Exhibit 2.1
AGREEMENT AND PLAN
OF MERGER
between
THE FIRST JERMYN CORP.
and
UPPER VALLEY BANCORP, INC.
October 15, 1997
AGREEMENT
TABLE OF CONTENTS
Page
BACKGROUND................................................... 1
AGREEMENT.................................................... 1
ARTICLE I
THE MERGERS
Section 1.01 Definitions.................................... 2
Section 1.02 The Merger..................................... 6
Section 1.03 The Bank Merger................................ 12
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF UPPER VALLEY
Section 2.01 Organization................................... 13
Section 2.02 Capitalization................................. 14
Section 2.03 Authority; No Violation........................ 15
Section 2.04 Consents....................................... 16
Section 2.05 Financial Statements........................... 16
Section 2.06 Taxes.......................................... 17
Section 2.07 No Material Adverse Effect..................... 18
Section 2.08 Contracts...................................... 18
Section 2.09 Ownership of Property; Insurance Coverage...... 19
Section 2.10 Legal Proceedings.............................. 20
Section 2.11 Compliance With Applicable Law................. 20
Section 2.12 ERISA.......................................... 21
Section 2.13 Brokers, Finders and Financial Advisors........ 23
Section 2.14 Environmental Matters.......................... 23
Section 2.15 Loan Portfolio................................. 23
Section 2.16 Information to be Supplied..................... 24
Section 2.17 Related Party Transactions..................... 24
Section 2.18 Schedule of Termination Benefits............... 24
Section 2.19 Loans.......................................... 25
Section 2.20 Quality of Representations..................... 25
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FIRST JERMYN
Section 3.01 Organization................................... 25
Section 3.02 Capital Structure.............................. 26
Section 3.03 Authority; No Violation........................ 27
Section 3.04 Consents....................................... 28
Section 3.05 Financial Statements........................... 29
Section 3.06 Taxes.......................................... 29
Section 3.07 No Material Adverse Effect..................... 30
Section 3.08 Contracts...................................... 30
Section 3.09 Ownership of Property; Insurance Coverage...... 31
Section 3.10 Legal Proceedings.............................. 32
Section 3.11 Compliance With Applicable Law................. 33
Section 3.12 ERISA.......................................... 33
Section 3.13 Securities Documents........................... 35
Section 3.14 Brokers and Finders............................ 35
Section 3.15 Environmental Matters.......................... 35
Section 3.16 Loan Portfolio................................. 36
Section 3.17 Information to be Supplied..................... 36
Section 3.18 Related Party Transactions..................... 36
Section 3.19 Schedule of Termination Benefits............... 36
Section 3.20 Loans.......................................... 37
Section 3.21 Quality of Representations..................... 37
ARTICLE IV
COVENANTS OF THE PARTIES
Section 4.01 Conduct of Business............................ 37
Section 4.02 Access; Confidentiality........................ 44
Section 4.03 Regulatory Matters and Consents................ 45
Section 4.04 Taking of Necessary Action..................... 46
Section 4.05 Certain Agreements............................. 47
Section 4.06 No Other Bids and Related Matters.............. 48
Section 4.07 Duty to Advise; Duty to Update Upper Valley's
Disclosure Schedule.......................................... 49
Section 4.08 Board and Committee Minutes.................... 49
Section 4.09 Additional Undertakings by First Jermyn and Upper
Valley....................................................... 49
Section 4.10 Employee Benefits and Termination Benefits..... 52
Section 4.11 Duty to Advise; Duty to Update First Jermyn's
Disclosure Schedule.......................................... 52
ARTICLE V
CONDITIONS
Section 5.01 Conditions to Upper Valley's Obligations under this
Agreement.................................................... 53
Section 5.02 Conditions to First Jermyn's Obligations under this
Agreement.................................................... 55
ARTICLE VI
TERMINATION, WAIVER AND AMENDMENT
Section 6.01 Termination.................................... 57
Section 6.02 Effect of Termination.......................... 58
Section 6.03 Termination Fees............................... 58
ARTICLE VII
MISCELLANEOUS
Section 7.01 Expenses....................................... 60
Section 7.02 Non-Survival of Representations and Warranties. 60
Section 7.03 Amendment, Extension and Waiver................ 60
Section 7.04 Entire Agreement............................... 61
Section 7.05 No Assignment.................................. 61
Section 7.06 Notices........................................ 61
Section 7.07 Captions....................................... 62
Section 7.08 Counterparts................................... 62
Section 7.09 Severability................................... 62
Section 7.10 Governing Law.................................. 62
Exhibit 1 Upper Valley Affiliate Agreement
Exhibit 2 First Jermyn Affiliate Agreement
Exhibit 3 Bank Plan of Merger
Exhibit 4 Forms of First Jermyn Restated Articles of
Incorporation and Restated Bylaws
Exhibit 5 Form of Benefits Acknowledgement
Exhibit 6 Form of Opinion of First Jermyn's Counsel
Exhibit 7 Form of Tax Opinion of First Jermyn's Counsel
Exhibit 8 Form of Opinion of Upper Valley's Counsel
AGREEMENT
THIS AGREEMENT AND PLAN OF MERGER, dated as of
October 15, 1997, is made by and between THE FIRST JERMYN CORP.
("First Jermyn"), a Pennsylvania corporation, having its
principal place of business in Jermyn, Pennsylvania, and UPPER
VALLEY BANCORP, INC. ("Upper Valley"), a Pennsylvania
corporation, having its principal place of business in Olyphant,
Pennsylvania.
BACKGROUND
1. First Jermyn and Upper Valley desire for Upper
Valley to merge with and into First Jermyn, with First Jermyn
surviving such merger, in accordance with the applicable laws of
the Commonwealth of Pennsylvania, and in accordance with the plan
of merger set forth herein.
2. At or prior to the execution and delivery of this
Agreement, certain directors, officers, and affiliates of each of
Upper Valley and First Jermyn have executed in favor of the
other, a Letter Agreement dated October 15, 1997, in the forms
attached hereto as Exhibits 1 and 2, respectively.
3. First Jermyn desires to merge NBO National Bank, a
national banking association and a wholly-owned subsidiary of
Upper Valley ("NBO"), into and with The First National Bank of
Jermyn, ("FNBJ"), a national banking association and a
wholly-owned subsidiary of First Jermyn ("FNBJ"), with FNBJ
surviving such merger in accordance with the Bank Plan of Merger
in the form attached hereto as Exhibit 3.
4. First Jermyn and Upper Valley desire to provide
the terms and conditions governing the transactions contemplated
herein, including specifically without limitation, the provisions
of the forms of Articles of Incorporation and Bylaws attached
hereto as Exhibit 4 which, among other things, require
supermajority voting requirements of shareholders and directors
to effect a change of control of the resulting corporation so
that the Board of Directors and management of the resulting
corporation can realize the potential for cost savings and
revenue enhancements without differences relating to strategic
direction.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and of
the mutual covenants, agreements, representations and warranties
herein contained, the parties hereto, intending to be legally
bound, do hereby agree as follows:
ARTICLE I
THE MERGERS
Section 1.01 Definitions. As used in this Agreement,
the following terms shall have the indicated meanings (such
meanings to be equally applicable to both the singular and plural
forms of the terms defined):
Affiliate means, with respect to any Person, any
Person who directly, or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under
common control with, such Person and, without limiting the
generality of the foregoing, includes any executive officer
or director of such Person and any Affiliate of such
executive officer or director.
Agreement means this agreement, and any amendment
or supplement hereto, which constitutes a "plan of merger"
between First Jermyn and Upper Valley.
Applications means the applications for regulatory
approval which are required by the transactions contemplated
hereby.
Articles of Merger means the articles of merger to
be executed by First Jermyn and Upper Valley and to be filed
in the PDS, in accordance with the laws of the Commonwealth
of Pennsylvania.
Bank Merger means the merger of NBO with and into
FNBJ, with FNBJ surviving such merger, contemplated by
Section 1.03 of this Agreement.
Bank Plan of Merger has the meaning given to that
term in Section 1.03 of this Agreement.
BCL means the Pennsylvania Business Corporation
Law of 1988, as amended.
BHC Act means the Bank Holding Company Act of
1956, as amended.
Closing Date means the date specified by the
parties within five (5) business days after satisfaction or
waiver (subject to applicable law) of the conditions
(excluding conditions that, by their terms cannot be
satisfied until the Closing Date) set forth in Article V, or
such other date as First Jermyn and Upper Valley shall
agree.
Dissenting Upper Valley Shares has the meaning
given to that term in Section 1.02(e)(iii).
Effective Date means the date upon which the
Articles of Merger shall be filed in the PDS, and shall be
the same as the Closing Date.
Employee Benefit Plans has the meaning given to
that term in Section 2.12 of this Agreement.
Environmental Law means any federal, state, local
or foreign law, statute, ordinance, rule, regulation, code,
license, permit, authorization, approval, consent, order,
judgment, decree, injunction or agreement with any
Regulatory Authority relating to (i) the protection,
preservation or restoration of the environment (including,
without limitation, air, water vapor, surface water,
groundwater, drinking water supply, surface soil, subsurface
soil, plant and animal life or any other natural resource),
and/or (ii) the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling,
production, release or disposal of any substance presently
listed, defined, designated or classified as hazardous,
toxic, radioactive or dangerous, or otherwise regulated,
whether by type or by quantity, including any material
containing any such substance as a component.
ERISA means the Employee Retirement Income
Security Act of 1974, as amended.
Exchange Act means the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated
from time to time thereunder.
Exchange Ratio has the meaning given to that term
in Section 1.02(e)(ii) of this Agreement.
FDIA means the Federal Deposit Insurance Act, as
amended.
FDIC means the Federal Deposit Insurance
Corporation.
First Jermyn Benefits Schedule has the meaning
given to that term in Section 3.19 of this Agreement.
First Jermyn Common Stock has the meaning given to
that term in Section 3.02(a) of this Agreement.
First Jermyn Disclosure Schedule means a
disclosure schedule delivered by First Jermyn to Upper
Valley pursuant to Article III of this Agreement.
First Jermyn Financials means (i) the audited
consolidated financial statements of First Jermyn as of
December 31, 1996 and for the three years ended December 31,
1996, including the notes thereto and (ii) the unaudited
interim consolidated financial statements of First Jermyn as
of each calendar quarter thereafter included in Securities
Documents filed by First Jermyn.
First Jermyn Market Price means, as of any date,
the average of the closing sale prices of a share of First
Jermyn Common Stock, as reported by an independent source in
the over-the-counter market, for the twenty (20) consecutive
trading days commencing twenty-one (21) trading days prior
to the date of determination.
First Jermyn Regulatory Reports means the Annual
Reports of First Jermyn on Form FRY-6 and any Current Report
of First Jermyn on Form FRY-6A filed with the FRB from
December 31, 1995 through the Closing Date and the Reports
of Condition and Income of FNBJ and accompanying schedules
for each calendar quarter, beginning with the quarter ended
December 31, 1995 through the Closing Date.
First Jermyn Subsidiaries means any corporation,
50% or more of the capital stock of which is owned, either
directly or indirectly, by First Jermyn, except any
corporation the stock of which is held in the ordinary
course of the lending activities of a bank.
FRB means the Federal Reserve Board.
GAAP means generally accepted accounting
principles as in effect at the relevant date.
IRC means the Internal Revenue Code of 1986, as
amended.
IRS means the Internal Revenue Service.
Material Adverse Effect shall mean, with respect
to First Jermyn or Upper Valley, any adverse effect on its
assets, financial condition or operations which is material
to its assets, financial condition or results of operations
on a consolidated basis, except for any material adverse
effect caused by (i) any change in the value of the
respective investment portfolios of First Jermyn or Upper
Valley resulting from a change in interest rates generally
or (ii) any change occurring after the date hereof in any
federal or state law, rule or regulation or in GAAP, which
change affects banking institutions generally, including any
changes affecting the Bank Insurance Fund or the Savings
Association Insurance Fund.
Merger means the merger of Upper Valley with and
into First Jermyn, with First Jermyn surviving such merger,
contemplated by this Agreement.
NBA means the National Bank Act.
OCC means the Office of the Comptroller of the
Currency.
PDS means the Department of State of the
Commonwealth of Pennsylvania.
Person means any individual, corporation,
partnership, joint venture, association, trust or "group"
(as that term is defined under the Exchange Act).
Prospectus/Proxy Statement means the
prospectus/proxy statement, together with any supplements
thereto, to be transmitted to holders of Upper Valley Common
Stock and First Jermyn Common Stock in connection with the
transactions contemplated by this Agreement.
Registration Statement means the registration
statement on Form S-4, including any pre-effective or
post-effective amendments or supplements thereto, as filed
with the SEC under the Securities Act with respect to the
First Jermyn Common Stock to be issued in connection with
the transactions contemplated by this Agreement.
Regulatory Agreement has the meaning given to that
term in Section 2.11 of this Agreement.
Regulatory Authority means any banking agency or
department of any federal or state government, including
without limitation, the FDIC, the OCC, the FRB, or the
respective staffs thereof.
Rights means warrants, options, rights,
convertible securities and other capital stock equivalents
which obligate an entity to issue its securities.
SEC means the Securities and Exchange Commission.
Securities Act means the Securities Act of 1933,
as amended, and the rules and regulations promulgated from
time to time thereunder.
Securities Documents means all registration
statements, schedules, statements, forms, reports, proxy
material, and other documents required to be filed under the
Securities Laws.
Securities Laws means the Securities Act and the
Exchange Act and the rules and regulations promulgated from
time to time thereunder.
Subsidiary means any corporation or other entity,
50% or more of the capital stock or ownership interests of
which are owned, either directly or indirectly, by another
entity, except any corporation or other entity the capital
stock or ownership interests of which are held in the
ordinary course of the lending activities of a bank.
Transition Period means the period of time
beginning on the Effective Date and ending on December 31,
2004.
Upper Valley Benefits Schedule has the meaning
given to that term in Section 2.18 of this Agreement.
Upper Valley Common Stock means the common stock
of Upper Valley described in Section 2.02(a).
Upper Valley Disclosure Schedule means a
disclosure schedule delivered by Upper Valley to First
Jermyn pursuant to Article II of this Agreement.
Upper Valley Financials means (i) the audited
consolidated financial statements of Upper Valley as of
December 31, 1996 and for the three years ended December 31,
1996, including the notes thereto, (ii) the unaudited
interim consolidated financial statements of Upper Valley as
of and for each calendar quarter thereafter.
Upper Valley Regulatory Reports means the Annual
Reports of Upper Valley on Form FRY-6, any Current Report of
Upper Valley on Form FRY-6A filed with the FRB from
December 31, 1995 through the Closing Date and the Reports
of Condition and Income of NBO and accompanying schedules
for each calendar quarter, beginning with the quarter ended
December 31, 1995 through the Closing Date.
Upper Valley Stock Options has the meaning given
to that term in Section 1.02(f) of this Agreement.
Upper Valley Subsidiaries means any corporation,
50% or more of the capital stock of which is owned, either
directly or indirectly, by Upper Valley, except any
corporation the stock of which is held in the ordinary
course of the lending activities of NBO.
Section 1.02 The Merger.
(a) Closing. The closing will take place at
10:00 a.m. on the Closing Date at the offices of ▇▇▇▇▇▇▇ & ▇▇▇,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇,
unless another time and place are agreed to by the parties
hereto; provided, in any case, that all conditions to closing set
forth in Article V have been satisfied or waived at or prior to
the Closing Date. On the Closing Date, Upper Valley and First
Jermyn shall cause the Articles of Merger to be duly executed and
to be filed in the PDS.
(b) The Merger. Subject to the terms and
conditions of this Agreement, on the Effective Date: Upper
Valley shall merge with and into First Jermyn; the separate
existence of Upper Valley shall cease; First Jermyn shall be the
surviving corporation in the Merger; and all of the property
(real, personal and mixed), rights, powers and duties and
obligations of Upper Valley shall be taken and deemed to be
transferred to and vested in First Jermyn, as the surviving
corporation in the Merger, without further act or deed; all
debts, liabilities and duties of each of Upper Valley and First
Jermyn shall thereafter be the responsibility of First Jermyn as
the surviving corporation; all in accordance with the applicable
laws of the Commonwealth of Pennsylvania.
(c) First Jermyn's Articles of Incorporation and
Bylaws. On and after the Effective Date, the articles of
incorporation and the bylaws of First Jermyn, as the surviving
corporation in the Merger, shall be the articles of incorporation
and bylaws attached hereto as Exhibit 4, until thereafter
altered, amended or repealed.
(d) Board of Directors and Officers of First
Jermyn and FNBJ; Name.
(i) On the Effective Date, the Board of
Directors of First Jermyn, as the surviving corporation in the
Merger, shall consist of (i) those persons holding such office
immediately prior to the Effective Date and (ii) ▇▇▇▇ ▇▇▇▇▇▇ (to
be elected as a Class III director to serve until 1998),
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (to be elected as a Class III director to serve
until 1998), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (to be elected as a Class III
director to serve until 1998), ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (to be elected as
a Class I director to serve until 1999), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (to
be elected as a Class I director to serve until 1999) and ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ (to be elected as a Class I director to serve until
1999), all as further set forth in the form of Restated Articles
of Incorporation of First Jermyn attached hereto as Exhibit 4.
First Jermyn (i) shall cause Messrs. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇
and ▇▇▇▇▇▇▇▇ to be renominated for election to the Board of
Directors of First Jermyn at any annual or special meeting of
shareholders of First Jermyn held during the Transition Period at
which the Class in which such individuals are serving is
considered for re-election and (ii) shall cause Messrs. ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ to be renominated for re-election to the
Board of Directors of First Jermyn at any annual or special
meeting of shareholders of First Jermyn held through December 31,
1999 at which the Class in which such individuals are serving is
considered for re-election. In the event that any of such
individuals are unable or unwilling to serve as a member of the
Board of Directors at any time during their term as such, the
Board of Directors of First Jermyn shall fill the vacancy created
thereby. Upper Valley acknowledges that, prior to the Effective
Date, First Jermyn may add one (1) additional member to the Board
of Directors so that the total number of Directors of First
Jermyn on the Effective Date, including the representatives of
Upper Valley, will be eighteen (18).
(ii) On the Effective Date, the officers of
First Jermyn duly elected and holding office immediately prior to
the Effective Date shall be the officers of First Jermyn, as the
surviving corporation in the Merger, existing on such Effective
Date and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ shall be elected as an Executive Vice
President of First Jermyn effective as of the Effective Date.
(iii) On the effective date of the Bank
Merger, the directors of FNBJ as the surviving institution in the
Bank Merger shall consist of (i) those persons holding such
office immediately prior to the Effective Date and (ii) Messrs.
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇. First Jermyn and FNBJ
agree to cause such individuals to be elected to the Board of
Directors of FNBJ at any annual or special meeting of the sole
shareholder of FNBJ held during the time that such individuals
are serving as directors of First Jermyn.
(iv) On the effective date of the Bank
Merger, the officers of FNBJ duly elected and holding office
immediately prior to such effective date shall be the officers of
FNBJ, as the surviving corporation in the Bank Merger, and
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ shall be elected as an Executive Vice President
of FNBJ effective as of the Effective Date.
(v) On the Effective Date, the name of First
Jermyn shall be changed to such name as may be mutually agreed to
by First Jermyn and Upper Valley.
(e) Conversion of Shares.
(i) First Jermyn Common Stock.
(A) Each share of First Jermyn Common
Stock issued and outstanding immediately prior to the
Effective Date shall, on and after the Effective Date,
continue to be issued and outstanding as an identical share
of First Jermyn Common Stock. Shares of First Jermyn Common
Stock owned by Upper Valley (other than shares held in
trust, managed, custodial or nominee accounts and the like
that in any such case are beneficially owned by third
parties (any such shares, "trust account shares") and shares
acquired in respect of debts previously contracted (any such
shares, "DPC shares")) shall become treasury stock of First
Jermyn.
(B) Each share of First Jermyn Common
Stock issued and held in the treasury of First Jermyn as of
the Effective Date, if any, shall, on and after the
Effective Date, continue to be issued and held in the
treasury of First Jermyn.
(ii) Upper Valley Common Stock.
(A) Subject to the provisions of
Section 1.02(e)(iii) hereof with respect to dissenting
shares, each share of Upper Valley Common Stock issued and
outstanding immediately prior to the Effective Date (other
than shares then owned by First Jermyn, if any) shall, on
the Effective Date, by reason of the Merger and without any
action on the part of the holder thereof, be converted into
and become .6890 shares of First Jermyn Common Stock
(subject to possible adjustment as set forth in
Section 1.02(h), the "Exchange Ratio").
(B) Each share of Upper Valley Common
Stock (other than trust account shares or DPC shares) owned
by First Jermyn or a First Jermyn Subsidiary on the
Effective Date, if any, shall be cancelled.
(C) Each share of Upper Valley Common
Stock issued and held in the treasury of Upper Valley or
owned by Upper Valley or any Upper Valley Subsidiary (other
than trust account shares or DPC shares) as of the Effective
Date, if any, shall be cancelled, and no cash, stock or
other property shall be delivered in exchange therefor.
(D) No fraction of a whole share of
First Jermyn Common Stock and no scrip or certificates
therefor shall be issued in connection with the Merger. Any
former holder of Upper Valley Common Stock who would
otherwise be entitled to receive a fraction of a share of
First Jermyn Common Stock shall receive, in lieu thereof,
cash in an amount equal to such fraction of a share
multiplied by the First Jermyn Market Price determined as of
the Effective Date.
(iii) Dissenting Shareholders of Upper
Valley. If there are holders of Upper Valley Common Stock
who dissent from the Merger and exercise and perfect the
right to obtain valuation of and payment for their shares
("Dissenting Upper Valley Shares") pursuant to Section
1930(a) and Subchapter D of Chapter 15 of the BCL, the
following provisions will govern payments to be made in
respect of Dissenting Upper Valley Shares:
(A) all payments in respect of
Dissenting Upper Valley Shares, if any, will be made
directly by First Jermyn, as the surviving corporation in
the Merger; and
(B) Dissenting Upper Valley Shares, if
any, will be deemed to have been retired and cancelled
immediately prior to the Merger, with the effect that no
conversion thereof will occur pursuant to Section
1.02(e)(ii) hereof.
(f) Stock Options. From and after the Effective
Date, all stock options to purchase shares of Upper Valley Common
Stock ("Upper Valley Stock Options"), which are then outstanding
and unexercised, shall be converted into and become options to
purchase shares of First Jermyn Common Stock, and First Jermyn
shall assume each such Upper Valley Stock Option in accordance
with the terms of the plan and agreement by which it is
evidenced; provided, however, that from and after the Effective
Date (i) each such Upper Valley Stock Option assumed by First
Jermyn may be exercised solely to purchase shares of First Jermyn
Common Stock, (ii) the number of shares of First Jermyn Common
Stock purchasable upon exercise of such Upper Valley Stock Option
shall be equal to the number of shares of Upper Valley Common
Stock that was purchasable under such Upper Valley Stock Option
immediately prior to the Effective Date multiplied by the
Exchange Ratio and rounding up to the nearest whole share, and
(iii) the per share exercise price under each such Upper Valley
Stock Option shall be adjusted by dividing the per share exercise
price of each such Upper Valley Stock Option by the Exchange
Ratio, and rounding up to the nearest cent. The terms of each
Upper Valley Stock Option shall, in accordance with its terms, be
subject to further adjustment as appropriate to reflect any stock
split, stock dividend, recapitalization or other similar
transaction with respect to First Jermyn Common Stock on or
subsequent to the Effective Date. It is intended that the
foregoing assumption shall be effected in a manner which is
consistent with the requirements of Section 424 of the Code, as
to any Upper Valley Stock Option that is an "incentive stock
option" (as defined in Section 422 of the Code).
(g) Surrender and Exchange of Upper Valley Stock
Certificates.
(i) Exchange of Certificates. Each holder
of shares of Upper Valley Common Stock, other than holders
of Dissenting Upper Valley Shares, who surrenders to First
Jermyn (or its agent) the certificate or certificates
representing such shares will be entitled to receive, as
soon as practicable after the Effective Date, in exchange
therefor a certificate or certificates for the number of
whole shares of First Jermyn Common Stock into which such
holder's shares of Upper Valley Common Stock have been
converted pursuant to the Merger, together with a check for
cash in lieu of any fractional share in accordance with
Section 1.02(e)(ii)(D) hereof.
(ii) Rights Evidenced by Certificates. Each
certificate for shares of First Jermyn Common Stock issued
in exchange for certificates for Upper Valley Common Stock
pursuant to Section 1.02(g)(i) hereof will be dated the
Effective Date and be entitled to dividends and all other
rights and privileges pertaining to such shares of stock
from and after the Effective Date. Until surrendered, each
certificate theretofore evidencing shares of Upper Valley
Common Stock will, from and after the Effective Date,
evidence solely the right to receive certificates for shares
of First Jermyn Common Stock pursuant to Section 1.02(g)(i)
hereof and a check for cash in lieu of any fractional share
in accordance with Section 1.02(e)(ii)(D) hereof. If
certificates for shares of Upper Valley Common Stock are
exchanged for First Jermyn Common Stock at a date following
one or more record dates for the payment of dividends or of
any other distribution on the shares of First Jermyn Common
Stock, First Jermyn will pay cash in an amount equal to
dividends theretofore payable on such First Jermyn Common
Stock and pay or deliver any other distribution to which
holders of shares of First Jermyn Common Stock have
theretofore become entitled. No interest will accrue or be
payable in respect of dividends or cash otherwise payable
under this Section 1.02(g) upon surrender of certificates
for shares of Upper Valley Common Stock. Notwithstanding
the foregoing, no party hereto will be liable to any holder
of Upper Valley Common Stock for any amount paid upon advice
of legal counsel and in good faith to a public official or
agency pursuant to any applicable abandoned property,
escheat or similar law. Until such time as certificates for
shares of Upper Valley Common Stock are surrendered by a
Upper Valley shareholder to First Jermyn for exchange, First
Jermyn shall have the right to withhold dividends or any
other distributions on the shares of First Jermyn Common
Stock issuable to such shareholder.
(iii) Exchange Procedures. Each certificate
for shares of Upper Valley Common Stock delivered for
exchange under this Section 1.02(g) must be endorsed in
blank by the registered holder thereof or be accompanied by
a power of attorney to transfer such shares endorsed in
blank by such holder. If more than one certificate is
surrendered at one time and in one transmittal package for
the same shareholder account, the number of whole shares of
First Jermyn Common Stock for which certificates will be
issued pursuant to this Section 1.02(g) will be computed on
the basis of the aggregate number of shares represented by
the certificates so surrendered. If shares of First Jermyn
Common Stock or payments of cash are to be issued or made to
a person other than the one in whose name the surrendered
certificate is registered, the certificate so surrendered
must be properly endorsed in blank, with signature(s)
guaranteed, or otherwise in proper form for transfer, and
the person to whom certificates for shares of First Jermyn
Common Stock is to be issued or to whom cash is to be paid
shall pay any transfer or other taxes required by reason of
such issuance or payment to a person other than the
registered holder of the certificate for shares of Upper
Valley Common Stock which are surrendered. As promptly as
practicable after the Effective Date, First Jermyn shall
send or cause to be sent to each shareholder of record of
Upper Valley Common Stock transmittal materials for use in
exchanging certificates representing Upper Valley Common
Stock for certificates representing First Jermyn Common
Stock into which the former have been converted in the
Merger. Certificates representing shares of First Jermyn
Common Stock and checks for cash in lieu of fractional
shares shall be mailed to former shareholders of Upper
Valley as soon as reasonably possible but in no event later
than twenty (20) business days following the receipt of
certificates representing former shares of Upper Valley
Common Stock duly endorsed or accompanied by the materials
referenced herein and delivered by certified mail, return
receipt requested (but in no event earlier than the second
business day following the Effective Date).
(iv) Closing of Stock Transfer Books;
Cancellation of Upper Valley Certificates. Upon the
Effective Date, the stock transfer books for Upper Valley
Common Stock will be closed and no further transfers of
shares of Upper Valley Common Stock will thereafter be made
or recognized. All certificates for shares of Upper Valley
Common Stock surrendered pursuant to this Section 1.02(g)
will be cancelled by First Jermyn.
(h) Anti-Dilution Provisions. If First Jermyn
shall, at any time before the Effective Date, (A) issue a
dividend in shares of First Jermyn Common Stock, (B) combine the
outstanding shares of First Jermyn Common Stock into a smaller
number of shares, (C) subdivide the outstanding shares of First
Jermyn Common Stock, or (D) reclassify the shares of First Jermyn
Common Stock, then, in any such event, the number of shares of
First Jermyn Common Stock to be delivered to Upper Valley
shareholders who are entitled to receive shares of First Jermyn
Common Stock in exchange for shares of Upper Valley Common Stock
shall be adjusted so that each Upper Valley shareholder shall be
entitled to receive such number of shares of First Jermyn Common
Stock as such shareholder would have been entitled to receive if
the Effective Date had occurred immediately prior to the
happening of such event. (By way of illustration, if First
Jermyn shall declare a stock dividend of 7% payable with respect
to a record date on or prior to the Effective Date, the Exchange
Ratio determined pursuant to Sections 1.02(e)(ii) hereof shall be
adjusted upward by 7%.)
Section 1.03 The Bank Merger. First Jermyn and Upper
Valley shall use their best efforts to cause NBO to merge with
and into FNBJ under the NBA, with FNBJ surviving such merger, as
soon as practicable after the Effective Date. Concurrently with,
or as soon as practicable after, the execution and delivery of
this Agreement, First Jermyn shall cause FNBJ, and Upper Valley
shall cause NBO, to execute and deliver the Bank Plan of Merger
attached hereto as Exhibit 3. In connection with the Bank
Merger, the name of FNBJ shall be changed to such name as may be
mutually agreed to by First Jermyn and Upper Valley.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF UPPER VALLEY
Upper Valley hereby represents and warrants to First
Jermyn that, except as specifically set forth in the Upper Valley
Disclosure Schedule (which Upper Valley Disclosure Schedule
qualifies and represents exceptions to all of the representations
and warranties of Upper Valley contained in this Agreement taken
as a whole and does not relate to particular representations and
warranties) delivered to First Jermyn by Upper Valley on the date
hereof:
Section 2.01 Organization.
(a) Upper Valley is a corporation duly organized,
validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania. Upper Valley is a bank holding
company duly registered under the BHC Act. Upper Valley has the
corporate power and authority to carry on its business and
operations as now being conducted and to own and operate the
properties and assets now owned and being operated by it. Upper
Valley is not qualified or licensed to do business as a foreign
corporation in any other jurisdiction and is not required to be
so qualified or licensed as the result of the ownership or
leasing of property or the conduct of its business except where
the failure to be so qualified or licensed would not have a
Material Adverse Effect.
(b) NBO is a national banking association duly
organized and validly existing under the laws of the United
States of America. NBO has the corporate power and authority to
carry on its business and operations as now being conducted and
to own and operate the properties and assets now owned and being
operated by it. Neither NBO nor any other Upper Valley
Subsidiary is qualified or licensed to do business as a foreign
corporation in any other jurisdiction and neither is required to
be so qualified or licensed as the result of the ownership or
leasing of property or the conduct of its business, except where
the failure to be so qualified or licensed would not have a
Material Adverse Effect.
(c) There are no Upper Valley Subsidiaries other
than NBO. There are no NBO Subsidiaries.
(d) The deposits of NBO are insured by the FDIC
to the extent provided in the Federal Deposit Insurance Act.
(e) The respective minute books of Upper Valley
and NBO and each other Upper Valley Subsidiary accurately record,
in all material respects, all material corporate actions of their
respective shareholders and boards of directors (including
committees) through the date of this Agreement.
(f) Prior to the date of this Agreement, Upper
Valley has delivered to First Jermyn true and correct copies of
the articles of incorporation and bylaws of Upper Valley and the
articles of association and bylaws of NBO as in effect on the
date hereof.
Section 2.02 Capitalization.
(a) The authorized capital stock of Upper Valley
consists of 2,000,000 shares of common stock, $0.50 par value
("Upper Valley Common Stock"), of which, at the date of this
Agreement, 1,000,599 shares are outstanding, validly issued,
fully paid and nonassessable and free of preemptive rights.
Neither Upper Valley nor NBO nor any other Upper Valley
Subsidiary has or is bound by any subscription, option, warrant,
call, commitment, agreement, plan or other Right of any character
relating to the purchase, sale or issuance or voting of, or right
to receive dividends or other distributions on any shares of
Upper Valley Common Stock or any other security of Upper Valley
or any securities representing the right to vote, purchase or
otherwise receive any shares of Upper Valley Common Stock or any
other security of Upper Valley, other than stock options
described in the Upper Valley Disclosure Schedule or in Note 10
to the audited financial statements included in Upper Valley's
1996 Annual Report to Shareholders.
(b) The authorized capital stock of NBO consists
of $100,000.00 divided into 5,000 shares of common stock, par
value $20.00 per share, all of the outstanding shares of which
are validly issued, fully paid, nonassessable, free of preemptive
rights and owned by Upper Valley. Neither Upper Valley nor any
Upper Valley Subsidiary has or is bound by any subscription,
option, warrant, call, commitment, agreement or other Right of
any character relating to the purchase, sale or issuance or
voting of, or right to receive dividends or other distributions
on any shares of the capital stock of any Upper Valley Subsidiary
or any other security of any Upper Valley Subsidiary or any
securities representing the right to vote, purchase or otherwise
receive any shares of the capital stock or any other security of
any Upper Valley Subsidiary. Either Upper Valley or NBO owns all
of the outstanding shares of capital stock of each Upper Valley
Subsidiary free and clear of all liens, security interests,
pledges, charges, encumbrances, agreements and restrictions of
any kind or nature.
(c) Neither (i) Upper Valley, (ii) NBO nor
(iii) any other Upper Valley Subsidiary, owns any equity
interest, directly or indirectly, treasury stock, in any other
company or controls any other company, except for equity
interests held in the investment portfolios of Upper Valley
Subsidiaries, equity interests held by Upper Valley Subsidiaries
in a fiduciary capacity, and equity interests held in connection
with the commercial loan activities of Upper Valley Subsidiaries.
There are no subscriptions, options, warrants, calls,
commitments, agreements or other Rights outstanding and held by
Upper Valley or NBO with respect to any other company's capital
stock or the equity of any other person.
(d) To Upper Valley's knowledge, without any
independent investigation, no person or "group" (as that term is
used in Section 13(d)(3) of the Exchange Act), is the beneficial
owner (as defined in Section 13(d) of the Exchange Act) of 5% or
more of the outstanding shares of Upper Valley Common Stock,
except as disclosed in reasonable detail (using the principles
described in Item 403 of the SEC's Regulation S-K) in the Upper
Valley Disclosure Schedule.
Section 2.03 Authority; No Violation.
(a) Upper Valley has full corporate power and
authority to execute and deliver this Agreement and to consummate
the transactions contemplated hereby. NBO has full corporate
power and authority to execute and deliver the Bank Plan of
Merger and to consummate the Bank Merger. The execution and
delivery of this Agreement by Upper Valley and the consummation
by Upper Valley of the transactions contemplated hereby have been
duly and validly approved by the Board of Directors of Upper
Valley and, except for approval by the shareholders of Upper
Valley, no other corporate proceedings on the part of Upper
Valley are necessary to complete the transactions contemplated
hereby. This Agreement has been duly and validly executed and
delivered by Upper Valley and, subject to approval of the
shareholders of Upper Valley and receipt of the required
approvals from Regulatory Authorities described in Section 3.04
hereof, constitutes the valid and binding obligation of Upper
Valley, enforceable against Upper Valley in accordance with its
terms, subject to applicable bankruptcy, insolvency and similar
laws affecting creditors' rights generally and subject, as to
enforceability, to general principles of equity. The Bank Plan
of Merger, upon its execution and delivery by NBO concurrently
with the execution and delivery of this Agreement, will
constitute the valid and binding obligation of NBO, enforceable
against NBO in accordance with its terms, subject to applicable
conservatorship or receivership provisions of the FDIA, or
insolvency and similar laws affecting creditors' rights generally
and subject, as to enforceability, to general principles of
equity.
(b) (A) The execution and delivery of this
Agreement by Upper Valley, (B) the execution and delivery of the
Bank Plan of Merger by NBO, (C) subject to receipt of approvals
from the Regulatory Authorities referred to in Section 3.04
hereof and Upper Valley's and First Jermyn's compliance with any
conditions contained therein, the consummation of the
transactions contemplated hereby, and (D) compliance by Upper
Valley or NBO with any of the terms or provisions hereof or of
the Bank Plan of Merger, will not (i) conflict with or result in
a breach of any provision of the articles of incorporation or
bylaws of Upper Valley or any Upper Valley Subsidiary or the
articles of association or bylaws of NBO; (ii) violate any
statute, code, ordinance, rule, regulation, judgment, order,
writ, decree or injunction applicable to Upper Valley or any
Upper Valley Subsidiary or any of their respective properties or
assets; or (iii) violate, conflict with, result in a breach of
any provisions of, constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default)
under, result in the termination of, accelerate the performance
required by, or result in a right of termination or acceleration
or the creation of any lien, security interest, charge or other
encumbrance upon any of the properties or assets of Upper Valley
or any Upper Valley Subsidiary under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture,
deed of trust, license, lease, agreement, commitment or other
instrument or obligation to which Upper Valley or any Upper
Valley Subsidiary is a party, or by which they or any of their
respective properties or assets may be bound or affected, except
for such violations, conflicts, breaches or defaults under
clause (ii) or (iii) hereof which, either individually or in the
aggregate, will not have a Material Adverse Effect on Upper
Valley.
Section 2.04 Consents. Except for the consents,
approvals, filings and registrations from or with the Regulatory
Authorities referred to in Section 3.04 hereof and compliance
with any conditions contained therein, and the approval of this
Agreement by the shareholders of Upper Valley, and the approval
of the Bank Plan of Merger by Upper Valley as sole shareholder of
NBO under the FDIA, and by the NBO Board of Directors, no
consents or approvals of, or filings or registrations with, any
public body or authority are necessary, and no consents or
approvals of any third parties are necessary, or will be, in
connection with (a) the execution and delivery of this Agreement
by Upper Valley or the Bank Plan of Merger by NBO, and (b) the
completion by Upper Valley of the transactions contemplated
hereby or by NBO of the Bank Merger. Upper Valley has no reason
to believe that (i) any required consents or approvals will not
be received or will be received with conditions, limitations or
restrictions unacceptable to it or which would adversely impact
Upper Valley's ability to complete the transactions contemplated
by this Agreement or that (ii) any public body or authority, the
consent or approval of which is not required or any filing with
which is not required, will object to the completion of the
transactions contemplated by this Agreement.
Section 2.05 Financial Statements.
(a) Upper Valley has previously delivered, or
will deliver, to First Jermyn the Upper Valley Regulatory
Reports. The Upper Valley Regulatory Reports have been, or will
be, prepared in all material respects in accordance with
applicable regulatory accounting principles and practices
throughout the periods covered by such statements, and fairly
present, or will fairly present in all material respects, the
financial position, results of operations and changes in
shareholders' equity of Upper Valley as of and for the periods
ended on the dates thereof, in accordance with applicable
regulatory accounting principles applied on a consistent basis.
(b) Upper Valley has previously delivered to
First Jermyn the Upper Valley Financials. The Upper Valley
Financials have been, or will be, prepared in accordance with
generally accepted accounting principles and practices applied on
a consistent basis throughout the periods covered by such
statements, and fairly present, or will fairly present, the
consolidated financial position, results of operations and cash
flows of Upper Valley as of and for the periods ending on the
dates thereof, in accordance with generally accepted accounting
principles applied on a consistent basis.
(c) At the date of each balance sheet included in
the Upper Valley Financials or the Upper Valley Regulatory
Reports, neither Upper Valley nor NBO (as the case may be) had,
or will have, any liabilities, obligations or loss contingencies
of any nature (whether absolute, accrued, contingent or
otherwise) of a type required to be reflected in such Upper
Valley Financials or Upper Valley Regulatory Reports or in the
footnotes thereto which are not fully reflected or reserved
against therein or fully disclosed in a footnote thereto, except
for liabilities, obligations and loss contingencies which are not
material in the aggregate and which are incurred in the ordinary
course of business, consistent with past practice, and subject,
in the case of any unaudited statements, to normal, recurring
audit adjustments and the absence of footnotes.
Section 2.06 Taxes.
(a) Upper Valley and the Upper Valley
Subsidiaries are members of the same affiliated group within the
meaning of IRC Section 1504(a). Upper Valley has duly filed, and
will file, all federal, state and local tax returns required to
be filed by or with respect to Upper Valley and all Upper Valley
Subsidiaries on or prior to the Closing Date (all such returns
being accurate and correct in all material respects) and has duly
paid or will pay, or made or will make, provisions for the
payment of all federal, state and local taxes which have been
incurred by or are due or claimed to be due from Upper Valley and
any Upper Valley Subsidiary by any taxing authority or pursuant
to any tax sharing agreement or arrangement (written or oral) on
or prior to the Closing Date other than taxes which (i) are not
delinquent or (ii) are being contested in good faith.
(b) No consent pursuant to IRC Section 341(f) has
been filed (or will be filed prior to the Closing Date) by or
with respect to Upper Valley or any Upper Valley Subsidiary.
Section 2.07 No Material Adverse Effect. Upper Valley
has not suffered any Material Adverse Effect since December 31,
1996.
Section 2.08 Contracts.
(a) Except as described in Upper Valley's Annual
Reports to Shareholders for the years ended December 31, 1994,
1995 and 1996, previously delivered to First Jermyn, or in the
footnotes to the audited consolidated financial statements of
Upper Valley as of December 31, 1996, and for the three years
ended December 31, 1996, neither Upper Valley nor any Upper
Valley Subsidiary is a party to or subject to: (i) any
employment, consulting or severance contract or arrangement with
any past or present officer, director or employee of Upper Valley
or any Upper Valley Subsidiary, except for "at will"
arrangements; (ii) any plan, arrangement or contract providing
for bonuses, pensions, options, deferred compensation, retirement
payments, profit sharing or similar arrangements for or with any
past or present officers, directors or employees of Upper Valley
or any Upper Valley Subsidiary; (iii) any collective bargaining
agreement with any labor union relating to employees of Upper
Valley or any Upper Valley Subsidiary; (iv) any agreement which
by its terms limits the payment of dividends by any Upper Valley
Subsidiary; (v) any instrument evidencing or related to
indebtedness for borrowed money whether directly or indirectly,
by way of purchase money obligation, conditional sale, lease
purchase, guaranty or otherwise, in respect of which Upper Valley
or any Upper Valley Subsidiary is an obligor to any person, which
instrument evidences or relates to indebtedness other than
deposits, repurchase agreements, bankers acceptances and
"treasury tax and loan" accounts established in the ordinary
course of business and transactions in "federal funds" or which
contains financial covenants or other restrictions (other than
those relating to the payment of principal and interest when due)
which would be applicable on or after the Closing Date to First
Jermyn or any First Jermyn Subsidiary; (vi) any contract (other
than this Agreement) limiting the freedom of any Upper Valley
Subsidiary to engage in any type of banking or bank-related
business permissible under law or (vii) any other material
contract.
(b) True and correct copies of agreements, plans,
arrangements and instruments referred to in Section 2.08(a) or
described in a footnote to such audited consolidated financial
statements, have been provided to First Jermyn on or before the
date hereof, are listed on the Upper Valley Disclosure Schedule
and are in full force and effect on the date hereof and neither
Upper Valley nor any Upper Valley Subsidiary (nor, to the
knowledge of Upper Valley, any other party to any such contract,
plan, arrangement or instrument) has breached any provision of,
or is in default in any respect under any term of, any such
contract, plan, arrangement or instrument which breach has
resulted in or will result in a Material Adverse Effect with
respect to Upper Valley. No party to any material contract,
plan, arrangement or instrument will have the right to terminate
any or all of the provisions of any such contract, plan,
arrangement or instrument as a result of the transactions
contemplated by this Agreement. None of the employees (including
officers) of Upper Valley or any Upper Valley Subsidiary, possess
the right to terminate their employment as a result of the
execution of this Agreement. No plan, employment agreement,
termination agreement, or similar agreement or arrangement to
which Upper Valley or any Upper Valley Subsidiary is a party or
under which Upper Valley or any Upper Valley Subsidiary may be
liable contains provisions which permit an employee or
independent contractor to terminate it without cause and continue
to accrue future benefits thereunder. No such agreement, plan or
arrangement (x) provides for acceleration in the vesting of
benefits or payments due thereunder upon the occurrence of a
change in ownership or control of Upper Valley or any Upper
Valley Subsidiary absent the occurrence of a subsequent event;
(y) provides for benefits which may cause the disallowance of a
federal income tax deduction under IRC Section 280G; or
(z) requires Upper Valley or any Upper Valley Subsidiary to
provide a benefit in the form of Upper Valley Common Stock or
determined by reference to the value of Upper Valley Common
Stock.
Section 2.09 Ownership of Property; Insurance
Coverage.
(a) Upper Valley and the Upper Valley
Subsidiaries have, or will have as to property acquired after the
date hereof, good and, as to real property, marketable title to
all assets and properties owned by Upper Valley or any Upper
Valley Subsidiary in the conduct of its business, whether such
assets and properties are real or personal, tangible or
intangible, including assets and property reflected in the
balance sheets contained in the Upper Valley Regulatory Reports
and in the Upper Valley Financials or acquired subsequent thereto
(except to the extent that such assets and properties have been
disposed of for fair value, in the ordinary course of business,
since the date of such balance sheets), subject to no
encumbrances, liens, mortgages, security interests or pledges,
except (i) those items that secure liabilities for borrowed money
and that are described in the Upper Valley Disclosure Schedule or
permitted under Article IV hereof and (ii) statutory liens for
amounts not yet delinquent or which are being contested in good
faith. Upper Valley and the Upper Valley Subsidiaries, as
lessee, have the right under valid and subsisting leases of real
and personal properties used by Upper Valley and its Subsidiaries
in the conduct of their businesses to occupy or use all such
properties as presently occupied and used by each of them.
(b) With respect to all agreements pursuant to
which Upper Valley or any Upper Valley Subsidiary has purchased
securities subject to an agreement to resell, if any, Upper
Valley or such Upper Valley Subsidiary, as the case may be, has a
valid, perfected first lien or security interest in the
securities or other collateral securing the repurchase agreement,
and the value of such collateral equals or exceeds the amount of
the debt secured thereby.
(c) Upper Valley and the Upper Valley
Subsidiaries currently maintain insurance in amounts considered
by Upper Valley to be reasonable for their respective operations
and similar in scope and coverage to that maintained by other
businesses similarly engaged. Neither Upper Valley nor any Upper
Valley Subsidiary has received notice from any insurance carrier
that (i) such insurance will be cancelled or that coverage
thereunder will be reduced or eliminated or (ii) premium costs
with respect to such policies of insurance will be substantially
increased. There are presently no material claims pending under
such policies of insurance and no notices have been given by
Upper Valley or NBO under such policies. All such insurance is
valid and enforceable and in full force and effect, and within
the last three years Upper Valley has received each type of
insurance coverage for which it has applied and during such
periods has not been denied indemnification for any material
claims submitted under any of its insurance policies.
Section 2.10 Legal Proceedings. Neither Upper Valley
nor any Upper Valley Subsidiary is a party to any, and there are
no pending or, to the best of Upper Valley's knowledge,
threatened legal, administrative, arbitration or other
proceedings, claims (whether asserted or unasserted), actions or
governmental investigations or inquiries of any nature
(i) against Upper Valley or any Upper Valley Subsidiary, (ii) to
which Upper Valley or any Upper Valley Subsidiary's assets are or
may be subject, (iii) challenging the validity or propriety of
any of the transactions contemplated by this Agreement, or
(iv) which could adversely affect the ability of Upper Valley to
perform under this Agreement, except for any proceedings, claims,
actions, investigations or inquiries referred to in clauses (i)
or (ii) which, if adversely determined, individually or in the
aggregate, could not be reasonably expected to have a Material
Adverse Effect.
Section 2.11 Compliance With Applicable Law.
(a) Upper Valley and the Upper Valley
Subsidiaries hold all licenses, franchises, permits and
authorizations necessary for the lawful conduct of their
businesses under, and have complied in all material respects
with, applicable laws, statutes, orders, rules or regulations of
any federal, state or local governmental authority relating to
them, other than where such failure to hold or such noncompliance
will neither result in a limitation in any material respect on
the conduct of their businesses or otherwise have a Material
Adverse Effect.
(b) Neither Upper Valley nor any Upper Valley
Subsidiary has received any notification or communication from
any Regulatory Authority (i) asserting that Upper Valley or any
Upper Valley Subsidiary is not in compliance with any of the
statutes, regulations or ordinances which such Regulatory
Authority enforces; (ii) threatening to revoke any license,
franchise, permit or governmental authorization which is material
to Upper Valley or any Upper Valley Subsidiary; (iii) requiring
or threatening to require Upper Valley or any Upper Valley
Subsidiary, or indicating that Upper Valley or any Upper Valley
Subsidiary may be required, to enter into a cease and desist
order, agreement or memorandum of understanding or any other
agreement restricting or limiting, or purporting to restrict or
limit, in any manner the operations of Upper Valley or any Upper
Valley Subsidiary, including without limitation any restriction
on the payment of dividends; or (iv) directing, restricting or
limiting, or purporting to direct, restrict or limit, in any
manner the operations of Upper Valley or any Upper Valley
Subsidiary, including without limitation any restriction on the
payment of dividends (any such notice, communication, memorandum,
agreement or order described in this sentence is hereinafter
referred to as a "Regulatory Agreement"). Neither Upper Valley
nor any Upper Valley Subsidiary has consented to or entered into
any Regulatory Agreement, except as heretofore disclosed to First
Jermyn.
Section 2.12 ERISA. Upper Valley has previously
delivered to First Jermyn true and complete copies of all
employee pension benefit plans within the meaning of ERISA
Section 3(2), profit sharing plans, stock purchase plans,
deferred compensation and supplemental income plans, supplemental
executive retirement plans, employment agreements, annual or long
term incentive plans, settlement plans, policies and agreements,
group insurance plans, and all other employee welfare benefit
plans within the meaning of ERISA Section 3(1) (including
vacation pay, sick leave, short-term disability, long-term
disability, and medical plans) and all other employee benefit
plans, policies, agreements and arrangements ("Employee Benefit
Plans"), all of which are set forth in the Upper Valley
Disclosure Schedule, maintained or contributed to for the benefit
of the employees or former employees (including retired
employees) and any beneficiaries thereof or directors or former
directors of Upper Valley or any Upper Valley Subsidiary,
together with (i) the most recent actuarial (if any) and
financial reports relating to those plans which constitute
"qualified plans" under IRC Section 401(a), (ii) the most recent
annual reports relating to such plans filed by them,
respectively, with any government agency, and (iii) all rulings
and determination letters which pertain to any Upper Valley
Employee Benefit Plans. Neither Upper Valley nor any Upper
Valley Subsidiary, and no pension plan maintained by Upper Valley
or any Upper Valley Subsidiary, has incurred, directly or
indirectly, within the past six (6) years any liability under
Title IV of ERISA (including to the Pension Benefit Guaranty
Corporation) or to the IRS with respect to any pension plan
qualified under IRC Section 401(a) except liabilities to the
Pension Benefit Guaranty Corporation pursuant to ERISA
Section 4007, all of which have been fully paid, nor has any
reportable event under ERISA Section 4043(b) occurred with
respect to any such pension plan. With respect to each Upper
Valley Employee Benefit Plan that is subject to Title IV of
ERISA, the present value of the accrued benefits under such plan,
based upon the actuarial assumptions used for funding purposes in
the plan's most recent actuarial report did not, as of its latest
valuation date, exceed the then current value of the assets of
such plan allocable to such accrued benefits. With respect to
each Upper Valley Employee Benefit Plan, Upper Valley will have
made on or prior to the Closing Date, all payments required to be
made by it prior to the Closing Date and will have accrued as of
the Closing Date all payments due but not yet payable so that
there will not have been nor will there be any accumulated
funding deficiencies (as defined in ERISA or the Code) or waivers
of such deficiencies. Neither Upper Valley nor any Upper Valley
Subsidiary has incurred or is subject to any liability under
ERISA Section 4201 for a complete or partial withdrawal from a
multi-employer plan. All "employee benefit plans," as defined in
ERISA Section 3(3), comply, and within the past six (6) years
have complied, in all material respects with (i) relevant
provisions of ERISA and (ii), in the case of plans intended to
qualify for favorable income tax treatment, provisions of the IRC
relevant to such treatment. No prohibited transaction (which
shall mean any transaction prohibited by ERISA Section 406 and
not exempt under ERISA Section 408 or any transaction prohibited
under IRC Section 4975) has occurred within the past six (6)
years with respect to any employee benefit plan maintained by
Upper Valley or any Upper Valley Subsidiary that would result in
the imposition, directly or indirectly, of an excise tax under
IRC 4975 or other penalty under ERISA or the IRC, which,
individually or in the aggregate, has resulted in or will result
in a Material Adverse Effect with respect to Upper Valley. Upper
Valley and the Upper Valley Subsidiaries provide continuation
coverage under group health plans for separating employees and
"qualified beneficiaries" in accordance with the provisions of
IRC Section 4980B(f). Such group health plans are in compliance
with Section 1862(b)(1) of the Social Security Act. There are no
pending actions, claims or lawsuits which have been asserted or
instituted against any of Upper Valley's Employee Benefit Plans,
the assets of any of the trusts under such Plans, the plan
sponsor, the plan administrator or against any fiduciary of any
of Upper Valley's Employee Benefit Plans (other than routine
benefit claims) nor does Upper Valley have knowledge of facts
which could form the basis of any such action, claim or lawsuit.
There are no investigations or audits of any of Upper Valley's
Employee Benefit Plans, any trusts under such plans, the plan
sponsor, the plan administrator or any fiduciary of any of Upper
Valley's Employee Benefit Plans which have been threatened or
instituted nor does Upper Valley have knowledge of facts which
could form the basis for any such investigation or audit. No
event has occurred or will occur which will result in liability
to Upper Valley in connection with any Employee Benefit Plan
established, maintained, or contributed to (currently or
previously) by Upper Valley or by any other entity which,
together with Upper Valley, constitute elements of either (i) a
controlled group of corporations (within the meaning of IRC
Section 414(b)), (ii) a group of trades or businesses under
common control (within the meaning of IRC Sections 414(c) or
4001), (iii) an affiliated service group (within the meaning of
IRC Section 414(m), or (iv) another arrangement covered by IRC
Section 414(o).
Section 2.13 Brokers, Finders and Financial Advisors.
Neither Upper Valley nor any Upper Valley Subsidiary, nor any of
their respective officers, directors, employees or agents, has
employed any broker, finder or financial advisor in connection
with the transactions contemplated by this Agreement or in
connection with any transaction other than the Merger, or, except
for its commitments disclosed in Upper Valley Disclosure
Schedule, incurred any liability or commitment for any fees or
commissions to any such person in connection with the
transactions contemplated by this Agreement or in connection with
any transaction other than the Merger, which has not been
reflected in the Upper Valley Financials.
Section 2.14 Environmental Matters. To the knowledge
of Upper Valley, neither Upper Valley nor any Upper Valley
Subsidiary, nor any properties owned or operated by Upper Valley
or any Upper Valley Subsidiary has been or is in violation of or
liable under any Environmental Law which violation or liability,
individually or in the aggregate, resulted in, or will result, in
a Material Adverse Effect with respect to Upper Valley. There
are no actions, suits or proceedings, or demands, claims, notices
or investigations (including without limitation notices, demand
letters or requests for information from any environmental
agency) instituted or pending, or to the knowledge of Upper
Valley, threatened, relating to the liability of any property
owned or operated by Upper Valley or any Upper Valley Subsidiary
under any Environmental Law.
Section 2.15 Loan Portfolio. The allowance for loan
losses reflected, and to be reflected, in the Upper Valley
Regulatory Reports, and shown, and to be shown, on the balance
sheets contained in the Upper Valley Financials have been, and
will be, established in accordance with the requirements of
generally accepted accounting principles and all applicable
regulatory criteria. First Jermyn acknowledges that the
allowance for loan losses of Upper Valley as of September 30,
1997 reflected or to be reflected in the Upper Valley Regulatory
Reports and shown or to be shown on the balance sheets contained
in the Upper Valley Financials has been established in accordance
with the requirements of generally accepted accounting
principles.
Section 2.16 Information to be Supplied. The
information to be supplied by Upper Valley and NBO for inclusion
in the Registration Statement (including the Prospectus/Proxy
Statement) will not, at the time the Registration Statement is
declared effective pursuant to the Securities Act, contain any
untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein not
misleading. The information supplied, or to be supplied, by
Upper Valley for inclusion in the Applications will, at the time
such documents are filed with any Regulatory Authority, be
accurate in all material aspects.
Section 2.17 Related Party Transactions. Except as
disclosed in the footnotes to the Upper Valley Financials, Upper
Valley is not a party to any transaction (including any loan or
other credit accommodation) with any Affiliate of Upper Valley
(except an Upper Valley Subsidiary). Any such transaction
(a) was made in the ordinary course of business, (b) was made on
substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable
transactions with other Persons, and (c) did not involve more
than the normal risk of collectability or present other
unfavorable features. No loan or credit accommodation to any
Affiliate of Upper Valley is presently in default or, during the
three year period prior to the date of this Agreement, has been
in default or has been restructured, modified or extended.
Neither Upper Valley nor NBO has been notified that principal and
interest with respect to any such loan or other credit
accommodation will not be paid when due or that the loan grade
classification accorded such loan or credit accommodation by NBO
is inappropriate.
Section 2.18 Schedule of Termination Benefits. The
Upper Valley Disclosure Schedule includes a schedule of a good
faith estimate of the present value as of December 31, 1997 of
termination benefits and related payments that would be payable
to the executive officers identified thereon, excluding any
options to acquire Upper Valley Common Stock granted to such
individuals, under any and all employment agreements, special
termination agreements, supplemental executive retirement plans,
deferred bonus plans, deferred compensation plans, salary
continuation plans, or any other pension benefit or welfare
benefit plan maintained by Upper Valley solely for the benefit of
officers of Upper Valley or Upper Valley Subsidiaries (the "Upper
Valley Benefits Schedule"), assuming their employment is
terminated as of December 31, 1997 and the Closing Date occurs
prior to such termination. No other individuals are entitled to
benefits under any such plans. The present value of the
termination benefits and related payments specified, including
required gross-up payments under Section 280G of the IRC, on the
Upper Valley Benefit Schedule with respect to each named
individual (based on a 6% per annum discount factor) is true and
correct in all material respects.
Section 2.19 Loans. Each loan reflected as an asset
in the Upper Valley Financial Statements (i) is evidenced by
notes, agreements or other evidences of indebtedness which are
true, genuine and correct (ii) to the extent secured, has been
secured by valid liens and security interests which have been
perfected, and (iii) is the legal, valid and binding obligation
of the obligor named therein, enforceable in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent conveyance
and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles, in each case
other than loans as to which the failure to satisfy the foregoing
standards would not have a Material Adverse Effect on Upper
Valley.
Section 2.20 Quality of Representations. The
representations made by Upper Valley in this Agreement are true,
correct and complete in all material respects, and do not omit
statements necessary to make them not misleading under all facts
and circumstances.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FIRST JERMYN
First Jermyn hereby represents and warrants to Upper
Valley that, except as set forth in the First Jermyn Disclosure
Schedule (which First Jermyn Disclosure Schedule qualifies and
represents exceptions to all of the representations and
warranties of First Jermyn contained in this Agreement taken as a
whole and does not relate solely to particular representations
and warranties) delivered by First Jermyn to Upper Valley on or
prior to the date hereof:
Section 3.01 Organization.
(a) First Jermyn is a corporation duly organized,
validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania. First Jermyn is a bank holding
company duly registered under the BHC Act. First Jermyn has the
corporate power and authority to carry on its business and
operations as now being conducted and to own and operate the
properties and assets now owned and being operated by it First
Jermyn is not qualified or licensed to do business as a foreign
corporation in any other jurisdiction and is not required to be
so qualified or licensed as the result of the ownership or
leasing of property or the conduct of its business, except where
the failure to be so qualified or licensed would not have a
Material Adverse Effect.
(b) FNBJ is a national banking association duly
organized and validly existing under the laws of the United
States of America. FNBJ has the corporate power and authority to
carry on its business and operations as now being conducted and
to own and operate the properties and assets now owned and being
operated by it. Neither FNBJ nor any other First Jermyn
Subsidiary is qualified or licensed to do business as a foreign
corporation in any other jurisdiction and neither is required to
be so qualified or licensed as the result of the ownership or
leasing of property or the conduct of its business, except where
the failure to be so qualified or licensed would not have a
Material Adverse Effect.
(c) There are no First Jermyn Subsidiaries other
than FNBJ or as disclosed in First Jermyn's Annual Report on
Form 10-K for the year ended December 31, 1996. There are no
FNBJ Subsidiaries.
(d) The deposits of FNBJ are insured by the FDIC
to the extent provided in the Federal Deposit Insurance Act.
(e) The respective minute books of First Jermyn
and FNBJ accurately record, in all material respects, all
material corporate actions of their respective shareholders and
boards of directors (including committees) through the date of
this Agreement.
(f) Prior to the execution of this Agreement,
First Jermyn has delivered to Upper Valley true and correct
copies of the articles of incorporation and the bylaws of First
Jermyn and the articles of association and bylaws of FNBJ as in
effect on the date hereof.
Section 3.02 Capital Structure.
(a) The authorized capital stock of First Jermyn
consists of (a) 2,500,000 shares of common stock, $1.25 par value
("First Jermyn Common Stock"), of which, at the date of this
Agreement, 15,205 shares are issued and held by First Jermyn as
treasury stock and 884,680 shares are outstanding, validly
issued, fully paid and nonassessable and free of preemptive
rights. Neither First Jermyn nor FNBJ nor any other First Jermyn
Subsidiary has or is bound by any subscription, option, warrant,
call, commitment, agreement, plan or other Right of any character
relating to the purchase, sale or issuance or voting of, or right
to receive dividends or other distributions on any shares of
First Jermyn Common Stock or any other security of First Jermyn
or any securities representing the right to vote, purchase or
otherwise receive any shares of First Jermyn Common Stock or any
other security of First Jermyn.
(b) The authorized capital stock of FNBJ consists
of 128,496 shares of common stock, par value $6.25 per share,
all of which shares are outstanding, validly issued, fully paid,
nonassessable, free of preemptive rights and owned by First
Jermyn. Neither First Jermyn nor any First Jermyn Subsidiary has
or is bound by any subscription, option, warrant, call,
commitment, agreement or other Right of any character relating to
the purchase, sale or issuance or voting of, or right to receive
dividends or other distributions on any shares of the capital
stock of any First Jermyn Subsidiary or any other security of any
First Jermyn Subsidiary or any securities representing the right
to vote, purchase or otherwise receive any shares of the capital
stock or any other security of any First Jermyn Subsidiary.
Either First Jermyn or FNBJ owns all of the outstanding shares of
capital stock of each First Jermyn Subsidiary free and clear of
all liens, security interests, pledges, charges, encumbrances,
agreements and restrictions of any kind or nature.
(c) Neither (i) First Jermyn, (ii) FNBJ nor
(iii) any other First Jermyn Subsidiary, owns any equity
interest, directly or indirectly, treasury stock, in any other
company or controls any other company, except for equity
interests held in the investment portfolios of First Jermyn
Subsidiaries, equity interests held by First Jermyn Subsidiaries
in a fiduciary capacity, equity interests held in connection with
the commercial loan activities of First Jermyn Subsidiaries, and
equity interests disclosed in First Jermyn's Annual Report on
Form 10-K for the year ended December 31, 1996. There are no
subscriptions, options, warrants, calls, commitments, agreements
or other Rights outstanding and held by First Jermyn or FNBJ with
respect to any other company's capital stock or the equity of any
other person.
(d) To First Jermyn's knowledge, without any
independent investigation, except as disclosed in First Jermyn's
proxy statement dated April 4, 1997, no person or "group" (as
that term is used in Section 13(d)(3) of the Exchange Act) is the
beneficial owner (as defined in Section 13(d) of the Exchange
Act) of 5% or more of the outstanding shares of First Jermyn
Common Stock.
Section 3.03 Authority; No Violation.
(a) First Jermyn has full corporate power and
authority to execute and deliver this Agreement and to consummate
the transactions contemplated hereby. FNBJ has full corporate
power and authority to execute and deliver the Bank Plan of
Merger and to consummate the Bank Merger. The execution and
delivery of this Agreement by First Jermyn and the consummation
by First Jermyn of the transactions contemplated hereby have been
duly and validly approved by the Board of Directors of First
Jermyn and, except for approval of the shareholders of First
Jermyn, no other corporate proceedings on the part of First
Jermyn are necessary to complete the transactions contemplated
hereby. This Agreement has been duly and validly executed and
delivered by First Jermyn and, subject to approval by the
shareholders of First Jermyn and receipt of the required
approvals of Regulatory Authorities described in Section 3.04
hereof, constitutes the valid and binding obligation of First
Jermyn, enforceable against First Jermyn in accordance with its
terms, subject to applicable bankruptcy, insolvency and similar
laws affecting creditors' rights generally and subject, as to
enforceability, to general principles of equity. The Bank Plan
of Merger, upon its execution and delivery by FNBJ concurrently
with the execution and delivery of this Agreement, will
constitute the valid and binding obligation of FNBJ, enforceable
against FNBJ in accordance with its terms, subject to applicable
conservatorship and receivership provisions of the FDIA, or
insolvency and similar laws affecting creditors' rights generally
and subject, as to enforceability, to general principles of
equity.
(b) (A) The execution and delivery of this
Agreement by First Jermyn, (B) the execution and delivery of the
Bank Plan of Merger by FNBJ, (C) subject to receipt of approvals
from the Regulatory Authorities referred to in Section 3.04
hereof and Upper Valley's and First Jermyn's compliance with any
conditions contained therein, the consummation of the
transactions contemplated hereby, and (D) compliance by First
Jermyn or FNBJ with any of the terms or provisions hereof or of
the Bank Plan of Merger will not (i) conflict with or result in a
breach of any provision of the articles of incorporation or
bylaws of First Jermyn or any First Jermyn Subsidiary or the
articles of association or bylaws of FNBJ; (ii) violate any
statute, code, ordinance, rule, regulation, judgment, order,
writ, decree or injunction applicable to First Jermyn or any
First Jermyn Subsidiary or any of their respective properties or
assets; or (iii) violate, conflict with, result in a breach of
any provisions of, constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default),
under, result in the termination of, accelerate the performance
required by, or result in a right of termination or acceleration
or the creation of any lien, security interest, charge or other
encumbrance upon any of the properties or assets of First Jermyn
or any First Jermyn Subsidiary under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture,
deed of trust, license, lease, agreement or other instrument or
obligation to which First Jermyn or FNBJ is a party, or by which
they or any of their respective properties or assets may be bound
or affected, except for such violations, conflicts, breaches or
defaults under clause (ii) or (iii) hereof which, either
individually or in the aggregate, will not have a Material
Adverse Effect on First Jermyn.
Section 3.04 Consents. Except for any required
consents, approvals, filings and registrations from or with the
FRB, the FDIC, the OCC, the SEC, and state "blue sky"
authorities, and compliance with any conditions contained
therein, and the approval of this Agreement by the shareholders
of First Jermyn, and the approval of the Bank Plan of Merger by
First Jermyn as sole shareholder of FNBJ under the FDIA, and by
the FNBJ Board of Directors, no consents or approvals of, or
filings or registrations with, any public body or authority are
necessary, and no consents or approvals of any third parties are
necessary, or will be, in connection with (a) the execution and
delivery of this Agreement by First Jermyn or the Bank Plan of
Merger by FNBJ, and (b) the completion by First Jermyn of the
transactions contemplated hereby or by FNBJ of the Bank Merger.
First Jermyn has no reason to believe that (i) any required
consents or approvals will not be received or will be received
with conditions, limitations or restrictions unacceptable to it
or which would adversely impact First Jermyn's ability to
complete the transactions contemplated by this Agreement or that
(ii) any public body or authority, the consent or approval of
which is not required or any filing with which is not required,
will object to the completion of the transactions contemplated by
this Agreement.
Section 3.05 Financial Statements.
(a) First Jermyn has previously delivered, or
will deliver, to Upper Valley the First Jermyn Regulatory
Reports. The First Jermyn Regulatory Reports have been, or will
be, prepared in all material respects in accordance with
applicable regulatory accounting principles and practices
throughout the periods covered by such statements, and fairly
present, or will fairly present in all material respects, the
financial position, results of operations and changes in
shareholders' equity of First Jermyn as of and for the periods
ended on the dates thereof, in accordance with applicable
regulatory accounting principles applied on a consistent basis.
(b) First Jermyn has previously delivered, or
will deliver, to Upper Valley the First Jermyn Financials. The
First Jermyn Financials have been, or will be, prepared in
accordance with generally accepted accounting principles and
practices applied on a consistent basis throughout the periods
covered by such statements, and fairly present, or will fairly
present, the consolidated financial position, results of
operations and cash flows of First Jermyn as of and for the
periods ending on the dates thereof, in accordance with generally
accepted accounting principles.
(c) At the date of each balance sheet included in
the First Jermyn Financials or the First Jermyn Regulatory
Reports, neither First Jermyn nor FNBJ (as the case may be) had
or will have any liabilities, obligations or loss contingencies
of any nature (whether absolute, accrued, contingent or
otherwise) of a type required to be reflected in such First
Jermyn Financials or the First Jermyn Regulatory Reports or in
the footnotes thereto which are not fully reflected or reserved
against therein or disclosed in a footnote thereto, except for
liabilities, obligations or loss contingencies which are not
material in the aggregate and which are incurred in the ordinary
course of business, consistent with past practice, and subject,
in the case of any unaudited statements, to normal, recurring
audit adjustments and the absence of footnotes.
Section 3.06 Taxes. (a) First Jermyn and the First
Jermyn Subsidiaries are members of the same affiliated group
within the meaning of IRC Section 1504(a). First Jermyn has duly
filed, and will file, all federal, state and local tax returns
required to be filed by or with respect to First Jermyn and all
First Jermyn Subsidiaries on or prior to the Closing Date (all
such returns being accurate and correct in all material respects)
and has duly paid or will pay, or made or will make, provisions
for the payment of all federal, state and local taxes which have
been incurred by or are due or claimed to be due from First
Jermyn and any First Jermyn Subsidiary by any taxing authority or
pursuant to any tax sharing agreement or arrangement (written or
oral) on or prior to the Closing Date other than taxes which
(i) are not delinquent or (ii) are being contested in good faith.
(b) No consent pursuant to IRC Section 341(f) has
been filed (or will be filed prior to the Closing Date) by or
with respect to First Jermyn or any First Jermyn Subsidiary.
Section 3.07 No Material Adverse Effect. First Jermyn
has not suffered any Material Adverse Effect since December 31,
1996.
Section 3.08 Contracts.
(a) Except as described in First Jermyn's Annual
Reports to Shareholders for the years ended December 31, 1994,
1995 and 1996, previously delivered to Upper Valley, or in the
footnotes to the audited consolidated financial statements of
First Jermyn as of December 31, 1996, and for the three years
ended December 31, 1996, neither First Jermyn nor any First
Jermyn Subsidiary is a party to or subject to: (i) any
employment, consulting or severance contract or arrangement with
any past or present officer, director or employee of First Jermyn
or any First Jermyn Subsidiary, except for "at will"
arrangements; (ii) any plan, arrangement or contract providing
for bonuses, pensions, options, deferred compensation, retirement
payments, profit sharing or similar arrangements for or with any
past or present officers, directors or employees of First Jermyn
or any First Jermyn Subsidiary; (iii) any collective bargaining
agreement with any labor union relating to employees of First
Jermyn or any First Jermyn Subsidiary; (iv) any agreement which
by its terms limits the payment of dividends by any First Jermyn
Subsidiary; (v) any instrument evidencing or related to
indebtedness for borrowed money whether directly or indirectly,
by way of purchase money obligation, conditional sale, lease
purchase, guaranty or otherwise, in respect of which First Jermyn
or any First Jermyn Subsidiary is an obligor to any person, which
instrument evidences or relates to indebtedness other than
deposits, repurchase agreements, bankers acceptances and
"treasury tax and loan" accounts established in the ordinary
course of business and transactions in "federal funds;" (vi) any
contract (other than this Agreement) limiting the freedom of any
First Jermyn Subsidiary to engage in any type of banking or
bank-related business permissible under law or (vii) any other
material contract.
(b) True and correct copies of agreements, plans,
arrangements and instruments referred to in Section 3.08(a) or
described in a footnote to such audited consolidated financial
statements, have been provided to Upper Valley on or before the
date hereof, are listed on the First Jermyn Disclosure Schedule
and are in full force and effect on the date hereof and neither
First Jermyn nor any First Jermyn Subsidiary (nor, to the
knowledge of First Jermyn, any other party to any such contract,
plan, arrangement or instrument) has breached any provision of,
or is in default in any respect under any term of, any such
contract, plan, arrangement or instrument which breach has
resulted in or will result in a Material Adverse Effect with
respect to First Jermyn. No party to any material contract,
plan, arrangement or instrument will have the right to terminate
any or all of the provisions of any such contract, plan,
arrangement or instrument as a result of the transactions
contemplated by this Agreement. None of the employees (including
officers) of First Jermyn or any First Jermyn Subsidiary, possess
the right to terminate their employment as a result of the
execution of this Agreement. No plan, employment agreement,
termination agreement, or similar agreement or arrangement to
which First Jermyn or any First Jermyn Subsidiary is a party or
under which First Jermyn or any First Jermyn Subsidiary may be
liable contains provisions which permit an employee or
independent contractor to terminate it without cause and continue
to accrue future benefits thereunder. No such agreement, plan or
arrangement (x) provides for acceleration in the vesting of
benefits or payments due thereunder upon the occurrence of a
change in ownership or control of First Jermyn or any First
Jermyn Subsidiary absent the occurrence of a subsequent event;
(y) provides for benefits which may cause the disallowance of a
federal income tax deduction under IRC Section 280G; or
(z) requires First Jermyn or any First Jermyn Subsidiary to
provide a benefit in the form of First Jermyn Common Stock or
determined by reference to the value of First Jermyn Common
Stock.
Section 3.09 Ownership of Property; Insurance
Coverage.
(a) First Jermyn and the First Jermyn
Subsidiaries have, or will have as to property acquired after the
date hereof, good and, as to real property, marketable title to
all assets and properties owned by First Jermyn or any First
Jermyn Subsidiary in the conduct of its business, whether such
assets and properties are real or personal, tangible or
intangible, including assets and property reflected in the
balance sheets contained in the First Jermyn Regulatory Reports
and in the First Jermyn Financials or acquired subsequent thereto
(except to the extent that such assets and properties have been
disposed of for fair value, in the ordinary course of business,
since the date of such balance sheets), subject to no
encumbrances, liens, mortgages, security interests or pledges,
except (i) those items that secure liabilities for borrowed money
and that are described in the First Jermyn Disclosure Schedule or
permitted under Article IV hereof and (ii) statutory liens for
amounts not yet delinquent or which are being contested in good
faith. First Jermyn and the First Jermyn Subsidiaries, as
lessee, have the right under valid and subsisting leases of real
and personal properties used by First Jermyn and its Subsidiaries
in the conduct of their businesses to occupy and use all such
properties as presently occupied and used by each of them.
(b) With respect to all agreements pursuant to
which First Jermyn or any First Jermyn Subsidiary has purchased
securities subject to an agreement to resell, if any, First
Jermyn or such First Jermyn Subsidiary, as the case may be, has a
valid, perfected first lien or security interest in the
securities or other collateral securing the repurchase agreement,
and the value of such collateral equals or exceeds the amount of
the debt secured thereby.
(c) First Jermyn and the First Jermyn
Subsidiaries currently maintain insurance in amounts considered
by First Jermyn to be reasonable for their respective operations
and similar in scope and coverage to that maintained by other
businesses similarly engaged. Neither First Jermyn nor any First
Jermyn Subsidiary has received notice from any insurance carrier
that (i) such insurance will be cancelled or that coverage
thereunder will be reduced or eliminated or (ii) premium costs
with respect to such insurance will be substantially increased.
There are presently no material claims pending under such
policies of insurance and no notices have been given by First
Jermyn or FNBJ under such policies. All such insurance is valid
and enforceable and in full force and effect, and within the last
three years First Jermyn has received each type of insurance
coverage for which it has applied and during such periods has not
been denied indemnification for any material claims submitted
under any of its insurance policies.
Section 3.10 Legal Proceedings. Neither First Jermyn
nor any First Jermyn Subsidiary is a party to any, and there are
no pending or, to the best of First Jermyn's knowledge,
threatened legal, administrative, arbitration or other
proceedings, claims (whether asserted or unasserted), actions or
governmental investigations or inquiries of any nature
(i) against First Jermyn or any First Jermyn Subsidiary, (ii) to
which First Jermyn's or any First Jermyn Subsidiary's assets are
or may be subject, (iii) challenging the validity or propriety of
any of the transactions contemplated by this Agreement, or
(iv) which could adversely affect the ability of First Jermyn to
perform under this Agreement, except for any proceedings, claims,
actions, investigations or inquiries referred to in clauses (i)
or (ii) which, individually or in the aggregate, could not be
reasonably expected to have a Material Adverse Effect.
Section 3.11 Compliance With Applicable Law.
(a) First Jermyn and the First Jermyn
Subsidiaries hold all licenses, franchises, permits and
authorizations necessary for the lawful conduct of their
businesses under, and have complied in all material respects
with, applicable laws, statutes, orders, rules or regulations of
any federal, state or local governmental authority relating to
them, other than where such failure to hold or such noncompliance
will neither result in a limitation in any material respect on
the conduct of their businesses nor otherwise have a Material
Adverse Effect.
(b) Neither First Jermyn nor any First Jermyn
Subsidiary has received any notification or communication from
any Regulatory Authority (i) asserting that First Jermyn or any
First Jermyn Subsidiary is not in compliance with any of the
statutes, regulations or ordinances which such Regulatory
Authority enforces; (ii) threatening to revoke any license,
franchise, permit or governmental authorization which is material
to First Jermyn or any First Jermyn Subsidiary; (iii) requiring
or threatening to require First Jermyn or any First Jermyn
Subsidiary, or indicating that First Jermyn or any First Jermyn
Subsidiary may be required, to enter into a cease and desist
order, agreement or memorandum of understanding or any other
agreement restricting or limiting, or purporting to restrict or
limit, in any manner the operations of First Jermyn or any First
Jermyn Subsidiary, including without limitation any restriction
on the payment of dividends; or (iv) directing, restricting or
limiting, or purporting to direct, restrict or limit, in any
manner the operations of First Jermyn or any First Jermyn
Subsidiary, including without limitation any restriction on the
payment of dividends (any such notice, communication, memorandum,
agreement or order described in this sentence is hereinafter
referred to as a "Regulatory Agreement"). Neither First Jermyn
nor any First Jermyn Subsidiary has consented to or entered into
any Regulatory Agreement, except as heretofore disclosed to Upper
Valley.
Section 3.12 ERISA. First Jermyn has previously made
available to Upper Valley true and complete copies of the First
Jermyn Employee Benefit Plans, all of which are set forth on the
First Jermyn Disclosure Schedule, maintained or contributed to
for the benefit of the employees or former employees (including
retired employees) and any beneficiaries thereof or directors or
former directors of First Jermyn or any First Jermyn Subsidiary,
together with (i) the most recent actuarial (if any) and
financial reports relating to those plans which constitute
"qualified plans" under IRC Section 401(a), (ii) the most recent
annual reports relating to such plans filed by them,
respectively, with any government agency, and (iii) all rulings
and determination letters which pertain to any First Jermyn
Employee Benefit Plans. Neither First Jermyn nor any First
Jermyn Subsidiary, and no pension plan maintained by First Jermyn
or any First Jermyn Subsidiary, has incurred, directly or
indirectly, within the past six (6) years any liability under
Title IV of ERISA (including to the Pension Benefit Guaranty
Corporation) or to the IRS with respect to any pension plan
qualified under IRC Section 401(a) except liabilities to the
Pension Benefit Guaranty Corporation pursuant to ERISA Section
4007, all of which have been fully paid, nor has any reportable
event under ERISA Section 4043(b) occurred with respect to any
such pension plan. With respect to each First Jermyn Employee
Benefit Plan that is subject to Title IV of ERISA, the present
value of the accrued benefits under such plan, based upon the
actuarial assumptions used for funding purposes in the plan's
most recent actuarial report did not, as of its latest valuation
date, exceed the then current value of the assets of such plan
allocable to such accrued benefits. With respect to each First
Jermyn Employee Benefit Plan, First Jermyn will have made on or
prior to the Closing Date, all payments required to be made by it
prior to the Closing Date and will have accrued as of the Closing
Date all payments due but not yet payable so that there will not
have been nor will there be any accumulated funding deficiencies
(as defined in ERISA or the Code) or waives of such deficiencies.
Neither First Jermyn nor any First Jermyn Subsidiary has incurred
or is subject to any liability under ERISA Section 4201 for a
complete or partial withdrawal from a multi-employer plan. All
"employee benefit plans," as defined in ERISA Section 3(3),
comply, and in the past six (6) years have complied, in all
material respects with (i) relevant provisions of ERISA and
(ii), in the case of plans intended to qualify for favorable
income tax treatment, provisions of the IRC relevant to such
treatment. No prohibited transaction (which shall mean any
transaction prohibited by ERISA Section 406 and not exempt under
ERISA Section 408 or any transaction prohibited under IRC
Section 4975) has occurred within the past six (6) years with
respect to any employee benefit plan maintained by First Jermyn
or any First Jermyn Subsidiary that would result in the
imposition, directly or indirectly, of an excise tax under IRC
Section 4975 or other penalty under ERISA or the IRC, which
individually or in the aggregate, has resulted in or will result
in a Material Adverse Effect with respect to First Jermyn. First
Jermyn and the First Jermyn Subsidiaries provide continuation
coverage under group health plans for separating employees and
"qualified beneficiaries" in accordance with the provisions of
IRC Section 4980B(f). Such group health plans are in compliance
with Section 1862(b)(1) of the Social Security Act. There are no
pending actions, claims or lawsuits which have been asserted or
instituted against any of First Jermyn's Employee Benefit Plans,
the assets of any of the trusts under such Plans, the plan
sponsor, the plan administrator or against any fiduciary of any
of First Jermyn's Employee Benefit Plans (other than routine
benefit claims) nor does First Jermyn have knowledge of facts
which could form the basis of any such action, claim or lawsuit.
There are no investigations or audits of any of First Jermyn's
Employee Benefit Plans, any trusts under such plans, the plan
sponsor, the plan administrator or any fiduciary of any of First
Jermyn's Employee Benefit Plans which have been threatened or
instituted nor does First Jermyn's have knowledge of facts which
could form the basis for any such investigation or audit. No
event has occurred or will occur which will result in liability
to First Jermyn in connection with any Employee Benefit Plan
established, maintained, or contributed to (currently or
previously) by First Jermyn or by any other entity which,
together with First Jermyn, constitute elements of either (i) a
controlled group of corporations (within the meaning of IRC
Section 414(b)), (ii) a group of trades or businesses under
common control (within the meaning of IRC Sections 414(c) or
4001), (iii) an affiliated service group (within the meaning of
IRC Section 414(m), or (iv) another arrangement covered by IRC
Section 414(o).
Section 3.13 Securities Documents. First Jermyn has
delivered, or will deliver, to Upper Valley copies of its
(i) annual reports on SEC Form 10-K for the years ended
December 31, 1996, 1995, and 1994, (ii) quarterly reports on SEC
Form 10-Q for the quarters ended June 30, 1997, March 31, 1997,
September 30, 1996, June 30, 1996 and March 31, 1996, and
(iii) proxy statement dated April 5, 1997 used in connection with
its annual meeting of shareholders held in May 1997. Such
reports and such proxy materials complied, at the time filed with
the SEC, in all material respects, with the Exchange Act and the
applicable rules and regulations of the SEC.
Section 3.14 Brokers and Finders. Neither First
Jermyn nor any First Jermyn Subsidiary, nor any of their
respective officers, directors, employees or agents, has employed
any broker, finder or financial advisor, or incurred any
liability for any fees or commissions to any such person, in
connection with the transactions contemplated by this Agreement
or in connection with any transaction other than the Merger, or,
except for its commitments disclosed in the First Jermyn
Disclosure Schedule, incurred any liability or commitment for any
fees or commissions to any such person in connection with the
transactions contemplated by this Agreement or in connection with
any transaction other than the Merger, which has not been
reflected in the First Jermyn Financials.
Section 3.15 Environmental Matters. To the knowledge
of First Jermyn, neither First Jermyn nor any First Jermyn
Subsidiary, nor any properties owned or operated by First Jermyn
or any First Jermyn Subsidiary has been or is in violation of or
liable under any Environmental Law which violation or liability,
individually or in the aggregate, resulted in or will result in a
Material Adverse Effect with respect to First Jermyn. There are
no actions, suits or proceedings, or demands, claims, notices or
investigations (including without limitation notices, demand
letters or requests for information from any environmental
agency) instituted or pending, or to the knowledge of First
Jermyn, threatened, relating to the liability of any property
owned or operated by First Jermyn or any First Jermyn Subsidiary
under any Environmental Law.
Section 3.16 Loan Portfolio. The allowance for loan
losses reflected, and to be reflected, in the First Jermyn
Regulatory Reports, and shown, and to be shown, on the balance
sheets contained in the First Jermyn Financials have been, and
will be, established in accordance with the requirements of
generally accepted accounting principles and all applicable
regulatory criteria. Upper Valley acknowledges that the
allowance for loan losses of First Jermyn as of September 30,
1997 reflected or to be reflected in the First Jermyn Regulatory
Reports and shown or to be shown on the balance sheets contained
in the First Jermyn Financials has been established in accordance
with the requirements of generally accepted accounting
principles.
Section 3.17 Information to be Supplied. The
information to be supplied by First Jermyn and FNBJ for inclusion
in the Registration Statement (including the Prospectus/Proxy
Statement) will not, at the time the Registration Statement is
declared effective pursuant to the Securities Act, contain any
untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein not
misleading. The information supplied, or to be supplied, by
First Jermyn for inclusion in the Applications will, at the time
such documents are filed with any Regulatory Authority, be
accurate in all material aspects.
Section 3.18 Related Party Transactions. Except as
disclosed in the footnotes to the First Jermyn Financials, First
Jermyn is not a party to any transaction (including any loan or
other credit accommodation) with any Affiliate of First Jermyn
(except a First Jermyn Subsidiary). Any such transaction (a) was
made in the ordinary course of business, (b) was made on
substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable
transactions with other Persons, and (c) did not involve more
than the normal risk of collectability or present other
unfavorable features. No loan or credit accommodation to any
Affiliate of First Jermyn is presently in default or, during the
three year period prior to the date of this Agreement, has been
in default or has been restructured, modified or extended.
Neither First Jermyn nor FNBJ has been notified that principal
and interest with respect to any such loan or other credit
accommodation will not be paid when due or that the loan grade
classification accorded such loan or credit accommodation by FNBJ
is inappropriate.
Section 3.19 Schedule of Termination Benefits. The
First Jermyn Disclosure Schedule includes a schedule of a good
faith estimate of the present value as of December 31, 1997 of
termination benefits and related payments that would be payable
to the executive officers identified thereon, under any and all
employment agreements, special termination agreements,
supplemental executive retirement plans, deferred bonus plans,
deferred compensation plans, salary continuation plans, or any
other pension benefit or welfare benefit plan maintained by First
Jermyn solely for the benefit of officers of First Jermyn or
First Jermyn Subsidiaries (the "First Jermyn Benefits Schedule"),
assuming their employment is terminated as of December 31, 1997
and the Closing Date occurs prior to such termination. No other
individuals are entitled to benefits under any such plans. The
present value of the termination benefits and related payments
specified, including required gross-up payments under
Section 280G of the IRC, on the First Jermyn Benefit Schedule
with respect to each named individual (based on a 6% per annum
discount factor) is true and correct in all material respects.
Section 3.20 Loans. Each loan reflected as an asset
in the First Jermyn Financial Statements (i) is evidenced by
notes, agreements or other evidences of indebtedness which are
true, genuine and correct (ii) to the extent secured, has been
secured by valid liens and security interests which have been
perfected, and (iii) is the legal, valid and binding obligation
of the obligor named therein, enforceable in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent conveyance
and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles, in each case
other than loans as to which the failure to satisfy the foregoing
standards would not have a Material Adverse Effect on First
Jermyn.
Section 3.21 Quality of Representations. The
representations made by First Jermyn in this Agreement are true,
correct and complete in all material respects and do not omit
statements necessary to make the representations not misleading
under the circumstances.
ARTICLE IV
COVENANTS OF THE PARTIES
Section 4.01 Conduct of Business.
(a) From the date of this Agreement to the
Closing Date, Upper Valley and each Upper Valley Subsidiary will
conduct its business and engage in transactions, including
extensions of credit, only in the ordinary course and consistent
with past practice and policies, except as otherwise required by
this Agreement or with the written consent of First Jermyn.
Upper Valley will use its reasonable good faith efforts, and will
cause NBO to use its reasonable good faith efforts, to
(i) preserve its business organizations intact, (ii) maintain
good relationships with employees, and (iii) preserve for itself
the good will of customers of Upper Valley and Upper Valley
Subsidiaries and others with whom business relationships exist.
From the date hereof to the Closing Date, except as otherwise
consented to or approved by First Jermyn in writing or as
permitted or required by this Agreement, Upper Valley will not,
and Upper Valley will not permit any Upper Valley Subsidiary to:
(i) amend or change any provision of its
articles of incorporation or association, charter, or
bylaws;
(ii) change the number of authorized or
issued shares of its capital stock or issue or grant any
option, warrant, call, commitment, subscription, Right or
agreement of any character relating to its authorized or
issued capital stock or any securities convertible into
shares of such stock, or split, combine or reclassify any
shares of capital stock, or declare, set aside or pay any
dividend or other distribution in respect of capital stock,
or redeem or otherwise acquire any shares of capital stock,
except that (A) Upper Valley may issue shares of Upper
Valley Common Stock upon the valid exercise, subject to the
terms of the letter agreement attached hereto as Exhibit 1,
of presently outstanding options to acquire Upper Valley
Common Stock under the Upper Valley Stock Option Plans and
(B) Upper Valley may pay a regular quarterly cash dividend,
not to exceed $.22 per share of Upper Valley Common Stock
outstanding; after the date of this Agreement, First Jermyn
and Upper Valley shall consult with and coordinate with the
other the payment of dividends with respect to First Jermyn
Common Stock and Upper Valley Common Stock and the record
and payment dates relating thereto, it being the intention
of First Jermyn and Upper Valley that holders of Upper
Valley Common Stock shall not receive two dividends, or fail
to receive one dividend, for any single calendar quarter
with respect to their shares of Upper Valley Common Stock;
subject to applicable regulatory restrictions, if any, NBO
may pay a cash dividend, in the aggregate, sufficient to
fund any dividend by Upper Valley permitted hereunder;
(iii) grant any severance or termination pay
(other than pursuant to written policies or written
agreements of Upper Valley or Upper Valley Subsidiaries in
effect on the date hereof and provided to First Jermyn prior
to the date hereof) to, or enter into any new or amend any
existing employment agreement with, or increase the
compensation of, any employee, officer or director of Upper
Valley or any Upper Valley Subsidiary, except for routine
periodic increases, individually and in the aggregate, in
accordance with past practice, or hire or agree to hire any
additional employees, except for hiring in accordance with
past practice;
(iv) merge or consolidate Upper Valley or
any Upper Valley Subsidiary with any other corporation; sell
or lease all or any substantial portion of the assets or
business of Upper Valley or any Upper Valley Subsidiary;
make any acquisition of all or any substantial portion of
the business or assets of any other person, firm,
association, corporation or business organization other than
in connection with the collection of any loan or credit
arrangement between any Upper Valley Subsidiary and any
other person; enter into a purchase and assumption
transaction with respect to deposits and liabilities; permit
the revocation or surrender by any Upper Valley Subsidiary
of its certificate of authority to maintain, or file an
application for the relocation of, any existing branch
office, or file an application for a certificate of
authority to establish a new branch office;
(v) sell or otherwise dispose of the capital
stock of NBO or sell or otherwise dispose of any asset of
Upper Valley or of any Upper Valley Subsidiary other than in
the ordinary course of business consistent with past
practice or upon the valid exercise, subject to the terms of
the letter agreement attached hereto as Exhibit 1, of
presently outstanding options to acquire Upper Valley Common
Stock under the Upper Valley Stock Option Plans; subject any
asset of Upper Valley or of any Upper Valley Subsidiary to a
lien, pledge, security interest or other encumbrance (other
than in connection with deposits, repurchase agreements,
bankers acceptances, "treasury tax and loan" accounts
established in the ordinary course of business and
transactions in "federal funds" and the satisfaction of
legal requirements in the exercise of trust powers) other
than in the ordinary course of business consistent with past
practice; incur any indebtedness for borrowed money (or
guarantee any indebtedness for borrowed money), except in
the ordinary course of business consistent with past
practice;
(vi) take any action which would result in
any of the representations and warranties of Upper Valley
set forth in this Agreement becoming untrue as of any date
after the date hereof or in any of the conditions set forth
in Article V hereof not being satisfied;
(vii) change any method, practice or
principle of accounting, except as may be required from time
to time by GAAP (without regard to any optional early
adoption date) or any Regulatory Authority responsible for
regulating Upper Valley or NBO;
(viii) waive, release, grant or transfer any
rights of value or modify or change in any material respect
any existing material agreement to which Upper Valley or any
Upper Valley Subsidiary is a party, other than in the
ordinary course of business, consistent with past practice;
(ix) implement any pension, retirement,
profit sharing, bonus, welfare benefit or similar plan or
arrangement that was not in effect on the date of this
Agreement, or materially amend any existing plan or
arrangement except to the extent such amendments do not
result in an increase in cost; provided, however, that Upper
Valley may contribute to the Upper Valley pension plan an
amount not to exceed the minimum amount required under ERISA
or the IRC only if (A) such amount is usual and ordinary,
consistent with past practice and (B) the full amount of
such contribution will be deductible by Upper Valley for
federal tax purposes;
(x) purchase any security for its investment
portfolio not rated "A" or higher by either Standard &
Poor's Corporation or ▇▇▇▇▇'▇ Investor Services, Inc.,
except in the ordinary course of business consistent with
past practice;
(xi) make any new loan or other credit
facility commitment (including without limitation, lines of
credit and letters of credit) to any borrower or group of
affiliated borrowers in excess of $1,000,000 in the
aggregate, or increase, compromise, extend, renew or modify
any existing loan or commitment outstanding in excess of
$1,000,000, except for any commitment disclosed on the Upper
Valley Disclosure Schedule; provided that First Jermyn will
not unreasonably withhold its consent with respect to any
request by Upper Valley for permission to increase,
compromise, extend, renew or modify any loan subject to this
provision;
(xii) except as set forth on the Upper
Valley Disclosure Schedule, enter into, renew, extend or
modify any other transaction with any Affiliate other than
NBO;
(xiii) enter into any interest rate swap or
similar commitment, agreement or arrangement;
(xiv) except for the execution of this
Agreement, take any action that would give rise to a right
of payment to any individual under any employment agreement;
(xv) intentionally and knowingly take any
action that would preclude satisfaction of the condition to
closing contained in Section 5.02(k) relating to financial
accounting treatment of the Merger; or
(xvi) agree to do any of the foregoing.
For purposes of this Section 4.01, it shall not be
considered in the ordinary course of business for Upper Valley or
any Upper Valley Subsidiary to do any of the following: (i) make
any capital expenditure of $25,000 or more not disclosed on Upper
Valley Disclosure Schedule 4.01, without the prior written
consent of First Jermyn; (ii) make any sale, assignment,
transfer, pledge, hypothecation or other disposition of any
assets having a book or market value, whichever is greater, in
the aggregate in excess of $25,000, other than pledges of assets
to secure government deposits, to exercise trust powers, sales of
assets received in satisfaction of debts previously contracted in
the normal course of business, issuance of loans, or transactions
in the investment securities portfolio by Upper Valley or a Upper
Valley Subsidiary or repurchase agreements made, in each case, in
the ordinary course of business; or (iii) undertake or enter any
lease, contract or other commitment for its account, other than
in the normal course of providing credit to customers as part of
its banking business, involving a payment by Upper Valley or any
Upper Valley Subsidiary of more than $25,000 annually, or
containing a material financial commitment and extending beyond
12 months from the date hereof.
(b) From the date of this Agreement to the
Closing Date, First Jermyn and each First Jermyn Subsidiary will
conduct its business and engage in transactions, including
extensions of credit, only in the ordinary course of business and
consistent with past practice and policies, except as otherwise
required by this Agreement or with the written consent of Upper
Valley. First Jermyn will use its reasonable good faith efforts,
and will cause FNBJ to use its reasonable good faith efforts, to
(i) preserve its business organizations intact, (ii) maintain
good relationships with employees, and (iii) preserve for itself
the good will of customers of First Jermyn and First Jermyn
Subsidiaries and others with whom business relationships exist.
From the date hereof to the Closing Date, except as otherwise
consented to or approved by Upper Valley in writing or as
permitted or required by this Agreement, First Jermyn will not,
and First Jermyn will not permit any First Jermyn Subsidiary to:
(i) amend or change any provision of its
articles of incorporation or association, charter, or
bylaws, except as expressly contemplated by this Agreement;
(ii) change the number of authorized or
issued shares of its capital stock or issue or grant any
option, warrant, call, commitment, subscription, Right or
agreement of any character relating to its authorized or
issued capital stock or any securities convertible into
shares of such stock, or split, combine or reclassify any
shares of capital stock, or declare, set aside or pay any
dividend or other distribution in respect of capital stock,
or redeem or otherwise acquire any shares of capital stock,
except that First Jermyn may pay a regular semi-annual cash
dividend, not to exceed $.70 per share of First Jermyn
Common Stock outstanding; after the date of this Agreement,
First Jermyn and Upper Valley shall consult with and
coordinate with the other the payment of dividends with
respect to First Jermyn Common Stock and Upper Valley Common
Stock and the record and payment dates relating thereto, it
being the intention of First Jermyn and Upper Valley that
holders of Upper Valley Common Stock shall not receive two
dividends, or fail to receive one dividend, for any single
calendar quarter with respect to their shares of Upper
Valley Common Stock; subject to applicable regulatory
restrictions, if any, FNBJ may pay a cash dividend, in the
aggregate, sufficient to fund any dividend by First Jermyn
permitted hereunder;
(iii) grant any severance or termination pay
(other than pursuant to written policies or written
agreements of First Jermyn or First Jermyn Subsidiaries in
effect on the date hereof and provided to Upper Valley prior
to the date hereof) to, or enter into any new or amend any
existing employment agreement with, or increase the
compensation of, any employee, officer or director of First
Jermyn or any First Jermyn Subsidiary, except for routine
periodic increases, individually and in the aggregate, in
accordance with past practice, or hire any additional
employees, except in accordance with past practice;
(iv) merge or consolidate First Jermyn or
any First Jermyn Subsidiary with any other corporation; sell
or lease all or any substantial portion of the assets or
business of First Jermyn or any First Jermyn Subsidiary;
make any acquisition of all or any substantial portion of
the business or assets of any other person, firm,
association, corporation or business organization other than
in connection with the collection of any loan or credit
arrangement between any First Jermyn Subsidiary and any
other person; enter into a purchase and assumption
transaction with respect to deposits and liabilities; permit
the revocation or surrender by any First Jermyn Subsidiary
of its certificate of authority to maintain, or file an
application for the relocation of, any existing branch
office, or file an application for a certificate of
authority to establish a new branch office;
(v) sell or otherwise dispose of the capital
stock of FNBJ or sell or otherwise dispose of any asset of
First Jermyn or of any First Jermyn Subsidiary other than in
the ordinary course of business consistent with past
practice; subject any asset of First Jermyn or of any First
Jermyn Subsidiary to a lien, pledge, security interest or
other encumbrance (other than in connection with deposits,
repurchase agreements, bankers acceptances, "treasury tax
and loan" accounts established in the ordinary course of
business and transactions in "federal funds" and the
satisfaction of legal requirements in the exercise of trust
powers) other than in the ordinary course of business
consistent with past practice; incur any indebtedness for
borrowed money (or guarantee any indebtedness for borrowed
money), except in the ordinary course of business consistent
with past practice;
(vi) take any action which would result in
any of the representations and warranties of First Jermyn
set forth in this Agreement becoming untrue as of any date
after the date hereof or in any of the conditions set forth
in Article V hereof not being satisfied;
(vii) change any method, practice or
principle of accounting, except as may be required from time
to time by GAAP (without regard to any optional early
adoption date) or any Regulatory Authority responsible for
regulating First Jermyn or FNBJ;
(viii) waive, release, grant or transfer any
rights of value or modify or change in any material respect
any existing material agreement to which First Jermyn or any
First Jermyn Subsidiary is a party, other than in the
ordinary course of business, consistent with past practice;
(ix) implement any pension, retirement,
profit sharing, bonus, welfare benefit or similar plan or
arrangement that was not in effect on the date of this
Agreement, or materially amend any existing plan or
arrangement except to the extent such amendments do not
result in an increase in cost;
(x) purchase any security for its investment
portfolio not rated "A" or higher by either Standard &
Poor's Corporation or ▇▇▇▇▇'▇ Investor Services, Inc.,
except in the ordinary course of business consistent with
past practice;
(xi) make any new loan or other credit
facility commitment (including without limitation, lines of
credit and letters of credit) to any borrower or group of
affiliated borrowers in excess of $1,000,000 in the
aggregate, or increase, compromise, extend, renew or modify
any existing loan or commitment outstanding in excess of
$1,000,000, except for any commitment disclosed on the First
Jermyn Disclosure Schedule; provided that Upper Valley will
not unreasonably withhold its consent with respect to any
request by First Jermyn for permission to increase,
compromise, extend, renew or modify any loan subject to this
provision;
(xii) except as set forth on the First
Jermyn Disclosure Schedule, enter into, renew, extend or
modify any other transaction with any Affiliate other than
FNBJ;
(xiii) enter into any interest rate swap or
similar commitment, agreement or arrangement;
(xiv) except for the execution of this
Agreement, take any action that would give rise to a right
of payment to any individual under any employment agreement;
(xv) intentionally and knowingly take any
action that would preclude satisfaction of the condition to
closing contained in Section 5.02(k) relating to financial
accounting treatment of the Merger; or
(xvi) agree to do any of the foregoing.
For purposes of this Section 4.01, it shall not be
considered in the ordinary course of business for First Jermyn or
any First Jermyn Subsidiary to do any of the following: (i) make
any capital expenditure of $25,000 or more not disclosed on First
Jermyn Disclosure Schedule 4.01, without the prior written
consent of Upper Valley; (ii) make any sale, assignment,
transfer, pledge, hypothecation or other disposition of any
assets having a book or market value, whichever is greater, in
the aggregate in excess of $25,000, other than pledges of assets
to secure government deposits, to exercise trust powers, sales of
assets received in satisfaction of debts previously contracted in
the normal course of business, issuance of loans, or transactions
in the investment securities portfolio by First Jermyn or a First
Jermyn Subsidiary or repurchase agreements made, in each case, in
the ordinary course of business; or (iii) undertake or enter any
lease, contract or other commitment for its account, other than
in the normal course of providing credit to customers as part of
its banking business, involving a payment by First Jermyn or any
First Jermyn Subsidiary of more than $25,000 annually, or
containing a material financial commitment and extending beyond
12 months from the date hereof.
Section 4.02 Access; Confidentiality.
(a) From the date of this Agreement through the
Closing Date, Upper Valley or First Jermyn, as the case may be,
shall afford to, and shall cause each Upper Valley Subsidiary or
First Jermyn Subsidiary to afford to, the other party and its
authorized agents and representatives, complete access to their
respective properties, assets, books and records and personnel,
at reasonable hours and after reasonable notice for the purpose
of undertaking a comprehensive due diligence investigation; and
the officers of Upper Valley and First Jermyn will furnish any
person making such investigation on behalf of the other party
with such financial and operating data and other information with
respect to the businesses, properties, assets, books and records
and personnel as the person making such investigation shall from
time to time reasonably request.
(b) Upper Valley and First Jermyn each agree to
conduct such investigation and discussions hereunder in a manner
so as not to interfere unreasonably with normal operations and
customer and employee relationships of the other party.
(c) In addition to the access permitted by
subparagraph (a) above, from the date of this Agreement through
the Closing Date, each of First Jermyn and Upper Valley shall
permit employees of the other reasonable access to and
participation in matters relating to problem loans, loan
restructurings and loan work-outs, provided that nothing
contained in this subparagraph shall be construed to grant First
Jermyn or Upper Valley or any of their respective employees any
final decision-making authority with respect to such matters.
(d) If the transactions contemplated by this
Agreement shall not be consummated, Upper Valley and First Jermyn
will each destroy or return all documents and records obtained
from the other party or its representatives, during the course of
its investigation and will cause all information with respect to
the other party obtained pursuant to this Agreement or
preliminarily thereto to be kept confidential, except to the
extent such information becomes public through no fault of the
party to whom the information was provided or any of its
representatives or agents and except to the extent disclosure of
any such information is legally required. Upper Valley and First
Jermyn shall each give prompt notice to the other party of any
contemplated disclosure where such disclosure is so legally
required.
Section 4.03 Regulatory Matters and Consents.
(a) First Jermyn and Upper Valley will prepare
all Applications and make all filings for, and use their best
efforts to obtain as promptly as practicable after the date
hereof, all necessary permits, consents, approvals, waivers and
authorizations of all Regulatory Authorities necessary or
advisable to consummate the transactions contemplated by this
Agreement.
(b) Upper Valley will furnish First Jermyn with
all information concerning Upper Valley and Upper Valley
Subsidiaries as may be necessary or advisable in connection with
any Application or filing made by or on behalf of First Jermyn to
any Regulatory Authority in connection with the transactions
contemplated by this Agreement.
(c) First Jermyn will promptly furnish Upper
Valley with copies of all material written communications to, or
received by First Jermyn or any First Jermyn Subsidiary from, any
Regulatory Authority in respect of the transactions contemplated
hereby.
(d) First Jermyn will furnish Upper Valley with
(i) copies of all Applications prior to filing with any
Regulatory Authority and provide Upper Valley a reasonable
opportunity to suggest changes to such Applications, which
suggested changes First Jermyn may, in its reasonable discretion
accept or reject, (ii) copies of all Applications filed by First
Jermyn and (iii) copies of all documents filed by First Jermyn
under the Exchange Act.
(e) Upper Valley will cooperate with First Jermyn
in the foregoing matters and will furnish First Jermyn with all
information concerning Upper Valley and Upper Valley Subsidiaries
as may be necessary or advisable in connection with any
Application or filing (including the Registration Statement and
any report filed with the SEC) made by or on behalf of First
Jermyn to any Regulatory Authority in connection with the
transactions contemplated by this Agreement, and such information
will be accurate and complete in all material respects. In
connection therewith, Upper Valley will provide certificates and
other documents reasonably requested by First Jermyn.
Section 4.04 Taking of Necessary Action.
(a) First Jermyn and Upper Valley shall each use
its best efforts in good faith, and each of them shall cause its
Subsidiaries to use their best efforts in good faith, to
(i) furnish such information as may be required in connection
with the preparation of the documents referred to in Section 4.03
of this Agreement, and (ii) take or cause to be taken all action
necessary or desirable on its part using its best efforts so as
to permit completion of the Merger and the Bank Merger including,
without limitation, (A) obtaining the consent or approval of each
individual, partnership, corporation, association or other
business or professional entity whose consent or approval is
required or desirable for consummation of the transactions
contemplated hereby (including assignment of leases without any
change in terms), provided that neither Upper Valley nor any
Upper Valley Subsidiary shall agree to make any payments or
modifications to agreements in connection therewith without the
prior written consent of First Jermyn, and (B) requesting the
delivery of appropriate opinions, consents and letters from its
counsel and independent auditors. No party hereto shall take, or
cause, or to the best of its ability permit to be taken, any
action that would substantially impair the prospects of
completing the Merger and the Bank Merger pursuant to this
Agreement and the Bank Plan of Merger; provided that nothing
herein contained shall preclude First Jermyn or Upper Valley from
exercising its rights under this Agreement.
(b) Upper Valley and First Jermyn shall promptly
prepare a Prospectus/Proxy Statement to be mailed to their
respective shareholders in connection with the meetings of their
respective shareholders and transactions contemplated hereby, and
to be filed by First Jermyn with the SEC in the Registration
Statement, which Prospectus/Proxy statement shall conform in all
material respects to all applicable legal requirements. First
Jermyn shall, as promptly as practicable following the
preparation thereof, file the Registration Statement with the SEC
and Upper Valley and First Jermyn shall use all reasonable
efforts to have the Registration Statement declared effective
under the Securities Act as promptly as practicable after such
filing. First Jermyn will advise Upper Valley, promptly after
First Jermyn receives notice thereof, of the time when the
Registration Statement has become effective or any supplement or
amendment has been filed, of the issuance of any stop order or
the suspension of the qualification of the shares of capital
stock issuable pursuant to the Registration Statement, or the
initiation or threat of any proceeding for any such purpose, or
of any request by the SEC for the amendment or supplement of the
Registration Statement or for additional information. First
Jermyn shall use its best efforts to obtain, prior to the
effective date of the Registration Statement, all necessary state
securities laws or "Blue Sky" permits and approvals required to
carry out the transactions contemplated by this Agreement. First
Jermyn will provide Upper Valley with as many copies of such
Registration Statement and all amendments thereto promptly upon
the filing thereof as Upper Valley may reasonably request.
Section 4.05 Certain Agreements.
(a) In the event of any threatened or actual
claim, action, suit, proceeding or investigation, whether civil,
criminal or administrative, whether or not brought by or in the
name of Upper Valley, in which any person who is now, or has been
at any time prior to the date of this Agreement, or who becomes
prior to the Effective Date, a director or officer or employee of
Upper Valley or any of its Subsidiaries (the "Indemnified
Parties") is, or is threatened to be, made a party to a suit
based in whole or in part on, or arising in whole or in part out
of, or pertaining to (i) the fact that he is or was a director,
officer or employee of Upper Valley, any of the Upper Valley's
Subsidiaries or any of their respective predecessors (including
in such person's capacity is a trustee of any pension plan of
Upper Valley or NBO) or (ii) this Agreement or any of the
transactions contemplated hereby, whether in any case asserted or
arising before or after the Effective Date, the parties hereto
agree to cooperate and use their best efforts to defend against
and respond thereto to the maximum extent permitted by the BCL
and the Articles of Incorporation and Bylaws of Upper Valley. On
or after the Effective Date, First Jermyn shall indemnify, defend
and hold harmless all prior and then-existing directors and
officers of Upper Valley and NBO (including in such person's
capacity as a trustee of any pension plan of Upper Valley or
NBO), against (i) all losses, claims, damages, costs, expenses,
liabilities or judgments or amounts that are paid in settlement
(with the approval of First Jermyn which approval shall not be
unreasonably withheld) of or in connection with any claim,
action, suit, proceeding or investigation, whether or not brought
by or in the name of Upper Valley, based in whole or in part on
or arising in whole or in part out of the fact that such person
is or was a director, officer or employee of Upper Valley or any
Upper Valley Subsidiary, whether pertaining to any matter
existing or occurring at or prior to or after the Effective Date
and whether asserted or claimed prior to, or at or after, the
Effective Date ("Indemnified Liabilities") and (ii) all
Indemnified Liabilities based in whole or in part on, or arising
in whole or in part out of, or pertaining to this Agreement or
the transactions contemplated hereby, to the same extent as such
officer, director or employee may be indemnified by Upper Valley
or NBO as of the date hereof including the right to advancement
of expenses, provided, however, that any such officer, director
or employee of Upper Valley or NBO may not be indemnified by
First Jermyn and/or FNBJ if such indemnification is prohibited by
applicable law.
(b) First Jermyn shall maintain Upper Valley's
existing directors' and officers' liability insurance policy (or
a policy providing comparable coverage amounts on terms generally
no less favorable, including First Jermyn's existing policy if it
meets the foregoing standard) covering persons who are currently
covered by such insurance for a period of five years after the
Effective Date; provided, however, that in no event shall First
Jermyn be obligated to expend, in order to maintain or provide
insurance coverage pursuant to this Section 4.05(b), any amount
per annum in excess of 150% of the amount of the annual premiums
paid as of the date hereof by Upper Valley for such insurance
(the "Maximum Amount"). If the amount of the annual premiums
necessary to maintain or procure such insurance coverage exceeds
the Maximum Amount, First Jermyn shall use all reasonable efforts
to maintain the most advantageous policies of directors' and
officers' insurance obtainable for an annual premium equal to the
Maximum Amount.
(c) First Jermyn agrees to honor and First Jermyn
agrees to cause FNBJ to honor all terms and conditions of all
existing employment contracts and special termination agreements
disclosed in the Upper Valley Disclosure Schedule.
Section 4.06 No Other Bids and Related Matters. So
long as this Agreement remains in effect, without the consent of
the other, each of First Jermyn and Upper Valley shall not, nor
shall either of them permit any Subsidiary or any other Affiliate
or any officer, director or employee of any of them, or any
investment banker, attorney, accountant or other representative
retained by either of them, any Subsidiary or any other Affiliate
to, directly or indirectly, solicit, encourage, initiate or
engage in discussions or negotiations with, or respond to
requests for information, inquiries, or other communications
from, any person other than the other concerning the fact of, or
the terms and conditions of, this Agreement, or concerning any
acquisition of First Jermyn or Upper Valley, any Subsidiary, or
any assets or business thereof (except that their respective
officers may respond to inquiries from analysts, Regulatory
Authorities and holders of First Jermyn Common Stock or Upper
Valley Common Stock, as the case may be, in the ordinary course
of business). Each of First Jermyn and Upper Valley shall notify
the other immediately if (i) any such discussions or negotiations
are sought to be initiated with them by any other person, or
(ii) if any such requests for information, inquiries, proposals
or communications are received from any other person, except
analysts, Regulatory Authorities and holders of First Jermyn
Common Stock or Upper Valley Common Stock in the ordinary course
of business.
Section 4.07 Duty to Advise; Duty to Update Upper
Valley's Disclosure Schedule. Upper Valley shall promptly advise
First Jermyn of any change or event having a Material Adverse
Effect on it or on any Upper Valley Subsidiary or which it
believes would or would be reasonably likely to cause or
constitute a material breach of any of its representations,
warranties or covenants set forth herein. Upper Valley shall
update Upper Valley's Disclosure Schedule as promptly as
practicable after the occurrence of an event or fact which, if
such event or fact had occurred prior to the date of this
Agreement, would have been disclosed in the Upper Valley
Disclosure Schedule. The delivery of such updated Disclosure
Schedule shall not relieve Upper Valley from any breach or
violation of this Agreement and shall not have any effect for the
purposes of determining the satisfaction of the condition set
forth in Sections 5.02(c) hereof.
Section 4.08 Board and Committee Minutes. Each of
First Jermyn and Upper Valley shall provide the other, within
30 days after any meeting of the Board of Directors of First
Jermyn or Upper Valley or any Subsidiary, or any committee
thereof, or any senior management committee, a copy of the
minutes of such meeting, except that with respect to any meeting
held within 30 days of the Closing Date, such minutes shall be
provided prior to the Closing Date.
Section 4.09 Additional Undertakings by First Jermyn
and Upper Valley.
(a) From and after the date of this Agreement,
Upper Valley shall:
(i) Approval of Bank Plan of Merger.
Approve the Bank Plan of Merger as sole shareholder of NBO
and obtain the approval of, and cause the execution and
delivery of, the Bank Plan of Merger by NBO;
(ii) Reserves and Merger-Related Costs. On
or before the Effective Date, establish such additional
accruals and reserves as may be necessary to conform the
accounting reserve practices and methods (including credit
loss practices and methods) of Upper Valley to those of
First Jermyn (as such practices and methods are to be
applied to Upper Valley from and after the Closing Date) and
First Jermyn's plans with respect to the conduct of the
business of Upper Valley following the Merger and otherwise
to reflect Merger-related expenses and costs incurred by
Upper Valley, provided, however, that Upper Valley shall not
be required to take such action (A) other than immediately
prior to Closing; and (B) unless First Jermyn agrees in
writing that all conditions to closing set forth in
Section 5.02 have been satisfied or waived (except for the
expiration of any applicable waiting periods); prior to the
delivery by First Jermyn of the writing referred to in the
preceding clause, Upper Valley shall provide First Jermyn a
written statement, certified without personal liability by
the chief executive officer of Upper Valley and dated the
date of such writing, that the representation made in
Section 2.15 hereof is true as of such date or,
alternatively, setting forth in detail the circumstances
that prevent such representation from being true as of such
date; and no accrual or reserve made by Upper Valley or any
Upper Valley Subsidiary pursuant to this subsection, or any
litigation or regulatory proceeding arising out of any such
accrual or reserve, shall constitute or be deemed to be a
breach or violation of any representation, warranty,
covenant, condition or other provision of this Agreement or
to constitute a termination event within the meaning of
Section 6.01 hereof.
(b) From and after the date of this Agreement,
First Jermyn shall:
(i) Approval of Bank Plan of Merger.
Approve the Bank Plan of Merger as sole shareholder of FNBJ
and obtain the approval of, and cause the execution and
delivery of, the Bank Plan of Merger.
(c) From and after the date of this Agreement,
First Jermyn and Upper Valley shall each:
(i) Shareholders Meetings. Submit this
Agreement to its shareholders for approval at a meeting to
be held as soon as practicable, and use their respective
best efforts to cause their Boards of Director to
unanimously recommend approval of this Agreement to their
respective shareholders;
(ii) Filings and Approvals. Cooperate with
the other in the preparation and filing, as soon as
practicable, of (A) the Applications, (B) the Registration
Statement and related filings under state securities laws
covering the First Jermyn Common Stock to be issued pursuant
to the Merger, (C) all other documents necessary to obtain
any other approvals and consents required to effect the
completion of the Merger and the Bank Merger, and (D) all
other documents contemplated by this Agreement;
(iii) Committee Meetings. Permit a
representative of the other, who is reasonably acceptable to
it, to attend all committee meetings of its management,
including, without limitation, any loan or asset/liability
committee. Each party shall respond reasonably and in good
faith to any request of the other to permit a
representative, who is reasonably acceptable to it, to
attend any meeting of its Board of Directors or the
Executive Committee thereof;
(iv) Public Announcements. Cooperate and
cause their respective officers, directors, employees and
agents to cooperate in good faith, consistent with their
respective legal obligations, in the preparation and
distribution of, and agree upon the form and substance of,
any press release related to this Agreement and the
transactions contemplated hereby, and any other public
disclosures related thereto, including without limitation
communications to their respective shareholders, internal
announcements and customer disclosures, but nothing
contained herein shall prohibit either party from making any
disclosure which its counsel deems legally necessary;
(v) Maintenance of Insurance. Maintain, and
cause their respective Subsidiaries to maintain, insurance
in such amounts as are reasonable to cover such risks as are
customary in relation to the character and location of its
properties and the nature of its business;
(vi) Maintenance of Books and Records.
Maintain, and cause their respective Subsidiaries to
maintain, books of account and records in accordance with
generally accepted accounting principles applied on a basis
consistent with those principles used in preparing the
financial statements heretofore delivered;
(vii) Delivery of Securities Documents.
Deliver to the other, copies of all Securities Documents
simultaneously with the filing thereof;
(viii) Taxes. File all federal, state, and
local tax returns required to be filed by them or their
respective Subsidiaries on or before the date such returns
are due (including any extensions) and pay all taxes shown
to be due on such returns on or before the date such payment
is due;
(ix) List of Nonperforming Assets. Provide
the other, within ten (10) days of the end of each calendar
month, a written list of its nonperforming assets (as
defined in Section 6.01(c) or 6.01(d), as the case may be)
as of the end of such month; and
(x) Timely Review. If requested by the
other at the requesting party's sole expense, cause its
independent certified public accountants to perform a review
of its unaudited consolidated financial statements as of the
end of any calendar quarter, in accordance with Statement of
Auditing Standards No. 71, and to issue their report on such
financial statements as soon as is practicable thereafter.
Section 4.10 Employee Benefits and Termination
Benefits.
(a) Employee Benefits. On and after the
Effective Date, the employee pension and welfare benefit plans of
First Jermyn and Upper Valley may, at First Jermyn's election and
subject to the requirements of the IRC, continue to be maintained
separately or consolidated, provided, however, that Upper Valley
employees shall receive benefits at least as favorable, in the
aggregate, as the benefits to which they were entitled on
December 31, 1996. In the event of a consolidation of any or all
of such plans or in the event of termination of the Upper Valley
benefit plans, Upper Valley and NBO employees shall receive
credit for service with Upper Valley or NBO under any First
Jermyn benefit plan, or new First Jermyn benefit plan in which
such employees would be eligible to enroll for purposes of
eligibility and vesting determination but not for purposes of
benefit accrual.
(b) Termination Benefits. Upper Valley shall
cause to be delivered to First Jermyn concurrently with the
execution of this Agreement with respect to each individual named
on the Upper Valley Benefits Schedule included in the Upper
Valley Disclosure Schedule, the written acknowledgment of each
such individual in the form attached hereto as Exhibit 5 pursuant
to which each such individual agrees and acknowledges that the
dollar amount set forth opposite such individual's name on such
Benefits Schedule is a good faith estimate of the entire amount
that would be due to such individual under any employment
agreement, special termination agreement, supplemental executive
retirement plan, deferred bonus plan, deferred compensation plan,
salary continuation plan, or any other benefit or welfare plan
maintained by Upper Valley solely for the benefit of officers of
Upper Valley or Upper Valley Subsidiaries assuming a termination
of such individual's employment on December 31, 1997, subsequent
to the Closing Date. Upper Valley and First Jermyn acknowledge
and agree that the amounts shown on the Upper Valley Benefits
Schedule and the letter of acknowledgement for each officer named
herein reflect a good faith estimate of the amounts that will be
payable to such individuals under the circumstances described and
may be subject to adjustment upon an actual termination of
employment in order to reflect increases in such individuals'
compensation and benefit plans consistent with past practices for
routine periodic increases.
Section 4.11 Duty to Advise; Duty to Update First
Jermyn's Disclosure Schedule. First Jermyn shall promptly advise
Upper Valley of any change or event having a Material Adverse
Effect on it or on any First Jermyn Subsidiary or which it
believes would or would be reasonably likely to cause or
constitute a material breach of any of its representations,
warranties or covenants set forth herein. First Jermyn shall
update First Jermyn's Disclosure Schedule as promptly as
practicable after the occurrence of an event or fact which, if
such event or fact had occurred prior to the date of this
Agreement, would have been disclosed in the First Jermyn
Disclosure Schedule. The delivery of such updated Disclosure
Schedule shall not relieve First Jermyn from any breach or
violation of this Agreement and shall not have any effect for the
purposes of determining the satisfaction of the condition set
forth in Sections 5.01(c) hereof.
ARTICLE V
CONDITIONS
Section 5.01 Conditions to Upper Valley's Obligations
under this Agreement. The obligations of Upper Valley hereunder
shall be subject to satisfaction at or prior to the Closing Date
of each of the following conditions, unless waived by Upper
Valley pursuant to Section 7.03 hereof:
(a) Corporate Proceedings. All action required
to be taken by, or on the part of, First Jermyn and FNBJ to
authorize the execution, delivery and performance of this
Agreement and the Bank Plan of Merger, respectively, and the
consummation of the transactions contemplated by this Agreement
and the Bank Plan of Merger, shall have been duly and validly
taken by First Jermyn and FNBJ; and Upper Valley shall have
received certified copies of the resolutions evidencing such
authorizations;
(b) Covenants. The obligations and covenants of
First Jermyn required by this Agreement to be performed by First
Jermyn at or prior to the Closing Date shall have been duly
performed and complied with in all material respects;
(c) Representations and Warranties. The
representations and warranties of First Jermyn set forth in this
Agreement shall be true and correct, as of the date of this
Agreement, and as of the Closing Date as though made on and as of
the Closing Date, except as to any representation or warranty
(i) which specifically relates to an earlier date or (ii) where
the breach of the representation or warranty would not, either
individually or in the aggregate, constitute a Material Adverse
Effect with respect to First Jermyn;
(d) Approvals of Regulatory Authorities. First
Jermyn shall have received all required approvals of Regulatory
Authorities of the Merger, and delivered copies thereof to Upper
Valley; and all notice and waiting periods required thereunder
shall have expired or been terminated;
(e) No Injunction. There shall not be in effect
any order, decree or injunction of a court or agency of competent
jurisdiction which enjoins or prohibits consummation of the
transactions contemplated hereby;
(f) No Material Adverse Effect. Since
December 31, 1996, there shall not have occurred any Material
Adverse Effect with respect to First Jermyn;
(g) Officer's Certificate. First Jermyn shall
have delivered to Upper Valley a certificate, dated the Closing
Date and signed, without personal liability, by its chairman or
president, to the effect that the conditions set forth in
subsections (a) through (e) of this Section 5.01 have been
satisfied, to the best knowledge of the officer executing the
same;
(h) Opinion of First Jermyn's Counsel. Upper
Valley shall have received an opinion of ▇▇▇▇▇▇▇ & ▇▇▇, counsel
to First Jermyn, dated the Closing Date, in form and substance
reasonably satisfactory to Upper Valley and its counsel to the
effect set forth on Exhibit 6 attached hereto;
(i) Registration Statement. The Registration
Statement shall be effective under the Securities Act and no
proceedings shall be pending or threatened by the SEC to suspend
the effectiveness of the Registration Statement; and all required
approvals by state securities or "blue sky" authorities with
respect to the transactions contemplated by this Agreement, shall
have been obtained;
(j) Tax Opinion. Upper Valley shall have
received an opinion of ▇▇▇▇▇▇▇ & ▇▇▇, in form and substance
reasonably satisfactory to Upper Valley and its counsel to the
effect set forth on Exhibit 7 attached hereto;
(k) Approval of Upper Valley's Shareholders.
This Agreement shall have been approved by the shareholders of
Upper Valley by such vote as is required under Upper Valley's
articles of incorporation and bylaws and by law;
(l) Investment Banking Opinion. Upper Valley
shall have received an oral opinion from a financial adviser on
or before the date of this Agreement, and updated in writing as
of a date within five (5) days of mailing the Prospectus/Proxy
Statement, to the effect that the consideration to be received by
shareholders of Upper Valley pursuant to this Agreement is fair,
from a financial point of view, to such shareholders; and
(m) First Jermyn Articles of Incorporation and
Bylaws. The Articles of Incorporation and Bylaws of First Jermyn
shall have been amended to read in their entirety as set forth on
Exhibit 4.
(n) Pooling Letter. First Jermyn shall have
received an opinion from KPMG Peat Marwick, LLP to the effect
that the Merger will be treated as a "pooling of interests" for
financial accounting purposes;
(o) Upper Valley's Dissenting Shareholders.
Upper Valley shareholders owning 9% or more of the issued and
outstanding shares of Upper Valley Common Stock shall not have
asserted and duly perfected dissenters' rights with respect to
Upper valley Common Stock pursuant to the BCL;
Section 5.02 Conditions to First Jermyn's Obligations
under this Agreement. The obligations of First Jermyn hereunder
shall be subject to satisfaction at or prior to the Closing Date
of each of the following conditions, unless waived by First
Jermyn pursuant to Section 7.03 hereof:
(a) Corporate Proceedings. All action required
to be taken by, or on the part of, Upper Valley and NBO to
authorize the execution, delivery and performance of this
Agreement and the Bank Plan of Merger, respectively, and the
consummation of the transactions contemplated by this Agreement
and the Bank Plan of Merger, shall have been duly and validly
taken by Upper Valley and NBO; and First Jermyn shall have
received certified copies of the resolutions evidencing such
authorizations;
(b) Covenants. The obligations and covenants of
Upper Valley, required by this Agreement to be performed by it at
or prior to the Closing Date shall have been duly performed and
complied with in all material respects;
(c) Representations and Warranties. The
representations and warranties of Upper Valley set forth in this
Agreement shall be true and correct as of the date of this
Agreement, and as of the Closing Date as though made on and as of
the Closing Date, except as to any representation or warranty
(i) which specifically relates to an earlier date or (ii) where
the breach of the representation or warranty would not, either
individually or in the aggregate, result in a Material Adverse
Effect with respect to Upper Valley;
(d) Approvals of Regulatory Authorities. First
Jermyn shall have received all required approvals of Regulatory
Authorities for the Merger, without the imposition of any term or
condition that would have a Material Adverse Effect on First
Jermyn upon completion of the Merger; and all notice and waiting
periods required thereunder shall have expired or been
terminated;
(e) No Injunction. There shall not be in effect
any order, decree or injunction of a court or agency of competent
jurisdiction which enjoins or prohibits consummation of the
transactions contemplated hereby;
(f) No Material Adverse Effect. Since
December 31, 1996, there shall not have occurred any Material
Adverse Effect with respect to Upper Valley;
(g) Officer's Certificate. Upper Valley shall
have delivered to First Jermyn a certificate, dated the Closing
Date and signed, without personal liability, by its chairman of
the board or president, to the effect that the conditions set
forth in subsections (a) through (e) of this Section 5.02 have
been satisfied, to the best knowledge of the officer executing
the same;
(h) Opinions of Upper Valley's Counsel. First
Jermyn shall have received an opinion of Blank Rome ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, counsel to Upper Valley, dated the Closing Date, in
form and substance reasonably satisfactory to First Jermyn and
its counsel to the effect set forth on Exhibit 8 attached hereto;
(i) Registration Statement. The Registration
Statement shall be effective under the Securities Act and no
proceedings shall be pending or threatened by the SEC to suspend
the effectiveness of the Registration Statement; and all required
approvals by state securities or "blue sky" authorities with
respect to the transactions contemplated by this Agreement, shall
have been obtained;
(j) Tax Opinion. First Jermyn shall have
received an opinion of ▇▇▇▇▇▇▇ & ▇▇▇, its counsel, substantially
to the effect set forth on Exhibit 6 attached hereto;
(k) Approval of First Jermyn's Shareholders.
This Agreement shall have been approved by the shareholders of
First Jermyn by such vote as is required by law;
(l) Investment Banking Opinion. First Jermyn
shall have received an oral opinion from a financial advisor on
or before the date of this Agreement, and updated in writing as
of a date within five (5) days of mailing the Prospectus/Proxy
Statement, to the effect that the Merger is fair, from a
financial point of view, to the shareholders of First Jermyn;
(m) First Jermyn Articles of Incorporation and
Bylaws. The Articles of Incorporation and Bylaws of First Jermyn
shall have been amended to read in their entirety as set forth on
Exhibit 4;
(n) Pooling Letter. First Jermyn shall have
received an opinion from KPMG Peat Marwick, LLP to the effect
that the Merger will be treated as a "pooling of interests" for
financial accounting purposes;
(o) Upper Valley's Dissenting Shareholders.
Upper Valley shareholders owning 9% or more of the issued and
outstanding shares of Upper Valley common stock shall not have
asserted and duly perfected dissenters rights with respect to
Upper Valley common stock pursuant to the BCL;
(p) Advisor Fees. Upper Valley shall have
received a written acknowledgement from ▇▇▇-▇▇▇▇ ▇▇▇▇▇▇, Inc.
that no additional amounts are due for services performed for or
on behalf of Upper Valley or otherwise under the engagement
letters dated April 17, 1996 and July 9, 1996, respectively.
ARTICLE VI
TERMINATION, WAIVER AND AMENDMENT
Section 6.01 Termination. This Agreement may be
terminated on or at any time prior to the Closing Date:
(a) By the mutual written consent of the parties
hereto;
(b) By First Jermyn or Upper Valley:
(i) if, in the case of termination by Upper
Valley, there shall have been any breach of any
representation or warranty of First Jermyn which results in
a Material Adverse Effect with respect to First Jermyn, on
the one hand, or, in the case of termination by First
Jermyn, there shall have been any breach of any
representation or warranty of Upper Valley which results in
a Material Adverse Effect with respect to Upper Valley, on
the other hand, and such breach cannot be, or shall not have
been, remedied within 30 days after receipt by such other
party of notice in writing specifying the nature of such
breach and requesting that it be remedied;
(ii) if, in the case of termination by Upper
Valley, there shall have been any breach of any material
covenant or other obligation of First Jermyn, on the one
hand, or, in the case of termination by First Jermyn, there
shall have been any breach of any material covenant or other
obligation of Upper Valley, on the other hand, and such
breach cannot be, or shall not have been, remedied within 30
days after receipt by such other party of notice in writing
specifying the nature of such breach and requesting that it
be remedied;
(iii) if the Closing Date shall not have
occurred on or before June 30, 1998, unless the failure of
such occurrence shall be due to the failure of the party
seeking to terminate this Agreement to perform or observe
its agreements set forth in this Agreement required to be
performed or observed by such party on or before the Closing
Date; or
(iv) if either party has been informed in
writing by a Regulatory Authority whose approval or consent
has been requested that such approval or consent is unlikely
to be granted, unless the failure of such occurrence shall
be due to the failure of the party seeking to terminate this
Agreement to perform or observe its agreements set forth
herein required to be performed or observed by such party on
or before the Closing Date; or
(c) By First Jermyn, if the amount of
nonperforming assets of Upper Valley and the Upper Valley
Subsidiaries, at the Closing Date, increases by more than
$1,000,000 over the amount of such nonperforming assets as of
September 30, 1997 (the term "nonperforming assets," for purposes
of this subsection, means (i) loans that are "troubled debt
restructurings" (as defined in Statement of Financial Accounting
Standards 15) or loans which are otherwise restructured,
excluding, in each case, restructured loans the terms and
conditions of which were approved in writing in advance by First
Jermyn, (ii) loans on nonaccrual, including loans placed on
nonaccrual that may have been previously restructured with First
Jermyn's approval, (iii) real estate owned, and/or (iv) real
estate construction loans on interest reserve which have been
extended as to maturity at least once); or
(d) By Upper Valley, if the amount of
nonperforming assets of First Jermyn and the First Jermyn
Subsidiaries, at the Closing Date, increases by more than
$1,000,000 over the amount of such nonperforming assets as of
September 30, 1997 (the term "nonperforming assets," for purposes
of this subsection, means (i) loans that are "troubled debt
restructurings" (as defined in Statement of Financial Accounting
Standards 15) or loans which are otherwise restructured,
excluding, in each case, restructured loans the terms and
conditions of which were approved in writing in advance by Upper
Valley, (ii) loans on nonaccrual, including loans placed on
nonaccrual that may have been previously restructured with Upper
Valley's approval, (iii) real estate owned, and/or (iv) real
estate construction loans on interest reserve which have been
extended as to maturity at least once).
Section 6.02 Effect of Termination. If this Agreement
is terminated pursuant to Section 6.01 hereof, this Agreement
shall forthwith become void (other than Section 4.02(d),
Section 6.03 and Section 7.01 hereof, which shall remain in full
force and effect), and there shall be no further liability on the
part of First Jermyn or Upper Valley to the other, except for any
liability arising out of any breach of any covenant or other
agreement contained in this Agreement.
Section 6.03 Termination Fees.
(a) If, within 18 calendar months following the
date of termination of this Agreement, a Person other than First
Jermyn or an Affiliate of First Jermyn, enters into an agreement
with Upper Valley or NBO pursuant to which such Person or
Affiliate would (i) merge or consolidate, or enter into any
similar transaction, with Upper Valley or NBO, (ii) acquire all
or substantially all of the assets of Upper Valley or NBO, or
(iii) acquire beneficial ownership of securities representing, or
the right to acquire beneficial ownership or to vote securities
representing, 25% or more of the then outstanding shares of Upper
Valley Common Stock or NBO common stock, then Upper Valley shall
immediately pay to First Jermyn a fee of $1.5 million, which fee
shall include reimbursement to First Jermyn for its costs and
expenses, including legal fees and expenses, incurred in
connection with this Agreement and the transactions contemplated
hereby. Nothing in this Section 6.03 shall constitute a waiver
or limitation, in whole or in part, of any legal or equitable
rights which First Jermyn may possess against any Person or
Affiliate relating to this Agreement or the Affiliate Agreement,
or relating to First Jermyn's relationship with Upper Valley or
for any act or omission of such Person or Affiliate, including
any tortious interference with this Agreement or the Affiliate
Agreement or otherwise wrongfully inducing or causing any breach
of any such agreement. The provisions of this Section 6.03(a)
shall not apply in the event of termination of this Agreement
pursuant to (i) Section 6.01(a), (ii) Section 6.01(b)(i) or (ii)
on account of an unremedied material breach by First Jermyn,
(iii) Section 6.01(b)(iii) or (iv) (unless in either case the
failure of such occurrence shall be due to the failure of Upper
Valley to perform or observe any of its agreements set forth in
this Agreement required to be performed or observed by Upper
Valley on or before the Closing Date), or (iv) Section 6.01(d).
(b) If, within 18 calendar months following the
date of termination of this Agreement, a Person other than Upper
Valley or an Affiliate of Upper Valley, enters into an agreement
with First Jermyn or FNBJ pursuant to which such Person or
Affiliate would (i) merge or consolidate, or enter into any
similar transaction, with First Jermyn or FNBJ, (ii) acquire all
or substantially all of the assets of First Jermyn or FNBJ, or
(iii) acquire beneficial ownership of securities representing, or
the right to acquire beneficial ownership or to vote securities
representing, 25% or more of the then outstanding shares of First
Jermyn Common Stock or FNBJ common stock, then First Jermyn shall
immediately pay to Upper Valley a fee of $1.5 million, which fee
shall include reimbursement to Upper Valley for its costs and
expenses, including legal fees and expenses, incurred in
connection with this Agreement and the transactions contemplated
hereby. Nothing in this Section 6.03 shall constitute a waiver
or limitation, in whole or in part, of any legal or equitable
rights which Upper Valley may possess against any Person or
Affiliate relating to this Agreement or the Affiliate Agreement,
or relating to Upper Valley's relationship with First Jermyn or
for any act or omission of such Person or Affiliate, including
any tortious interference with this Agreement or the Affiliate
Agreement or otherwise wrongfully inducing or causing any breach
of any such agreement. The provisions of this Section 6.03(a)
shall not apply in the event of termination of this Agreement
pursuant to (i) Section 6.01(a), (ii) Section 6.01(b)(i) or (ii)
on account of an unremedied material breach by Upper Valley,
(iii) Section 6.01(b)(iii) or (iv) (unless in either case the
failure of such occurrence shall be due to the failure of First
Jermyn to perform or observe any of its agreements set forth in
this Agreement required to be performed or observed by Upper
Valley on or before the Closing Date), or (iv) Section 6.01(c).
(c) The provisions of this Section 6.03 shall not
apply in the event of a merger, consolidation or similar
transaction involving First Jermyn or Upper Valley, as the case
may be, in which (i) persons who were members of the Board of
Directors of First Jermyn or Upper Valley, as the case may be,
immediately prior to such termination continue to constitute at
least a majority of the members of the Board of Directors of the
surviving or resulting entity following completion of such
transaction and (ii) shareholders of First Jermyn or Upper
Valley, as the case may be, immediately prior to such transaction
continue to own at least a majority of the outstanding voting
securities of the surviving or resulting entity immediately
following completion of such transaction.
ARTICLE VII
MISCELLANEOUS
Section 7.01 Expenses. Except for the cost of
printing and mailing the Proxy Statement/Prospectus which shall
be shared equally, each party hereto shall bear and pay all costs
and expenses incurred by it in connection with the transactions
contemplated hereby, including fees and expenses of its own
financial consultants, accountants and counsel.
Section 7.02 Non-Survival of Representations and
Warranties. All representations, warranties, agreements and
covenants set forth in this Agreement, shall terminate on the
Closing Date, except for covenants to be performed after the
Closing Date, which will continue until performed.
Section 7.03 Amendment, Extension and Waiver. Subject
to applicable law, at any time prior to the consummation of the
transactions contemplated by this Agreement, the parties may
(a) amend this Agreement, (b) extend the time for the performance
of any of the obligations or other acts of either party hereto,
(c) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto, or
(d) waive compliance with any of the agreements or conditions
contained in Articles IV and V hereof or otherwise. This
Agreement may not be amended except by an instrument in writing
authorized by the respective Boards of Directors and signed, by
duly authorized officers, on behalf of the parties hereto. Any
agreement on the part of a party hereto to any extension or
waiver shall be valid only if set forth in an instrument in
writing signed by a duly authorized officer on behalf of such
party, but such waiver or failure to insist on strict compliance
with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
Section 7.04 Entire Agreement. This Agreement,
including the documents and other writings referred to herein or
delivered pursuant hereto, contains the entire agreement and
understanding of the parties with respect to its subject matter.
This Agreement supersedes all prior arrangements and
understandings between the parties, both written or oral with
respect to its subject matter. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their
respective successors; provided, however, that nothing in this
Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto and their respective
successors, any rights, remedies, obligations or liabilities
other than pursuant to Sections 1.02(d)(i) and (iii), 1.02(f),
1.02(g), 4.05, and 4.10(a) and (b) with respect to
indemnification, employee benefits and certain other matters.
Section 7.05 No Assignment. Neither party hereto may
assign any of its rights or obligations hereunder to any other
person, without the prior written consent of the other party
hereto.
Section 7.06 Notices. All notices or other
communications hereunder shall be in writing and shall be deemed
given if delivered personally, mailed by prepaid registered or
certified mail (return receipt requested), or sent by telecopy,
addressed as follows:
(a) If to First Jermyn, to:
The First Jermyn Corp.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President and
Chief Executive Officer
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ & ▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esquire and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Upper Valley, to:
Upper Valley Bancorp, Inc.
▇▇▇-▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Chairman Emeritus
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Blank Rome ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Section 7.07 Captions. The captions contained in this
Agreement are for reference purposes only and are not part of
this Agreement.
Section 7.08 Counterparts. This Agreement may be
executed in any number of counterparts, and each such counterpart
shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
Section 7.09 Severability. If any provision of this
Agreement or the application thereof to any person or
circumstance shall be invalid or unenforceable to any extent, the
remainder of this Agreement and the application of such
provisions to other persons or circumstances shall not be
affected thereby and shall be enforced to the greatest extent
permitted by law.
Section 7.10 Governing Law. This Agreement shall be
governed by and construed in accordance with the domestic
internal law (without regard to the law of conflicts of law) of
the Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed by their duly authorized officers as of
the day and year first above written.
THE FIRST JERMYN CORP.
By_________________________________
UPPER VALLEY BANCORP, INC.
By_________________________________
The following members of the Board of Directors of Upper
Valley hereby acknowledge, without personal liability with
respect to any representation, warranty, covenant or agreement
made by Upper Valley, their approval of the foregoing Agreement
this _____ day of October, 1997.
__________________________________
__________________________________
__________________________________
__________________________________
__________________________________
__________________________________
__________________________________
__________________________________
__________________________________
__________________________________
__________________________________
__________________________________
The following members of the Board of Directors of First
Jermyn hereby acknowledge, without personal liability with
respect to any representation, warranty, covenant or agreement
made by First Jermyn, their approval of the foregoing Agreement
this _____ day of October, 1997.
______________________________ _____________________________
______________________________ _____________________________
______________________________ _____________________________
______________________________ _____________________________
______________________________ _____________________________
______________________________
Exhibit 1
October 15, 1997
The First Jermyn Corp.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The First Jermyn Corp. ("First Jermyn") and Upper Valley
Bancorp, Inc. ("Upper Valley") desire to enter into an agreement
dated October 15, 1997 ("Agreement"), pursuant to which, subject
to the terms and conditions set forth therein, (a) Upper Valley
will merge with and into Jermyn with Jermyn surviving the merger,
and (b) shareholders of Upper Valley will receive common stock of
Jermyn in exchange for common stock of Upper Valley outstanding
on the closing date (the foregoing, collectively, referred to
herein as the "Merger").
First Jermyn has required, as a condition to its execution
and delivery to Upper Valley of the Agreement, that the
undersigned, being directors, executive officers and major
shareholders of Upper Valley, execute and deliver to First Jermyn
this Letter Agreement.
Each of the undersigned, in order to induce First Jermyn to
execute and deliver to Upper Valley the Agreement, hereby
irrevocably:
(a) Agrees to be present (in person or by proxy) at
all meetings of shareholders of Upper Valley called to vote for
approval of the Merger so that all shares of common stock of
Upper Valley then owned by the undersigned will be counted for
the purpose of determining the presence of a quorum at such
meetings and to vote all such shares in favor of approval and
adoption of the Agreement and the transactions contemplated
thereby (including any amendments or modifications of the terms
thereof approved by the Board of Directors of Upper Valley);
(b) Agrees not to vote or execute any written consent
to rescind or amend in any manner any prior vote or written
consent, as a shareholder of Upper Valley, to approve or adopt
the Agreement;
(c) Agrees not to take any actions that would prevent
or hinder the Merger from being consummated;
(d) Agrees not to solicit or initiate any negotiations
or discussions with any party other than First Jermyn with
respect to any offer, sale, transfer or other disposition of, any
shares of common stock of Upper Valley now or hereafter owned by
the undersigned;
(e) Agrees not to offer, sell, transfer or otherwise
dispose of any shares of common stock of First Jermyn received in
the Merger, except (i) at such time as a registration statement
under the Securities Act of 1933, as amended ("Securities Act")
covering sales of such First Jermyn common stock is effective and
a prospectus is made available under the Securities Act,
(ii) within the limits, and in accordance with the applicable
provisions of, Rule 145(d) under the Securities Act, or (iii) in
a transaction which, in the opinion of counsel satisfactory to
First Jermyn or as described in a "no-action" or interpretive
letter from the staff of the Securities and Exchange Commission
("SEC"), is not required to be registered under the Securities
Act; and acknowledges and agrees that First Jermyn is under no
obligation to register the sale, transfer or other disposition of
First Jermyn common stock by the undersigned or on behalf of the
undersigned, or to take any other action necessary to make an
exemption from registration available;
(f) Notwithstanding the foregoing, agrees not to sell,
or in any other way reduce the risk of the undersigned relative
to, any shares of common stock of Upper Valley or of common stock
of First Jermyn, during the period commencing thirty days prior
to the effective date of the Merger and ending on the date on
which financial results covering at least thirty days of post-
Merger combined operations of First Jermyn and Upper Valley have
been published within the meaning of Section 201.01 of the SEC's
Codification of Financial Reporting Policies;
(g) Agrees that First Jermyn shall not be bound by any
attempted sale of any shares of First Jermyn common stock, and
First Jermyn's transfer agent shall be given an appropriate stop
transfer order and shall not be required to register any such
attempted sale, unless the sale has been effected in compliance
with the terms of this Letter Agreement; and further agrees that
the certificate representing shares of First Jermyn common stock
owned by the undersigned may be endorsed with a restrictive
legend consistent with the terms of this Letter Agreement;
(h) Acknowledges and agrees that the provisions of
subparagraphs (f), (g) and (h) hereof also apply to shares of
First Jermyn common stock received in the Merger (or any shares
of Upper Valley common stock or of First Jermyn common stock,
whether or not received in the Merger, for the period referred to
in subparagraph (g) above) owned by (i) his or her spouse,
(ii) any of his or her relatives or relatives of his or her
spouse occupying his or her home, (iii) any trust or estate in
which he or she, his or her spouse, or any such relative owns at
least a 10% beneficial interest or of which any of them serves as
trustee, executor or in any similar capacity, and (iv) any
corporation or other organization in which the undersigned, any
affiliate of the undersigned, his or her spouse, or any such
relative owns at least 10% of any class of equity securities or
of the equity interest;
(i) Represents that the undersigned has no plan or
intention to sell, exchange, or otherwise dispose of any shares
of common stock of First Jermyn to be received in the Merger
prior to expiration of the time period referred to in
subparagraph (g) hereof; and
(j) Represents that the undersigned has the capacity
to enter into this Letter Agreement and that it is a valid and
binding obligation enforceable against the undersigned in
accordance with its terms, subject to bankruptcy, insolvency and
other laws affecting creditors' rights and general equitable
principles.
The obligations set forth herein shall terminate
concurrently with any termination of the Agreement.
________________________
This Letter Agreement may be executed in two or more
counterparts, each of which shall be deemed to constitute an
original, but all of which together shall constitute one and the
same Letter Agreement.
________________________
This Letter Agreement shall terminate concurrently with any
termination of the Agreement in accordance with its terms.
________________________
The undersigned intend to be legally bound hereby.
Sincerely,
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
Exhibit 2
October 15, 1997
Upper Valley Bancorp, Inc.
▇▇▇-▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
The First Jermyn Corp. ("First Jermyn") and Upper Valley
Bancorp, Inc. ("Upper Valley") desire to enter into an agreement
dated October 15, 1997 ("Agreement"), pursuant to which, subject
to the terms and conditions set forth therein, (a) Upper Valley
will merge with and into Jermyn with Jermyn surviving the merger,
and (b) shareholders of Upper Valley will receive common stock of
Jermyn in exchange for common stock of Upper Valley outstanding
on the closing date (the foregoing, collectively, referred to
herein as the "Merger").
Upper Valley has required, as a condition to its execution
and delivery to First Jermyn of the Agreement, that the
undersigned, being directors, executive officers and major
shareholders of First Jermyn, execute and deliver to Upper Valley
this Letter Agreement.
Each of the undersigned, in order to induce Upper Valley to
execute and deliver to First Jermyn the Agreement, hereby
irrevocably:
(a) Agrees to be present (in person or by proxy) at
all meetings of shareholders of First Jermyn called to vote for
approval of the Merger so that all shares of common stock of
First Jermyn then owned by the undersigned will be counted for
the purpose of determining the presence of a quorum at such
meetings and to vote all such shares in favor of approval and
adoption of the Agreement and the transactions contemplated
thereby (including any amendments or modifications of the terms
thereof approved by the Board of Directors of First Jermyn);
(b) Agrees not to vote or execute any written consent
to rescind or amend in any manner any prior vote or written
consent, as a shareholder of First Jermyn, to approve or adopt
the Agreement;
(c) Agrees to use reasonable best efforts to cause the
Merger to be consummated;
(d) Notwithstanding the foregoing, agrees not to sell,
or in any other way reduce the risk of the undersigned relative
to, any shares of common stock of First Jermyn, during the period
commencing thirty days prior to the effective date of the Merger
and ending on the date on which financial results covering at
least thirty days of post-Merger combined operations of First
Jermyn and Upper Valley have been published within the meaning of
Section 201.01 of the SEC's Codification of Financial Reporting
Policies;
(e) Agrees that First Jermyn shall not be bound by any
attempted sale of any shares of First Jermyn common stock, and
First Jermyn's transfer agent shall be given an appropriate stop
transfer order and shall not be required to register any such
attempted sale, unless the sale has been effected in compliance
with the terms of this Letter Agreement.
(f) Acknowledges and agrees that the provisions of
subparagraphs (d), (e) and (f) hereof also apply to shares of
First Jermyn common stock for the period referred to in
subparagraph (e) above) owned by (i) his or her spouse, (ii) any
of his or her relatives or relatives of his or her spouse
occupying his or her home, (iii) any trust or estate in which he
or she, his or her spouse, or any such relative owns at least a
10% beneficial interest or of which any of them serves as
trustee, executor or in any similar capacity, and (iv) any
corporation or other organization in which the undersigned, any
affiliate of the undersigned, his or her spouse, or any such
relative owns at least 10% of any class of equity securities or
of the equity interest;
(g) Represents that the undersigned has no plan or
intention to sell, exchange, or otherwise dispose of any shares
of common stock of First Jermyn prior to expiration of the time
period referred to in subparagraph (e) hereof; and
(h) Represents that the undersigned has the capacity
to enter into this Letter Agreement and that it is a valid and
binding obligation enforceable against the undersigned in
accordance with its terms, subject to bankruptcy, insolvency and
other laws affecting creditors' rights and general equitable
principles.
The obligations set forth herein shall terminate
concurrently with any termination of the Agreement.
________________________
This Letter Agreement may be executed in two or more
counterparts, each of which shall be deemed to constitute an
original, but all of which together shall constitute one and the
same Letter Agreement.
________________________
This Letter Agreement shall terminate concurrently with any
termination of the Agreement in accordance with its terms.
________________________
The undersigned intend to be legally bound hereby.
Sincerely,
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
Exhibit 3
BANK PLAN OF MERGER
THIS BANK PLAN OF MERGER ("Plan of Merger") dated
October 15, 1997, is by and between THE FIRST NATIONAL BANK OF
JERMYN, a national banking association ("FNBJ"), and NBO NATIONAL
BANK, a national banking association ("NBO").
BACKGROUND
1. FNBJ is a national bank and a wholly-owned
subsidiary of The First Jermyn Corp., a Pennsylvania corporation
("First Jermyn"). The authorized capital stock of FNBJ consists
of 128,496 shares of common stock, par value $6.25 per share
("FNBJ Common Stock"), all of which at the date hereof are issued
and outstanding.
2. NBO is a national bank and a wholly-owned
subsidiary of Upper Valley Bancorp, Inc., a Pennsylvania
corporation ("Upper Valley"). The authorized capital stock of
NBO consists of 5,000 shares of common stock, par value $20.00
per share ("NBO Common Stock"), of which at the date hereof
__________ shares are issued and outstanding.
3. The respective Boards of Directors of FNBJ and NBO
deem the merger of NBO with and into FNBJ, pursuant to the terms
and conditions set forth or referred to herein, to be desirable
and in the best interests of the respective corporations and
their respective shareholders.
4. The respective Boards of Directors of FNBJ and NBO
have adopted resolutions approving this Plan of Merger. The
respective Boards of Directors of First Jermyn and Upper Valley
have adopted resolutions approving an Agreement dated October 15,
1997 (the "Agreement") between First Jermyn and Upper Valley,
pursuant to which this Plan of Merger is being executed by FNBJ
and NBO.
AGREEMENT
In consideration of the premises and of the mutual
covenants and agreements herein contained, and in accordance with
the applicable laws and regulations of the United States of
America, FNBJ and NBO, intending to be legally bound hereby,
agree:
ARTICLE I
MERGER; BUSINESS
1.1 Merger. Subject to the terms and conditions of
this Plan of Merger and in accordance with the applicable laws
and regulations of the United States of America, on the Effective
Date (as that term is defined in Article V hereof): NBO shall
merge with and into FNBJ; the separate existence of NBO shall
cease; and FNBJ shall be the surviving corporation (such
transaction referred to herein as the "Merger" and FNBJ, as the
surviving corporation in the Merger, referred to herein as the
"Surviving Bank").
1.2 Business. The business of the Surviving Bank
shall be conducted at its main office, which shall be located at
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and at its
legally established branches, which shall include all of the
branch office of FNBJ and NBO, and the main office of NBO prior
to the Effective Date.
ARTICLE II
CHARTER AND BYLAWS
On and after the Effective Date, the Articles of
Association and Bylaws of FNBJ, as in effect immediately prior to
the Effective Date, shall automatically be and remain the
Articles of Association and Bylaws of the Surviving Bank, until
altered, amended or repealed. Said Articles of Association are
set forth in an Appendix attached hereto and made a part hereof.
ARTICLE III
BOARD OF DIRECTORS AND OFFICERS
3.1 Board of Directors. On and after the Effective
Date, the directors of the Surviving Bank shall consist of the
following persons, who shall serve as such until their successors
have been elected and qualified: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇; ▇▇▇▇▇▇ ▇.
Biancharelli; ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇; ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇; ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇; ▇▇▇▇ ▇. ▇▇▇▇▇▇▇; ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇; ▇▇▇▇ ▇▇▇▇▇▇;
▇▇▇▇▇▇ ▇. ▇▇▇▇▇; ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.; I. ▇▇▇ Moskowvitz;
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.; ▇▇▇▇▇ ▇. ▇▇▇▇▇; ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇;
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇; ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇; and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇.
Such persons shall continue to serve as directors, subject to any
applicable legal restrictions, during such time as they serve as
members of the Board of Directors of First Jermyn.
3.2 Officers. On and after the Effective Date, the
officers of the Surviving Bank shall consist of the officers of
FNBJ duly elected and holding office immediately prior to the
Effective Date, and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ shall be elected as an
Executive Vice President of the Surviving Bank effective as of
the Effective Date.
ARTICLE IV
CONVERSION OF SHARES
4.1 Stock of FNBJ. Each share of FNBJ Common Stock
issued and outstanding immediately prior to the Effective Date
shall, on and after the Effective Date, continue to be issued and
outstanding as a share of common stock of the Surviving Bank.
4.2 Stock of NBO. Each share of NBO Common Stock
issued and outstanding immediately prior to the Effective Date,
and each share of NBO Common Stock issued and held in the
treasury of Upper Valley as of the Effective Date, if any, shall,
on the Effective Date, be cancelled, and no cash, stock or other
property shall be delivered in exchange therefor.
ARTICLE V
EFFECTIVE DATE OF THE MERGER
The Merger shall be effective on the date and at the
time specified in the certificate to be issued by the Comptroller
of Currency approving this Merger (the "Effective Date").
ARTICLE VI
EFFECT OF THE MERGER
On the Effective Date: the separate existence of NBO
shall cease; and all of the property (real, personal and mixed),
rights, powers, duties and obligations of NBO shall be taken and
deemed to be transferred to and vested in the Surviving Bank,
without further act or deed, as provided by applicable laws and
regulations.
ARTICLE VII
CONDITIONS PRECEDENT
The obligations of FNBJ and NBO to effect the Merger
shall be subject to satisfaction, unless duly waived by the party
permitted to do so, of the conditions precedent set forth in the
Agreement.
ARTICLE VIII
TERMINATION
This Plan of Merger shall terminate upon any
termination of the Agreement in accordance with its terms;
provided, however, that any such termination of this Plan of
Merger shall not relieve any party hereto from liability on
account of a breach by such party of any of the terms hereof or
thereof.
ARTICLE IX
AMENDMENT
Subject to applicable law, this Plan of Merger may be
amended, by action of the respective Boards of Directors of the
parties hereto, at any time prior to consummation of the Merger,
but only by an instrument in writing signed by duly authorized
officers on behalf of the parties hereto.
ARTICLE X
MISCELLANEOUS
10.1 Extensions; Waivers. Each party, by a written
instrument signed by a duly authorized officer, may extend the
time for the performance of any of the obligations or other acts
of the other party hereto and may waive compliance with any of
the covenants, or performance of any of the obligations, of the
other party contained in this Plan of Merger.
10.2 Notices. Any notice or other communication
required or permitted under this Plan of Merger shall be given,
and shall be effective, in accordance with the provisions of
Section 7.06 of the Agreement.
10.3 Captions. The headings of the several Articles
and Sections herein are inserted for convenience of reference
only and are not intended to be part of, or to affect the meaning
or interpretation of, this Plan of Merger.
10.4 Counterparts. For the convenience of the parties
hereto, this Plan of Merger may be executed in several
counterparts, each of which shall be deemed the original, but all
of which together shall constitute one and the same instrument.
10.5 Governing Law. This Plan of Merger shall be
governed by and construed in accordance with the laws of the
United States of America and, in the absence of controlling
federal law, in accordance with the laws of the Commonwealth of
Pennsylvania.
IN WITNESS WHEREOF, FNBJ and NBO have caused this Bank
Plan of Merger to be executed by their duly authorized officers
and their corporate seals to be hereunto affixed on the date
first written above.
THE FIRST NATIONAL BANK OF JERMYN
By________________________________
NBO NATIONAL BANK
By________________________________
Exhibit 4
RESTATED
ARTICLES OF INCORPORATION
OF
____________________________
FIRST. The name of the Corporation is __________________.
SECOND. The location and post office address of its
registered office in this Commonwealth is ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
THIRD. The Corporation is incorporated under the provisions
of the Business Corporation Law of 1988, as amended. The
purpose of the Corporation is and it shall have unlimited power
to engage in and to do any lawful act concerning any or all
lawful business for which corporations may be incorporated under
such Act.
FOURTH. The term of the Corporation's existence is
perpetual.
FIFTH. The aggregate number of shares of capital stock
which the Corporation shall have authority to issue is Ten
Million (10,000,000) shares of common stock, par value $1.25 per
share ("Common Stock"). The issuance of shares of Common Stock
by the Corporation, or securities convertible into shares of
Common Stock, for cash consideration shall require the
affirmative vote of 80% of the total number of directors then in
office (rounding up to the nearest whole number); provided,
however, that this voting requirement shall not apply to the
issuance of shares of Common Stock pursuant to any employee
benefit or similar plan of the Corporation, including stock
options.
SIXTH: The directors of the Corporation shall be divided
into three classes: Class I, Class II, and Class III. Each
Class shall be as nearly equal in number as possible. If the
number of Class I, Class II or Class III directors is fixed for
any term of office it shall not be increased during that term,
except by (i) a vote of 80% of the total number of directors then
in office (rounding up to the nearest whole number) at any time
on or prior to January 1, 2004 or (ii) a vote of 66-2/3% of the
total number of directors then in office (rounding up to the
nearest whole number) at any time after January 1, 2004. Except
for the Board of Directors to be effective upon the filing of
these Restated Articles of Incorporation as provided for in this
ARTICLE SIXTH, the term of office of each Class shall be three
(3) years; provided, however, that the term of office of the
initial Class I directors shall expire at the annual election of
directors by the shareholders of the Corporation in 1999; the
term of office of the initial Class II directors shall expire at
the annual election of directors by the shareholders of the
Corporation in 2000; and the term of office of the initial Class
III directors shall expire at the annual election of directors by
the shareholders of the Corporation in 1998, so that, after the
expiration of each such initial term, the terms of office of one
class of directors shall expire each year when their respective
successors have been duly elected by the shareholders and
qualified. At each annual election of directors of the
Corporation held during and after 1998, the directors chosen to
succeed those whose terms then expire shall be identified as
being of the same class as the directors they succeed.
The names and Class designations of the Board of Directors
of the Corporation to be effective upon the filing of these
Restated Articles of Incorporation, who shall sit until the first
annual election of directors for the Class in which such
directors are serving are as follows:
Class I (serving until the 1999 Annual Meeting of Shareholders)
Name
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
I. ▇▇▇ Moskowvitz
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Class II (serving until the 2000 Annual Meeting of Shareholders)
Name
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. Biancharelli
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Class III (serving until the 1998 Annual Meeting of Shareholders)
Name
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
SEVENTH: Each holder of record of Common Stock shall have
the right to one vote for each share of Common Stock standing in
his name on the books of the Corporation. Shareholders shall not
be entitled to cumulate votes for the election of directors.
EIGHTH: The management, control and government of the
Corporation shall be vested in a Board of Directors consisting of
not less than five (5) nor more than twenty-five (25) members in
number, as fixed by the Board of Directors of the Corporation
from time to time.
NINTH: The affirmative vote of both directors and
shareholders of the Corporation as set forth in this ARTICLE
NINTH shall be required to approve any of the following (each a
"Transaction"):
(a) any merger or consolidation of the Corporation
with or into any other corporation or any division involving
the Corporation;
(b) any share exchange in which a corporation, person
or entity acquires the issued or outstanding shares of
capital stock of the Corporation pursuant to a vote of
shareholders;
(c) any sale, lease, exchange or other transfer of
all, or substantially all, of the assets of the Corporation
to any other corporation, person or entity;
(d) a liquidation or dissolution involving the
Corporation; or
(e) any transaction similar to, or having similar
effect as, any of the foregoing transactions.
In the event of any proposed Transaction, then the following
voting requirements shall apply during the following applicable
time periods: (A) on or before January 1, 2004, the affirmative
vote of both (i) 80% of the total number of directors then in
office (rounding up to the nearest whole number) and (ii) 80% of
the total votes which all shareholders of the Corporation are
entitled to cast, and if any class of shares is entitled to vote
as a separate class, the affirmative vote of at least a majority
of the votes entitled to be cast by the outstanding shares of
such class shall be required to approve any Transaction; and
(B) after January 1, 2004, the affirmative vote of both (i) 66-
2/3% of the total number of directors then in office (rounding up
to the nearest whole number) and (ii) 66-2/3% of the total votes
which all shareholders are entitled to cast, and if any class of
shares is entitled to vote as a separate class, the affirmative
vote of at least a majority of the votes entitled to be cast by
the outstanding shares of such class shall be required to approve
any Transaction.
The provisions of this ARTICLE NINTH shall not apply to
(A) any Transaction occurring prior to January 1, 2004 in which
(i) members of the Corporation's Board of Directors immediately
prior to the Transaction continue to constitute at least a
majority of the Board of Directors of the resulting or surviving
corporation upon completion thereof and (ii) shareholders of the
Corporation immediately prior to the Transaction continue to own
at least a majority of the outstanding voting securities or
interests of the resulting or surviving corporation outstanding
upon completion thereof provided the transaction is approved by
both (i) 80% of the total number of directors then in office
(rounding up to the nearest whole number) and (ii) 66-2/3% of the
total vote which all shareholders are entitled to cast, and if
any class of shares is entitled to vote as a separate class, the
affirmative vote of at least a majority of the votes entitled to
be cast by the outstanding shares of such class or (B) any
Transaction approved in advance by the unanimous vote of all
directors of the Corporation then in office.
An affirmative vote as provided in the foregoing provisions
shall be in addition to any vote of the shareholders otherwise
required by law.
The Board of Directors of the Corporation shall have the
power and duty to determine, for purposes of this ARTICLE NINTH,
if any transaction is similar to, or has a similar effect as, any
of the Transactions identified above in this ARTICLE NINTH. Any
such determination shall be conclusive and binding for all
purposes of this ARTICLE NINTH.
TENTH: No action required to be taken or which may be taken
at any annual or special meeting of shareholders of the
Corporation may be taken without a meeting, and the power of the
shareholders of the Corporation to consent in writing to action
without a meeting is specifically denied.
ELEVENTH: Except as otherwise specially required by the
Bylaws of the Corporation, the authority to make, amend, alter,
change or repeal the bylaws of the Corporation is hereby
expressly and solely granted to and vested in the Board of
Directors of the Corporation by a vote of 66-2/3% of the total
number of directors then in office (rounding up to the nearest
whole number), subject always to the power of the shareholders to
make, amend, alter, change or repeal the bylaws of the
Corporation by the following votes during the following time
periods: (A) on or before January 1, 2004, the affirmative vote
of 80% of the total votes which all shareholders of the
Corporation are entitled to cast, and if any class of shares is
entitled to vote as a separate class, the affirmative vote of at
least a majority of the votes entitled to be cast by the
outstanding shares of such class; and (B) after January 1, 2004,
the affirmative vote of 66-2/3% of the total votes which all
shareholders of the Corporation are entitled to cast, and if any
class of shares is entitled to vote as a separate class, the
affirmative vote of at least a majority of the votes entitled to
be cast by the outstanding shares of such class.
TWELFTH: (a) The provisions of Subchapter E (relating to
Control Transactions), Chapter 25 of Title 15, known as the
Associations Code of the Commonwealth of Pennsylvania, or any
amendment or restatement of such Subchapter, shall not apply to
the Corporation.
(b) If any corporation, person, entity or group
becomes the beneficial owner, directly or indirectly, of shares
of capital stock of the Corporation having the right to cast in
the aggregate 25% or more of all votes entitled to be cast by all
issued and outstanding shares of capital stock of the Corporation
entitled to vote, such corporation, person, entity or group shall
within 30 days thereafter offer to purchase all shares of capital
stock of the Corporation, issued, outstanding and entitled to
vote. Such offer to purchase shall be at a price per share equal
to the higher of (a) the highest price paid for a share of the
respective class or series of capital stock of the Corporation
purchased by such corporation, person, entity or group within the
preceding twelve months or (b), if the Board of Directors so
elects, the fair market value of a share of the Corporation's
outstanding capital stock, determined in writing by an investment
banking firm selected by the Board of Directors and experienced
in the valuation of financial institutions, as of the date on
which such corporation, person, entity or group becomes the
beneficial owner, directly or indirectly, of shares of capital
stock of the Corporation having the right to cast in the
aggregate 25% or more of all votes entitled to be cast by all
issued and outstanding shares of capital stock of the Corporation
entitled to vote, including an increment representing a
proportion of any value payable for acquisition of control of the
Corporation. Such offer shall provide that the purchase price
for such shares shall be payable in cash. The provisions of this
Article Twelfth shall not apply if 80% or more of the total
number of directors then in office (rounding up to the nearest
whole number) approve in advance the acquisition of beneficial
ownership by such corporation, person, entity or group of shares
of capital stock of the Corporation having the right to cast in
the aggregate 25% or more of all votes entitled to be cast by all
issued and outstanding shares of capital stock of the
Corporation.
THIRTEENTH: The Corporation reserves the right to amend,
alter, change or repeal any provision contained in its Articles
of Incorporation in the manner now or hereafter prescribed by
statute and all rights conferred upon shareholders and directors
herein are hereby granted subject to this reservation; provided,
however, that the provisions set forth in ARTICLES SIXTH,
SEVENTH, and EIGHTH of these Articles of Incorporation may not be
repealed, altered or amended, in any respect whatsoever, unless
such repeal, alteration or amendment is approved by either
(a) the affirmative vote of shareholders of the Corporation
entitled to cast at least 66-2/3% of all votes which shareholders
of the Corporation are then entitled to cast, and if any class of
shares is entitled to vote as a separate class, the affirmative
vote of at least a majority of the votes entitled to be cast by
the outstanding shares of such class, or (b) the affirmative vote
of 66-2/3% of the total number of directors then in office
(rounding up to the nearest whole number) and the affirmative
vote of shareholders of the Corporation entitled to cast at least
a majority of all votes which shareholders of the Corporation are
then entitled to cast, and if any class of shares is entitled to
vote as a separate class, the affirmative vote of at least a
majority of the votes entitled to be cast by the outstanding
shares of such class; and further provided, that the provisions
set forth in this ARTICLE THIRTEENTH and in ARTICLES EIGHTH,
NINTH, TENTH, ELEVENTH and TWELFTH of these Articles of
Incorporation may not be repealed, altered or amended, in any
respect whatsoever, unless such repeal, alteration or amendment
is approved by the following votes during the following time
periods: (A) on or before January 1, 2004, the affirmative vote
of both (i) 80% of the total number of directors then in office
(rounding up to the nearest whole number) and (ii) 80% of the
total votes which all shareholders of the Corporation are
entitled to cast, and if any class of shares is entitled to vote
as a separate class, the affirmative vote of at least a majority
of the votes entitled to be cast by the outstanding shares of
such class; and (B) after January 1, 2004, the affirmative vote
of both (i) 66-2/3% of the total number of directors then in
office (rounding up to the nearest whole number) and (ii) 66-2/3%
of the total votes which all shareholders are entitled to cast,
and if any class of shares is entitled to vote as a separate
class, the affirmative vote of at least a majority of the votes
entitled to be cast by the outstanding shares of such class.
RESTATED
BYLAWS
OF
_________________________
ARTICLE I. MEETINGS OF SHAREHOLDERS.
Section 101. Place of Meetings. All meetings of the
shareholders shall be held at such place or places, within or
without the Commonwealth of Pennsylvania, as shall be determined
by the Board of Directors from time to time.
Section 102. Annual Meetings.
(a) Time and Date. The annual meeting of the
shareholders for the election of Directors and the transaction of
such other business as may properly come before the meeting shall
be held at such date or hour as may be fixed by the Board of
Directors. At each annual meeting of shareholders, directors
shall be elected, reports of the affairs of the Corporation shall
be considered, and any other business may be transacted which is
within the power of the shareholders.
(b) Agenda for Annual Meeting. Matters to be placed
on the agenda for consideration at annual meetings of
shareholders may be determined by the Board of Directors or by
any shareholder entitled to vote for the election of directors.
Matters proposed for the agenda by shareholders entitled to vote
for the election of directors shall be made by notice in writing,
delivered or mailed by first-class United States mail, postage
prepaid, to the Secretary of the Corporation not less than sixty
(60) days prior to any annual meeting of shareholders; provided,
however, that if less than twenty-one (21) days' notice of the
meeting is given to shareholders, such written notice shall be
delivered or mailed, as prescribed, to the Secretary of the
Corporation not later than the close of the seventh day following
the day on which notice of the meeting was mailed to
shareholders. Notice of matters which are proposed by the Board
of Directors shall be given at any time by the Chairman of the
Board or any other appropriate officer. Each notice made by
shareholders shall set forth a brief description of the business
desired to be brought before the annual meeting. The chairman of
the meeting may determine and declare to the meeting that a
matter proposed for the agenda was not made in accordance with
the foregoing procedure, and if the chairman should so determine,
the chairman shall so declare to the meeting and the matter shall
be disregarded.
Section 103. Special Meetings. Special meetings of the
shareholders may be called at any time by the Board of Directors
in the manner provided herein. Shareholders shall not have the
right to call special meetings of shareholders, except as
specifically provided by law.
Section 104. Conduct of Shareholders' Meetings. At every
meeting of the shareholders, the Chairman of the Board or, in the
Chairman's absence, the President or, in the President's absence,
a chairman (who shall be one of the officers, if any is present)
chosen by a majority of the members of the Board of Directors
shall act as chairman of the meeting. The chairman of the
meeting shall have any and all powers and authority necessary in
the chairman's sole discretion to conduct an orderly meeting and
preserve order and to determine any and all procedural matters,
including imposing reasonable limits on the amount of time at the
meeting taken up in remarks by any one shareholder or group of
shareholders. In addition, until the business to be completed at
a meeting of the shareholders is completed, the chairman of a
meeting of the shareholders is expressly authorized to
temporarily adjourn and postpone the meeting from time to time.
The Secretary of the Corporation or in the Secretary's absence,
an assistant secretary, shall act as secretary of all meetings of
the shareholders. In the absence at such meeting of the
Secretary or assistant secretary, the chairman of the meeting may
appoint another person to act as secretary of the meeting.
Section 105. Determination of Record Date. The Board of
Directors may fix a time prior to the date of any meeting of
shareholders as a record date for the determination of the
shareholders entitled to notice of, or to vote at, the meeting,
which time, except in the case of an adjourned meeting, shall be
not more than 90 days prior to the date of the meeting of
shareholders. Only shareholders of record on the date fixed
shall be so entitled notwithstanding any transfer of shares on
the books of the Corporation after any record date fixed as
provided in this section. The Board of Directors may similarly
fix a record date for the determination of shareholders of record
for any other purpose. When a determination of shareholders of
record has been made as provided in this section for purposes of
a meeting, the determination shall apply to any adjournment
thereof unless the Board of Directors fixes a new record date for
the adjourned meeting.
Section 106. Voting List. The officer or agent having
charge of the transfer books for shares of the Corporation shall
make a complete list of the shareholders entitled to vote at any
meeting of shareholders, arranged in alphabetical order, with the
address of and the number of shares held by each. The list shall
be produced and kept open at the time and place of the meeting
and shall be subject to the inspection of any shareholder during
the whole time of the meeting for the purposes thereof.
Failure to comply with the requirements of this section
shall not affect the validity of any action taken at a meeting
prior to a demand at the meeting by any shareholder entitled to
vote thereat to examine the list. The original share register or
transfer book, or a duplicate thereof kept in Pennsylvania, shall
be prima facie evidence as to who are the shareholders entitled
to examine the list or share register or transfer book or to vote
at any meeting of shareholders.
Section 107. Judges of Election. In advance of any meeting
of shareholders of the Corporation, the Board of Directors may
appoint judges of election, who need not be shareholders, to act
at the meeting or any adjournment thereof. If judges of election
are not so appointed, the presiding officer of the meeting may,
and on the request of any shareholder shall, appoint judges of
election at the meeting. The number of judges shall be one (1)
or three (3). No person who is a candidate for office to be
filled at the meeting shall act as a judge of election.
In the event any person appointed as a judge fails to appear
or fails or refuses to act, the vacancy may be filled by
appointment made by the Board of Directors in advance of
convening the meeting or at the meeting by the presiding officer
thereof.
The judges of election shall determine the number of shares
outstanding and the voting power of each, the shares represented
at the meeting, the existence of a quorum, the authenticity,
validity and effect of proxies, receive votes or ballots, hear
and determine all challenges and questions in any way arising in
connection with the right to vote, count and tabulate all votes,
determine the result and do such acts as may be proper to conduct
the election or vote with fairness to all shareholders. The
judge or judges of election shall perform their duties
impartially, in good faith, to the best of their ability and as
expeditiously as is practical. If there are three judges of
election, the decision, act or certificate of a majority shall be
effective in all respects as the decision, act or certificate of
all.
On request of the presiding officer of the meeting, or of
any shareholder, the judge or judges shall make a report in
writing of any challenge or question or matter determined by
them, and execute a certificate of any fact found by them. Any
report or certificate made by them shall be prima facie evidence
of the facts stated therein.
Section 108. No Consent of Shareholders in Lieu of Meeting.
No action required to be taken or which may be taken at any
annual or special meeting of shareholders of the Corporation may
be taken without a meeting, and the power of the shareholders to
consent in writing to action without a meeting is specifically
denied.
ARTICLE II. DIRECTORS AND BOARD MEETINGS.
Section 201. Management by Board of Directors. The
business and affairs of the Corporation shall be managed by a
Board of Directors consisting of not less than five (5) nor more
than twenty-five (25) members, as fixed by the Board of Directors
from time to time. The Board of Directors may exercise all such
powers of the Corporation and do all such lawful acts and things
as are not by statute, regulation, the Articles of Incorporation
or these Bylaws directed or required to be exercised or done by
the shareholders.
Section 202. Nominations for Directors. Nominations by
shareholders for directors to be elected at an annual meeting of
shareholders must be submitted to the Secretary of the
Corporation in writing not later than the close of business on
the twentieth (20th) day immediately preceding the date of the
meeting. Such notification shall contain the following
information: (a) name and address of each proposed nominee;
(b) the principal occupation of each proposed nominee; (c) the
total number of shares of capital stock of the Corporation that
will be voted for each proposed nominee; (d) the name and
residence address of the notifying shareholder; and (e) the
number of shares of capital stock of the Corporation owned by the
notifying shareholder. Nominations not made in accordance
herewith may, in the discretion of the chairman of the meeting,
be disregarded and, upon instruction, the judges of election may
disregard all votes cast for any such proposed nominee.
Section 203. Qualifications of Directors.
(a) Share Ownership. Every Director must be a
shareholder of the Corporation and shall own in his/her own right
the number of shares (if any) required by law in order to qualify
as such Director. Any Director shall forthwith cease to be a
Director when he/she no longer holds such shares, which fact
shall be reported to the Board of Directors by the Secretary,
whereupon the Board of Directors shall declare the seat of such
Director vacated.
(b) Retirement. No person shall be eligible for
election as a member of the Board of Directors of the Corporation
following such person's attainment of the age of seventy-five
(75); provided, however, that this provision shall not apply to
any person serving on the Board of Directors of the Corporation
on _________________, 1998. Any person elected to the Board of
Directors of the Corporation prior to attainment of age seventy-
five (75) shall not be required to resign by reason of such
person's attainment of such age.
Section 204. Classification of Directors. The Board of
Directors of the Corporation shall be divided into three (3)
classes, as nearly equal in number as possible, as provided in
the Corporation's Articles of Incorporation.
Section 205. Compensation of Directors. No Director shall
be entitled to any salary as such; but the Board of Directors may
fix, from time to time, reasonable fees or other compensation,
payable in cash, stock or other property, for acting as a
Director and reasonable fees to be paid each Director for his/her
services in attending meetings of the Board and meetings of
committees appointed by the Board. The Corporation may reimburse
Directors for expenses related to their duties as members of the
Board of Directors.
Section 206. Regular Meetings. Regular meetings of the
Board of Directors shall be held on such day, at such hour, and
at such place, consistent with applicable law, as the Board of
Directors shall from time to time designate or as may be
designated in any notice from the Secretary calling the meeting.
The Board of Directors shall meet for reorganizational purposes
at the first regular meeting following the annual meeting of
shareholders at which the Directors are elected. Notice need not
be given of regular meetings of the Board of Directors which are
held at the time and place designated by the Board of Directors.
If a regular meeting is not to be held at the time and place
designated by the Board of Directors, notice of such meeting,
which need not specify the business to be transacted thereat and
which may be either verbal or in writing, shall be given by the
President to each member of the Board of Directors at least
twenty-four (24) hours before the time of the meeting.
A majority of the members of the Board of Directors shall
constitute a quorum for the transaction of business. If at the
time fixed for the meeting, including the meeting to organize the
new Board following the annual meeting of shareholders, a quorum
is not present, the directors in attendance may adjourn the
meeting from time to time until a quorum is present.
Except as otherwise provided in Section 209 or as otherwise
provided herein, a majority of Directors present and voting at
any meeting of the Board of Directors at which a quorum is
present, shall decide each matter considered. A Director cannot
vote by proxy, or otherwise act by proxy at a meeting of the
Board of Directors.
Section 207. Special Meetings. Special meetings of the
Board of Directors may be called by the Chairman of the Board,
the President or at the request of a majority of Directors then
in office. A special meeting of the Board of Directors shall be
deemed to be any meeting other than a regular meeting of the
Board of Directors. Notice of the time and place of every
special meeting, which need not specify the business to be
transacted thereat, shall be given by the President to each
member of the Board at least twenty-four (24) hours before the
time of such meeting.
Section 208. Reports and Records. The reports of officers
and Committees and the records of the proceedings of all
Committees shall be filed with the Secretary of the Corporation
and presented to the Board of Directors, if practicable, at its
next regular meeting. The Board of Directors shall keep complete
records of its proceedings in a minute book kept for that
purpose. When a Director shall request it, the vote of each
Director upon a particular question shall be recorded in the
minutes.
Section 209. Special Director Voting Requirements.
Notwithstanding anything contained herein to the contrary, until
January 1, 2004, approval of any of the following actions shall
require a vote of 80% of the total number of directors of the
Corporation then in office (rounding up to the nearest whole
number):
(i) adopting a motion or resolution to study sale
of the Corporation as a strategic alternative, or engaging a
financial advisor with respect thereto;
(ii) adopting a motion or resolution approving a
fundamental transaction (a "Fundamental Transaction")
involving the Corporation within the meaning of Chapter 19
of Title 15 of the Pennsylvania Business Corporation Law of
1988, as amended, or any successor provisions (whether by
merger, consolidation, share exchange or otherwise), or
calling a special meeting of shareholders of the Corporation
to consider any such proposal or placing any such proposal
on the agenda for an annual meeting of shareholders of the
Corporation;
(iii) recommending that shareholders of the
Corporation (A) accept a transaction or tender their shares
of the Corporation's voting securities in connection with a
tender or exchange offer for the Corporation's voting
securities or (B) cast votes with respect to their voting
securities in a proxy solicitation conducted by a party
other than the Corporation's Board of Directors contrary to
the recommendation of the Board of Directors;
(iv) soliciting indications of interest or
responding to proposals relating to a Fundamental
Transaction in which the Corporation, upon completion of
such Fundamental Transaction, would not be the surviving or
controlling entity; or
(v) amending or repealing Sections 203 or 209 of
these Bylaws.
ARTICLE III. COMMITTEES.
Section 301. Committees. The following two (2) Committees
of the Board of Directors shall be established by the Board of
Directors in addition to any other Committee the Board of
Directors may in its discretion establish: Executive and Audit
Section 302. Executive Committee. The Executive Committee
shall consist of five (5) Directors. A majority of the members
of the Executive Committee shall constitute a quorum, and actions
of a majority of those present at a meeting at which a quorum is
present shall be the actions of the Committee. Meetings of the
Committee may be called at any time by the Chairman of the
Committee or his designee. A majority of the members of the
Committee shall constitute a quorum for the transaction of
business, and the actions of a majority of those present at a
meeting at which a quorum is present shall be the actions of the
Committee. The Executive Committee shall have and exercise the
authority of the Board of Directors in the management of the
business of the Corporation between the dates of regular meetings
of the Board of Directors.
Section 303. Audit Committee. The Audit Committee shall
consist of at least four (4) Directors, none of whom shall be
officers of the Corporation. Meetings of the Committee may be
called at any time by the Chairman of the Committee or his
designee. A majority of the members of the Committee shall
constitute a quorum for the transaction of business, and the
actions of a majority of those present at a meeting at which a
quorum is present shall be the actions of the Committee. The
Committee shall, among other things, supervise the audit of the
books of the Corporation and recommend for approval by the Board
the services of a reputable Certified Public Accounting firm to
perform such audit.
Section 304. Appointment of Committee Members. The Board
of Directors shall elect the members of the Committees and the
Chairman of each such Committee to serve until the next annual
meeting of shareholders. The President shall appoint or shall
establish a method of appointing, subject to the approval of the
Board of Directors, the members of any other Committees
established by the Board of Directors, and the Chairman of such
Committee, to serve until the next annual meeting of
shareholders. The Board of Directors may appoint, from time to
time, other committees, for such purposes and with such powers as
the Board may determine.
Section 305. Organization and Proceedings. Each Committee
of the Board of Directors shall effect its own organization by
the appointment of a Secretary and such other officers, except
the Chairman, as it may deem necessary. A record of proceedings
of all Committees shall be kept by the Secretary of such
Committee and filed and presented as provided in Section 208 of
these Bylaws.
ARTICLE IV. OFFICERS.
Section 401. Chairman of the Board. The Board of Directors
shall appoint one of its members to be the Chairman of the Board
to serve at the pleasure of the Board. He shall be a voting
member of the Board of Directors and shall preside at all
meetings of the Board of Directors and shareholders. The
Chairman of the Board shall supervise the carrying out of the
policies adopted or approved by the Board. He shall have general
executive powers, as well as the specific powers conferred by
these Bylaws. He shall also have and may exercise such further
powers and duties as from time to time may be conferred upon,or
assigned to him by the Board of Directors.
Section 402. President. The Board of Directors shall
appoint one of its members to be President of the Corporation.
In the absence of the Chairman, he shall preside at any meeting
of the Board. The President shall have general executive powers,
and shall have and may exercise any and all other powers and
duties pertaining by law, regulation, or practice, to the office
of President, or imposed by these Bylaws. He shall also have and
may exercise such further powers and duties as from time to time
may be conferred upon or assigned to him by the Board of
Directors.
Section 403. Vice Presidents. The Board of Directors may
appoint an Executive Vice President and one or more Vice
Presidents. The Executive Vice President and each Vice President
shall have such powers and duties as may be assigned to him by
the Board of Directors. The Executive Vice President shall, in
the absence of the President, perform all the duties of the
President.
Section 404. Secretary. The Board of Directors shall
appoint a Secretary, who shall be Secretary of the Board and of
the Corporation, and shall keep accurate minutes of all meetings.
He shall attend to the giving of all notices required by these
Bylaws to be given. He shall be custodian of the corporate seal,
records, documents and papers of the Corporation. He shall
provide for the keeping of proper records of all transactions of
the Corporation. He shall have and may exercise any and all
other powers and duties pertaining by law, regulation or
practice, to the office of Secretary, or imposed by these Bylaws.
He shall also perform such other duties as may be assigned to
him, from time to time, by the Board of Directors.
Section 405. Treasurer. The Treasurer shall act under the
supervision of the President or such other Officer as the
President may designate. The Treasurer shall have custody of the
Corporation's funds and such other duties as may be prescribed by
the Board of Directors, President or such other Supervising
Officer as the President may designate.
Section 406. Assistant Officers. Unless otherwise provided
by the Board of Directors, each Assistant Officer shall perform
such duties as shall be prescribed by the Board of Directors, the
President or the Officer to whom he/she is an Assistant. In the
event of the absence or disability of an Officer or his/her
refusal to act, his/her Assistant Officer shall, in the order of
their rank, and within the same rank in the order of their
seniority, have the powers and authorities of such Officer.
Section 407. Compensation. Unless otherwise provided by
the Board of Directors, the salaries and compensation of all
Officers and Assistant Officers, except the President and the
Executive Vice President, shall be fixed in accordance with the
general salary administration programs and guidelines established
by the Board.
Section 408. General Powers. The Officers are authorized
to do and perform such corporate acts as are necessary in the
carrying on of the business of the Corporation, subject always to
the direction of the Board of Directors.
ARTICLE V. SHARES OF CAPITAL STOCK.
Section 501. Authority to Sign Share Certificates. Every
share certificate of the Corporation shall be signed by the
President and by the Executive Vice President or one of the Vice
Presidents. Certificates may be signed by facsimile signature.
Section 502. Lost or Destroyed Certificates. Any person
claiming a share certificate to be lost, destroyed or wrongfully
taken shall receive a replacement certificate if such person
shall have: (a) requested such replacement certificate before the
Corporation has notice that the shares have been acquired by a
bona fide purchaser; (b) provided the Corporation with an
indemnity agreement satisfactory in form and substance to the
President or the Executive Vice President; and (c) satisfied any
other reasonable requirements (including providing an affidavit
and a surety bond) fixed by the President or the Executive Vice
President.
ARTICLE VI. GENERAL.
Section 601. Fiscal Year. The fiscal year of the
Corporation shall begin on the first (1st) day of January in each
year and end on the thirty-first (31st) day of December in each
year.
Section 602. Emergency Bylaws. In the event of any
emergency resulting from a nuclear attack or similar disaster,
and during the continuance of such emergency, the following Bylaw
provisions shall be in effect, notwithstanding any other
provisions of the Bylaws:
(a) A meeting of the Board of Directors or of any
Committee thereof may be called by any Officer or Director upon
one (1) hour's notice to all persons entitled to notice whom, in
the sole judgment of the notifier, it is feasible to notify;
(b) The Director or Directors in attendance at the
meeting of the Board of Directors or of any Committee thereof
shall constitute a quorum; and
(c) These Bylaws may be amended or repealed, in whole
or in part, by a majority vote of the Directors attending any
meeting of the board of Directors, provided such amendment or
repeal shall only be effective for the duration of such
emergency.
Section 603. Severability. If any provision of these
Bylaws is illegal or unenforceable as such, such illegality or
unenforceability shall not affect any other provision of these
Bylaws and such other provisions shall continue in full force and
effect.
ARTICLE VII. LIABILITY OF DIRECTORS: INDEMNIFICATION.
Section 701. Elimination of Liability. To the fullest
extent permitted by the laws of the Commonwealth of Pennsylvania,
a Director of the Corporation shall not be personally liable for
monetary damages for any action taken or any failure to take any
action unless the Director has breached or failed to perform the
duties of his or her office under the Pennsylvania Business
Corporation Law of 1988, as amended, or any successor statute,
and such breach or failure constitutes self-dealing, willful
misconduct or recklessness. The provisions of this Section 701
shall not apply with respect to the responsibility or liability
of a Director under any criminal statute or the liability of a
director for the payment of taxes pursuant to local, state or
federal law.
Section 702. Indemnification. The Corporation shall
indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, or
investigative by reason of the fact that such person is or was a
Director, officer, employee, or agent of the Corporation, or is
or was serving at the request of the corporation as a director,
officer, employee, or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses
(including attorneys' fees), amounts paid in settlement,
judgments, and fines actually and reasonably incurred by such
person in connection with such action, suit, or proceeding;
provided, however, that no indemnification shall 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.
Section 703. Expenses. Expenses (including attorneys'
fees) incurred in defending a civil or criminal action, suit, or
proceeding shall be paid by the Corporation in advance of the
final disposition of such action, suit, or proceeding upon
receipt of an undertaking by or on behalf of the Director,
officer, employee, or agent to repay such amount if it shall be
ultimately determined that he/she is not entitled to be
indemnified by the Corporation as authorized in this Article VII.
Section 704. Non-Exclusive. The indemnification and
advancement of expenses provided by this Article VII shall not be
deemed exclusive of any other right to which persons seeking
indemnification and advancement of expenses may be entitled under
any agreement, vote of shareholders or disinterested directors,
or otherwise, both as to actions in such persons' official
capacity and as to their actions in another capacity while
holding office, and shall continue as to a person who has ceased
to be a director, officer, employee, or agent and shall inure to
the benefit of the heirs, executors, and administrator of such
person.
Section 705. Insurance, Etc. The Corporation may purchase
and maintain insurance on behalf of any person, may enter into
contracts of indemnification with any person, may create a fund
of any nature (which may, but need not be, under the control of a
trustee) for the benefit of any person, and may otherwise secure
in any manner its obligations with respect to indemnification and
advancement of expenses, whether arising under this Article IX or
otherwise, to or for the benefit of any person, whether or not
the Corporation would have the power to indemnify such person
against such liability under the provisions of this Article VII.
Section 706. Amendment. Notwithstanding anything herein
contained or contained in the Articles of Incorporation to the
contrary, this Article VII may not be amended or repealed, and a
provision inconsistent herewith may not be adopted, except by the
affirmative vote of 80% of the members of the entire Board of
Directors or by the affirmative vote of shareholders of the
corporation entitled to cast at least 80% of all votes which
shareholders of the corporation are then entitled to cast, except
that, if the laws of the Commonwealth of Pennsylvania are amended
or any other statute is enacted so as to decrease the exposure of
directors to liability or to increase the indemnification rights
available, this Article VII and any other provision of these
Bylaws inconsistent with such decreased exposure or increased
indemnification rights shall be amended, automatically and
without any further action on the part of shareholders or
directors, to reflect such decreased exposure or to include such
increased indemnification rights, unless such legislation
expressly otherwise requires. Any repeal or modification of this
Article VII by the directors or shareholders of the Corporation
shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a director of the
Corporation or any right to indemnification for any action taken
or any failure to take any action occurring prior to the time of
such repeal or modification.
Section 707. Severability. If, for any reason, any
provision of this Article VII shall be held invalid, such
invalidity shall not affect any other provision not held so
invalid, and each such other provision shall, to the full extent
consistent with law, continue in full force and effect. If any
provision of this Article VII shall be held invalid in part, such
invalidity shall in no way affect the remainder of such
provision, and the remainder of such provision, together with all
other provisions of this Article VII shall, to the full extent
consistent with law, continue in full force and effect.
ARTICLE VIII. AMENDMENT OR REPEAL.
Section 801. Amendment or Repeal by the Board of Directors.
These Bylaws may be amended or repealed, in whole or in part, in
the manner set forth in the Articles of Incorporation.
Exhibit 5
Form of Agreement Re: Benefits
October 15, 1997
The First Jermyn Corp.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Gentlemen:
I, the undersigned, hereby acknowledge and agree that an
amount not to exceed $__________ is the maximum amount that I
would be entitled to receive from Upper Valley Bancorp, Inc.
("Upper Valley"), any Upper Valley subsidiary or any of their
respective successors or assigns pursuant to any employment
agreement, special termination agreement, supplemental executive
retirement plan, deferred compensation plan, salary continuation
plan, or any other benefit or welfare plan assuming that my
employment with Upper Valley or any Upper Valley subsidiary (or
any of their respective successors or assigns) is terminated for
any reason, whether voluntarily or involuntarily, on December 31,
1997, and following the Closing Date of the transaction described
in the Agreement and Plan of Merger dated as of October 15, 1997
between The First Jermyn Corp. and Upper Valley (the
"Agreement"). The amount shown above represents the total of all
amounts available for payment in an immediate lump-sum upon
termination and the present value, as of December 31, 1997 (based
on a 6% per annum discount factor) of all payments to be made on
a date or dates subsequent to the date of termination.
Sincerely,
EXHIBIT 6
FORM OF OPINION OF COUNSEL TO FIRST JERMYN
Upper Valley shall have received from counsel to First
Jermyn, an opinion, dated as of the Closing Date, substantially
to the effect that, subject to customary exceptions and
qualifications:
(a) First Jermyn and FNBJ have full corporate power to
carry out the transactions contemplated in the Agreement and the
Plan of Merger, respectively. The execution and delivery of the
Agreement and the Plan of Merger and the consummation of the
transactions contemplated thereunder have been duly and validly
authorized by all necessary corporate action on the part of First
Jermyn and FNBJ, and the Agreement and the Plan constitute valid
and legally binding obligations of First Jermyn and FNBJ,
respectively, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium, receivership, conservatorship, and
other laws affecting creditors' rights generally and institutions
the deposits of which are insured by the FDIC, and as may be
limited by the exercise of judicial discretion in applying
principles of equity. Subject to satisfaction of the conditions
set forth in the Agreement, neither the transactions contemplated
in the Agreement or the Plan, nor compliance by First Jermyn and
FNBJ with any of the respective provisions thereof, will
(i) conflict with or result in a breach or default under (A) the
articles of incorporation or bylaws of First Jermyn or the
articles of association or bylaws of FNBJ, or, (B) based solely
on certificates of officers and without independent verification,
to the knowledge of such counsel, any note, bond, mortgage,
indenture, license, agreement or other material instrument or
obligation to which First Jermyn or FNBJ is a party; or
(ii) based solely on certificates of officers and without
independent verification, to the knowledge of such counsel,
result in the creation or imposition of any material lien or
encumbrance upon the property of First Jermyn or FNBJ, except
such material lien, instrument or obligation that has been
disclosed pursuant to the Agreement or the Plan; or (iii) violate
in any material respect any order, writ, injunction or decree
known to such counsel, or any federal or Pennsylvania statute,
rule or regulation applicable to First Jermyn or FNBJ.
(b) FNBJ is a validly existing national bank organized
and in good standing under the laws of the United States of
America. The deposits of FNBJ are insured to the maximum extent
provided by law by the Federal Deposit Insurance Corporation.
(c) There is, to the knowledge of such counsel, no
legal, administrative, arbitration or governmental proceeding or
investigation pending or threatened to which First Jermyn or FNBJ
is a party which would, if determined adversely to First Jermyn
or FNBJ, have a material adverse effect on the financial
condition or results of operation of First Jermyn and FNBJ taken
as a whole, or which presents a claim to restrain or prohibit the
transactions contemplated by the Agreement and the Plan,
respectively.
(d) To the knowledge of such counsel, no consent,
approval, authorization or order of any federal or state court or
federal or state governmental agency or body is required for the
consummation by First Jermyn or FNBJ of the transactions
contemplated by the Agreement and the Plan, except for such
consents, approvals, authorizations or orders as have been
obtained.
(e) Upon the filing and effectiveness of the Articles
of Merger with the PDS with respect to the Merger, and Articles
of Merger with the OCC with respect to the Bank Merger in
accordance with the Agreement and the Plan, the mergers of First
Jermyn and Upper Valley and of FNBJ and NBO contemplated by the
Agreement and the Plan, respectively, will have been effected in
compliance with all applicable federal and Pennsylvania laws and
regulations in all material respects.
(f) The shares of First Jermyn Common Stock to be
issued in connection with the merger of Upper Valley and First
Jermyn contemplated by the Agreement have been duly authorized
and will, when issued in accordance with the terms of the
Agreement, be validly issued, fully paid and nonassessable, free
and clear of any mortgage, pledge, lien, encumbrance or claim
(legal or equitable).
Such counsel shall also provide a statement to the
following effect:
By way of supplemental information, such counsel
advises that, on the sole basis of such counsel's participation
in conferences with officers and employees of First Jermyn in
connection with the Proxy Statement/Prospectus, and without other
independent investigation or inquiry, such counsel has no reason
to believe that the Proxy Statement/Prospectus, including any
amendments or supplements thereto (except for the financial
information, financial schedules and other financial or
statistical data contained therein and except for any information
supplied by Upper Valley or NBO for inclusion therein, as to
which counsel need express no belief), as of the date of mailing
thereof, contained any untrue statement of a material fact with
respect to First Jermyn or omitted to state any material fact
with respect to First Jermyn necessary to make any statement
therein with respect to First Jermyn, in light of the
circumstances under which it was made, not misleading. Counsel
may state in delivering such opinion, that such counsel has not
independently verified and does not assume the responsibility for
the accuracy, completeness or fairness of any information or
statements contained in the Proxy Statement/Prospectus, except
with respect to identified statements of law or regulations or
legal conclusions relating to First Jermyn or the transactions
contemplated in the Agreement and the Plan.
EXHIBIT 7
FORM OF TAX OPINION OF ▇▇▇▇▇▇▇ & ▇▇▇
First Jermyn and Upper Valley shall have received an opinion
of ▇▇▇▇▇▇▇ & ▇▇▇ substantially to the effect that, under the
provisions of the IRC:
1. Provided the Merger qualifies as a statutory merger
under applicable law, the transfer by Upper Valley of all of its
assets to First Jermyn in exchange for First Jermyn Common Stock
(including fractional share interests) and the assumption by
First Jermyn of all of Upper Valley's liabilities will constitute
a reorganization within the meaning of Section 368(a)(1)(A) of
the IRC.
2. Upper Valley and First Jermyn will each be "a party to
a reorganization" within the meaning of Section 368(b) of the
IRC.
3. Neither Upper Valley nor First Jermyn will recognize
any gain or loss upon the transfer of Upper Valley's assets to
First Jermyn in exchange solely for First Jermyn Common Stock
(including fractional share interests) and the assumption by
First Jermyn of the liabilities of Upper Valley.
4. The basis of the Upper Valley assets in the hands of
First Jermyn will be the same as the basis of such assets in the
hands of Upper Valley immediately prior to the Merger.
5. The holding period of the assets of Upper Valley to be
received by First Jermyn will include the period during which the
assets were held by Upper Valley.
6. No gain or loss will be recognized by the shareholders
of Upper Valley on the receipt of First Jermyn Common Stock
(including fractional share interests) solely in exchange for
their shares of Upper Valley Common Stock.
7. The basis of the First Jermyn Common Stock (including
fractional share interests) to be received by the Upper Valley
shareholders in the Merger will be the same as the basis of the
Upper Valley Common Stock surrendered in exchange therefor.
8. The holding period of the First Jermyn Common Stock
(including fractional share interests) to be received by the
Upper Valley shareholders in the Merger will include the period
during which the Upper Valley shareholders held their Upper
Valley Common Stock, provided the shares of Upper Valley Common
Stock are held as a capital asset on the Effective Date.
9. The payment of cash in lieu of fractional share
interests of First Jermyn Common Stock will be treated as if the
fractional share interests were distributed as part of the Merger
and then redeemed by First Jermyn. Such cash payments will be
treated as having been received as distribution in full payment
in exchange for the fractional share interests redeemed, as
provided in Section 302(a) of the IRC.
10. As provided in Section 381(c)(2) of the IRC and related
Treasury regulations, First Jermyn will succeed to and take into
account the earnings and profits, or deficit in earnings and
profits, of Upper Valley as of the Effective Date. Any deficit
in the earnings and profits of First Jermyn or Upper Valley will
be used only to offset the earnings and profits accumulated after
the Merger.
11. Pursuant to Section 381(a) of the IRC and related
Treasury regulations, First Jermyn will succeed to and take into
account the items of Upper Valley described in Section 381(c) of
the IRC. Such items will be taken into account by First Jermyn
subject to the conditions and limitations of Sections 381, 382,
383, and 384 of the IRC and the Treasury regulations thereunder.
12. Provided the Bank Merger constitutes a statutory merger
under applicable law, the Bank Merger will constitute a
reorganization within the meaning of Section 368(a)(1)(A) of the
IRC.
13. NBO and FNBJ will each be "a party to a reorganization"
within the meaning of Section 368(b) of the IRC.
14. Neither NBO nor FNBJ will recognize any gain or loss
upon the transfer of NBO's assets to FNBJ in constructive
exchange solely for FNBJ common stock and the assumption by FNBJ
of the liabilities of NBO.
15. The basis of the NBO assets in the hands of FNBJ will
be the same as the basis of such assets in the hands of NBO
immediately prior to the Bank Merger.
16. The holding period of the NBO assets in the hands of
FNBJ will include the period during which such assets were held
by NBO.
17. No gain or loss will be recognized by First Jermyn, as
the shareholder of NBO, upon the constructive receipt of shares
of FNBJ common stock in exchange for the NBO common stock
surrendered in exchange therefor in the Bank Merger.
18. The basis of the FNBJ common stock to be held by First
Jermyn after the Bank Merger will equal the basis of such stock
immediately before the Bank Merger, increased by the basis of the
NBO common stock surrendered in the constructive exchange.
19. As provided in Section 381(c)(2) of the IRC and related
Treasury regulations, FNBJ will succeed to and take into account
the earnings and profits, or deficit in earnings and profits, of
NBO as of the effective date of the Bank Merger. Any deficit in
the earnings and profits of FNBJ or NBO will be used only to
offset the earnings and profits accumulated after the Bank
Merger.
20. Pursuant to Section 381(a) of the IRC and related
Treasury regulations, FNBJ will succeed to and take into account
the items of NBO described in Section 381(c) of the IRC. Such
items will be taken into account by FNBJ subject to the
conditions and limitations of Sections 381, 382, 383, and 384 of
the IRC and the Treasury regulations thereunder.
EXHIBIT 8
FORM OF OPINION OF COUNSEL TO UPPER VALLEY
First Jermyn shall have received from counsel to Upper
Valley, an opinion, dated as of the Closing Date, substantially
to the effect that, subject to customary exceptions and
qualifications:
(a) Upper Valley and NBO have full corporate power to
carry out the transactions contemplated in the Agreement and the
Plan of Merger, respectively. The execution and delivery of the
Agreement and the Plan of Merger and the consummation of the
transactions contemplated thereunder have been duly and validly
authorized by all necessary corporate action on the part of Upper
Valley and NBO, and the Agreement and the Plan constitute a valid
and legally binding obligation, in accordance with their
respective terms, of Upper Valley and NBO, respectively, except
as may be limited by bankruptcy, insolvency, reorganization,
moratorium, receivership, conservatorship, and other laws
affecting creditors' rights generally and institutions the
deposits of which are insured by the FDIC, and as may be limited
by the exercise of judicial discretion in applying principles of
equity. Subject to satisfaction of the conditions set forth in
the Agreement, neither the transactions contemplated in the
Agreement and the Plan, nor compliance by Upper Valley and NBO
with any of the respective provisions thereof, will (i) conflict
with or result in a breach or default under (A) the articles of
incorporation or bylaws of Upper Valley or the articles of
association or bylaws of NBO, or (B) based solely on certificates
of officers and without independent verification, to the
knowledge of such counsel, any note, bond, mortgage, indenture,
license, agreement or other instrument or obligation to which
Upper Valley or NBO is a party; or (ii) based solely on
certificates of officers, to the knowledge of such counsel,
result in the creation or imposition of any material lien,
instrument or encumbrance upon the property of Upper Valley or
NBO, except such material lien, instrument or obligation that has
been disclosed to First Jermyn pursuant to the Agreement and the
Plan, or (iii) violate in any material respect any order, writ,
injunction, or decree known to such counsel, or any statute, rule
or regulation applicable to Upper Valley or NBO.
(b) NBO is a validly existing national bank organized
and in good standing under the laws of the United States of
America. The deposits of NBO are insured to the maximum extent
provided by law by the Federal Deposit Insurance Corporation.
(c) There is, to the knowledge of such counsel, no
legal, administrative, arbitration or governmental proceeding or
investigation pending or threatened to which Upper Valley or NBO
is a party which would, if determined adversely to Upper Valley
or NBO, have a material adverse effect on the business,
properties, results of operations, or condition, financial or
otherwise, of Upper Valley or NBO taken as a whole or which
presents a claim to restrain or prohibit the transactions
contemplated by the Agreement and the Plan, respectively.
(d) To the knowledge of such counsel, no consent,
approval, authorization, or order of any federal or state court
or federal or state governmental agency or body, or of any third
party, is required for the consummation by Upper Valley or NBO of
the transactions contemplated by the Agreement and the Plan,
except for such consents, approvals, authorizations or orders as
have been obtained.
Such counsel shall also provide a statement to the
following effect:
By way of supplemental information, such counsel
advises that on the sole basis of such counsel's participation in
conferences with officers and employees of Upper Valley in
connection with the preparation of the Prospectus/Proxy Statement
and without other independent investigation or inquiry, such
counsel has no reason to believe that the Prospectus/Proxy
Statement, including any amendments or supplements thereto
(except for the financial information, financial statements,
financial schedules and other financial or statistical data
contained therein and except for any information supplied by
First Jermyn for inclusion therein, as to which counsel need
express no belief), as of the date of mailing thereof, contained
any untrue statement of a material fact or omitted to state a
material fact necessary to make any statement therein, in light
of the circumstances under which it was made, not misleading.
Counsel may state in delivering such opinion, that such counsel
has not independently verified and does not assume any
responsibility for the accuracy, completeness or fairness of any
information or statements contained in the Prospectus/Proxy
Statement, except with respect to identified statements of law or
regulations or legal conclusions relating to Upper Valley or NBO
or the transactions contemplated in the Agreement and the Plan.
