, or to purchase all or substantially all of the Company's assets; or (iii) certain other events related to the acquisition of the assets of the Company or its Common Stock by an entity other than the Acquirer occur. The managements of the Acquirer and the Company have determined that the following transactions would enable (i) the acquirer to expand its business operations into New Jersey and result in a favorable diversification of its assets and earnings and (ii) The Bank of Gloucester County, through affiliation with a larger more diversified financial institution, to remain competitive and offer expanded services to the customers and communities that it serves: (1) Pursuant to the Merger Agreement, the Company will be merged with and into the Acquirer, with the Acquirer surviving. Pursuant to the Merger Agreement, upon the merger of the Company into the Acquirer, each share of Company Common Stock issued and outstanding immediately before the effective time of the Merger will be converted into a number of shares of Acquirer Common Stock ranging from 1.530 to 1.730 shares, depending upon the average per share closing bid price of Acquirer Common Stock on the Nasdaq National Market System for the 10 trading days preceding the date which is 2 business days before the effective date of the Merger (the "Closing Price"). The holders of Company Common Stock are not entitled to dissenters' rights under New Jersey law. No fractional shares of Acquirer Common Stock will be issued in the Merger. Each Company shareholder who would have been entitled to receive a fractional share will receive in lieu thereof cash in an amount equal to the value of the fractional share determined using the Closing Price. (2) Pursuant to the Merger, each holder of an Employee Option shall receive in cancellation of the Employee Option an option to purchase a number of shares of Acquirer Common Stock equal to the number of shares covered by the Employee Option multiplied by the conversion ratio applicable to the merger exchange at a per share exercise price equal to the per share exercise price of the Employee Option divided by such conversion ratio. DRAFT Piper & Marbury L.L.P. Fulton Financial Corporation Gloucester County Bankshares, Inc. ____________, 1995 Page 4 With respect to the Merger of the Company into the Acquirer in exchange for Acquirer Common Stock, managements of the Acquirer and the Company have certified to us that: (a) The number of shares of Acquirer Common Stock received by each holder of Company Common Stock in exchange for his or her shares of Company Common Stock was determined in arms-length negotiations between the Acquirer and the Company. (b) There is no plan or intention by the holders of Company Common Stock who own one percent or more of Company Common Stock, and, to the best knowledge of the managements of the Acquirer and the Company, there is no plan or intention on the part of the remaining holders of Company Common Stock to sell or otherwise dispose of a number of shares of Acquirer Common Stock received in the Merger that would reduce the former Company Common Stockholders' ownership of Acquirer Common Stock to a number of shares having, in the aggregate, a value, as of the date of the Merger, of less than 50 percent of the fair market value of Company Common Stock outstanding as of the same date. For purposes of the preceding sentence, all shares of Company Common Stock exchanged for cash in lieu of fractional shares of Acquirer Common Stock will be considered outstanding stock of the Company as of the date of the Merger. Moreover, shares of Company Common Stock and shares of Acquirer Common Stock held by holders of Company Common Stock and otherwise sold, redeemed, or disposed of prior or subsequent to the Merger are taken into account for purpose of the first sentence of this paragraph. (c) The Acquirer has no plan or intention to redeem or otherwise reacquire any of its stock issued in the Merger. (d) All liabilities of the Company at the time of the Merger, except for those related to expenses incurred by the Company in connection with the Merger, will have been incurred by the Company in the ordinary course of business or will be associated with the assets transferred to the Acquirer in the Merger. (e) Following the Merger, the historic business of the Company will be continued by the Acquirer in a substantially unchanged manner. DRAFT Piper & Marbury L.L.P. Fulton Financial Corporation Gloucester County Bankshares, Inc. ____________, 1995 Page 5 (f) The Company, the Acquirer, and their respective shareholders shall each pay their own expenses, if any, incurred in connection with the Merger. (g) There is no intercorporate indebtedness existing between the Company and the Acquirer that was issued, acquired or will be settled at a discount. (h) Neither the Company nor the Acquirer is an investment company as defined in sections 368(a)(2)(F)(iii) and (iv) of the Internal Revenue Code of 1986, as amended (the "Code"). (i) The fair market value of the assets of the Company transferred to the Acquirer in the Merger will exceed the sum of the liabilities assumed by the Acquirer in the Merger plus the amount of the Company's liabilities to which the transferred assets are subject. (j) The Acquirer will not have owned any shares of Company Common Stock prior to the Merger. (k) The payment of cash to the holders of Company Common Stock in lieu of fractional shares of Acquirer Common Stock is solely for the purpose of avoiding the expense and inconvenience to the Acquirer of issuing fractional shares and does not represent separately bargained for consideration. The total cash consideration paid in the Merger to the holders of Company Common Stock in lieu of issuing fractional shares of Acquirer Common Stock will not exceed one percent of the total consideration received by the holders of Company Common Stock in the Merger. The fractional share interests of each holder of Company Common Stock will be aggregated, and no holder of Company Common Stock will receive cash in lieu of fractional shares in an amount equal to or greater than the value of one full share of Acquirer Common Stock. (l) No compensation to be paid by the Acquirer to any shareholder-employee of the Company will be separate consideration for or allocable to such shareholder's shares of Company Common Stock; none of Acquirer Common Stock to be received by any shareholder- employee is separate consideration for or allocable to any employment agreement; and the compensation paid to any shareholder-employee will be for services actually rendered and will be DRAFT Piper & Marbury L.L.P. Fulton Financial Corporation Gloucester County Bankshares, Inc. ____________, 1995 Page 6 commensurate with amounts paid to third parties bargaining at arm's-length for similar services. Based on the foregoing, we are of the opinion that: (1) Provided that the Merger of the Company with and into the Acquirer qualifies as a statutory merger under the applicable state law, the acquisition by the Acquirer of the assets of the Company in the Merger in exchange for shares of Acquirer Common Stock and the assumption by the Acquirer of the liabilities of the Company plus the liabilities to which the Company's assets are subject will constitute a reorganization within the meaning of sections 368(a)(1)(A) of the Code. The Acquirer and the Company will each be "a party to a reorganization" within the meaning of section 368(b) of the Code. (2) No gain or loss will be recognized by the Acquirer, the Company, or The Bank of Gloucester County on the receipt by the Acquirer of the assets of the Company in exchange for Acquirer Common Stock and the assumption by the Acquirer of the liabilities of the Company and the liabilities to which the transferred assets are subject. (3) The basis of the Company assets in the hands of the Acquirer will be the same as the basis of those assets in the hands of the Company immediately prior to the Merger. (4) The holding period of the assets of the Company in the hands of the Acquirer will include, in each instance, the period during which such assets were held by the Company prior to the Merger. (5) A holder of Company Common Stock who receives solely shares of Acquirer Common Stock in exchange for his shares of Company Common Stock pursuant to the Merger (including fractional shares of Acquirer Common Stock deemed issued as described below) will not recognize any gain or loss upon the exchange. (6) A holder of Company Common Stock who receives cash in lieu of a fractional share of Acquirer Common Stock will be treated as if he received a fractional share of Acquirer Common Stock pursuant to the Merger and the DRAFT Piper & Marbury L.L.P. Fulton Financial Corporation Gloucester County Bankshares, Inc. ____________, 1995 Page 7 Acquirer then redeemed such fractional share for the cash. The holder of Company Common Stock will recognize capital gain or loss on the constructive redemption of the fractional share in an amount equal to the difference between the cash received and the adjusted basis of the fractional share. (7) The basis of Acquirer Common Stock to be received by the holders of Company Common Stock (including fractional shares of Acquirer Common Stock deemed issued as described above) will be the same as the basis of Company Common Stock surrendered in exchange therefor. (8) The holding period of Acquirer Common Stock received by the holders of Company Common Stock will include the period during which Company Common Stock surrendered in exchange therefor was held, provided that Company Common Stock is held as a capital asset in the hands of the holders of Company Common Stock on the date of the exchange. (9) The Acquirer will succeed to and take into account, as of the date of the Merger, the items of the Company described in section 381(c) of the Code. These items will be taken into account by the Acquirer subject to the provisions and limitations specified in sections 381, 382(b), 383, and 384 of the Code and the regulations thereunder. (10) The Acquirer will succeed to and take into account the earnings and profits, or deficit in earnings and profits, of the Company as of the date or dates of transfer in accordance with section 381(c)(2) of the Code and section 1.381(c)(2)-1 of the income tax regulations. Any deficit in earnings and profits of the Company will be used only to offset earnings and profits accumulated after the of date or dates transfer. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to our firm under the caption "Legal Matters" in the Proxy Statement/Prospectus included in the Registration Statement. This opinion is furnished for your benefit and that of the holders of Company Common Stock and may not be relied upon by any other person without our express written consent. Our DRAFT Piper & Marbury L.L.P. Fulton Financial Corporation Gloucester County Bankshares, Inc. ____________, 1995 Page 8 opinion is limited to matters expressly set forth herein. No opinion is to be implied or inferred beyond the matters expressly so stated. Very truly yours, DRAFT EX-21 4 SUBSIDIARIES OF FULTON FINANCIAL CORP. EXHIBIT 21 SUBSIDIARIES OF FULTON FINANCIAL CORPORATION -------------------------------------------- Name of Subsidiary State of Incorporation ------------------ ---------------------- Fulton Bank Pennsylvania Farmers Trust Bank Pennsylvania Swineford National Bank Pennsylvania Lafayette Bank Pennsylvania FNB Bank, National Association Pennsylvania Great Valley Savings Bank Pennsylvania Hagerstown Trust Company Maryland Delaware National Bank Delaware Fulton Financial Realty Company Pennsylvania Fulton Life Insurance Company Pennsylvania Central Pennsylvania Financial Corp. Pennsylvania EX-23.A 5 CONSENT OF BARLEY, SNYDER, SENFT & COHEN EXHIBIT 23(a) CONSENT OF BARLEY, SNYDER, SENFT & COHEN ---------------------------------------- We hereby consent to the use in this registration statement of the opinion filed as Exhibit 5 hereto and to the references to this firm under the caption "Legal Matters" in the related prospectus. Lancaster, Pennsylvania BARLEY, SNYDER, SENFT & COHEN December ____, 1995 By: -------------------------------------- EX-23.B 6 CONSENT OF ARTHUR ANDERSEN LLP EXHIBIT 23(b) CONSENT OF ARTHUR ANDERSEN LLP ------------------------------ As independent public accountants, we hereby consent to the incorporation by reference in this registration statement of our report dated ________________, 1995 included in Fulton Financial Corporation's Form 10-K for the year ended December 31, 1994, and to all references to our firm included in this registration statement. Lancaster, Pennsylvania ARTHUR ANDERSEN LLP December ____, 1995 By: ----------------------------------- EX-23.C 7 CONSENT OF PIPER & MARBURY L.L.P. EXHIBIT 23(c) CONSENT OF PIPER & MARBURY L.L.P. --------------------------------- We hereby consent to the use in this Registration Statement of the opinion filed as Exhibit 8 hereto and to the reference to our firm under the heading "Legal Matters" in the Proxy Statement/Prospectus included in the Registration Statement. Baltimore, Maryland PIPER & MARBURY L.L.P. December ____, 1995 By: ----------------------------------- EX-23.D 8 CONSENT OF GRANT THORNTON LLP EXHIBIT 23(d) CONSENT OF GRANT THORNTON LLP ----------------------------- CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS We have issued our reports dated February 10, 1995 accompanying the consolidated financial statements of Glouster County Bankshares, Inc. and subsidiary appearing in the 1994 Annual Report of the Company to its shareholders included in the Annual Report on Form 10-K for the year ended December 31, 1994 which are incorporated by reference in this Registration Statement. We consent to the incorporation by reference in the Registration Statement of the aforementioned reports and to the use of our name as it appears under the caption "Experts." GRANT THORNTON LLP Philadelphia, Pennsylvania December 11, 1995 EX-23.E 9 CONSENT OF BERWIND FINANCIAL GROUP, L.L.P. EXHIBIT 23(e) CONSENT OF BERWIND FINANCIAL GROUP, L.P. ---------------------------------------- EX-24 10 POWER OF ATTORNEY EXHIBIT 24 POWER OF ATTORNEY ----------------- The undersigned officers and directors of Fulton Financial Corporation hereby constitute and appoint Rufus A. Fulton, Jr., Charles J. Nugent and Kenneth E. Shenenberger, or each of them singly, the true and lawful agents and attorneys-in-fact of the undersigned with full power and authority to sign for the undersigned and in their respective names, in any and all capacities, any and all amendments (including post-effective amendments) to this Registration Statement and generally to take all such steps as may be necessary or appropriate to enable Fulton Financial Corporation to comply with the provisions of the Securities Act of 1933, as amended, and all requirements of the Securities and Exchange Commission related thereto, hereby ratifying and confirming all acts taken by such agents and attorneys-in-fact, as herein authorized. Signature Capacity Date --------- -------- ---- /s/James R. Argires Director December 11, 1995 - ---------------------------- (James R. Argires) /s/Donald M. Bowman, Jr. Director December 11, 1995 - ---------------------------- (Donald M. Bowman, Jr.) /s/Thomas D. Caldwell, Jr. Director December 11, 1995 - ---------------------------- (Thomas D. Caldwell, Jr.) Vice President /s/Beth Ann L. Chivinski and Controller December 11, 1995 - ---------------------------- (Principal Accounting (Beth Ann L. Chivinski) Officer) /s/Harold D. Chubb Director December 11, 1995 - ---------------------------- (Harold D. Chubb) /s/William H. Clark, Jr. Director December 11, 1995 - ---------------------------- (William H. Clark, Jr.) /s/Richard F. Erdley Director December 11, 1995 - ---------------------------- (Richard F. Erdley) Signature Capacity Date --------- -------- ---- /s/David S. Etter Director December 11, 1995 - ---------------------------- (David S. Etter) /s/Frederick B. Fichthorn Director December 11, 1995 - ---------------------------- (Frederick B. Fichthorn) /s/Rufus A. Fulton, Jr. President, Chief December 11, 1995 - ---------------------------- Executive Officer and (Rufus A. Fulton, Jr.) Director (Principal Executive Officer) /s/Henry N. Funk Director December 11, 1995 - ---------------------------- (Henry N. Funk) /s/John F. Garber, Jr. Director December 11, 1995 - ---------------------------- (John F. Garber, Jr.) /s/Eugene H. Gardner Director December 11, 1995 - ---------------------------- (Eugene H. Gardner) Chairman of the Board December 11, 1995 /s/Robert D. Garner and Director - ---------------------------- (Robert D. Garner) /s/Daniel M. Heisey Director December 11, 1995 - ---------------------------- (Daniel M. Heisey) /s/J. Robert Hess Director December 11, 1995 - ---------------------------- (J. Robert Hess) /s/Carolyn R. Holleran Director December 11, 1995 - ---------------------------- (Carolyn R. Holleran) /s/Clyde W. Horst Director December 11, 1995 - ---------------------------- (Clyde W. Horst) /s/Bernard J. Metz, Sr. Director December 11, 1995 - ---------------------------- (Bernard J. Metz, Sr.) Signature Capacity Date --------- -------- ---- Executive Vice December 11, 1995 /s/Charles J. Nugent President and Chief - ---------------------------- Financial Officer (Charles J. Nugent) (Principal Financial Officer) /s/Arthur M. Peters, Jr. Director December 11, 1995 - ---------------------------- (Arthur M. Peters, Jr.) /s/Stuart H. Raub, Jr. Director December 11, 1995 - ---------------------------- (Stuart H. Raub, Jr.) /s/Donald E. Ruhl Director December 11, 1995 - ---------------------------- (Donald E. Ruhl) /s/William E. Rusling Director December 11, 1995 - ---------------------------- (William E. Rusling) /s/Mary Ann Russell Director December 11, 1995 - ---------------------------- (Mary Ann Russell) /s/John O. Shirk Director December 11, 1995 - ---------------------------- (John O. Shirk) Executive Vice December 11, 1995 /s/R. Scott Smith President - ---------------------------- (R. Scott Smith) /s/James K. Sperry Executive Vice December 11, 1995 - ---------------------------- President and (James K. Sperry) Director /s/Kenneth G. Stoudt Director December 11, 1995 - ---------------------------- (Kenneth G. Stoudt) EX-99.A 11 FORM OF PROXY EXHIBIT 99(a) FORM OF PROXY ------------- GLOUCESTER COUNTY BANKSHARES, INC. PROXY SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON JANUARY 24, 1996 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned hereby constitutes and appoints [names] and each or any one of them, as proxies of the undersigned, with full power of substitution, to represent and vote, as directed below, all of the shares of GLOUCESTER COUNTY BANKSHARES, INC. common stock held of record by the undersigned at the close of business on December 11, 1995, at the Special Meeting of the shareholders of Gloucester County Bankshares, Inc. to be held on January 24, 1996, at 10:30 a.m. at Ron Jaworski's Eagle's Nest Country Club, Woodbury-Glassboro Road, Deptford, New Jersey, or at any adjournment or postponement thereof, with all of the powers the undersigned would possess if personally present, as follows: PROPOSAL to approve, adopt, ratify and confirm the Merger Agreement, dated October 25, 1995, between Fulton Financial Corporation and Gloucester County Bankshares, Inc. providing, among other things, for the merger of Gloucester County Bankshares, Inc. with and into Fulton Financial Corporation and for the automatic conversion of each share of the common stock of Gloucester County Bankshares, Inc. into a specified number of shares of Fulton Financial Corporation Common Stock. Approval of the proposal will also constitute approval of an amendment to The Gloucester County Bankshares, Inc. 1992 Stock Option Plan, which extends the term during which members of the Board of Directors of Gloucester County Bankshares, Inc. may hold stock options granted to them. [_] FOR [_] AGAINST [_] ABSTAIN The Board of Directors recommends a vote FOR this proposal. The shares represented by this proxy will be voted as directed above. If no directions are given, the shares represented by this proxy will be voted FOR the Proposal. This proxy also confers authority to vote the shares represented hereby on whatever other business may properly be brought before the meeting or any postponement or adjournment thereof. The Board of Directors at present knows of no other business to be brought before the meeting, but if any other business is properly brought before the meeting, the shares represented by this proxy will be voted in accordance with the recommendations of the management of Gloucester County Bankshares, Inc. The undersigned acknowledges receipt of the Notice of Special Meeting of Shareholders and the Proxy Statement/Prospectus dated December ___, 1995, and hereby revoke(s) all other proxies heretofore given by the undersigned in connection with this meeting. Dated: __________________________, 199___ ---------------------------------------- Signature ---------------------------------------- Signature Please sign exactly as your name appears hereon. If stock is jointly held, each joint owner should sign. If signing for a corporation or a partnership, or as attorney or fiduciary, indicate your fill title. If more than one fiduciary is involved, all should sign. Number of Shares Held of Record on December 11, 1995. - ----------------------------------- IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. PLEASE SIGN, DATE AND RETURN THIS PROXY AS PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING. THIS PROXY IS REVOCABLE AT ANY TIME BEFORE IT IS EXERCISED AND MAY BE WITHDRAWN IF YOU ELECT TO ATTEND THE MEETING AND WISH TO VOTE IN PERSON. EX-99.B 12 SPECIAL MEETING EXHIBIT 99(b) [GLOUCESTER COUNTY BANKSHARES, INC. LETTERHEAD] December ___, 1995 Dear Shareholder: You are cordially invited to a Special Meeting of Shareholders of Gloucester County Bankshares, Inc. ("GCB") to be held on January 24, 1996, at 10:30 a.m. at Ron Jaworski's Eagle's Nest Country Club, Woodbury-Glassboro Road, Deptford, New Jersey. At this Special Meeting, holders of all outstanding shares of Common Stock, par value $5.00 per share (the "Shares"), of GCB will be asked to consider and vote upon a proposal to approve the merger of GCB with and into Fulton Financial Corporation ("FFC") (the "Merger"), in accordance with the terms of the Merger Agreement dated October 25, 1995, between GCB and FFC (the "Merger Agreement"). Pursuant to the Merger Agreement, each Share outstanding at the effective date of the Merger will automatically be converted into the right to receive a specified number of shares of FFC's Common Stock. Cash will be paid in lieu of fractional shares. FFC will survive the Merger and become the parent company of GCB's banking subsidiary, The Bank of Gloucester County. The Board of Directors of GCB, by a unanimous vote of all directors, has approved and declared the Merger advisable and recommends that the shareholders of GCB vote in favor of the Merger Agreement. Sincerely yours, Warner A. Knobe Donald S. Carter President and Chief Chairman of the Executive Officer Board EX-99.C 13 NOTICE OF SPECIAL MEETING EXHIBIT 99(c) ------------- GLOUCESTER COUNTY BANKSHARES, INC. 1100 Old Broadway Woodbury, N.J.New Jersey 08096 NOTICE OF SPECIAL MEETING OF SHAREHOLDERS To be Held January 24, 1996 To the Shareholders of Gloucester County Bankshares, Inc.: NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of Gloucester County Bankshares, Inc. ("GCB") will be held at Ron Jaworski's Eagle's Nest Country Club, Woodbury - Glassboro Road, Deptford, New Jersey, on January 24, 1996, at 10:30 a.m. local time, for the following purposes: (1) To consider and vote upon a proposal to approve the merger (the "Merger") of GCB with and into Fulton Financial Corporation ("FFC"), a Pennsylvania bank holding company, in accordance with the terms of the Merger Agreement dated October 25, 1995, between GCB and FFC (a copy of which, without exhibits or schedules, is attached to the accompanying Proxy Statement/Prospectus as Exhibit A). In the Merger, each of the outstanding shares of Common Stock, par value $5.00 per share (the "Shares"), of GCB will automatically be converted into the right to receive a specified number of shares of FCC's Common Stock, all as more fully described in the accompanying Proxy Statement. Approval of the Merger will also constitute approval of an amendment to The Gloucester County Bankshares, Inc. 1992 Stock Option Plan, which extends the term during which members of the Board of Directors of GCB may hold stock options granted to them (a copy of which amendment is attached to the accompanying Proxy Statement/Prospectus as Exhibit D); and (2) To transact such other business as may properly come before the Special Meeting or any adjournments thereof. The Board of Directors has fixed the close of business on December 11, 1995, as the record date for the Special Meeting. Only those persons who are record holders of GCB Common Stock at such date will be entitled to notice of, and to vote at, the Special Meeting and any adjournment thereof. The attached Proxy Statement/Prospectus forms a part of this Notice and is incorporated herein by reference. THE AFFIRMATIVE VOTE OF THE HOLDERS OF TWO-THIRDS OF THE OUTSTANDING SHARES OF COMMON STOCK OF GCB ENTITLED TO VOTE THEREON WILL BE REQUIRED TO ADOPT THE MERGER AGREEMENT PROVIDING FOR THE MERGER OF GCB WITH AND INTO FFC. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, THE BOARD OF DIRECTORS URGES YOU TO MARK, SIGN, DATE AND RETURN AS SOON AS POSSIBLE THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE. GIVING THE PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING. Under Section 14A:11-1(1)(a)(i)(B) of the Business Corporation Act of the State of New Jersey, shareholders of GCB will not be entitled to dissent from the Merger and receive appraisal rights for, the "fair value" of their Shares. A summary of the provisions of Section 14A:11-1(1)(a)(i)(B) of the New Jersey Business Corporation Act is included in the accompanying Proxy Statement/Prospectus. By order of the Board of Directors Woodbury, New Jersey _______________, 1995 Dale T. Taylor, Secretary EX-99.D 14 STATUTE RELATING TO INDEMNIFICATION EXHIBIT 99(d) STATUTE RELATING TO INDEMNIFICATION ----------------------------------- Subchapter D of Chapter 17 of the Pennsylvania Business Corporation Law of 1988 Indemnification --------------- (S) 1741. Third-party actions Unless otherwise restricted in its bylaws, a business corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation), by reason of the fact that he is or was a representative of the corporation, or is or was serving at the request of the corporation as a representative of another domestic or foreign corporation for profit or not-for-profit, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with the action or proceeding if he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the corporation and, with respect to any criminal proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action or proceeding by judgment, order, settlement or conviction or upon a plea of nolo contendere or its equivalent shall not of itself create a presumption that the person did not act in good faith and in a manner that he reasonably believed to be in, or not opposed to, the best interests of the corporation and with respect to any criminal proceeding, had reasonable cause to believe that his conduct was unlawful. (S) 1742. Derivative and corporate actions Unless otherwise restricted in its bylaws, a business corporation shall have power to indemnify any person who was or is a party, or is threatened to be made a party, to any threatened, pending or completed action by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a representative of the corporation or is or was serving at the request of the corporation as a representative of another domestic or foreign corporation for profit or not-for-profit, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of the action if he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the corporation. Indemnification shall not be made under this section in respect of any claim, issue or matter as to which the person has been adjudged to be liable to the corporation unless and only to the extent that the court of common pleas of the judicial district embracing the county in which the registered office of the corporation is located or the court in which the action was brought determines upon application that, despite the adjudication of liability but in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for the expenses that the court of common pleas or other court deems proper. (S) 1743. Mandatory indemnification To the extent that a representative of a business corporation has been successful on the merits or otherwise in defense of any action or proceeding referred to in section 1741 (relating to third-party actions) or 1742 (relating to derivative and corporate actions) or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorney fees) actually and reasonably incurred by him in connection therewith. (S) 1744. Procedure for effecting indemnification Unless ordered by a court, any indemnification under section 1741 (relating to third-party actions) or 1742 (relating to derivative and corporate actions) shall be made by the business corporation only as authorized in the specific case upon a determination that indemnification of the representative is proper in the circumstances because he has met the applicable standard of conduct set forth in those sections. The determination shall be made: (1) by the board of directors by a majority vote of a quorum consisting of directors who were not parties to the action or proceeding; (2) if such a quorum is not obtainable or if obtainable and a majority vote of a quorum of disinterested directors so directs by independent legal counsel in a written opinion; or (3) by the shareholders. (S) 1745. Advancing expenses Expenses (including attorneys' fees) incurred in defending any action or proceeding referred to in this subchapter may be paid by a business corporation in advance of the final disposition of the action or proceeding upon receipt of an undertaking by or on behalf of the representative to repay the amount if it is ultimately determined that he is not entitled to be indemnified by the corporation as authorized in this subchapter or otherwise. (S) 1746. Supplementary coverage (a) General rule. The indemnification and advancement of expenses provided by, or granted pursuant to, the other sections of this subchapter shall not be deemed exclusive of any other rights to which a person seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of shareholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding that office. Section 1728 (relating to interested directors or officers; quorum) and, in the case of a registered corporation, section 2538 (relating to approval of transactions with interested shareholders) shall be applicable to any bylaw, contract or transaction authorized by the directors under this section. A corporation may create a fund of any nature, which may, but need not be, under the control of a trustee, or otherwise secure or insure in any manner its indemnification obligations, whether arising under or pursuant to this section or otherwise. (b) When indemnification is not to be made. Indemnification pursuant to subsection (a) shall not be made in any case where the act or failure to act giving rise to the claim for indemnification is determined by a court to have constituted willful misconduct or recklessness. The articles may not provide for indemnification in the case of willful misconduct or recklessness. (c) Grounds. Indemnification pursuant to subsection (a) under any bylaw, agreement, vote of shareholders or directors or otherwise may be granted for any action taken and may be made whether or not the corporation would have the power to indemnify the person under any other provision of the law except as provided in this section and whether or not the indemnified liability arises or arose from any threatened, pending or completed action by or in the right of the corporation. Such indemnification is declared to be consistent with the public policy of this Commonwealth. (S) 1747. Power to purchase insurance Unless otherwise restricted in its bylaws, a business corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a representative of the corporation or is or was serving at the request of the corporation as a representative of another domestic or foreign corporation for profit or not-for-profit, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against that liability under the provisions of this subchapter. Such insurance is declared to be consistent with the public policy of this Commonwealth. (S) 1748. Application to surviving or new corporation For the purposes of this subchapter, references to "the corporation" include all constituent corporations absorbed in a consolidation, merger or division, as well as the surviving or new corporations surviving or resulting therefrom, so that any person who is or was a representative of the constituent, surviving or new corporation, or is or was serving at the request of the constituent, surviving or new corporation as a representative of another domestic or foreign corporation for profit or not-for-profit, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this subchapter with respect to the surviving or new corporation as he would if he had served the surviving or new corporation in the same capacity. (S) 1749. Application to employee benefit plans For purposes of this subchapter: (1) References to "other enterprises" shall include employee benefit plans and references to "serving at the request of the corporation" shall include any service as a representative of the business corporation that imposes duties on, or involves services by, the representative with respect to an employee benefit plan, its participants or beneficiaries. (2) Excise taxes assessed on a person with respect to an employee benefit plan pursuant to applicable law shall be deemed "fines." (3) Action with respect to an employee benefit plan taken or omitted in good faith by a representative of the corporation in a manner he reasonably believed to be in the interest of the participants and beneficiaries of the plan shall be deemed to be action in a manner that is not opposed to the best interests of the corporation. (S) 1750. Duration and extent of coverage The indemnification and advancement of expenses provided by, or granted pursuant to, this subchapter shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a representative of the corporation and shall inure to the benefit of the heirs and personal representative of that person. -----END PRIVACY-ENHANCED MESSAGE-----