Exhibit 2.1
AGREEMENT OF MERGER
between
PENNS ▇▇▇▇▇ BANCORP, INC.
and
THE FIRST NATIONAL BANK OF SPRING ▇▇▇▇▇
July 22, 1998
AGREEMENT
TABLE OF CONTENTS
Page
BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . . . 1
AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
THE MERGERS
Section 1.01 Definitions. . . . . . . . . . . . . . . . . . . 1
Section 1.02 The Merger . . . . . . . . . . . . . . . . . . . 6
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF FNBSM
Section 2.01 Organization . . . . . . . . . . . . . . . . . . 11
Section 2.02 Capitalization . . . . . . . . . . . . . . . . . 12
Section 2.03 Authority; No Violation. . . . . . . . . . . . . 12
Section 2.04 Consents . . . . . . . . . . . . . . . . . . . . 13
Section 2.05 Financial Statements . . . . . . . . . . . . . . 14
Section 2.06 Taxes. . . . . . . . . . . . . . . . . . . . . . 15
Section 2.07 No Material Adverse Effect . . . . . . . . . . . 15
Section 2.08 Contracts. . . . . . . . . . . . . . . . . . . . 15
Section 2.09 Ownership of Property; Insurance Coverage. . . . 16
Section 2.10 Legal Proceedings. . . . . . . . . . . . . . . . 17
Section 2.11 Compliance With Applicable Law . . . . . . . . . 17
Section 2.12 ERISA. . . . . . . . . . . . . . . . . . . . . . 18
Section 2.13 Brokers, Finders and Financial Advisors. . . . . 19
Section 2.14 Environmental Matters. . . . . . . . . . . . . . 20
Section 2.15 Loan Portfolio . . . . . . . . . . . . . . . . . 20
Section 2.16 Information to be Supplied . . . . . . . . . . . 20
Section 2.17 Related Party Transactions . . . . . . . . . . . 20
Section 2.18 Loans. . . . . . . . . . . . . . . . . . . . . . 21
Section 2.19 Quality of Representations . . . . . . . . . . . 21
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PENNS ▇▇▇▇▇
Section 3.01 Organization . . . . . . . . . . . . . . . . . . 21
Section 3.02 Capital Structure. . . . . . . . . . . . . . . . 22
Section 3.03 Authority; No Violation. . . . . . . . . . . . . 23
Section 3.04 Consents . . . . . . . . . . . . . . . . . . . . 24
Section 3.05 Financial Statements . . . . . . . . . . . . . . 25
Section 3.06 Taxes. . . . . . . . . . . . . . . . . . . . . . 25
Section 3.07 No Material Adverse Effect . . . . . . . . . . . 26
Section 3.08 Ownership of Property; Insurance Coverage. . . . 26
Section 3.9 Legal Proceedings . . . . . . . . . . . . . . . . 27
Section 3.10 Compliance With Applicable Law . . . . . . . . . 27
Section 3.11 Securities Documents . . . . . . . . . . . . . . 28
Section 3.12 Brokers and Finders. . . . . . . . . . . . . . . 28
Section 3.13 Environmental Matters. . . . . . . . . . . . . . 28
Section 3.14 Loan Portfolio . . . . . . . . . . . . . . . . . 29
Section 3.15 Information to be Supplied . . . . . . . . . . . 29
Section 3.16 Loans. . . . . . . . . . . . . . . . . . . . . . 29
Section 3.17 Quality of Representations . . . . . . . . . . . 29
ARTICLE IV
COVENANTS OF THE PARTIES
Section 4.01 Conduct of Business. . . . . . . . . . . . . . . 29
Section 4.02 Access; Confidentiality. . . . . . . . . . . . . 32
Section 4.03 Regulatory Matters and Consents. . . . . . . . . 33
Section 4.04 Taking of Necessary Action . . . . . . . . . . . 34
Section 4.05 Certain Agreements . . . . . . . . . . . . . . . 35
Section 4.06 No Other Bids and Related Matters. . . 36
Section 4.07 Duty to Advise; Duty to Update FNBSM's
Disclosure Schedule . . . . . . . . . . . . . . . . . . . 37
Section 4.08 Board and Committee Minutes. . . . . . . . . . . 37
Section 4.09 Additional Undertakings by FNBSM and Penns
▇▇▇▇▇ . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 4.10 Employee Benefits and Termination Benefits . . . 39
Section 4.11 Duty to Advise; Duty to Update Penns ▇▇▇▇▇'
Disclosure Schedule . . . . . . . . . . . . . . . . . . . 41
ARTICLE V
CONDITIONS
Section 5.01 Conditions to FNBSM's Obligations under this
Agreement . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 5.02 Conditions to Penns ▇▇▇▇▇' Obligations under
this Agreement. . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE VI
TERMINATION, WAIVER AND AMENDMENT
Section 6.01 Termination. . . . . . . . . . . . . . . . . . . 45
Section 6.02 Effect of Termination. . . . . . . . . . . . . . 46
ARTICLE VII
MISCELLANEOUS
Section 7.01 Expenses . . . . . . . . . . . . . . . . . . . . 47
Section 7.02 Non-Survival of Representations and
Warranties. . . . . . . . . . . . . . . . . . . . . . . . 47
Section 7.03 Amendment, Extension and Waiver. . . . . . . . . 47
Section 7.04 Entire Agreement . . . . . . . . . . . . . . . . 47
Section 7.05 No Assignment. . . . . . . . . . . . . . . . . . 47
Section 7.06 Notices. . . . . . . . . . . . . . . . . . . . . 48
Section 7.07 Captions . . . . . . . . . . . . . . . . . . . . 49
Section 7.08 Counterparts . . . . . . . . . . . . . . . . . . 49
Section 7.09 Severability . . . . . . . . . . . . . . . . . . 49
Section 7.10 Governing Law. . . . . . . . . . . . . . . . . . 49
Exhibit 1 Plan of Merger
Exhibit 2 Affiliate Agreement
Exhibit 3 Form of Opinion of Penns ▇▇▇▇▇' Counsel
Exhibit 4 Form of Tax Opinion of Penns ▇▇▇▇▇' Counsel
Exhibit 5 Form of Opinion of FNBSM's Counsel
PAGE 4
AGREEMENT
THIS AGREEMENT OF MERGER, dated as of July 22, 1998, is
made by and between PENNS ▇▇▇▇▇ BANCORP, INC. ("Penns ▇▇▇▇▇"), a
Pennsylvania corporation, having its principal place of business
in Jersey Shore, Pennsylvania, and FIRST NATIONAL BANK OF SPRING
▇▇▇▇▇ ("FNBSM"), a national banking association, having its
principal place of business in Spring ▇▇▇▇▇, Pennsylvania.
BACKGROUND
1. Penns ▇▇▇▇▇ and FNBSM desire for FNBSM to merge
with and into JERSEY SHORE STATE BANK, a Pennsylvania banking
institution and a wholly owned subsidiary of Penns ▇▇▇▇▇
("JSSB"), with JSSB surviving such merger, in accordance with the
applicable laws of the Commonwealth of Pennsylvania and the
United States of America, and in accordance with the plan of
merger attached hereto as Exhibit 1.
2. At or prior to the execution and delivery of this
Agreement, certain directors, officers, and affiliates of FNBSM
have executed in favor of Penn ▇▇▇▇▇, a Letter Agreement dated
July 22, 1998, in the form attached hereto as Exhibit 2.
3. Penns ▇▇▇▇▇ and FNBSM desire to provide the terms
and conditions governing the transactions contemplated herein.
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.
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 JSSB and FNBSM and to be filed in the PDB, in
accordance with the laws of the Commonwealth of
Pennsylvania.
Plan of Merger means the plan of merger between
JSSB and FNBSM attached hereto as Exhibit 1.
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 Penns ▇▇▇▇▇ and FNBSM shall agree.
Dissenting FNBSM 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 PDB and 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.
FNBSM Benefits Schedule has the meaning given to
that term in Section 2.18 of this Agreement.
FNBSM Common Stock means the common stock of FNBSM
described in Section 2.02(a).
FNBSM Disclosure Schedule means a disclosure
schedule delivered by FNBSM to Penns ▇▇▇▇▇ pursuant to
Article II of this Agreement.
FNBSM Financials means (i) the audited
consolidated financial statements of FNBSM as of
December 31, 1997 and for the three years ended December 31,
1997, including the notes thereto, (ii) the unaudited
interim consolidated financial statements of FNBSM as of and
for each calendar quarter thereafter.
FNBSM Regulatory Reports means the Reports of
Condition and Income of FNBSM and accompanying schedules for
each calendar quarter, beginning with the quarter ended
December 31, 1996 through the Closing Date.
FNBSM Subsidiaries means any corporation, 50% or
more of the capital stock of which is owned, either directly
or indirectly, by FNBSM, except any corporation the stock of
which is held in the ordinary course of the lending
activities of FNBSM.
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 Penns ▇▇▇▇▇ or FNBSM, 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 Penns ▇▇▇▇▇ or FNBSM
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 FNBSM with and into
JSSB, with JSSB surviving such merger, contemplated by this
Agreement and the Plan of Merger.
NBA means the National Bank Act.
OCC means the Office of the Comptroller of the
Currency.
PDB means the Department of Banking of the
Commonwealth of Pennsylvania.
PDS means the Department of State of the
Commonwealth of Pennsylvania.
Penns ▇▇▇▇▇ Benefits Schedule has the meaning
given to that term in Section 3.19 of this Agreement.
Penns ▇▇▇▇▇ Common Stock has the meaning given to
that term in Section 3.02(a) of this Agreement.
Penns ▇▇▇▇▇ Disclosure Schedule means a disclosure
schedule delivered by Penns ▇▇▇▇▇ to FNBSM pursuant to
Article III of this Agreement.
Penns ▇▇▇▇▇ Financials means (i) the audited
consolidated financial statements of Penns ▇▇▇▇▇ as of
December 31, 1997 and for the three years ended December 31,
1997, including the notes thereto, and (ii) the unaudited
interim consolidated financial statements of Penns ▇▇▇▇▇ as
of each calendar quarter thereafter included in Securities
Documents filed by Penns ▇▇▇▇▇.
Penns ▇▇▇▇▇ Market Price means, as of any date,
the average of the closing sale prices (or if unavailable
for any day, the mean between the high bid and low asked
prices for such day) of a share of Penns ▇▇▇▇▇ Common Stock,
as reported by the OTC Bulletin Board or, if not so
reported, by an independent source in the over-the-counter
market, for each of the twenty (20) consecutive trading days
commencing twenty-one (21) trading days prior to the date of
determination.
Penns ▇▇▇▇▇ Regulatory Reports means the Annual
Reports of Penns ▇▇▇▇▇ on Form FRY-6 and any Current Report
of Penns ▇▇▇▇▇ on Form FRY-6A filed with the FRB
from December 31, 1996 through the Closing Date and the
Reports of Condition and Income of JSSB and accompanying
schedules for each calendar quarter, beginning with the
quarter ended December 31, 1996 through the Closing Date.
Penns ▇▇▇▇▇ Subsidiaries means any corporation,
50% or more of the capital stock of which is owned, either
directly or indirectly, by Penns ▇▇▇▇▇, except any
corporation the stock of which is held in the ordinary
course of the lending activities of JSSB.
Person means any individual, corporation,
partnership, joint venture, association, trust or "group"
(as that term is defined under the Exchange Act).
Plan of Merger means the plan of merger between
JSSB and FNBSM attached hereto as Exhibit 1.
Prospectus/Proxy Statement means the
prospectus/proxy statement, together with any supplements
thereto, to be transmitted to holders of FNBSM 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
Penns ▇▇▇▇▇ 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, the PDB, 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.
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, Penns ▇▇▇▇▇ and FNBSM shall cause the
Articles of Merger to be duly executed and to be filed in the PDB
and the PDS.
(b) The Merger. Subject to the terms and
conditions of this Agreement, on the Effective Date: FNBSM shall
merge with and into JSSB; the separate existence of FNBSM shall
cease; JSSB shall be the surviving corporation in the Merger; and
all of the property (real, personal and mixed), rights, powers
and duties and obligations of FNBSM shall be taken and deemed to
be transferred to and vested in JSSB, as the surviving
corporation in the Merger, without further act or deed; all
debts, liabilities and duties of each of FNBSM and JSSB shall
thereafter be the responsibility of JSSB as the surviving
corporation; all in accordance with the applicable laws of the
Commonwealth of Pennsylvania and the United States of America.
(c) JSSB's Articles of Incorporation and Bylaws.
On and after the Effective Date, the articles of incorporation
and the bylaws of JSSB, as the surviving corporation in the
Merger, shall continue to be the articles of incorporation and
bylaws of JSSB, until thereafter altered, amended or repealed.
(d) Board of Directors and Officers of Penns
▇▇▇▇▇ and JSSB.
(i) On the Effective Date, the Board of
Directors of Penns ▇▇▇▇▇ shall take such actions as may be
necessary to cause the Board of Directors of Penn ▇▇▇▇▇ to
consist of (i) those persons holding such office immediately
prior to the Effective Date and (ii) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (to be
elected as a Class 1 director to serve until 2001). Penns ▇▇▇▇▇
agrees to cause ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ to be nominated for re-election
to the Board of Directors of Penns ▇▇▇▇▇ at the annual meeting of
shareholders of Penns ▇▇▇▇▇ to be held in 2001.
(ii) On the Effective Date, the officers of
Penns ▇▇▇▇▇ duly elected and holding office immediately prior to
the Effective Date shall continue to be the officers of Penns
▇▇▇▇▇. On the Effective Date, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall be elected
as a Senior Vice President of Penns ▇▇▇▇▇, and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
shall be elected as a Vice President of Penns ▇▇▇▇▇.
(iii) On the Effective Date, the directors
of JSSB as the surviving institution in the Merger shall consist
of (i) those persons holding such office immediately prior to the
Effective Date and (ii) Penns ▇▇▇▇▇ agrees to cause ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ to be elected to the Board of Directors of JSSB at any
annual or special meeting of the sole shareholder of JSSB held
during the time that he is serving as director of Penns ▇▇▇▇▇.
(iv) On the Effective Date, the officers of
JSSB duly elected and holding office immediately prior to such
effective date shall be the officers of JSSB, as the surviving
corporation in the Merger, and Penns ▇▇▇▇▇ shall cause ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ to be elected as a Senior Vice President of JSSB and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ to be elected as a Vice President of JSSB.
(v) On the Effective Date, Penns ▇▇▇▇▇ shall
establish, and shall maintain for a period of two years after the
Effective Date, the FNBSM Advisory Board (the "Advisory Board").
During the first year following the Effective Date, the Advisory
Board shall consist of all members of the FNBSM Board of
Directors immediately prior to the Effective Date. During the
second year following the Effective Date, the Advisory Board
shall consist of any of such former members of the FNBSM Board of
Directors who have not attained the mandatory retirement age of
70 prior to the commencement of such year. Each member of the
Advisory Board shall be paid $150 for each monthly meeting of the
Advisory Board actually attended. After the second year
following the Effective Date, the Advisory Board may be
maintained at the discretion of Penns ▇▇▇▇▇.
(e) Conversion of Shares.
(i) Penns ▇▇▇▇▇ Common Stock.
(A) Each share of Penns ▇▇▇▇▇ 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 Penns ▇▇▇▇▇ Common Stock. Shares of Penns ▇▇▇▇▇ Common
Stock owned by FNBSM (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 Penns ▇▇▇▇▇.
(B) Each share of Penns ▇▇▇▇▇ Common
Stock issued and held in the treasury of Penns ▇▇▇▇▇ as of
the Effective Date, if any, shall, on and after the
Effective Date, continue to be issued and held in the
treasury of Penns ▇▇▇▇▇.
(ii) FNBSM Common Stock.
(A) Subject to the provisions of
Section 1.02(e)(iii) hereof with respect to dissenting
shares, each share of FNBSM Common Stock issued and
outstanding immediately prior to the Effective Date (other
than shares then owned by Penns ▇▇▇▇▇, 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 3.5 shares of Penns ▇▇▇▇▇ Common Stock (subject
to possible adjustment as set forth in Section 1.02(g), the
"Exchange Ratio").
(B) Each share of FNBSM Common Stock
(other than trust account shares or DPC shares) owned by
Penns ▇▇▇▇▇ or a Penns ▇▇▇▇▇ Subsidiary on the Effective
Date, if any, shall be cancelled.
(C) Each share of FNBSM Common Stock
issued and held in the treasury of FNBSM or owned by FNBSM
or any FNBSM 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
Penns ▇▇▇▇▇ Common Stock and no scrip or certificates
therefor shall be issued in connection with the Merger. Any
former holder of FNBSM Common Stock who would otherwise be
entitled to receive a fraction of a share of Penns ▇▇▇▇▇
Common Stock shall receive, in lieu thereof, cash in an
amount equal to such fraction of a share multiplied by the
Penns ▇▇▇▇▇ Market Price determined as of the Effective
Date.
(iii) Dissenting Shareholders of FNBSM. If
there are holders of FNBSM Common Stock who dissent from the
Merger and exercise and perfect the right to obtain
valuation of and payment for their shares ("Dissenting FNBSM
Shares") pursuant to the NBA, the following provisions will
govern payments to be made in respect of Dissenting FNBSM
Shares:
(A) all payments in respect of
Dissenting FNBSM Shares, if any, will be made directly by
Penns ▇▇▇▇▇ or by JSSB, as the surviving corporation in the
Merger; and
(B) Dissenting FNBSM 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) Surrender and Exchange of FNBSM Stock
Certificates.
(i) Exchange of Certificates. Each holder
of shares of FNBSM Common Stock, other than holders of
Dissenting FNBSM Shares, who surrenders to Penns ▇▇▇▇▇ (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 Penns
▇▇▇▇▇ Common Stock into which such holder's shares of FNBSM
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 Penns ▇▇▇▇▇ Common Stock issued in
exchange for certificates for FNBSM Common Stock pursuant to
Section 1.02(f)(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 FNBSM Common Stock will,
from and after the Effective Date, evidence solely the right
to receive certificates for shares of Penns ▇▇▇▇▇ Common
Stock pursuant to Section 1.02(f)(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 FNBSM Common Stock are exchanged for Penns ▇▇▇▇▇ 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 Penns ▇▇▇▇▇ Common Stock, Penns ▇▇▇▇▇ will pay
cash in an amount equal to dividends theretofore payable on
such Penns ▇▇▇▇▇ Common Stock and pay or deliver any other
distribution to which holders of shares of Penns ▇▇▇▇▇
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(f) upon surrender
of certificates for shares of Penns ▇▇▇▇▇ Common Stock.
Notwithstanding the foregoing, no party hereto will be
liable to any holder of Penns ▇▇▇▇▇ 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 FNBSM Common Stock are
surrendered by a FNBSM shareholder to Penns ▇▇▇▇▇ for
exchange, Penns ▇▇▇▇▇ shall have the right to withhold
dividends or any other distributions on the shares of Penns
▇▇▇▇▇ Common Stock issuable to such shareholder.
(iii) Exchange Procedures. Each certificate
for shares of FNBSM Common Stock delivered for exchange
under this Section 1.02(f) 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
Penns ▇▇▇▇▇ Common Stock for which certificates will be
issued pursuant to this Section 1.02(f) will be computed on
the basis of the aggregate number of shares represented by
the certificates so surrendered. If shares of Penns ▇▇▇▇▇
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 Penns ▇▇▇▇▇
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 FNBSM
Common Stock which are surrendered. As promptly as
practicable after the Effective Date, Penns ▇▇▇▇▇ shall send
or cause to be sent to each shareholder of record of FNBSM
Common Stock transmittal materials for use in exchanging
certificates representing FNBSM Common Stock for
certificates representing Penns ▇▇▇▇▇ Common Stock into
which the former have been converted in the Merger.
Certificates representing shares of Penns ▇▇▇▇▇ Common Stock
and checks for cash in lieu of fractional shares shall be
mailed to former shareholders of FNBSM as soon as reasonably
possible but in no event later than twenty (20) business
days following the receipt of certificates representing
former shares of FNBSM 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 FNBSM Certificates. Upon the Effective
Date, the stock transfer books for FNBSM Common Stock will
be closed and no further transfers of shares of FNBSM Common
Stock will thereafter be made or recognized. All
certificates for shares of FNBSM Common Stock surrendered
pursuant to this Section 1.02(g) will be cancelled by Penns
▇▇▇▇▇.
(g) Anti-Dilution Provisions. If Penns ▇▇▇▇▇
shall, at any time before the Effective Date, (A) issue a
dividend in shares of Penns ▇▇▇▇▇ Common Stock, (B) combine the
outstanding shares of Penns ▇▇▇▇▇ Common Stock into a smaller
number of shares, (C) subdivide the outstanding shares of Penns
▇▇▇▇▇ Common Stock, or (D) reclassify the shares of Penns ▇▇▇▇▇
Common Stock, or set a record date prior to the Effective Date
with respect to any of the foregoing, then, in any such event,
the number of shares of Penns ▇▇▇▇▇ Common Stock to be
delivered to FNBSM shareholders who are entitled to receive
shares of Penns ▇▇▇▇▇ Common Stock in exchange for shares of
FNBSM Common Stock shall be adjusted so that each FNBSM
shareholder shall be entitled to receive in the Merger such
number of shares of Penns ▇▇▇▇▇ Common Stock as such shareholder
would have been entitled to receive if the Effective Date had
occurred immediately prior to such event or the record date for
such event. (By way of illustration, if Penns ▇▇▇▇▇ shall
declare a stock dividend of 10% 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 so that former shareholders of FNBSM would receive
3.85 shares of Penns ▇▇▇▇▇ Common Stock in the Merger.)
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF FNBSM
FNBSM hereby represents and warrants to Penns ▇▇▇▇▇
that, except as specifically set forth in the FNBSM Disclosure
Schedule (which FNBSM Disclosure Schedule qualifies and
represents exceptions to all of the representations and
warranties of FNBSM contained in this Agreement taken as a whole
and does not relate to particular representations and warranties)
delivered to Penns ▇▇▇▇▇ by FNBSM on the date hereof:
Section 2.01 Organization.
(a) FNBSM is a national banking association duly
organized and validly existing under the laws of the United
States of America. FNBSM 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. FNBSM 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 with respect to FNBSM.
(b) There are no FNBSM Subsidiaries.
(c) The deposits of FNBSM are insured by the FDIC
to the extent provided in the Federal Deposit Insurance Act.
(d) The minute books of FNBSM 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.
(e) Prior to the date of this Agreement, FNBSM
has delivered to Penns ▇▇▇▇▇ true and correct copies of the
articles of association and bylaws of FNBSM as in effect on the
date hereof.
Section 2.0. Capitalization.
(a) The authorized capital stock of FNBSM
consists of 100,000 shares of common stock, par value $2.00 per
share, 75,000 shares of which are outstanding, validly issued,
fully paid, and nonassessable (except pursuant to 12 U.S.C.A.
Section 55). FNBSM is not 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 FNBSM or any other security of
FNBSM or any securities representing the right to vote, purchase
or otherwise receive any shares of the capital stock or any other
security of FNBSM.
(b) FNBSM does not own any equity interest,
directly or indirectly, in any other company or controls any
other company, except for equity interests held in the investment
portfolio of FNBSM, equity interests held by FNBSM in a fiduciary
capacity, and equity interests held in connection with the
commercial loan activities of FNBSM. There are no subscriptions,
options, warrants, calls, commitments, agreements or other Rights
outstanding and held by FNBSM with respect to any other company's
capital stock or the equity of any other person.
(c) To FNBSM'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 FNBSM Common Stock, except as
disclosed in reasonable detail (using the principles described in
Item 403 of the SEC's Regulation S-K) in the FNBSM Disclosure
Schedule.
Section 2.03 Authority; No Violation.
(a) FNBSM has full corporate power and authority
to execute and deliver this Agreement and the Plan of Merger and
to consummate the transactions contemplated thereby. The
execution and delivery of this Agreement by FNBSM and the
consummation by FNBSM of the transactions contemplated hereby
have been duly and validly approved by the Board of Directors of
FNBSM and, except for approval by the shareholders of FNBSM, no
other corporate proceedings on the part of FNBSM are necessary to
complete the transactions contemplated hereby and by the Plan of
Merger. This Agreement has been duly and validly executed and
delivered by FNBSM and, subject to approval of the shareholders
of FNBSM and receipt of the required approvals from Regulatory
Authorities described in Section 3.04 hereof, constitutes the
valid and binding obligation of FNBSM, enforceable against FNBSM
in accordance with its terms, subject to applicable
conservatorship or receivership provisions of the FDIA
bankruptcy, insolvency and similar laws affecting creditors'
rights generally and subject, as to enforceability, to general
principles of equity. The Plan of Merger, upon its execution and
delivery by FNBSM concurrently with the execution and
delivery of this Agreement, and subject to approval of the
shareholders of FNBSM and receipt of the required approvals from
Regulatory Authorities described in Section 3.04 hereof, will
constitute the valid and binding obligation of FNBSM, enforceable
against FNBSM in accordance with its terms, subject to applicable
conservatorship or receivership provisions of the FDIA, or
bankruptcy, 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 and the Plan of Merger by FNBSM, (B) subject to receipt
of approvals from the Regulatory Authorities referred to in
Section 3.04 hereof and FNBSM's and Penns ▇▇▇▇▇' compliance with
any conditions contained therein, the consummation of the
transactions contemplated hereby, and (C) compliance by FNBSM
with any of the terms or provisions hereof or of the Plan of
Merger, will not (i) conflict with or result in a breach of any
provision of the articles of association or bylaws of FNBSM;
(ii) violate any statute, code, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to FNBSM
or any of its 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 FNBSM 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 FNBSM 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 with respect to FNBSM.
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 and the Plan of Merger by the shareholders of FNBSM, 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
or the Plan of Merger by FNBSM and (b) the completion by FNBSM of
the transactions contemplated hereby. FNBSM has no reason to
believe that 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
FNBSM's ability to complete the transactions contemplated by this
Agreement.
Section 2.05 Financial Statements.
(a) FNBSM has previously delivered, or will
deliver, to Penns ▇▇▇▇▇ the FNBSM Regulatory Reports. The FNBSM
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 FNBSM as of
and for the periods ended on the dates thereof, in accordance
with applicable regulatory accounting principles applied on a
consistent basis.
(b) FNBSM has previously delivered to Penns ▇▇▇▇▇
the FNBSM Financials. The FNBSM 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 FNBSM as of and for the periods
ending on the dates thereof, in accordance with generally
accepted accounting principles applied on a consistent basis,
except where changes in accounting principles from one year to
the next have been disclosed therein.
(c) At the date of each balance sheet included in
the FNBSM Financials or the FNBSM Regulatory Reports, FNBSM did
not have, and will not 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 FNBSM Financials or FNBSM 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) FNBSM has duly filed, and will file, all
federal, state and local tax returns required to be filed by or
with respect to FNBSM 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 FNBSM 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 FNBSM.
Section 2.0A No Material Adverse Effect. FNBSM has
not suffered any Material Adverse Effect since December 31, 1997.
Section 2.08 Contracts.
(a) Except as described in footnotes to the FNBSM
Financials, FNBSM is not 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 FNBSM,
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 FNBSM; (iii) any collective bargaining agreement
with any labor union relating to employees of FNBSM; (iv) any
agreement which by its terms limits the payment of dividends by
FNBSM; (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 FNBSM 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 Penns
▇▇▇▇▇ or any Penns ▇▇▇▇▇ Subsidiary; (vi) any contract (other
than this Agreement) limiting the freedom of FNBSM 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) have
been provided to Penns ▇▇▇▇▇ on or before the date hereof, are
listed on the FNBSM Disclosure Schedule and are in full force and
effect on the date hereof. Neither FNBSM nor, to the knowledge
of FNBSM, 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 FNBSM. 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 FNBSM, 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 FNBSM is a party or
under which FNBSM 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 FNBSM 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 FNBSM to provide a benefit in the form of FNBSM
Common Stock or determined by reference to the value of FNBSM
Common Stock.
Section 2.09 Ownership of Property; Insurance
Coverage.
(a) FNBSM has, 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 FNBSM 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
FNBSM Regulatory Reports and in the FNBSM 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 FNBSM 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. FNBSM, as lessee, has the right under valid and
subsisting leases of real and personal properties used by FNBSM
in the conduct of its business to occupy or use all such
properties as presently occupied and used by it.
(b) With respect to all agreements pursuant to
which FNBSM has purchased securities subject to an agreement to
resell, if any, FNBSM, 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) FNBSM currently maintains insurance in
amounts considered by FNBSM to be reasonable for its operations
and similar in scope and coverage to that maintained by other
businesses similarly engaged. FNBSM has not 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 FNBSM under such policies. All such insurance
is valid and enforceable and in full force and effect, and within
the last three years FNBSM 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. FNBSM is not a party
to any, and there are no pending or, to the best of FNBSM'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 FNBSM, (ii) to which FNBSM'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 FNBSM to perform under this
Agreement or the Plan of Merger, 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 with respect to FNBSM.
Section 2.11 Compliance With Applicable Law.
(a) FNBSM holds all licenses, franchises, permits
and authorizations necessary for the lawful conduct of its
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 its businesses or otherwise have a Material
Adverse Effect with respect to FNBSM.
(b) FNBSM has not received any notification or
communication from any Regulatory Authority (i) asserting that
FNBSM 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 FNBSM;
(iii) requiring or threatening to require FNBSM, or indicating
that FNBSM 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 FNBSM, 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 FNBSM,
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"). FNBSM has not consented to or entered
into any Regulatory Agreement, except as heretofore disclosed to
Penns ▇▇▇▇▇.
Section 2.12 ERISA. FNBSM has previously delivered to
Penns ▇▇▇▇▇ 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 FNBSM 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 FNBSM, 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 FNBSM Employee Benefit Plans. To the best of
FNBSM's knowledge, neither FNBSM nor any pension plan maintained
by FNBSM, 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 FNBSM 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 FNBSM Employee Benefit Plan, FNBSM 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 at least 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. FNBSM has not incurred or is subject to
any liability under ERISA Section 4201 for a complete or partial
withdrawal from a multi-employer plan. To the best of FNBSM's
knowledge, 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. To the best of FNBSM's knowledge, 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 FNBSM 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 FNBSM.
FNBSM provides 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 FNBSM'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 FNBSM's Employee Benefit Plans (other
than routine benefit claims) nor does FNBSM 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 FNBSM's
Employee Benefit Plans, any trusts under such plans, the plan
sponsor, the plan administrator or any fiduciary of any of
FNBSM's Employee Benefit Plans which have been threatened or
instituted nor does FNBSM 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 FNBSM in
connection with any Employee Benefit Plan established,
maintained, or contributed to (currently or previously) by FNBSM
or by any other entity which, together with FNBSM, 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 FNBSM 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 other transaction or, except
for its commitments disclosed in the FNBSM 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 other
transaction, which has not been reflected in the FNBSM
Financials.
Section 2.14 Environmental Matters. To the knowledge
of FNBSM, neither FNBSM, nor any properties owned or operated by
FNBSM 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 FNBSM. 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 FNBSM,
threatened, relating to the liability of any property owned or
operated by FNBSM under any Environmental Law.
Section 2.15 Loan Portfolio. The allowance for loan
losses reflected, and to be reflected, in the FNBSM Regulatory
Reports, and shown, and to be shown, on the balance sheets
contained in the FNBSM Financials have been, and will be,
established in accordance with the requirements of generally
accepted accounting principles and all applicable regulatory
criteria.
Section 2.16 Information to be Supplied. The
information to be supplied by FNBSM 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 FNBSM 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 FNBSM Financials, FNBSM is not
a party to any transaction (including any loan or other credit
accommodation) with any Affiliate of FNBSM. 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 FNBSM 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. FNBSM
has not 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 FNBSM is inappropriate.
Section 2.18 Loans. Each loan reflected as an asset
in the FNBSM 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 FNBSM.
Section 2.19 Quality of Representations. The
representations made by FNBSM 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 PENNS ▇▇▇▇▇
Penns ▇▇▇▇▇ hereby represents and warrants to FNBSM
that, except as set forth in the Penns ▇▇▇▇▇ Disclosure Schedule
(which Penns ▇▇▇▇▇ Disclosure Schedule qualifies and represents
exceptions to all of the representations and warranties of Penns
▇▇▇▇▇ contained in this Agreement taken as a whole and does not
relate solely to particular representations and warranties)
delivered by Penns ▇▇▇▇▇ to FNBSM on or prior to the date hereof:
Section 3.01 Organization.
(a) Penns ▇▇▇▇▇ is a corporation duly organized,
validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania. Penns ▇▇▇▇▇ is a bank holding
company duly registered under the BHC Act. Penns ▇▇▇▇▇ 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 Penns
▇▇▇▇▇ 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 with respect to Penns ▇▇▇▇▇.
(b) JSSB is a banking institution duly organized
and validly existing under the laws of the Commonwealth of
Pennsylvania. JSSB 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 JSSB nor any other Penns ▇▇▇▇▇
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 with respect to Penns ▇▇▇▇▇.
(c) There are no Penns ▇▇▇▇▇ Subsidiaries other
than JSSB or as disclosed in Penns ▇▇▇▇▇' Annual Report on
Form 10-K for the year ended December 31, 1997. There are no
JSSB Subsidiaries.
(d) The deposits of JSSB are insured by the FDIC
to the extent provided in the Federal Deposit Insurance Act.
(e) The respective minute books of Penns ▇▇▇▇▇
and JSSB 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,
Penns ▇▇▇▇▇ has delivered to FNBSM true and correct copies of the
articles of incorporation and the bylaws of Penns ▇▇▇▇▇ and the
articles of incorporation and bylaws of JSSB as in effect on the
date hereof.
Section 3.02 Capital Structure.
(a) The authorized capital stock of Penns ▇▇▇▇▇
consists of (a) 10,000,000 shares of common stock, $10.00 par
value ("Penns ▇▇▇▇▇ Common Stock"), of which, at the date of this
Agreement, 2,569,558 shares are outstanding, validly issued,
fully paid and nonassessable and free of preemptive rights.
Except as disclosed in Penn's ▇▇▇▇▇' Securities Documents,
neither Penns ▇▇▇▇▇ nor JSSB nor any other Penns ▇▇▇▇▇ 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
Penns ▇▇▇▇▇ Common Stock or any other security of Penns ▇▇▇▇▇ or
any securities representing the right to vote, purchase or
otherwise receive any shares of Penns ▇▇▇▇▇ Common Stock or any
other security of Penns ▇▇▇▇▇.
(b) The authorized capital stock of JSSB consists
of 120,000 shares of common stock, par value $10.00 per share,
102,000 of which shares are outstanding, validly issued, fully
paid, nonassessable, free of preemptive rights and owned by Penns
▇▇▇▇▇. Neither Penns ▇▇▇▇▇ nor any Penns ▇▇▇▇▇ 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 Penns ▇▇▇▇▇ Subsidiary or any other security of any
Penns ▇▇▇▇▇ 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 Penns ▇▇▇▇▇ Subsidiary.
Either Penns ▇▇▇▇▇ or JSSB owns all of the outstanding shares of
capital stock of each Penns ▇▇▇▇▇ Subsidiary free and clear of
all liens, security interests, pledges, charges, encumbrances,
agreements and restrictions of any kind or nature.
(c) Neither (i) Penns ▇▇▇▇▇, (ii) JSSB nor
(iii) any other Penns ▇▇▇▇▇ 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 Penns ▇▇▇▇▇ Subsidiaries, equity
interests held by Penns ▇▇▇▇▇ Subsidiaries in a fiduciary
capacity, equity interests held in connection with the commercial
loan activities of Penns ▇▇▇▇▇ Subsidiaries, and equity interests
disclosed in Penns ▇▇▇▇▇' Annual Report on Form 10-K for the year
ended December 31, 1997. There are no subscriptions, options,
warrants, calls, commitments, agreements or other
Rights outstanding and held by Penns ▇▇▇▇▇ or JSSB with respect
to any other company's capital stock or the equity of any other
person.
(d) To Penns ▇▇▇▇▇' knowledge, without any
independent investigation, except as disclosed in Penns ▇▇▇▇▇'
proxy statement dated March 26, 1998, 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 Penns ▇▇▇▇▇
Common Stock.
Section 3.03 Authority; No Violation.
(a) Penns ▇▇▇▇▇ has full corporate power and
authority to execute and deliver this Agreement and to consummate
the transactions contemplated hereby. JSSB has full corporate
power and authority to execute and deliver the Plan of Merger and
to consummate the Merger. The execution and delivery of this
Agreement by Penns ▇▇▇▇▇ and the consummation by Penns ▇▇▇▇▇ of
the transactions contemplated hereby have been duly and validly
approved by the Board of Directors of Penns ▇▇▇▇▇ and no other
corporate proceedings on the part of Penns ▇▇▇▇▇ are necessary to
complete the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by Penns ▇▇▇▇▇
and, subject to receipt of the required approvals of Regulatory
Authorities described in Section 3.04 hereof, constitutes the
valid and binding obligation of Penns ▇▇▇▇▇, enforceable against
Penns ▇▇▇▇▇ 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 Plan of Merger, upon its execution and
delivery by JSSB concurrently with the execution and delivery of
this Agreement, will constitute the valid and binding obligation
of JSSB, enforceable against JSSB 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 Penns ▇▇▇▇▇, (B) the execution and delivery of the
Plan of Merger by JSSB, (C) subject to receipt of approvals from
the Regulatory Authorities referred to in Section 3.04 hereof and
FNBSM's and Penns ▇▇▇▇▇' and JSSB's compliance with any
conditions contained therein, the consummation of the
transactions contemplated hereby, and (D) compliance by Penns
▇▇▇▇▇ or JSSB 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 Penns ▇▇▇▇▇ or any Penns ▇▇▇▇▇ Subsidiary; (ii) violate
any statute, code, ordinance, rule, regulation, judgment, order,
writ, decree or injunction applicable to Penns ▇▇▇▇▇ or any Penns
▇▇▇▇▇ 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 Penns ▇▇▇▇▇
or any Penns ▇▇▇▇▇ 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 Penns ▇▇▇▇▇ or JSSB 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 with respect to Penns ▇▇▇▇▇.
Section 3.04 Consents. Except for any required
consents, approvals, filings and registrations from or with the
FRB, the FDIC, the OCC, the PDB, the SEC, and state "blue sky"
authorities, and compliance with any conditions contained
therein, and the approval of the Plan of Merger by Penns ▇▇▇▇▇ as
sole shareholder of JSSB, and by the JSSB 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 Penns ▇▇▇▇▇ or the Plan of Merger by JSSB, and (b) the
completion by Penns ▇▇▇▇▇ of the transactions contemplated hereby
or by JSSB of the Merger. Penns ▇▇▇▇▇ has no reason to believe
that 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 Penns ▇▇▇▇▇'
ability to complete the transactions contemplated by this
Agreement.
Section 3.05 Financial Statements.
(a) Penns ▇▇▇▇▇ has previously delivered, or will
deliver, to FNBSM the Penns ▇▇▇▇▇ Regulatory Reports. The Penns
▇▇▇▇▇ 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 Penns ▇▇▇▇▇
as of and for the periods ended on the dates thereof, in
accordance with applicable regulatory accounting principles
applied on a consistent basis.
(b) Penns ▇▇▇▇▇ has previously delivered, or will
deliver, to FNBSM the Penns ▇▇▇▇▇ Financials. The Penns ▇▇▇▇▇
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 Penns ▇▇▇▇▇ as of and for the periods ending on the
dates thereof, in accordance with generally accepted accounting
principles, except where changes in accounting principles from
one year to the next have been disclosed therein.
(c) At the date of each balance sheet included in
the Penns ▇▇▇▇▇ Financials or the Penns ▇▇▇▇▇ Regulatory Reports,
neither Penns ▇▇▇▇▇ nor JSSB (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 Penns ▇▇▇▇▇ Financials or
the Penns ▇▇▇▇▇ 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) Penns ▇▇▇▇▇ and the Penns
▇▇▇▇▇ Subsidiaries are members of the same affiliated group
within the meaning of IRC Section 1504(a). Penns ▇▇▇▇▇ has duly
filed, and will file, all federal, state and local tax returns
required to be filed by or with respect to Penns ▇▇▇▇▇ and all
Penns ▇▇▇▇▇ 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 Penns ▇▇▇▇▇
and any Penns ▇▇▇▇▇ 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 Penns ▇▇▇▇▇ or any Penns ▇▇▇▇▇ Subsidiary.
Section 3.07 No Material Adverse Effect. Penns ▇▇▇▇▇
has not suffered any Material Adverse Effect since December 31,
1997.
Section 3.08 Ownership of Property; Insurance
Coverage.
(a) Penns ▇▇▇▇▇ and the Penns ▇▇▇▇▇ 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 Penns ▇▇▇▇▇ or any Penns ▇▇▇▇▇ 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
Penns ▇▇▇▇▇ Regulatory Reports and in the Penns ▇▇▇▇▇
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
Penns ▇▇▇▇▇ 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. Penns ▇▇▇▇▇ and the
Penns ▇▇▇▇▇ Subsidiaries, as lessee, have the right under valid
and subsisting leases of real and personal properties used by
Penns ▇▇▇▇▇ 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 Penns ▇▇▇▇▇ or any Penns ▇▇▇▇▇ Subsidiary has purchased
securities subject to an agreement to resell, if any, Penns ▇▇▇▇▇
or such Penns ▇▇▇▇▇ 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) Penns ▇▇▇▇▇ and the Penns ▇▇▇▇▇ Subsidiaries
currently maintain insurance in amounts considered by Penns ▇▇▇▇▇
to be reasonable for their respective operations and similar in
scope and coverage to that maintained by other businesses
similarly engaged. Neither Penns ▇▇▇▇▇ nor any Penns ▇▇▇▇▇
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 Penns ▇▇▇▇▇ or JSSB
under such policies. All such insurance is valid and enforceable
and in full force and effect, and within the last three years
Penns ▇▇▇▇▇ 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 3.9 Legal Proceedings. Neither Penns ▇▇▇▇▇
nor any Penns ▇▇▇▇▇ Subsidiary is a party to any, and there are
no pending or, to the best of Penns ▇▇▇▇▇' knowledge, threatened
legal, administrative, arbitration or other proceedings, claims
(whether asserted or unasserted), actions or governmental
investigations or inquiries of any nature (i) against Penns ▇▇▇▇▇
or any Penns ▇▇▇▇▇ Subsidiary, (ii) to which Penns ▇▇▇▇▇' or any
Penns ▇▇▇▇▇ 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 Penns ▇▇▇▇▇ 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 with
respect to Penns ▇▇▇▇▇.
Section 3.10 Compliance With Applicable Law.
(a) Penns ▇▇▇▇▇ and the Penns ▇▇▇▇▇ 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 with
respect to Penns ▇▇▇▇▇.
(b) Neither Penns ▇▇▇▇▇ nor any Penns ▇▇▇▇▇
Subsidiary has received any notification or communication from
any Regulatory Authority (i) asserting that Penns ▇▇▇▇▇ or any
Penns ▇▇▇▇▇ 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 Penns ▇▇▇▇▇ or any Penns ▇▇▇▇▇ Subsidiary; (iii) requiring or
threatening to require Penns ▇▇▇▇▇ or any Penns ▇▇▇▇▇ Subsidiary,
or indicating that Penns ▇▇▇▇▇ or any Penns ▇▇▇▇▇ 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 Penns ▇▇▇▇▇ or any Penns ▇▇▇▇▇ 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 Penns ▇▇▇▇▇ or any Penns ▇▇▇▇▇ 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 Penns ▇▇▇▇▇ nor any Penns
▇▇▇▇▇ Subsidiary has consented to or entered into any Regulatory
Agreement, except as heretofore disclosed to FNBSM.
Section 3.11 Securities Documents. Penns ▇▇▇▇▇ has
delivered, or will deliver, to FNBSM copies of its (i) annual
reports on SEC Form 10-K for the years ended December 31, 1997,
1996, and 1995, (ii) quarterly reports on SEC Form 10-Q for the
quarters ended March 31, 1998, September 30, 1997, June 30, 1997,
and March 31, 1997, and (iii) proxy statement dated March 26,
1998 used in connection with its annual meeting of shareholders
held in April 1998. 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 3.12 Brokers and Finders. Neither Penns ▇▇▇▇▇
nor any Penns ▇▇▇▇▇ 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 Penns ▇▇▇▇▇ 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 Penns ▇▇▇▇▇ Financials.
Section 3.13 Environmental Matters. To the knowledge
of Penns ▇▇▇▇▇, neither Penns ▇▇▇▇▇ nor any Penns ▇▇▇▇▇
Subsidiary, nor any properties owned or operated by Penns ▇▇▇▇▇
or any Penns ▇▇▇▇▇ 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 Penns ▇▇▇▇▇. 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 Penns
▇▇▇▇▇, threatened, relating to the liability of any property
owned or operated by Penns ▇▇▇▇▇ or any Penns ▇▇▇▇▇ Subsidiary
under any Environmental Law.
Section 3.14 Loan Portfolio. The allowance for loan
losses reflected, and to be reflected, in the Penns ▇▇▇▇▇
Regulatory Reports, and shown, and to be shown, on the balance
sheets contained in the Penns ▇▇▇▇▇ Financials have been, and
will be, established in accordance with the requirements of
generally accepted accounting principles and all applicable
regulatory criteria.
Section 3.15 Information to be Supplied. The
information to be supplied by Penns ▇▇▇▇▇ and JSSB 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
Penns ▇▇▇▇▇ for inclusion in the Applications will, at the time
such documents are filed with any Regulatory Authority, be
accurate in all material aspects.
Section 3.16 Loans. Each loan reflected as an asset
in the Penns ▇▇▇▇▇ 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 with
respect to Penns ▇▇▇▇▇.
Section 3.17 Quality of Representations. The
representations made by Penns ▇▇▇▇▇ 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. From the date of
this Agreement to the Closing Date, FNBSM 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 Penns ▇▇▇▇▇. FNBSM will
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 FNBSM and others with whom business relationships
exist. From the date hereof to the Closing Date, except as
otherwise consented to or approved by Penns ▇▇▇▇▇ in writing or
as permitted or required by this Agreement, FNBSM will not:
(i) amend or change any provision of its
articles of association 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 FNBSM may pay on or before December 31, 1998 a
regular semi-annual cash dividend, not to exceed $1.25 per
share of FNBSM Common Stock outstanding; after the date of
this Agreement, Penns ▇▇▇▇▇ and FNBSM shall consult with and
coordinate with the other the payment of dividends with
respect to Penns ▇▇▇▇▇ Common Stock and FNBSM Common Stock
and the record and payment dates relating thereto, it being
the intention of Penns ▇▇▇▇▇ and FNBSM that holders of FNBSM
Common Stock shall not receive two dividends, or fail to
receive one dividend, for any single calendar quarter with
respect to their shares of FNBSM Common Stock;
(iii) grant any severance or termination pay
(other than pursuant to written policies or written
agreements of FNBSM in effect on the date hereof and
provided to Penns ▇▇▇▇▇ 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 FNBSM, 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 to the extent necessary to
replace any present employee whose employment terminates;
(iv) merge or consolidate FNBSM or with any
other corporation; sell or lease all or any substantial
portion of the assets or business of FNBSM; 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 FNBSM and any other person; enter into a
purchase and assumption transaction with respect to deposits
and liabilities; permit the revocation or surrender by FNBSM
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 any asset
of FNBSM other than in the ordinary course of business
consistent with past practice; subject any asset of FNBSM 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 FNBSM 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 FNBSM;
(viii) waive, release, grant or transfer any
rights of value or modify or change in any material respect
any existing material agreement to which FNBSM 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 FNBSM
may contribute to the FNBSM defined contribution pension
plan an amount as provided in Section 4.10(a)(i) of this
Agreement;
(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 $425,000 in the aggregate,
or increase, compromise, extend, renew or modify any
existing loan or commitment outstanding in excess of
$425,000, except for any commitment disclosed on the FNBSM
Disclosure Schedule;
(xii) except as set forth on the FNBSM
Disclosure Schedule, enter into, renew, extend or modify any
other transaction with any Affiliate;
(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 FNBSM to do any
of the following: (i) make any capital expenditure of $25,000 or
more not disclosed on FNBSM Disclosure Schedule 4.01, without the
prior written consent of Penns ▇▇▇▇▇; (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 FNBSM 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 FNBSM 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, FNBSM or Penns ▇▇▇▇▇, as the case may be, shall
afford to, and Penns ▇▇▇▇▇ shall cause each 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
FNBSM and Penns ▇▇▇▇▇ 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) FNBSM and Penns ▇▇▇▇▇ 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, FNBSM shall permit employees of JSSB 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 JSSB
or any of its employees any final decision-making authority with
respect to such matters.
(d) If the transactions contemplated by this
Agreement shall not be consummated, FNBSM and Penns ▇▇▇▇▇ 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. FNBSM and Penns ▇▇▇▇▇ 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) Penns ▇▇▇▇▇ and FNBSM 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) FNBSM will furnish Penns ▇▇▇▇▇ with all
information concerning FNBSM as may be necessary or advisable in
connection with any Application or filing made by or on behalf of
Penns ▇▇▇▇▇ to any Regulatory Authority in connection with the
transactions contemplated by this Agreement.
(c) Penns ▇▇▇▇▇ will promptly furnish FNBSM with
copies of all material written communications to, or received by
Penns ▇▇▇▇▇ or any Penns ▇▇▇▇▇ Subsidiary from, any Regulatory
Authority in respect of the transactions contemplated hereby.
(d) Penns ▇▇▇▇▇ will furnish FNBSM with
(i) copies of all Applications prior to filing with any
Regulatory Authority and provide FNBSM a reasonable opportunity
to suggest changes to such Applications, which suggested changes
Penns ▇▇▇▇▇ may, in its reasonable discretion accept or reject,
(ii) copies of all Applications filed by Penns ▇▇▇▇▇ and
(iii) copies of all documents filed by Penns ▇▇▇▇▇ under the
Exchange Act.
(e) FNBSM will cooperate with Penns ▇▇▇▇▇ in the
foregoing matters and will furnish Penns ▇▇▇▇▇ with all
information concerning FNBSM 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 Penns ▇▇▇▇▇ 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, FNBSM will provide
certificates and other documents reasonably requested by Penns
▇▇▇▇▇.
Section 4.04 Taking of Necessary Action.
(a) Penns ▇▇▇▇▇ and FNBSM shall each use its best
efforts in good faith, and each of them shall cause any
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 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 shall not agree to make any
payments or modifications to agreements in connection therewith
without the prior written consent of Penns ▇▇▇▇▇, 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; provided that nothing herein
contained shall preclude Penns ▇▇▇▇▇ or FNBSM from exercising its
rights under this Agreement.
(b) Penns ▇▇▇▇▇ and FNBSM shall promptly prepare
a Prospectus/Proxy Statement to be mailed to shareholders of
FNBSM in connection with the meeting of FNBSM shareholders and
transactions contemplated hereby, and to be filed by Penns ▇▇▇▇▇
with the SEC in the Registration Statement, which
Prospectus/Proxy statement shall conform in all material respects
to all applicable legal requirements. Penns ▇▇▇▇▇ shall, as
promptly as practicable following the preparation thereof, file
the Registration Statement with the SEC and FNBSM and Penns ▇▇▇▇▇
shall use all reasonable efforts to have the Registration
Statement declared effective under the Securities Act as promptly
as practicable after such filing. Penns ▇▇▇▇▇ will advise FNBSM,
promptly after Penns ▇▇▇▇▇ 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. Penns ▇▇▇▇▇ 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. Penns ▇▇▇▇▇ shall provide FNBSM with as many
copies of such Registration Statement and all amendments thereto
promptly upon the filing thereof as FNBSM 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 FNBSM, 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 FNBSM
(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 FNBSM or any of
its respective predecessors 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,
the NBA and the Articles of Association and Bylaws of FNBSM. On
or after the Effective Date, Penns ▇▇▇▇▇ shall indemnify, defend
and hold harmless all prior and then-existing directors and
officers of FNBSM, against (i) all losses, claims, damages,
costs, expenses, liabilities or judgments or amounts that are
paid in settlement (with the approval of Penns ▇▇▇▇▇ 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 FNBSM, 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 FNBSM or
any FNBSM 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 FNBSM as of
the date hereof including the right to advancement of expenses,
provided, however, that any such officer, director or employee of
FNBSM may not be indemnified by Penns ▇▇▇▇▇ and/or JSSB if such
indemnification is prohibited by applicable law.
(b) Penns ▇▇▇▇▇ shall maintain FNBSM's existing
directors' and officers' liability insurance policy (or a policy
providing comparable coverage amounts on terms generally no less
favorable, including Penns ▇▇▇▇▇' 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.
(c) On or prior to the Effective Date, Penns
▇▇▇▇▇ and JSSB shall enter into employment agreements with
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, to be effective as of the
Effective Date, on terms mutually satisfactory to Penns ▇▇▇▇▇ and
such individuals. Such agreements shall, among other things,
(i) provide for a term of three years from the Effective Date and
automatic annual renewals thereafter absent notice of nonrenewal
by either party, (ii) provide for a minimum base salary equal to
the base salary of the executive immediately prior to the
Effective Date, (iii) provide for a severance payment equivalent
to the greater of 24 months' base salary or base salary payable
over the remaining term of the agreement in the event the
executive's employment is terminated involuntarily or the
executive terminates employment for "good reason" following a
"change in control" of Penns ▇▇▇▇▇, and (iv) provide that the
executive shall be eligible for consideration to receive stock
option grants under Penns ▇▇▇▇▇' stock option plans
then in effect in the same manner as other executive officers of
Penns ▇▇▇▇▇.
Section 4.06 No Other Bids and Related Matters. So
long as this Agreement remains in effect, FNBSM shall not and
shall not authorize or permit any of its directors, officers,
employees or agents, to directly or indirectly (i) respond to,
solicit, initiate or encourage any inquiries relating to, or the
making of any proposal which relates to, an Acquisition
Transaction (as defined below), (ii) recommend or endorse an
Acquisition Transaction, (iii) participate in any discussions or
negotiations regarding an Acquisition Transaction, (iv) provide
any third party (other than Penns ▇▇▇▇▇ or an affiliate of Penns
▇▇▇▇▇) with any nonpublic information in connection with any
inquiry or proposal relating to an Acquisition Transaction, or
(v) enter into an agreement with any other party with resect to
an Acquisition Transaction. Notwithstanding the foregoing, the
Board of Directors of FNBSM may respond to unsolicited inquiries
relating to an Acquisition Transaction or the Board of Directors
of FNBSM may recommend or endorse an Acquisition Transaction, in
each case, if it receives an unqualified written opinion of
outside counsel that the failure to do so would constitute a
breach of their fiduciary duty. In the event of any such
response by FNBSM, Penn ▇▇▇▇▇ shall have the right, but not the
obligation, to terminate this Agreement at any time thereafter
without penalty or further liability. As used in this Agreement,
"Acquisition Transaction" shall mean any of the following
transactions: (i) a merger or consolidation, or any similar
transaction, involving FNBSM, (ii) a purchase, lease or other
acquisition of all or a substantial portion of the assets or
liabilities of FNBSM hereto, or (iii) a purchase or other
acquisition (including by way of share exchange, tender offer,
exchange offer or otherwise) of 20% or more of the outstanding
shares of FNBSM Common Stock. FNBSM shall notify Penns ▇▇▇▇▇
immediately if (i) any such discussions or negotiations are
sought to be initiated with it 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 FNBSM Common
Stock in the ordinary course of business.
Section 4.07 Duty to Advise; Duty to Update FNBSM's
Disclosure Schedule. FNBSM shall promptly advise Penns ▇▇▇▇▇ of
any change or event having a Material Adverse Effect on it 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. FNBSM shall update
FNBSM'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 FNBSM Disclosure Schedule. The delivery of such
updated Disclosure Schedule shall not relieve FNBSM 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. FNBSM shall
provide Penns ▇▇▇▇▇, within 30 days after any meeting of the
Board of Directors of FNBSM, 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 FNBSM and
Penns ▇▇▇▇▇.
(a) From and after the date of this Agreement,
FNBSM shall:
(i) Shareholders Meeting. Submit this
Agreement to its shareholders for approval at a meeting to
be held as soon as practicable, and use its best efforts to
cause its Boards of Director to unanimously recommend
approval of this Agreement to FNBSM shareholders; and
(ii) Committee Meetings. Permit a
representative of Penns ▇▇▇▇▇, who is reasonably acceptable
to FNBSM, to attend all meetings of FNBSM's Board of
Directors, and all committee meetings of FNBSM's management,
including, without limitation, any loan or asset/liability
committee.
(b) From and after the date of this Agreement,
Penns ▇▇▇▇▇ shall:
(i) Approval of Bank Plan of Merger.
Approve the Plan of Merger as sole shareholder of JSSB and
obtain the approval of, and cause the execution and delivery
of, the Plan of Merger; and
(ii) Delivery of Securities Documents.
Deliver to FNBSM, copies of all Securities Documents
simultaneously with the filing thereof.
(c) From and after the date of this Agreement,
Penns ▇▇▇▇▇ and FNBSM shall each:
(i) 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 Penns ▇▇▇▇▇ 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 (D) all other documents
contemplated by this Agreement;
(ii) 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;
(iii) 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;
(iv) 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;
(v) 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; and
(vi) 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) FNBSM Pension and Other Plans.
(i) As of the Closing Date, Penns ▇▇▇▇▇
shall become plan sponsor to the FNBSM Pension Plan and
shall continue to maintain the FNBSM Pension Plan after the
Closing Date and up through the end of the FNBSM Pension
Plan's October 14, 1999 Plan year for the benefit of
employees of FNBSM who become employees of Penns ▇▇▇▇▇ or
any Penns ▇▇▇▇▇ subsidiary. Upon the earlier of the last
business day immediately preceding the Closing Date or
December 31, 1998 (the "Pre-Fund Contribution Date"), FNBSM
shall make a contribution to the FNBSM Pension
Plan in an amount equal to the "Contribution Amount." For
purposes of this Section 4.10(a)(1), the Contribution Amount
shall be determined by multiplying (A) times (B) as follows:
(A) The required contribution formula
amount in effect under the FNBSM Pension Plan as of the
execution of this Agreement, multiplied by
(B) The compensation of FNBSM Pension
Plan "Eligible Participants" from October 15, 1998
through the Pre-Fund Contribution Date hereof, plus the
projected compensation of FNBSM Pension Plan Eligible
Participants from the Pre-Fund Contribution Date up
through October 14, 1999.
For purposes of this Section 4.10(a)(i), Eligible
Participants shall mean those FNBSM employees who are
eligible to participate in the FNBSM Pension Plan as of
October 15, 1998 and those FNBSM employees who will be
eligible to participate in the FNBSM Pension Plan by
October 14, 1999. For purposes of this Section 4.10(a)(i)
and calculating the Contribution Amount an Eligible
Participant shall receive a full year of service credit for
compensation determination purposes for the FNBSM Pension
Plan's October 15, 1998 through October 14, 1999 plan year.
Penn ▇▇▇▇▇ agrees that from the Closing Date and up through
the close of the FNBSM Pension Plan's year ending
October 14, 1999, Penn ▇▇▇▇▇ will not amend the FNBSM
Pension Plan, except as required by law or to clarify
participation of FNBSM employees who become employees of
Penns ▇▇▇▇▇ or of any Penns ▇▇▇▇▇ Subsidiary and will not
freeze or reduce the FNBSM Pension Plan contribution
formula. As of the close of the FNBSM Pension Plan year
ending October 14, 1999, Penn ▇▇▇▇▇, at its election, may
freeze, merge, consolidate or terminate the FNBSM Pension
Plan.
(ii) Except as set forth in
Section 4.10(a)(i) as to the FNBSM Pension Plan, on and
after the Effective Date, the employee pension and welfare
benefit plans of Penns ▇▇▇▇▇ and FNBSM may, at Penns ▇▇▇▇▇'
election and subject to the requirements of the IRC,
continue to be maintained separately or consolidated,
provided that FNBSM employees shall, except as provided
below, be entitled to participate in the employee pension
and welfare plans of Penns ▇▇▇▇▇ as follows: FNBSM
employees will be eligible to participate in the defined
contribution pension plan of Penns ▇▇▇▇▇ (with a cash or
deferred feature) on the first quarterly entry date for new
participants under the terms of such plan concurrent with or
immediately following the Effective Date and FNBSM employees
will be eligible to participate in the defined benefit
pension plan of Penns ▇▇▇▇▇ effective October 1, 1999.
FNBSM employees shall receive credit for service with FNBSM
under any Penns ▇▇▇▇▇ benefit plan, or new Penns
▇▇▇▇▇ benefit plan, for purposes of eligibility and vesting
determination but not for purposes of benefit accrual.
(b) Split Dollar Agreements. Penns ▇▇▇▇▇ agrees
to continue to pay, or cause the continuation and payment of, the
premiums relating to the current split-dollar life insurance
arrangements for ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as
described in Section 2.12 of the FNBSM Disclosure Schedule, until
the respective retirements of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ provided that FNBSM and each of such individuals executes
a customary form of written agreement applicable to such
arrangements which is reasonably satisfactory to Penns ▇▇▇▇▇ and
which provides, among other things, for the reimbursement of all
premiums paid on behalf of such individual upon death,
retirement, or other termination of employment.
(c) Severance Policy. Penns ▇▇▇▇▇ agrees to
cause JSSB to provide any employee of FNBSM whose employment is
involuntarily terminated other than for Cause (as defined below)
within one year after the Effective Date or who within such one-
year period is offered but declines to accept employment at a
location more than 35 miles from such employee's work location
with FNBSM provided such employees execute such documentation as
Penns ▇▇▇▇▇ may reasonably require: (i) one week of base salary
for each year of service with FNBSM with a minimum of two weeks
and a maximum of twenty weeks; (ii) continued medical insurance
coverage during the time period set forth in the preceding
clause (i) to the extent permitted under Penns ▇▇▇▇▇' health
insurance programs or, to the extent impermissible, reimbursement
for the cost of continuation coverage provided under IRC Section
4980B(f) during the time period set forth in the preceding
clause (i), and (iii) a cash payment for any vacation days
accrued but unused in the year in which employment terminates.
For purposes of this Section 4.10(c), "Cause" shall mean
termination because of the employee's personal dishonesty,
willful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties or willful
violation of any law, rule or regulation (other than traffic
violations or similar offenses). The benefits provided to
terminated FNBSM employees under this subsection are the only
severance benefits payable by FNBSM under any plan or policy.
The benefits payable to FNBSM employees under this subsection or
otherwise shall in any event be in lieu of any termination
benefits to which such employees would otherwise be entitled
under Penns ▇▇▇▇▇' or JSSB's severance policies or programs then
in effect. The benefits payable under this subsection shall not
apply to any FNBSM employee who enters into a written employment
agreement with Penns ▇▇▇▇▇ or JSSB.
(d) Other Benefits. Notwithstanding anything
contained in this Agreement to the contrary, FNBSM shall be
permitted to pay customary year-end bonuses to employees for the
year ending December 31, 1998 in an amount not to exceed $1,200
per employee and shall be permitted to make cash payments to its
eligible employees in lieu of accumulated sick leave
pursuant to the program set forth in Section 4.01 of the FNBSM
Disclosure Schedule.
Section 4.11 Duty to Advise; Duty to Update Penns
▇▇▇▇▇' Disclosure Schedule. Penns ▇▇▇▇▇ shall promptly advise
FNBSM of any change or event having a Material Adverse Effect on
it or on any Penns ▇▇▇▇▇ 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. Penns ▇▇▇▇▇ shall update Penns ▇▇▇▇▇' 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
Penns ▇▇▇▇▇ Disclosure Schedule. The delivery of such updated
Disclosure Schedule shall not relieve Penns ▇▇▇▇▇ 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 FNBSM's Obligations under
this Agreement. The obligations of FNBSM hereunder shall be
subject to satisfaction at or prior to the Closing Date of each
of the following conditions, unless waived by FNBSM pursuant to
Section 7.03 hereof:
(a) Corporate Proceedings. All action required
to be taken by, or on the part of, Penns ▇▇▇▇▇ and JSSB to
authorize the execution, delivery and performance of this
Agreement and the Plan of Merger, respectively, and the
consummation of the transactions contemplated by this Agreement
and the Plan of Merger, shall have been duly and validly taken by
Penns ▇▇▇▇▇ and JSSB; and FNBSM shall have received certified
copies of the resolutions evidencing such authorizations;
(b) Covenants. The obligations and covenants of
Penns ▇▇▇▇▇ required by this Agreement to be performed by Penns
▇▇▇▇▇ 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 Penns ▇▇▇▇▇ 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 Penns ▇▇▇▇▇;
(d) Approvals of Regulatory Authorities. Penns
▇▇▇▇▇ shall have received all required approvals of Regulatory
Authorities of the Merger, and delivered copies thereof
to FNBSM; 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, 1997, there shall not have occurred any Material
Adverse Effect with respect to Penns ▇▇▇▇▇;
(g) Officer's Certificate. Penns ▇▇▇▇▇ shall
have delivered to FNBSM 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 (f) of this Section 5.01 have been satisfied, to the best
knowledge of the officer executing the same;
(h) Opinion of Penns ▇▇▇▇▇' Counsel. FNBSM shall
have received an opinion of ▇▇▇▇▇▇▇ & ▇▇▇, P.C., counsel to Penns
▇▇▇▇▇, dated the Closing Date, in form and substance reasonably
satisfactory to FNBSM and its counsel to the effect set forth on
Exhibit 3 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. FNBSM shall have received an
opinion of ▇▇▇▇▇▇▇ & ▇▇▇, P.C., in form and substance reasonably
satisfactory to FNBSM and its counsel to the effect set forth on
Exhibit 4 attached hereto;
(k) Approval of FNBSM's Shareholders. This
Agreement shall have been approved by the shareholders of FNBSM
by such vote as is required under FNBSM's articles of association
and bylaws and by applicable law;
(l) Investment Banking Opinion. FNBSM shall have
received an oral opinion from Berwind Financial, L.P. 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 FNBSM pursuant to this Agreement is fair, from a
financial point of view, to such shareholders; and
(m) FNBSM's Dissenting Shareholders. FNBSM
shareholders owning 9% or more of the issued and outstanding
shares of FNBSM Common Stock shall not have asserted and duly
perfected dissenters' rights with respect to FNBSM
Common Stock pursuant to the NBA;
Section 5.02 Conditions to Penns ▇▇▇▇▇' Obligations
under this Agreement. The obligations of Penns ▇▇▇▇▇ hereunder
shall be subject to satisfaction at or prior to the Closing Date
of each of the following conditions, unless waived by Penns ▇▇▇▇▇
pursuant to Section 7.03 hereof:
(a) Corporate Proceedings. All action required
to be taken by, or on the part of, FNBSM to authorize the
execution, delivery and performance of this Agreement and the
Plan of Merger, respectively, and the consummation of the
transactions contemplated by this Agreement and the Plan of
Merger, shall have been duly and validly taken by FNBSM; and
Penns ▇▇▇▇▇ shall have received certified copies of the
resolutions evidencing such authorizations;
(b) Covenants. The obligations and covenants of
FNBSM, 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 FNBSM 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 FNBSM;
(d) Approvals of Regulatory Authorities. Penns
▇▇▇▇▇ 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 Penns
▇▇▇▇▇ 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, 1997, there shall not have occurred any Material
Adverse Effect with respect to FNBSM;
(g) Officer's Certificate. FNBSM shall have
delivered to Penns ▇▇▇▇▇ 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 (c), (e) and (f) of this Section 5.02
have been satisfied, to the best knowledge of the
officer executing the same;
(h) Opinions of FNBSM's Counsel. Penns ▇▇▇▇▇
shall have received an opinion of ▇▇▇▇▇▇ & Sinon, LLP, counsel to
FNBSM, dated the Closing Date, in form and substance reasonably
satisfactory to Penns ▇▇▇▇▇ and its counsel to the effect set
forth on Exhibit 5 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. Penns ▇▇▇▇▇ shall have received
an opinion of ▇▇▇▇▇▇▇ & ▇▇▇, P.C., its counsel, substantially to
the effect set forth on Exhibit 5 attached hereto;
(k) Approval of FNBSM's Shareholders. This
Agreement shall have been approved by the shareholders of FNBSM
by such vote as is required by the articles of association of
FNBSM and by law;
(l) Pooling Letter. Penns ▇▇▇▇▇ shall have
received an opinion from its independent auditors to the effect
that the Merger will be treated as a "pooling of interests" for
financial accounting purposes; and
(m) FNBSM's Dissenting Shareholders. FNBSM
shareholders owning 9% or more of the issued and outstanding
shares of FNBSM Common Stock shall not have asserted and duly
perfected dissenters rights with respect to FNBSM Common Stock
pursuant to the NBA.
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; or
(b) By Penns ▇▇▇▇▇ or FNBSM:
(i) if, in the case of termination by FNBSM,
there shall have been any breach of any representation or
warranty of Penns ▇▇▇▇▇ which results in a Material Adverse
Effect with respect to Penns ▇▇▇▇▇, on the one hand, or, in
the case of termination by Penns ▇▇▇▇▇, there shall have
been any breach of any representation or warranty of FNBSM
which results in a Material Adverse Effect with respect to
FNBSM, 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
FNBSM, there shall have been any breach of any material
covenant or other obligation of Penns ▇▇▇▇▇, on the one
hand, or, in the case of termination by Penns ▇▇▇▇▇, there
shall have been any breach of any material covenant or other
obligation of FNBSM, 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 May 30, 1999, 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.
Section 6.02 Effect of Termination.
(a) If this Agreement is terminated pursuant to
Section 6.01 hereof, this Agreement shall forthwith become void
(other than Section 4.02(d), Section 6.02(b) and Section 7.01
hereof, which shall remain in full force and effect), and there
shall be no further liability on the part of Penns ▇▇▇▇▇ or FNBSM
to the other, except for any liability arising out of any breach
of any covenant or other agreement contained in this Agreement.
(b) If, within nine months following the date of
termination of this Agreement, other than any termination by
FNBSM pursuant to Section 6.01(b)(i) or (ii) on account of an
unremedied material breach by Penns ▇▇▇▇▇, Section 6.01(b)(iii),
or Section 6.01(b)(iv), a Person other than Penns ▇▇▇▇▇ or an
affiliate of Penns ▇▇▇▇▇, enters into an agreement with FNBSM
pursuant to which such Person or Affiliate would (i) merge or
consolidate, or enter into any similar transaction, with FNBSM,
(ii) acquire all or substantially all of the assets of FNBSM, or
(iii) acquire beneficial ownership of securities representing, or
the right to acquire beneficial ownership or to vote securities
representing, 20% or more of the then outstanding
shares of FNBSM Common Stock, then FNBSM shall immediately pay to
Penns ▇▇▇▇▇ a fee of $1 million, which fee shall include
reimbursement to Penns ▇▇▇▇▇ 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 6.02(b) shall constitute a waiver of limitation,
in whole or in part, of any legal or equitable rights which Penns
▇▇▇▇▇ may possess against any Person or Affiliate relating to
this Agreement, or relating to Penns ▇▇▇▇▇' relationship with
FNBSM or for any act or omission of such Person, including any
tortious interference with this Agreement or otherwise wrongfully
inducing or causing any breach of any such agreement.
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),
4.05, and 4.10(a), (b) and (c) 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 Penns ▇▇▇▇▇, to:
Penns ▇▇▇▇▇ Bancorp., Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
P.O. Box 5098
Jersey Shore, Pennsylvania 17740
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President and
Chief Executive Officer
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ & ▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esquire and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to FNBSM, to:
First National Bank of Spring ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
President
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇ & ▇▇▇▇▇, LLP
One South Market Square
12th Floor
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
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.
PENNS ▇▇▇▇▇ BANCORP, INC.
By/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
THE FIRST NATIONAL BANK OF SPRING
▇▇▇▇▇
By/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
PAGE 48
Exhibit 1
PLAN OF MERGER
THIS PLAN OF MERGER ("Plan of Merger") dated as of
July 22, 1998, is by and between JERSEY SHORE STATE BANK, a
Pennsylvania banking institution ("JSSB"), and FIRST NATIONAL
BANK OF SPRING ▇▇▇▇▇, a national banking association ("FNBSM").
BACKGROUND
1. JSSB is a Pennsylvania banking institution and a
wholly-owned subsidiary of Penns ▇▇▇▇▇ Bancorp, Inc., a
Pennsylvania corporation ("Penns ▇▇▇▇▇"). The authorized capital
stock of JSSB consists of 120,000 shares of common stock, par
value $10.00 per share ("JSSB Common Stock"), 102,000 of which at
the date hereof are issued and outstanding.
2. FNBSM is a national banking association. The
authorized capital stock of FNBSM consists of 100,000 shares of
common stock, par value $2.00 per share ("FNBSM Common Stock"),
of which at the date hereof 75,000 shares are issued and
outstanding.
3. The respective Boards of Directors of JSSB and
FNBSM deem the merger of FNBSM with and into JSSB, 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 JSSB and
FNBSM have adopted resolutions approving this Plan of Merger.
The respective Boards of Directors of Penns ▇▇▇▇▇ and FNBSM have
adopted resolutions approving an Agreement dated as of July 22,
1998 (the "Agreement") between Penns ▇▇▇▇▇ and FNBSM, pursuant to
which this Plan of Merger is being executed by JSSB and FNBSM.
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 Commonwealth of
Pennsylvania and the United States of America, JSSB and FNBSM,
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 Commonwealth of Pennsylvania and the
United States of America, on the Effective Date (as that term is
defined in Article V hereof): FNBSM shall merge with and into
JSSB; the separate existence of FNBSM shall cease; and JSSB shall
be the surviving corporation (such transaction referred
to herein as the "Merger" and JSSB, 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 JSSB and FNBSM, and the main
office of FNBSM prior to the Effective Date.
ARTICLE II
CHARTER AND BYLAWS
On and after the Effective Date, the Articles of
Incorporation and Bylaws of JSSB, as in effect immediately prior
to the Effective Date, shall automatically be and remain the
Articles of Incorporation and Bylaws of the Surviving Bank, until
altered, amended or repealed.
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
(i) those persons serving in such capacity immediately prior to
the Effective Date and (ii) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, who shall serve as
such until their successors have been elected and qualified.
3.2 Officers. On and after the Effective Date, the
officers of the Surviving Bank shall consist of (i) the officers
of JSSB duly elected and holding office immediately prior to the
Effective Date and (ii) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as a Senior Vice
President and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as a Vice President.
3.3 Advisory Board. The Surviving Bank shall
establish an Advisory Board on the terms and in the manner set
forth in the Agreement.
ARTICLE IV
CONVERSION OF SHARES
4.1 Stock of JSSB. Each share of JSSB 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 FNBSM. Each share of FNBSM Common Stock
issued and outstanding immediately prior to the Effective Date,
and each share of FNBSM Common Stock issued and held in the
treasury of FNBSM as of the Effective Date, if any, shall, on the
Effective Date, be converted into and become shares of common
stock, $10.00 par value per share, of Penns ▇▇▇▇▇ or cancelled,
as set forth in the Agreement.
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
Pennsylvania Department of [Banking] approving this Merger (the
"Effective Date").
ARTICLE VI
EFFECT OF THE MERGER
On the Effective Date: the separate existence of FNBSM
shall cease; and all of the property (real, personal and mixed),
rights, powers, duties and obligations of FNBSM 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 JSSB and FNBSM 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
Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, JSSB and FNBSM 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.
JERSEY SHORE STATE BANK
By________________________________
FIRST NATIONAL BANK OF SPRING ▇▇▇▇▇
By________________________________
PAGE 4
Exhibit 2
July 22, 1998
Penns ▇▇▇▇▇ Bancorp, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
P.O. Box 5098
Jersey ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Penns ▇▇▇▇▇ Bancorp, Inc. ("Penns ▇▇▇▇▇") and First National
Bank of Spring ▇▇▇▇▇ ("FNBSM") desire to enter into an agreement
dated as of July 22, 1998 ("Agreement"), pursuant to which,
subject to the terms and conditions set forth therein and in the
plan of merger related thereto, (a) FNBSM will merge with and
into Jersey Shore State Bank, the wholly owned subsidiary of
Penns ▇▇▇▇▇ ("JSSB"), with JSSB surviving the merger, and
(b) shareholders of FNBSM will receive common stock of Penns
▇▇▇▇▇ in exchange for common stock of FNBSM outstanding on the
closing date (the foregoing, collectively, referred to herein as
the "Merger").
Penns ▇▇▇▇▇ has required, as an inducement to its execution
and delivery to FNBSM of the Agreement, that the undersigned,
being directors, executive officers and major shareholders of
FNBSM, execute and deliver to Penns ▇▇▇▇▇ this Letter Agreement.
Each of the undersigned, in order to induce Penns ▇▇▇▇▇ to
execute and deliver to FNBSM the Agreement, hereby irrevocably:
(a) Agrees to be present (in person or by proxy) at
all meetings of shareholders of FNBSM called to vote for approval
of the Merger so that all shares of common stock of FNBSM 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 FNBSM);
(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 FNBSM, to approve or adopt the
Agreement;
(c) Agrees not to take any actions with the intent to
prevent or hinder the Merger from being consummated;
(d) Agrees not to solicit or initiate any negotiations
or discussions with any party other than Penns ▇▇▇▇▇ with respect
to any offer, sale, transfer or other disposition of, any shares
of common stock of FNBSM now or hereafter owned by the
undersigned;
(e) Agrees not to offer, sell, transfer or otherwise
dispose of any shares of common stock of Penns ▇▇▇▇▇ 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 Penns ▇▇▇▇▇ 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
Penns ▇▇▇▇▇ 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 Penns ▇▇▇▇▇ is under no
obligation to register the sale, transfer or other disposition of
Penns ▇▇▇▇▇ 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 FNBSM or of common stock of
Penns ▇▇▇▇▇, 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 Penns ▇▇▇▇▇ and FNBSM have been published
within the meaning of Section 201.01 of the SEC's Codification of
Financial Reporting Policies;
(g) Agrees that Penns ▇▇▇▇▇ shall not be bound by any
attempted sale of any shares of Penns ▇▇▇▇▇ common stock, and
Penns ▇▇▇▇▇' 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 Penns ▇▇▇▇▇ 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 (e), (f) and (g) hereof, to the extent the
undersigned can control any of the following persons or entities,
also apply to shares of Penns ▇▇▇▇▇ common stock received in the
Merger (or any shares of FNBSM common stock or of Penns ▇▇▇▇▇
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 Penns ▇▇▇▇▇ to be received in the Merger prior
to expiration of the time period referred to in subparagraph (f)
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.
________________________
It is understood and agreed that the provisions of
subparagraphs (a) through (d) of this Letter Agreement relate
solely to the capacity of the undersigned as a shareholder or
other beneficial owner of shares of FNBSM Common Stock and is not
in any way intended to affect the exercise by the undersigned of
the undersigned's responsibilities as a director or officer of
FNBSM. It is further understood and agreed that such
subparagraphs of this Letter Agreement are not in any way
intended to affect the exercise by the undersigned of any
fiduciary responsibility which the undersigned may have in
respect of any shares of FNBSM Common Stock held by the
undersigned as of the date hereof.
________________________
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,
PAGE 4
Exhibit 3
FORM OF OPINION OF COUNSEL TO PENNS ▇▇▇▇▇
FNBSM shall have received from counsel to Penns ▇▇▇▇▇,
an opinion, dated as of the Closing Date, substantially to the
effect that, subject to customary exceptions and qualifications:
(a) Penns ▇▇▇▇▇ and JSSB 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 Penns
▇▇▇▇▇ and JSSB, and the Agreement and the Plan constitute valid
and legally binding obligations of Penns ▇▇▇▇▇ and JSSB,
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 Penns ▇▇▇▇▇ and
JSSB 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 Penns ▇▇▇▇▇ or JSSB, 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 Penns ▇▇▇▇▇ or JSSB 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 Penns ▇▇▇▇▇ or JSSB,
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 Penns ▇▇▇▇▇ or JSSB.
(b) JSSB is a validly existing state-chartered bank
organized and in good standing under the laws of the Commonwealth
of Pennsylvania. The deposits of JSSB 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 Penns ▇▇▇▇▇
or JSSB is a party which would, if determined adversely to Penns
▇▇▇▇▇ or JSSB, have a material adverse effect on the financial
condition or results of operation of Penns ▇▇▇▇▇ and JSSB 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 Penns ▇▇▇▇▇ or JSSB 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 PDB and the PDS with respect to the Merger,
the mergers of JSSB and FNBSM 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 Penns ▇▇▇▇▇ Common Stock to be
issued in connection with the merger of FNBSM and JSSB
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).
PAGE 2
Exhibit 4
FORM OF TAX OPINION OF COUNSEL TO PENNS ▇▇▇▇▇
Penns ▇▇▇▇▇ and FNBSM shall have received an opinion of
▇▇▇▇▇▇▇ & ▇▇▇ substantially to the effect that, under the
provisions of the IRC:
1. The Merger will constitute a reorganization within the
meaning of Sections 368(a)(1)(A) and 368(a)(2)(D) of the IRC.
2. Penns ▇▇▇▇▇, FNBSM and JSSB will each be "a party to a
reorganization" within the meaning of Section 368(b) of the IRC.
3. Neither FNBSM nor JSSB will recognize any gain or loss
by reason of the Merger upon the transfer of FNBSM's assets to
JSSB and the assumption by JSSB of the liabilities of FNBSM.
4. The basis of the FNBSM assets in the hands of JSSB will
be the same as the basis of such assets in the hands of FNBSM
immediately prior to the Merger.
5. The holding period of the FNBSM assets in the hands of
JSSB will include the period during which such assets were held
by FNBSM prior to the Merger.
6. No gain or loss will be recognized by the shareholders
of FNBSM on the receipt of Penns ▇▇▇▇▇ Common Stock (including
fractional share interests) solely in exchange for their shares
of FNBSM Common Stock.
7. The basis of the Penns ▇▇▇▇▇ Common Stock (including
fractional share interests) to be received by the FNBSM
shareholders in the Merger will be the same as the basis of the
FNBSM Common Stock surrendered in exchange therefor.
8. The holding period of the Penns ▇▇▇▇▇ Common Stock
(including fractional share interests) to be received by the
FNBSM shareholders in the Merger will include the period during
which the FNBSM shareholders held their FNBSM Common Stock,
provided the shares of FNBSM Common Stock are held as a capital
asset on the Effective Date.
9. The payment of cash in lieu of fractional share
interests of Penns ▇▇▇▇▇ Common Stock will be treated as if the
fractional share interests were distributed as part of the Merger
and then redeemed by Penns ▇▇▇▇▇. Such cash payments will be
treated as having been received as distributions 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, JSSB will succeed to and take into account
the earnings and profits, or deficit in earnings and profits, of
FNBSM as of the effective date of the Merger. Any deficit in the
earnings and profits of JSSB or FNBSM 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, JSSB will succeed to and take into account
the items of FNBSM described in Section 381(c) of the IRC. Such
items will be taken into account by JSSB subject to the
conditions and limitations of Sections 381, 382, 383, and 384 of
the IRC and the Treasury regulations thereunder.
PAGE 2
Exhibit 5
FORM OF OPINION OF COUNSEL TO
FIRST NATIONAL BANK OF SPRING ▇▇▇▇▇
Penns ▇▇▇▇▇ shall have received from counsel to FNBSM
an opinion, dated as of the Closing Date, substantially to the
effect that, subject to customary exceptions and qualifications:
(a) FNBSM has 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
FNBSM, and the Agreement and the Plan constitute valid and
legally binding obligations, in accordance with their respective
terms, of FNBSM, 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 FNBSM with any of the respective
provisions thereof, will (i) conflict with or result in a breach
or default under (A) the articles of association or bylaws of
FNBSM, 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 FNBSM 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
FNBSM, except such material lien, instrument or obligation that
has been disclosed to Penns ▇▇▇▇▇ 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 FNBSM.
(b) FNBSM is a validly existing national bank
organized and in good standing under the laws of the United
States of America. The deposits of FNBSM 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 FNBSM is a
party which would, if determined adversely to FNBSM, have a
material adverse effect on the business, properties, results of
operations, or condition, financial or otherwise, of FNBSM 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 FNBSM of the
transactions contemplated by the Agreement and the Plan, except
for such consents, approvals, authorizations or orders as have
been obtained.