RISK FACTORS

        The purpose of the Plan is to provide a convenient and useful service for the Corporation's shareholders. Nothing in this Prospectus represents a recommendation by the Corporation or anyone else that a person buy or sell the Corporation's Common Stock. We urge you to read this Prospectus thoroughly before you make your investment decision regarding participation in the Plan.

        Before you invest in the Corporation's Common Stock, you should be aware that an investment in our Common Stock involves a variety of risks, including those described below. You should carefully read and consider these risk factors, together with all the other information contained in this Prospectus, before you decide whether to purchase the Corporation's Common Stock.

You will have a limited influence on shareholder decisions.

        Together, our directors and executive officers hold 455,509 shares, representing 14.28% of the total number of shares outstanding as of February 15, 2005. Further, this percentage of ownership could increase if our directors and officers participate in the Plan. Our directors and officers are able to significantly influence our management policies and decisions as well as issues that require a shareholder vote. If our directors and executive officers vote together, they could influence the outcome of certain corporate actions requiring shareholder approval, including the election of directors and the approval or non-approval of significant corporate transactions, such as the merger or sale of all or substantially all of our assets. Their interests may differ from the interests of other shareholders with respect to management issues.

Our issuance of additional shares of Common Stock could dilute or depress the value of your shares of our Common Stock.

        The Corporation's Articles of Incorporation authorize the issuance of up to 10 million shares of Common Stock. The issuance of additional stock within these limits may not require prior shareholder approval. Sales of additional shares of stock, or the perception that shares may be sold, could negatively affect the market price of the Corporation's stock. The issuance of additional shares could also dilute the percentage ownership interest and corresponding voting power of the prior shareholders.

Regulatory restrictions may affect our ability to pay dividends.

        Our ability to pay dividends to our shareholders is also subject to and limited by certain legal and regulatory restrictions.

The trading market for our Common Stock is not active.

        There is a limited public market for the Common Stock of the Corporation. We cannot assure you that a more liquid or active trading market will develop. In a less active market, you may not be able to sell your shares when you would like to sell them.

Anti-takeover provisions in our articles of incorporation and bylaws and certain provisions of Pennsylvania law may discourage or prevent a takeover of our company and result in a lower market price for our Common Stock.

        Our articles of incorporation and bylaws contain certain provisions that enhance the ability of our Board of Directors to deal with attempts to acquire control of our company. In addition, Pennsylvania law contains certain anti-takeover provisions that apply to us. While these provisions may provide us with flexibility in managing our business, they could discourage or make a merger, tender offer or proxy contest more difficult, even though certain shareholders may wish to participate in the transaction. These provisions could also potentially adversely affect the market price of the Common Stock.

Our future success is dependent on our ability to compete effectively in the highly competitive banking industry.

        We face substantial competition in all phases of our operations from a variety of different competitors. Our future growth and success will depend on our ability to compete effectively in this highly competitive environment. We compete for loans, deposits and other financial services in our geographic market with other commercial banks, savings and loan associations, credit unions, finance companies, mutual funds, insurance companies, brokerage and investment banking firms and various other non-bank competitors.

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Changes in the law and regulations may affect our ability to do business, our costs, and our profits.

        We are subject to extensive state and federal supervision and regulation. These laws and regulations are intended to protect depositors, not shareholders. Any change in applicable laws or regulations may have a material effect on our business and prospects. We cannot predict the nature or the extent of the effect on our business or earnings that monetary policies, economic control, or new federal or state regulations may have in the future.

Changes in interest rates could make us less profitable.

        Our profitability is dependent to a large extent on our net interest income. Net interest income is the difference between interest income on interest-earning assets and interest expense on interest-bearing liabilities. Like most financial institutions, we are affected by changes in general interest rate levels, which are currently at low levels, and by other economic factors beyond our control. In addition, interest rate risks can result from mismatches between the dollar amount of repricing or maturing assets and liabilities and is measured in terms of the ratio of the interest rate sensitivity gap to total assets. Although our management believes it has implemented strategies to reduce the potential effects of changes in interest rates on our results of operations, any substantial and prolonged change in market interest rates could adversely affect our operating results.

Our allowance for loan losses may prove to be insufficient to absorb potential losses in our loan portfolio.

        Lending money is a substantial part of our business. However, every loan we make carries a certain risk of non-payment. We cannot assure you that our allowance for loan losses will be sufficient to absorb actual loan losses. We also cannot assure you that we will not experience significant losses in our loan portfolios that may require significant increases to the allowance for loan losses in the future. Although we evaluate every loan that we make against our underwriting criteria, we may experience losses by reasons of factors beyond our control. Some of these factors include changes in market conditions affecting the value of real estate and unexpected problems affecting the creditworthiness of our borrowers.

        We determine the adequacy of our allowance of loan losses on an ongoing basis by considering various factors, including:

•

An analysis of the risk characteristics of various classifications of loans;



•

Previous loan loss experience;



•

Specific loans that would have loan loss potential;



•

Delinquency trends;



•

Estimated fair value of the underlying collateral;



•

Current economic conditions;



•

The view of our regulators; and



•

Geographic and industry loan concentration.

Changes in real estate values may adversely impact our loans that are secured by real estate.

        A significant portion of our loan portfolio consists of residential and commercial mortgages secured by real estate. These properties are concentrated in eastern Pennsylvania. Real estate values and real estate markets generally are affected by, among other things, changes in national, regional or local economic conditions, fluctuations in interest rates and the availability of loans to potential purchasers, changes in the tax laws and other governmental statutes, regulations and policies, and acts of nature. If real estate prices decline, particularly in eastern Pennsylvania, the value of the real estate collateral securing the Corporation's loans could be reduced. This reduction in the value of the collateral would increase the number of non-performing loans and could have a material negative impact on our financial performance.

Common Stock

        You do not have control or authority to direct the price or time at which Common Stock is purchased or sold for Plan Accounts. Therefore, you bear the market risk associated with fluctuations in the price of Common Stock. The Plan Administrator will allocate shares purchased to 4 decimal places; thus, there will likely always be a partial share in your Plan Account. This practice allows maximum investment of your dividends.

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        The Plan does not represent a change in the Corporation's dividend policy, which will continue to depend upon earnings, financial and regulatory requirements and other factors, and which will be determined by the Corporation's Board of Directors from time to time. Shareholders who do not wish to participate in this Plan will continue to receive cash dividends when and as declared. The Corporation cannot provide any assurance whether, or at what rate, the Corporation will continue to pay dividends.

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THE CORPORATION

        The Corporation, a Pennsylvania business corporation, is a bank holding company registered with and supervised by the Board of Governors of the Federal Reserve System. The Corporation was formed in 1991, as the holding company for Mid Penn Bank (the "Bank"), the Registrant's subsidiary Pennsylvania chartered commercial bank. As used herein, the "Corporation" refers to Mid Penn Bancorp, Inc. and its subsidiaries.

        The Bank is a full-service commercial bank with trust powers and provides a wide range of banking and financial services to individuals and small to medium-sized businesses. The principal executive offices of the Corporation are located at 349 Union Street, Millersburg, Pennsylvania 17061.

AMENDMENT TO THE PLAN

        The Corporation's Board of Directors amended the Plan on September 28, 2005, to provide for registration of 300,000 shares of Common Stock issuable under the Plan. The amendment is effective after the filing of this Registration Statement.

EXPLANATION OF THE
AMENDED AND RESTATED DIVIDEND REINVESTMENT PLAN

        The following, in a question and answer format, constitutes a summary description of the Mid Penn Bancorp, Inc. Amended and Restated Dividend Reinvestment Plan (the "Plan") a complete copy of which Plan document is filed as Exhibit 99.1 to the Registration Statement of which this Prospectus forms a part. Those holders of the Corporation's Common Stock who do not participate in the Plan will continue to receive cash dividends by check or advance of credit to their account, if and when declared.

1.

What is the purpose of the Plan?

        The Plan provides participating record holders ("Participants") of the Corporation's Common Stock with a convenient method of investing cash dividends payable upon their Common Stock and of making voluntary cash payments to purchase additional shares of Common Stock. To the extent that the additional shares are purchased directly from the Corporation under the Plan, the Corporation will receive additional funds for its general corporate purposes. (See "USE OF PROCEEDS".) Each Participant should recognize that neither the Corporation nor the Plan Administrator (See No. 3 below) can provide any assurance that shares purchased under the Plan will, at any particular time, be worth more or less than their purchase price.

2.

What are the advantages of the Plan?

•

Participants have cash dividends on all of the shares of Common Stock credited to their Plan Account and automatically reinvested in additional shares of Common Stock, purchased without payment of any service charges or brokerage commissions. The Plan also provides shareholders with the opportunity to make additional voluntary cash payments, within specified limits, to purchase additional shares of Common Stock.



•

Participants will obtain full investment use of funds, because the Plan provides for fractional shares as well as whole shares to be credited to the Participants' accounts. Fractional shares earn dividends just like whole shares when held in the Plan Account. (See No. 11 below.)



•

Participants may avoid cumbersome safekeeping and record keeping costs through the free custodial and reporting services furnished by the Plan. Shares are held in "Book Entry" form and regular statements of account are provided by the Plan Administrator. (See No. 17 below.)



•

Participants benefit because the Corporation pays all of the administrative costs of the Plan. (See No. 15 below.)

3.

Who administers the Plan for Participants?

        Registrar and Transfer Company ("R&T") administers the Plan, as "Plan Administrator". In such capacity, the Plan Administrator sends periodic statements of account to Participants and performs other administrative duties relating to the Plan. Shares purchased for a Participant under the Plan are held by the Plan Administrator and registered in its name. (See No. 17 below.)

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        Any notices, questions or other communications relating to the Plan should include the Participant's account number and tax identification number and should be addressed to:

Registrar and Transfer Company
Attn: Dividend Reinvestment Plan Department
P.O. Box 664
Cranford, NJ 07016

        Participants who have questions regarding the Plan also may contact the Plan Administrator at 1-800-368-5948.

Participation

4.

Who is eligible to participate in the Plan?

        Generally, record holders of Common Stock of the Corporation are eligible to participate in the Plan. However, the Corporation may refuse to offer the Plan to various shareholders of the Corporation as follows:

        1)    those who are residents of a state that may require registration, qualification or exemption of the Common Stock to be issued under the Plan, or registration or qualification of the Corporation or any of its officers or employees as a broker, dealer, salesman or agent where the Plan Administrator determines, in its discretion, that the number of shareholders or number of shares held does not justify the expense of registration, fees, etc. in said state(s);

        2)    those whose shares are registered in the name of a nominee, such as a brokerage firm or securities depository, unless such shares are first transferred into the record name of the beneficial owner; and

        3)    those shareholders who beneficially own five percent (5%) or more of the Corporation's outstanding Common Stock, as determined by the Plan Administrator, in its sole discretion.

        Subject to the limitations in the paragraph immediately above and without limiting the generality of this statement, Participants in the Plan may make voluntary cash payments of not less than One Hundred Dollars ($100.00) or more than Ten Thousand Dollars ($10,000) per quarter. (See No. 13 below.)

5.

How does an eligible shareholder become a Participant in the Plan?

        An eligible shareholder may join the Plan at any time by completing and signing the authorization form included with the Prospectus (the "Authorization Form") and returning it to the Plan Administrator. Additional Authorization Forms may be obtained, at any time, from the Plan Administrator. A properly completed Authorization Form must be received before a dividend record date in order for the dividends payable to shareholders of record on that date to be reinvested in the Corporation's Common Stock under the Plan. If an Authorization Form is received from a shareholder after the record date established for a particular dividend, the reinvestment of dividends may begin with the next dividend, provided the shareholder is still a shareholder of record on the record date with respect to the next dividend.

        Historically, dividends declared on the Common Stock have been declared and paid on a quarterly basis. The Corporation's Board of Directors reserves the right to change dividend record and payment dates, if and when dividends are declared.

6.

Does a shareholder have to authorize dividend reinvestment on all shares of Common Stock to participate in the Plan?

        No. All holders of record of the Corporation's Common Stock are eligible to participate in the Plan, except as discussed in No. 4 above. To participate in the Plan record holders of Common Stock may participate with respect to any or all shares of Common Stock that they hold, as long as they participate with respect to at least one share of Common Stock and arrange to have the dividends on all such share(s) reinvested under the Plan by completing the Authorization Form and sending the form to the Plan Administrator.

Purchases

7.

How are shares of Common Stock acquired under the Plan?

        Cash dividends payable on the Corporation's Common Stock held by persons participating in the Plan will be paid to the Plan Administrator. The dividends paid to the Plan Administrator will not include any applicable taxes withheld by the Corporation. The Plan Administrator will pool these cash dividends together with all voluntary cash payments received and, with respect to shares to be

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purchased on the open market, will transfer them to an independent purchasing agent (the "Purchasing Agent"), who will be a broker-dealer registered under the Securities Exchange Act of 1934, as amended. Aside from transferring funds to the Purchasing Agent, neither the Corporation nor the Plan Administrator shall have any influence on the manner, methods or timing of shares acquired in open market transactions. The Purchasing Agent will use the funds to purchase shares of the Corporation's Common Stock on the open market for the Plan Accounts of the Participants. Alternatively, the Plan Administrator will, if so directed by the Corporation, acquire shares directly from the Corporation. A combination of the foregoing methods may be used, as the Plan Administrator directs. Shares purchased from the Corporation will be authorized but unissued shares of Common Stock. In any event, each Participant's account will be credited with a pro rata share of such purchased shares.

8.

When will shares of Common Stock be purchased under the Plan?

        Cash dividends will be used to purchase Common Stock as soon as reasonably possible after the applicable dividend payment date, but not more than thirty (30) days after such date.

        Voluntary cash payments will be accepted for investment, and will be invested, only in connection with a dividend payment date. Voluntary cash contributions may vary from one dividend date to another. Because Participants will not be credited with interest on their voluntary cash payments prior to investment and because the Plan Administrator is prohibited from holding such voluntary cash payments for extended periods of time prior to investing them, participants are strongly encouraged to submit their voluntary cash payments as near as possible to the applicable dividend payment date. For investment of a voluntary cash payment to occur on a particular investment date, the voluntary cash payment must be received by the Plan Administrator within thirty (30) days prior to the corresponding dividend payment date, allowing adequate time for the checks or other drafts to clear prior to the corresponding dividend payment date. Voluntary cash contributions will not be deemed to have been made by a participant or received by the Plan Administrator until the funds so contributed are actually collected. Interest will not be paid on cash contributions. Payments received more than thirty (30) days prior to a dividend payment will be returned.

        Purchases of Common Stock in the open market may occur over one or more trading days.

9.

At what price will shares of Common Stock be purchased under the Plan?

        For purchases of shares of Common Stock in the open market the purchase price will be the fair market value of the Common Stock as of the Investment Date. The Investment Date is the day during a month on which a dividend is payable, and in any other month, the 15th day of such month, or in any case, if such day is not a business day on which securities are traded, then the next following business day on which securities are traded. The purchase price of the Common Stock purchased under the Plan in the open market will be the Participant's pro rata share of the actual costs (excluding brokerage commissions, if any) incurred by the Plan Administrator for such purchases. For shares of Common Stock purchased from the Corporation, the purchase price will be the fair market value of the Common Stock, as of the applicable Investment Date. In the event of purchases of Common Stock from the Corporation and in the open market, the purchase price per share of Common Stock to be charged to each Participant will be based on the weighted averages of the prices of all shares purchased. Each Participant's account will be credited with the number of whole and fractional shares calculated to four (4) decimal places, equal to the amount to be invested for the Participant divided by the applicable purchase price.

        If the Common Stock is listed on an established organized stock exchange, the fair market value will be the closing price per share for the Common Stock on such stock exchange on the applicable date or, if no sale of the Common Stock occurred on such stock exchange on that date, the closing price per share for the Common Stock on such exchange on the next day on which a sale of Common Stock occurred. If the Common Stock is not listed on an established exchange but is listed in the National Market System of the National Association of Securities Dealers Automated Quotation System ("NASDAQ/NMS"), the fair market value will be the average of the highest and lowest trading prices per share for the Common Stock on the applicable date or, if no trade of the Common Stock occurred in said National Market System on that date, the average of the highest and lowest trading prices per share for the Common Stock on the next day on which the Common Stock was traded in said National Market System. If the Common Stock is not listed on an established stock exchange or in the NASDAQ/NMS but is quoted on a system maintained by the National Association of Securities Dealers, Inc. ("NASD"), the fair market value will be the average of the closing dealer bid and asked prices per share for the Common Stock quoted on such system on the applicable date or, if no such bid and asked prices are quoted on such system on that date, the average of the closing dealer bid and asked prices for the Common Stock quoted on such system on the most recent previous day on which such prices were so quoted. If the Common Stock is not listed on an established stock exchange or in the NASDAQ/NMS, or quoted in a system maintained by the NASD, the fair market value will be the

6

average of the lowest bid and highest asked prices per share for the Common Stock quoted on the applicable date by one or more brokerage firms selected by the Plan Administrator which then make a market in the Common Stock or, in the absence of any such bid and asked prices quoted on such date, the quoted per share price (or average of the quoted per share prices, if several), whether bid or asked, for the Common Stock reported on that date or, failing this, on the most recent previous date on which such quotes are available.

10.

How many shares of Common Stock will be purchased for Participants?

        The number of shares purchased for each Participant will depend on the amount of dividends to be reinvested in a Participant's account, the amount of any voluntary cash payments and the applicable purchase price of the Common Stock (See No. 9 above). Each Participant's account will be credited with that number of shares, including any fractional interest computed to four (4) decimal places, equal to the total amount to be invested divided by the applicable purchase price as described in No. 9 above.

11.

Will cash dividends on shares held in a Participant's account be used to purchase additional shares under the Plan?

        Yes. If and when the Corporation declares cash dividends to the record holders of shares of its Common Stock, the Plan Administrator will credit each Participant's account with such dividends, and all such dividends will be automatically reinvested in additional shares of Common Stock, thereby compounding each Participant's investment. Fractional shares held under the Plan for a Participant's account will receive dividends in the same way as a whole share, but in proportion to the size of the fractional share.

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Voluntary Cash Payments

12.   Who is eligible to make voluntary cash payments?

        All record holders of Common Stock who elect to have dividends reinvested and who are eligible to participate, in accordance with the provisions of the Plan, may also elect to make voluntary cash payments.

13.   What are the limitations on voluntary cash payments?

        Participants are strongly encouraged to submit any voluntary cash payments as near as possible to the applicable dividend payment date (See No. 8 above). Voluntary cash payments received too early or too late will be returned to participants.

        Voluntary cash payments may not be less than One Hundred Dollars ($100.00) or more than Ten Thousand Dollars ($10,000) per quarter. The Corporation reserves the right, in its sole discretion, to determine whether voluntary cash payments are made on behalf of an eligible participant.

14.   How does the voluntary cash payment option work?

        A voluntary cash payment may be made by enclosing a personal check with the executed Authorization Form (for new participants) or by forwarding a personal check to the Plan Administrator with a payment form that will accompany each statement of account. Personal checks should be made payable to "Registrar and Transfer Company" and should include the Participant's account number and taxpayer identification number. Additional payment forms may be obtained from the Plan Administrator. In addition, Participants may arrange for automatic withdrawals from their checking or savings account at the Bank as a method to provide optional cash payments under the Plan. This will allow shareholders of the Corporation to authorize the Bank to withdraw funds automatically at the appropriate time, eliminating the necessity of mailing quarterly cash contributions within the specified time frames. The automatic withdrawal feature may be used on an ongoing basis or for periodic contributions. Participants who wish to use this feature must complete an authorization form available upon request from the Plan Administrator. The Participant's account will be debited on the 20 ^th day of the month in which the dividend is payable.

        Any voluntary cash payment received by the Plan Administrator within the period, described in No. 8 and No. 13 above, will be applied to the purchase of shares of Common Stock on the following investment date at a price determined in accordance with the provisions of the Plan. No interest will be paid on voluntary cash payments held by the Plan Administrator prior to the respective investment date.

Costs

15.   Are there any expenses to Participants in connection with purchases under the Plan?

        No. Participants are not obligated to pay any brokerage commissions or other charges with respect to purchases of Common Stock under the Plan.

        A Participant who requests that the Plan Administrator sell shares of Common Stock held in the Participant's account in the Plan incurs a $15.00 service fee and is required to pay brokerage fees, if any, incurred in connection with the sale. If a Participant pays the fee in advance when notice of sale is made, then the fee will not be deducted from the proceeds of the sale (See No. 19 and No. 21 below). All other costs of administration of the Plan are paid by the Corporation.

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Reports to Participants

16.   What kind of reports are sent to Participants in the Plan?

        The Plan Administrator maintains a separate account for each Participant. Each Participant in the Plan receives a statement of account subsequent to each dividend payment date describing cash dividends, the number of shares purchased, the amount of voluntary cash payments made by the Participant, the price per share and total shares accumulated under the Plan. These statements provide a continuing record of the dates and costs of purchases on a quarterly basis and should be retained for income tax purposes. In addition, Participants receive the Corporation's annual and quarterly reports to shareholders, notices of shareholder meetings, proxy statements, and Internal Revenue Service information for reporting dividends paid and commission expenses paid on their behalf.

Certificates for Shares

17.   Are certificates to be issued for shares of Common Stock purchased under the Plan?

        Generally not. The custodial, or "Book Entry" method of holding shares is a safekeeping feature that protects against loss, theft, or destruction of stock certificates. It is also a more economical way for the Plan Administrator to administer the Plan. Certificates for shares purchased for a Participant's account under the Plan will not be issued unless the Participant:

(i)

specifically requests in writing that such certificates be issued;



(ii)

withdraws shares from his or her Plan Account and requests that such shares be sold on his or her behalf; or



(iii)

terminates participation in the Plan and does not request such shares to be sold on his or her behalf. A $10.00 service fee is payable by Participants upon withdrawal or termination from the Plan. If the fee is not paid in advance when the withdrawal or termination is requested, the fee will be deducted from the Participant's account.

Withdrawal of Shares in Plan Accounts

18.   How may a Participant withdraw shares purchased under the Plan?

        A Participant may withdraw from participation in the Plan any or all of the whole shares of Common Stock credited to his or her account by submitting written notification to the Plan Administrator at the address shown in No. 3 above. Whole shares of Common Stock withdrawn from the Plan will be issued through a certificate in the name of the Participant and dividends will no longer be reinvested. Any notice of withdrawal received from a Participant less than one business day before a dividend record date will not be effective until the Participant's dividends paid on that date have been reinvested and the shares credited to the Participant's account. Any fractional interest withdrawn will be liquidated by the Plan Administrator on the basis of the then current fair market value of the Common Stock and a check issued for the proceeds thereof. In no case will certificates representing a fractional interest be issued.

19.   May a Participant elect to have the withdrawn shares sold?

        Yes. Participants may request the Plan Administrator to sell the shares withdrawn from the Plan. The request to sell received from a Participant less than one business day before a dividend record date will not be effective until the Participant's dividends paid on that date have been reinvested and the shares credited to the Participant's account. Participants should specify in their written notification of withdrawal if the Plan Administrator is to cause the sale of the withdrawn shares.

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        The Plan Administrator will direct the Purchasing Agent to execute a sale order providing for the sale of such shares, within thirty (30) days of receipt of the notice, and to deliver to the Participant a check for the proceeds of the sale, less: any brokerage commissions; a $15.00 service fee; applicable withholding taxes; and transfer taxes (if any) incurred in connection with the sale. A request for shares to be sold must be signed by all persons in whose names the account appears.

        Any fractional interest withdrawn will be liquidated by the Plan Administrator on the basis of the then current market value of the Common Stock and a check issued for the proceeds thereof. In no case will certificates representing a fractional interest be issued.

        Participants who withdraw all of the whole and fractional shares from their accounts will be treated as having terminated participation in the Plan and will incur a $15.00 service fee to execute a sale order. (See No. 21 below.)

Discontinuation of Dividend Reinvestment

20.   How does a Participant discontinue participation under the Plan?

        Participants may terminate their participation in the Plan at any time by sending written notice to the Plan Administrator. When a Participant terminates his or her participation in the Plan, the Plan Administrator will deliver to the Participant a certificate for whole shares credited to the Participant's account under the Plan, and a check representing: a) uninvested dividends, if any, held by the Plan Administrator for the Participant under the Plan, and; b) the value of any fractional share based on the then current fair market value per share of the Corporation's Common Stock. Any notice of termination received less than one business day prior to a dividend record date will not be effective until dividends paid for such record date have been reinvested and the shares credited to the Participant's account. There is a $10.00 service fee to terminate participation in the Plan.

21.   May a Participant request shares to be sold when terminating participation?

        Yes. The request should be in writing for all of the whole shares to be sold. Such a request must be signed by each person in whose name the Plan Account appears. On receipt of the request, the Plan Administrator will direct the Purchasing Agent to proceed in the same manner as set forth in No. 19 above. A check will be issued in lieu of the issuance of any fractional share based on the then current fair market value per share of the Corporation's Common Stock. Any Participant who elects to terminate his or her participation in the Plan and directs the Plan Administrator to sell the shares held in his or her account will incur a $15.00 service fee.

Federal Income Tax Information

22.   What are the federal income tax consequences of participation in the Plan?

        For federal income tax purposes, a Participant in the Plan will be treated as having received, on the dividend payment date, the full amount of dividends allocable to such Participant, regardless of whether such dividends are actually paid in cash, withheld for the payment of taxes, or invested in additional shares of Common Stock pursuant to the Plan. Additionally, the Participant will be deemed to have received taxable income in the amount of commissions and other brokerage expenses paid in purchasing shares on the Participant's behalf. The per share tax basis of shares acquired for a Participant under the Plan will be the price per share reported on the periodic statement of account supplied to each Participant after each applicable Investment Date, adjusted to include the amount of commissions and other brokerage expenses paid on behalf of the Participant, as reported in the Internal Revenue Service information referred to in No. 16 above.

        The holding period for shares acquired pursuant to the Plan will begin on the day after the date the shares are acquired for a Participant's account. When a Participant is subject to federal income tax

10

withholding on dividends, and when foreign Participants' taxable income under the Plan is subject to federal income tax withholding, dividends will be reinvested net of the amount of tax withheld under applicable law.

        The Corporation believes that Participants will not realize any taxable income upon receipt of certificates for whole shares credited to their account, either upon the withdrawal of shares from the Plan or upon termination of participation in the Plan. A Participant who sells or exchanges shares previously received from the Plan, or who directs the Plan Administrator to sell his or her Plan shares, may, however, recognize gain or loss. A Participant will also likely be required to recognize gain or loss upon the receipt of a cash payment for a fractional share credited to the Participant's account upon withdrawal of shares from the Plan. The amount of gain or loss in either case will be the difference between the amount the Participant receives for the Plan shares or fractional share and the Participant's tax basis in such shares or fractional share.

        Participants who purchase Common Stock under the Plan with voluntary cash payments should not be required to recognize income in connection with such purchases. The tax basis of shares purchased under these circumstances will be equal to the purchase price as adjusted for the amount of commission expenses paid on behalf of the Participants. The holding period for such shares will commence on the day after the shares are acquired.

        Dividends reinvested under the Plan by corporate shareholders may be eligible for the dividends-received deduction.

        The foregoing summary is based upon an interpretation of current federal income tax laws, and assumes that dividends paid by the Corporation will be from its earnings and profits. Participants should consult their own tax advisors to determine particular tax consequences, including state tax consequences, which may result from participation in the Plan, and any subsequent disposal of shares acquired pursuant to the Plan.

Other Information

23.   What happens if the Corporation declares a stock dividend or a stock split?

        The Common Stock in a Participant's account will be adjusted to give effect to the stock dividend or stock split. In such event, the number of shares available for issuance under the Plan shall likewise be adjusted.

24.   How will the shares credited to a Participant's account be voted at a meeting of shareholders?

        Participants will receive a proxy which will enable them to vote whole shares and fractional interests registered in their name and will enable them to direct the Plan Administrator how to vote whole shares and fractional interests credited to their Plan Account. Shares held by the Plan Administrator for the account of a Participant who does not properly return a proxy will not be voted. Participants will vote shares registered in their own names directly, or by proxy, as they have in the past.

25.   What are the responsibilities and liabilities of the Corporation and the Plan Administrator?

        The Corporation and the Plan Administrator shall not be liable for any act taken in good faith or for any good faith omission to act, including without limitation, any claims of liability: (a) arising out of failure to terminate a Participant's account upon his or her death; (b) with respect to the prices at which shares of the Corporation's Common Stock are purchased or sold, the times when or the manner in which such purchases or sales are made, the decision whether to purchase such shares of Common Stock on the open market or from the Corporation, fluctuations in the market value of the Common Stock; and (c) any matters relating to the operation or management of the Plan.

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        All transactions in connection with the Plan will be governed by the laws of the Commonwealth of Pennsylvania.

26.   May the Plan be modified or discontinued?

        Yes. The Corporation, in its discretion, may modify, suspend, or terminate the Plan and will endeavor to notify Participants of any such suspension, termination, or modification. The Corporation may terminate, for whatever reason, at any time, as it may determine, in its sole discretion, a Participant's participation in the Plan, after mailing a notice of intention to terminate to the Participant at the address as it appears on the Plan Administrator's records.

27.   May Participants pledge shares held in their account under the Plan?

        No. Shares credited to a Participant's account under the Plan may not be pledged or assigned, nor may any rights or interests under the Plan be transferred, pledged or assigned, and any purported pledge, assignment or transfer shall be void. Participants who wish to pledge or assign their shares held under the Plan must withdraw those shares from the Plan.