<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION , L998
REGISTRATION NO.: 33-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
----------------
JUNIATA VALLEY FINANCIAL CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
PENNSYLVANIA
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
6720
(PRIMARY STANDARD INDUSTRIAL CLASSIFICATION NO.)
23-2235254
(I.R.S. EMPLOYER IDENTIFICATION NO.)
BRIDGE AND MAIN STREETS, MIFFLINTOWN, PENNSYLVANIA 17059 (717) 436-8211
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OR
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
A. JEROME COOK
PRESIDENT AND C.E.O.
JUNIATA VALLEY FINANCIAL CORP.
BRIDGE AND MAIN STREETS
MIFFLINTOWN, PENNSYLVANIA 17059 (717) 436-8211
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
----------------
COPIES TO:
JAMES A. ULSH, ESQUIRE PAUL G. MATTAINI, ESQUIRE
METTE, EVANS & WOODSIDE BARLEY, SNYDER, SENFT & COHEN, LLC
3401 NORTH FRONT STREET 126 EAST KING STREET
P.O. BOX 5950 LANCASTER, PENNSYLVANIA 17602-2893
HARRISBURG, PENNSYLVANIA 17110-0950
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO
PUBLIC: As soon as practicable after the effective date of this Registration
Statement, and upon consummation of the merger of Lewistown Trust Company with
and into Juniata Valley Bank, a subsidiary of the Registrant, as described in
the enclosed Joint Proxy Statement/Prospectus.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
----------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
================================================================================
PROPOSED
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE TO BE OFFERING PRICE OFFERING REGISTRATION
REGISTERED REGISTERED PER UNIT(1) PRICE(1) FEE
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock Par value
$1.00 per share....... 937,024 $15.42 $14,448,910.08 $4,378.46
================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee and
calculated in accordance with Rule 457(f)(2) on the basis of the book
value of common stock of Lewistown Trust Company on February 28, 1998 of
$15.42 and the estimated maximum of 937,024 shares of such stock to be
converted in the merger described herein into Common Stock of the
Registrant.
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATES AS THE COMMISSION
ACTING PURSUANT TO SUCH SECTION 8(A) MAY DETERMINE.
================================================================================
<PAGE>
[JUNIATA LETTERHEAD]
April 20, 1998
Dear Shareholder:
We invite you to attend the Annual Meeting (the "Juniata Annual Meeting") of
Shareholders of Juniata Valley Financial Corp. ("Juniata"), to be held at the
Juniata Valley Bank's branch office located at Monument Square, Lewistown,
Pennsylvania, on May 19, 1998 at 10:30 a.m., local time.
At the Juniata Annual Meeting, the shareholders will be asked to consider
and vote upon: (a) a proposal to approve the Agreement and Plan of
Reorganization dated as of December 30, 1997 (the "Merger Agreement") among
Lewistown Trust Company ("Lewistown"), Juniata and Juniata Valley Bank
("JVB"), a wholly-owned subsidiary of Juniata, as well as the merger (the
"Merger") of Lewistown with and into JVB, as contemplated therein; (b) the
election of four Class B Directors to serve until the 2001 Annual Meeting; (c)
a proposal (the "Adjournment Proposal") to postpone or adjourn the Juniata
Annual Meeting to another time and/or place for the purpose of soliciting
additional proxies in the event that there are not sufficient votes at the
time of the Juniata Annual Meeting to approve the Merger and the Merger
Agreement; (d) a proposal to amend the Juniata Articles of Incorporation to
increase the authorized shares of Juniata Common Stock from 5,000,000 shares
to 20,000,000 shares (the "Amendment") and (e) such other business as may
properly come before the Juniata Annual Meeting or any adjournment thereof.
In connection with the Merger, each share of Lewistown Common Stock issued
and outstanding as of the effective time of the Merger will be converted into
and become a right to receive one (1) share of Juniata Common Stock, par value
$1.00 per share (the "Juniata Common Stock"), subject to adjustment as
described more fully in the accompanying Joint Proxy Statement/Prospectus.
Your attention is directed to the attached Joint Proxy Statement/Prospectus
which contains a more complete description of the terms of the Merger and
provides detailed financial, business and other information concerning
Lewistown, Juniata and JVB.
After careful consideration of the terms of the Merger Agreement, the Board
of Directors of Juniata has determined that the Merger is in the best
interests of Juniata and its shareholders. ACCORDINGLY, YOUR BOARD OF
DIRECTORS RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE MERGER AND THE MERGER
AGREEMENT, AS WELL AS THE AMENDMENT.
It is very important that your shares be represented at the Juniata Annual
Meeting, whether or not you plan to attend in person. The affirmative vote of
the holders of 66 2/3% of all outstanding shares of Juniata Common Stock is
required to approve the Merger, the Merger Agreement and the Amendment. WE
URGE YOU TO EXECUTE, DATE AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED
POSTAGE-PAID ENVELOPE AS SOON AS POSSIBLE TO ASSURE THAT YOUR SHARES WILL BE
VOTED AT THE JUNIATA ANNUAL MEETING. On behalf of the Board of Directors, we
thank you for your support and urge you to vote "FOR" approval of the Merger,
the Merger Agreement and the Amendment.
Sincerely,
A. Jerome Cook
President and Chief Executive
Officer
<PAGE>
[LEWISTOWN LETTERHEAD]
April 20, 1998
Dear Shareholder:
We invite you to attend a Special Meeting (the "Lewistown Special Meeting")
of Shareholders of Lewistown Trust Company ("Lewistown"), to be held at 100 E.
Market Street, Lewistown, Pennsylvania, on May 19, 1998 at 1:30 p.m., local
time.
At the Lewistown Special Meeting, the shareholders will be asked to consider
and vote upon: (a) a proposal to approve the Agreement and Plan of
Reorganization dated as of December 30, 1997 (the "Merger Agreement") among
Lewistown, Juniata Valley Financial Corp. ("Juniata") and Juniata Valley Bank
("JVB"), a wholly-owned subsidiary of Juniata, as well as the merger (the
"Merger") of Lewistown with and into JVB, as contemplated therein; (b) a
proposal (the "Adjournment Proposal") to postpone or adjourn the Lewistown
Special Meeting to another time and/or place for the purpose of soliciting
additional proxies in the event that there are not sufficient votes at the
time of the Lewistown Special Meeting to approve the Merger and the Merger
Agreement; and (c) such other business as may properly come before the
Lewistown Special Meeting or any adjournment thereof.
In connection with the Merger, each share of Lewistown Common Stock issued
and outstanding as of the effective time of the Merger will be converted into
and become a right to receive one (1) share of Juniata Common Stock, par value
$1.00 per share (the "Juniata Common Stock"), subject to adjustment as
described more fully in the accompanying Joint Proxy Statement/Prospectus.
Your attention is directed to the attached Joint Proxy Statement/Prospectus
which contains a more complete description of the terms of the Merger and
provides detailed financial, business and other information concerning
Lewistown, Juniata and JVB.
After careful consideration of the terms of the Merger Agreement, the Board
of Directors of Lewistown has determined that the Merger is in the best
interests of Lewistown and its shareholders. ACCORDINGLY, YOUR BOARD OF
DIRECTORS RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE MERGER AND THE MERGER
AGREEMENT.
It is very important that your shares be represented at the Lewistown
Special Meeting, whether or not you plan to attend in person. The affirmative
vote of the holders of two-thirds of all outstanding shares of Lewistown
Common Stock is required to approve the Merger and the Merger Agreement. WE
URGE YOU TO EXECUTE, DATE AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED
POSTAGE-PAID ENVELOPE AS SOON AS POSSIBLE TO ASSURE THAT YOUR SHARES WILL BE
VOTED AT THE LEWISTOWN SPECIAL MEETING. On behalf of the Board of Directors,
we thank you for your support and urge you to vote "FOR" approval of the
Merger and the Merger Agreement.
Sincerely,
Francis J. Evanitsky
President and Chief Executive
Officer
<PAGE>
JUNIATA VALLEY FINANCIAL CORP.
BRIDGE AND MAIN STREETS
MIFFLINTOWN, PENNSYLVANIA 17059
(717) 692-4781
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 19, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Shareholders (the
"Juniata Annual Meeting") of Juniata Valley Financial Corp. ("Juniata") will
be held at the Juniata Valley Bank's branch office located at Monument Square,
Lewistown, Pennsylvania, on May 19, 1998 at 10:30 a.m. local time. A Proxy
Card and a Proxy Statement for the Juniata Annual Meeting are enclosed. The
Juniata Annual Meeting is for the purpose of considering and acting upon:
1. Approval of the Agreement and Plan of Reorganization dated as of
December 30, 1997 (the "Merger Agreement") among Lewistown Trust Company
("Lewistown"), Juniata and Juniata Valley Bank ("JVB"), a wholly-owned
subsidiary of Juniata, as well as the merger (the "Merger") of Lewistown
with and into JVB, as contemplated therein. Pursuant to the Merger
Agreement and as more fully described in the accompanying Joint Proxy
Statement/Prospectus, each share of Lewistown Common Stock issued and
outstanding as of the effective time of the Merger will be converted into
and become a right to receive one (1) share of Juniata Common Stock, par
value $1.00 per share (the "Juniata Common Stock"), subject to adjustment
as more fully described in the accompanying Joint Proxy
Statement/Prospectus.
2. The election of four Class B Directors to serve until the 2001 Annual
Meeting.
3. Postponement or adjournment of the Juniata Annual Meeting to another
time and/or place for the purpose of soliciting additional proxies in the
event that there are not sufficient votes at the time of the Juniata Annual
Meeting to approve the Merger and the Merger Agreement (the "Adjournment
Proposal").
4. A proposal to amend the Juniata Articles of Incorporation to increase
the authorized shares of Juniata Common Stock from 5,000,000 shares to
20,000,000 shares (the "Amendment").
5. Such other matters as may properly come before the Juniata Annual
Meeting or any adjournment thereof.
Any action may be taken on any one of the foregoing proposals at the Juniata
Annual Meeting on the date specified above, or on any date or dates to which,
by original or later adjournment, the Juniata Annual Meeting may be adjourned.
Only shareholders of record at the close of business on April 15, 1998, shall
be entitled to notice of and to vote at the Juniata Annual Meeting or any
adjournments or postponements thereof.
You are requested to complete, sign and date the enclosed Proxy Card, which
is solicited by the Board of Directors, and to promptly mail it in the
enclosed envelope. The giving of such proxy does not affect your right to vote
in person in the event you attend the Juniata Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
A. Jerome Cook
President and Chief Executive
Officer
Mifflintown, Pennsylvania
April 20, 1998
IMPORTANT: PLEASE SIGN, DATE AND COMPLETE THE ENCLOSED PROXY. THE PROMPT
RETURN OF PROXIES WILL SAVE JUNIATA THE EXPENSE OF FURTHER REQUESTS FOR
PROXIES TO ENSURE A QUORUM. AN ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
<PAGE>
LEWISTOWN TRUST COMPANY
100 EAST MARKET STREET
LEWISTOWN, PENNSYLVANIA 17044
(717) 242-0381
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 19, 1998
NOTICE IS HEREBY GIVEN that a Special Meeting of the Shareholders (the
"Lewistown Special Meeting") of Lewistown Trust Company ("Lewistown") will be
held at 100 E. Market Street, Lewistown, Pennsylvania, on May 19, 1998 at 1:30
p.m., local time. A Proxy Card and a Proxy Statement for the Lewistown Special
Meeting are enclosed. The Lewistown Special Meeting is for the purpose of
considering and acting upon:
1. Approval of the Agreement and Plan of Reorganization dated as of
December 30, 1997 (the "Merger Agreement") among Lewistown, Juniata Valley
Financial Corp. ("Juniata") and Juniata Valley Bank ("JVB"), a wholly-owned
subsidiary of Juniata, as well as the merger (the "Merger") of Lewistown
with and into JVB, as contemplated therein. Pursuant to the Merger
Agreement and as more fully described in the accompanying Joint Proxy
Statement/Prospectus, each share of Lewistown Common Stock issued and
outstanding as of the effective time of the Merger will be converted into
and become a right to receive one (1) share of Juniata Common Stock, par
value $1.00 per share (the "Juniata Common Stock"), subject to adjustment
as more fully described in the accompanying Joint Proxy
Statement/Prospectus;
2. Postponement or adjournment of the Lewistown Special Meeting to
another time and/or place for the purpose of soliciting additional proxies
in the event that there are not sufficient votes at the time of the
Lewistown Special Meeting to approve the Merger and the Merger Agreement
(the "Adjournment Proposal"); and
3. Such other matters as may properly come before the Lewistown Special
Meeting or any adjournment thereof.
Any action may be taken on any one of the foregoing proposals at the
Lewistown Special Meeting on the date specified above, or on any date or dates
to which, by original or later adjournment, the Lewistown Special Meeting may
be adjourned. Only shareholders of record at the close of business on April
15, 1998, shall be entitled to notice of and to vote at the Lewistown Special
Meeting or any adjournments or postponements thereof.
As required by the Pennsylvania Banking Code ("PBC"), and the Pennsylvania
Business Corporation Law ("BCL"), to which the PBC refers, any shareholder of
Lewistown who has voted against the Merger and the Merger Agreement at the
Lewistown Special Meeting and has given notice to Lewistown in writing at or
prior to the Lewistown Special Meeting that such shareholder dissents from the
Merger, shall be entitled to receive the "fair value" of the shares held by
that shareholder at the time the Merger Agreement has been approved by the
Pennsylvania Department of Banking ("PDOB"), the Federal Reserve Board and the
Federal Deposit Insurance Corporation ("FDIC"), upon written request made to
Juniata at any time within 30 days following the effective date of the Merger
(the "Effective Date"), accompanied by the surrender of such shareholder's
stock certificates. The relevant portions of the statutory dissenters
procedures are attached to this Joint Proxy Statement/Prospectus as Appendix
D.
You are requested to complete, sign and date the enclosed Proxy Card, which
is solicited by the Board of Directors, and to promptly mail it in the
enclosed envelope. The giving of such proxy does not affect your right to vote
in person in the event you attend the Lewistown Special Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Francis J. Evanitsky
President and Chief Executive
Officer
Lewistown, Pennsylvania
April 20, 1998
IMPORTANT: PLEASE SIGN, DATE AND COMPLETE THE ENCLOSED PROXY. THE PROMPT
RETURN OF PROXIES WILL SAVE LEWISTOWN THE EXPENSE OF FURTHER REQUESTS FOR
PROXIES TO ENSURE A QUORUM. AN ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
<PAGE>
JOINT PROXY STATEMENT/PROSPECTUS
JUNIATA VALLEY FINANCIAL CORP.
BRIDGE AND MAIN STREETS
MIFFLINTOWN, PENNSYLVANIA 17059
AND
LEWISTOWN TRUST COMPANY
100 EAST MARKET STREET
LEWISTOWN, PENNSYLVANIA 17044
UP TO 937,024 SHARES OF COMMON STOCK
PAR VALUE $1.00 PER SHARE, ISSUABLE IN PROPOSED
MERGER OF
LEWISTOWN TRUST COMPANY
WITH AND INTO
JUNIATA VALLEY BANK
This Joint Proxy Statement/Prospectus is being furnished to the shareholders
of Juniata Valley Financial Corp. ("Juniata") and Lewistown Trust Company
("Lewistown") in connection with the solicitation of proxies by their
respective Boards of Directors for use at the Annual Meeting of Shareholders
of Juniata (the "Juniata Annual Meeting") and a Special Meeting of
Shareholders of Lewistown (the "Lewistown Special Meeting"), each to be held
on May 19, 1998. The shareholders of Juniata and Lewistown will be asked to
consider and vote upon: (a) a proposal to approve the Agreement and Plan of
Reorganization dated as of December 30, 1997 (the "Merger Agreement") among
Lewistown, Juniata and Juniata Valley Bank ("JVB"), a wholly-owned subsidiary
of Juniata, as well as the merger (the "Merger") of Lewistown with and into
JVB, as contemplated therein; (b) a proposal (the "Adjournment Proposal") to
postpone or adjourn the respective Meetings to another time and/or place for
the purpose of soliciting additional proxies in the event that there are not
sufficient votes at the time of the respective Meetings to approve the Merger
and the Merger Agreement; and (c) such other business as may properly come
before the respective Meetings or any adjournment thereof. Additionally, the
shareholders of Juniata will be asked to consider and vote upon (i) the
election of four Class B Directors to serve until the 2001 Annual Meeting, and
(ii) a proposal to amend the Juniata Articles of Incorporation to increase the
authorized shares of Juniata Common Stock from 5,000,000 shares to 20,000,000
shares (the "Amendment").
In connection with the Merger, each share of Lewistown Common Stock issued
and outstanding as of the effective time of the Merger will be converted into
and become a right to receive one (1) share of Juniata Common Stock, par value
$1.00 per share (the "Juniata Common Stock"), subject to adjustment as
described more fully herein. Each share of Lewistown Common Stock held and
beneficially owned by Juniata or any Juniata subsidiary (other than shares
held in a fiduciary or similar capacity on behalf of others) shall be canceled
by virtue of the Merger.
As required by the Pennsylvania Banking Code ("PBC"), and the Pennsylvania
Business Corporation Law ("BCL"), to which the PBC refers, any shareholder of
Lewistown who has voted against the Merger and the Merger Agreement at the
Lewistown Special Meeting or has given notice to Lewistown in writing at or
prior to the Lewistown Special Meeting that such shareholder dissents from the
Merger, shall be entitled to receive the "fair value" of the shares held by
that shareholder at the time the Merger Agreement has been approved by the
Pennsylvania Department of Banking ("PDOB"), the Federal Reserve Board and the
Federal Deposit Insurance Corporation ("FDIC"), upon written request made to
Juniata at any time within 30 days following the effective date of the Merger
(the "Effective Date"), accompanied by the surrender of such shareholder's
stock certificates. The relevant portions of the statutory dissenters
procedures are attached to this Joint Proxy Statement/Prospectus as Appendix
D.
Juniata Common Stock is quoted on the Over-the-Counter ("OTC") Bulletin
Board. There is currently no public market for Lewistown Common Stock nor any
uniformly quoted price.
<PAGE>
This Joint Proxy Statement/Prospectus constitutes a prospectus of Juniata
appearing as a part of a registration statement filed with the Securities and
Exchange Commission relating to the 937,024 shares of Juniata Common Stock
issuable pursuant to the Merger Agreement. All information in this Joint Proxy
Statement/Prospectus relating to Juniata and JVB has been supplied by Juniata
and all information relating to Lewistown has been supplied by Lewistown.
This Joint Proxy Statement/Prospectus and the accompanying Proxy Card and
Notice of Special Meeting are first being mailed to shareholders of Lewistown
and Juniata on or about April 20, 1998.
THE SHARES OF JUNIATA COMMON STOCK ISSUABLE IN THE MERGER HAVE NOT BEEN
APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE
SECURITIES COMMISSION OR THE FEDERAL DEPOSIT INSURANCE CORPORATION (THE
"FDIC"), NOR HAS THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES
COMMISSION OR THE FDIC PASSED UPON THE ACCURACY OR ADEQUACY OF THIS JOINT
PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THE SHARES OF JUNIATA COMMON STOCK ISSUABLE IN THE MERGER ARE NOT SAVINGS
ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF A BANK OR DEPOSITORY INSTITUTION
AND ARE NOT INSURED BY THE FDIC OR ANY OTHER GOVERNMENTAL AGENCY. THE SHARES
OF JUNIATA COMMON STOCK ISSUABLE IN THE MERGER ARE SUBJECT TO INVESTMENT RISK,
INCLUDING LOSS OF PRINCIPAL OR INTEREST.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS JOINT PROXY
STATEMENT/PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY LEWISTOWN
OR JUNIATA. THIS JOINT PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE THE
SOLICITATION OF A PROXY TO OR FROM ANY PERSON IN ANY JURISDICTION WHERE IT IS
UNLAWFUL TO MAKE SUCH PROXY SOLICITATION. THE DELIVERY OF THIS JOINT PROXY
STATEMENT/PROSPECTUS SHALL NOT, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE INFORMATION ABOUT LEWISTOWN,
JUNIATA OR JVB CONTAINED IN THIS JOINT PROXY STATEMENT/PROSPECTUS SINCE THE
DATE HEREOF.
AVAILABLE INFORMATION
Juniata is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, accordingly, files
reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and
other information filed with the Commission are available for inspection and
copying at the public reference facilities maintained by the Commission at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC 20549, and
at the Commission's Regional Offices located at Northwestern Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and at Seven
World Trade Center, New York, New York 10048. Copies of such documents may
also be obtained from the Public Reference Section of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC 20549, at prescribed
rates. The Commission also maintains a World Wide Web site that contains
reports, proxy and information statements and other information regarding
Registrants such as Juniata that file electronically with the Commission. The
address of the Commissions's site is http://www.sec.gov. Juniata Common Stock
is authorized for quotation on the OTC Bulletin Board. Such materials and
other information concerning Juniata, therefore, can also be inspected at the
offices of the National Association of Securities Dealers, Inc., 1735 K
Street, N.W., Washington, D.C.
Juniata has filed with the Commission under the Securities Act of 1933, as
amended (the "Securities Act") a Registration Statement on Form S-4,
(including all amendments and exhibits thereto (the "Registration Statement"),
with respect to the Juniata Common Stock issuable pursuant to the Merger
Agreement. This Joint Proxy Statement/Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which
are omitted in accordance with the rules and regulations of the Commission.
The Registration Statement, including any amendments and exhibits thereto, is
available for inspection and copying as set forth
<PAGE>
above. Statements contained in this Joint Proxy Statement/Prospectus as to the
contents of any contract or other document are not necessarily complete, and
in each instance reference is made to copy of such contract or other document
filed as an exhibit to the Registration Statement, each such statement being
qualified in all respects by such reference.
THIS JOINT PROXY STATEMENT/PROSPECTUS INCORPORATES BY REFERENCE (I)
DOCUMENTS RELATING TO JUNIATA (THE "JUNIATA DOCUMENTS"), AND (II) THE MERGER
AGREEMENT, WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THE JUNIATA
DOCUMENTS AND COPIES OF THE MERGER AGREEMENT (NOT INCLUDING EXHIBITS THERETO,
UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE HEREIN) ARE
AVAILABLE WITHOUT CHARGE TO ANY PERSON TO WHOM THIS JOINT PROXY
STATEMENT/PROSPECTUS IS DELIVERED, UPON WRITTEN OR ORAL REQUEST DIRECTED TO
LINDA L. ENGLE, SR. VICE PRESIDENT, CHIEF FINANCIAL OFFICER, JUNIATA VALLEY
FINANCIAL CORP., P.O. BOX 66, MIFFLINTOWN, PA 17059. IN ORDER TO INSURE TIMELY
DELIVERY OF THE DOCUMENTS IN ADVANCE OF THE MEETING TO WHICH THIS JOINT PROXY
STATEMENT/PROSPECTUS RELATES, ANY REQUEST SHOULD BE MADE NO LATER MAY 10,
1998.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents and information are hereby incorporated by reference
into this Joint Proxy Statement/Prospectus:
1. Juniata's annual report on Form 10-K for the year ended December 31,
1997;
2. Juniata's current report on Form 8-K filed January 9, 1998.
3. The Agreement and Plan of Reorganization dated as of December 30, 1997
(the "Merger Agreement") among Juniata, JVB and Lewistown.
All documents filed by Juniata pursuant to Sections 13(a), 13(c), 14, or
15(d) of the 1934 Act after the date of this Joint Proxy Statement/Prospectus
and prior to the Lewistown Special Meeting and the Juniata Annual Meeting are
hereby incorporated by reference into this Joint Proxy Statement/Prospectus
and shall be deemed a part hereof from the dated of filing of each such
document. Any statement contained in a document incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this Joint
Proxy Statement/Prospectus to the extent that a statement contained herein or
in any other subsequently filed document which is also incorporated by
reference modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Joint Proxy Statement/Prospectus.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE(S)
-------
<S> <C>
SUMMARY................................................................. 1
The Parties............................................................. 1
Lewistown............................................................. 1
Juniata............................................................... 1
Juniata Valley Bank................................................... 1
The Meetings............................................................ 2
Date, Place and Time of the Meetings.................................. 2
Matters to be Considered at the Meetings.............................. 2
Record Date; Shares Outstanding; Quorum; Vote Required................ 2
Terms of the Merger................................................... 3
Exchange Procedure.................................................... 3
Opinions of Financial Advisors........................................ 3
Recommendation of the Boards of Directors............................. 3
Conditions to the Merger.............................................. 4
Closing; Effective Date............................................... 4
Termination; Waiver; Amendment........................................ 4
Fees and Expenses..................................................... 4
Dissenters Rights..................................................... 4
Certain Federal Income Tax Consequences of the Merger................. 5
Accounting Treatment.................................................. 5
Interests of Certain Persons in the Merger............................ 5
Comparison of Shareholder Rights...................................... 6
Adjournment of the Meeting............................................ 6
Market Price Data..................................................... 6
Selected Historical and Pro Forma Financial Data...................... 8
Juniata.............................................................
Lewistown...........................................................
Unaudited Pro Forma Selected Financial Data........................... 10
Comparative Per Share Data............................................ 11
THE MEETINGS............................................................ 12
General............................................................... 12
Date, Place and Time of the Meetings.................................. 12
Matters to be Considered at the Meetings.............................. 12
Record Date; Shares Outstanding; Quorum............................... 12
Votes Required........................................................ 12
Effect of Abstentions and Broker Nonvotes............................. 13
Voting, Revocation and Solicitation of Proxies........................ 13
Recommendation of the Boards of Directors............................. 14
THE MERGER.............................................................. 15
Introduction; Background of the Merger................................ 15
Lewistown........................................................... 15
Juniata............................................................. 15
Juniata Valley Bank................................................. 15
Reasons for the Merger; Recommendation of the Board of Directors...... 16
Voting Agreements..................................................... 17
Opinions of Financial Advisors........................................ 18
Terms of the Merger................................................... 24
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE(S)
-------
<S> <C>
Effect of the Merger................................................ 25
Merger Consideration; Conversion Factor............................. 25
Closing; Effective Date............................................. 25
Representations and Warranties...................................... 25
Conduct of Business Pending the Merger.............................. 25
Certain Other Agreements............................................ 26
Conditions Precedent................................................ 28
Waiver; Amendment................................................... 28
Termination......................................................... 29
Expenses.............................................................. 29
No Solicitation; Pursuit of Other Transactions........................ 30
Continued Employment of Lewistown Employees........................... 30
Indemnification of Lewistown Officers and Directors; Insurance........ 30
Juniata Valley Bank Shareholder Approval.............................. 31
Listing............................................................... 31
Exchange Procedure.................................................... 31
Appointment of Exchange Agent....................................... 31
Procedure........................................................... 31
Regulatory Approvals.................................................. 32
Interests of Certain Persons in the Merger............................ 32
Management of Juniata and Juniata Valley Bank After Merger............ 33
Accounting Treatment.................................................. 34
Certain Federal Income Tax Consequences............................... 34
Rights of Dissenting Shareholders..................................... 35
REGULATORY MATTERS...................................................... 35
General............................................................... 35
Restrictions on Resales by Affiliates................................. 35
Payment of Dividends.................................................. 36
Capital Limitations.................................................
Earnings Limitations................................................
Other Limitations...................................................
Holding Company Structure............................................. 36
Capital Adequacy...................................................... 37
Federal Deposit Insurance Corporation Improvement Act of 1991......... 38
JUNIATA ANNUAL MEETING--MATTERS FOR JUNIATA SHAREHOLDERS................ 40
Election of Directors................................................. 40
Board of Directors.................................................... 42
Executive Officers.................................................... 42
Board Personnel Committee Report on Executive Compensation............ 42
Transactions with Officers and Directors.............................. 47
Section 16(a) Beneficial Ownership Reporting Compliance............... 47
Committees of the Board of Directors of JVB........................... 48
Independent Certified Public Accountants.............................. 48
Year 2000 Compliance.................................................. 48
COMPARISON OF SHAREHOLDERS' RIGHTS...................................... 49
Introduction.......................................................... 49
Dividends............................................................. 49
Lewistown........................................................... 49
Juniata............................................................. 49
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
PAGE(S)
-------
<S> <C>
Voting Rights Generally............................................. 50
Lewistown......................................................... 50
Juniata........................................................... 50
Classified Board of Directors....................................... 50
Lewistown......................................................... 50
Juniata........................................................... 50
Number of Directors; Term........................................... 51
Lewistown......................................................... 51
Juniata........................................................... 51
Removal of Directors................................................ 51
Lewistown......................................................... 51
Juniata........................................................... 51
Qualifications of Directors......................................... 51
Lewistown......................................................... 51
Juniata........................................................... 51
Filling Vacancies on the Board of Directors......................... 51
Call of Special Shareholders' Meeting............................... 52
Lewistown......................................................... 52
Juniata........................................................... 52
Notice of Shareholders' Meetings.................................... 52
Lewistown......................................................... 52
Juniata........................................................... 52
Quorum Requirements and Adjournment of Meetings..................... 52
Dissenters Rights................................................... 52
Lewistown......................................................... 52
Juniata........................................................... 53
Limitations on Directors' Liability................................. 53
Indemnification..................................................... 53
Lewistown......................................................... 53
Juniata........................................................... 53
Lewistown and Juniata............................................. 53
Anti-Takeover Law Provisions........................................ 55
Lewistown......................................................... 55
Juniata........................................................... 55
Amendment of Articles of Incorporation.............................. 56
Lewistown......................................................... 56
Juniata........................................................... 56
Amendment of Bylaws................................................. 56
Lewistown......................................................... 56
Juniata........................................................... 56
UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS.................... 57
LEWISTOWN MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION............................................. 62
BUSINESS OF LEWISTOWN................................................. 74
Description of Business............................................. 74
Properties.......................................................... 74
Legal Proceedings................................................... 74
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF
LEWISTOWN............................................................ 75
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
PAGE(S)
-------
<S> <C>
ADJOURNMENT OF THE MEETING............................................ 75
EXPERTS............................................................... 76
LEGAL OPINIONS........................................................ 76
JUNIATA SHAREHOLDER PROPOSALS AND NOMINATIONS......................... 76
OTHER BUSINESS........................................................ 76
APPENDIX A--LEWISTOWN FINANCIAL STATEMENTS............................ A-1
APPENDIX B--OPINION OF RP FINANCIAL, LC. ............................. B-1
APPENDIX C--OPINION OF HOPPER SOLIDAY AND COMPANY, INC................ C-1
APPENDIX D--STATUTORY PROVISIONS CONCERNING DISSENTERS' RIGHTS FOR
SHAREHOLDERS OF LEWISTOWN............................................ D-1
</TABLE>
iv
<PAGE>
SUMMARY
The following is a summary of certain information relating to the Merger
which may also be contained elsewhere in this Joint Proxy
Statement/Prospectus. This summary is not intended to be a summary of all
information relating to the Merger and is qualified in its entirety by
reference to more detailed information contained elsewhere in this Joint Proxy
Statement/Prospectus, including the Appendices hereto. All shareholders are
urged to review the entire Joint Proxy Statement/Prospectus and Appendices
carefully.
THE PARTIES
LEWISTOWN
Lewistown Trust Company ("Lewistown") is a bank and trust company and an
FDIC-insured institution organized on September 13, 1906 under the laws of the
Commonwealth of Pennsylvania and headquartered in Lewistown, Pennsylvania.
Lewistown is engaged in accepting demand, time and savings deposits and
granting loans (consumer, commercial, real estate and business) to
individuals, corporations, partnerships, associations and municipalities and
other governmental bodies.
Lewistown Common Stock is not registered or publicly traded. Lewistown is
subject to the supervision of the Federal Deposit Insurance Corporation
("FDIC") and the Pennsylvania Department of Banking ("PDOB").
As of December 31, 1997, Lewistown had four (4) banking offices. Its
principal executive office, which it owns, is located at 100 East Market
Street, Lewistown, Pennsylvania 17044, and the telephone number at that
address is (717) 242-0381. Lewistown is not dependent on any one customer, and
the loss of any customer or a few customers would not have a material adverse
effect upon it.
At December 31, 1997, Lewistown reported total assets of $111,667,000,
deposits of $96,130,000 and net loans of $55,600,000. Lewistown reported net
income of $1.67 per share for the year ended December 31, 1996 and net income
of $1.63 per share for the year ended December 31, 1997.
JUNIATA
Juniata Valley Financial Corp. ("Juniata") is a Pennsylvania business
corporation which was organized in 1983, and is headquartered at Bridge and
Main Streets, Mifflintown, Pennsylvania 17059. Juniata is the holding company
of Juniata Valley Bank ("JVB"), currently its only wholly-owned banking
subsidiary, which originated under a state bank charter in 1867.
As a bank holding company, Juniata is registered with the Federal Reserve
Board in accordance with the requirements of the Bank Holding Company Act of
1956, as amended, and is subject to regulation by the Federal Reserve Board.
Juniata Common Stock is quoted under the symbol "JUVF" on the over-the-
counter ("OTC") Bulletin Board, an automated quotation service made available
through, and governed by, the National Association of Securities Dealers.
At December 31, 1997, Juniata reported total assets of $220,910,000,
deposits of $189,007,000 and net loans of $135,709,000. Juniata reported net
income of $2,764,000, or $1.98 per share for the year ended December 31, 1996,
and net income of $3,045,000, or $2.18 per share, for the year ended December
31, 1997.
JUNIATA VALLEY BANK
JVB is a wholly-owned Juniata subsidiary, and is a Pennsylvania banking
institution which was formed and organized in 1867. JVB, which is also an
FDIC-insured institution, engages in general commercial banking and provides
individuals, businesses and municipalities with financial services, including
trust and fiduciary services.
1
<PAGE>
JVB currently operates eight (8) offices in Juniata, Perry, Mifflin and
Huntingdon Counties. Upon consummation of the Merger, Lewistown will be merged
with and into JVB, which will be the surviving institution. After consummation
of the Merger, Lewistown will cease to exist as a separate institution.
THE MEETINGS
DATE, PLACE AND TIME OF THE MEETINGS
The annual meeting of Shareholders of Juniata (the "Juniata Annual Meeting")
will be held at 10:30 a.m. on May 19, 1998 at JVB's branch office located at
Monument Square, Lewistown, Pennsylvania.
The special meeting of the Shareholders of Lewistown (the "Lewistown Special
Meeting") will be held at 1:30 p.m. on May 19, 1998 at Lewistown's main office
at 100 E. Market Street, Lewistown, Pennsylvania.
MATTERS TO BE CONSIDERED AT THE MEETINGS
At their respective meetings, the Shareholders of Juniata and Lewistown will
be asked to approve: (a) an Agreement and Plan of Reorganization dated
December 30, 1997 (the "Merger Agreement") among Lewistown, Juniata and JVB,
as well as the merger (the "Merger") of Lewistown with and into JVB, as
contemplated therein; (b) a proposal (the "Adjournment Proposal") to postpone
or adjourn their respective meetings to another time and/or place for the
purpose of soliciting additional proxies in the event that there are not
sufficient votes at the time of their respective meetings to approve the
Merger and the Merger Agreement; and (c) such other business as may properly
come before their respective Meetings and/or any adjournment thereof.
Additionally, at the Juniata Annual Meeting, the shareholders of Juniata will
be asked to consider and vote upon the election of four Class B Directors to
serve until the 2001 Annual Meeting, and the proposal to amend the Juniata
Articles of Incorporation to increase the authorized shares of Juniata Common
Stock from 5,000,000 shares to 20,000,000 shares (the "Amendment"). See "THE
MEETINGS--Matters to be Considered at the Meetings."
RECORD DATE; SHARES OUTSTANDING; QUORUM; VOTE REQUIRED
Only holders of record of shares of Juniata Common Stock at the close of
business on April 15, 1998 (the "Juniata Record Date") will be entitled to
vote at the Juniata Annual Meeting. As of that date, approximately 1,385,491
shares of Juniata Common Stock were outstanding, each share being entitled to
one vote. Pursuant to Juniata's Articles of Incorporation, the affirmative
vote of the holders of 66 2/3% of all outstanding shares of Juniata Common
Stock is required to approve the Merger and the Merger Agreement. See "THE
MEETINGS--Vote Required."
As of the Juniata Record Date indicated above, directors and executive
officers of Juniata beneficially owned approximately 62,012 shares of Juniata
Common Stock or approximately 4.47% of the outstanding Juniata Common Stock
entitled to vote at the Juniata Annual Meeting. The directors and executive
officers of Juniata have agreed to vote all of such shares in favor of the
Merger and the Merger Agreement. See "THE MEETINGS--VOTES REQUIRED AND
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT."
Only holders of record of shares of Lewistown Common Stock at the close of
business on April 15, 1998 (the "Lewistown Record Date") will be entitled to
vote at the Lewistown Special Meeting. At that date, approximately 937,024
shares of Lewistown Common Stock were outstanding, each share being entitled
to one vote. The affirmative vote of the holders of two-thirds ( 2/3) of all
outstanding shares of Lewistown Common Stock is required to approve the Merger
and the Merger Agreement. See "THE MEETINGS--Vote Required."
As of the Record Date indicated above, directors and executive officers of
Lewistown beneficially owned approximately 92,771 shares of Lewistown Annual
Stock or approximately 9.90% of the outstanding Lewistown Common Stock
entitled to vote at the Lewistown Special Meeting. Prior to the execution of
the Merger
2
<PAGE>
Agreement, the directors and executive officers of Lewistown entered into an
agreement with Juniata that they would vote all of such shares in favor of the
Merger and the Merger Agreement. See "THE MEETINGS--Votes Required" and
"SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT."
TERMS OF THE MERGER
Pursuant to the Merger Agreement, Lewistown will be merged with and into
JVB. JVB is a wholly-owned subsidiary of Juniata, and a Pennsylvania state
banking institution formed and organized in 1867. JVB will be the surviving
institution. Each share of Lewistown Common Stock outstanding as of the
effective date of the Merger (the "Effective Date") will be converted into and
become a right to receive one (1) share (the "Conversion Factor") of Common
Stock of Juniata, par value $1.00 per share (the "Juniata Common Stock"). See
"THE MERGER--Terms of the Merger--Merger Consideration; Conversion Factor."
EXCHANGE PROCEDURE
As soon as practicable after the Effective Date, holders of shares of
Lewistown Common Stock will be furnished a form letter of transmittal for the
tender of their shares to Juniata, which will serve as the exchange agent, to
be exchanged for certificates for the appropriate number of shares of Juniata
Common Stock. See "THE MERGER--Exchange Procedure."
LEWISTOWN SHAREHOLDERS SHOULD NOT FORWARD STOCK CERTIFICATES FOR SHARES OF
JUNIATA COMMON STOCK TO LEWISTOWN OR JUNIATA UNTIL THEY HAVE RECEIVED THE
TRANSMITTAL LETTER. LEWISTOWN SHAREHOLDERS SHOULD NOT RETURN STOCK
CERTIFICATES WITH THE ENCLOSED PROXY CARD.
OPINIONS OF FINANCIAL ADVISORS
RP Financial, LC. ("RP Financial") rendered its opinion to the Board of
Directors of Lewistown that, based upon and subject to the various
considerations set forth therein, as of December 29, 1997 (the "December
Opinion"), and as of the date of this Joint Proxy Statement/Prospectus (the
"Proxy Opinion"), the consideration to be received, in the Merger, is fair,
from a financial point of view, to the holders of Lewistown Common Stock.
Hopper Soliday & Company, Inc. ("Hopper Soliday") rendered its opinion to the
Board of Directors of Juniata that as of December 30, 1997, the terms of the
Merger are fair from a financial point of view. These opinions, updated as of
April 20, 1998, which are attached to this Joint Proxy Statement/Prospectus as
Appendix B and Appendix C, respectively, should be read in their entirety with
respect to the assumptions made and other matters considered in rendering such
opinions. See "THE MERGER--Opinions of Financial Advisors."
RECOMMENDATION OF THE BOARDS OF DIRECTORS
THE BOARD OF DIRECTORS OF JUNIATA BELIEVES THAT THE MERGER IS IN THE BEST
INTERESTS OF JUNIATA'S SHAREHOLDERS, HAS BY UNANIMOUS VOTE APPROVED THE
MERGER, THE MERGER AGREEMENT AND THE AMENDMENT, AND RECOMMENDS THAT JUNIATA'S
SHAREHOLDERS VOTE "FOR" APPROVAL OF THE MERGER, THE MERGER AGREEMENT AND THE
AMENDMENT. See "THE MERGER--Reasons for the Merger; Recommendations of the
Boards of Directors."
THE BOARD OF DIRECTORS OF LEWISTOWN BELIEVES THAT THE MERGER IS IN THE BEST
INTERESTS OF LEWISTOWN'S SHAREHOLDERS, HAS BY UNANIMOUS VOTE APPROVED THE
MERGER AND THE MERGER AGREEMENT AND RECOMMENDS THAT LEWISTOWN'S SHAREHOLDERS
VOTE "FOR" APPROVAL OF THE MERGER AND THE MERGER AGREEMENT. See "THE MERGER--
Reasons for the Merger; Recommendations of the Boards of Directors."
3
<PAGE>
CONDITIONS TO THE MERGER
Consummation of the Merger is subject to various conditions, including the
approval of the Merger by the Board of Governors of the Federal Reserve System
(the "Federal Reserve Board"), the Federal Deposit Insurance Corporation (the
"FDIC") and the Pennsylvania Department of Banking (the "Department of
Banking") and its qualification for accounting purposes as a "pooling of
interests." See "THE MERGER--Regulatory Approvals." The Merger is also subject
to satisfaction of various other conditions specified in the Merger Agreement,
including approval of the Merger and the Merger Agreement by the requisite
vote of shareholders of Lewistown and Juniata. See "THE MERGER--Terms of the
Merger--Conditions Precedent."
CLOSING; EFFECTIVE DATE
The Merger Agreement provides that the closing of the Merger (the "Closing")
will be held at the executive offices of Juniata at 10:00 a.m. on a date to be
designated by Juniata (the "Effective Date"), which date shall not be later
than thirty (30) business days following the receipt of all governmental
approvals and Shareholder approvals and after the expiration of all applicable
waiting periods. See "THE MERGER--Terms of the Merger--Closing; Effective
Date" and "THE MERGER--Terms of the Merger--Conditions Precedent."
TERMINATION; WAIVER; AMENDMENT
The Merger Agreement may be terminated at any time prior to consummation of
the Merger in a number of circumstances, including, but not limited to: (a) by
mutual consent of the parties; (b) by either party if in its reasonable
opinion, a material adverse change shall have occurred since September 30,
1997, in the business or financial condition of the other party; (c) by either
party if there has been a failure on the part of the other party to comply
with its obligations under the Merger Agreement; (d) by the Board of Lewistown
or Juniata if the Merger and Merger Agreement are not approved by the
affirmative vote of (i) Lewistown Shareholders holding at least two-thirds (
2/3) of Lewistown outstanding Common Stock, and (ii) Juniata Shareholders
holding at least 66 and 2/3% of Juniata's outstanding Common Stock; and (e) by
the Board of Lewistown if, prior to the Effective Date, (i) a change of
control of Juniata occurs, (ii) Juniata enters into an agreement to effect a
change of control or (iii) Juniata enters into any agreement relating to a
transaction which would require the approval of its shareholders under
Juniata's Articles of Incorporation or Bylaws or under the BCL. See "THE
MERGER--Terms of the Merger--Termination."
Provisions of the Merger Agreement may be waived or amended under certain
circumstances, as set forth in the Merger Agreement. See "THE MERGER--Terms of
the Merger--Waiver; Amendment."
FEES AND EXPENSES
Except as described below, whether or not the Merger is consummated, all
costs and expenses incurred in connection with the Merger and the Merger
Agreement will be paid by the party incurring such costs, except that in the
event the Merger is not consummated for any reason, Juniata and Lewistown will
each pay one-half of: (a) the aggregate costs theretofore incurred in printing
the Juniata Registration Statement, Juniata's Prospectus (the "Prospectus")
and this Joint Proxy Statement/Prospectus; (b) the registration fee for the
Juniata Registration Statement; and (c) the fees for filing applications for
any government approvals required by the Merger Agreement. See "THE MERGER--
Expenses."
DISSENTERS RIGHTS
Lewistown
As required by the Pennsylvania Banking Code ("PBC"), and the Pennsylvania
Business Corporation Law ("BCL"), to which the PBC refers, any shareholder of
Lewistown who has voted against the Merger and the Merger Agreement at the
Meeting or has given notice to Lewistown in writing at or prior to the
Lewistown Special Meeting that such shareholder dissents from the Merger,
shall be entitled to receive the "fair value" of
4
<PAGE>
the shares held by that shareholder at the time the Merger Agreement has been
approved by the Pennsylvania Department of Banking ("PDOB"), the Federal
Reserve Board and the FDIC, upon written request made to Juniata at any time
within 30 days following the Effective Date, accompanied by the surrender of
such shareholder's stock certificates. The relevant portions of the statutory
dissenters procedures are attached to this Joint Proxy Statement/Prospectus as
Appendix D. Shareholders electing to exercise their dissenters rights under
the PBC and BCL may not vote for the Merger and the Merger Agreement. If a
shareholder returns a signed proxy but does not specify a vote against the
Merger and the Merger Agreement or does not give a direction to abstain, the
proxy will be voted for the Merger and the Merger Agreement, which will have
the effect of waiving that shareholder's dissenters rights. See "THE MERGER--
Appraisal Rights of Dissenting Shareholders."
Juniata
Juniata Shareholders will not have statutory dissenters' rights with respect
to the Merger and the Merger Agreement.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
It is intended that the Merger will be treated, for federal income tax
purposes, as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), and that, accordingly,
for income tax purposes: (a) the Merger of Lewistown with and into JVB upon
the terms and conditions of the Merger Agreement will not result in any
recognized gain or loss to Juniata, JVB or Lewistown; (b) except for any cash
received in lieu of any fractional share, no gain or loss will be recognized
by holders of Lewistown Common Stock who receive Juniata Common Stock in
exchange for the shares of Lewistown Common Stock which they hold; (c) the
holding period of Juniata Common Stock received in exchange for Lewistown
Common Stock will include the holding period of Lewistown Common Stock for
which it is exchanged, assuming the shares of Lewistown Common Stock are
capital assets in the hands of the holder thereof on the Effective Date; and
(d) the basis of Juniata Common Stock received in exchange for Lewistown
Common Stock will be the basis of Lewistown Common Stock for which it is
exchanged, less any basis attributable to fractional shares for which cash is
received.
The obligations of the parties to consummate the Merger are conditioned upon
the receipt of an opinion from Mette, Evans & Woodside, counsel to Juniata,
substantially to the effect that the federal income tax consequences of the
Merger are as summarized above. See "THE MERGER--Certain Federal Income Tax
Consequences."
EACH SHAREHOLDER IS ENCOURAGED TO CONSULT HIS OR HER OWN TAX ADVISOR AS TO
PARTICULAR FACTS AND CIRCUMSTANCES WHICH MAY BE UNIQUE AS TO ANY ESTATE, GIFT,
STATE, LOCAL OR FOREIGN TAX CONSEQUENCES ARISING OUT OF THE MERGER AND/OR ANY
SALE THEREAFTER OF SHARES OF JUNIATA COMMON STOCK RECEIVED IN THE MERGER.
ACCOUNTING TREATMENT
The Merger will be accounted for as, and is conditioned upon its
qualification for treatment as, a "pooling of interests" for accounting and
financial reporting purposes. See "THE MERGER--Accounting Treatment."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain directors and officers of Lewistown have interests in the Merger
that are in addition to their interests as shareholders of Lewistown
generally. These include JVB's agreement to indemnify and to provide insurance
covering Lewistown officers and directors following the consummation of the
Merger. See "THE MERGER--Indemnification of Lewistown Officers and Directors;
Insurance" and "THE MERGER--Interests of Certain Persons in the Merger." The
current members of the Board of Directors of Lewistown will be appointed to
the Board of Directors of Juniata. Additionally, Juniata has entered into an
employment agreement, which is conditioned upon consummation of the Merger,
and is effective on the Effective Date, whereby Francis J.
5
<PAGE>
Evanitsky will become President and Chief Operating Officer of Juniata and
JVB. See "THE MERGER--Terms of the Merger--Effect of the Merger" and "THE
MERGER--Interests of Certain Persons in the Merger."
COMPARISON OF SHAREHOLDER RIGHTS
Upon exchange of their shares of Lewistown Common Stock in accordance with
the exchange procedures set forth in the Merger Agreement, holders of
Lewistown Common Stock will become holders of Juniata Common Stock. The rights
of shareholders of Juniata are governed by the BCL and the Articles of
Incorporation and Bylaws of Juniata. The rights of shareholders of Juniata
differ from the rights of Lewistown shareholders with respect to certain
matters. See "COMPARISON OF SHAREHOLDER'S RIGHTS."
ADJOURNMENT OF THE MEETINGS
In the event that there is an insufficient number of votes cast in person or
by proxy at the Juniata Annual Meeting to approve the Merger and the Merger
Agreement, the Board of Directors of Juniata intends to adjourn the Meeting to
a later date for the solicitation of additional votes in favor thereof. The
affirmative vote of a majority of the shares present, in person or by proxy,
at the Juniata Annual Meeting, even if a quorum is not present, is required in
order to approve any such adjournment. JUNIATA'S BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE PROPOSAL TO ADJOURN
THE MEETING IF NECESSARY TO PERMIT FURTHER SOLICITATION OF PROXIES TO APPROVE
THE MERGER AND THE MERGER AGREEMENT. See "ADJOURNMENT OF THE MEETING."
In the event that there is an insufficient number of votes cast in person or
by proxy at the Lewistown Special Meeting to approve the Merger and the Merger
Agreement, the Board of Directors of Lewistown intends to adjourn the Meeting
to a later date for the solicitation of additional votes in favor thereof. The
affirmative vote of a majority of the shares present, in person or by proxy,
at the Lewistown Special Meeting, even if a quorum is not present, is required
in order to approve any such adjournment. LEWISTOWN'S BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE PROPOSAL TO ADJOURN
THE MEETING IF NECESSARY TO PERMIT FURTHER SOLICITATION OF PROXIES TO APPROVE
THE MERGER AND THE MERGER AGREEMENT. See "ADJOURNMENT OF THE MEETING."
MARKET PRICE DATA
Shares of Juniata Common Stock are included for quotation on the OTC
Bulletin Board. The average bid and ask price for Juniata Common Stock on the
OTC Bulletin Board on December 29, 1997, the last trading date prior to the
first public announcement of the Merger, was $36.50. Based on this average bid
and ask price, and the Conversion Factor of one (1) share of Juniata Common
Stock for each share of Lewistown Common Stock, the pro forma value of the
shares of Juniata Common Stock to be exchanged for Lewistown Common Stock was
also $36.50.
There is currently only a limited market for Lewistown Common Stock, which
is lightly traded over the counter. While there is no uniformly quoted price
for Lewistown Common Stock, quotes are available from brokers. The most recent
quote available was $32.00 per share.
On March 18, 1998, average bid and ask price for Juniata Common Stock was
$40.25. Using this price, the equivalent per share price for Lewistown Common
Stock, based on the conversion factor of 1, would have been $40.25.
No assurance can be given as to what the market price of Juniata Common
Stock will be when and if the Merger is consummated. Because the Merger
Conversion Factor is fixed and because the market price of Juniata Common
Stock is subject to fluctuation, the value of the shares of Juniata Common
Stock that holders of Lewistown Common Stock will receive in the Merger may
increase or decrease prior to and following the Merger. Juniata and Lewistown
shareholders are advised to obtain current market quotations for Juniata
Common Stock.
6
<PAGE>
Shares of Juniata Common Stock are included for quotation on the OTC
Bulletin Board. The following table sets forth the stock price range for
shares of Juniata Common Stock, and dividends paid, for the periods indicated
below.
<TABLE>
<CAPTION>
HIGH LOW DIV.
------ ------ ----
<S> <C> <C> <C>
1995
First Quarter........................................... $22.72 $20.80 $ --
Second Quarter.......................................... 21.28 21.28 .27
Third Quarter........................................... 21.76 21.28 --
Fourth Quarter.......................................... 25.12 21.76 .29
1996
First Quarter........................................... 27.00 25.60 --
Second Quarter.......................................... 29.40 27.00 .30
Third Quarter........................................... 30.20 29.20 --
Fourth Quarter.......................................... 32.00 30.20 .30
1997
First Quarter........................................... 32.80 32.00 --
Second Quarter.......................................... 34.00 32.80 .32
Third Quarter........................................... 35.00 34.00 --
Fourth Quarter.......................................... 36.50 35.00 .34
1998
First Quarter(1)........................................ 38.50 36.50 --
</TABLE>
- --------
(1) Through March 15, 1998.
7
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA
The following tables set forth certain selected historical financial
information for Lewistown and certain selected consolidated historical
financial information for Juniata. This data is derived from and should be
read in conjunction with, and is qualified in its entirety by, the
consolidated financial statements of Lewistown and the consolidated financial
statements of Juniata, including the notes thereto, incorporated by reference
or appearing elsewhere in this Joint Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
AT OR FOR THE YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Interest income......... $ 16,467 $ 15,755 $ 15,070 $ 13,972 $ 14,090
Interest expense........ 7,785 7,592 6,970 5,813 6,073
---------- ---------- ---------- ---------- ----------
Net interest income..... 8,682 8,163 8,100 8,159 8,017
Provision for loan
losses................. 180 180 135 220 220
---------- ---------- ---------- ---------- ----------
Net interest income
after provision for
loan losses............ 8,502 7,983 7,965 7,939 7,797
Other income............ 791 633 581 551 518
Other expenses.......... 5,398 5,071 5,106 5,146 5,237
---------- ---------- ---------- ---------- ----------
Income before income
taxes.................. 3,895 3,545 3,440 3,344 3,078
Federal income taxes.... 850 781 780 791 697
---------- ---------- ---------- ---------- ----------
Income before cumulative
effect of change in
accounting principle... 3,045 2,764 2,660 2,553 2,381
Net income.............. $ 3,045 $ 2,764 $ 2,660 $ 2,553 $ 2,934
========== ========== ========== ========== ==========
PER SHARE DATA*
Income before cumulative
effect of change in
accounting principle... $ 2.18 $ 1.98 $ 1.91 $ 1.84 $ 1.71
Basic earnings.......... 2.18 1.98 1.91 1.84 2.11
Cash dividends.......... 0.66 0.60 0.56 0.54 0.50
Book value.............. 20.72 19.21 17.77 16.13 14.95
Average shares
outstanding............ 1,396,401 1,393,264 1,391,251 1,391,251 1,391,251
Approximate number of
stockholders........... 1,195 1,098 1,066 1,089 1,021
BALANCE SHEET DATA
Assets.................. $ 220,910 $ 212,264 $ 205,878 $ 190,176 $ 189,776
Deposits................ 189,007 182,455 178,153 165,151 166,542
Loans receivable........ 135,709 126,439 121,322 121,668 114,276
Securities.............. 66,780 70,499 67,176 57,214 59,932
Stockholders' equity.... 28,712 26,763 24,723 22,434 20,803
Average equity.......... 27,815 25,443 23,316 21,363 19,497
Average assets.......... 217,531 209,613 197,168 192,759 187,603
RATIOS
Return on average
assets................. 1.40% 1.32% 1.35% 1.32% 1.27%
Return on average
equity................. 10.95 10.86 11.41 11.94 12.21(1)
Equity to assets (year
end)................... 13.00 12.61 12.01 11.80 10.27(1)
Loans to deposits (year
end)................... 71.80 69.30 68.10 73.67 68.62
Dividend payout
(percentage of
income)................ 30.31 30.25 29.14 29.18 28.60
</TABLE>
- --------
* Outstanding and per share information for all years presented has been
restated to give effect to stock dividends and stock splits issued through
December 31, 1997.
(1) Excluding the cumulative effect of change in accounting principle of
$553,000 or $.40 per share.
8
<PAGE>
LEWISTOWN TRUST COMPANY
<TABLE>
<CAPTION>
AT OR FOR THE YEAR ENDED DECEMBER 31,
------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Interest income............. $ 7,850 $ 7,856 $ 7,618 $ 6,582 $ 6,429
Interest expense............ 4,077 4,105 3,982 3,250 3,295
-------- -------- -------- -------- --------
Net interest income......... 3,773 3,751 3,636 3,332 3,134
Provision for loan losses... 40 50 55 25 40
-------- -------- -------- -------- --------
Net interest income after
provision for loan losses.. 3,733 3,701 3,581 3,307 3,094
Other income................ 481 395 288 305 306
Other expenses.............. 2,132 1,955 1,801 1,759 1,751
-------- -------- -------- -------- --------
Income before income taxes.. 2,082 2,141 2,068 1,853 1,649
Income taxes................ 555 575 570 485 390
-------- -------- -------- -------- --------
Net income.................. $ 1,527 $ 1,566 $ 1,498 $ 1,368 $ 1,259
======== ======== ======== ======== ========
PER SHARE DATA*
Basic earnings.............. $ 1.63 $ 1.67 $ 1.60 $ 1.46 $ 1.34
Cash dividends.............. 0.61 0.55 0.48 0.45 0.43
Book value.................. 15.07 14.08 13.10 11.52 10.68
Average shares outstanding.. 937,024 937,024 937,024 937,024 937,024
Approximate number of
stockholders............... 409 320 316 340 330
BALANCE SHEET DATA
Assets...................... $111,667 $106,539 $104,765 $ 97,387 $ 96,560
Deposits.................... 96,130 92,215 91,346 85,744 85,446
Loans receivable............ 55,600 52,103 51,869 50,864 49,867
Securities.................. 47,161 46,577 45,219 40,889 38,796
Stockholders' equity........ 14,119 13,193 12,277 10,790 10,011
RATIOS
Return on average assets.... 1.39% 1.45% 1.45% 1.39% 1.30%
Return on average equity.... 11.20 12.40 13.10 13.20 13.20
Equity to assets (year
end)....................... 12.64 12.38 11.72 11.08 10.37
Loans to deposits (year
end)....................... 57.84 56.50 56.78 59.32 58.36
Dividend payout ratio....... 37.46 32.89 29.84 30.48 31.77
</TABLE>
- --------
* Outstanding and per share information for all years presented has been
restated to give effect to stock dividends and stock splits issued through
December 31, 1997.
9
<PAGE>
UNAUDITED PRO FORMA SELECTED FINANCIAL DATA
The following table sets forth unaudited pro forma selected financial data
for Lewistown and Juniata which gives effect to the Merger, accounted for as a
pooling of interests, as if it had been consummated as of January 1, 1993. The
pro forma selected data is not necessarily indicative of the results that
would have been achieved had the transaction been consummated on such date and
should not be construed as representative of future operations. This
presentation is subject to the assumptions set forth in the notes to the
Unaudited Pro Forma Condensed Financial Statements appearing elsewhere in this
Joint Proxy Statement/Prospectus. The information presented should be read in
conjunction with such pro forma financial statements, and the notes thereto,
and the historical financial statements, including the notes thereto, of
Lewistown, and the historical consolidated financial statements, including the
notes thereto, of Juniata incorporated by reference in this Joint Proxy
Statement/Prospectus or appearing elsewhere herein.
<TABLE>
<CAPTION>
AT OR FOR THE YEAR ENDED DECEMBER 31,
--------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Interest income................. $ 24,317 $ 23,611 $ 22,688 $ 20,554 $ 20,519
Interest expense................ 11,862 11,697 10,952 9,063 9,368
-------- -------- -------- -------- --------
Net interest income............. 12,455 11,914 11,736 11,491 11,151
Provision for loan losses....... 220 230 190 245 260
-------- -------- -------- -------- --------
Net interest income after
provision for loan losses...... 12,235 11,684 11,546 11,246 10,891
Other income.................... 1,272 1,028 869 856 824
Other expenses.................. 7,530 7,026 6,907 6,905 6,988
-------- -------- -------- -------- --------
Income before income taxes...... 5,977 5,686 5,508 5,197 4,727
Applicable income taxes......... 1,405 1,356 1,350 1,276 1,087
-------- -------- -------- -------- --------
Net income...................... $ 4,572 $ 4,330 $ 4,158 $ 3,921 $ 4,193A
======== ======== ======== ======== ========
PER SHARE DATA
Basic earnings per share........ $ 1.96 $ 1.86 $ 1.79 $ 1.68 $ 1.80
======== ======== ======== ======== ========
BALANCE SHEET DATA
Total assets.................... $332,577 $318,803 $310,643 $287,563 $286,336
Loans receivable, net........... 191,309 178,542 173,191 172,532 164,143
Securities...................... 113,941 117,076 112,395 98,103 98,728
Deposits........................ 285,137 274,670 269,499 250,895 251,988
Stockholders' equity............ 42,831 39,956 37,000 33,224 30,814
</TABLE>
- --------
A--Includes cumulative effect of change in accounting principle of $553,000.
10
<PAGE>
COMPARATIVE PER SHARE DATA
The following table sets forth certain historical per share data of Juniata
and Lewistown and unaudited pro forma combined per share data of Juniata and
Lewistown, based on the assumption that the Merger was effective on January 1,
1995. Such pro forma data is not necessarily indicative of results that would
have been achieved had the Merger been consummated on such date.
<TABLE>
<CAPTION>
AT DECEMBER 31, 1997
--------------------
<S> <C>
BOOK VALUE PER COMMON SHARE
HISTORICAL
Juniata............................................. $20.72
Lewistown........................................... $15.07
PRO FORMA
Juniata and Lewistown............................... $18.44
Juniata............................................. $18.44
Lewistown(1)........................................ $18.44
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
CASH DIVIDENDS PER COMMON SHARE
HISTORICAL
Juniata.................................. $ 0.66 $ 0.60 $ 0.56
Lewistown................................ 0.61 0.55 0.48
PRO FORMA
Juniata.................................. 0.66 0.60 0.56
Lewistown(1)............................. 0.61 0.55 0.48
NET INCOME PER COMMON SHARE
HISTORICAL
Juniata.................................. $ 2.18 $ 1.98 $ 1.91
Lewistown................................ 1.63 1.67 1.60
PRO FORMA
Juniata and Lewistown.................... 1.96 1.86 1.79
Juniata.................................. 1.96 1.86 1.79
Lewistown(1)............................. 1.96 1.86 1.79
</TABLE>
- --------
(1) Pro Forma Equivalent amounts per share were calculated by taking the
corresponding pro forma per share amounts for Juniata and multiplying that
by the Conversion Factor of one (1) share of Juniata Common Stock for each
one (1) share of Lewistown Common Stock.
11
<PAGE>
THE MEETINGS
GENERAL
This Joint Proxy Statement/Prospectus is being furnished to holders of
Lewistown Common Stock and Juniata Common Stock in connection with the
solicitation of proxies by their respective Boards of Directors to be used at
the Juniata Annual Meeting and the Lewistown Special Meeting or any
adjournment thereof.
DATE, PLACE AND TIME OF THE MEETINGS
The annual meeting of Shareholders of Juniata (the "Juniata Annual Meeting")
will be held at 10:30 a.m. on May 19, 1998 at the Juniata Valley Bank's branch
office located at Monument Square, Lewistown, Pennsylvania.
The special meeting of the Shareholders of Lewistown (the "Lewistown Special
Meeting") will be held at 1:30 p.m. on May 19, 1998 at Lewistowns main office
at 100 E. Market Street, Lewistown, Pennsylvania.
MATTERS TO BE CONSIDERED AT THE MEETINGS
Juniata and Lewistown
At their respective meetings, the Shareholders of Juniata and Lewistown will
be asked to approve: (a) an Agreement and Plan of Reorganization dated
December 30, 1997 (the "Merger Agreement") among Lewistown, Juniata and
Juniata Valley Bank ("JVB"), a wholly-owned subsidiary of Juniata, as well as
the merger (the "Merger") of Lewistown with and into JVB, as contemplated
therein; (b) a proposal (the "Adjournment Proposal") to postpone or adjourn
their respective meetings to another time and/or place for the purpose of
soliciting additional proxies in the event that there are not sufficient votes
at the time of their respective meetings to approve the Merger and the Merger
Agreement; and (c) such other business as may properly come before their
respective Meetings and/or any adjournment thereof.
Juniata
Additionally, the shareholders of Juniata will be asked to consider and vote
on (i) the election of four Class B Directors to serve until the 2001 Annual
Meeting, and (ii) the proposal to amend the Juniata Articles of Incorporation
to increase the authorized shares of Juniata Common Stock from 5,000,000
shares to 20,000,000 shares (the "Amendment").
RECORD DATE; SHARES OUTSTANDING; QUORUM
Only holders of record of shares of Juniata Common Stock at the close of
business on April 15, 1998 (the "Juniata Record Date") will be entitled to
vote at the Juniata Annual Meeting. As of that date, approximately 1,385,491
shares of Juniata Common Stock were outstanding, each share being entitled to
one vote.
Only holders of record of shares of Lewistown Common Stock at the close of
business on April 15, 1998 (the "Lewistown Record Date") will be entitled to
vote at the Lewistown Special Meeting. At that date, approximately 937,024
shares of Lewistown Common Stock were outstanding, each share being entitled
to one vote.
VOTES REQUIRED
Juniata
Pursuant to Juniata's Articles of Incorporation, the affirmative vote of the
holders of 66 2/3% of all outstanding shares of Juniata Common Stock is
required to approve the Merger and the Merger Agreement. The presence in
person or by proxy of the holders of a majority of the outstanding shares of
Juniata Common Stock will constitute a quorum for the transaction of all other
business at the Juniata Annual Meeting.
12
<PAGE>
As of the Juniata Record Date indicated above, directors and executive
officers of Juniata beneficially owned approximately 62,012 shares of Juniata
Common Stock or approximately 4.47% of the outstanding Juniata Common Stock
entitled to vote at the Juniata Special Meeting. The directors and executive
officers of Juniata have indicated that they intend to vote all of such shares
in favor of the Merger and the Merger Agreement.
As of the Juniata Record Date, JVB's Trust Department, as corporate
fiduciary, owned approximately 54,710 shares of Juniata Common Stock, or
approximately 3.94% of the outstanding Juniata Common Stock entitled to vote
at the Juniata Special Meeting.
Lewistown
The affirmative vote of the holders of two-thirds ( 2/3) of all outstanding
shares of Lewistown Common Stock is required to approve the Merger and the
Merger Agreement.
As of the Lewistown Record Date indicated above, directors and executive
officers of Lewistown beneficially owned approximately 92,771 shares of
Lewistown Common Stock or approximately 9.90% of the outstanding Lewistown
Common Stock entitled to vote at the Lewistown Special Meeting. Prior to the
execution of the Merger Agreement, the directors and executive officers of
Lewistown entered into an agreement with Juniata that they would vote all of
such shares in favor of the Merger and the Merger Agreement. See "THE MERGER--
Voting Agreements."
EFFECT OF ABSTENTIONS AND BROKER NONVOTES
Abstentions may be specified on the Merger and the Merger Agreement and the
Adjournment Proposal. Such abstentions will be considered present and entitled
to vote at the Meeting, but will not be counted as votes cast in the
affirmative. ABSTENTIONS BY SHAREHOLDERS WILL HAVE THE EFFECT OF A VOTE
AGAINST THE MERGER, THE MERGER AGREEMENT, THE AMENDMENT AND THE ADJOURNMENT
PROPOSAL.
[Brokers that are member firms of the New York Stock Exchange ("NYSE") and
who hold shares in street name for customers have authority under the rules of
the NYSE to vote those shares with respect to certain matters if they do not
receive instructions from the beneficial owner. Brokers do not have the
authority to vote shares with respect to approval of the Merger and the Merger
Agreement. Assuming that sufficient shares are present at the respective
Meetings (so that a quorum may be obtained), a failure of brokers to vote
shares because they have not received instructions from beneficial owners (a
"broker nonvote") will have the effect of a vote against the Merger, the
Merger Agreement and the Amendment. Broker nonvotes will have no effect upon
the approval of the Adjournment Proposal.]
VOTING, REVOCATION AND SOLICITATION OF PROXIES
All shares represented by properly executed proxies received in time for the
respective Meetings will be voted at the Meetings in the manner specified by
the holders thereof, unless such proxies are revoked prior to the vote.
Proxies which do not contain voting instructions will be voted in favor of the
Merger and the Merger Agreement, and with respect to Juniata Shareholders, in
favor of the election as Directors of the nominees named herein.
It is not expected that any matter other than those referred to herein will
be brought before the Meetings. If, however, other matters are properly
presented, the persons named as proxies will vote in accordance with their
judgment with respect to such matters.
A shareholder who executes and returns a proxy on the enclosed form has the
power to revoke it at any time before it is voted. The giving of a proxy does
not affect the right of shareholders to attend the appropriate Meeting and
vote in person. A shareholder's presence at a meeting, however, will not in
itself revoke the shareholder's proxy. A shareholder may revoke a proxy at any
time prior to its exercise by filing with the Secretary of Juniata or
Lewistown, as the case may be, a duly executed revocation or a proxy bearing a
later
13
<PAGE>
date. Neither attendance nor voting in person at the appropriate Meeting will
of itself constitute revocation of a proxy.
In addition to solicitation by mail, directors, officers and employees of
Lewistown who will not be specifically compensated for such services may
solicit proxies from the shareholders of Lewistown personally or by telephone
or telegram or other forms of communication. Juniata and Lewistown will each
bear its own expenses in connection with the solicitation of proxies for its
respective Meeting.
SHAREHOLDERS OF LEWISTOWN SHOULD NOT SEND STOCK CERTIFICATES WITH THEIR
PROXY CARDS. AS DESCRIBED BELOW UNDER THE HEADING "THE MERGER--EXCHANGE
PROCEDURE," EACH LEWISTOWN SHAREHOLDER WILL BE PROVIDED WITH MATERIALS FOR
EXCHANGING SHARES OF LEWISTOWN COMMON STOCK AS PROMPTLY AS PRACTICABLE AFTER
THE EFFECTIVE DATE.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Boards of Directors of Juniata and Lewistown each recommend that their
respective shareholders vote FOR the approval of the Merger, the Merger
Agreement and the Amendment identified in this Joint Proxy
Statement/Prospectus.
14
<PAGE>
THE MERGER
The following is a description of the Merger. Such description is not
intended to be a complete description of all facts regarding the Merger and is
qualified in all respects by reference to the Merger Agreement incorporated
herein by reference. Shareholders of Juniata and the Shareholders of Lewistown
are urged to read carefully the Merger Agreement, a copy of which may be
obtained, at no cost, upon written or oral request to Linda L. Engle, Sr. Vice
President, Chief Financial Officer, Juniata Valley Financial Corp., P.O. Box
66, Mifflintown, PA 17059. For a summary of the Merger, see "SUMMARY--The
Merger."
INTRODUCTION; BACKGROUND OF THE MERGER
Lewistown
Lewistown Trust Company ("Lewistown") is a bank and trust company and an
FDIC-insured institution organized on September 13, 1906 under the laws of the
Commonwealth of Pennsylvania and headquartered in Lewistown, Pennsylvania.
Lewistown is a bank and trust company as defined in the Pennsylvania Banking
Code (the "PBC"), and is engaged in accepting demand, time and savings
deposits and granting loans (consumer, commercial, real estate and business)
to individuals, corporations, partnerships, associations and municipalities
and other governmental bodies.
Lewistown Common Stock is not registered, and is only lightly traded over
the counter. Lewistown is subject to the supervision of the Federal Deposit
Insurance Corporation ("FDIC") and the Pennsylvania Department of Banking
("PDOB").
As of December 31, 1997, Lewistown had four (4) banking offices. Its
principal executive office, which it owns, is located at 100 East Market
Street, Lewistown, Pennsylvania 17044, and the telephone number at that
address is (717) 242-0381. Lewistown is not dependent on any one customer, and
the loss of any customer or a few customers would not have a material adverse
effect upon it.
At December 31, 1997, Lewistown reported total assets of $111,667,000,
deposits of $96,130,000, and net loans of $55,600,000. Lewistown reported net
income of $1.67 per share for the year ended December 31, 1996 and net income
of $1.63 per share for the year ended December 31, 1997.
Juniata
Juniata is a Pennsylvania business corporation which was organized in 1983,
and is headquartered at Bridge and Main Streets, Mifflintown, Pennsylvania
17059. Juniata is the holding company of Juniata Valley Bank ("JVB"),
currently its only wholly-owned banking subsidiary, which originated under a
state bank charter in 1867.
As a bank holding company, Juniata is registered with the Federal Reserve
Board in accordance with the requirements of the Bank Holding Company Act of
1956, as amended, and is subject to regulation by the Federal Reserve Board.
Juniata Common Stock is quoted under the symbol "JUVF" on the over-the-
counter ("OTC") Bulletin Board, an automated quotation service made available
through, and governed by the National Association of Securities Dealers.
At December 31, 1997, Juniata reported total assets of $220,910,000,
deposits of $189,007,000 and net loans of $135,709,000. Juniata reported net
income of $2,764,000, or $1.98 per share, for the year ended December 31,
1996, and net income of $3,045,000, or $2.18 per share, for the year ended
December 31, 1997.
Juniata Valley Bank
JVB is a wholly-owned Juniata subsidiary, and is a Pennsylvania banking
institution which was formed and organized in 1867. JVB, which is also an
FDIC-insured institution, engages in general commercial banking and
15
<PAGE>
provides individuals, businesses and municipalities with financial services,
including trust and fiduciary services. JVB currently operates eight (8)
offices in Juniata, Perry, Mifflin and Huntingdon Counties. Upon consummation
of the Merger, Lewistown will be merged with and into JVB, which will be the
surviving institution. After consummation of the Merger, Lewistown will cease
to exist as a separate institution.
REASONS FOR THE MERGER; RECOMMENDATION OF THE BOARD OF DIRECTORS
The terms of the Merger Agreement are the result of arms-length negotiations
between representatives of Lewistown and Juniata. Juniata desired to expand
and increase its market share by affiliating with other institutions. Juniata
approached Lewistown in pursuit of such an affiliation due to, among other
things, the similarity in philosophies of the institutions. Although Juniata
and Lewistown had discussed a possible affiliation in the past, none of these
previous discussions resulted in any deal being made. The Boards of Directors
of Lewistown and Juniata believe that the terms of the Merger and the Merger
Agreement are in the best interests of Lewistown, Juniata and JVB, as well as
the shareholders.
In recent years, the landscape of the banking industry has changed
dramatically. Many of the smaller banking institutions have been acquired by
larger regional bank holding companies. Additionally, there has been a
substantial increase in the regulations governing the operation of banking
institutions. As a result, costs associated with regulatory compliance have
also increased.
While Lewistown has been relatively successful in competing in its market,
it is increasingly difficult to keep abreast of new service offerings and to
meet a major effort by both local and larger regional competitors for new loan
customers in its market area. Given the intense, increasing competition in its
market area, and the increased regulatory burden, the Board of Directors of
Lewistown has considered various forms of associations with other banking
organizations to (i) better capitalize upon economies of scale and alternative
forms of funding, and (ii) compete more effectively with local and larger
regional banking institutions.
The proposed merger with JVB, and, consequently, the affiliation with
Juniata also provides Lewistown the ability to offer new and innovative
products and services including additional electronic and investment services.
The affiliation also offers Lewistown's employees additional opportunities for
training and advancement commensurate with the resources of a larger
organization. Additionally, Juniata is headquartered in nearby Mifflintown,
Pennsylvania, and maintains offices in Lewistown, Pennsylvania. Thus, Juniata
and JVB (i) fully understand the needs of current and prospective customers in
Lewistown's market area, and (ii) share banking philosophies consistent with
Lewistown's.
Based upon the foregoing, the Board of Directors of Lewistown concluded that
affiliation with Juniata and JVB would provide the best framework for
expansion and continued development of the banking approach which has been the
foundation of its success and, accordingly, serve the best interests of the
shareholders and customers of Lewistown.
In reaching its determination that the Merger and the Merger Agreement are
fair to, and in the best interests of, Lewistown and its shareholders, the
Board of Directors of Lewistown consulted with its legal and financial
advisors, and considered a number of factors, including, without limitation,
the following:
. Lewistown Board of Directors' familiarity with and review of Juniata's
and JVB's business, operations, earnings, prospects and financial
condition;
. the enhanced opportunities for operating efficiencies (particularly in
terms of integration of operations and support functions) that could
result from the Merger, the enhanced opportunities for growth that the
Merger would make possible and the respective contributions the parties
would bring to the combined institution;
. the financial strength of Juniata and JVB and the composition of
Juniata's and JVB's business;
. the geographical location of Lewistown, Juniata and JVB;
16
<PAGE>
. the financial advice of RP Financial and the opinion of RP Financial that
the consideration to be paid in the Merger to the shareholders is fair
from a financial point of view;
. Lewistown Board of Directors' review of alternatives to the Merger
(including the alternatives of remaining independent and growing
internally, remaining independent for a period of time and then selling
the bank, and remaining independent and growing through future
acquisitions), the range of possible values to Lewistown shareholders
obtainable through implementation of such alternatives and the timing and
likelihood of actually receiving such values; and
. the current and prospective economic, regulatory and competitive
constraints facing financial institutions, including Lewistown.
Lewistown Board of Directors did not assign any specific or relative weight
to the factors in their consideration.
For Juniata and JVB, the Merger will strengthen their market position in
Central Pennsylvania. Juniata believes that as a result of the Merger it will
also be able to achieve operating economies and enhanced revenue growth
arising from a wider distribution of its products and services. Consummation
of the Merger will create an institution capable of competitively providing a
broad array of traditional and innovative banking products and services to the
resulting market. These products and services include complete banking
services, discount brokerage, leasing, investment advisory services, trust
services, mutual funds, annuities, and mortgage services. The combination of
the skills, resources and services offered by Juniata, JVB and Lewistown will
enable Juniata, as well as the resulting banking institution, to more
effectively compete with other full service financial institutions in the
Central Pennsylvania market.
THE RESPECTIVE BOARDS OF DIRECTORS OF LEWISTOWN AND JUNIATA HAVE EACH
UNANIMOUSLY APPROVED THE MERGER AND THE MERGER AGREEMENT AND BELIEVE THAT THE
PROPOSED MERGER IS IN THE BEST INTERESTS OF LEWISTOWN AND JUNIATA AND
RECOMMENDS THAT THEIR RESPECTIVE SHAREHOLDERS VOTE TO APPROVE THE MERGER AND
THE MERGER AGREEMENT.
VOTING AGREEMENTS
In connection with the Merger, the Directors of Lewistown have entered into
agreements with Juniata to vote in favor of the Merger all shares of Lewistown
Common Stock owned by them as individuals or (to the extent of their
proportionate voting interests) jointly with other persons, and that they will
use their best efforts to cause any other shares of Lewistown Common Stock
over which they have or share voting power to be voted in favor of the Merger.
In the aggregate, these agreements commit approximately 92,771 shares of
Lewistown Common Stock (9.90%) of the outstanding shares (to be voted in favor
of the Merger).
The agreements further provide that with respect to the shares of Lewistown
Common Stock owned by the Directors as individuals or (to the extent of the
Directors' proportionate voting interests) jointly with other persons
(collectively, "shares"), the Directors will not, until the Merger has been
consummated or the Merger Agreement has been terminated: (1) vote shares in
favor of any other merger or transaction which would have the effect of a
person other than Juniata or an affiliate acquiring control of Lewistown or
(2) sell or otherwise transfer shares (i) pursuant to any tender offer or
similar proposal made by a person other than Juniata or an affiliate, (ii) to
any person other than Juniata or an affiliate seeking to obtain control of
Lewistown or (iii) for the principal purpose of avoiding the Directors'
obligations under the agreement.
The agreements are applicable to the Directors only in their capacities as
shareholders and do not affect the exercise of their responsibilities as
Directors or officers. The agreements also do not apply to any shares of
Lewistown Common Stock held by a Director as a trustee or other fiduciary. No
monetary or other compensation was paid to any Lewistown Director for entering
into these agreements.
17
<PAGE>
OPINIONS OF FINANCIAL ADVISORS
LEWISTOWN--RP FINANCIAL OPINION
The Lewistown Board retained RP Financial in December 1997 as its financial
advisor, which included negotiating financial terms of the Merger with Juniata
and rendering its opinion with respect to the Merger Consideration from a
financial point of view to Lewistown stockholders in the event Lewistown
entered into an agreement to be acquired. In requesting RP Financial's advice
and opinion, the Lewistown Board did not give any special instructions to RP
Financial, nor did it impose any limitations upon the scope of the
investigation that RP Financial might wish to conduct to enable it to give its
opinion. RP Financial has delivered to Lewistown its written opinion, dated
December 29, 1997, and its updated opinion as of April , 1998, to the effect
that, based upon and subject to the matters set forth therein, as of the date
thereof, the Merger Consideration is fair to the holders of Lewistown Common
Stock from a financial point of view. The opinion of RP Financial is directed
toward the consideration to be received by Lewistown stockholders and does not
constitute a recommendation to any Lewistown stockholder to vote in favor of
approval of the Merger Agreement. A copy of the RP Financial opinion is set
forth as Appendix B to this Joint Proxy Statement/Prospectus and should be
read in its entirety by stockholders of Lewistown. RP Financial has consented
to the inclusion and description of its written opinion in this Joint Proxy
Statement/Prospectus.
RP Financial was selected by Lewistown to act as its financial advisor
because of RP Financial's expertise in the valuation of businesses and their
securities for a variety of purposes, including its expertise in connection
with mergers and acquisitions of commercial banks, bank holding companies,
savings and loan associations, savings banks and savings and loan holding
companies. Pursuant to a letter agreement dated December 9, 1997, and executed
by Lewistown on December 18, 1997, (the "Engagement Letter"), RP Financial
estimates that it will receive from Lewistown total professional fees of
approximately $32,000, of which $25,000 has been paid to date, plus
reimbursement of certain out-of-pocket expenses, for its services in
connection with the Merger. In addition, Lewistown has agreed to indemnify and
hold harmless to the fullest extent permitted by law, RP Financial, any
affiliates of RP Financial, and the respective directors, officers, agents and
employees of RP Financial or their successors and assigns who act for or on
behalf of RP Financial in connection with the services called for under the
Engagement Letter from and against any and all losses, claims, damages and
liabilities, joint or several, that RP Financial may become obligated to pay,
to which RP Financial may become subject or for which RP Financial may become
liable, in connection with any of the services rendered pursuant to or matters
that are the subject or arise out of the services rendered pursuant to the
Engagement Letter, provided that Lewistown will be under no obligation to
indemnify RP Financial if a court of competent jurisdiction determines by a
final nonappealable judgment that RP Financial was negligent or acted in bad
faith with respect to any actions or omissions of RP Financial related to a
matter for which indemnification is sought. Any time devoted by employees of
RP Financial to situations for which indemnification is provided, shall be an
indemnifiable cost payable by Lewistown at the normal hourly professional rate
chargeable by such employee. Lewistown shall pay for or reimburse the
reasonable expenses, including attorney's fees, incurred by RP Financial in
advance of the final disposition of any proceeding within thirty days of the
receipt of such request if RP Financial furnishes Lewistown: (1) a written
statement of RP Financial's good faith belief that it is entitled to
indemnification hereunder; and (2) a written undertaking to repay the advance
if it ultimately is determined in a final adjudication of such proceeding that
it or he is not entitled to such indemnification.
In rendering its fairness opinion, RP Financial reviewed and analyzed the
following material, the most recent of which includes: (i) the Merger
Agreement including exhibits; (ii) financial and other information for
Lewistown, all with regard to balance and off-balance sheet composition,
profitability, interest rates, volumes, maturities, trends, credit risk,
interest rate risk, liquidity risk and operations including (a) audited
financial statements for the fiscal years ended December 31, 1995 through
1997; (b) stockholder, regulatory and internal financial and other reports
through March 31, 1998, (c) the most recent proxy statement for Lewistown and
(d) Lewistown's management and Board comments regarding past and current
business, operations, financial condition and future prospects; and (iii)
financial and other information for Juniata including (a) audited financial
statements for the fiscal years ended December 31, 1996 and 1997, incorporated
in Juniata's Annual Report to
18
<PAGE>
Shareholders, (b) regulatory and internal financial and other reports through
March 31, 1998, (c) Juniata's Registration Statement on Form S-4 as filed with
the Securities and Exchange Commission on March , 1998 and (d) Juniata's
management comments regarding past and current business, operations, financial
condition and future prospects.
In rendering its opinion, RP Financial relied, without independent
verification, on the accuracy and completeness of the information concerning
Lewistown and Juniata as furnished by the respective institutions to RP
Financial for review for purposes of its opinion, as well as publicly-
available information regarding other financial institutions and economic and
demographic data. Lewistown and Juniata did not restrict RP Financial as to
the material it was permitted to review. RP Financial did not perform or
obtain any independent appraisals or evaluations of the assets and liabilities
and potential and/or contingent liabilities of Lewistown or Juniata.
RP Financial expresses no opinion on matters of a legal, regulatory, tax or
accounting nature or the ability of the Merger as set forth in the Merger
Agreement to be consummated. In rendering its opinion, RP Financial assumed
that in the course of obtaining the necessary regulatory and governmental
approvals for the Merger, no restriction will be imposed on Juniata that would
have a material adverse effect on the ability of the Merger to be consummated
as set forth in the Merger Agreement.
RP Financial's opinion was based solely upon the information available to it
and the economic, market and other circumstances as they existed as of
December 29, 1997 and April , 1998; events occurring after the most recent
date could materially affect the assumptions used in preparing the opinion.
In connection with rendering its opinion dated December 29, 1997 and updated
as of April , 1998, RP Financial performed a variety of financial analyses
that are summarized below. Although the evaluation of the fairness, from a
financial point of view, of the Merger Consideration was to some extent
subjective based on the experience and judgment of RP Financial, and not
merely the result of mathematical analyses of financial data, RP Financial
relied, in part, on the financial analyses summarized below in its
determinations. The preparation of a fairness opinion is a complex process and
is not necessarily susceptible to partial analyses or summary description. RP
Financial believes its analyses must be considered as a whole and that
selecting portions of such analyses and factors considered by RP Financial
without considering all such analyses and factors could create an incomplete
view of the process underlying RP Financial's opinion. In its analyses, RP
Financial took into account its assessment of general business, market,
monetary, financial and economic conditions, industry performance and other
matters, many of which are beyond the control of Lewistown and Juniata, as
well as RP Financial's experience in securities valuation, its knowledge of
financial institutions and its experience in similar transactions. With
respect to the comparable transactions analysis described below, no public
company utilized as a comparison is identical to Lewistown and such analyses
necessarily involve complex considerations and judgments concerning the
differences in financial and operating characteristics of the companies and
other factors that could affect the acquisition values of the companies
concerned. The analyses were prepared solely for purposes of RP Financial
providing its opinion as to the fairness of the Merger Consideration and do
not purport to be appraisals or necessarily reflect the prices at which
businesses or securities actually may be sold. Any estimates contained in RP
Financial's analyses are not necessarily indicative of future results of
values, which may be significantly more or less favorable than such estimates.
None of the analyses performed by RP Financial was assigned a greater
significance by RP Financial than any other.
Comparable Transactions Analysis
RP Financial compared the Merger on the basis of stated multiples of
reported earnings, tangible book value, assets and core deposit premium of
Lewistown implied by the Merger Consideration to be paid to the holders of
Lewistown Common Stock with the same ratios in pending and completed
acquisitions of: (a) Pennsylvania publicly-traded and non-publicly traded
commercial banks and bank holding companies, and (b) MidAtlantic Region
publicly-traded and non-publicly traded commercial banks and bank holding
companies.
19
<PAGE>
The Pennsylvania acquisitions pending or completed from 1996 to date
included institutions with assets up to $ billion. The acquisition
pricing ratios of this group were: (i) price/earnings ratios ranging from .
to . times, with a median of . times; (ii) price/tangible book ratios
ranging from to percent, with a median of percent; (iii) price/assets
ratios ranging from . to . percent, with a median of . percent; and (iv)
core deposit premiums of . to . percent, with a median of . percent.
The MidAtlantic Regional acquisitions pending or completed from 1996 to date
included institutions with assets up to $ billion. The acquisition
pricing ratios of this group were: (i) price/earnings ratios ranging from .
to . times, with a median of . times; (ii) price/tangible book ratios
ranging from to percent, with a median of percent; (iii) price/assets
ratios ranging from . to . percent, with a median of . percent; and (iv)
core deposit premiums of . to . percent, with a median of . percent.
In comparison to both groups, Lewistown was generally smaller, better
capitalized, possessed a stronger level of profitability as measured by return
on average assets and a comparable return on equity based on stronger
profitability and a higher equity/assets ratio. Lewistown's acquisition
pricing ratios for price/earnings, price/tangible book, price/assets and core
deposit premium exceeds the median ratios of these two groups assuming the
Merger Consideration was equivalent to the last reported sale price of Juniata
Common Stock on NASDAQ on April , 1998 ($ . ). Specifically, the Merger
Consideration of $ . , based on the Juniata price as of April , 1998,
indicated the following pricing ratios for shares of Lewistown Common Stock,
based on financial statements as of or for the 12 months ended March 31, 1998:
. times core earnings; . percent of reported tangible book value; .
percent of assets; and . percent premium on core deposits.
No company or transaction used in this composite is identical to Lewistown
or the Merger. Accordingly, an analysis of the results of the foregoing is not
mathematical; rather, it involves complex considerations and judgments
concerning differences in financial and operating characteristics of the
companies involved and other factors that could affect the public trading
values of the securities of the company or companies to which they are being
compared.
Discounted Cash Flow Analysis
Using a discounted cash flow analysis, RP Financial estimated the present
value of future dividends based on Lewistown's current payout ratio and
potential growth in the payout ratio and the present value of the sale-of-
control value at the end of the fifth year under alternative strategies,
reflecting a combination of a multiple to tangible book value and a multiple
to earnings. Alternative strategies analyzed included a base case scenario, an
increasing dividend scenario, a special dividend scenario, an increased
earnings scenario and an aggressive growth scenario. The price/tangible book
value and price/earnings multiples incorporated in RP Financial's analysis
were derived from the comparable transaction analysis discussed above. The
dividend streams and sale-of-control values were then discounted to present
values based on a discount rate selected after examining the earnings
capitalization rate of publicly-traded banks, the Treasury yield curve (i.e.
the risk-free rate) and perceived investment risks in the Lewistown Common
Stock. The Merger Consideration exceeds the upper end of the range of present
values of the future dividends and range of sale-of-control values derived
from the individual strategic scenarios. For example, the present values
derived from the individual strategic scenarios using a 10 percent discount
rate and a terminal value based on the average of a price/tangible book value
multiple of 2.25 times and an earnings multiple of 20 times, ranges from $ .
to $ . .
Pro Forma Impact Analysis
RP Financial evaluated the estimated financial impact of the Merger on the
potential for increased liquidity of Juniata Common Stock, the enhanced
ability to pursue growth (including through acquisitions) and expanded market
coverage. RP Financial's analysis considered the financial condition and
operations of Juniata on a stand alone basis at December 31, 1997 versus the
pro forma impact of the Merger. RP Financial considered that the
20
<PAGE>
Merger is estimated to be dilutive to Juniata's pro forma tangible book value
per share and initially dilutive to reported earnings per share before
incorporating anticipated merger synergies and leveraging pro forma tangible
capital. RP Financial considered the impact of the Merger on Juniata's key
financial characteristics, per share data and resulting pricing ratios, as
well as Juniata's longer term strategic objectives.
As described above, RP Financial's opinion and presentation to the Lewistown
Board was one of many factors taken into consideration by the Lewistown Board
in making its determination to approve the Merger Agreement. Although the
foregoing summary describes the material components of the analyses presented
by RP Financial to the Lewistown Board on December 29, 1997, and updated on
April , 1998, in connection with its opinion as of those dates, it does not
purport to be a complete description of all the analyses performed by RP
Financial and is qualified by reference to the written opinion of RP Financial
set forth as Appendix B hereto, which Lewistown's stockholders are urged to
read in its entirety.
THE FOREGOING PROVIDES ONLY A SUMMARY OF THE OPINION OF RP FINANCIAL AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THAT OPINION, WHICH
IS SET FORTH IN APPENDIX B TO THIS JOINT PROXY STATEMENT/PROSPECTUS.
JUNIATA--HOPPER SOLIDAY OPINION
General. Pursuant to the engagement letter dated December 4, 1997 (the
"Hopper Soliday Engagement Letter"), the Juniata Valley Financial Corporation
("Juniata") Board retained Hopper Soliday to render financial advisory and
investment banking services to Juniata in connection with the possible
affiliation of Lewistown Trust Company ("Lewistown") and Juniata (the
"Merger"). Hopper Soliday has no other material relationship with Juniata or
Lewistown.
Hopper Soliday is a regional investment banking firm and as a customary part
of its investment banking business is engaged in the valuation of bank and
bank holding company securities in connection with mergers, acquisitions,
underwritings, secondary distributions of listed and unlisted securities,
private placements and valuations for various other purposes. As a specialist
in the securities of financial institutions, Hopper Soliday has experience in,
and knowledge of, the valuation of banking enterprises. The Juniata Board
selected Hopper Soliday on the basis of Hopper Soliday's ability to evaluate
the fairness of the Merger from a financial point of view, its qualifications,
its previous experience and its reputation in the banking and investment
communities. Hopper Soliday has acted exclusively for the Juniata Board in
rendering its fairness opinion and will receive a fee from Juniata for its
services.
Hopper Soliday has rendered a written opinion to the Juniata Board, dated as
of the date of this joint Proxy Statement/Prospectus (the "Hopper Soliday
Opinion"), to the effect that, as of such date, the Merger Consideration is
fair, from a financial point of view, to the shareholders of Juniata. THE FULL
TEXT OF THE HOPPER SOLIDAY OPINION IS ATTACHED AS APPENDIX "C" TO THIS JOINT
PROXY STATEMENT/PROSPECTUS AND IS INCORPORATED HEREIN BY REFERENCE. JUNIATA
SHAREHOLDERS ARE URGED TO READ THE HOPPER SOLIDAY OPINION IN ITS ENTIRETY FOR
A DESCRIPTION OF THE PROCEDURES FOLLOWED, ASSUMPTIONS MADE, MATTERS
CONSIDERED, AND QUALIFICATIONS AND LIMITATIONS ON THE REVIEW UNDERTAKEN BY
HOPPER SOLIDAY IN CONNECTION THEREWITH. THE FOLLOWING SUMMARY OF THE HOPPER
SOLIDAY OPINION IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF
THE HOPPER SOLIDAY OPINION. THE MERGER CONSIDERATION WAS DETERMINED BY
NEGOTIATION BETWEEN JUNIATA AND LEWISTOWN AND WAS NOT DETERMINED BY HOPPER
SOLIDAY. See "THE MERGER--Background of the Merger."
The Hopper Soliday Opinion is directed only to the Merger Consideration and
does not constitute a recommendation to any Juniata shareholder as to how such
shareholder should vote at the Juniata Annual Meeting.
In rendering its Opinion, Hopper Soliday reviewed, among other things: i)
Lewistown's Quarterly Call Reports as filed with the Federal Deposit Insurance
Corporation (FDIC) for the periods ending March 31, 1996, June 30, 1996,
September 30, 1996, December 31, 1996, March 31, 1997, June 30, 1997 and
September 30,
21
<PAGE>
1997 and related unaudited financial information provided by Lewistown for
fiscal years ended December 31, 1992 through December 31, 1995; ii) Juniata's
Annual Reports on Form 10-K and related financial information for fiscal years
ended December 31, 1992 through December 31, 1996, and Juniata's Quarterly
Reports on Form 10-Q and related unaudited financial information for the
quarters ended March 31, 1997, June 30, 1997 and September 30, 1997; iii)
certain information concerning the respective businesses, operations,
regulatory condition and prospects of Juniata and Lewistown, including
financial forecasts, relating to the business, earnings, assets and prospects
of Juniata and Lewistown, furnished to Hopper Soliday by Juniata and
Lewistown, which Hopper Soliday discussed with members of senior management of
Juniata and Lewistown; iv) historical market prices and trading activity for
the Juniata Common Stock and Lewistown Common Stock and similar data for
certain publicly traded companies which Hopper Soliday deemed to be relevant;
v) the results of operations of Juniata and Lewistown and similar data for
certain companies which Hopper Soliday deemed to be relevant; vi) the
financial terms of the Merger contemplated by the Agreement and the financial
terms of certain other mergers and acquisitions which Hopper Soliday deemed to
be relevant; vii) the pro forma impact of the Merger on the earnings and book
value per share, consolidated capitalization and certain balance sheet and
profitability ratios of Juniata; viii) the Agreement; ix) such other matters
as Hopper Soliday deemed necessary. Hopper Soliday also met with certain
members of senior management and other representatives of Juniata and
Lewistown to discuss the foregoing as well as other matters Hopper Soliday
deemed relevant. Hopper Soliday also considered such financial and other
factors as it deemed appropriate under the circumstances and took into account
its assessment of general economic, market and financial conditions, and its
experience in similar transactions, as well as its experience in securities
valuation and its knowledge of the banking industry generally. Hopper
Soliday's opinions are necessarily based upon conditions as they existed and
could be evaluated on the respective dates thereof and the information made
available to Hopper Soliday through the respective dates thereof.
Hopper Soliday relied without independent verification upon the accuracy and
completeness of all of the financial and other information reviewed by and
discussed with it for purposes of its Opinion. With respect to the financial
forecasts reviewed by Hopper Soliday in rendering its Opinion, Hopper Soliday
assumed that such financial forecasts were reasonably prepared on bases
reflecting the best currently available estimates and judgments of the
managements of Juniata and Lewistown as to the future financial performance of
Juniata and Lewistown. Hopper Soliday did not make any independent evaluation
or appraisals of the assets or liabilities of Lewistown nor was it furnished
with any such appraisals.
The summary set forth below does not purport to be a complete description of
the analyses performed by Hopper Soliday in this regard. The preparation of a
fairness opinion involves various determinations as to the most appropriate
and relevant methods of financial analysis and the application of these
methods to the particular circumstances and, therefore, such an opinion is not
readily susceptible to summary description. Accordingly, notwithstanding the
separate factors discussed below, Hopper Soliday believes that its analyses
must be considered as a whole and that selecting portions of its analyses and
of the factors considered by it, without considering all analyses and factors,
could create an incomplete view of the evaluation process underlying its
opinion. No one of the analyses performed by Hopper Soliday was assigned a
greater significance with respect to industry performance, business and
economic conditions and other matters, many of which are beyond Juniata's or
Lewistown's control. The analyses performed by Hopper Soliday are not
necessarily indicative of actual values or future results, which may be
significantly more or less favorable than suggested by such analyses.
Additionally, analyses relating to the values of businesses do not purport to
be appraisals or to reflect the prices at which businesses actually may be
sold.
Transaction Summary. Hopper Soliday reviewed with the Juniata Board the key
financial terms of the proposed merger, including the expected method of
accounting, the Exchange Ratio, the share price of Juniata as of December 23,
1997, the resulting indicated value per share of Lewistown Common Stock of the
Merger and the resulting indicated aggregate consideration to be paid in the
Merger. The proposed method of accounting for the Merger was a pooling-of-
interests in a tax-free exchange. The indicated value was $36.00 per share of
Lewistown Common Stock, determined by multiplying the Exchange Ratio by the
closing price on the OTC
22
<PAGE>
Bulletin Board of Juniata Common Stock on December 23, 1997. The indicated
aggregate consideration to be paid in the merger was $33.7 million based on
937,024 shares of Lewistown Common Stock outstanding. Hopper Soliday noted
that the value of the Merger Consideration represented a 13% premium to
Lewistown's market price of $32.00 per share on December 23, 1997. Hopper
Soliday also noted that the $36.00 per share value represented 237% of
Lewistown's book value per share as of September 30, 1997 and a multiple of
23.4 times Lewistown's net income for the twelve months ended September 30,
1997.
Contribution Analysis. Hopper Soliday reviewed the contribution made by each
of Juniata and Lewistown to various balance sheet items and net income of the
combined company at the proposed Exchange Ratio based on balance sheet data at
September 30, 1997 and trailing twelve months earnings as of September 30,
1997. This analysis showed that Lewistown shareholders would own approximately
40.1% of the aggregate shares outstanding of the combined company and that
Lewistown was contributing 33.7% of total assets, 29.5% of total loans, 34.0%
of total deposits, 33.0% of shareholders' equity and 32.4% of net income,
respectively, of the pro forma combined company as of September 30, 1997.
Summary Comparison of Selected Institutions--Juniata. Hopper Soliday
compared selected balance sheet data, asset quality, capitalization and
profitability ratios and market statistics using financial data at or for the
twelve months ended September 30, 1997 and market data as of December 23, 1997
for Juniata to a group of Pennsylvania banks and bank holding companies
consisting of eight institutions with total assets between $172 million and
$398 million (the "Juniata Peer Group"). The analysis included, but was not
limited to, the following ratios: equity/assets, non-current assets/total
assets, allowance for loan losses/non-current loans, return on average assets,
return on average equity, net interest margin, price/earnings and price/book.
The analysis showed that: i) Juniata's equity/assets ratio was 13.09% versus a
Juniata Peer Group mean of 10.50%; ii) Juniata's ratio of non- current assets
to total assets was 0.20% versus a Juniata Peer Group mean of 0.58%; iii)
Juniata's allowance for loan losses/non-current loans ratio was 663.5% versus
a Juniata Peer Group mean of 254.6%; iv) Juniata's return on average assets
and return on average equity were 1.40% and 11.00%, respectively, versus
Juniata Peer Group means of 1.23% and 11.73%, respectively; v) Juniata's net
interest margin was 4.21% versus a Peer Group mean of 4.23%; and vi) Juniata's
price/earnings and price/book ratios were 16.6x and 175.0%, respectively,
versus Juniata Peer Group means of 18.8x and 214.9%, respectively.
Summary Comparison of Selected Institutions--Lewistown. Hopper Soliday also
compared selected balance sheet data, asset quality, capitalization and
profitability ratios and market statistics using financial data at or for the
twelve months ended September 30, 1997 and market data as of December 23, 1997
for Lewistown to a group of Pennsylvania banks and bank holding companies
consisting of nine institutions with total assets between $93 million and $160
million (the "Lewistown Peer Group"). The analysis included, but was not
limited to, the following ratios: equity/assets, non-current assets/total
assets, allowance for loan losses/non-current loans, return on average assets,
return on average equity, net interest margin, price/earnings and price/book.
The analysis showed that: i) Lewistown's equity/assets ratio was 12.69% versus
a Lewistown Peer Group mean of 9.90%; ii) Lewistown's ratio of non-current
assets to total assets was 0.21% versus a Lewistown Peer Group mean of 0.58%;
iii) Lewistown's allowance for loan losses/non-current loans ratio was 288.41%
versus a Lewistown Peer Group mean of 312.99%; iv) Lewistown's return on
average assets and return on average equity were 1.32% and 10.60%,
respectively, versus Lewistown Peer Group means of 1.14% and 11.81%,
respectively; v) Lewistown's net interest margin was 3.61% versus a Peer Group
mean of 4.32%; and vi) Lewistown's price/earnings and price/book ratios were
20.8x and 211.1%, respectively, versus Lewistown Peer Group means of 14.8x and
166.7%, respectively.
Summary of Selected Bank Merger and Acquisition Transactions. Hopper Soliday
compared the ratios of price/book, price/trailing 12 months earnings,
book/book, Juniata's price/book/transaction price/book and Juniata's
price/earnings/transaction price/earnings for the proposed merger to the
maximum, mean, median and minimum ratios for a group of seventeen transactions
announced since January 1, 1995. The selected transactions (the "Selected
Transactions") involved the acquisition of banks and bank holding companies
headquartered in Pennsylvania, Maryland, New Jersey, Ohio and West Virginia
with total assets less than $500 million and
23
<PAGE>
announced transaction values between $20 million and $50 million. This
analysis showed that: i) the Merger Consideration represented 237.0% of
Lewistown's fully-diluted book value versus a mean of 229.3% for the Selected
Transactions; ii) the Merger Consideration represented a price/trailing 12
months earnings ratio of 23.4x compared to a mean of 22.3x for the Selected
Transactions; iii) the Merger Consideration represented a book/book of 116.0%
compared to a mean of 122.4% for Selected Transactions; iv) the Merger
Consideration represented a ratio of Juniata's price/book to the transaction
price/book of 73.8% compared to a mean of 81.9% for the Selected Transactions;
and v) the Merger Consideration represented a ratio of Juniata's
price/earnings to the transaction price/earnings of 70.9% compared to a mean
of 65.7% for the Selected Transactions.
No company or transaction used in the above analysis as a comparison is
identical to Juniata, Lewistown or the contemplated transaction. Accordingly,
an analysis of the results of the foregoing is not mathematical; rather, it
involves complex consideration and judgments concerning differences in
financial and operating characteristics of the companies and other factors
that could affect the public trading value of the companies to which they are
being compared. The ranges of valuations resulting from any particular
analysis described above should not be taken to be Hopper Soliday's view of
the actual value of Juniata or Lewistown. The fact that any specific analysis
has been referred to in the summary above is not meant to indicate that such
analysis was given more weight than any other analyses.
In performing its analyses, Hopper Soliday made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of Juniata or Lewistown.
The analyses performed by Hopper Soliday are not necessarily indicative of
actual values or actual future results, which may be significantly more or
less favorable than suggested by such analyses. The analyses do not purport to
be appraisals or to reflect the prices at which a company might actually be
sold or the prices at which any securities may trade at the present time or at
any time in the future. In addition, as described above, Hopper Soliday's
opinion and presentation to the Juniata Board is just one of many factors
taken into consideration by the Juniata Board.
Pursuant to the Hopper Soliday Engagement Letter, Juniata agreed to pay
Hopper Soliday a fee of 0.30% of the aggregate consideration to be paid in the
Merger (the "Contingent Fee"). Based on the terms of the Merger Agreement, the
Contingent Fee payable by Juniata to Hopper Soliday would be approximately
$101,000. A retainer fee of $10,000 was paid to Hopper Soliday upon execution
of the Hopper Soliday Engagement Letter. A payment of $25,000 was made to
Hopper Soliday upon delivery of Hopper Soliday's written fairness opinion. The
balance of the fee is due upon consummation of the Merger. Both the retainer
fee and the $25,000 payment will be credited towards the contingent fee.
Hopper Soliday will be reimbursed for reasonable out-of-pocket expenses
incurred on behalf of Juniata. Juniata has agreed to indemnify Hopper Soliday
against certain liabilities.
Hopper Soliday has in the past provided and may in the future provide other
financial advisory services to Juniata and has received and will receive its
customary compensation for such services. In the ordinary course of its
business, Hopper Soliday may actively trade the equity securities of Juniata
and Lewistown and their respective affiliates for its own account and for the
accounts of customers and, may at any time hold a long or short position in
such securities.
THE FOREGOING PROVIDES ONLY A SUMMARY OF THE OPINION OF HOPPER SOLIDAY AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THAT OPINION,
WHICH IS ATTACHED AS APPENDIX C TO THIS PROXY STATEMENT/PROSPECTUS.
TERMS OF THE MERGER
The description of the Merger Agreement set forth below does not purport to
be complete and is qualified in its entirety by reference to the Merger
Agreement, which is incorporated by reference herein. Shareholders are urged
to read carefully the Merger Agreement, a copy of which may be obtained, at no
cost, upon written or oral request to Linda L. Engle, Sr. Vice President,
Chief Financial Officer, Juniata Valley Financial Corp., P.O. Box 66,
Mifflintown, PA 17059.
24
<PAGE>
Effect of the Merger
Pursuant to the Merger Agreement, Lewistown will be merged with and into
JVB, with JVB as the surviving entity (sometimes referred to as the "Surviving
Bank"). The Articles of Incorporation and Bylaws of JVB will remain in effect
as the Articles of Incorporation and Bylaws of the Surviving Bank. The
directors immediately prior to the Merger will become directors of Juniata.
Additionally, Francis J. Evanitsky will become President and Chief Operating
Officer ("COO") of Juniata and JVB. A. Jerome Cook shall serve as Chief
Executive Officer ("CEO") and Chairman of the Board of Directors of Juniata
and JVB. Linda L. Engle will serve as Executive Vice President and Chief
Financial Officer ("CFO") of Juniata and JVB.
Merger Consideration; Conversion Factor
In connection with the Merger, each share of Lewistown Common Stock issued
and outstanding as of the Effective Date, other than shares of Lewistown
Common Stock held by persons who have perfected dissenters rights and shares
of Lewistown Common Stock held and beneficially owned by Juniata or any
subsidiary of Juniata which are not held in a fiduciary or similar capacity on
behalf of others, will be converted into and become a right to receive one (1)
share (the "Conversion Factor") of Juniata Common Stock, par value $1.00 per
share.
In addition, subsequent to the date of the Merger Agreement but prior to the
Effective Date, whenever: (a) a record date occurs for the purpose of
determining the holders of Juniata Common Stock entitled to receive a dividend
declared payable in shares of Juniata Common Stock; (b) Juniata subdivides the
outstanding shares of Juniata Common Stock; (c) Juniata combines the
outstanding shares of Juniata Common Stock into a smaller number of shares; or
(d) Juniata issues by reclassification of its shares of Juniata Common Stock
any shares of stock of Juniata, the Conversion Factor will also be adjusted so
that each share of Lewistown Common Stock thereafter shall be convertible into
and exchangeable for the number of shares of Juniata Common Stock which the
shares of Lewistown Common Stock would have represented had such shares of
Lewistown Common Stock been converted into and exchanged for shares of Juniata
Common Stock prior to the happening of such event and such Juniata Common
Stock had been entitled to the benefit of the happening of such event.
Closing; Effective Date
The Merger Agreement provides that the Closing of the Merger will be held at
the executive offices of Juniata at 10:00 a.m. on the Effective Date which
date shall not be later than thirty (30) days after the receipt of all
required governmental approvals and shareholder approvals and after the
expiration of all applicable waiting periods. See "THE MERGER--Terms of the
Merger--Conditions Precedent" below.
Representations and Warranties
Lewistown, Juniata and JVB have made certain representations and warranties
as set forth in the Merger Agreement. The representations and warranties
relate to, among other things, proper organization; articles of association,
bylaws and minute books; powers and qualifications of each corporation;
subsidiaries; capital structures; leases; litigation; insurance; compliance
with environmental laws; material contracts and agreements; classified loans;
employee benefit plans; no material adverse change in financial condition;
title to real property and other assets; the adequacy of the provision for
current taxes payable and other tax matters; authorization of the Merger
Agreement; absence of conflict with other agreements and the consents and
approvals that will be required for the consummation of the Merger; adequacy
of financial statements; brokerage and other fees; the absence of false or
misleading statements in certain financial statements, Joint Proxy Statements,
reports, documents or other written material; and the delivery and filing of
certain tax returns and reports.
Conduct of Business Pending the Merger
Lewistown has agreed that prior to the Effective Date of the Merger, it will
conduct its business in the ordinary course as previously conducted and that
it will use its reasonable best efforts: (a) to preserve its respective
business and business organization; (b) to keep available to Juniata the
services of its present officers
25
<PAGE>
(provided, however, that it shall have the right to terminate the employment
of any such officer for cause in accordance with its established employee
procedures); (c) to preserve the good will of its customers and others having
business relations with it; (d) to consult with Juniata as to the making of
any decisions or the taking of any actions in matters other than in the
ordinary course of business; (e) to maintain its properties in customary
repair, working order and condition (reasonable wear and tear excepted); (f)
to comply with all laws applicable to it and the conduct of its business; (g)
to keep in force, at not less than their present limits, all policies of
insurance (including Federal Deposit Insurance Corporation ("FDIC") deposit
insurance); (h) to make no material change in the general terms, policies and
conditions upon which it presently does business other than in the ordinary
course of business; (i) to file in a due and timely manner all reports, tax
returns and other documents required to be filed with federal, state, local
and other authorities; and (j) unless it is contesting the same in good faith
and has established reasonable reserves therefor, to pay when required to be
paid all taxes indicated by tax returns so filed or otherwise lawfully levied
or assessed upon it or any of its properties and to withhold or collect and
pay to the proper governmental authorities or hold in separate bank accounts
for such payment all taxes and other assessments which it believes in good
faith to be required by law to be so withheld or collected.
Juniata and JVB have agreed that prior to the Effective Date of the Merger,
Juniata and JVB will each conduct its respective business in the ordinary
course as previously conducted and use its reasonable best efforts (i) to
preserve its respective business and business organization; (ii) to preserve
the good will of its customers and others having business relations with it;
(iii) to maintain its properties in customary repair, working order and
condition (reasonable wear and tear excepted); (iv) to comply with all laws
applicable to it and the conduct of its business; (v) to keep in force at not
less than their present limits all policies of insurance (including FDIC
deposit insurance); (vi) to file in a due and timely manner all reports, tax
returns and other documents required to be filed with federal, state, local
and other authorities; and (vii) unless it is contesting the same in good
faith and has established reasonable reserves therefor, to pay when required
to be paid all taxes indicated by tax returns so filed or otherwise lawfully
levied or assessed upon it or any of its properties and to withhold or collect
and pay to the proper governmental authorities or hold in separate bank
accounts for such payment all taxes and other assessments which it believes in
good faith to be required by law to be so withheld or collected.
Certain Other Agreements
Lewistown
Pursuant to the Merger Agreement, Lewistown has also agreed (except as
expressly permitted by the Merger Agreement or to the extent that Juniata
otherwise consents in writing), that it will not: (a) amend its articles of
association or bylaws; enter into any shareholder agreement, understanding or
commitment relating to the right to vote its shares of capital stock; or
repurchase, redeem or retire or otherwise acquire any share of, or any
security convertible into shares of, its capital stock or other equity
investment; (b) issue, deliver or sell shares of capital stock or securities
convertible into any such shares, or issue or grant any right, option or other
commitment for the issuance, delivery or sale of any such shares or
securities; (c) declare, set aside, or pay any dividend or other distribution
in respect of its capital stock (including, without limitation, any stock
dividend or distribution) other than regular quarterly cash dividends payable
in accordance with customary dividend policy (which shall mean cash dividends
payable with respect to Lewistown Common Stock at a semi-annual rate not in
excess of $.31 per share; (d) enter into or amend, or increase the
contribution to or obligation under, any employment contract or any bonus,
stock option, profit sharing, pension, retirement, savings, incentive,
deferral or similar employee benefit program or arrangement, or authorize the
creation of any new or replacement job classifications or staff positions, pay
bonuses or other extraordinary compensation, or grant any salary or wage
increase except normal individual increases in compensation to employees in
accordance with established employee procedures of Lewistown; or (e) other
than in the Ordinary Course of Business (as defined below), authorize or make
any material change in its business or operations; incur any material direct
or contingent liabilities or commitments; sell or dispose of any shares of it
capital stock or lease, sell or dispose of any other material part of its
assets; establish any new branch banking offices, loan production offices or
other offices, or make any capital expenditures in excess in the aggregate of
$5,000 (except for ordinary repairs, renewals or replacements); waive or
release any right or cancel or compromise any of its debts or claims; or
otherwise enter
26
<PAGE>
into any material contract, transaction or commitment. For purposes of the
Merger Agreement, the "Ordinary Course of Business" consists of the banking
business as presently conducted by Lewistown and not prohibited by the PBC.
Lewistown has also agreed that: (i) charge-offs and charge-downs of loans
will be taken against its allowance for loan losses in the Ordinary Course of
Business when a potential loss has been quantified by the executive officers
of Lewistown ; (ii) Juniata and its counsel, financial advisors and
accountants (all of whom shall be bound by the confidential nature of any of
the following) will be given full access, upon reasonable request, to
Lewistown properties, books, contracts and records, and that Lewistown shall
furnish all information concerning its affairs as such persons may reasonably
request; (iii) it shall use its reasonable best efforts to cause the Merger
and the Merger Agreement to be submitted to its shareholders for their
consideration and vote, and that the Board of Directors of Lewistown,
consistent with their fiduciary duties in the opinion of counsel, will
recommend that the Merger and the Merger Agreement be approved; (iv) it will
deliver to Juniata a correct and complete list of Lewistown shareholders; (v)
it will, separately and jointly with Juniata, use its reasonable best efforts
in good faith to take or cause to taken as promptly as practicable all steps
necessary to obtain requisite government approvals of the Merger and to cause
the Merger to be consummated; (vi) it will give written notice to Juniata upon
becoming aware of any impending or threatened occurrence of any event which
would cause or constitute a breach of any of the agreements, representations
or warranties of Lewistown contained or referred to in the Merger Agreement
and that it will use its reasonable best efforts to promptly prevent or remedy
the same; and (vii) it will not take any actions with respect to its business
or operations that in its or its accountants' judgment would cause the Merger
or any related transaction to fail to meet the relevant criteria for pooling
of interests accounting treatment. Lewistown has also agreed that in co-
operation with Juniata, it would promptly prepare for inclusion in the Juniata
Registration Statement (as defined below) this Joint Proxy
Statement/Prospectus for the purpose of submitting the Merger Agreement to the
Lewistown shareholders.
Juniata
Pursuant to the terms of the Merger Agreement, Juniata has agreed: (a) that
Juniata and/or JVB will use its reasonable best efforts in good faith to take
as promptly as practicable all steps necessary to cause the Merger to be
consummated as expeditiously as possible; (b) as the sole shareholder of JVB,
Juniata shall by unanimous shareholder action ratify and confirm the Merger
and cause the Board of Directors of JVB to approve the Merger; (c) that
Juniata will issue shares of Juniata Common Stock in accordance with the
Conversion Factor, and that such shares, when issued and delivered, will be
duly authorized and legally and validly issued, fully paid and nonassessable;
(d) that prior to the Effective Date, Juniata will appoint an Exchange Agent
for the purpose of exchanging certificates in accordance with the terms of the
Merger Agreement; (e) that prior to the Effective Date, separately and jointly
with Lewistown, Juniata will use its reasonable best efforts in good faith to
take or cause to be taken as promptly as possible all steps necessary to
obtain (i) the prior approval of the Merger by the Federal Reserve Board, the
FDIC and the Department of Banking ("PDOB"), and (ii) all other consents and
approvals of government agencies as are required by law or otherwise; (f) that
Juniata shall promptly give written notice to Lewistown upon becoming aware of
any impending or threatened occurrence of any event which would cause or
constitute a breach of any of the agreements, representations or warranties of
Juniata contained or referred to in the Merger Agreement and that it will use
its reasonable best efforts to promptly prevent or remedy the same; (g) that
Juniata and JVB will give Lewistown and its counsel, financial advisors and
accountants (all of whom shall be bound by the confidential nature of any of
the following) full access, upon reasonable request, to its properties, books,
contracts and records, and that they shall furnish all information concerning
their respective affairs as Lewistown may reasonably request; (h) that Juniata
shall cause JVB to employ persons who are employees of Lewistown immediately
prior to the Effective Date, and to pay compensation to each such person that
is consistent with the compensation practices of JVB then in effect, and to
provide employee benefits that are no less favorable than the employee
benefits afforded to similarly situated employees of Juniata and JVB; (i) that
Juniata will not take any actions or engage in any transaction following the
Merger that would cause the Merger to fail to qualify as a reorganization
within the meaning of Section 368 of the Code or fail to qualify for pooling
of interests accounting treatment; (j) Juniata shall cause the issuance of
shares of Juniata Common Stock
27
<PAGE>
in connection with the Merger and the Merger Agreement to be submitted
promptly for the approval of its shareholders at a meeting to be called and
held in accordance with Juniata's Articles of Incorporation and Bylaws and the
BCL; and (k) Juniata shall not adopt any amendments to its Articles or Bylaws
or other organizational documents that would alter the terms of Juniata Common
Stock or reasonably be expected to have a material adverse effect on the
ability of Juniata to perform its obligations under the Merger Agreement.
Juniata has also agreed that it will promptly prepare and file with the SEC a
registration statement (the "Juniata Registration Statement") under and
pursuant to the provisions of the Securities Act of 1933 (the "Securities
Act") for the purpose of registering the Juniata Common Stock to be issued in
connection with the Merger.
Pursuant to the terms of the Merger Agreement, Lewistown and Juniata have
both agreed that: (i) each party to the Merger Agreement shall, and shall
cause its directors, officers, attorneys and advisors, to maintain (unless
otherwise required by applicable law) the confidentiality of all information
obtained in connection with the Merger Agreement which is not otherwise
publicly disclosed by the other party or publicly available; and (ii) both
Juniata and Lewistown shall agree with each other as to the form and substance
of any press release related to the Merger Agreement or the transactions
contemplated thereby, and shall consult with each other as to the form and
substance of other public disclosures related thereto. Lewistown and Juniata
have also agreed that they shall use their reasonable best efforts to have the
Juniata Registration Statement declared effective under the Securities Act as
soon as may be practicable.
Conditions Precedent
The obligations of Lewistown and Juniata to consummate the Merger are
subject to, among other things, the satisfaction of the following
conditions: (a) the performance by Lewistown and Juniata of each of their
respective obligations under the Merger Agreement and the accuracy of each of
Lewistown and Juniata's respective representations and warranties contained
therein; (b) the absence of any material adverse change in the financial
condition of each of the respective parties and their subsidiaries; (c)
approval of the Merger Agreement and the transactions contemplated therein by
the shareholders of Lewistown and Juniata; (d) the receipt, by each of the
respective parties, of a certificate from the other party as to matters
specifically enumerated in the Merger Agreement and the opinion of counsel as
required therein; (e) the effectiveness of the Juniata Registration Statement
and the absence of stop orders suspending the effectiveness; (f) the receipt
of all governmental approvals required by the Merger Agreement; (g) the
receipt of a letter from Beard & Company, Inc., dated the effective date of
Juniata's Registration Statement, subject to satisfaction of the requirements
of Statement on Auditing Standards No. 72 of the American Institute of
Certified Public Accountants, if applicable; (h) the receipt of an opinion
from Mette, Evans & Woodside, special counsel to Juniata, as to certain tax
matters; and (i) the Merger is accounted for under the pooling of interests
method of accounting. The obligations of Lewistown to consummate the Merger
are further subject to the receipt of the RP Financial Opinion.
The obligations of Juniata to consummate the Merger are further subject
to: (a) the receipt of a letter from Lewistown litigation counsel on the
Effective Date setting forth pending litigation involving Lewistown which was
not previously disclosed in writing to Juniata; (b) the aggregate number of
shares of Lewistown Common Stock held by persons who have taken the steps
required prior to the Effective Date to perfect their right (if any) to be
paid the fair value of such shares under the PBC and BCL ("Dissenting Shares")
are not enough to prevent Juniata from meeting the continuity of business
enterprise requirement of Section 368(a)(1)(A) of the Code, and the number of
Dissenting Shares, plus the number of shares owned by Juniata or its
affiliates, together with the aggregate number of fractional shares with
respect to which persons will receive cash in lieu of Juniata Common Stock
pursuant to the Merger Agreement, shall be less than 10% of the number of
outstanding shares of Lewistown Common Stock or such number, if less, which
will allow Juniata to account for the Merger as a "pooling of interest"; (c)
the receipt by Juniata of letters from Lewistown affiliates for purposes of
Rule 145 under the Securities Act; and (d) receipt of the Hopper Soliday
Opinion.
Waiver; Amendment
Any provision of the Merger Agreement may be: (a) waived by the party
benefitted by the provision; or (b) amended or modified at any time by an
agreement in writing duly authorized and executed by each of the
28
<PAGE>
parties, except that no amendment which would reduce the amount or change the
form of consideration to be delivered to the shareholders of Lewistown or
alter or change any of the terms or conditions of the Merger Agreement so as
to materially adversely affect the shareholders of Lewistown or Juniata, may
be made subsequent to shareholder approvals without obtaining further
shareholder approvals.
Termination
The Merger Agreement provides that it may be terminated by the mutual
consent of both Lewistown and Juniata at any time prior to the consummation of
the Merger.
The Merger Agreement further provides that it may be terminated by the Board
of Directors of Lewistown: (a) if in its reasonable opinion, (i) a material
adverse change has occurred since September 30, 1997 in the business or
financial condition of Juniata, or (ii) there has been a failure, or
prospective failure, on the part of Juniata to comply with its obligations or
any conditions applicable to it under the Merger Agreement; (b) on or after
September 30, 1998, if (i) any of the conditions to which the obligations of
Lewistown are subject under the Merger Agreement have not been fulfilled
(provided, however, that Lewistown shall not have the right to terminate the
Merger Agreement for a period of three months if Juniata is engaged in
litigation or an appeal procedure relating to an attempt to obtain one or more
of the government approvals required by the Merger Agreement), or (ii) such
conditions have been fulfilled or waived but Juniata shall have failed to
complete the Merger; (c) if the Merger and the Merger Agreement are not
approved by the affirmative vote of Lewistown shareholders owning at least
two-thirds of its capital stock outstanding at the Lewistown Special Meeting,
including any adjournment thereof; provided, however, that Lewistown and
Juniata may mutually agree to keep the Merger Agreement in effect to call an
additional meeting of the Lewistown shareholders to obtain such shareholder
approval; and (d) if, prior to the Effective Date, (i) a change of control of
Juniata occurs, (ii) Juniata enters into an agreement to effect a change of
control or (iii) Juniata enters into any agreement relating to a transaction
which would require the approval of its shareholders under Juniata's Articles
or Bylaws or the BCL.
The Merger Agreement further provides that it may be terminated by the Board
of Directors of Juniata: (a) on or after September 30, 1998 if (i) any of the
conditions to which the obligations of Juniata are subject under the Merger
Agreement have not been fulfilled, or (ii) such conditions have been fulfilled
or waived by Juniata but Lewistown shall have failed to complete the Merger;
(b) if in its reasonable opinion (i) a material adverse change has occurred
since September 30, 1997 in the business or financial condition of Lewistown,
or (ii) there has been a failure, or prospective failure, on the part of
Lewistown to comply with its obligations or any conditions applicable to it
under the Merger Agreement; or (c) if the Merger and the Merger Agreement are
not approved by the affirmative vote of Juniata shareholders owning at least
66 2/3% of its capital stock outstanding at the Juniata Annual Meeting.
The Merger Agreement further provides that it may be terminated by the Board
of Directors of either Lewistown or Juniata if any material action, proceeding
or investigation is pending or threatened before any court or administrative
agency by any governmental agency or other person challenging, or seeking
material damages in connection with, the Merger.
The Merger Agreement further provides that under the Merger Agreement, the
power of termination may only be exercised by written notice, signed on behalf
of the party by its Chairman (or President) and Chief Executive Officer, to
the other party. Additionally, termination of the Merger Agreement will not
terminate or affect the obligations of Lewistown and Juniata to pay any
expenses required by the Merger Agreement, or any other agreement reached
between the parties after such termination.
EXPENSES
Whether or not the Merger is consummated, all costs and expenses incurred in
connection with the Merger Agreement and the transactions contemplated therein
shall be paid by the party incurring such costs, except that in the event the
Merger is not consummated for any reason Juniata and Lewistown shall each pay
one-half of:
29
<PAGE>
(a) the aggregate costs theretofore incurred in printing the Juniata
Registration Statement and this Joint Proxy Statement/Prospectus; (b) the
registration fee for the Juniata Registration Statement; and (c) the fees for
filing applications for any government approvals required by the Merger
Agreement.
NO SOLICITATION; PURSUIT OF OTHER TRANSACTIONS
In the Merger Agreement, Lewistown has agreed that, except to the extent
which the Board of Directors in good faith believes it is required to
discharge its fiduciary duties after consultation with its legal counsel,
neither it nor any of its officers or directors shall (and Lewistown has
agreed to direct and use its reasonable best efforts to cause its employees,
agents and representatives, including, without limitation, any investment
banker, attorney or accountant retained by it not to) initiate, solicit or
encourage, directly or indirectly, any inquiries for the making of any
proposal or offer (including, without limitation, any proposal or offer to
Shareholders of Lewistown, but excluding the transactions contemplated by the
Merger Agreement) with respect to a merger, consolidation, or similar
transaction involving, or any purchase of all or any significant portion of
the assets or any equity securities of, Lewistown (any such proposal or offer
being hereinafter referred to as an "Acquisition Proposal") or engage in any
negotiations concerning, or provide any confidential information or data to,
or have any discussions with, any person relating to an Acquisition Proposal,
or otherwise facilitate any effort or attempt to make or implement an
Acquisition Proposal. Lewistown has agreed to promptly notify Juniata of any
inquiries or proposals regarding an Acquisition Proposal.
CONTINUED EMPLOYMENT OF LEWISTOWN EMPLOYEES
Pursuant to the terms of the Merger Agreement, Juniata has agreed to cause
JVB to employ persons who are employees of Lewistown immediately prior to the
Effective Date and pay compensation to each such person that is consistent
with the compensation policies of JVB then in effect, and to provide employee
benefits that are no less favorable than the employee benefits afforded to
similarly situated employees of Juniata and JVB. In the event the application
of Juniata/JVB compensation policies and employee benefits to an individual
Lewistown employee causes a reduction in the overall level of compensation and
benefits to that employee, Juniata will use its reasonable best efforts to
increase that employee's aggregate compensation and benefits to the level in
effect prior to the Effective Date over a period of two (2) years.
Additionally, Francis J. Evanitsky has entered into an employment agreement
with Juniata, which is conditioned upon consummation of the Merger. See--
"Interests of Certain Persons in the Merger." In the event JVB terminates the
employment (other than as a result of unsatisfactory performance of their
respective duties) of any officers or employees of Lewistown as of the
Effective Date within one (1) year of the Effective Date, Juniata shall cause
JVB to pay severance benefits to such employees in accordance with such
severance policies as may be agreed to by Juniata's Chairman/CEO and
President/COO and adopted from time to time by the Board of Directors of
Juniata.
INDEMNIFICATION OF LEWISTOWN OFFICERS AND DIRECTORS; INSURANCE
In the Merger Agreement, JVB has agreed to indemnify and hold harmless,
prior to and after the Effective Date, each present and former director and
officer of Lewistown determined as of the Effective Date (the "Indemnified
Parties") against any costs and expenses (including reasonable attorneys'
fees), judgments, fines, losses, claims, damages or liabilities (collectively,
the "Costs") incurred in connection with any claim, action, suit, proceedings
or investigation, whether civil, criminal, administrative or investigative,
arising out of an Indemnified Matter. Pursuant to the Merger Agreement, an
"Indemnified Matter" includes any matter directly or indirectly involving
transactions contemplated by or required in connection with the Merger
Agreement, as well as any matter existing or occurring at or prior to the
Effective Date, whether asserted or claimed prior to, at or after the
Effective Date, to the fullest extent to which such persons were entitled to
be indemnified under Lewistown articles of incorporation or bylaws in effect
as of the date of the Merger Agreement, but only to the extent permitted by
applicable law, and also advance expenses as incurred to the fullest extent to
which such persons were entitled under Lewistown's Articles of Incorporation
and Bylaws as in effect on the date of the
30
<PAGE>
Merger Agreement (to the fullest extent permitted under applicable law),
provided the person to whom expenses are advanced provides an undertaking to
repay such advances if it is ultimately determined that such person is not
entitled to indemnification. An Indemnified Matter does not include any action
or omission by an Indemnified Party resulting from such person's gross
negligence or deliberate misconduct. JVB has also agreed, for a period of six
years after the Effective Date, to use its reasonable efforts to cause to be
maintained in effect the current policies of directors' and officers'
liability insurance maintained by Lewistown; provided, however, that JVB may
substitute therefor policies of comparable coverage; and provided further that
in no event shall JVB be obligated to expend any amount per annum in excess of
150% of the total amount of annual premiums paid as of the date of the Merger
Agreement by Lewistown for such insurance (the "Maximum Amount"). If the
amount of the annual premiums necessary to maintain or procure such insurance
coverage exceeds the Maximum Amount, Juniata has agreed to use its reasonable
efforts to maintain the most advantageous policies of directors' and officers'
insurance obtainable for an annual premium equal to the Maximum Amount.
JUNIATA VALLEY BANK SHAREHOLDER APPROVAL
Under the Merger Agreement, Juniata, as the sole shareholder of JVB, has
agreed to ratify and confirm the Merger and the Merger Agreement.
EXCHANGE PROCEDURE
Appointment of Exchange Agent
Juniata will act as its own exchange agent for the purpose of exchanging
certificates representing shares of Juniata Common Stock. As such, Juniata
will issue and deliver shares of Juniata Common Stock, and will pay such
amounts of cash as shall be required to be delivered to holders of shares of
Lewistown Common Stock entitled to cash in lieu of fractional shares. Any
Juniata Common Stock and any amounts of cash allocated for this purpose, and
unclaimed at the end of two years from the Effective Date will be retained by
Juniata, in which event the persons entitled thereto shall only look to
Juniata for payment thereof; provided, however, that if Juniata shall, as
required by law, pay to the Commonwealth of Pennsylvania any unclaimed Juniata
Common Stock or monies so retained by Juniata, those persons may thereafter
look only to the Commonwealth of Pennsylvania for payment thereof.
Procedure
As soon as practicable after the Effective Date of the Merger, holders of
shares of Lewistown Common Stock will be furnished a form letter of
transmittal for the tender of their shares to Juniata to be exchanged for new
certificates for the appropriate number of shares of Juniata Common Stock.
Juniata will be required to issue Juniata Common Stock only upon the actual
surrender of Lewistown shares and will require an indemnity agreement or a
bond from any Lewistown shareholder who is unable to surrender his or her
certificate by reason of loss, theft or destruction of the certificate.
Upon surrender for cancellation to Juniata of one or more certificates for
shares of Lewistown Common Stock ("Old Certificates"), accompanied by a duly
executed letter of transmittal in proper form, Juniata shall, promptly after
the Effective Date of the Merger, deliver to each holder of such surrendered
Old Certificates new certificates representing the appropriate number of
shares of Juniata Common Stock ("New Certificates"), together with checks for
payment of cash in lieu of fractional interests to be issued in respect of the
Old Certificates.
Until Old Certificates have been surrendered and exchanged for New
Certificates, each outstanding Old Certificate shall be deemed, for all
corporate purposes of Juniata, to be the number of whole shares of Juniata
Common Stock into which the number of shares of Lewistown Common Stock shown
thereon have been converted. At the option of Juniata, no dividends or other
distributions which are declared on Juniata Common Stock will be paid to
persons otherwise entitled to receive the same until the Old Certificates have
been
31
<PAGE>
surrendered in exchange for New Certificates in the manner described above,
but upon such surrender, such dividends or other distributions, from and after
the Effective Date of the Merger, will be paid to such persons in accordance
with the terms of such Juniata Common Stock. In no event shall the persons
entitled to receive such dividends or other distributions be entitled to
receive interest on such dividends or other distributions.
REGULATORY APPROVALS
The approval of the Federal Reserve Board, the FDIC and the Pennsylvania
Department of Banking must also be obtained before the Merger can be
consummated. On April 1, 1998, an application was filed with the Department of
Banking seeking approval of the Merger. Applications for the Federal Reserve
Board's and FDIC's respective approvals will also be filed.
Lewistown and Juniata are not aware of any other governmental approvals or
actions that are required for consummation of the Merger, except as described
above. Should any such approval or action be required, it is presently
contemplated that such approval or action would be sought.
The Merger cannot proceed in the absence of the requisite regulatory
approvals. There can be no assurance that all such regulatory approvals will
be obtained, and, if the Merger is approved, there can be no assurance as to
the date of any such approval. There can also be no assurance that any such
approvals will not contain a condition or requirement which causes such
approvals to fail to satisfy the conditions set forth in the Merger Agreement.
There can likewise be no assurance that the U.S. Department of Justice or the
state Attorney General will not challenge the Merger, or if such a challenge
is made, as to the result thereof.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
As of the Record Date, the directors and executive officers of Lewistown may
be deemed to be beneficial owners of 92,771 shares of Lewistown Common Stock,
or 9.73% of the then outstanding shares of Lewistown Common Stock.
Certain directors and officers of Lewistown have interests in the Merger
that are in addition to their interests as shareholders of Lewistown
generally. The Merger Agreement provides that from and after the Effective
Date, JVB will provide indemnification to each person who is at the Effective
Date, or has been at any time prior to the Effective Date, an officer or
director of Lewistown against any costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "Costs") incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of matters existing or occurring at or prior to the
Effective Date, whether asserted or claimed prior to, at or after the
Effective Date, to the fullest extent to which such persons were entitled
under the articles of association or bylaws of Lewistown in effect on the date
of the Merger Agreement, to the extent permitted under applicable law. JVB
will advance expenses as incurred to the fullest extent to which such persons
were entitled under the articles of association and bylaws as in effect on the
date of the Merger Agreement, to the extent permitted under applicable law,
provided the person to whom expenses are advanced provides an undertaking to
repay such advances if it is ultimately determined that such person is not
entitled to indemnification.
The Merger Agreement also provides that for a period of six years after the
Effective Date, JVB will use all reasonable efforts to cause to be maintained
in effect the current policies of directors' and officers' liability insurance
maintained by Lewistown (provided that JVB may substitute policies of
comparable coverage); provided, however, that in no event will JVB be
obligated to expend, in order to maintain such insurance coverage, any amount
per annum in excess of 150% of the total amount of the annual premiums paid as
of the date of the Merger Agreement by Lewistown for such insurance.
The current members of the Board of Directors of Lewistown will be appointed
to the Board of Directors of Juniata.
32
<PAGE>
Additionally, Juniata has entered into an employment agreement which is
conditioned upon consummation of the Merger, and is effective on the Effective
Date of the Merger, whereby Francis J. Evanitsky will become President and COO
of Juniata and JVB.
Francis J. Evanitsky
Pursuant to the employment agreement described above, Francis J. Evanitsky,
currently the President and CEO of Lewistown, will become the President and
COO of Juniata and JVB at an annual salary fixed from time to time by Juniata
of not less than the sum of $96,500. Mr. Evanitsky's salary may be increased
from time to time by Juniata's Board of Directors.
Mr. Evanitsky's employment may be terminated by Juniata for cause (as
defined in the agreement), upon thirty (30) days written notice, or without
cause. Mr. Evanitsky may terminate his employment with cause (as defined in
the agreement).
In the event Juniata terminates Mr. Evanitsky's employment without cause, or
Mr. Evanitsky terminates his employment with cause, he will receive severance
compensation equal to 2.95 times his average annual compensation over the five
taxable years immediately preceding the termination of his employment with
Juniata and JVB. Mr. Evanitsky then has the option of electing to receive a
portion of his severance compensation in the form of continued health, medical
or life insurance benefits or coverage for a period not to exceed one (1)
year.
MANAGEMENT OF JUNIATA AND JUNIATA VALLEY BANK AFTER THE MERGER
On the Effective Date, the Board of Directors of Juniata shall consist of
the following:
(a) The 11 persons who are then members of the Board of Directors of
Juniata (the "Juniata Directors");
(b) The 9 persons who are then members of the Board of Directors of
Lewistown (the "Lewistown Directors"). On the Effective Date, in accordance
with Juniata's current classification of directors, Juniata shall appoint:
(1) Three (3) such Lewistown Directors as Class A Directors, to
continue in office until 2000;
(2) Three (3) such Lewistown Directors as Class B Directors, to
continue in office until 2001;
(3) Three (3) such Lewistown Directors as Class C Directors, to
continue in office until 1999.
From and after the Effective Date, the officers of Juniata will be those
persons who were the officers and directors of Juniata provided, however, that
Francis J. Evanitsky will be appointed the President and Chief Operating
Officer ("COO") of Juniata, A. Jerome Cook will be appointed Chief Executive
Officer ("CEO") and Chairman of the Board of Directors of Juniata and JVB, and
Linda L. Engle will be appointed Executive Vice-President and Chief Financial
Officer ("CFO") of Juniata and JVB. The officers of Juniata will also consist
of such other officers as the Juniata Board of Directors may appoint. Such
officers shall hold office until such time as their successors have been
elected or appointed and have qualified unless sooner removed, resigned,
disqualified, or deceased.
On the Effective Date, Juniata will appoint the then members of the Board of
Directors of Lewistown to the Board of Directors of JVB so that the Board of
Directors of JVB will consist of those persons who are then members of the
Board of Directors of Lewistown and those persons who are then members of the
Board of Directors of JVB. From and after the Effective Date, the officers of
JVB will consist of those persons who were then officers of JVB; provided that
Francis J. Evanitsky will be appointed President and COO of JVB, A. Jerome
Cook will be appointed CEO and Chairman of the Board of Directors of JVB, and
Linda L. Engle will be appointed Executive Vice-President and CFO of JVB. Such
officers shall hold office until such time as their successors have been duly
elected or appointed and have qualified, unless sooner removed, resigned,
disqualified, or deceased.
33
<PAGE>
On the Effective Date, the Juniata Directors and the Lewistown Directors
will each appoint two (2) vice- chairmen of the Boards of Directors of Juniata
and JVB.
On the Effective Date, the Bylaws of Juniata and JVB shall be amended to
create the offices appointed as set forth in the Merger Agreement.
The Juniata Board of Directors will nominate and support for reelection each
former Lewistown Director whose term as a director of Juniata and JVB expires
on or before the 2001 Annual Meeting of the Shareholders of Juniata.
ACCOUNTING TREATMENT
Juniata intends to treat the Merger as a "pooling of interests" for
accounting purposes.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the anticipated material federal income tax
consequences of the Merger. Each shareholder's individual circumstances may
affect the tax consequences of the Merger to that shareholder. In addition, no
information is provided herein with respect to the tax consequences of the
Merger under applicable foreign, state or local laws. Consequently, each
shareholder is advised to consult with his or her own tax advisor as to the
specific tax consequences of the Merger.
It is intended that the Merger will be treated for federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the Code,
and that, accordingly, for income tax purposes: (i) the Merger of Lewistown
with and into JVB upon the terms and conditions of the Merger Agreement will
not result in any recognized gain or loss to Juniata, JVB or Lewistown; (ii)
except for any cash received in lieu of any fractional share, no gain or loss
will be recognized by holders of Lewistown Common Stock who receive Juniata
Common Stock in exchange for the shares of Lewistown Common Stock which they
hold; (iii) the holding period of Juniata Common Stock received in exchange
for Lewistown Common Stock will include the holding period of Lewistown Common
Stock for which it is exchanged, assuming the shares of Lewistown Common Stock
are capital assets in the hands of the holder thereof on the Effective Date;
and (iv) the basis of Juniata Common Stock received in exchange for Lewistown
Common Stock will be the basis of Lewistown Common Stock for which it is
exchanged, less any basis attributable to fractional shares for which cash is
received.
The obligations of the parties to consummate the Merger is conditioned upon
the receipt of an opinion from Mette, Evans & Woodside, counsel to Juniata,
substantially to the effect that the federal income tax consequences of the
Merger are as summarized above.
Assuming that the Merger satisfies all of the requirements of a
reorganization within the meaning of Section 368(a) of the Code, the Merger
will have the following tax consequences to a Lewistown shareholder: except
for any cash received in lieu of any fractional share, no gain or loss will be
recognized by a Lewistown shareholder who exchanges his or her shares for
Juniata Common Stock. The tax basis of the shares of Juniata Common Stock
received by a shareholder will be equal to the tax basis of the shares of
Lewistown Common Stock exchanged therefor (less any basis attributable to
fractional shares for which cash is received), and, if the shares of Lewistown
Common Stock surrendered were a capital asset in the hands of the Lewistown
shareholder, the holding periods of the shares of Juniata Common Stock
received by the shareholder will include the holding periods for the shares of
Lewistown Common Stock.
EACH SHAREHOLDER IS ENCOURAGED TO CONSULT WITH HIS OR HER OWN TAX ADVISOR AS
TO PARTICULAR FACTS AND CIRCUMSTANCES WHICH MAY BE UNIQUE TO SUCH SHAREHOLDER
AND NOT COMMON TO SHAREHOLDERS AS A WHOLE AND ALSO AS TO ANY ESTATE, GIFT,
STATE, LOCAL OR FOREIGN TAX CONSEQUENCES ARISING OUT OF THE MERGER AND/OR ANY
SALE THEREAFTER OF SHARES OF JUNIATA COMMON STOCK RECEIVED IN THE MERGER.
34
<PAGE>
RIGHTS OF DISSENTING SHAREHOLDERS
Pursuant to the BCL, to which the PBC refers, each holder of record of
Lewistown Common Stock is entitled to dissent from the Merger and receive
"fair value" for his or her Lewistown Common Stock. Lewistown Shareholders
must comply with the terms of Subchapter D of Chapter 15 of the BCL
("Subchapter 15D"). A copy of Subchapter 15D is attached to this Joint Proxy
Statement/Prospectus as Appendix "D".
The following description of the applicable statutory procedures to be
followed by a holder of Lewistown Common Stock in order to dissent from the
Merger is not intended to be complete and is qualified in its entirety by
reference to Subchapter 15D, the text of which is set forth in Appendix D
hereto. Any shareholder considering dissenters' rights is advised to review
Appendix D and consult legal counsel because the failure to precisely follow
all the necessary legal requirements may result in the loss of such rights.
Holders of record of Lewistown Common Stock who desire to exercise their
appraisal rights must fully satisfy all of the following conditions. Each
holder must not vote to approve the Merger and the Merger Agreement and must
give notice in writing prior to the Lewistown Special Meeting that such holder
dissents from the Merger and the Merger Agreement to Lewistown Trust Company,
100 East Market Street, Lewistown, Pennsylvania 17044, Attention: James C.
Dillman, Secretary of the Board. Additionally, Lewistown Shareholders
intending to dissent from the Merger and Merger Agreement must not buy, sell
or otherwise transfer beneficial ownership of any shares of Lewistown Common
Stock after giving such notice.
HOLDERS OF LEWISTOWN COMMON STOCK SHOULD CAREFULLY CONSIDER APPENDIX D AND
SHOULD CONSULT WITH THEIR LEGAL COUNSEL REGARDING THEIR RIGHT TO DISSENT FROM
THE MERGER AND TO RECEIVE FAIR VALUE OF THEIR SHARES OF LEWISTOWN COMMON
STOCK. FAILURE TO FOLLOW PRECISELY ANY STEP REQUIRED BY SUBCHAPTER 15D IN
CONNECTION WITH THE EXERCISE OF DISSENTERS' RIGHTS MAY RESULT IN TERMINATION
OF SUCH RIGHTS.
REGULATORY MATTERS
GENERAL
Juniata is registered as a bank holding company under the Bank Holding
Company Act of 1956, as amended (the "BHCA"). As a bank holding company,
Juniata is subject to the regulation and supervision of the Federal Reserve
Board. Under the BHCA, bank holding companies may not directly or indirectly
acquire ownership or control of more than 5% of the voting shares or
substantially all of the assets of any company, including a bank, without the
prior approval of the Federal Reserve Board. Additionally, bank holding
companies are generally prohibited by the BHCA from engaging in nonbanking
activities, subject to certain exceptions.
Lewistown is a Pennsylvania bank and trust company, as defined in the PBC,
and is subject to the regulation and supervision of the PDOB. Lewistown is
also an "insured depository institution" as defined in the Federal Deposit
Insurance Act, as amended (the "FDIA"). Lewistown is also subject to various
requirements and restrictions under Pennsylvania law, including requirements
to maintain reserves against deposits, restrictions on the types and amounts
of loans that may be granted and the interest that may be charged thereon and
limitations on the types of investments that may be made and the types of
services that may be offered. Various consumer laws and regulations also
affect the operations of Lewistown. In addition to the impact of regulation,
commercial banking institutions are affected significantly by the actions of
the Federal Reserve Board as it attempts to control the money supply and
credit availability in order to influence the economy.
RESTRICTIONS ON RESALES BY AFFILIATES
The shares of Juniata common stock to be issued to Lewistown shareholders in
the Merger have been registered under the Securities Act. Such shares may be
traded freely and without restriction by those shareholders not deemed to be
"affiliates" of Lewistown as that term is defined by the Securities Act. Any
subsequent transfer of such shares, however, by any person who is an affiliate
of Lewistown at the time the Merger is submitted for vote of the Lewistown
shareholders will, under existing laws, require either (a) the
35
<PAGE>
further registration under the Securities Act of the shares of Juniata Common
Stock to be transferred, (b) compliance with Rule 145 of the Securities
Exchange Commission promulgated under the Securities Act (permitting limited
sales under certain circumstances), or (c) the availability of another
exemption from registration. An "affiliate" of Lewistown, as defined by the
rules promulgated pursuant to the Securities Act, is a person who, directly or
indirectly, through one or more intermediaries controls or is controlled by or
is under common control with Lewistown.
The foregoing restrictions are expected to apply to the Directors, executive
officers, and the holders of ten percent (10%) or more of Lewistown Common
Stock (and of certain relatives or the spouse of any such person in any
trusts, estates, corporations, or other entities in which any such person has
a ten percent (10%) or greater equity interest). Stock transfer instructions
will be given by Juniata to the Exchange Agent, with respect to the shares of
Juniata Common Stock to be received by persons subject to the restrictions
described above, and the certificates for such Juniata Common Stock will be
appropriately legended. Lewistown has agreed to obtain from each of those
individuals identified by Lewistown as affiliates appropriate agreements that
such individual will not make any further sale of Juniata Common Stock
received upon consummation of the Merger, except in compliance with the
restrictions described above.
PAYMENT OF DIVIDENDS
Juniata is a Pennsylvania business corporation, and as such, is subject to
the provisions of the BCL. The BCL provides that a corporation is generally
permitted to pay dividends unless, after giving effect thereto, the
corporation would be unable to pay its debts as they become due in the usual
course of business or the total assets of the corporation would be less than
the sum of its total liabilities plus the amount that would be needed upon
dissolution to satisfy the preferential rights of shareholders whose
preferential rights on dissolution are superior to those receiving the
dividends.
It is important to note that Juniata is also a legal entity separate and
distinct from its banking subsidiary, JVB. The principal source of cash flow
of Juniata, including cash flow to pay dividends on Juniata Common Stock, is
dividends from JVB. As discussed below, there are statutory and regulatory
limitations on the payment of dividends by JVB.
Under state law, the dividends which JVB may pay without prior regulatory
approval are subject to certain limitations. As a Pennsylvania state banking
institution, under the PBC, JVB may pay dividends only out of accumulated net
earnings. JVB may not declare or pay any dividend requiring a reduction of the
statutorily required surplus of the institution.
Other Limitations
The FDIC has indicated that paying dividends that deplete a bank's capital
base to an inadequate level would be an unsafe and unsound banking practice.
Under the Federal Deposit Insurance Corporation Improvements Act of 1991
("FDICIA"), an insured bank may not pay any dividend if payment would cause it
to become undercapitalized. In addition, no dividend payments are permitted
once an insured bank is undercapitalized. See "REGULATORY MATTERS--Federal
Deposit Insurance Corporation Improvement Act of 1991." Moreover, the PDOB has
also adopted minimum capital standards. Both the PDOB and the FDIC have broad
authority to prohibit a bank from engaging in unsafe or unsound banking
practices.
HOLDING COMPANY STRUCTURE
Under Federal Reserve Board policy, a bank holding company is expected to
act as a source of financial strength to its subsidiary banks and to make
capital injections into a troubled subsidiary bank, and the Federal Reserve
Board may charge the bank holding company with engaging in unsafe and unsound
practices for failure to commit resources to a subsidiary bank when required.
A required capital injection may be called for at a time when the holding
company does not have the resources to provide it. Any capital loans by a
holding company to its subsidiary bank would be subordinate in right of
payment to deposits and to certain other indebtedness of such subsidiary bank.
36
<PAGE>
In addition, under the Financial Institutions Reform, Recovery and
Enforcement Act of 1989 ("FIRREA"), depository institutions insured by the
FDIC can be held liable for any losses incurred by, or reasonably anticipated
to be incurred by, the FDIC after August 9, 1989 in connection with: (a) the
default of a commonly controlled FDIC-insured depository institution; or (b)
any assistance provided by the FDIC to a commonly controlled FDIC-insured
depository institution in danger of default. "Default" is defined generally as
the appointment or a conservator or a receiver and "in danger of default" is
defined generally as the existence of certain conditions indicating that a
"default" is likely to occur in the absence of regulatory assistance.
Accordingly, in the event that any insured depository institution of Juniata
causes a loss to the FDIC, other insured subsidiaries, if any, of Juniata
could be required to compensate the FDIC by reimbursing it for the estimated
amount of such loss.
For a description of certain other requirements relating to capital
distributions between depository institutions and bank holding companies and
the potential obligation of a bank holding company to guarantee the capital
restoration plans of any of its undercapitalized depository institution
subsidiaries, see "REGULATORY MATTERS--Federal Deposit Insurance Corporation
Improvement Act of 1991."
CAPITAL ADEQUACY
Bank holding companies are required to comply with risk-based capital
guidelines established by the Federal Reserve Board. The guidelines, which
were fully phased in at the end of 1992, establish a framework that is
intended to make regulatory capital requirements more sensitive to differences
in risk profiles among banking organizations and take off-balance sheet
exposures into explicit account in assessing capital adequacy. The risk-based
ratios are determined by allocating assets and specified off-balance sheet
commitments into four risk-weight categories, with higher levels of capital
being required for categories perceived as representing greater risk.
Generally, under applicable guidelines, a banking organization's capital is
divided into two tiers. "Tier 1", or core capital, includes common equity,
perpetual preferred stock (excluding auction rate issues) and minority
interests in equity accounts of consolidated subsidiaries, less goodwill and
other intangibles, subject to certain exceptions. "Tier 2", or supplementary
capital, includes, among other things, perpetual preferred stock (subject to
certain exceptions), hybrid capital instruments, qualifying subordinated debt,
and the allowance for loan and lease losses, subject to certain limitations
and less required deductions. "Total capital" is the sum of Tier 1 and Tier 2
capital. The Tier 1 component must comprise at least 50% of the qualifying
total capital.
Banking organizations that are subject to the guidelines are required to
maintain a ratio of Tier 1 capital to risk-weighted assets of at least 4% and
a ratio of total capital to risk-weighted assets of at least 8%. The
appropriate regulatory authority may set higher capital requirements when an
organization's particular circumstances warrant.
The Federal Reserve Board and the FDIC have also adopted leverage capital
guidelines to which Juniata, JVB and Lewistown are subject. The guidelines
provide for a minimum leverage ratio (Tier 1 capital to adjusted total assets)
of 3% for financial institutions that have the highest regulatory examination
ratings and are not experiencing or anticipating significant growth. Financial
institutions not meeting these criteria are required to maintain leverage
ratios of at least one to two percentage points higher.
On August 9, 1995, the federal banking agencies issued a Final Rule and
Policy Statement ("Final Rule") revising the risk-based capital rules to take
account of interest rate risk. The Final Rule offers alternative approaches
for determining the additional amount of capital, if any, that a bank may be
required to have for interest rate risk. The first approach is to reduce a
bank's risk-based capital ratios by an amount based on its measured exposure
to interest rate risk in excess of a specified threshold. The second approach
is to assess the need for additional capital on a case-by-case basis,
considering both the level of measured exposure and qualitative risk factors.
37
<PAGE>
On December 23, 1994, the federal banking agencies issued a Final Rule on
their respective risk-based capital requirements that explicitly identifies
concentration of credit risk with certain risks arising from nontraditional
activities, and the management of such risks, as important factors to consider
in assessing an individual's overall capital adequacy. The Final Rule does
not, however, mandate any specific adjustments to the risk-based capital
calculations as a result of such factors.
On December 23, 1994, the Federal Reserve Board amended its risk-based
capital standards to increase the amount of capital required under such
standards for long-dated interest rate and exchange rate contracts and for
derivative contracts based on equity securities and indexes, precious metals
(other than gold) and other commodities. The amendment permits banking
institutions to recognize the effect of bilateral netting arrangements in
calculating their exposure to derivative contracts for risk-based capital
purposes. Juniata does not expect this amendment to have a material effect on
its financial condition or results of operations.
Failure to meet applicable capital guidelines could subject a banking
organization to a variety of enforcement actions, including limitations on its
ability to pay dividends, the issuance by the applicable regulatory authority
of a capital directive to increase capital, and, in the case of depository
institutions, the termination of deposit insurance by the FDIC, as well as to
the measures described under "REGULATORY MATTERS--Federal Deposit Insurance
Corporation Improvement Act of 1991" below, as applicable to undercapitalized
institutions.
The following table sets forth, as of December 31, 1997, the capital ratios
of Lewistown and Juniata:
<TABLE>
<CAPTION>
LEWISTOWN JUNIATA/JVB REQUIRED
--------- ----------- --------
<S> <C> <C> <C>
Tier 1 risk-based capital ratio............... 25.49% 18.61% 4%
Total risk-based capital ratio................ 26.57% 19.82% 8%
Leverage Ratio................................ 12.56% 12.82% 3-5%
</TABLE>
FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT OF 1991
In December, 1991, Congress enacted FDICIA which substantially revised the
bank regulatory and funding provisions of the FDIA and made significant
revisions to several other federal banking statutes. FDICIA provides for,
among other things: (a) a recapitalization of the Bank Insurance Fund of the
FDIC (the "BIF") by increasing the FDIC's borrowing authority and providing
for adjustments in its assessment rates; (b) annual on-site examinations of
federally-insured depository institutions by banking regulators; (c) publicly
available annual financial and management reports for financial institutions,
including audits by independent accountants; (d) the establishment of uniform
accounting standards by federal banking agencies; (e) the establishment of a
"prompt corrective action" system of regulatory supervision and intervention,
based on capitalization levels, with more scrutiny and restrictions placed on
depository institutions with lower levels of capital; (f) additional grounds
for the appointment of a conservator or receiver; (g) a requirement that the
FDIC use the least-cost method of resolving cases of troubled institutions in
order to keep the costs to insurance funds at a minimum; (h) more
comprehensive regulation and examination of foreign banks; (i) consumer
protection provisions including a Truth-in-Savings Act; (j) a requirement that
the FDIC establish a risk-based deposit insurance assessment system; (k)
restrictions or prohibitions on accepting brokered deposits, except for
institutions which significantly exceed minimum capital requirements; and (l)
certain additional limits on deposit insurance coverage.
A central feature of FDICIA is the requirement that the federal banking
agencies take "prompt corrective action" with respect to depository
institutions that do not meet minimum capital requirements. Pursuant to
FDICIA, the federal bank regulatory authorities have adopted regulations
setting forth a five-tiered system for measuring the capital adequacy of the
depository institutions that they supervise. Under these regulations, a
depository institution is classified in one of the following capital
categories: "well capitalized," "adequately capitalized," "undercapitalized,"
"significantly undercapitalized," and "critically undercapitalized." A
depository institution is "well capitalized" if it has: (i) total risk-based
capital ratio or 10% or greater; (ii) a Tier 1 risk-based capital ratio of 6%
or greater; (iii) a leverage ratio of 5% or greater; and (iv) is not subject
to
38
<PAGE>
any order, regulatory agreement or written directive to meet and maintain a
specific capital level for any capital measure. An "adequately capitalized"
institution is defined as one that has: (a) a total risk-based capital ratio
of 8% or greater; (b) a Tier 1 capital ratio of 4% or greater; and (c) a
leverage ratio of 4% or greater (or 3% or greater in the case of a bank with a
composite CAMEL rating of 1). A depository institution is considered:
(i) "under-capitalized" if it has (a) a total risk-based capital ratio of less
than 8%; (b) a Tier 1 risk-based capital ratio of less than 4%; or (c) a
leverage ratio of less than 4% (or 3% in the case of an institution with a
CAMEL rating of 1); (ii) "significantly undercapitalized" if it has: (a) a
total risk-based capital ratio of less than 6%; (b) a Tier 1 risk-based
capital ratio of less than 3%; or (c) a leverage ratio of less than 3%; and
(iii) "critically undercapitalized" if it has a ratio of tangible equity to
total assets equal to or less than 2%. An institution may be deemed by
regulators to be in a capitalization category that is lower than is indicated
by its actual capital position if, among other things, it receives an
unsatisfactory examination rating with respect to asset quality, management,
earnings or liquidity.
FDICIA generally prohibits a depository institution from making any capital
distribution (including payment of a cash dividend) or paying any management
fees to its holding company if the depository institution would thereafter be
undercapitalized. Undercapitalized depository institutions are subject to
growth limitations and are required to submit capital restoration plans. The
federal banking agencies may not accept a capital plan without determining,
among other things, that the plan is based on realistic assumptions and is
likely to succeed in restoring the depository institution's capital. In
addition, for a capital restoration plan to be acceptable, the depository
institution's parent holding company must guarantee that the institution will
comply with such capital restoration plan. The aggregate liability of the
parent holding company in respect of any capital restoration plan is limited
to the lesser of: (a) an amount equal to 5% of the depository institution's
total assets at the time it became under capitalized; and (b) the amount which
is necessary (or would have been necessary) to bring the institution into
compliance with all capital standards applicable with respect to such
institution as of the time it fails to comply with the plan. If a depository
institution fails to submit an acceptable plan, it is treated as if it is
significantly undercapitalized.
Significantly undercapitalized depository institutions may be subject to a
number of other requirements and restrictions, including orders to sell
sufficient voting stock in order to become adequately capitalized,
requirements to reduce total assets and order to stop accepting deposits from
or correspondent banks. Critically undercapitalized institutions are subject
to the appointment of a receiver or conservator, generally within 90 days of
the date such institution is determined to be critically undercapitalized.
FDICIA also provides for increased funding of the FDIC insurance funds. The
FDIC has adopted final rules implementing, for assessment periods commencing
January 1, 1994, risk-based insurance premiums. Under the assessment system,
each depository institution is assigned to one of nine risk classifications
based upon certain capital and supervisory measures and, depending upon its
classification, will be assessed premiums ranging from .23% to .31% of
domestic deposits. In adopting the risk-based assessment system, the FDIC
indicated that, if future conditions so warrant, it may reconsider certain
aspects of the rate schedules and of the risk classification categories. In
addition, the FDIC has authority to impose special assessments from time to
time.
FDICIA provides the federal banking agencies with significantly expanded
powers to take enforcement action against institutions which fail to comply
with capital or other standards. Such action may include the termination of
deposit insurance or the appointment of a receiver or conservator for the
institution. FDICIA also limits the circumstances under which the FDIC is
permitted to provide financial assistance to an insured institution before
appointment of a conservator or receiver.
39
<PAGE>
JUNIATA ANNUAL MEETING
MATTERS FOR JUNIATA SHAREHOLDERS
ELECTION OF DIRECTORS OF JUNIATA
The Bylaws of Juniata provide that the Board of Directors may, from time to
time, fix the number of directors and their respective classifications. The
number of directors that shall constitute the whole Board of Directors shall
be not less than five nor more than 25. The Bylaws also provide that the Board
of Directors shall be classified into three classes as nearly equal in number
as possible, each class to be elected for a term of three years. Each class
shall be elected in a separate election. At each subsequent annual meeting of
Shareholders, successors to the class of directors whose term shall then
expire shall be elected to hold office for a term of three years, so that the
term of office of one class of directors shall expire in each year.
Nomination for elections to the Board of Directors may be made by the Board
of Directors or by any holder of the common stock of Juniata entitled to vote
at the election of directors. Nominations, other than those made by or on
behalf of the existing management of Juniata, shall be made in writing and
shall be delivered or mailed to the secretary of Juniata not less than 45 days
prior to the date of any meeting of shareholders called for the election of
directors. Such notification shall contain the following information to the
extent known by the notifying shareholder: (a) the name and address of each
proposed nominee; (b) the age of each proposed nominee; (c) the principal
occupation of each proposed nominee; (d) the number of shares of Juniata owned
by each proposed nominee; (e) the total number of shares that, to the
knowledge of the notifying shareholder, will be voted for each proposed
nominee; (f) the name and residence address of the notifying shareholder; and
(g) the number of shares of Juniata owned by the notifying shareholder. Any
nomination for director not made in accordance with the above procedure shall
be disregarded by the Chairman of the meeting, and votes cast for each such
nominee shall be disregarded by the Judge of Election.
It is the intention of the persons named in the Proxy to vote for the
election of the four individuals listed as Class B Directors to the class to
which said directors have been designated, to serve until the 2001 Annual
Meeting of Shareholders.
In absence of instructions to the contrary, proxies will be voted in favor
of the election of the management's nominees. In the event any nominee should
become unavailable, it is intended that the proxies will be voted for such
substitute nominee as may be nominated by management. Management has no
present knowledge that any of the nominees will be unavailable to serve.
Each nominee for the position of Class B Director is currently a director of
Juniata and JVB. All Class B Directors were elected directors of Juniata at
the 1995 Annual Meeting of Shareholders of Juniata.
40
<PAGE>
The following table sets forth the name and age of each nominee to each
class of the Board of Directors of Juniata, as well as the nominee's business
experience, including principal occupation for the past five years, the period
during which he has served as a director of Juniata, the Bank, and the number
and percentage of outstanding shares of common stock of Juniata beneficially
owned by said nominee as of the Juniata Record Date.
<TABLE>
<CAPTION>
BUSINESS EXPERIENCE AMOUNT AND
INCLUDING PRINCIPAL NATURE OF PERCENTAGE OF
OCCUPATION FOR THE DIRECTOR BENEFICIAL OUTSTANDING
NAME AND AGE PAST FIVE YEARS SINCE(1) OWNERSHIP(2) STOCK OWNED
- ------------ ------------------- -------- ------------ -------------
<S> <C> <C> <C> <C>
CLASS B DIRECTORS TO BE ELECTED FOR A THREE-YEAR TERM ENDING IN 2001.
Harry B. Fairman, Jr. President of Hilltop Oil, Inc. 1983 4,737 .34%
Age 70 Mifflintown, PA
Don E. Haubert President, Haubert Homes, Inc., 1975 11,558 .83%
Age 58 Mifflintown, PA
John A. Renninger President of A.D. Renninger Lumber Co. 1979 10,020 .72%
Age 61 Richfield, PA
Ronald H. Witherite Owner, Ron's IGA Fruit Market, Inc. 1992 1,085 .07%
Age 60 Reedsville, PA
CLASS A DIRECTORS TO CONTINUE IN OFFICE TO 2000.
A. Jerome Cook President and CEO of The Juniata Valley Bank 1976 4,767 .34%
Age 57 and Juniata Valley Financial Corp.
Martin L. Dreibelbis Self-employed Petroleum Consultant 1998 2,026 .14%
Age 45
Karl E. Guss Funeral Director with Guss Funeral, Home, 1974 15,480 1.11%
Age 70 Mifflintown, PA
CLASS C DIRECTORS TO CONTINUE IN OFFICE TO 1999.
Joe E. Benner Owner, Benner Automotive 1996 3,617 .25%
Age 59
Dale G. Nace Owner, Glenn Nace Plumbing & Heating; 1992 1,663 .12%
Age 53 GlenDale Storage, Millerstown, PA
Edward R. Rhodes Retired Partner E. R. Rhodes & Son 1992 1,410 .10%
Age 69 Lewistown, PA
Harold B. Shearer Self-Employed Farmer 1988 4,068 .29%
Age 62 East Waterford, PA
</TABLE>
- --------
(1) Includes period prior to the formation of Juniata (1983) during which
named person served as director of the Bank. Each director of Juniata also
serves as a director of the Bank.
(2) The securities "beneficially owned" by an individual are determined in
accordance with the definition of "beneficial ownership" set forth in the
regulations of the Securities and Exchange Commission. Accordingly, they
may include securities owned by or for, among others, the wife and/or
minor children of the individual and any other relative who has the same
home as such individual, as well as other securities as to which the
individual has or shares voting or investment power or has the right to
acquire under outstanding stock options within 60 days after April 20,
1998. Beneficial ownership may be disclaimed as to certain of the
securities.
41
<PAGE>
The following are all shares owned beneficially by all directors and
principal officers as a group:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
----------------------
TITLE OF CLASS DIRECT INDIRECT PERCENTAGE
-------------- ---------- ----------- ----------
<S> <C> <C> <C>
Common................... 59,115 2,897 4.47%
</TABLE>
MANAGEMENT OF JUNIATA AND JVB
BOARD OF DIRECTORS
The Board of Directors of Juniata and the Bank are identical. The Board of
Directors of Juniata has not appointed any committees as of this date. Juniata
has utilized the Bank's committees.
EXECUTIVE OFFICERS
The following table sets forth the executive officers of Juniata, their
ages, their positions with Juniata and the beneficial ownership (as determined
in accordance with the rules and regulations of the Securities and Exchange
Commission) of Juniata Common Stock by each of such persons. Share information
is stated as of April 20, 1998.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENTAGE OF
BENEFICIAL OUTSTANDING
NAME AND AGE TITLE OWNERSHIP STOCK
------------ ----- ---------- -------------
<S> <C> <C> <C>
A. Jerome Cook President and CEO of Juniata and JVB 4,767 .34%
Age 57
</TABLE>
BOARD PERSONNEL COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Juniata does not have a Compensation Committee. The Board of Directors has
delegated to the Personnel Committee initial review and recommendations for
executive compensation. Recommendations of the Personnel Committee are
reviewed and ratified by the full Board of Directors.
Executive compensation is designed to provide a level of salary competitive
with that offered by other similar regional bank holding companies and banks.
To that end, the Personnel Committee reviews the results of several salary and
compensation surveys. At the present time, there is no relationship between
executive compensation and Juniata's corporate performance. Rather, the
process of determining executive compensation is primarily subjective and not
based on quantifiable data.
Executive officers of Juniata participate in the same two bonus programs in
which all employees of Juniata participate. These programs pay modest bonuses;
one is paid at year end and the other after Juniata's return on assets is
calculated.
Mr. Cook, as President and Chief Executive Officer of Juniata, receives a
salary determined by the Personnel Committee in the manner described above. In
addition, he participates in the same bonus programs which are applicable to
all employees. Mr. Cook's total compensation is disclosed in the Summary
Compensation Table set forth below on Page 42.
Juniata offers no special incentive programs for its executive officers.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Members of the Personnel Committee are Harry Fairman, John Renninger, Edward
Rhodes, and Ronald Witherite. None of these committee members have been
officers or employees of Juniata or the Bank at any time, and none had any
relationship with Juniata or the Bank requiring specific disclosure under
applicable Securities and Exchange Commission regulations.
This report is given over the signatures of the Personnel Committee,
consisting of Harry Fairman, John Renninger, Edward Rhodes, and Ronald
Witherite.
42
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph sets forth the yearly percentage change in Juniata's
cumulative total shareholder return on its common stock from December 31, 1993
to December 31, 1997. This percentage change is measured by dividing (i) the
sum of (A) the cumulative amount of dividends for the period measured,
assuming dividend reinvestment and (B) the difference between Juniata's share
price at December 31, 1997 and December 31, 1993 by (ii) the share price of
December 31, 1993. This result, on the following performance graph, is
compared with the NASDAQ Market Index and the MG Industry Group 042-Middle
Atlantic Banks:
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG JUNIATA VALLEY FINANCIAL CORP.,
NASDAQ MARKET INDEX AND MG GROUP INDEX
JUNIATA VALLEY
DATE FINANCIAL CORP. INDUSTRY INDEX BROAD MARKET
- ---- --------------- -------------- ------------
1992 100 100 100
1993 130.95 124.23 119.95
1994 154.82 117.94 125.94
1995 194.18 179.1 163.35
1996 226.26 253.66 202.99
1997 262.76 375.28 248.3
ASSUMES $100 INVESTED ON JAN. 1, 1993
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DEC. 31, 1997
43
<PAGE>
REMUNERATION OF EXECUTIVE OFFICERS
The following Summary Compensation Table sets forth the remuneration of the
executive officer of Juniata (as defined in applicable securities
regulations), and the annual salary and other compensation of that officer for
the preceding three years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
----------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
---------------------------------- ------------------------- --------------
SECURITIES
OTHER ANNUAL RESTRICTED UNDERLYING ALL OTHER
NAME AND COMPEN- STOCK OPTIONS/ LTIP COMPEN-
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) SATION(1) ($) AWARDS(2) ($) SARS(3) (#) PAYOUTS(4) ($) SATION(5) ($)
- ------------------ ---- ---------- --------- ------------- ------------- ----------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
A. Jerome Cook 1997 123,392 1,185 -- -- -- -- 37,204
Chairman & CEO 1996 119,500 1,175 -- -- -- -- 23,005
1995 116,423 1,175 -- -- -- -- 21,795
</TABLE>
- --------
(1) The aggregate of personal benefits provided by Juniata and JVB for any
executive officer, individually or all executive officers as a group did
not exceed the lesser of (i) $50,000 or (ii) 10% of the salary and bonus
of the officer for any of the years referenced. This does not include
benefits that are available to all salaried officers, directors and
employees on a non-discriminatory basis.
(2) Juniata has not issued any Restricted Stock Awards to any executive
officer.
(3) Juniata has not issued any options or SARs to any Executive Officer.
(4) Juniata does not maintain any Long-Term Incentive Plan as defined in the
applicable Securities and Exchange Commission Regulations, and
consequently has made no payouts pursuant to any such plan.
(5) Mr. Cook received $7,800 in 1997, $7,800 in 1996, and $7,500 in 1995 as
compensation for serving as a director of Juniata and JVB. Mr. Cook has
elected to defer a portion of this compensation in the manner described
below under "Director's Compensation." Mr. Cook participated in the
Officer's Supplemental Retirement Plan, also described below. Accruals to
Mr. Cook's account under this Plan were $29,000 in 1997, $15,000 in 1996,
and $13,000 in 1995. Finally, Mr. Cook participated in the Director's
Retirement Plan described below. Accruals to Mr. Cook's account under this
plan were $5,012 in 1997, $1,010 in 1996, and $947 in 1995. Mr. Cook is
provided with the use of an automobile; the compensation element of this
automobile aggregated $404 in 1997, $505 in 1996, and $348 in 1995.
EMPLOYMENT AGREEMENT
In 1995, Juniata and JVB entered into a deferred compensation agreement with
A. Jerome Cook. The agreement provides that Juniata and JVB shall, if Mr.
Cook's employment is terminated without cause, or, if Mr. Cook's employment
with Juniata and JVB is terminated by either Mr. Cook, Juniata or JVB within a
period commencing six months before or nine months after a change in control
of Juniata and JVB, pay Mr. Cook severance compensation equal to 2.95 times
Mr. Cook's average annual compensation over the five taxable years immediately
preceding the termination of Mr. Cook's employment with Juniata and JVB. The
agreement shall expire when Mr. Cook retires.
44
<PAGE>
STOCK OPTION GRANTS
Applicable Securities and Exchange Commission regulations require disclosure
of Stock Option grants to executive employees. Juniata maintains no stock
option plans and the following table indicates that no such options have been
granted:
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
INDIVIDUAL GRANTS VALUE AT
--------------------------------------- ASSUMED ANNUAL
% OF TOTAL ALTERNATIVE
NUMBER OF OPTIONS/ RATES OF STOCK
SECURITIES SARS PRICE
UNDERLYING GRANTED TO EXERCISE APPRECIATION
OPTIONS/ EMPLOYEES OR BASE EXPIRA- FOR OPTION
SARS IN FISCAL PRICE TION TERM
NAME GRANTED (#) YEAR ($/SH) DATE 5% ($) 10% ($)
---- ----------- ---------- -------- ------------- -------
<S> <C> <C> <C> <C> <C> <C>
A. Jerome Cook 0 0% $0 0 $0 $0
</TABLE>
INCENTIVE STOCK OPTION GRANTS
IN LAST FISCAL YEAR
PENSION PLAN
Juniata and JVB maintain a pension plan for employees of Juniata and JVB.
The aggregate amount set aside or accrued as of December 31, 1997, for all
pension or retirement benefits to be paid under existing plan for all plan
participants was $102,503, an amount equal to 4.74% of the total covered
compensation of all plan participants. All employees with 12 months'
continuous service who have attained the age of 21 years (except those paid
hourly who work less than 1,000 hours per year) are eligible to participate.
The cost of the pension, which is actuarially determined, is paid by Juniata
and JVB. The amount of the contribution or accrual with respect to a specified
pension is not and cannot readily be separated or individually calculated by
the regular actuaries for the Plan. The formula used to determine an
employee's monthly pension income is 1% of the employee's average monthly
compensation for the Plan year multiplied by his or her years of Benefit
Formula Service, not to exceed 99 years. Early retirement is possible with
reduced benefits provided the employee has attained the age of 55 years and
has completed 20 years of service. Average monthly earnings are calculated
from the employee's highest five consecutive years of earnings and exclude
directors' fees, whether paid in cash or deferred.
The amount shown on the following table assumes the retirement of an
employee who chose a straight life annuity, who is presently 50 years old and
who will retire at the age of 65 years.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
---------------------------------------------------------------
REMUNERATION 15 20 25 30 35
------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
75,000 $13,594 $18,125 $22,656 $27,187 $31,718
95,000 $18,674 $24,900 $31,125 $37,349 $43,574
115,000 $23,794 $31,725 $39,656 $47,587 $55,518
135,000 $28,894 $38,525 $48,156 $57,787 $67,418
145,000 $31,444 $41,925 $52,406 $62,887 $73,368
155,000 $32,700 $43,600 $54,500 $65,400 $76,300
</TABLE>
As of December 31, 1997, A. Jerome Cook had 32 years of credited service
under the Pension Plan.
45
<PAGE>
OFFICER'S SUPPLEMENTAL RETIREMENT PLAN
In December, 1988, JVB established a supplemental retirement plan for
certain key executive employees (the "Officer's Plan"). The Officer's Plan
provides for a target annual retirement benefit, payable over 10 years
beginning at age 65, in an amount equal to 40% of the employee's 1988
compensation. The retirement benefit will accrue to the account of each
participating employee, commencing in 1989, over his working years with JVB
until he attains the age of 65. The Plan is dependent on annual funding which
is subject to approval by the Board of Directors. If the Board terminates the
Plan or declines to make a contribution in any year, participants will receive
only such benefits as have accrued, even if less than the targeted benefits.
A lesser retirement benefit, equal to the employee's accrued benefit to date
of retirement, is payable if the employee retires on or after attainment of
the age of 62, provided that he has completed 15 years of service. If the
Board of Directors approves, receipt of benefits on early retirement may
commence, but the benefit will be the then actuarial equivalent of the accrued
retirement benefit.
The plan also provides for a disability pension in an amount equal to the
employee's accrued retirement benefit on the date of disability. This pension
is payable over a 10-year period, commencing when the employee attains the age
of 65. However, payment may be accelerated with approval of the Board; in such
event, the actuarial equivalent of the benefit will be paid.
If a participant in the plan dies while employed by JVB, a death benefit is
payable. The amount of the benefit depends on whether JVB has purchased
insurance on the life of the participant. The death benefit is equal to the
proceeds of the policy if JVB has purchased insurance, and the equivalent of
the participant's accrued retirement benefit if life insurance has not been
purchased.
OFFICERS' SALARY CONTINUATION PLAN
In September of 1997, JVB implemented a non-qualified executive benefit plan
(the "Salary Continuation Plan"), for the benefit of certain key executive
employees, in which JVB agrees to pay the executive additional benefits in the
future, usually at retirement, in return for continued satisfactory
performance by the executive. Unlike a 401(k) plan or a pension plan, the
Salary Continuation Plan is a non-qualified plan. Thus, JVB can selectively
reward certain key executives without regard to the non-discrimination and
reporting requirements of qualified plans. The Salary Continuation Plan is
also an unfunded plan which means there are no specific assets set aside by
JVB in connection with the establishment of the plan.
The Salary Continuation Plan is embodied in a written agreement between JVB
and the executives selected to participate in the plan. The executive has no
rights under the agreement beyond those of a general creditor of JVB. The
agreement includes provisions which indicate the benefits to be provided at
retirement (age 65) or in the event of death, disability or termination of
employment prior to retirement.
Upon normal retirement (age 65) the executive is entitled to annual
benefits, in an amount established by the Board of Directors, for a period of
fifteen (15) years. The benefits are also payable upon death, disability or
termination of employment prior to retirement. Estimated liability under the
agreement is accrued as earned by the employee. JVB has purchased life
insurance policies on each officer, designed to off-set JVB's contractual
obligation to pay pre-retirement death benefits and to recover JVB's costs of
providing benefits. The officer is the insured person under the policy, and
JVB is the owner and the beneficiary. The insured officer has no claim on the
insurance policy, its cash value or the proceeds thereof. While the insurance
contract and the Salary Continuation Plan agreement are executed at the same
time, there is no direct linkage between the two.
DIRECTORS' COMPENSATION
Subject to the right of a director to defer the payment of directors' fees
in accordance with the directors' compensation plan set forth below, each
director is paid an annual fee of $7,800 for attendance at 12 regular meetings
of the Board of Directors of JVB. Each director who is not an executive
officer also receives $70 for
46
<PAGE>
attendance of each committee meeting of JVB and special meeting of the Board
of Directors of JVB. Juniata directors receive no fees in addition to those
received from JVB.
DIRECTOR'S DEFERRED COMPENSATION PLANS
In 1982, Juniata established a director's deferred compensation plan. This
plan permitted participating directors to defer $3,700 in director's fees each
year for a five year period commencing with the election to participate in the
plan in return for an undertaking by Juniata to pay each participating
director a specified amount in 120 equal payments beginning at the last to
occur of the attainment of the age of 65 or the expiration of five years from
the date of the director's election to participate in the plan, or if the
director were to die prior to such time, upon the death of the director.
Juniata applied the deferred director's compensation to the purchase of life
insurance policies which will fund Juniata's obligations under the plan.
Juniata is the owner and the beneficiary of these life insurance policies.
In 1987, when the first director's deferred compensation plan was fully
funded, Juniata offered directors a second deferred compensation plan whereby
each director could elect to defer $4,900 in directors fees each year for five
years in exchange for an additional benefit similar to that offered under the
1982 plan. In 1991, when the second plan was funded, Juniata offered a third
deferred compensation plan to directors whereby they may elect to defer $6,000
in director's fees each year for five years in order to receive an additional
benefit similar to that offered under the 1982 and 1987 plans. All three plans
operate in substantially the same manner and all are funded by insurance
policies as described above. Juniata has no plans to offer any additional
deferred compensation plans to its directors. The above-referenced plans will
continue in effect.
DIRECTOR'S RETIREMENT PLAN
In December, 1988, JVB established a retirement program for directors (the
"Director's Plan"). All persons who were directors of JVB on January 1, 1988,
are eligible for benefits under the Plan. All directors whose service
commenced after January 1, 1988, are eligible following the completion of six
months of service on the Board. The Director's Plan provides for a target
retirement benefit of $7,800 per year for 10 years commencing at age 65, or,
if later, at such time as the director has completed 10 years of credited
service (as defined in the Director's Plan) with the Board. The retirement
benefit for each director will accrue over his remaining projected period of
service until he reaches age 65 or completes 10 years of credited service. The
Plan is dependent on annual funding which is subject to approval by the Board
of Directors. If the Board terminates the Plan or declines to make a
contribution in any year, directors will receive only such benefits as have
accrued, even if less than the targeted benefits. Lesser benefits are payable
in the event of the director's death, disability, or other termination (except
terminations caused by the director's fraud or dishonesty).
TRANSACTIONS WITH OFFICERS AND DIRECTORS
During 1997, JVB had and expects to have in the future banking transactions
in the ordinary course of its business with directors, officers, principal
shareholders and their associates of Juniata and JVB, on the same terms,
including interest rates and collateral on loans as those prevailing at the
same time for comparable transactions with others. Such loans present, in the
opinion of management, no more than the normal risk of collectibility or
present other unfavorable features. During 1997, the highest aggregate amount
of extensions of credit to directors, officers and their associates either
directly or indirectly, did not exceed 20% of equity capital. Also during
1997, extension of credit to any one director, officer, or principal
shareholder did not exceed 10% of equity capital.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the directors
and executive officers of Juniata to file with the Securities and Exchange
Commission initial reports of ownership and reports of change in
47
<PAGE>
ownership of common stock and other equity securities of Juniata. To the
knowledge of Juniata, all Section 16(a) filing requirements applicable to its
directors and executive officers have been complied with in 1997.
COMMITTEES OF THE BOARD OF DIRECTORS OF JVB
The Board of Directors of Juniata has not established its own committees but
rather utilizes the committees of JVB.
The total number of Board of Directors' meetings during 1997 was 13 and no
director attended fewer than 75% of the aggregate total number of meetings of
the Board of Directors and the total number of meetings held by all committees
of the Board on which he served.
AUDIT COMMITTEE
Members of the Audit Committee were Karl E. Guss, Dale Nace and Edward
Rhodes. This Committee met three times during 1997. The Audit Committee causes
to be made by certified public accountants a complete audit of the books and
financial statements of Juniata. Upon receipt and review of the internal
auditor's report and certified public accountants audit report, the Committee
brings to the Board of Directors the Committee's recommendations concerning
the audit. The Committee also reviews any examination reports by the
Department of Banking, Federal Deposit Insurance Corporation and The Federal
Reserve Bank of Philadelphia.
TRUST COMMITTEE
Members of the Trust Committee were Joe Benner, Harold Shearer, and Ronald
Witherite. This Committee met 11 times during 1997. The Trust Committee
determines the policy and investments of the Trust Department, the acceptance
of all fiduciary relationships and relinquishment of all fiduciary
relationships. The Trust Committee keeps minutes of their meetings which are
reviewed by the Board of Directors monthly.
PERSONNEL COMMITTEE
Members of the Personnel Committee were John Renninger, Edward Rhodes, and
Ronald Witherite. This Committee met once during 1997. The Personnel Committee
reviews all personnel policies, including compensation of all employees.
OTHER COMMITTEES OF JVB
There is no nominating committee but there are other standing committees
which are appointed from time to time by the Chairman of the Board of
Directors subject to the approval of the Board. Examples of some of the
committees are Policy, Consumer, Marketing, Buildings and Grounds, Pension and
Finance.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors of Juniata has engaged Beard & Company, Inc.,
Reading, Pennsylvania, as independent accountant for Juniata and JVB to audit
its financial statements for the year 1997. This firm has no material
relationship with Juniata or JVB and is considered to be well qualified. A
representative of the firm is expected to be at the Annual Meeting of
Shareholders.
YEAR 2000 COMPLIANCE
Juniata has conducted a comprehensive review of Juniata's and JVB's computer
systems to identify the systems that could be affected by the year 2000 issues
and is developing an implementation plan to resolve any possible issues. The
year 2000 problem is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of Juniata's or
JVB's programs that have time-sensitive software could recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a major
system
48
<PAGE>
failure. Financial institutions, such as JVB, are in a unique situation in
that time-deposits and loans for a number of years have had maturity dates
into the future well beyond the year 2000.
Juniata and JVB use two major software vendors for their data processing.
Letters of certification have been obtained assuring that they will be year
2000 compliant in 1998 and testing can be performed by the fall of 1998 and
into 1999. Because of Juniata's and JVB's data processing being out-sourced,
any costs associated with the year 2000 compliance will be shared with the two
data processing vendors. To date, one of these vendors has informed Juniata
and JVB that the cost to be passed through to JVB will be $25,000. The other
vendor has not yet given Juniata or JVB an estimated cost. However, Juniata
does not expect the total costs from both vendors to exceed $100,000. Juniata
will continuously monitor this year 2000 compliance situation, and all related
costs, and provide updates in its quarterly reports. In any event, management
does not feel that the possible costs of year 2000 compliance will materially
impact the results of operations of Juniata or JVB in 1998 or 1999.
FORM 10-K ANNUAL REPORT
Securities and Exchange Commission Form 10-K Annual Report is available free
of charge. If you desire a copy of this report, forward your request to:
Ms. Linda L. Engle
Sr. Vice President/CFO
The Juniata Valley Bank
P.O. Box 66
Mifflintown, PA 17059
COMPARISON OF SHAREHOLDERS' RIGHTS
INTRODUCTION
Upon consummation of the Merger, holders of Lewistown Common Stock, whose
rights presently are governed by the PBC and Lewistown articles of association
(the "Lewistown Articles") and bylaws (the "Lewistown Bylaws"), will become
shareholders of Juniata Common Stock. Accordingly, their rights will be
governed by the Bank Holding Company Act of 1956, as amended (the "BHCA"), the
BCL and Juniata's articles of incorporation (the "Juniata Articles") and
bylaws (the "Juniata Bylaws"). Certain differences arise from differences
between the Lewistown and Juniata Articles and Bylaws, as well as from
differences in treatment under the PBC, the BHCA and the BCL. The following
discussion is not intended to be a complete statement of all differences
affecting the rights of shareholders, but summarizes material differences and
is qualified in its entirety by reference to applicable national laws,
Pennsylvania corporate and banking laws and the articles of incorporation and
bylaws of Lewistown and Juniata.
DIVIDENDS
Lewistown
The ability of Lewistown to pay dividends is governed by the PBC and the
regulations of the PDOB thereunder. See "REGULATORY MATTERS--Payment of
Dividends" for a general discussion.
Juniata
The ability of Juniata to pay dividends is governed by the BCL and certain
other statutory and regulatory limitations applicable to bank holding
companies. See "REGULATORY MATTERS--Payment of Dividends" for a general
discussion.
49
<PAGE>
VOTING RIGHTS GENERALLY
Lewistown
With respect to all matters on which shareholders are entitled to vote,
shareholders of Lewistown Common Stock are entitled to one vote per share.
Pursuant to the PBC and the Lewistown Articles and Bylaws, shareholders of
Lewistown have cumulative voting rights in the election of directors.
Accordingly, in such elections, each shareholder of Lewistown is entitled to
as many votes as shall equal the number of shares owned, multiplied by the
number of directors to be elected, and may cast all such votes for a single
nominee or may distribute them among two or more nominees.
Except in cases where by law a larger vote is required (i.e., the Merger),
any action to be taken by vote of the Lewistown shareholders shall be
authorized upon receipt of the affirmative vote of a majority of the shares of
Lewistown Common Stock represented and entitled to vote at a shareholders'
meeting.
Juniata
With respect to all matters on which shareholders are entitled to vote,
holders of shares of Juniata Common Stock are entitled to one vote per share.
According to the BCL, shareholders do not have a right to cumulate their votes
for directors unless the articles of incorporation so provide. The Juniata
Articles provide that no cumulative voting shall exist. As required by Section
1722 of the BCL, members of the Juniata Board of Directors do not have to
consist of Juniata shareholders. The election of the Board may be accomplished
by the affirmative vote of a majority of the shares of Juniata Common Stock
represented and entitled to vote at a shareholders' meeting. The amendment of
certain articles of the Juniata Articles, or the authorization of any Business
Combination (as that term is defined in the Juniata Articles)) may only be
accomplished by the affirmative vote of at least 85%, and certain transactions
which are not defined as "Business Combinations" (i.e. the Merger) will
require the affirmative vote of at least 75%, of the votes which all
shareholders are entitled to cast thereon; provided, however, that if 66 2/3%
of the entire Board of Directors of Juniata recommends approval of any such
action, the action will be authorized if there are cast in its favor at least
66 2/3% of the votes which all shareholders are entitled to cast thereon.
CLASSIFIED BOARD OF DIRECTORS
Lewistown
The Lewistown Bylaws provide that the Board of Directors of Lewistown be
divided into three classes of directors as nearly equal in number as possible.
At each annual meeting of shareholders, one class of directors is elected for
a three-year term. Classification of directors has the effect of making it
more difficult for shareholders to change the composition of the board of
directors. At least two annual meetings of shareholders, instead of one, will
generally be required to effect a change in the majority of the Board of
Directors of Lewistown.
Juniata
The BCL permits a corporation's board of directors to be divided into
various classes serving staggered terms of office. The Juniata Bylaws provide
that the Board of Directors of Juniata be divided into three classes of
directors as nearly equal in number as possible. At each annual meeting of
shareholders, one class of directors is elected for a three-year term.
Classification of directors has the effect of making it more difficult for
shareholders to change the composition of the board of directors. At least two
annual meetings of shareholders, instead of one, will generally be required to
effect a change in the majority of the Board of Directors of Juniata. Such
classification provisions could also have the effect of discouraging a third
party from initiating a proxy contest, making a tender offer or otherwise
attempting to obtain control of Juniata.
50
<PAGE>
NUMBER OF DIRECTORS; TERM
Lewistown
In accordance with the PBC, the Lewistown Bylaws establish the number of
directors to be no less than five and no more than twenty-five. The exact
number of members of the Board of Directors of Lewistown is determined by the
affirmative vote of a majority of the shareholders entitled to vote. A
majority of the Directors may increase the number of Directors in a class by
not more than two (2), in any period between annual meetings of shareholders.
Currently, there are 9 persons serving on Lewistown Board of Directors. The
term of office for each director is three years with the term of office of at
least one class expiring each year.
Juniata
The Juniata Bylaws establish the number of directors to be no less than five
and no more than twenty-five. The exact number of members of the Board of
Directors of Juniata is determined by the Board of Directors of Juniata. The
term of office for each director is three years with the term of office of at
least one class expiring each year.
REMOVAL OF DIRECTORS
Lewistown
The PBC provides that the entire board of directors, or an individual
directors, may be removed, without cause, by the vote of shareholders entitled
to cast at least a majority of the votes which all shareholders would be
entitled to cast at an annual election of directors. If, in the case of an
individual director, votes of a sufficient number of shares, which if
cumulatively voted at an annual election would be enough to elect one or more
directors, are cast against the resolution for removal, that director shall
not be removed.
Juniata
The BCL provides generally that, unless otherwise provided in the Bylaws,
shareholders may remove one or more directors with or without cause. However,
the BCL also provides, with respect to corporations with a classified board of
directors, such as Juniata, directors may only be removed by shareholders for
cause, unless the Articles provide otherwise. Neither the Juniata Articles nor
Bylaws provide otherwise for the removal of directors.
QUALIFICATIONS OF DIRECTORS
Lewistown
The Lewistown Bylaws require Lewistown directors to be: (i) shareholders of
Lewistown, (ii) at least 21 years of age and (iii) under 72 years of age on or
before the thirtieth day prior to election (except those directors elected
prior to 1972).
Juniata
The Juniata Bylaws and the BCL provide that a director must be a natural
person of full age. However, neither the Juniata Bylaws nor the BCL require
that a director be a resident of Pennsylvania or a shareholder of the
corporation. Additionally, the Juniata Bylaws limit the age of the
corporation's directors to 72, except those directors who were directors of
JVB prior to 1970.
FILLING VACANCIES ON THE BOARD OF DIRECTORS
Both the Lewistown Bylaws and the Juniata Bylaws provide that vacancies
occurring on the board of directors, including vacancies resulting from an
increase in the number of directors, may be filled by the
51
<PAGE>
affirmative vote of a majority of the remaining directors even if the number
of remaining directors constitutes less than a quorum. Any director so chosen
shall have a term of office continuing until term of office for that
particular class of directors expires and the next election for that class of
directors takes place.
CALL OF SPECIAL SHAREHOLDERS' MEETINGS
Lewistown
Special meetings of the shareholders of Lewistown may be called by: (a) the
President, (b) the Board of Directors; or (c) the request of shareholders
owning, in the aggregate, not less than one-fifth ( 1/5) of the shares of
Lewistown entitled to vote at the particular meeting.
Juniata
Special meetings of the shareholders of Juniata may be called by: (a) the
President; (b) the Chairman of the Board of Directors; (c) a majority of the
Board of Directors; or (d) shareholders entitled to cast at least one-fifth (
1/5) of the votes which all shareholders are entitled to cast at any
particular meeting. Such meeting shall be called by the Secretary no later
than ten days and no more than sixty days following the request for such
meeting.
NOTICE OF SHAREHOLDERS' MEETINGS
Lewistown
Notice of a Lewistown shareholders' meeting must be delivered at least ten
(10) days in advance of any shareholders meeting. Such notice must contain the
time, place and purpose of the meeting.
Juniata
Notice of a Juniata shareholders' meeting must be delivered at least five
days in advance of the scheduled meeting. Such notice must contain the time,
place, day and purpose of the meeting.
QUORUM REQUIREMENTS AND ADJOURNMENT OF MEETINGS
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares entitled to vote at a meeting constitutes a quorum for both
a Lewistown shareholders' meeting and a Juniata shareholders' meeting.
Shareholders present at a duly convened Lewistown or Juniata meeting may
continue to transact business until adjournment, notwithstanding the
withdrawal of enough shareholders to leave less than a quorum. In the case of
a Lewistown or Juniata meeting called for the election of directors, such
meeting may be adjourned for any period not exceeding fifteen days. Those
Lewistown or Juniata shareholders who attend the meeting which had previously
been adjourned shall, even if they are less than a quorum, constitute a quorum
for the purpose of electing directors, but for no other purpose.
If a quorum is not present at a Lewistown or a Juniata shareholders meeting,
no business may be transacted except to adjourn to a future time.
DISSENTERS RIGHTS
Lewistown
Under the PBC, shareholders are generally entitled to the same dissenters'
rights as provided under the BCL. The BCL provides that shareholders are
generally entitled to dissent from, and demand payment of the fair value of
their shares in connection with, a plan of merger, consolidation, share
exchange, asset transfer or division.
52
<PAGE>
Juniata
Under the BCL, shareholders are generally entitled to dissent from, and
demand payment of the fair value of their shares in connection with, a plan of
merger, consolidation, share exchange, asset transfer or division.
Additionally, Subchapter 25E of the BCL, which applies to Juniata, provides
shareholders of a registered corporation remedies similar to dissenters rights
where a person or group acquires 20% or more of the voting shares of the
registered corporation.
LIMITATIONS ON DIRECTORS' LIABILITY
Both the Lewistown Bylaws and the Juniata Bylaws provide that directors
shall not be personally liable to the corporation or its shareholders for
monetary damages for any action taken, or any failure to take any action,
unless the director has breached or failed to perform the duties of his or her
office under applicable Pennsylvania law and the breach or failure to perform
constitutes self-dealing, willful misconduct or recklessness. These
provisions, however, do not apply to the responsibility or liability of a
director for the payment of taxes pursuant to local, state or federal law.
INDEMNIFICATION
Lewistown
Lewistown provides in its bylaws for the indemnification of directors,
officers and employees for expenses reasonably incurred in actions to which
the directors, officers or employees are parties or potential parties by
reason of the performance of their official duties.
Juniata
Sections 1741 and 1742 of the BCL generally provide that a corporation may
indemnify directors and officers against liabilities they may incur as such,
provided that the particular person acted in good faith and in a manner he or
she reasonably believed to be in, or not opposed to, the best interests of the
corporation, and, with respect to any criminal proceeding, had no reasonable
cause to believe his or her conduct was unlawful. In the case of actions
against a director or officer by or in the right of the corporation, the power
to indemnify extends only to expenses (not judgments and amounts paid in
settlement) and such power generally does not exist if the person otherwise
entitled to indemnification shall have been adjudged to be liable to the
corporation unless it is judicially determined that, despite the adjudication
of liability but in view of all the circumstances of the case, the person is
fairly and reasonably entitled to indemnification for specified expenses.
Section 1743 of the BCL also requires a corporation to indemnify
representatives of the corporation against expenses they may incur in
defending actions against them in such capacities if they are successful on
the merits or otherwise in the defense of such actions.
Section 1746 of the BCL also grants a corporation broad authority to
indemnify its directors, officers and other agents for liabilities and
expenses incurred in such capacity, except in circumstances where the act or
failure to act giving rise to the claim for indemnification is determined by a
court to have constituted willful misconduct or recklessness. Pursuant to the
authority of Section 1746 of the BCL, the Juniata Bylaws provide for
indemnification of directors, officers and other agents of the corporation to
the extent otherwise permitted by Section 1741 of the BCL and also in certain
circumstances not otherwise permitted by Sections 1741 and 1742 of the BCL.
Lewistown and Juniata
Specifically, both the Lewistown and Juniata Bylaws provide indemnification
for any director, officer or employee, or any former director, officer or
employee, who was or is a party to, or is threatened to be made a party to, or
who is called as a witness in connection with any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of
53
<PAGE>
Lewistown or Juniata) by reason of the fact that such person is or was a
director, officer or employee of Lewistown or Juniata, or is or was serving at
the request of Juniata as a director, officer, employee or agent of another
bank, partnership, joint venture, trust or other enterprise, against expenses
(including attorney's fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or her in connection with such action,
suit or proceeding if he or she acted in good faith and in a manner he or she
reasonably believed to be in, or not opposed to, the best interests of
Lewistown or Juniata, as the case may be, and with respect to any criminal
action or proceeding, had no reasonable cause to believe his or her conduct
was unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction or upon a plea of nolo contendere or its
equivalent, shall not of itself create a presumption that the person did not
act in good faith and in a manner which he or she reasonably believed to be
in, or not opposed to, the best interests of Lewistown or Juniata, and, with
respect to any criminal action or proceeding, had reasonable cause to believe
that his or her conduct was unlawful.
In addition, both the Lewistown and Juniata Bylaws provide indemnification
for any officer, director or employee, present or former, who was or is a
party to, or is threatened to be made a party to, or who is called as a
witness in connection with any threatened, pending or completed action, suit
or proceeding, by or in the right of Lewistown or Juniata, as the case may be,
to procure a judgment in its favor by reason of the fact that such person is
or was a director, officer or employee of Lewistown or Juniata, or is or was
serving at the request of Lewistown or Juniata as a director, officer,
employee or agent of another bank, partnership, joint venture, trust or other
enterprise, against amounts paid in settlement and expenses (including
attorney's fees), actually and reasonably incurred by him or her in connection
with the defense or settlement of, or serving as a witness in, such action or
suit if he or she acted in good faith and in a manner he or she reasonably
believed to be in, or not opposed to, the best interests of Lewistown or
Juniata, and except that no indemnification shall be made in respect of any
such claim, issue or matter as to which such person shall have been adjudged
to be liable for misconduct in the performance of his or her duty to Lewistown
or Juniata, as the case may be.
Except as may be otherwise ordered by a court, there shall be a presumption
that any director, officer or employee of Lewistown or Juniata is entitled to
indemnification as provided by their respective Bylaws, unless either a
majority of the members of the Board who are not involved in such proceedings
("disinterested directors") or, if there are less than three disinterested
directors, then the holders of one-third of the outstanding shares of
Lewistown or Juniata determine that the person is not entitled to such
presumption by certifying such determination in writing to the Secretary of
Lewistown or Juniata, as appropriate. In such event the disinterested
director(s) or, in the event of certification by shareholders, the Secretary
of Lewistown or Juniata, shall request of independent counsel, who may be the
outside general counsel of Lewistown or Juniata, as appropriate, a written
opinion as to whether or not the parties involved are entitled to
indemnification under the Lewistown or Juniata Bylaws.
Also, expenses incurred in defending a civil or criminal action, suit or
proceeding may be paid by Lewistown or Juniata, as the case may be, in advance
of the final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of the director, officer or employee to repay such
amount if it shall ultimately be determined that he or she is not entitled to
be indemnified by Juniata.
The indemnification provided by Lewistown or Juniata shall not be deemed
exclusive of any other rights to which a person seeking indemnification may be
entitled under any agreement, vote of shareholders, or disinterested
directors, or otherwise, both as to action in his or her official capacity
which serving as a director, officer, or employee, or as to any action in
another capacity while holding such office. The respective Boards of Directors
may, by resolution, provide for additional indemnification or advancement of
expenses to or for any director, officer, or employee provided said
indemnification is not inconsistent with the provisions of the applicable
Bylaws, Articles, applicable provisions of the PBC or BCL or other applicable
provisions of law. Indemnification shall continue as to a person who has
ceased to be a director, officer or employee and shall inure to the benefit of
the heirs and personal representatives of such person.
54
<PAGE>
The Lewistown and Juniata Bylaws also provide that no director shall be
personally liable for monetary damages as such for any action taken, or any
failure to take any action, in the director's capacity as a director of
Lewistown or Juniata or pursuant to the request of Lewistown or Juniata
unless: (a) the director has breached or failed to perform the duties of his
or her office as set forth in the BCL; or (b) the breach or failure to perform
constitutes self-dealing, willful misconduct or recklessness.
ANTI-TAKEOVER LAW PROVISIONS
Lewistown
The PBC provides that a merger or consolidation by a state bank, such as
Lewistown, must be approved by a majority of the Directors of Lewistown and by
the vote of the holders of at least two-thirds of its capital stock.
Juniata
Article 10 of the Juniata Articles provides that the Juniata Board of
Directors, in its sole discretion, may oppose any offer, proposed or attempted
by any corporation or other business entity, person or group to: (a) make any
tender or other offer to acquire any of Juniata's securities; (b) merge or
consolidate Juniata with or into another entity; (c) purchase or otherwise
acquire all or substantially all of Juniata's assets; or (d) make any
transaction similar in purpose or effect to any of the above. In considering
whether to oppose, recommend or remain neutral with respect to any such
offers, proposals or plans, the Juniata Board of Directors must evaluate what
is in the best interests of Juniata, and may, but is not legally obligated to,
consider any pertinent factors, including, but not limited to: (i) whether the
offering price is adequate and acceptable based upon both the current market
price of Juniata's securities and the historical and present operating results
or financial condition of the corporation; (ii) whether a more fordable price
to the shareholders may be obtained now or in the future; (iii) the impact the
offer would have on the employees, depositors, clients and customers of
Juniata and its subsidiaries and the communities which they serve; (iv) the
present and historical financial position of the offeror, its reputation and
related factors; (v) an analysis of the value of securities (if any) offered
in exchange for Juniata's securities; and (vi) any anti-trust or other legal
or regulatory issues raised by the offer.
If the Juniata Board of Directors determines that an offer shall be
rejected, it may take any lawful action to accomplish its purpose, including,
but not limited to, (a) advising shareholders not to accept the offer; (b)
litigation against the offeror; (c) filing complaint with all government and
regulatory authorities having jurisdiction over the offer; (d) acquiring
Juniata's securities; (e) selling or otherwise issuing authorized but unissued
securities or treasury stock and granting options with respect thereto; (f)
acquiring a company to create an anti-trust or other regulatory problem for
the offeror; and (g) obtaining a more favorable offer from another individual
or entity.
The Change in Bank Control Act and the BHCA prohibit a person or group from
acquiring "control" of a bank holding company unless the Federal Reserve Board
has been given sixty days' prior written notice of the proposed acquisition
and within that time period the Federal Reserve Board has not issued a
disapproval or extended for up to another thirty days the period during which
such a disapproval may be issued.
The BCL contains certain "anti-takeover" provisions that are only applicable
to registered corporations. These provisions do not apply to Lewistown.
Because Juniata is a registered corporation, however, certain of these
provisions do apply to Juniata.
Subchapter 25E of the BCL is a "cash-out" anti-takeover statute which
generally provides that if any person or group acquires 20% or more of the
voting shares of a corporation, the remaining shareholders may demand from
such person or group the fair value of their shares, including a proportionate
amount of any control premium.
Under Subchapter 25F of the BCL, Juniata is prohibited from engaging in
specified business combination transactions with an interested stockholder
(defined in general as any beneficial owner of at least 20% of Juniata's
55
<PAGE>
outstanding voting shares) during the five-year period following the date such
person became an interested stockholder unless: (a) the business combination
or share acquisition is approved by the Board of Directors of Juniata prior to
the date such person becomes an interested stockholder; (b) the business
combination is approved by unanimous vote of the holders of all outstanding
common stock; or (c) the interested shareholder owns at least 80% of Juniata's
outstanding voting shares, the business combination is approved by a majority
of the holders of Juniata voting shares (not including shares held by the
interested shareholder), and the interested shareholder complies with
specified procedural and minimum fair price criteria. After the five-year
period, a business combination may be effected if: (i) the transaction is
approved by a majority of the outstanding Juniata voting shares (not including
shares held by the interested shareholder); or (ii) the transaction is
approved by a majority of the outstanding Juniata voting shares (including
shares held by the interested shareholder) and the interested shareholder
complies with specified procedural and minimum fair price criteria. Juniata is
also subject to another somewhat similar Pennsylvania law provision, Section
2538 of the BCL, which requires certain fundamental transactions with an
interested shareholder to be approved by a majority of the corporation's
directors who are unaffiliated with such shareholder.
Pennsylvania's control share acquisition statute (Subchapter 25G of the BCL)
provides that: (i) the restoration of voting rights of control shares requires
the vote of both the majority of the disinterested shares and the majority of
all outstanding shares; and (ii) a Pennsylvania corporation may redeem the
control shares at the market price of the corporation's shares rather than the
"fair value".
Subchapter 25H of the BCL requires persons who acquire 20% of the voting
power of a corporation, or who announce that they may acquire control of the
corporation and then sell shares within 18 months thereafter, to disgorge to
the corporation profits made from such transactions.
AMENDMENT OF ARTICLES OF INCORPORATION
Lewistown
As required by the PBC, amendment of the Lewistown Articles requires the
affirmative vote of a majority of the votes which all shareholders are
entitled to cast thereon.
Juniata
Amendment of the Juniata Articles 7-12 require shareholder approval by the
affirmative vote of 85% of the votes of all shareholders entitled to vote;
provided, however, that if 66 2/3% of the entire Board of Directors recommends
approval of the amendment of the Juniata Articles, such action shall be
authorized if shareholder approval by the affirmative vote of 66 2/3% of the
votes which all shareholders entitled to cast is obtained. Pursuant to Section
1714 of the BCL, most of the remainder of the articles of the Juniata Articles
may be amended upon receipt of the affirmative vote of a majority of the votes
cast by all Juniata shareholders. Certain minor amendments, such a change in
corporate name or providing for perpetual corporate existence, for example,
only require approval by the Board of Directors and do not require shareholder
approval.
AMENDMENT OF BYLAWS
Lewistown
Amendments to the Lewistown Bylaws may be made at any meeting of the Board
of Directors by an affirmative vote of the majority of the members of Board of
Directors of Lewistown.
Juniata
Amendments to the Juniata Bylaws may be made by the affirmative vote of 75%
of the outstanding shares of Juniata Common Stock at any regular or special
meeting duly convened after notice to the shareholders of that purpose, or by
a majority vote of the members of the Board of Directors at any regular or
special meeting
56
<PAGE>
thereof duly convened after notice to the directors of that purpose, subject
to the power of the shareholders to change such action of the Board by the
affirmative vote of the holders of 66 2/3% of the outstanding shares of
Juniata Common Stock.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma combined condensed financial statements
assume a business combination between Juniata and Lewistown that qualifies as
a pooling of interests for financial reporting purposes. Under this method of
accounting, the recorded assets and liabilities of Juniata and Lewistown are
carried forward to Juniata at their recorded amounts, income of Juniata
includes income of Juniata and Lewistown for the entire fiscal year in which
the Merger occurs, and the reported income of Juniata and Lewistown for prior
periods is combined and restated as income of Juniata. The pro forma combined
condensed financial statements are based upon the respective historical
consolidated financial statements of Juniata and historical financial
statements of Lewistown and should be read in conjunction with such historical
financial statements and the notes thereto, which are incorporated by
reference or included elsewhere in this Joint Proxy Statement/Prospectus. The
unaudited pro forma combined condensed balance sheet data are presented as if
the Merger occurred on the date thereof. The unaudited pro forma combined
condensed statements of income data are presented as if the Merger occurred at
the beginning of the earliest period presented.
The unaudited pro forma financial information is presented for illustrative
purposes only and is not necessarily indicative of the operating results or
financial position that would have occurred if the Merger had been consummated
at the beginning of the earliest period presented with respect to the
unaudited pro forma combined condensed statements of income or with respect to
the pro forma combined condensed balance sheets, nor is it necessarily
indicative of the future operating results or financial position of Juniata.
The pro forma information does not give effect to any synergies that may occur
due to the integration of Juniata's and Lewistown's operations. Additionally,
the unaudited pro forma financial information excludes the transaction costs
of the Merger, and the nonrecurring costs and expenses associated with
integrating the operations of the businesses.
Certain material, nonrecurring adjustments will be recorded in conjunction
with the Merger, but the amounts of these adjustments cannot be determined
until Juniata reviews all facilities, operations and systems of Lewistown and
finalizes its plans with respect to integrating the businesses. The aggregate
amount of these adjustments will include costs associated with consolidating
operations and systems, severance pay for involuntary termination, early
retirement and related employee benefits; conforming accounting practices; and
expenses incurred in connection with the Merger. Juniata has not yet
quantified any of these adjustments. The impact of these adjustments, except
for conforming accounting principles, are expected to be recorded in the
second or third quarter of 1998, after consummation of the Merger.
57
<PAGE>
JUNIATA AND LEWISTOWN
PRO FORMA UNAUDITED COMBINED CONDENSED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
-----------------------------
PRO FORMA
JUNIATA LEWISTOWN COMBINED
--------- --------- ---------
<S> <C> <C> <C>
Interest income................................. $ 16,467 $ 7,850 $ 24,317
Interest expense................................ 7,785 4,077 11,862
--------- ------- ---------
Net interest income............................. 8,682 3,773 12,455
Provision for loan losses....................... 180 40 220
--------- ------- ---------
Net interest income after provision for loan
losses......................................... 8,502 3,733 12,235
Other income.................................... 791 481 1,272
Other expenses.................................. 5,398 2,132 7,530
--------- ------- ---------
Income before income taxes...................... 3,895 2,082 5,977
Income taxes.................................... 850 555 1,405
--------- ------- ---------
Net income...................................... $ 3,045 $ 1,527 $ 4,572
========= ======= =========
Basic earnings per share........................ $ 2.18 $ 1.63 $ 1.96
========= ======= =========
Weighted average number of shares outstanding... 1,396,401 937,024 2,333,425
========= ======= =========
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
-----------------------------
PRO FORMA
JUNIATA LEWISTOWN COMBINED
--------- --------- ---------
<S> <C> <C> <C>
Interest income................................. $ 15,755 $ 7,856 $ 23,611
Interest expense................................ 7,592 4,105 11,697
--------- ------- ---------
Net interest income............................. 8,163 3,751 11,914
Provision for loan losses....................... 180 50 230
--------- ------- ---------
Net interest income after provision for loan
losses......................................... 7,983 3,701 11,684
Other income.................................... 633 395 1,028
Other expenses.................................. 5,071 1,955 7,026
--------- ------- ---------
Income before income taxes...................... 3,545 2,141 5,686
Income taxes.................................... 781 575 1,356
--------- ------- ---------
Net income...................................... $ 2,764 $ 1,566 $ 4,330
========= ======= =========
Basic earnings per share........................ $ 1.98 $ 1.67 $ 1.86
========= ======= =========
Weighted average number of shares outstanding... 1,393,264 937,024 2,330,288
========= ======= =========
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
-----------------------------
PRO FORMA
JUNIATA LEWISTOWN COMBINED
--------- --------- ---------
<S> <C> <C> <C>
Interest income................................. $ 15,070 $ 7,618 $ 22,688
Interest expense................................ 6,970 3,982 10,952
--------- ------- ---------
Net interest income............................. 8,100 3,636 11,736
Provision for loan losses....................... 135 55 190
--------- ------- ---------
Net interest income after provision for loan
losses......................................... 7,965 3,581 11,546
Other income.................................... 581 288 869
Other expenses.................................. 5,106 1,801 6,907
--------- ------- ---------
Income before income taxes...................... 3,440 2,068 5,508
Income taxes.................................... 780 570 1,350
--------- ------- ---------
Net income...................................... $ 2,660 $ 1,498 $ 4,158
========= ======= =========
Basic earnings per share........................ $ 1.91 $ 1.60 $ 1.79
========= ======= =========
Weighted average number of shares outstanding... 1,391,251 937,024 2,328,275
========= ======= =========
</TABLE>
See accompanying notes to unaudited pro forma financial information
58
<PAGE>
JUNIATA AND LEWISTOWN
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
AS OF DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, 1997
------------------------------------------
PRO FORMA PRO FORMA
JUNIATA LEWISTOWN ADJUSTMENTS COMBINED
-------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Cash and cash equivalents.......... $ 10,713 $ 6,954 $ -- $ 17,667
Securities......................... 66,780 47,161 -- 113,941
Loans receivable................... 137,512 56,187 -- 193,699
Allowance for loan losses.......... (1,803) (587) -- (2,390)
Other assets....................... 7,708 1,952 -- 9,660
-------- -------- ------- --------
Total Assets..................... $220,910 $111,667 $ -- $332,577
======== ======== ======= ========
Deposits........................... $189,007 $ 96,130 $ -- $285,137
Other borrowings................... -- 498 -- 498
Other liabilities.................. 3,191 920 -- 4,111
-------- -------- ------- --------
Total Liabilities................ 192,198 97,548 -- 289,746
-------- -------- ------- --------
Common stock....................... 1,400 1,171 (1,171)A 2,337
937A
Treasury stock..................... (543) -- (543)
Surplus............................ 14,709 5,665 (5,665)A 20,608
5,899A
Retained Earnings.................. 12,651 6,942 -- 19,593
Net unrealized loss on investment
securities available for sale..... 495 341 -- 836
-------- -------- ------- --------
Total Stockholders' Equity....... 28,712 14,119 -- 42,831
-------- -------- ------- --------
Total Liabilities and
Stockholder's Equity............ $220,910 $111,667 $ -- $332,577
======== ======== ======= ========
</TABLE>
- --------
A = Juniata will exchange 937,024 shares of Juniata Common Stock ($1 par value)
for 937,024 shares of Lewistown Common Stock ($1.25 par value).
See accompanying notes to unaudited pro forma financial information
59
<PAGE>
JUNIATA AND LEWISTOWN
UNAUDITED PRO FORMA CAPITAL SCHEDULE
AS OF DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, 1997
----------------------------------------
PRO FORMA PRO FORMA
JUNIATA LEWISTOWN ADJUSTMENTS COMBINED
------- --------- ----------- ---------
<S> <C> <C> <C> <C>
BORROWINGS:
Short-term........................... $ -- $ 498 $ -- $ 498
Long-term............................ -- -- -- --
------- ------- ------- -------
Total Borrowings................... $ -- $ 498 $ -- $ 498
======= ======= ======= =======
STOCKHOLDERS' EQUITY:
Common stock......................... $ 1,400 $ 1,171 $(1,171) $ 2,337
937
Surplus.............................. 14,709 5,665 (5,665) 20,608
5,899
Retained Earnings.................... 12,651 6,942 -- 19,593
Treasury stock....................... (543) -- -- (543)
Net unrealized appreciation on
securities available for sale ...... 495 341 -- 836
------- ------- ------- -------
Total Stockholders' Equity......... $28,712 $14,119 $ -- $42,831
======= ======= ======= =======
</TABLE>
See accompanying notes to unaudited pro forma financial information.
60
<PAGE>
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
NOTE 1. BASIS OF PRESENTATION
Pursuant to the Merger, each share of Lewistown Common Stock outstanding at
the effective time will be converted into one (1) share of Juniata Common
Stock. The Merger is to be accounted for under the "pooling of interests"
method. Accordingly, recorded assets and liabilities are carried forward to
the combined company at their historical values.
The unaudited pro forma financial information does not give effect to any
synergies that are expected to occur due to the integration of Lewistown and
Juniata operations. Additionally, the unaudited pro forma financial
information excludes the transaction costs of the Merger, and the nonrecurring
costs and expenses associated with integrating the operations of the
businesses.
Certain material, nonrecurring adjustments may be recorded in conjunction
with the Merger, but the amounts of these adjustments cannot be determined
until Juniata reviews all facilities, operations and systems of Lewistown and
finalizes its plans with respect to integrating the businesses. The aggregate
amount of these adjustments will include costs associated with consolidating
operations and systems; severance pay for involuntary termination, early
retirement and related employee benefits; conforming accounting practices; and
expenses incurred in connection with the Merger. Juniata has not yet
quantified any of these adjustments. The impact of these adjustments, if any,
is expected to be recorded in the second or third quarter of 1998.
NOTE 2. PRO FORMA ADJUSTMENTS
A. Stockholders' Equity and related Per Share Data
The average number of shares of Juniata Common Stock outstanding during the
periods presented and per share and net earnings per share have been adjusted
for each period presented by multiplying the applicable number of shares of
Lewistown Common Stock by one (1).
The combined equity account of Juniata reflected the combination of the
equity accounts for Juniata and Lewistown. Shares of Juniata Common Stock have
a par value of $1. Based on the exchange ratio (conversion factor) discussed
in Note 1 above, Juniata will exchange 937,024 shares of Juniata Common Stock
for 937,024 shares of Lewistown Common Stock, calculated as of December 31,
1997.
61
<PAGE>
LEWISTOWN MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The purpose of this discussion is to focus on information about Lewistown
Trust Company's financial condition and results of operations which is not
otherwise apparent from the financial statements. Reference should be made to
those statements and the selected financial data presented elsewhere for an
understanding of the following discussion and analysis.
RESULTS OF OPERATIONS
Lewistown recorded net income of $1,527,000 ($1.63 per share) for 1997
compared to $1,566,000 ($1.67 per share) in 1996, and $1,498,000 ($1.60 per
share) in 1995. Return on average assets was 1.39% for 1997 and 1.45% for 1996
and 1995. The decrease in net income of $39,000 in 1997 was primarily caused
by an increase in other expenses of $177,000 which was offset by an increase
in other income of $86,000 and an increase in net interest income of $22,000
from 1996 to 1997. A more detailed explanation for each contribution to the
change in net income from 1996 to 1997 is included in the remainder of this
analysis.
NET INTEREST INCOME
Net interest income is the primary source of operating income for Lewistown.
Net interest income is the difference between interest earned on loans and
securities and interest paid on deposits and other funding sources. The
factors that influence net interest income include changes in interest rates
and changes in the volume and mix of assets and liability balances.
Net interest income increased $22,000, or .59% in 1997 compared to 1996, and
$115,000 or 3.16% in 1996 compared to 1995. Table 1 analyzes the factors
contributing to the increase in net interest income in 1997 and 1996. The
average balances, interest income and expense, and the average rates earned
and paid for assets and liabilities are found in Table 2.
During 1997, the average yield on earning assets decreased 15 basis points
and the average cost of funds decreased 5 basis points. The decrease is
attributable to lower market rates in addition to competitive pricing. An
increase of $3,516,000 or 6.83% in average loan volume during 1997 resulted in
additional loan interest income of $319,000. However the reduced rates
resulted in a decrease in the yield earned on average loans in 1997 to 8.71%
compared to 9.08% and 9.45% in 1996 and 1995 respectively.
Lewistown's average securities' portfolio in 1997 remained comparable to the
portfolio at December 31, 1996, while the portfolio grew by $5,214,000 in
1996. Interest income decreased $87,000 or 2.98% in 1997 compared to 1996, and
increased $367,000 or 14.40% in 1996 compared to 1995. The increase in 1996
was principally attributed to the growth in the portfolio as rates were
relatively stable over the three year period.
Interest bearing demand deposits, savings deposits and time deposits
increased $384,000 in 1997 compared to 1996. The decrease in interest expense
of $29,000 on these deposits or .70% was primarily a result of the decrease in
interest rates offered during 1997. The increase in interest expense on these
deposits in 1996 was principally due to the $2,255,000 increase in time
deposits as rates were relatively stable between 1996 and 1995.
62
<PAGE>
TABLE 1--RATE/VOLUME ANALYSIS OF NET INTEREST INCOME
<TABLE>
<CAPTION>
1997/1996 1996/1995
INCREASE INCREASE
(DECREASE) DUE TO (DECREASE) DUE TO
CHANGE IN CHANGE IN
------------------ ------------------
VOLUME RATE NET VOLUME RATE NET
------ ----- ---- ------ ----- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Interest bearing deposits in other
banks................................ $-- $ 1 $ 1 $-- $ (1) $ (1)
Securities (taxable).................. (40) (15) (55) 237 56 293
Securities (tax exempt)............... (13) (19) (32) 69 5 74
Federal funds sold and other.......... (36) (5) (41) (44) (10) (54)
Loans................................. 319 (198) 121 121 (195) (74)
---- ----- ---- ---- ----- ----
Total interest income............... 230 (236) (6) 383 (145) 238
---- ----- ---- ---- ----- ----
Other borrowings...................... 0 1 1 (5) 3 (2)
Interest bearing demand deposits...... 8 (21) (13) (4) (23) (27)
Savings deposits...................... (5) (12) (17) 3 3 6
Time deposits......................... 18 (17) 1 118 28 146
---- ----- ---- ---- ----- ----
Total interest expense.............. 21 (49) (28) 112 11 123
---- ----- ---- ---- ----- ----
Increase (decrease) in net interest
income............................... $209 $(187) $ 22 $271 $(156) $115
==== ===== ==== ==== ===== ====
</TABLE>
63
<PAGE>
TABLE 2--AVERAGE BALANCES AND INTEREST RATES
<TABLE>
<CAPTION>
1997 1996 1995
------------------------ ------------------------ ------------------------
INTEREST INTEREST INTEREST
AVERAGE INCOME % AVERAGE INCOME % AVERAGE INCOME %
BALANCES (EXPENSE) RATE BALANCES (EXPENSE) RATE BALANCES (EXPENSE) RATE
-------- --------- ---- -------- --------- ---- -------- --------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest earning assets
Interest bearing
deposits In other
banks................. $ 100 $ 6 6.00% $ 100 $ 5 5.00% $ 100 $ 6 6.00%
Securities (taxable).... 37,178 2,408 6.48% 37,794 2,463 6.52% 34,066 2,170 6.37%
Securities (tax
exempt)................ 9,326 420 4.50% 9,595 452 4.71% 8,109 378 4.66%
Federal funds sold...... 4,095 224 5.47% 4,733 265 5.60% 5,495 319 5.81%
Loans................... 54,987 4,792 8.71% 51,471 4,671 9.08% 50,195 4,745 9.45%
-------- ------ -------- ------ -------- ------
Total interest Earning
assets................ 105,686 7,850 7.43% 103,693 7,856 7.58% 97,965 7,618 7.78%
Non-interest earning
assets
Cash and due from
banks................. 3,409 2,737 2,537
Other assets........... 1,184 2,072 3,199
Less: allowance for
Loan losses........... (605) (636) (604)
-------- -------- --------
Total assets........... $109,674 $107,866 $103,097
======== ======== ========
Interest bearing
liabilities
Other borrowings....... $ 184 $ 10 5.43% $ 179 $ 9 5.03% $ 323 $ 11 3.41%
Interest bearing demand
deposits.............. 20,570 698 3.39% 20,340 711 3.50% 20,452 738 3.61%
Savings deposits....... 4,805 121 2.52% 4,990 138 2.77% 4,876 132 2.71%
Other time deposits.... 61,623 3,248 5.27% 61,284 3,247 5.30% 59,029 3,101 5.25%
-------- ------ -------- ------ -------- ------
Total interest Bearing
liabilities........... 87,182 4,077 4.68% 86,793 4,105 4.73% 84,680 3,982 4.70%
Non-interest bearing
liabilities
Demand deposits........ 8,117 7,801 6,478
Other liabilities...... 741 643 504
Stockholders' equity... 13,634 12,629 11,435
-------- -------- --------
Total liabilities and
stockholders' equity.. $109,674 $107,866 $103,097
======== ------ ======== ------ ======== ------
Net interest
income/spread.......... $3,773 2.75% $3,751 2.85% $3,636 3.08%
====== ====== ======
Margin analysis
Interest Income/Earning
Assets................ 7.43% 7.58% 7.78%
Interest
Expense/Earning
Assets................ 3.86% 3.96% 4.06%
---- ---- ----
Net interest margin..... 3.57% 3.62% 3.72%
==== ==== ====
</TABLE>
64
<PAGE>
For purpose of computing average loan balances, nonaccruing loans are
excluded from the daily average loan balance. Yields on tax exempt securities
are not presented on a tax equivalent basis.
OTHER INCOME
Other income increased by $86,000 or 21.77% from 1996 to 1997 and $107,000
or 37.15% from 1996 to 1995. The increase which occurred in 1997 is summarized
as follows. The increase in trust income of $41,000 or 41.84% was a result of
increased fees associated with settling estates and an increase in number of
trust customers. Service charges on deposit accounts increased $27,000 or
22.69% which directly correlated with the increase in customer accounts. The
increase in other income of $34,000 or 41% is due to an increase in
commissions on the sale of life and disability insurance. The increase in 1996
compared to 1995 was directly related to realized gains on the sale of
securities totalling $95,000 in 1996. Realized gains in 1997 were $79,000.
OTHER EXPENSE
Other expenses increased $177,000 or 9.05% in 1997 to $2,132,000 compared to
$1,955,000 in 1996 and $1,801,000 in 1995. Salaries and benefits totaled
$1,275,000 in 1997, an increase of $107,000 or 9.16% from 1996. Occupancy
expense totaled $257,000 in 1997, an increase of $51,000 or 24.76% compared to
$206,000 in 1996 and $168,000 in 1995. Other operating expenses were $469,000
in 1997 and $472,000 in 1996 compared to $397,000 in 1995. The increase from
1995 to 1996 in salaries and benefits was due to the opening of a new branch
in October 1996, and the hiring of an executive vice-president during the
second quarter of 1996. The new facility also attributed to the increase in
occupancy expense in 1996 and 1997, the increase in other operating expenses
in 1996, and salaries and benefits in 1997, as the branch operated for a full
year during 1997.
Federal deposit insurance premiums were $14,000 in 1997 compared to $2,000
in 1996 and $133,000 in 1995. FDIC insurance premiums are applied to all
financial institutions based on a risk-based premium assessment system. Under
this system, bank strength is based on three factors: 1) asset quality, 2)
capital strength, and 3) management. Premium assessments are then assigned
based on the institution's overall rating, with the stronger institutions
paying lower rates. The FDIC restructured its assessment schedule in 1995,
after the Bank Insurance Fund (BIF) was determined to be adequately funded.
The assessment for 1996 was the statutory minimum of $2,000. Total savings in
1996 compared to 1995 were $131,000, or 98.50%. Recent legislation passed in
September 1996 instituted provisions for assessing BIF and Savings Association
Insurance Fund (SAIF) insured institutions in preparation for merging the two
funds. The assessment resulted in an expense of $14,000 in 1997.
FEDERAL INCOME TAXES
The provision for income taxes for 1997 was $555,000 compared to $575,000 in
1996 and $570,000 in 1995. The effective tax rate, which is the ratio of
income tax expense to income before income taxes was 26.66% in 1997, a slight
decrease from 26.86% in 1996 and 27.56% in 1995. The tax rate for all periods
was less than the statutory rate of 34% due to tax exempt securities and loan
income. Refer to Note 9 to the Financial Statements "Income Taxes" for further
analysis of federal income tax expense.
65
<PAGE>
FINANCIAL CONDITION
Lewistown's financial condition can be evaluated in terms of trends in its
sources and uses of funds. Table 3 illustrates how Lewistown has managed its
sources and uses of funds which are directly affected by outside economic
factors, such as interest rate fluctuations.
TABLE 3--SOURCES AND USES OF FUNDS
<TABLE>
<CAPTION>
1997 INCREASE (DECREASE) 1996 INCREASE (DECREASE) 1995
AVERAGE --------------------- AVERAGE -------------------- AVERAGE
BALANCE AMOUNT % BALANCE AMOUNT % BALANCE
-------- --------------------- -------- -------------------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Funding uses:
Interest earning
assets:
Loans:
Commercial........... $ 20,223 $ (419) (2.03)% $ 20,642 $ 425 2.10% $ 20,217
Mortgage............. 22,511 1,350 6.38 21,161 (424) (1.96) 21,585
Consumer............. 12,253 2,585 26.74 9,668 1,275 15.19 8,393
-------- ---------- -------- --------- --------
54,987 3,516 6.83 51,471 1,276 2.54 50,195
Less: Allowance for
loan losses.......... (605) 31 (4.87) (636) (32) 5.30 (604)
-------- ---------- -------- --------- --------
54,382 3,547 6.98 50,835 1,244 2.51 49,591
Interest bearing
deposits with banks.. 100 -- -- 100 -- -- 100
Securities............ 46,504 (885) (1.87) 47,389 5,214 12.36 42,175
Funds sold............ 4,095 (638) (13.48) 4,733 (762) (13.87) 5,495
-------- ---------- -------- --------- --------
50,699 (1,523) (2.92) 52,222 4,452 9.32 47,770
Total interest earning
assets................ 105,081 2,024 1.96 103,057 5,696 5.85 97,361
Other assets........... 4,593 (216) (4.49) 4,809 (927) (16.16) 5,736
-------- ---------- -------- --------- --------
Total Uses.......... $109,674 $ 1,808 1.68 $107,866 $ 4,769 4.63 $103,097
======== ========== ======== ========= ========
Funding sources:
Deposits:
Demand................ $ 8,117 $ 316 4.05 $ 7,801 $ 1,323 20.42 $ 6,478
Interest bearing
demand............... 20,570 230 1.13 20,340 (112) (0.55) 20,452
Savings............... 4,805 (185) (3.71) 4,990 114 2.34 4,876
Time under $100,000 .. 57,096 559 0.99 56,537 2,495 4.62 54,042
-------- ---------- -------- --------- --------
Total core deposits.... 90,588 920 1.03 89,668 3,820 4.45 85,848
Time over $100,000..... 4,527 (220) (4.63) 4,747 (240) (4.81) 4,987
-------- ---------- -------- --------- --------
Total deposits......... 95,115 700 .074 94,415 3,580 3.94 90,835
Short-term borrowings.. 184 5 2.79 179 (144) (44.58) 323
-------- ---------- -------- --------- --------
Interest bearing
liabilities........... 95,229 705 0.75 94,594 3,436 3.77 91,158
Other liabilities...... 741 98 15.24 643 139 27.58 504
Stockholders' equity... 13,634 1,005 7.96 12,629 1,194 10.44 11,435
-------- ---------- -------- --------- --------
Total Sources....... $109,674 $ 1,808 1.68 $107,866 $ 4,769 4.63 $103,097
======== ========== ======== ========= ========
</TABLE>
LOANS RECEIVABLE
Average loans receivable, net of the allowance for loan losses, increased
$3,547,000 or 6.98% in 1997 compared to an increase of $1,244,000 or 2.51% in
1996. The increase in loans was directly attributable to the addition of a
branch in the fourth quarter of 1996, favorable economic conditions in
Lewistown's market area, and competitive pricing. The majority of the growth
in 1996 and 1997 occurred in the consumer loan portfolio. Table 4 provides an
analysis of Lewistown's loan distribution at the end of each of the last five
years. Consumer
66
<PAGE>
loans include revolving credit plans, personal lines of credit, installment
loans and student loans. Loans which are secured by real estate include
residential and nonresidential mortgages and home equity loans to individuals.
TABLE 4--LOAN PORTFOLIO
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Commercial, financial and
agricultural......................... $ 3,590 $ 3,723 $ 3,289 $ 1,961 $ 1,857
Consumer, net of unearned discount.... 7,140 7,761 9,097 10,314 10,517
Real estate........................... 43,833 39,000 37,394 36,275 35,361
All other............................. 1,624 2,262 2,701 2,906 2,708
------- ------- ------- ------- -------
$56,187 $52,746 $52,481 $51,456 $50,443
======= ======= ======= ======= =======
</TABLE>
TABLE 5--LOAN MATURITIES
The following table shows the maturity of loans (excluding residential
mortgages of 1-4 family residences and consumer loans) outstanding at December
31, 1997.
<TABLE>
<CAPTION>
MATURITY MATURING MATURING
DURING FROM 1999 AFTER
1998 THRU 2000 2000 TOTAL
-------- --------- -------- ------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Commercial, financial and
agricultural.......................... $3,590 $ -- $ -- $3,590
All other.............................. 1,624 -- -- 1,624
------ ----- ----- ------
Total Loans.......................... $5,214 $ -- $ -- $5,214
====== ===== ===== ======
</TABLE>
NONPERFORMING LOANS
Table 6 reflects Lewistown's nonaccrual, past due and restructured loans for
each of the past five years. A loan is generally placed on nonaccrual when the
contractual payment of principal or interest has become 90 days past due or
management has serious doubts about further collectibility of principal or
interest, even though the loan is currently performing.
TABLE 6--NONPERFORMING LOANS
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Average loans outstanding........ $54,987 $51,471 $50,195 $51,236 $49,274
======= ======= ======= ======= =======
Nonaccrual loans................. 126 186 122 -- 444
Accruing loans past due 90 days
or more......................... 136 12 49 354 187
Restructured loans............... 173 -- -- -- --
------- ------- ------- ------- -------
Total.......................... $ 435 $ 198 $ 171 $ 354 $ 631
======= ======= ======= ======= =======
Ratio of non-performing loans to
average loans outstanding....... 0.79% 0.38% 0.34% 0.69% 1.28%
</TABLE>
67
<PAGE>
TABLE 7--NONACCRUAL AND RESTRUCTURED LOANS--RELATED INFORMATION
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1997 1996 1995 1994 1993
---- ---- ---- ----- ----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Nonaccrual loans................................. $126 $186 $122 $ -- $444
Restructured loans............................... 173 -- -- -- --
Interest income that would have been recorded
under original terms............................ 2 15 11 -- 44
Interest income recorded during the period....... 24 4 -- -- --
Commitments to lend additional funds............. -- -- -- -- --
</TABLE>
All of the nonaccrual loans at December 31, 1997 are secured by real estate
or otherwise guaranteed as to repayment. Management has not identified any
other material potential problem loans that are not included in the above
table.
ALLOWANCE FOR LOAN LOSSES
The amount charged to operations and the related balance in the allowance
for loan losses is based upon periodic evaluations of the loan portfolio by
management. These evaluations consider several factors including, but not
limited to, current economic conditions, loan portfolio composition, prior
loan loss experience, trends in portfolio volume, and management's estimation
of future potential losses. Management believes that the allowance for loan
losses is adequate. Table 8 is an analysis of the allowance for loan losses
for the past five years.
TABLE 8--SUMMARY OF LOAN LOSS EXPERIENCE
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
------- ------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Average loans outstanding........ $54,987 $51,471 $50,195 $51,236 $49,274
======= ======= ======= ======= =======
Allowance for loan losses January
1............................... $ 643 $ 612 $ 592 $ 576 $ 560
Losses charged to allowance
Commercial..................... 59 -- -- -- --
Real estate.................... -- -- -- -- --
Consumer....................... 51 53 42 17 29
------- ------- ------- ------- -------
110 53 42 17 29
------- ------- ------- ------- -------
Recoveries credited to allowance
Commercial..................... -- -- -- -- --
Real estate.................... -- -- -- -- --
Consumer....................... 14 34 7 8 5
------- ------- ------- ------- -------
14 34 7 8 5
------- ------- ------- ------- -------
Net charge-offs.................. 96 19 35 9 24
Provision for loan losses........ 40 50 55 25 40
------- ------- ------- ------- -------
Allowance for loan losses at
December 31..................... $ 587 $ 643 $ 612 $ 592 $ 576
======= ======= ======= ======= =======
Ratio of net charge-offs to
average loans outstanding....... 0.17% 0.04% 0.07% 0.02% 0.05%
</TABLE>
The increase in net charge-offs in 1997 was primarily due to charging off a
portion of a commercial loan which was classified as nonaccrual in 1996 and
restructured during 1997.
68
<PAGE>
The specific allocations of the allowance for loan losses are based on
management's evaluation of the risks inherent in the specific portfolios for
the dates indicated. Amounts in a particular category may be used to absorb
losses if another category allocation proves to be inadequate. Table 9
reflects the allocations of the allowance for loan losses for each of the past
five years.
TABLE 9--ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
------------------ ------------------ ------------------ ------------------ ------------------
% OF % OF % OF % OF % OF
AMOUNT TOTAL LOANS AMOUNT TOTAL LOANS AMOUNT TOTAL LOANS AMOUNT TOTAL LOANS AMOUNT TOTAL LOANS
------ ----------- ------ ----------- ------ ----------- ------ ----------- ------ -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial.............. 146 9.3% 239 11.4% 189 11.4% 168 9.5% 179 9.1%
Real estate............. 141 78.0% 110 73.9% 110 71.3% 118 70.5% 133 70.1%
Consumer................ 205 12.7% 159 14.7% 154 17.3% 183 20.0% 182 20.8%
Unallocated............. 95 -- 135 -- 159 -- 123 -- 82 --
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
$587 100% $643 100% $612 100% $592 100% $576 100%
==== ==== ==== ==== ==== ==== ==== ==== ==== ====
</TABLE>
Highly leveraged transactions (HLT's) generally include loans and
commitments made in connection with recapitalizations, acquisitions, and
leveraged buyouts, and result in the borrower's debt-to-total assets ratio
exceeding 75%. Lewistown had no loans at December 31, 1997 that qualified as
HLT's.
SECURITIES
Lewistown's securities' portfolio is classified as available for sale and is
carried at fair value. Lewistown intends to hold the securities for an
indefinite amount of time, but not necessarily to maturity. No securities of a
single issuer exceed 10% of stockholders' equity at December 31, 1997.
During 1997 Lewistown used excess funds originated from operating activities
and maturities of U.S. Treasury and Corporate securities to purchase U.S.
Government agency securities which increased $4,391,000 or 56.78%.
Table 10 sets forth the carrying amount of securities at the dates
indicated.
TABLE 10--SECURITIES PORTFOLIO
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1997 1996 1995
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Available for sale securities (at fair value):
U.S. Treasury securities......................... $ 4,623 $ 6,913 $ 6,636
U. S. Government agencies........................ 12,124 7,733 6,185
State and political subdivisions................. 17,018 17,948 15,058
Corporate securities............................. 417 1,835 3,674
Mortgage-backed securities....................... 12,641 11,851 13,285
Equity securities................................ 338 297 381
------- ------- -------
$47,161 $46,577 $45,219
======= ======= =======
</TABLE>
Table 11 sets forth the maturities and the weighted average yields of
securities by contractual maturities at December 31, 1997. Yields on
obligations of states and political subdivisions are not presented on a tax-
equivalent basis. Mortgage-backed securities with contractual maturities after
ten years from December 31, 1997 feature regular repayments of principal and
average lives of three to seven years.
69
<PAGE>
TABLE 11--ANALYSIS OF SECURITIES
<TABLE>
<CAPTION>
MATURING
-----------------------------------------------------
AFTER ONE AFTER FIVE
WITHIN BUT WITHIN BUT WITHIN AFTER
ONE YEAR FIVE YEARS TEN YEARS TEN YEARS
------------ ------------- ------------ -------------
AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD
------ ----- ------- ----- ------ ----- ------- -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury
securities............. $2,955 5.77% $ 1,668 6.46% $ -- -- $ -- --
U.S. Government
agencies............... 1,693 7.94% 8,927 6.52% 1,149 7.37% 355 6.40%
State and political
subdivisions........... 2,531 5.31% 11,515 5.68% 2,678 5.59% 294 4.49%
Corporate securities.... 100 6.93% 127 6.06% 90 3.00% 100 6.20%
Mortgage-backed
securities............. -- -- 260 7.20% 12,381 6.39%
------ ------- ------ -------
$7,279 $22,237 $4,177 $13,130
====== ======= ====== =======
</TABLE>
DEPOSITS
Lewistown's primary source of funds continue to be core deposit accounts
which include both interest and noninterest bearing demand, savings, and time
deposits under $100,000. Core deposits increased an average of $920,000 or
1.03% in 1997 compared to $3,820,000 or 4.45% in 1996. The largest category of
core deposits and the primary source of funds continues to be time deposits
under $100,000. This category includes certificates of deposit, which allow
customers to invest their funds at selected maturity ranges from thirty days
to five years, individual retirement accounts, and Lewistown's Golden Passbook
accounts. The average balance of these funds increased $559,000 or .99% in
1997 and $2,495,000 or 4.62% in 1996.
Interest bearing demand accounts, consisting of Super N.O.W. and Money
Manager accounts increased an average of $230,000 or 1.13% in 1997 and
decreased an average of $112,000 or .55% in 1996. The decrease was a result of
consumers looking for a higher return on their deposits, as evidenced by the
shift of money to higher yield time deposit products.
The average daily amount of deposits and rates paid on such deposits is
summarized for the years ended December 31, as indicated in Table 12.
TABLE 12--AVERAGE DEPOSITS AND AVERAGE RATES BY MAJOR CLASSIFICATION
<TABLE>
<CAPTION>
1997 1996 1995
------------- ------------- -------------
AMOUNT RATE AMOUNT RATE AMOUNT RATE
------- ----- ------- ----- ------- -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Non-interest bearing demand...... $ 8,117 $ 7,801 $ 6,478
Interest bearing demand.......... 20,570 3.39% 20,340 3.50% 20,452 3.61%
Savings deposits................. 4,805 2.52% 4,990 2.77% 4,876 2.71%
Time deposits.................... 61,623 5.27% 61,284 5.30% 59,029 5.25%
------- ------- -------
Total.......................... $95,115 $94,415 $90,835
======= ======= =======
</TABLE>
At December 31, 1997, time deposits outstanding in an individual amount of
$100,000 or more totaled $5,349,000. The maturity of these deposits is
reflected in Table 13.
TABLE 13--MATURITIES OF TIME DEPOSITS OF $100,000 OR MORE
<TABLE>
<CAPTION>
OVER 3 OVER 6
3 MONTHS THROUGH 6 THROUGH 12 OVER 12
OR LESS MONTHS MONTHS MONTHS
-------- --------- ---------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
$1,502 $679 $1,023 $2,145
====== ==== ====== ======
</TABLE>
70
<PAGE>
OTHER BORROWINGS
Lewistown maintains a U.S. Treasury tax and loan option account for the
deposit of withholding taxes, corporate income taxes and certain other
payments to the federal government. Borrowings under the note option account
which were used as source of funds were consistent during 1997 and 1996. These
borrowings do not represent a significant source of funds for Lewistown.
CAPITAL REQUIREMENTS/RATIOS
Lewistown places a significant emphasis on maintaining a strong capital
base. The capital resources of Lewistown consist of two major components of
regulatory capital, stockholders' equity and the allowance for loan losses.
Lewistown's capital maintained steady growth during 1997.
Current capital guidelines issued by federal regulatory authorities require
banks to meet minimum risk-based capital ratios in an effort to make
regulatory capital more responsive to the risk exposure related to a bank's on
and off balance sheet items.
Risk-based capital guidelines re-define the components of capital,
categorize assets into risk classes, and include certain off-balance sheet
items in the calculation of capital requirements. The components of risk-based
capital are segregated as Tier I and Tier II capital. Tier I capital is
composed of total stockholders' equity reduced by goodwill and other
intangible assets. Tier II capital is comprised of the allowance for loan
losses and any qualifying debt obligations. Regulators also have adopted
minimum requirements of 4% of Tier I capital and 8% of risk-adjusted assets in
total capital.
Lewistown is also subject to leverage capital requirements. This requirement
compares Tier I capital to average total assets and is intended to supplement
the risk-based capital ratio in measuring capital adequacy. The guidelines set
a minimum leverage ratio of 3% for institutions that are highly rated in terms
of safety and soundness, and which are not experiencing or anticipating any
significant growth. Other institutions are expected to maintain capital levels
of at least 1% or 2% above the minimum. As of December 31, 1997 Lewistown had
a leverage ratio of 12.56%.
The following table sets forth the computation of Lewistown's regulatory
capital ratios for the dates indicated. Lewistown exceeded the minimum capital
levels of the well capitalized category.
TABLE 14--CAPITAL RATIOS
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1997 1996 1995
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Tier I
Common stockholders' equity (excluding
appreciation on securities)................... $13,778 $12,823 $11,772
------- ------- -------
Tier II
Allowable portion of allowance for loan
losses........................................ 587 643 612
------- ------- -------
Risk-based capital............................... $14,365 $13,466 $12,384
======= ======= =======
Risk-adjusted assets (including off-balance-sheet
exposures)...................................... $54,063 $52,327 $55,265
======= ======= =======
Tier I risk-based capital ratio.................. 25.49% 24.51% 21.30%
Total risk-based capital ratio................... 26.57% 25.73% 22.41%
Leverage ratio................................... 12.56% 11.89% 11.42%
</TABLE>
- --------
Note: Any unrealized appreciation and depreciation on securities available for
sale was excluded from regulatory capital components of risk-based
capital and leverage ratios.
71
<PAGE>
CAPITAL ANALYSIS
During 1997 Lewistown paid cash dividends to its shareholders amounting to
$572,000 compared to $515,000 and $447,000 in 1996 and 1995 respectively. On a
per share basis, dividends for 1997 increased 10.91% to $.61 from $.55 in
1996.
Lewistown issued a 2-for-1 stock split in the form of a 100% stock dividend
in 1996. In 1995 Lewistown issued a 10% stock dividend. The number of common
shares issued were adjusted accordingly.
Stockholders' equity is adjusted for the effect of unrealized appreciation
or depreciation, net of tax, on securities classified as available for sale.
At December 31, 1997 and 1996, stockholders' equity included $341,000 and
$370,000, respectively, in unrealized appreciation.
The return on average equity for the years ended December 31, 1997, 1996 and
1995 was 11.20%, 12.40%, and 13.10%, respectively.
INTEREST RATE SENSITIVITY AND MARKET RISK
The operations of Lewistown are subject to risk resulting from interest rate
fluctuations to the extent that there is a difference between the amount of
Lewistown's interest earning assets and the amount of interest bearing
liabilities that are prepaid/withdrawn, mature or reprice in specified
periods.
The principal objective of Lewistown's asset/liability management activities
is to provide consistently higher levels of net interest income while
maintaining acceptable levels of interest rate and liquidity risk and
facilitating the funding needs of Lewistown. Lewistown utilizes an interest
rate sensitivity model as the primary quantitative tool in measuring the
amount of interest rate risk that is present. The traditional maturity "gap"
analysis, which reflects the volume difference between interest rate sensitive
assets and liabilities during a given time period, is reviewed regularly by
management. A positive gap occurs when the amount of interest sensitive assets
exceeds interest sensitive liabilities. This position would contribute
positively to net income in a rising interest rate environment. Conversely, if
the balance sheet has more liabilities repricing than assets, the balance
sheet is liability sensitive or negatively gapped. Management continues to
monitor sensitivity in order to avoid overexposure to changing interest rates.
The operations of Lewistown do not subject it to foreign currency exchange
or commodity price risk. Also, Lewistown does not utilize interest rate swaps,
caps or other hedging transactions.
72
<PAGE>
The following table provides information about Lewistown's financial
instruments that are sensitive to changes in interest rates. For securities,
loans and deposits, the table presents principal cash flows and related
weighted average interest rates by maturity dates or repricing frequency.
Lewistown has no market risk sensitive instruments entered into for trading
purposes.
TABLE 15--INTEREST RATE SENSITIVITY
REMAINING MATURITY/EARLIEST POSSIBLE REPRICING
(IN THOUSANDS)
<TABLE>
<CAPTION>
FAIR VALUE
AT
DECEMBER 31,
1998 1999 2000 2001 2002 THEREAFTER TOTAL 1997
-------- -------- -------- -------- -------- ---------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INTEREST EARNING ASSETS
Interest bearing
deposits............... $ 100 $ -- $ -- $ -- $ -- $ -- $ 100 $ 100
Average interest rate.. 6.00%
Federal funds sold...... 1,900 -- -- -- -- -- 1,900 1,900
Average interest rate.. 5.47%
Securities, amortized
cost................... 19,322 6,565 6,789 5,190 3,557 5,119 46,542 $ 46,823
Average interest rate.. 6.29% 5.92% 5.94% 6.17% 6.39% 6.16%
Loans, excluding
nonaccrual loans....... 14,816 2,227 742 3,211 1,070 33,995 56,061 55,945
Average interest rate.. 9.18% 9.92% 9.92% 8.69% 8.69% 8.23%
-------- -------- -------- -------- -------- ------- -------- --------
Total interest earning
assets................. 36,138 8,792 7,531 8,401 4,627 39,114 104,603 104,768
-------- -------- -------- -------- -------- ------- -------- --------
INTEREST BEARING
LIABILITIES
Interest bearing demand
deposits............... 22,340 -- -- -- -- -- 22,340 22,340
Average interest rate.. 3.39%
Savings deposits........ 4,624 -- -- -- -- -- 4,624 4,624
Average interest rate.. 2.52%
Certificates of
deposit................ 42,599 7,595 6,159 1,676 3,759 45 61,833 62,060
Average interest rate.. 5.00% 5.67% 6.30% 6.25% 6.08% 6.79%
Other borrowings........ 498 -- -- -- -- -- 498 498
Average interest rate.. 5.43%
-------- -------- -------- -------- -------- ------- -------- --------
Total interest bearing
liabilities............ 70,061 7,595 6,159 1,676 3,759 45 89,295 89,522
-------- -------- -------- -------- -------- ------- -------- ========
Interest Sensivity Gap.. $(33,923) $ 1,197 $ 1,372 $ 6,725 $ 868 $39,069 $ 15,308
======== ======== ======== ======== ======== ======= ========
Cumulative Gap.......... $(33,923) $(33,726) $(31,354) $(24,629) $(23,761) $15,308
======== ======== ======== ======== ======== =======
</TABLE>
LIQUIDITY
Liquidity management involves meeting the funds flow requirements of
customers who may either be depositors wanting to withdraw funds, or borrowers
needing assurance that sufficient funds will be available to meet their credit
needs.
Lewistown's principal source of asset liquidity is the securities portfolio.
As disclosed in Note 3 to the financial statements, the carrying value of
securities maturing in less than one year equals $7,279,000. In addition to
those maturities, Lewistown receives monthly principal repayments on mortgage-
backed securities which totaled $12,641,000 at December 31, 1997.
Liability liquidity, which is more difficult to measure, can be met by
attracting deposits and maintaining the core deposit base. Lewistown's ability
to attract deposits depends primarily on several factors including sales
efforts, competitive interest rates, and other conditions which help maintain
consumer confidence in the stability of the financial institution. This
confidence is evaluated by such factors as profitability, capitalization and
overall financial condition.
73
<PAGE>
Other sources of funds are principal paydowns and maturities in the loan
portfolio. The loan maturity schedule (Table 5) illustrates the maturities of
commercial loans.
EFFECTS OF INFLATION
The majority of assets and liabilities of a financial institution are
monetary in nature, and therefore, differ greatly from most commercial and
industrial companies that have significant investments in fixed assets or
inventories. The precise impact of inflation upon Lewistown is difficult to
measure. Inflation may affect the borrowing needs of consumers, thereby
impacting the growth rate of Lewistown's assets. Inflation may also affect the
general level of interest rates, which can have a direct bearing on Lewistown.
Management believes the most significant impact on financial results is
Lewistown's ability to react to changes in interest rates.
BUSINESS OF LEWISTOWN
DESCRIPTION OF BUSINESS
Lewistown is a bank and trust company and an FDIC-insured institution
organized in 1906 under the laws of the Commonwealth of Pennsylvania and
headquartered in Lewistown, Pennsylvania. Lewistown engages in commercial
banking authorized by the Pennsylvania Banking Code ("PBC"). This involves
accepting demand, time and savings deposits and granting loans (consumer,
commercial, real estate and business) to individuals, corporations,
partnerships, associations and municipalities and other governmental bodies.
Lewistown is not dependent on any one customer, and the loss of any customer
or a few customers would not have a material adverse effect upon it.
PROPERTIES
As of December 30, 1997, Lewistown had four (4) banking offices. Its
principal executive office, which it owns, is located at 100 East Market
Street, Lewistown, Pennsylvania 17044, and the telephone number at that
address is (717) 242-0381.
Its other branch offices are located at: (a) 100 West Water Street,
Lewistown, Pennsylvania 17044; (b) Open Hearth, Burnham, Pennsylvania; and (c)
Wal-Mart Supercenter, Lewistown, Pennsylvania 17044.
LEGAL PROCEEDINGS
There are no material proceedings to which Lewistown or any of its directors
or officers are a party. All legal proceedings presently pending against
Lewistown involve routine litigation incidental to the business of Lewistown
and are either not material in respect to the amount in controversy or are
fully covered by insurance.
74
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF LEWISTOWN
To the knowledge of Lewistown, on the Record Date, no shareholders are
entitled to cast more than 5% of the total votes to be cast at the Meeting.
The table below sets forth, as of the Record Date, approximate information
regarding the beneficial ownership of Lewistown Common Stock by each director
and executive officer of Lewistown.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP OF
LEWISTOWN COMMON STOCK
---------------------------
NUMBER OF PERCENT OF
SHARES TOTAL
------------ ------------
<S> <C> <C>
DIRECTORS:
Philip E. Gingerich, Jr..................... 4,690 .50%
Timothy I. Havice........................... 5,418 .60%
Charles L. Hershberger...................... 1,830 .19%
Robert K. Metz, Jr.......................... 14,362 1.5%
Richard M. Scanlon, DMD..................... 1,395 .15%
Jan G. Snedeker............................. 1,148 .12%
John M. Wilson.............................. 32,940 3.5%
Marshall L. Hartman......................... 29,988 3.2%
Francis J. Evanitsky*....................... 1,000 .11%
EXECUTIVE OFFICERS:
Francis J. Evanitsky, President and CEO--*
See above.
------------ ----------
ALL DIRECTORS AND EXECUTIVE OFFICERS AS A
GROUP: 92,771 9.90%
OTHER 5% SHAREHOLDERS: None.
</TABLE>
ADJOURNMENT OF THE MEETING
If there is an insufficient number of votes cast in person or by proxy at
the either of the Lewistown Special Meeting or the Juniata Annual Meeting to
approve the Merger and the Merger Agreement, the respective Boards of
Directors of Lewistown or Juniata, as the case may be, intends to adjourn the
Meeting to a later date for the solicitation of additional votes in favor of
the Merger and the Merger Agreement. The affirmative vote of a majority of the
shares present, in person or by proxy, at the Meeting, even if a quorum is not
present, is required in order to approve any such adjournment. The place and
date to which the Meeting would be adjourned would be announced at the
appropriate Meeting.
THE RESPECTIVE BOARDS OF DIRECTORS OF LEWISTOWN AND JUNIATA RECOMMEND THAT
THEIR RESPECTIVE SHAREHOLDERS VOTE "FOR" THE PROPOSAL TO ADJOURN THE MEETING
IF NECESSARY TO PERMIT FURTHER SOLICITATION OF PROXIES TO APPROVE THE MERGER,
THE MERGER AGREEMENT AND THE AMENDMENT.
75
<PAGE>
EXPERTS
JUNIATA
The consolidated financial statements of Juniata as of December 31, 1997 and
1996 and for each of the three years in the period ended December 31, 1997,
incorporated by reference in Juniata's Annual Report on Form 10-K for the year
ended December 31, 1997, have been audited by Beard & Company, Inc.,
independent accountants, as set forth in their report thereon included therein
and incorporated herein by reference. Such consolidated financial statements
are included in reliance upon such report given upon the authority of such
firm as experts in accounting and auditing.
LEWISTOWN
The financial statements of Lewistown appearing in this Joint Proxy
Statement/Prospectus, have been audited by Beard & Company, Inc., independent
accountants, to the extent and for the periods indicated in their report
appearing elsewhere herein, and are included in reliance upon such report and
upon the authority of such firm as experts in accounting and auditing.
LEGAL OPINIONS
The legality of the Juniata Common Stock issued in connection with the
Merger and the tax consequence of the Merger were passed upon by Mette, Evans
& Woodside, Harrisburg, Pennsylvania, legal counsel to Juniata. Certain legal
matters relating to Lewistown were passed upon at the effective time of the
Merger by Barley, Snyder, Senft & Cohen, LLC, Lancaster, Pennsylvania, legal
counsel to Lewistown.
JUNIATA SHAREHOLDER PROPOSALS AND NOMINATIONS
Proposals of shareholders of Juniata intended to be presented at the next
annual meeting of shareholders of Juniata must be received by Juniata for
inclusion in Juniata's Proxy Statement and Form of Proxy relating to that
meeting by November 12, 1998.
If the date of the next Annual Meeting of Shareholders of Juniata is
advanced or delayed by more than 30 days from April 20, 1999, shareholders
will be timely informed of the change of the Annual Meeting of Shareholders
and the date by which proposals of security holders must be received.
OTHER BUSINESS
No other business is expected to be brought before the Special Meetings for
consideration by the shareholders.
By Order of the Board of Directors,
___________________________
A. Jerome Cook, President
76
<PAGE>
APPENDIX A--LEWISTOWN FINANCIAL STATEMENTS
LEWISTOWN TRUST COMPANY
FINANCIAL STATEMENTS
INDEX
<TABLE>
<S> <C>
Independent auditor's report................................................ A-2
Balance sheets.............................................................. A-3
Statements of income........................................................ A-4
Statements of stockholders' equity.......................................... A-5
Statements of cash flows.................................................... A-6
Notes to financial statements............................................... A-7
</TABLE>
A-1
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Lewistown Trust Company
Lewistown, Pennsylvania
We have audited the accompanying balance sheets of Lewistown Trust Company
as of December 31, 1997 and 1996, and the related statements of income,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1997. These financial statements are the responsibility of
the Bank's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Lewistown Trust Company as
of December 31, 1997 and 1996, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1997 in
conformity with generally accepted accounting principles.
Beard & Company, Inc.
Harrisburg, Pennsylvania
March 10, 1998
A-2
<PAGE>
LEWISTOWN TRUST COMPANY
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1997 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Cash and due from banks...................................... $ 4,954 $ 2,620
Interest bearing deposits with banks......................... 100 100
Federal funds sold........................................... 1,900 3,400
-------- --------
Total cash and cash equivalents.......................... 6,954 6,120
Securities available for sale................................ 47,161 46,577
Loans receivable, net of allowance for loan losses 1997
$587,000; 1996 $643,000..................................... 55,600 52,103
Bank premises and equipment, net............................. 868 824
Accrued interest receivable and other assets................. 1,084 915
-------- --------
Total assets............................................. $111,667 $106,539
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Non-interest bearing....................................... $ 7,333 $ 7,102
Interest bearing........................................... 88,797 85,113
-------- --------
Total deposits........................................... 96,130 92,215
Other borrowings........................................... 498 249
Accrued interest payable and other liabilities............. 920 882
-------- --------
Total liabilities........................................ 97,548 93,346
-------- --------
STOCKHOLDERS' EQUITY
Common stock, par value $1.25 per share; authorized 1,280,000
shares; issued and outstanding 937,024 shares............... 1,171 1,171
Surplus...................................................... 5,665 5,665
Retained earnings............................................ 6,942 5,987
Net unrealized appreciation on securities, net of taxes...... 341 370
-------- --------
Total stockholders' equity............................... 14,119 13,193
-------- --------
Total liabilities and stockholders' equity............... $111,667 $106,539
======== ========
</TABLE>
See Notes to Financial Statements.
A-3
<PAGE>
LEWISTOWN TRUST COMPANY
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1997 1996 1995
-------- -------- --------
(IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)
<S> <C> <C> <C>
Interest income:
Loans receivable, including fees.................. $ 4,792 $ 4,671 $ 4,745
Securities:
Taxable......................................... 2,408 2,463 2,170
Tax-exempt...................................... 420 452 378
Other............................................. 230 270 325
-------- -------- --------
Total interest income......................... 7,850 7,856 7,618
-------- -------- --------
Interest expense:
Deposits.......................................... 4,067 4,096 3,971
Other............................................. 10 9 11
-------- -------- --------
Total interest expense........................ 4,077 4,105 3,982
-------- -------- --------
Net interest income........................... 3,773 3,751 3,636
Provision for loan losses........................... 40 50 55
-------- -------- --------
Net interest income after provision for loan
losses....................................... 3,733 3,701 3,581
-------- -------- --------
Other income:
Trust income...................................... 139 98 89
Service charges on deposit accounts............... 146 119 124
Net realized gain on sale of securities........... 79 95 --
Other............................................. 117 83 75
-------- -------- --------
Total other income............................ 481 395 288
-------- -------- --------
Other expenses:
Salaries and employee benefits.................... 1,275 1,168 1,005
Occupancy......................................... 257 206 168
Taxes, other than income.......................... 117 107 98
Federal deposit insurance premiums................ 14 2 133
Other operating expenses.......................... 469 472 397
-------- -------- --------
Total other expenses.......................... 2,132 1,955 1,801
-------- -------- --------
Income before income taxes.................... 2,082 2,141 2,068
Federal income taxes................................ 555 575 570
-------- -------- --------
Net income.................................... $ 1,527 $ 1,566 $ 1,498
======== ======== ========
Basic earnings per share............................ $ 1.63 $ 1.67 $ 1.60
======== ======== ========
Weighted average number of shares outstanding....... 937,024 937,024 937,024
======== ======== ========
</TABLE>
See Notes to Financial Statements.
A-4
<PAGE>
LEWISTOWN TRUST COMPANY
STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
NET UNREALIZED
APPRECIATION
(DEPRECIATION)
ON SECURITIES TOTAL
COMMON RETAINED AVAILABLE STOCKHOLDERS'
STOCK SURPLUS EARNINGS FOR SALE EQUITY
------ ------- -------- -------------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Balance, December 31,
1994..................... $ 532 $3,802 $ 6,387 $ 69 $10,790
Net income.............. -- -- 1,498 -- 1,498
Cash dividends ($.48 per
share)................. -- -- (447) -- (447)
10% stock dividend...... 54 1,863 (1,917) -- --
Net change in unrealized
appreciation
(depreciation) on
securities available
for sale, net of
taxes.................. -- -- -- 436 436
------ ------ ------- ---- -------
Balance, December 31,
1995..................... 586 5,665 5,521 505 12,277
Net income.............. -- -- 1,566 -- 1,566
Cash dividends ($.55 per
share)................. -- -- (515) -- (515)
2-for-1 stock split in
the form of 100% stock
dividend............... 585 -- (585) -- --
Net change in unrealized
appreciation
(depreciation) on
securities available
for sale, net of
taxes.................. -- -- -- (135) (135)
------ ------ ------- ---- -------
Balance, December 31,
1996..................... 1,171 5,665 5,987 370 13,193
Net income.............. -- -- 1,527 -- 1,527
Net change in unrealized
appreciation
(depreciation) on
securities available
for sale, net of
taxes.................. -- -- -- (29) (29)
Cash dividends ($.61 per
share)................. -- -- (572) -- (572)
------ ------ ------- ---- -------
Balance, December 31,
1997..................... $1,171 $5,665 $ 6,942 $341 $14,119
====== ====== ======= ==== =======
</TABLE>
See Notes to Financial Statements.
A-5
<PAGE>
LEWISTOWN TRUST COMPANY
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------
1997 1996 1995
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income...................................... $ 1,527 $ 1,566 $ 1,498
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses..................... 40 50 55
Provision for depreciation and amortization... 87 74 66
Net amortization (accretion) of securities
premiums and discounts....................... (14) (14) (3)
Gain on sale of securities.................... (79) (95) --
(Increase) decrease in accrued interest
receivable and other assets.................. (169) (97) 19
Increase in accrued interest payable and other
liabilities.................................. 44 76 11
-------- -------- --------
Net cash provided by operating activities... 1,436 1,560 1,646
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of securities available for
sale........................................... 99 1,690 --
Proceeds from sales of securities held to
maturity....................................... -- -- 97
Proceeds from maturities and principal
repayments of securities available for sale.... 21,376 15,915 3,500
Proceeds from maturities and principal
repayments of securities held to maturity...... -- -- 13,628
Purchase of securities available for sale....... (22,010) (19,057) (1,621)
Purchase of securities held to maturity......... -- -- (19,270)
Net increase in loans receivable................ (3,537) (284) (1,060)
Purchases of bank premises and equipment........ (131) (303) (18)
-------- -------- --------
Net cash used in investing activities....... (4,203) (2,039) (4,744)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits........................ 3,915 869 5,602
Net increase (decrease) in other borrowings..... 249 (67) 33
Dividends paid.................................. (563) (468) (426)
-------- -------- --------
Net cash provided by financing activities... 3,601 334 5,209
-------- -------- --------
Increase (decrease) in cash and cash
equivalents................................ 834 (145) 2,111
Cash and cash equivalents:
Beginning..................................... 6,120 6,265 4,154
-------- -------- --------
Ending........................................ $ 6,954 $ 6,120 $ 6,265
======== ======== ========
Cash payments for:
Interest...................................... $ 4,083 $ 4,135 $ 3,950
======== ======== ========
Income taxes.................................. $ 564 $ 564 $ 526
======== ======== ========
</TABLE>
See Notes to Financial Statements.
A-6
<PAGE>
LEWISTOWN TRUST COMPANY
NOTES TO FINANCIAL STATEMENTS
1 SIGNIFICANT ACCOUNTING POLICIES
Nature of operations:
Lewistown Trust Company (the Bank) operates under a state bank charter and
provides full banking services, including trust services. As a state bank, the
Bank is subject to regulation of the Pennsylvania Department of Banking and
the Federal Deposit Insurance Corporation. The area served by the Bank is
principally Mifflin County, Pennsylvania and contiguous counties.
Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Presentation of cash flows:
For purposes of reporting cash flows, cash and cash equivalents include cash
on hand, amounts due from banks and federal funds sold.
Securities:
Securities classified as available for sale are those securities that the
Bank intends to hold for an indefinite period of time but not necessarily to
maturity. Any decision to sell a security classified as available for sale
would be based on various factors, including significant movement in interest
rates, changes in maturity mix of the Bank's assets and liabilities, liquidity
needs, regulatory capital considerations and other similar factors. Securities
available for sale are carried at fair value. Unrealized appreciation or
depreciation is reported as increases or decreases in stockholders' equity,
net of the related deferred tax effect. Realized gains or losses, determined
on the basis of the cost of the specific securities sold, are included in
earnings. Premiums and discounts are recognized in interest income using a
method which approximates the interest method over the period to maturity.
Securities that management has both the positive intent and ability to hold
to maturity are classified as securities held to maturity and are carried at
cost, adjusted for amortization of premium or accretion of discount using a
method which approximates the interest method.
Management determines the appropriate classification of debt securities at
the time of purchase and reevaluates such designation as of each balance sheet
date.
Loans receivable:
Loans that management has the intent and ability to hold for the foreseeable
future or until maturity or pay-off generally are stated at their outstanding
unpaid principal balances, net of unearned discount and an allowance for loan
losses. Interest income is accrued on the unpaid principal balance. Unearned
discount on discounted loans is amortized to income over the life of the
loans, using a method which approximates the interest method.
A loan is generally considered impaired when it is probable the Bank will be
unable to collect all contractual principal and interest payments due in
accordance with the terms of the loan agreement. The accrual of interest is
discontinued when the contractual payment of principal or interest has become
90 days past due or management has serious doubts about further collectibility
of principal or interest, even though the loan is currently performing. A loan
may remain on accrual status if it is in the process of collection and is
either guaranteed or well secured. When a loan is placed on nonaccrual status,
unpaid interest credited to income in the
A-7
<PAGE>
LEWISTOWN TRUST COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
current year is reversed and unpaid interest accrued in prior years is charged
against the allowance for loan losses. Interest received on nonaccrual loans
generally is either applied against principal or reported as interest income,
according to management's judgment as to the collectibility of principal.
Generally, loans are restored to accrual status when the obligation is brought
current, has performed in accordance with the contractual terms for a
reasonable period of time and the ultimate collectibility of the total
contractual principal and interest is no longer in doubt.
Allowance for loan losses:
The allowance for loan losses is established through provisions for loan
losses charged against income. Loans deemed to be uncollectible are charged
against the allowance for loan losses, and subsequent recoveries, if any, are
credited to the allowance.
The allowance for loan losses related to impaired loans that are identified
for evaluation is based on discounted cash flows using the loan's initial
effective interest rate or the fair value, less selling costs, of the
collateral for certain collateral dependent loans. By the time a loan becomes
probable of foreclosure, it has been charged down to fair value, less
estimated costs to sell.
The allowance for loan losses is maintained at a level considered adequate
to provide for losses that can be reasonably anticipated. Management's
periodic evaluation of the adequacy of the allowance is based on the Bank's
past loan loss experience, known and inherent risks in the portfolio, adverse
situations that may affect the borrower's ability to repay, the estimated
value of any underlying collateral, composition of the loan portfolio, current
economic conditions and other relevant factors. This evaluation is inherently
subjective as it requires material estimates that may be susceptible to
significant change, including the amounts and timing of future cash flows
expected to be received on impaired loans.
Bank premises and equipment:
Bank premises and equipment are stated at cost less accumulated
depreciation. Depreciation is computed principally on an accelerated method
over the estimated useful lives of the related assets.
Income taxes:
Deferred taxes are provided on the liability method whereby deferred tax
assets are recognized for deductible temporary differences and deferred tax
liabilities are recognized for taxable temporary differences. Temporary
differences are the differences between the reported amounts of assets and
liabilities and their tax basis. Deferred tax assets are reduced by a
valuation allowance when, in the opinion of management, it is more likely than
not that some portion of all of the deferred tax assets will not be realized.
Deferred tax assets and liabilities are adjusted for the effects of changes in
tax laws and rates on the date of enactment.
Off-balance sheet financial instruments:
In the ordinary course of business, the Bank has entered into off-balance
sheet financial instruments consisting of commitments to extend credit and
standby letters of credit. Such financial instruments are recorded in the
balance sheet when they are funded.
Earnings per share:
The Bank adopted Financial Accounting Standards Board (FASB) Statement No.
128, "Earnings Per Share" in 1997. Since the Bank has a simple capital
structure, previously reporting earnings per share for 1996 and 1995 equals
basic earnings per share for those periods as reflected in the statements of
income. The weighted average number of common shares outstanding is adjusted
for stock dividends for all periods presented.
A-8
<PAGE>
LEWISTOWN TRUST COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
2 RESTRICTIONS ON CASH AND DUE FROM BANK BALANCES
The Bank is required to maintain reserve balances with the Federal Reserve
Bank. The reserve balances approximated $780,000 and $718,000 at December 31,
1997 and 1996 respectively.
3 SECURITIES
The amortized cost and fair value of available for sale securities at
December 31 were as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST APPRECIATION DEPRECIATION VALUE
--------- ------------ ------------ -------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
DECEMBER 31, 1997:
U.S. Treasury securities..... $ 4,597 $ 26 $ -- $ 4,623
U.S. Government agencies..... 12,123 15 (14) 12,124
State and political
subdivisions................ 16,814 235 (31) 17,018
Corporate securities......... 416 1 -- 417
Mortgage-backed securities... 12,592 55 (6) 12,641
Equity securities............ 102 236 -- 338
------- ---- ----- -------
$46,644 $568 $ (51) $47,161
======= ==== ===== =======
DECEMBER 31, 1996:
U.S. Treasury securities..... $ 6,893 $ 26 $ (6) $ 6,913
U.S. Government agencies..... 7,709 41 (17) 7,733
State and political
subdivisions................ 17,789 213 (54) 17,948
Corporate securities......... 1,829 6 -- 1,835
Mortgage-backed securities... 11,675 198 (22) 11,851
Equity securities............ 121 176 -- 297
------- ---- ----- -------
$46,016 $660 $ (99) $46,577
======= ==== ===== =======
</TABLE>
Equity securities are principally comprised of common stocks of community
banks. During 1995, the Bank re-evaluated the appropriateness of all
securities held and transferred $38,515,000 of securities from securities held
to maturity to securities available for sale in accordance with the Guide to
Implementation of Statement No. 115 issued by the FASB. The securities were
transferred at their value on the date of transfer which was $284,000 greater
than the amortized cost of the securities. The transfer represented the entire
held to maturity portfolio.
The amortized cost and fair value of securities as of December 31, 1997 by
contractual maturity are shown below. Expected maturities may differ from
contractual maturities or call dates because borrowers may have the right to
prepay obligations with or without call or prepayment penalties:
<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
--------- -------
(IN THOUSANDS)
<S> <C> <C>
Due in one year or less................................. $ 7,273 $ 7,279
Due after one year through five years................... 22,073 22,237
Due after five years through ten years.................. 3,862 3,917
Due after ten years..................................... 742 749
Mortgage-backed securities.............................. 12,592 12,641
Equity securities....................................... 102 338
------- -------
$46,644 $47,161
======= =======
</TABLE>
A-9
<PAGE>
LEWISTOWN TRUST COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Securities with a fair value of $11,387,000 and $11,032,000 at December 31,
1997 and 1996 were pledged to secure public deposits and for other purposes as
required or permitted by law.
Gross gains of $79,000 and gross losses of $-0- were realized on sales of
securities in 1997. Gross gains of $142,000 and gross losses of $47,000 were
realized on sales of securities in 1996. There were no gains or losses
recognized on sales of securities in 1995.
4 LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES
Loans are comprised of the following at December 31:
<TABLE>
<CAPTION>
1997 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Commercial, financial and agricultural.................... $ 3,590 $ 3,723
Consumer.................................................. 7,402 8,432
Real estate............................................... 43,833 39,000
Other..................................................... 1,624 2,262
------- -------
Total loans............................................. 56,449 53,417
Allowance for loan losses................................. 587 643
Net unearned discount..................................... 262 671
------- -------
Net loans............................................... $55,600 $52,103
======= =======
</TABLE>
Changes in the allowance for loan losses were as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------
1997 1996 1995
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Balance, beginning............................. $ 643 $ 612 $ 592
Provision for loan losses...................... 40 50 55
Loans charged off.............................. (110) (53) (42)
Recoveries..................................... 14 34 7
-------- ------- -------
Balance, ending................................ $ 587 $ 643 $ 612
======== ======= =======
</TABLE>
The recorded investment in impaired loans, not requiring an allowance for
loan losses, was $173,000 and $-0- at December 31, 1997 and 1996 respectively.
The recorded investment in impaired loans requiring an allowance for loan
losses was $-0- and $167,000 at December 31, 1997 and 1996 respectively. At
December 31, 1997 and 1996, the related allowance for loan losses associated
with those loans was $-0- and $81,000 respectively. For the years ended
December 31, 1997, 1996 and 1995, the average recorded investment in these
impaired loans was $174,000, $167,000 and $173,000, and the interest income
recognized on impaired loans was $16,000, $2,000 and $4,000 respectively.
A-10
<PAGE>
LEWISTOWN TRUST COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
5 BANK PREMISES AND EQUIPMENT
Components of bank premises and equipment were as follows at December 31:
<TABLE>
<CAPTION>
1997 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Land...................................................... $ 98 $ 98
Buildings................................................. 1,052 1,015
Furniture................................................. 1,037 943
------- -------
2,187 2,056
Less accumulated depreciation............................. 1,319 1,232
------- -------
$ 868 $ 824
======= =======
</TABLE>
6 DEPOSITS
The composition of deposits is as follows at December 31:
<TABLE>
<CAPTION>
1997 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Demand, non-interest bearing.............................. $ 7,333 $ 7,102
NOW accounts.............................................. 18,094 14,030
Money market accounts..................................... 4,246 4,910
Savings accounts.......................................... 4,624 5,262
Time certificates $100,000 or more........................ 5,349 4,983
Other time certificates................................... 56,484 55,928
------- -------
$96,130 $92,215
======= =======
</TABLE>
At December 31, 1997, the scheduled maturities of time deposits are as
follows (in thousands):
<TABLE>
<S> <C>
1998............................. $42,599
1999............................. 7,595
2000............................. 6,159
2001............................. 1,676
2002............................. 3,759
Thereafter....................... 45
-------
$61,833
=======
</TABLE>
7 BORROWED FUNDS
The Bank maintains a U.S. Treasury tax and loan note option account for the
deposit of withholding taxes, corporate income taxes and certain other
payments to the federal government. Deposits are subject to withdrawal and are
evidenced by an open-ended interest-bearing note of 5.25% at December 31,
1997. Borrowings under this note option account were $498,000 and $249,000 at
December 31, 1997 and 1996 respectively.
8 EMPLOYEE BENEFITS
Profit sharing plan:
The Bank has a profit-sharing plan for the benefit of all eligible
employees. The annual contribution, which is allocated based on salary, is
determined each year at the discretion of the Board of Directors. The
contributions for 1997, 1996 and 1995 were $143,000, $151,000 and $143,000
respectively.
A-11
<PAGE>
LEWISTOWN TRUST COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Deferred compensation plan:
The bank has entered into deferred compensation agreements with certain
directors and the former President of the Bank. At December 31, 1997 and 1996,
the liability (included in other liabilities) was $175,000 and $89,000
respectively. For the years ended December 31, 1997, 1996 and 1995, $86,000,
$61,000 and $28,000 respectively was charged to expense in connection with
this plan.
9 INCOME TAXES
The provision for federal income taxes consisted of the following:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1997 1996 1995
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Current........................................ $ 553 $ 569 $ 596
Deferred....................................... 2 6 (26)
-------- -------- --------
$ 555 $ 575 $ 570
======== ======== ========
</TABLE>
A reconciliation of the statutory income tax expense computed at 34% to the
income tax expense included in the statements of income is as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------
1997 1996 1995
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Computed statutory tax expense............... $ 708 $ 728 $ 703
Tax-exempt interest.......................... (186) (185) (162)
Disallowed interest expense.................. 31 30 26
Other, net................................... 2 2 3
-------- -------- --------
$ 555 $ 575 $ 570
======== ======== ========
</TABLE>
The income tax provision includes $27,000 in 1997, $32,000 in 1996 and $-0-
in 1995 of income taxes related to realized gains on sales of securities.
The net deferred tax liability consisted of the following components at
December 31:
<TABLE>
<CAPTION>
1997 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Allowance for loan losses............................ $ 124 $ 143
Deferred compensation plan........................... 59 30
Other................................................ 32 24
------- -------
Total deferred tax assets.......................... 215 197
------- -------
Deferred tax liabilities:
Securities accretion................................. 69 49
Net unrealized appreciation on securities available
for sale............................................ 176 191
------- -------
Total deferred tax liabilities..................... 245 240
------- -------
Net deferred tax liability......................... $ (30) $ (43)
======= =======
</TABLE>
A-12
<PAGE>
LEWISTOWN TRUST COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
10 TRANSACTIONS WITH EXECUTIVE OFFICERS, DIRECTORS AND PRINCIPAL STOCKHOLDERS
The Bank has had banking transactions in the ordinary course of business
with its executive officers, directors, principal stockholders and their
affiliated companies (related parties) on the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with others. At December 31, 1997 and 1996, these persons were
indebted to the Bank for loans totaling $871,000 and $1,014,000 respectively.
During 1997, $126,000 of new loans were made repayments totaled $269,000.
11 FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
The Bank is a party to financial instruments with off-balance sheet risk in
the normal course of business to meet the financing needs of its customers.
These financial instruments include commitments to extend credit and standby
letters of credit. Those instruments involve, to varying degrees, elements of
credit risk and interest rate risk in excess of the amount recognized in the
balance sheet.
The Bank's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit and
standby letters of credit is represented by the contractual amount of those
instruments. The Bank uses the same credit policies in making commitments and
conditional obligations as it does for on-balance sheet instruments.
A summary of the Bank's financial instrument commitments is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1997 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Commitments to extend credit.............................. $ 3,918 $ 3,320
Outstanding standby letters of credit..................... 153 45
</TABLE>
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract. Since many
of the commitments are expected to expire without being drawn upon, the total
commitment amounts do not necessarily represent future cash requirements.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. The Bank evaluates each customer's credit
worthiness on a case-by-case basis. The amount of collateral obtained, if
deemed necessary by the Bank upon extension of credit, is based on
management's credit evaluation. Collateral held varies but may include
personal or commercial real estate, accounts receivable, inventory and
equipment.
Outstanding standby letters of credit written are conditional commitments
issued by the Bank to guarantee the performance of a customer to a third
party. The credit risk involved in issuing standby letters of credit is
essentially the same as that involved in extending loan facilities to
customers.
12 CONCENTRATION OF CREDIT RISK
The Bank grants commercial, residential and consumer loans to customers
primarily located in Mifflin County, Pennsylvania. The concentrations of
credit by type of loan are set forth in Note 4. Although the Bank has a
diversified loan portfolio, its debtors' ability to honor their contracts is
influenced by the region's economy.
13 REGULATORY MATTERS
The Bank is subject to various regulatory capital requirements administered
by the federal banking agencies. Failure to meet minimum capital requirements
can initiate certain mandatory and possibly additional
A-13
<PAGE>
LEWISTOWN TRUST COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
discretionary actions by regulators that, if undertaken, could have a direct
material affect on the Bank's financial statements. Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, the Bank
must meet specific capital guidelines that involve quantitative measures of
the Bank's assets, liabilities and certain off-balance sheet items as
calculated under regulatory accounting practices. The Bank's capital amounts
and classification are also subject to qualitative judgments by the regulators
about components, risk weightings and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth below) of
total and Tier 1 capital (as defined in the regulations) to risk-weighted
assets, and of Tier 1 capital to average assets. Management believes, as of
December 31, 1997, that the Bank meets all capital adequacy requirements to
which it is subject.
As of December 31, 1997, the most recent notification from the Federal
Deposit Insurance Corporation categorized the Bank as well capitalized under
the regulatory framework for prompt corrective action. There are no conditions
or events since that notification that management believes have changed the
Bank's category.
The Bank's actual capital amounts and ratios at December 31, 1997 and 1996
are presented below:
<TABLE>
<CAPTION>
TO BE WELL
FOR CAPITAL CAPITALIZED UNDER
ADEQUACY PROMPT CORRECTIVE
ACTUAL PURPOSES ACTION PROVISIONS
------------- ------------- ------------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------- ----- ------- ----- --------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
AT DECEMBER 31, 1997:
Total capital (to risk
weighted assets)........... $14,365 26.57% $^4,325 ^8.00% $ ^5,406 ^10.00%
Tier I capital (to risk
weighted assets)........... 13,778 25.49 ^2,163 ^4.00 ^3,244 ^6.00
Tier I capital (to average
assets).................... 13,778 12.56 ^4,387 ^4.00 ^5,484 ^5.00
AT DECEMBER 31, 1996:
Total capital (to risk
weighted assets)........... $13,466 25.73% $^4,186 ^8.00% $ ^5,233 ^10.00%
Tier I capital (to risk
weighted assets)........... 12,823 24.51 ^2,093 ^4.00 ^3,140 ^6.00
Tier I capital (to average
assets).................... 12,823 11.89 ^4,315 ^4.00 ^5,393 ^5.00
</TABLE>
The Bank is subject to certain restrictions on the amount of dividends that
it may declare without prior regulatory approval. At December 31, 1997,
$6,942,000 of retained earnings were available for dividend declaration
without prior regulatory approval.
14 COMMITMENT
The Bank leases a branch facility under a lease agreement which commenced in
1996 and which expires in 2001. The rent expense which includes the licensing
fee was $34,000 and $20,000 in 1997 and 1996 respectively.
Minimum future payments under this noncancellable lease agreement at
December 31, 1997 are in thousands:
<TABLE>
<S> <C>
1998................................ $ 34
1999................................ 34
2000................................ 34
2001................................ 29
----
$131
====
</TABLE>
A-14
<PAGE>
LEWISTOWN TRUST COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
15 FAIR VALUES OF FINANCIAL INSTRUMENTS
Management uses its best judgment in estimating the fair value of the Bank's
financial instruments; however, there are inherent weaknesses in any
estimation technique. Therefore, for substantially all financial instruments,
the fair value estimates herein are not necessarily indicative of the amounts
the Bank could have realized in a sales transaction on the dates indicated.
The estimated fair value amounts have been measured as of year end and have
not been re-evaluated or updated for purposes of these financial statements
subsequent to that date. As such, the estimated fair values of these financial
instruments subsequent to the respective reporting date may be different than
the amounts reported at each year end.
The following information should not be interpreted as an estimate of the
fair value of the entire Bank since a fair value calculation is only provided
for a limited portion of the Bank's assets. Due to a wide range of valuation
techniques and the degree of subjectivity used in making the estimates,
comparisons between the Bank's disclosures and those of other companies may
not be meaningful. The following methods and assumptions were used to estimate
the fair value of the Bank's financial instruments at December 31, 1997 and
1996:
Cash and cash equivalents:
The carrying amounts reported in the balance sheet for cash and
short-term instruments approximate those assets' fair values.
Securities (including mortgage-backed securities):
Fair values for securities are based on quoted market prices, where
available. If quoted market prices are not available, fair values are
based on quoted market prices of comparable instruments.
Loans receivable:
For variable rate loans that reprice frequently and with no
significant change in credit risk, fair values are based on carrying
values. The fair values for other loans (e.g., residential real estate
and consumer loans) are estimated using discounted cash flow analyses,
using interest rates currently being offered for loans with similar
terms to borrowers of similar credit quality.
Accrued interest receivable and payable:
The carrying amount of accrued interest receivable and accrued
interest payable approximates its fair value.
Deposit liabilities:
The fair values disclosed for demand deposits (e.g., interest and
non-interest checking, passbook savings and certain types of money
market accounts) are, by definition, equal to the amount payable on
demand at the reporting date (i.e., their carrying amounts). Fair
values for fixed-rate certificates of deposit are estimated using a
discounted cash flow calculation that applies interest rates currently
being offered on certificates to a schedule of aggregated expected
monthly maturities on time deposits.
Other borrowings:
The carrying amount of other borrowed funds approximates its fair
value.
Off-balance-sheet-instruments:
Fair values for the Bank's off-balance sheet instruments (lending
commitments and standby letters of credit) are based on fees currently
charged to enter into similar agreements, taking into account, the
remaining terms of the agreements and the counterparties' credit
standing.
A-15
<PAGE>
LEWISTOWN TRUST COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The estimated fair values of the Bank's financial instruments were as
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------
1997 1996
---------------- ----------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- ------- -------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Financial assets:
Cash and due from banks.............. $ 5,054 $ 5,054 $ 2,720 $ 2,720
Federal funds sold................... 1,900 1,900 3,400 3,400
Securities........................... 47,161 47,161 46,577 46,577
Loans, net of allowance.............. 55,600 55,358 52,103 52,004
Accrued interest receivable.......... 992 992 900 900
Financial liabilities:
Deposits............................. 96,130 96,357 92,215 92,638
Other borrowings..................... 498 498 249 249
Accrued interest payable............. 311 311 317 317
Off-balance sheet financial
instruments:
Commitments to extend credit......... -- -- -- --
Standby letters of credit............ -- -- -- --
</TABLE>
16 MERGER
In December 1997, the Bank announced the signing of a definitive agreement
to merge with Juniata Valley Financial Corp. (JVFC), a commercial bank with
total assets of $221 million, headquartered in Mifflintown, Pennsylvania.
Under the terms of the agreement, each Lewistown Trust shareholder will
receive one share of JVFC's common stock for each Lewistown Trust share and
Lewistown Trust will be merged into Juniata Valley Bank, a wholly-owned
subsidiary of JVFC. The transaction will be accounted for under the pooling-
of-interests method of accounting and is subject to regulatory and shareholder
approvals. The merger is expected to be consummated by the second or third
quarter of 1998.
The following table provides a summary of the consolidated operating results
and financial condition, on a pro forma basis, as of and for the year ended
December 31, 1997:
<TABLE>
<CAPTION>
LEWISTOWN
TRUST CONSOLIDATED
(AS REPORTED) JVFC PRO FORMA
------------- -------- ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Net interest income.................... $ 3,773 $ 8,682 $ 12,455
Net income............................. 1,527 3,045 4,572
Total assets........................... 111,667 220,910 332,577
Total stockholders' equity............. 14,119 28,712 42,831
</TABLE>
A-16
<PAGE>
APPENDIX B--OPINION OF RP FINANCIAL, L.C.
April , 1998
Board of Directors
Lewistown Trust Company
100 East Market Street
Lewistown, Pennsylvania 17044-8106
Members of the Board:
You have requested RP Financial, LC. ("RP Financial") to provide you with
its opinion as to the fairness from a financial point of view to the
stockholders of Lewistown Trust Company, Lewistown, Pennsylvania
("Lewistown"), of the Agreement and Plan of Merger (the "Merger Agreement"),
by and among Juniata Valley Financial Corporation, a Pennsylvania Corporation
("Juniata"), The Juniata Valley Bank ("JVB") and Lewistown. The Merger
Agreement is incorporated herein by reference. Unless otherwise defined, all
capitalized terms incorporated herein have the meanings ascribed to them in
the Merger Agreement.
Summary Description of Consideration
As fully described in the Merger Agreement, at the Effective Date of the
Merger, each share of Lewistown's common stock issued and outstanding
immediately prior to the Effective Date of the Merger, except for (i)
Perfected Dissenting Shares and (ii) shares of Lewistown's Common Stock held
and beneficially owned by Juniata which shall be cancelled by virtue of the
merger, shall be converted into one share of common stock of Juniata. Cash
will be paid in lieu of fractional shares.
RP Financial Background and Experience
RP Financial, as part of its financial institution valuation and consulting
practice, is regularly engaged in the valuation of financial institution
securities in connection with mergers and acquisitions of commercial banks and
thrift institutions, initial and secondary offerings, mutual-to-stock
conversions of thrift institutions, and business valuations for other
corporate purposes for financial institutions. As specialists in the
securities of financial institutions, RP Financial has experience in, and
knowledge of, the Pennsylvania and Northeast markets for bank and thrift
securities and financial institutions operating in Pennsylvania.
Materials Reviewed
In rendering its fairness opinion, RP Financial reviewed and analyzed the
following material, the most recent of which includes: (i) the Merger
Agreement including exhibits; (ii) financial and other information for
Lewistown, all with regard to balance and off-balance sheet composition,
profitability, interest rates, volumes, maturities, trends, credit risk,
interest rate risk, liquidity risk and operations including (a) audited
financial statements for the fiscal years ended December 31, 1995 through
1997, (b) stockholder, regulatory and internal financial and other reports
through March 31, 1998, (c) the most recent proxy statement for Lewistown, and
(d) Lewistown's management and Board comments regarding past and current
business, operations, financial condition and future prospects; and (iii)
financial and other information for Juniata including (a) audited financial
statements for the fiscal years ended December 31, 1996 and 1997, incorporated
in Juniata's Annual Report to Shareholders, (b) regulatory and internal
financial and other reports through March 31, 1998, (c) Juniata's Registration
Statement on Form S-4 as filed with the Securities and Exchange Commission on
March , 1998 and (d) Juniata's management comments regarding past and current
business, operations, financial condition and future prospects.
RP Financial reviewed financial, operational, market area and stock price
and trading characteristics for Lewistown and Juniata relative to regional
publicly-traded banking institutions, respectively, with comparable resources,
financial condition, earnings, operations and markets. RP Financial also
considered the economic and
B-1
<PAGE>
demographic characteristics in the local market area, and the potential impact
of the regulatory, legislative and economic environments on operations for
Lewistown and Juniata and the public perception of the banking industry. RP
Financial also considered: (a) the financial terms, financial and operating
condition and market area of other recently completed acquisitions of
commercial banks both regionally and in Pennsylvania; (b) discounted cash flow
analyses for Lewistown incorporating future prospects; and (c) the pro forma
impact on Juniata of the acquisition of Lewistown, which is expected to be
accounted for as a pooling of interests.
In rendering its opinion, RP Financial relied, without independent
verification, on the accuracy and completeness of the information concerning
Lewistown and Juniata as furnished by the respective institutions to RP
Financial for review for purposes of its opinion, as well as publicly-
available information regarding other financial institutions and economic and
demographic data. Lewistown and Juniata did not restrict RP Financial as to
the material it was permitted to review. RP Financial did not perform or
obtain any independent appraisals or evaluations of the assets and liabilities
and potential and/or contingent liabilities of Lewistown or Juniata.
RP Financial expresses no opinion on matters of a legal, regulatory, tax or
accounting nature or the ability of the Merger as set forth in the Merger
Agreement to be consummated. In rendering its opinion, RP Financial assumed
that in the course of obtaining the necessary regulatory and governmental
approvals for the Merger, no restriction will be imposed on Juniata that would
have a material adverse effect on the ability of the Merger to be consummated
as set forth in the Merger Agreement.
Opinion
It is understood that this letter is directed to the Board of Directors of
Lewistown in its consideration of the Merger Agreement, and does not
constitute a recommendation to any stockholder of Lewistown as to any action
that such stockholder should take in connection with the Merger Agreement, or
otherwise.
It is understood that this opinion is based on market conditions and other
circumstances existing on the date hereof.
It is understood that this opinion may be included in its entirety in any
communication by Lewistown or its Board of Directors to the stockholders of
Lewistown. It is also understood that this opinion may be included in its
entirety in any regulatory filing by Lewistown or Juniata, and that RP
Financial consents to the summary of the opinion in the proxy materials of
Lewistown, and any amendments thereto. Except as described above, this opinion
may not be summarized, excerpted from or otherwise publicly referred to
without RP Financial's prior written consent. Based upon and subject to the
foregoing, and other such matters considered relevant, it is RP Financial's
opinion that, as of the date hereof, the Merger Consideration to be received
by Lewistown's stockholders, as described in the Merger Agreement, is fair to
such stockholders from a financial point of view.
Respectfully submitted,
RP FINANCIAL, LC.
B-2
<PAGE>
APPENDIX C--OPINION OF HOPPER SOLIDAY AND COMPANY, INC.
April , 1998
Board of Directors
Juniata Valley Financial Corporation
Bridge & Main Streets
Mifflintown, PA 17059
Gentlemen:
You have requested our opinion, as investment bankers, as to the fairness,
from a financial point of view, of the terms of the proposed merger (the
"Merger") of Lewistown Trust Company ("Lewistown") with and into Juniata
Valley Bank, a wholly owned subsidiary of Juniata Valley Financial Corporation
("Juniata"). Pursuant to the Agreement and Plan of Merger dated December 29,
1997 between Juniata and Lewistown, each outstanding share of Lewistown common
stock will be converted into and become the right to receive one (1) share of
Juniata common stock (the "Merger Consideration").
Hopper Soliday & Co., Inc. ("Hopper Soliday"), as a customary part of its
investment banking business, is engaged in valuing businesses and their
securities in connection with mergers and acquisitions, stock purchase offers,
negotiated underwritings, secondary distributions of securities, private
placements and for estate, corporate reorganization and other purposes.
Hopper Soliday reviewed, among other things: i) Lewistown's Quarterly Call
Reports as filed with the Federal Deposit Insurance Corporation (FDIC) for the
periods ending March 31, 1996, June 30, 1996, September 30, 1996, December 31,
1996, March 31, 1997, June 30, 1997 and September 30, 1997 and related
unaudited financial information provided by Lewistown for fiscal years ended
December 31, 1992 through December 31, 1995; ii) Juniata's Annual Reports on
Form 10-K and related financial information for fiscal years ended December
31, 1992 through December 31, 1996, and Juniata's Quarterly Reports on Form
10-Q and related unaudited financial information for the quarters ended March
31, 1997, June 30, 1997 and September 30, 1997; iii) certain information
concerning the respective businesses, operations, regulatory condition and
prospects of Juniata and Lewistown, including financial forecasts, relating to
the business, earnings, assets and prospects of Juniata and Lewistown,
furnished to Hopper Soliday by Juniata and Lewistown, which Hopper Soliday
discussed with members of senior management of Juniata and Lewistown; iv)
historical market prices and trading activity for the Juniata Common Stock and
Lewistown Common Stock and similar data for certain publicly traded companies
which Hopper Soliday deemed to be relevant; v) the results of operations of
Juniata and Lewistown and similar data for certain companies which Hopper
Soliday deemed to be relevant; vi) the financial terms of the Merger
contemplated by the Agreement and the financial terms of certain other mergers
and acquisitions which Hopper Soliday deemed to be relevant; vii) the pro
forma impact of the Merger on the earnings and book value per share,
consolidated capitalization and certain balance sheet and profitability ratios
of Juniata; viii) the Agreement; ix) such other matters as Hopper Soliday
deemed necessary. Hopper Soliday also met with certain members of senior
management and other representatives of Juniata and Lewistown to discuss the
foregoing as well as other matters Hopper Soliday deemed relevant.
In conducting our review and in arriving at our opinion, we relied upon and
assumed the accuracy and completeness of the financial and other information
provided to us or that which was publicly available and did not attempt
independently to verify such information. We relied upon the managements of
Juniata and Lewistown as to the reasonableness and achievability of the
financial and operating forecasts and projections (and the assumptions and
bases thereof) provided to us and assumed that such forecasts and projections
reflected the best currently available estimates and judgements of such
managements and that such forecasts and projections would be realized in the
amounts and in the time periods estimated by such managements. We also
assumed, without independent verification, that the aggregate allowances for
loan losses for Juniata and Lewistown were adequate to cover such losses. We
did not make or obtain any evaluations or appraisals of the
C-1
<PAGE>
assets of Juniata and Lewistown, nor did we examine any individual loan credit
files. Our opinion is limited to the fairness, from a financial point of view,
to the shareholders of Juniata of the Merger Consideration.
In rendering our opinion we have assumed that in the course of obtaining the
necessary regulatory approvals for the Merger, no conditions will be imposed
that will have a material adverse effect on the contemplated benefits of the
Merger to either Juniata or, on a pro forma basis, the resulting company
following the Merger. Our opinion necessarily is based upon conditions as they
exist on, and can be evaluated as of, the date of this letter.
On the basis of the aforementioned analysis, and subject to the
qualifications described above, as of the date hereof, we are of the opinion
that the Merger Consideration provided for by the Merger Agreement is fair to
the shareholders of Juniata from a financial point of view.
Sincerely,
/s/ Hopper Soliday & Co., Inc.
C-2
<PAGE>
APPENDIX D--DISSENTERS' RIGHTS
SUBCHAPTER 15D OF THE PENNSYLVANIA BUSINESS CORPORATION LAW
(S) 1571. APPLICATION AND EFFECT OF SUBCHAPTER
(a) General rule.--Except as otherwise provided in subsection (b), any
shareholder of a business corporation shall have the right to dissent from,
and to obtain payment of the fair value of his shares in the event of, any
corporate action, or to otherwise obtain fair value for his shares, where this
part expressly provides that a shareholder shall have the rights and remedies
provided in this subchapter.
See: Section 1906(c) (relating to dissenters rights upon special
treatment).
Section 1930 (relating to dissenters rights).
Section 1931(d) (relating to dissenters rights in share exchanges).
Section 1932(c) (relating to dissenters rights in asset transfers).
Section 1952(d) (relating to dissenters rights in division).
Section 1962(c) (relating to dissenters rights in conversion).
Section 2104(b) (relating to procedure).
Section 2324 (relating to corporation option where a restriction on
transfer of a security is held invalid).
Section 2325(b) (relating to minimum vote requirement).
Section 2704(c) (relating to dissenters rights upon election).
Section 2705(d) (relating to dissenters rights upon renewal of
election).
Section 2907(a) (relating to proceedings to terminate breach of
qualifying conditions).
Section 7104(b)(3) (relating to procedure).
(b) Exceptions.--
(1) Except as otherwise provided in paragraph (2), the holders of the
shares of any class or series of shares that, at the record date fixed to
determine the shareholders entitled to notice of and to vote at the meeting
at which a plan specified in any of section 1930, 1931(d), 1932(c) or
1952(d) is to be voted on, are either:
(i) listed on a national securities exchange; or
(ii) held of record by more than 2,000 shareholders;
shall not have the right to obtain payment of the fair value of any such
shares under this subchapter.
(2) Paragraph (1) shall not apply to and dissenters rights shall be
available without regard to the exception provided in that paragraph in the
case of:
(i) Shares converted by a plan if the shares are not converted solely
into shares of the acquiring, surviving, new or other corporation or
solely into such shares and money in lieu of fractional shares.
(ii) Shares of any preferred or special class unless the articles,
the plan or the terms of the transaction entitle all shareholders of
the class to vote thereon and require for the adoption of the plan or
the effectuation of the transaction the affirmative vote of a majority
of the votes cast by all shareholders of the class.
(iii) Shares entitled to dissenters rights under section 1906(c)
(relating to dissenters rights upon special treatment).
(3) The shareholders of a corporation that acquires by purchase, lease,
exchange or other disposition all or substantially all of the shares,
property or assets of another corporation by the issuance of shares,
obligations or otherwise, with or without assuming the liabilities of the
other corporation and with or without the intervention of another
corporation or other person, shall not be entitled to the rights and
remedies of dissenting shareholders provided in this subchapter regardless
of the fact, if it be the case, that the acquisition was accomplished by
the issuance of voting shares of the corporation to be outstanding
immediately after the acquisition sufficient to elect a majority or more of
the directors of the corporation.
D-1
<PAGE>
(c) Grant of optional dissenters rights.--The bylaws or a resolution of the
board of directors may direct that all or a part of the shareholders shall
have dissenters rights in connection with any corporate action or other
transaction that would otherwise not entitle such shareholders to dissenters
rights.
(d) Notice of dissenters rights.--Unless otherwise provided by statute, if a
proposed corporate action that would give rise to dissenters rights under this
subpart is submitted to a vote at a meeting of shareholders, there shall be
included in or enclosed with the notice of meeting:
(1) a statement of the proposed action and a statement that the
shareholders have a right to dissent and obtain payment of the fair value
of their shares by complying with the terms of this subchapter; and
(2) a copy of this subchapter.
(e) Other statutes.--The procedures of this subchapter shall also be
applicable to any transaction described in any statute other than this part
that makes reference to this subchapter for the purpose of granting dissenters
rights.
(f) Certain provisions of articles ineffective.--This subchapter may not be
relaxed by any provision of the articles.
(g) Cross references.--See sections 1105 (relating to restriction on
equitable relief), 1904 (relating to de facto transaction doctrine abolished)
and 2512 (relating to dissenters rights procedure).
(S) 1572. DEFINITIONS
The following words and phrases when used in this subchapter shall have the
meanings given to them in this section unless the context clearly indicates
otherwise:
"Corporation." The issuer of the shares held or owned by the dissenter
before the corporate action or the successor by merger, consolidation,
division, conversion or otherwise of that issuer. A plan of division may
designate which of the resulting corporations is the successor corporation for
the purposes of this subchapter. The successor corporation in a division shall
have sole responsibility for payments to dissenters and other liabilities
under this subchapter except as otherwise provided in the plan of division.
"Dissenter." A shareholder or beneficial owner who is entitled to and does
assert dissenters rights under this subchapter and who has performed every act
required up to the time involved for the assertion of those rights.
"Fair value." The fair value of shares immediately before the effectuation
of the corporate action to which the dissenter objects, taking into account
all relevant factors, but excluding any appreciation or depreciation in
anticipation of the corporate action.
"Interest." Interest from the effective date of the corporate action until
the date of payment at such rate as is fair and equitable under all the
circumstances, taking into account all relevant factors, including the average
rate currently paid by the corporation on its principal bank loans.
(S) 1573. RECORD AND BENEFICIAL HOLDERS AND OWNERS
(a) Record holders of shares.--A record holder of shares of a business
corporation may assert dissenters rights as to fewer than all of the shares
registered in his name only if he dissents with respect to all the shares of
the same class or series beneficially owned by any one person and discloses
the name and address of the person or persons on whose behalf he dissents. In
that event, his rights shall be determined as if the shares as to which he has
dissented and his other shares were registered in the names of different
shareholders.
(b) Beneficial owners of shares.--A beneficial owner of shares of a business
corporation who is not the record holder may assert dissenters rights with
respect to shares held on his behalf and shall be treated as a
D-2
<PAGE>
dissenting shareholder under the terms of this subchapter if he submits to the
corporation not later than the time of the assertion of dissenters rights a
written consent of the record holder. A beneficial owner may not dissent with
respect to some but less than all shares of the same class or series owned by
the owner, whether or not the shares so owned by him are registered in his
name.
(S) 1574. NOTICE OF INTENTION TO DISSENT
If the proposed corporate action is submitted to a vote at a meeting of
shareholders of a business corporation, any person who wishes to dissent and
obtain payment of the fair value of his shares must file with the corporation,
prior to the vote, a written notice of intention to demand that he be paid the
fair value for his shares if the proposed action is effectuated, must effect
no change in the beneficial ownership of his shares from the date of such
filing continuously through the effective date of the proposed action and must
refrain from voting his shares in approval of such action. A dissenter who
fails in any respect shall not acquire any right to payment of the fair value
of his shares under this subchapter. Neither a proxy nor a vote against the
proposed corporate action shall constitute the written notice required by this
section.
(S) 1575. NOTICE TO DEMAND PAYMENT
(a) General rule.--If the proposed corporate action is approved by the
required vote at a meeting of shareholders of a business corporation, the
corporation shall mail a further notice to all dissenters who gave due notice
of intention to demand payment of the fair value of their shares and who
refrained from voting in favor of the proposed action. If the proposed
corporate action is to be taken without a vote of shareholders, the
corporation shall send to all shareholders who are entitled to dissent and
demand payment of the fair value of their shares a notice of the adoption of
the plan or other corporate action. In either case, the notice shall:
(1) State where and when a demand for payment must be sent and
certificates for certificated shares must be deposited in order to obtain
payment.
(2) Inform holders of uncertificated shares to what extent transfer of
shares will be restricted from the time that demand for payment is
received.
(3) Supply a form for demanding payment that includes a request for
certification of the date on which the shareholder, or the person on whose
behalf the shareholder dissents, acquired beneficial ownership of the
shares.
(4) Be accompanied by a copy of this subchapter.
(b) Time for receipt of demand for payment.--The time set for receipt of the
demand and deposit of certificated shares shall be not less than 30 days from
the mailing of the notice.
(S) 1576. FAILURE TO COMPLY WITH NOTICE TO DEMAND PAYMENT, ETC.
(a) Effect of failure of shareholder to act.--A shareholder who fails to
timely demand payment, or fails (in the case of certificated shares) to timely
deposit certificates, as required by a notice pursuant to section 1575
(relating to notice to demand payment) shall not have any right under this
subchapter to receive payment of the fair value of his shares.
(b) Restriction on uncertificated shares.--If the shares are not represented
by certificates, the business corporation may restrict their transfer from the
time of receipt of demand for payment until effectuation of the proposed
corporate action or the release of restrictions under the terms of section
1577(a) (relating to failure to effectuate corporate action).
(c) Rights retained by shareholder.--The dissenter shall retain all other
rights of a shareholder until those rights are modified by effectuation of the
proposed corporate action.
(S) 1577. RELEASE OF RESTRICTIONS OR PAYMENT FOR SHARES
(a) Failure to effectuate corporate action.--Within 60 days after the date
set for demanding payment and depositing certificates, if the business
corporation has not effectuated the proposed corporate action, it shall return
D-3
<PAGE>
any certificates that have been deposited and release uncertificated shares
from any transfer restrictions imposed by reason of the demand for payment.
(b) Renewal of notice to demand payment.--When uncertificated shares have
been released from transfer restrictions and deposited certificates have been
returned, the corporation may at any later time send a new notice conforming
to the requirements of section 1575 (relating to notice to demand payment),
with like effect.
(c) Payment of fair value of shares.--Promptly after effectuation of the
proposed corporate action, or upon timely receipt of demand for payment if the
corporate action has already been effectuated, the corporation shall either
remit to dissenters who have made demand and (if their shares are
certificated) have deposited their certificates the amount that the
corporation estimates to be the fair value of the shares, or give written
notice that no remittance under this section will be made. The remittance or
notice shall be accompanied by:
(1) The closing balance sheet and statement of income of the issuer of
the shares held or owned by the dissenter for a fiscal year ending not more
than 16 months before the date of remittance or notice together with the
latest available interim financial statements.
(2) A statement of the corporation's estimate of the fair value of the
shares.
(3) A notice of the right of the dissenter to demand payment or
supplemental payment, as the case may be, accompanied by a copy of this
subchapter.
(d) Failure to make payment.--If the corporation does not remit the amount
of its estimate of the fair value of the shares as provided by subsection (c),
it shall return any certificates that have been deposited and release
uncertificated shares from any transfer restrictions imposed by reason of the
demand for payment. The corporation may make a notation on any such
certificate or on the records of the corporation relating to any such
uncertificated shares that such demand has been made. If shares with respect
to which notation has been so made shall be transferred, each new certificate
issued therefor or the records relating to any transferred uncertificated
shares shall bear a similar notation, together with the name of the original
dissenting holder or owner of such shares. A transferee of such shares shall
not acquire by such transfer any rights in the corporation other than those
that the original dissenter had after making demand for payment of their fair
value.
(S) 1578. ESTIMATE BY DISSENTER OF FAIR VALUE OF SHARES
(a) General rule.--If the business corporation gives notice of its estimate
of the fair value of the shares, without remitting such amount, or remits
payment of its estimate of the fair value of a dissenter's shares as permitted
by section 1577(c) (relating to payment of fair value of shares) and the
dissenter believes that the amount stated or remitted is less than the fair
value of his shares, he may send to the corporation his own estimate of the
fair value of the shares, which shall be deemed a demand for payment of the
amount or the deficiency.
(b) Effect of failure to file estimate.--Where the dissenter does not file
his own estimate under subsection (a) within 30 days after the mailing by the
corporation of its remittance or notice, the dissenter shall be entitled to no
more than the amount stated in the notice or remitted to him by the
corporation.
(S) 1579. VALUATION PROCEEDINGS GENERALLY
(a) General rule.--Within 60 days after the latest of:
(1) effectuation of the proposed corporate action;
(2) timely receipt of any demands for payment under section 1575
(relating to notice to demand payment); or
(3) timely receipt of any estimates pursuant to section 1578 (relating to
estimate by dissenter of fair value of shares);
if any demands for payment remain unsettled, the business corporation may file
in court an application for relief requesting that the fair value of the
shares be determined by the court.
D-4
<PAGE>
(b) Mandatory joinder of dissenters.--All dissenters, wherever residing,
whose demands have not been settled shall be made parties to the proceeding as
in an action against their shares. A copy of the application shall be served
on each such dissenter. If a dissenter is a nonresident, the copy may be
served on him in the manner provided or prescribed by or pursuant to 42
Pa.C.S. Ch. 53 (relating to bases of jurisdiction and interstate and
international procedure). > [FN1]
(c) Jurisdiction of the court.--The jurisdiction of the court shall be
plenary and exclusive. The court may appoint an appraiser to receive evidence
and recommend a decision on the issue of fair value. The appraiser shall have
such power and authority as may be specified in the order of appointment or in
any amendment thereof.
(d) Measure of recovery.--Each dissenter who is made a party shall be
entitled to recover the amount by which the fair value of his shares is found
to exceed the amount, if any, previously remitted, plus interest.
(e) Effect of corporation's failure to file application.--If the corporation
fails to file an application as provided in subsection (a), any dissenter who
made a demand and who has not already settled his claim against the
corporation may do so in the name of the corporation at any time within 30
days after the expiration of the 60-day period. If a dissenter does not file
an application within the 30-day period, each dissenter entitled to file an
application shall be paid the corporation's estimate of the fair value of the
shares and no more, and may bring an action to recover any amount not
previously remitted.
(S) 1580. COSTS AND EXPENSES OF VALUATION PROCEEDINGS
(a) General rule.--The costs and expenses of any proceeding under section
1579 (relating to valuation proceedings generally), including the reasonable
compensation and expenses of the appraiser appointed by the court, shall be
determined by the court and assessed against the business corporation except
that any part of the costs and expenses may be apportioned and assessed as the
court deems appropriate against all or some of the dissenters who are parties
and whose action in demanding supplemental payment under section 1578
(relating to estimate by dissenter of fair value of shares) the court finds to
be dilatory, obdurate, arbitrary, vexatious or in bad faith.
(b) Assessment of counsel fees and expert fees where lack of good faith
appears.--Fees and expenses of counsel and of experts for the respective
parties may be assessed as the court deems appropriate against the corporation
and in favor of any or all dissenters if the corporation failed to comply
substantially with the requirements of this subchapter and may be assessed
against either the corporation or a dissenter, in favor of any other party, if
the court finds that the party against whom the fees and expenses are assessed
acted in bad faith or in a dilatory, obdurate, arbitrary or vexatious manner
in respect to the rights provided by this subchapter.
(c) Award of fees for benefits to other dissenters.--If the court finds that
the services of counsel for any dissenter were of substantial benefit to other
dissenters similarly situated and should not be assessed against the
corporation, it may award to those counsel reasonable fees to be paid out of
the amounts awarded to the dissenters who were benefited.
D-5
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Sections 1741 and 1742 of the Pennsylvania Business Corporation Law of 1988,
as amended (the "BCL") provide that a business corporation may indemnify
directors and officers against liability they may incur as such provided that
the particular person acted in good faith and in a manner he or she reasonably
believed to be in, or not opposed to, the best interests of the corporation
and, with respect to any criminal proceeding, had no reasonable cause to
believe his or her conduct was unlawful. In the case of actions against a
director or officer by or in the right of the Corporation, the power to
indemnify extends only to expenses (not judgments and amounts paid in the
settlement) and such power generally does not exist if the person otherwise
entitled to indemnification shall have been adjudged to be liable to the
Corporation unless it is judicially determined that, despite the adjudication
of liability but in view of all the circumstances of the case, the person is
fairly and reasonably entitled to indemnification for specified expenses.
Under Section 1743 of the BCL, the Corporation is required to indemnify
directors and officers against expenses they may incur in defending actions
against them in such capacities if they are successful on the merits or
otherwise in the defense of such actions. Under Section 1745 of the BCL, a
corporation may pay the expenses of a director or officer incurred in
defending an action or proceeding in advance of the final amounts advanced
unless it is ultimately determined that such person is entitled to
indemnification from the corporation. Article 13 of the Juniata Valley
Financial Corp. ("Juniata") Articles of Incorporation and Article 20 of
Juniata's Bylaws provide indemnification of directors, officers and other
agents of Juniata and advancement of expenses to the extent otherwise
permitted by the BCL.
Section 1746 of the BCL grants a corporation broad authority to indemnify is
directors, officers and other agents for liabilities and expenses incurred in
such capacity, except in circumstances where the act or failure to act giving
rise to the claim for indemnification is determined by a court to have
constituted wilful misconduct or recklessness. Article 13 of Juniata's
Articles of Incorporation provides that the Corporation indemnify any and all
persons whom it shall have the power to indemnify for and against any and all
expenses, liabilities or other matters for which indemnification is permitted
by applicable laws.
Article 20 of Juniata's Bylaws conditions any indemnification or advancement
of expenses upon a determination, made in accordance with the procedures
specified in Section 1744 of the BCL, by Juniata's directors or shareholders
that indemnification or advancement of expenses is proper because the director
or officer met the standard of conduct set forth in Section 1741 or 1742 of
the BCL, as applicable.
As authorized by Section 1747 of the BCL and Article XIV, Juniata maintains,
on behalf of its directors and officers, insurance protection against certain
liabilities arising out of the discharge of their duties, as well as insurance
covering Juniata for indemnification payments made to its directors and
officers for certain liabilities. The premiums for such insurance are paid by
Juniata.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS.
(2) Agreement and Plan of Reorganization, dated December 30, 1997, among
Juniata, Juniata Valley Bank ("JVB") and Lewistown Trust Company
("Lewistown").
(3)(a) Articles of Incorporation of Juniata--Incorporated by reference to
Exhibit 3(a) of Juniata's Form S-14 Registration Statement filed
March, 1983.
(3)(b) Bylaws of Juniata--Incorporated by reference to Exhibit 3(b) of
Juniata's Form S-14 Registration Statement filed March, 1983.
(5) Opinion re Legality--Opinion of Mette, Evans & Woodside
(8) Opinion re Tax Matters--Opinion of Mette, Evans & Woodside
I-1
<PAGE>
(13) Juniata's Annual Report on Form 10-K for the year ended December 31,
1997--Incorporated by reference in the Joint Proxy Statement/
Prospectus included in Part I of this Registration Statement.
(23)(a) Consent of Mette, Evans & Woodside (included in its opinions filed
as Exhibits (5) and (8))
(23)(b) Consents of Beard & Company, Inc. (re: Juniata and Lewistown)
(23)(c) Consent of RP Financial, LC.
(23)(d) Consent of Hopper Soliday & Co., Inc.
(24) Power of Attorney (included in "SIGNATURES" in Part II of this
Registration Statement)
(99)(a) Form of Proxy--Juniata
(99)(b) Form of Proxy--Lewistown
(99)(c) Employment Agreement dated as of December 30, 1997 between Juniata
and Francis J. Evanitsky.
(B) FINANCIAL STATEMENT SCHEDULES.
None.
(C) OPINIONS OF FINANCIAL ADVISORS.
Furnished as Appendices B and C to the Joint Proxy Statement/Prospectus
included in Part I of this Registration Statement.
ITEM 22. UNDERTAKINGS.
1. The undersigned Registrant hereby undertakes as follows:
(a) to file, during any period in which offers or sales are being made, a
post effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement;
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement.
(b) that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(c) to remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
2. The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the Registration Statement through the
date of responding to the request.
II-2
<PAGE>
3. The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
4. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's Annual Report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
5. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of
whether such indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such issue.
6. The undersigned Registrant hereby undertakes that for purposes of
determining any liability under the Securities Act of 1933, the information
omitted from the form of prospectus filed as part of a registration statement
as permitted by Rule 430A and contained in the form of prospectus to be filed
by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of the registration statement at the
time it was declared effective.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN MIFFLINTOWN,
PENNSYLVANIA, ON MARCH 17, 1998.
Juniata Valley Financial Corp.
By: /s/ A. Jerome Cook
---------------------------------
A. JEROME COOK
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED. EACH PERSON WHOSE SIGNATURE APPEARS
BELOW IN SO SIGNING ALSO MAKES, CONSTITUTES AND APPOINTS A. JEROME COOK HIS
TRUE AND LAWFUL ATTORNEY-IN-FACT, WITH FULL POWER OF SUBSTITUTION, FOR HIM IN
ANY AND ALL CAPACITIES, TO EXECUTE AND CAUSE TO BE FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION ANY OR ALL AMENDMENTS AND POST-EFFECTIVE AMENDMENTS TO
THIS REGISTRATION STATEMENT, WITH EXHIBITS THERETO AND OTHER DOCUMENTS IN
CONNECTION THEREWITH, AND HEREBY RATIFIES AND CONFIRMS ALL THAT SAID ATTORNEY-
IN-FACT OR HIS SUBSTITUTE OR SUBSTITUTES MAY DO OR CAUSE TO BE DONE BY VIRTUE
HEREOF.
SIGNATURE TITLE DATE
/s/ President and Chief March 17, 1998
- ------------------------------------- Executive Officer
A. JEROME COOK and Director
/s/ Director March 17, 1998
- -------------------------------------
MARTIN L. DREIBELBIS
/s/ Director March 17, 1998
- -------------------------------------
KARL E. GUSS
/s/ Director March 17, 1998
- -------------------------------------
HARRY B. FAIRMAN, JR.
/s/ Director March 17, 1998
- -------------------------------------
DON E. HAUBERT
/s/ Director March 17, 1998
- -------------------------------------
JOHN A. RENNINGER
/s/ Director March 17, 1998
- -------------------------------------
RONALD H. WITHERITE
II-4
<PAGE>
SIGNATURE TITLE DATE
/s/ Director March 17, 1998
- -------------------------------------
DALE G. NACE
/s/ Director March 17, 1998
- -------------------------------------
JOE E. BENNER
/s/ Director March 17, 1998
- -------------------------------------
EDWARD R. RHODES
/s/ Director March 17, 1998
- -------------------------------------
HAROLD B. SHEARER
II-5
<PAGE>
EXHIBIT INDEX
EXHIBIT EXHIBIT INDEX
------- -------------
(2) Agreement and Plan of Reorganization, dated December 30, 1997,
among Juniata, Juniata Valley Bank ("JVB") and Lewistown Trust
Company ("Lewistown").
(3)(a) Articles of Incorporation of Juniata--Incorporated by reference
to Exhibit 3(a) of Juniata's Form S-14 Registration Statement
filed March, 1983.
(3)(b) Bylaws of Juniata--Incorporated by reference to Exhibit 3(b) of
Juniata's Form S-14 filed March, 1983.
(5) Opinion re Legality--Opinion of Mette, Evans & Woodside
(8) Opinion re Tax Matters--Opinion of Mette, Evans & Woodside
(13) Juniata's Annual Report on Form 10-K for the year ended December
31, 1997--Incorporated by reference in the Joint Proxy
Statement/ Prospectus included in Part I of this Registration
Statement.
(23)(a) Consent of Mette, Evans & Woodside (included in its opinions
filed as Exhibits (5) and (8))
(23)(b) Consents of Beard & Company, Inc. (re: Juniata and Lewistown)
(23)(c) Consent of RP Financial, LC.
(23)(d) Consent of Hopper Soliday & Co., Inc.
(24) Power of Attorney (included in "SIGNATURES" in Part II of this
Registration Statement)
(99)(a) Form of Proxy--Juniata
(99)(b) Form of Proxy--Lewistown
(99)(c) Employment Agreement dated as of December 30, 1997 between
Juniata and Francis J. Evanitsky.
<PAGE>
EXHIBIT 2
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF MERGER
OF
LEWISTOWN TRUST COMPANY
WITH AND INTO
THE JUNIATA VALLEY BANK,
A WHOLLY OWNED SUBSIDIARY OF
JUNIATA VALLEY FINANCIAL CORP.
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") made and entered into this
30TH day of December, 1997 by and among LEWISTOWN TRUST COMPANY ("Lewistown"), a
Pennsylvania trust company organized and existing under the laws of the
Commonwealth of Pennsylvania, having its headquarters at P. O. Box 270, 100 East
Market Street, Lewistown, Pennsylvania 17044; THE JUNIATA VALLEY BANK ("JVB"), a
Pennsylvania chartered banking institution, having its headquarters at Box 66,
Bridge and Main Streets, Mifflintown, Pennsylvania 17059; and JUNIATA VALLEY
FINANCIAL CORP. ("Juniata"), a Pennsylvania business corporation having its
corporate headquarters at Box 66, Bridge and Main Streets, Mifflintown,
Pennsylvania 17059.
WHEREAS, the Boards of Directors of Lewistown, JVB, and Juniata deem it
advisable and in the reasonable best interest of their respective shareholders
that under and pursuant to the terms and conditions herein set forth, Lewistown
be merged with and into JVB (the "Merger"); and
WHEREAS, this Agreement has been approved by the Board of Directors of each
party hereto; and
WHEREAS, the parties hereto desire to adopt this Agreement as a Plan of
Merger and to consummate the Merger in accordance with the provisions of
Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, acting pursuant to resolutions of their respective Boards of
Directors, and in accordance with the provisions of the laws of the Commonwealth
of Pennsylvania, Lewistown, JVB, and Juniata hereby agree as follows:
ARTICLE I
THE MERGER
1.1 Lewistown shall be merged into JVB upon the terms and provisions of
this Agreement and under the Articles of Incorporation and By-Laws of JVB
(subject to future alteration, amendment, or repeal). The Merger shall be
pursuant to the provisions of, and with the effect provided in, the Pennsylvania
Banking Code of 1965 as amended and shall be expressly conditioned upon receipt
of all necessary regulatory and corporate approvals.
1.2 The name of the surviving banking institution shall be THE JUNIATA
VALLEY BANK. The Articles of Incorporation and the Bylaws of the surviving
banking institution shall be the Articles of Incorporation and the Bylaws of JVB
in effect immediately prior to the Merger.
1.3 The business of the surviving banking institution after the Effective
Date of the Merger shall be a Pennsylvania chartered banking institution which
shall be conducted by JVB at its main office as then located and at its legally
established branches including all branches and the main office of Lewistown
immediately prior to the Merger.
<PAGE>
1.4 At the Effective Date of the Merger, the separate existence of
Lewistown shall cease and JVB, as the surviving entity, shall continue
unaffected and unimpaired by the Merger and shall be liable for all of the
liabilities of Lewistown existing at the Effective Date.
1.5 All assets, rights, privileges, immunities, powers, franchises and
interests of Lewistown in and to every type of property (real, personal and
mixed) and choses in action, as they exist as of the Effective Date, shall pass
and be transferred to and vest in JVB by virtue of the Merger on the Effective
Date without any deed, conveyance or other transfer; the separate existence of
Lewistown shall cease and the existence of JVB as the surviving Pennsylvania
chartered bank and as a Pennsylvania chartered banking institution organized
under the Pennsylvania Banking Code of 1965 shall continue unaffected and
unimpaired by the Merger; and JVB shall be deemed to be the same institution as
Lewistown and shall be subject to all of its duties and liabilities of every
kind and description.
JVB, upon the Merger and without any order or other action on the part of
any court or otherwise, shall possess, hold and enjoy all rights, privileges,
immunities, franchises and interests, both as a public nature and as a private
nature, in the same manner and to the same extent as such rights, privileges,
immunities, franchises and interests were possessed, held, or enjoyed by
Lewistown as of the Effective Date. All property, real, personal and mixed, and
all debts due on whatever account, including subscriptions to share and all
other choses in action, and all and every other interest, of or belonging to or
due to Lewistown, shall be taken and deemed to be transferred to and vested in
JVB without further act or deed. The title to any real estate, or any interest
therein, vested in Lewistown shall not revert or be in any way impaired by
reason of the Merger.
1.6 JVB shall be responsible and liable for all the liabilities and
obligations of Lewistown and any claim existing or action or proceeding pending
by or against Lewistown may be prosecuted as if the Merger had not taken place,
or JVB may be substituted in its place. Neither the rights of creditors nor any
liens upon the property of Lewistown shall be impaired by reason of the Merger.
1.7 The shares of capital stock of JVB issued and outstanding immediately
prior to the Effective Date shall at the Effective Date continue to be issued
and outstanding.
ARTICLE II
CONVERSION AND EXCHANGE OF LEWISTOWN'S COMMON STOCK
2.1 At the Effective Date of the Merger, by virtue of the Merger and
without any action on the part of any holder thereof:
(a) Each share of Lewistown's Common Stock issued and outstanding
immediately prior to the Effective Date of the Merger, except for (i)
Perfected Dissenting Shares (as defined in Section 2.4) and (ii) shares of
Lewistown's Common Stock held and beneficially owned by Juniata or any Juniata
subsidiary (other than shares of Lewistown's Common Stock held in a fiduciary
or similar capacity on behalf of others) which shall be canceled by virtue of
the Merger, shall automatically be converted into one (1) share (as adjusted
pursuant to Section 2.6 herein), (the "Conversion Factor") of common stock,
$1.00 par value, of Juniata ("Juniata Common Stock").
(b) Each share of Lewistown's Common Stock which, immediately prior to
the Effective Date of the Merger, was issued and held in the treasury of
Lewistown, if any, will be canceled and retired.
(c) No Perfected Dissenting Shares will be converted into Juniata Common
Stock under this Section 2.1, but such Perfected Dissenting Shares will be
subject to the provisions of Section 2.4.
(d) Each authorized but unissued share of Lewistown's Common Stock will
cease to exist.
(e) Each share of Juniata's Common Stock issued and outstanding shall
remain issued and outstanding.
<PAGE>
2.2 Neither certificates nor scrip for fractional interests in Juniata's
Common Stock will be issued, but in lieu thereof each holder of shares of
Lewistown's Common Stock who would otherwise have been entitled to a fraction of
a share of Juniata's Common Stock will be paid an amount in cash equal to such
fraction multiplied by the market value per share of Juniata as of the close of
business on the fifth (5) day preceding the Effective Date of the Merger. For
purposes of this Agreement, "market value per share" shall mean with respect to
a calculation date the average of the closing sales price of Juniata's Common
Stock as reported by the Over The Counter ("OTC") Bulletin Board for the thirty
(30) consecutive trading days ending on and including the date as of which the
market value per share is to be calculated.
2.3 As soon as practicable after the Effective Date of the Merger, holders
of shares of Lewistown's Common Stock shall be furnished a form letter of
transmittal for the tender of their shares to an Exchange Agent appointed by
Juniata, to be exchanged for new certificates for the appropriate number of
shares of Juniata's Common Stock. Juniata shall be required to issue Juniata's
Common Stock only upon the actual surrender of Lewistown's shares and will
require an indemnity agreement or a bond from any Lewistown shareholder who is
unable to surrender his or her certificate by reason of loss, theft or
destruction of the certificate.
2.4 Each outstanding share of Lewistown's Common Stock, the holder of
which has timely filed a written notice of intention to demand appraisal for his
shares pursuant to the Pennsylvania Banking Code and Subchapter D of the
Pennsylvania Business Corporation Law of 1988 as amended (the "BCL") is herein
called a "Dissenting Share." Dissenting Shares, the holders of which have not
effectively withdrawn or lost (for failure to timely file a demand for appraisal
of their shares or otherwise) their dissenters' rights under the BCL ("Perfected
Dissenting Shares"), shall not be converted pursuant to Section 2.1 hereof, but
the holders thereof shall be entitled only to such rights as are granted by
Subchapter D of the BCL. Each holder of Dissenting Shares who becomes entitled
to payment for his Lewistown Common Stock pursuant to the provisions of
Subchapter D of the BCL shall receive payment therefor from Juniata but only
after the amount thereof shall have been agreed upon or finally determined
pursuant to such provisions.
2.5(a) As of the Effective Date of the Merger, Juniata will issue and will
deliver to the Exchange Agent certificates representing a sufficient number of
shares of Juniata's Common Stock issuable in the Merger and a sufficient amount
of cash in lieu of fractional shares payable in the Merger.
(b) Upon surrender for cancellation to the Exchange Agent of one or more
certificates for shares of Lewistown's Common Stock ("Old Certificates"),
accompanied by a duly executed letter of transmittal in proper form, the
Exchange Agent shall, promptly after the Effective Date of the Merger, deliver
to each holder of such surrendered Old Certificates new certificates
representing the appropriate number of shares of Juniata's Common Stock ("New
Certificates") together with checks for payment of cash in lieu of fractional
interests to be issued in respect of the Old Certificates.
(c) Until Old Certificates have been surrendered and exchanged as herein
provided for New Certificates, each outstanding Old Certificate shall be deemed,
for all corporate purposes of Juniata, to be the number of whole shares of
Juniata's Common Stock into which the number of shares of Lewistown's Common
Stock shown thereon have been converted. At the option of Juniata, no dividends
or other distributions which are declared on Juniata's Common Stock will be
paid to persons otherwise entitled to receive the same until the Old
Certificates have been surrendered in exchange for New Certificates in the
manner herein provided, but upon such surrender, such dividends or other
distributions, from and after the Effective Date of the Merger, will be paid to
such persons in accordance with the terms of such Juniata's Common Stock. In no
event shall the persons entitled to receive such dividends or other
distributions be entitled to receive interest on such dividends or other
distributions.
2.6 The Conversion Factor shall be subject to adjustment from time to time
as follows:
(a) Whenever, subsequent to the date hereof but prior to the Effective
Date of the Merger, (i) a record date occurs for the purpose of determining
the holders of Juniata's Common Stock entitled to receive a dividend declared
payable in shares of Juniata's Common Stock, (ii) Juniata subdivides the
outstanding shares
<PAGE>
of Juniata's Common Stock, (iii) Juniata combines the outstanding shares of
Juniata's Common Stock into a smaller number of shares, or (iv) Juniata issues
by reclassification of its shares of Juniata's Common Stock any shares of
stock of Juniata (all shares so issued being included in the "Juniata Common
Stock" as used in this Section 2.6), the Conversion Factor shall be adjusted
so that each share of Lewistown's Common Stock shall under Section 2.1(a)
thereafter be convertible into and exchangeable for the number of shares of
Juniata's Common Stock which the shares of Lewistown's Common Stock would have
represented had such shares of Lewistown's Common Stock been converted into
and exchanged for shares of Juniata's Common Stock prior to the happening of
such event and such Juniata Common Stock had been entitled to the benefit of
the happening of such event.
ARTICLE III
BOARD OF DIRECTORS AND OFFICERS OF
JUNIATA AND JVB
3.1 On the Effective Date, the Board of Directors of Juniata shall consist
of the following:
(a) The 11 persons who are then members of the Board of Directors of
Juniata (the "Juniata Directors");
(b) The 9 persons who are then members of the Board of Directors of
Lewistown (the "Lewistown Directors"). On the Effective Date, in accordance
with Juniata's current classification of directors, Juniata shall appoint:
(1) Three (3) such Lewistown Directors as Class A Directors, to
continue in office until 2000;
(2) Three (3) such Lewistown Directors as Class B Directors, to
continue in office until 2001;
(3) Three (3) such Lewistown Directors as Class C Directors, to
continue in office until 1999.
3.2 From and after the Effective Date, the officers of Juniata shall be
those persons who were the officers and directors of Juniata provided, however,
that Francis J. Evanitsky shall be appointed the President and Chief Operating
Officer of Juniata, A. Jerome Cook shall be appointed Chief Executive Officer
and Chairman of the Board of Directors of Juniata, and Linda L. Engle shall be
appointed Executive Vice-President and Chief Financial Officer of Juniata. The
officers of Juniata shall also consist of such other officers as the Juniata
Board of Directors may appoint. Such officers shall hold office until such time
as their successors have been elected or appointed and have qualified unless
sooner removed, resigned, disqualified, or deceased. On the date hereof the
Board of Directors of Juniata shall enter into an Employment Agreement which
shall be conditioned upon consummation of the Merger and shall become effective
on the Effective Date with Francis J. Evanitsky pursuant to which he shall
become President and Chief Operating Officer of Juniata and JVB. The Employment
Agreement shall be in the form attached hereto as Exhibit "A".
-----------
3.3 On the Effective Date, Juniata shall appoint the then members of the
Board of Directors of Lewistown to the Board of Directors of JVB so that the
Board of Directors of JVB shall be and consist of those persons who were then
members of the Board of Directors of Lewistown and those persons who are then
members of the Board of Directors of JVB. From and after the Effective Date,
the officers of JVB shall be and consist of those persons who were then officers
of JVB provided that Francis J. Evanitsky shall be appointed President and
Chief Operating Officer of JVB, A. Jerome Cook shall be appointed Chief
Executive Officer and Chairman of the Board of Directors of JVB, and Linda L.
Engle shall be appointed Executive Vice-President and Chief Financial Officer of
JVB. Such officers shall hold office until such time as their successors have
been duly elected or appointed and have qualified, unless sooner removed,
resigned, disqualified, or deceased.
3.4 On the Effective Date, the Juniata Directors and the Lewistown
Directors shall each appoint two (2) vice-chairman of the Boards of Directors of
Juniata and JVB.
<PAGE>
3.5 On the Effective Date, the Bylaws of Juniata and JVB shall be amended
to create the offices herein appointed.
3.6 The Juniata Board of Directors shall nominate and support for
reelection each former Lewistown Director whose term as a director of Juniata
and JVB expires on or before the 2001 annual meeting of the shareholders of
Juniata.
ARTICLE IV
AMENDMENT AND WAIVER
4.1 This Agreement may be amended by the parties hereto, by action taken
by or on behalf of their respective Boards of Directors, at any time before or
after approval of the Merger by the shareholders of Lewistown and Juniata;
provided, however, that after such approval by the shareholders of Lewistown and
Juniata no such amendment, without further shareholder approval, shall reduce
the amount or change the form of the consideration to be delivered to the
shareholders of Lewistown as contemplated by this Agreement or alter or change
any of the terms or conditions of this Agreement if such alteration or change
would materially adversely affect the shareholders of Lewistown and Juniata.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
4.2 Any of the terms or conditions of this Agreement may be waived at any
time by whichever of the parties is, or the shareholders of which are, entitled
to the benefit thereof, in the case of a party, by action taken by the Board of
Directors of such party. The failure of any party at any time or times to
require performance of any provision hereof shall in no manner affect such
party's right at a later time to enforce the same. No waiver by any party of
any condition, or of the breach of any term, covenant, representation or
warranty contained in this Agreement, whether by conduct or otherwise, in any
one or more instances shall be deemed to be or construed as a further or
continuing waiver of any such condition or breach or waiver of any other
condition or of the breach of any other term, covenant, representation or
warranty.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 Representations and Warranties of Lewistown. Lewistown represents and
-------------------------------------------
warrants to Juniata that:
(a) Lewistown is a trust company that is duly organized, validly existing
and in good standing under the laws of the Commonwealth of Pennsylvania.
Lewistown is an "insured depository institution" as defined in the Federal
Deposit Insurance Act, as amended ("FDIA").
(b) The copies of the Articles of Incorporation and the Bylaws of
Lewistown delivered to Juniata and which are included in Schedule I attached
hereto and made a part hereof by reference thereto are complete and accurate
copies thereof as in effect on the date hereof. The minute books of Lewistown
which have been made available for inspection by Juniata contain a complete
and accurate record of all meetings of Lewistown.
(c) Lewistown (i) has corporate power to own its properties and to conduct
its business as currently conducted, (ii) has substantially complied with, and
is not in default in any material respect under, any laws, regulations,
ordinances, orders or decrees applicable to the conduct of its business and
the ownership of its properties, including regulatory minimum capital
requirements, the non-compliance with which or the default under which in the
aggregate would materially adversely affect the business of Lewistown, (iii)
has not failed to file with the proper federal, state, local or other
authorities any material report or other document required to be so filed, and
(iv) has all approvals, authorizations, consents, licenses, clearances and
orders of, and has currently effective all registrations with, all
governmental and regulatory authorities, which are necessary to the business
or operations of Lewistown, the non-receipt of which would in the aggregate
materially adversely affect the business of Lewistown.
<PAGE>
(d) The authorized capital stock of Lewistown consists of 1,200,000 shares
of Lewistown Common Stock, par value $1.25 per share, of which 937,024 shares
of Common Stock were validly authorized, issued and outstanding, fully paid
and nonassessable as of December 30, 1997. As of the date hereof there are
outstanding no subscriptions, options, warrants, calls or rights or other
agreements or commitments of any kind obligating Lewistown to issue or dispose
of any securities of Lewistown or securities of Lewistown convertible into any
shares of Lewistown's Common Stock. From December 31, 1996 to the date hereof,
no dividends or other distributions (including, without limitation, any stock
dividend or distribution) have been declared, set aside or paid to the holders
of Lewistown Common Stock except those permitted under Section 6.2(a)(3)
below.
(e) Except as disclosed in Schedule I, Lewistown does not own, directly or
indirectly, any equity interest in any bank, corporation, general partnership,
limited partnership or other equity, except in a fiduciary capacity.
(f)(1) Lewistown has delivered to Juniata a copy of the following
financial statements, each of which (including any related notes and
schedules) is included in Schedule I and presents fairly the financial
condition and results of operations of Lewistown, at the dates and for the
periods covered by such statements in accordance with generally accepted
accounting principles consistently applied throughout the periods covered by
such statements (It being understood that Lewistown's financial statements,
except the June 30, 1996 Balance Sheet, are not audited and are not prepared
with related notes but reflect all adjustments which are, in the opinion of
Lewistown, necessary for a fair presentation of such financial statements):
(A) The June 30, 1996 Balance Sheet (the "Lewistown June 30, 1996
Balance Sheet") prepared and audited by KPMG Peat Marwick;
(B) Balance Sheet (the "Lewistown 1996 Balance Sheet"), Statement
of Income, Statement of Stockholders' Equity and Statement of Cash Flows at
December 31, 1996 and for the twelve months then ended, prepared by
Lewistown;
(C) Balance Sheets, Statements of Income, Statements of
Stockholders' Equity and Statements of Cash Flows at December 31, 1995 and
1994, and for the years then ended, prepared by Lewistown;
(D) Interim Balance Sheets (the "Lewistown's September 31, 1997
Balance Sheet"), Statements of Income, Statements of Stockholders' Equity
and Statements of Cash Flows at September 30,1997, and for the nine months
then ended.
(2) Lewistown has provided Juniata with copies of all financial
statements, proxy statements, reports and other documents issued to its
shareholders after December 31, 1996 which are included in Schedule I and will
provide Juniata with copies of such statements, reports, and documents issued
after the date hereof, but on or prior to the Effective Date, and all reports
and other documents filed by it with any federal or state authority during
such period, and Lewistown shall make available for inspection by officials or
representatives of Juniata all financial statements prepared by Lewistown.
(g)(1) Lewistown has delivered to Juniata copies of:
(A) its Annual Report to Shareholders for the years ended
December 31, 1996 and 1995;
(B) Lewistown's Annual Report to the Pennsylvania Department of
Banking, and the FDIC for the years ended December 31, 1996 and 1995;
(C) all other periodic reports filed by Lewistown with the
Pennsylvania Department of Banking and the FDIC; and
<PAGE>
(D) all proxy statements and other written materials furnished to
Lewistown's shareholders since January 1, 1995;
true and correct copies of which are included in Schedule I.
(2) No statement contained in any of the documents referred to in
Section 5.1(g)(1), or to be contained in any financial statement, proxy
statement, report, document or other written materials provided or to be
provided to Juniata as required by Section 5.1(f), as of the date of such
document or other materials, contained, or as to documents or other materials
to be delivered after the date hereof will contain, any untrue statement of
material fact, or, at the date thereof, omitted or will omit to state a
material fact necessary in order to make the statements contained therein, in
light of the circumstances under which such statements are or will be made,
not misleading; provided, however, that information as of a later date shall
be deemed to modify information as of any earlier date.
(h)(1) Lewistown has timely filed all federal, state, county and local
returns in respect of taxes, including, without limitation, estimated tax
returns, employer's withholding tax returns, other withholding tax returns and
Federal Unemployment Tax Act returns, and all other reports or other
information required or requested to be filed by it, and each such return,
report or other information is complete and accurate in all material respects.
Lewistown has paid the amounts shown as owing on such returns (collectively,
"Taxes"). No waivers of statutes of limitations, and no agreement relating to
assessment or collection, are in effect in respect of any Taxes. Except as
disclosed in Schedule I, there are no claims pending against Lewistown for the
alleged deficiency in the payment of any Taxes, and Lewistown does not know of
any pending or threatened audits, investigations or claims for unpaid Taxes or
relating to any liability in respect of Taxes.
(2) Lewistown has heretofore delivered to Juniata copies of its
United States federal and Pennsylvania tax returns for the fiscal years ended
December 31, 1995 and 1996, true and correct copies of which are included in
Schedule I.
(3) To the extent required by generally accepted accounting
principles, the provision for current taxes payable reflected in "Other
Liabilities" in the Lewistown's 1996 Balance Sheet, as of the date hereof and
as of the Effective Date, is and will be adequate to cover (A) all or
substantially all accrued and unpaid taxes of Lewistown, whether or not
disputed, for the period ended December 31, 1996, and for all prior periods,
and (B) all or substantially all Taxes that may become due and payable by
Lewistown in future periods (i) in respect of transactions, sales or services
occurring or performed on or prior to December 31, 1996, which by virtue of
tax or accounting treatment will not be included in income until subsequent to
such date, or (ii) in respect of deductions, costs or other allowances taken
for federal income tax purposes which Lewistown has reason to believe are
likely to be disallowed by the Internal Revenue Service if audited by such
Service. The provision for applicable taxes stated on the books of Lewistown
as of the date hereof and as of the Effective Date, is and will be adequate to
cover (A) all accrued and unpaid federal, state, county and local taxes of
Lewistown, whether or not disputed, for the period ended on the date hereof or
on the Effective Date, as the case may be, and for all prior periods, and (B)
all federal, state, county and local Taxes that may become due and payable by
Lewistown in future periods (i) in respect of such transactions, sales or
services occurring or performed on or prior to the date hereof or the
Effective Date, as the case may be, which by virtue of tax or accounting
treatment will not be included in income until subsequent to such dates, or
(ii) in respect of deductions, costs or other allowances taken for federal
income tax purposes which Lewistown has reason to believe are likely to be
disallowed by the Internal Revenue Service if audited by such Service.
(4) No consent has been filed relating to Lewistown pursuant to
Section 341(f) of the Internal Revenue Code of 1986, as amended (the "Code").
(i) Since September 30,1997, (1) there has been no material adverse
change in the business or financial condition of Lewistown, and (2) except as
set forth in Schedule I, no event described in Section 6.2(a)has occurred.
<PAGE>
(j)(1) Except as disclosed in Schedule I, Lewistown has good and
marketable title, free and clear of all liens and encumbrances, and the right
of possession subject to existing leaseholds, to all real properties and good
title to all other property and assets, tangible and intangible, reflected in
Lewistown's 1996 Balance Sheet or purported to have been acquired by it since
the date thereof (except property held as lessee under leases and disclosed in
writing prior to the date hereof and except real or personal property sold or
otherwise disposed of since December 31, 1996, in the Ordinary Course of
Business (as defined in Section 6.2(a)(5) hereof)), except liens for taxes or
assessments not delinquent, pledges to secure deposits, repurchase agreements
in the Ordinary Course of Business and such other liens and encumbrances and
imperfections of title as do not materially affect the value of such property
or as reflected in Lewistown's 1996 Balance Sheet or as currently shown on the
books and records of it and which do not interfere with or impair its present
and continued use. All real properties owned or leased by Lewistown which are
material to the business, operations or financial condition of Lewistown are
in substantially good operating condition and repair (ordinary wear and tear
excepted).
(2) All properties held by Lewistown under leases are held by it
under valid, binding and enforceable leases (subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and subject,
as to enforceability, to general principles of equity), with such exceptions
as are not material and do not interfere with the conduct of its business, as
the case may be, and it enjoys quiet and peaceful possession of such leased
properties. Lewistown is not in default in any material respect under any
material lease, agreement or obligation regarding its properties to which it
is a party or by which it is bound.
(k) Except as specifically disclosed in Schedule I, and other than loans
in the Ordinary Course of Business, time deposits and leases of less than two
years duration on which less than $5,000 in annual rental is payable,
Lewistown is not a party to or bound by any contract or other agreement made
in the Ordinary Course of Business which involves aggregate future payments by
it of more than $25,000 and which is made for a fixed period expiring more
than one year from the date hereof, and Lewistown is not a party to or bound
by any agreement not made in the Ordinary Course of Business which is to be
performed at or after the date hereof. Each of the contracts and agreements
disclosed in Schedule I pursuant to this Section 5.1(k) are valid, binding and
enforceable (subject to applicable bankruptcy, insolvency and similar laws
affecting creditors' rights generally and subject, as to enforceability, to
general principles of equity) and no breach or default (and no condition
which, with notice or passage of time, could become a breach or default)
exists as to Lewistown with respect thereto, except such as in the aggregate
are not material to the business or financial condition of Lewistown.
(l) Except as specifically disclosed in Schedule I, as of
September 30,1997, there are no commercial, commercial real estate or
residential real estate loans of Lewistown in excess of $25,000 that have been
classified by any financial institution examiner as "Other Loans Especially
Mentioned," "Special Mention," "Substandard," "Doubtful" or "Loss" or
internally classified in a similar or comparable category. Except as
specifically disclosed in Schedule I, as of September 30, 1997, there are no
consumer loans that are delinquent more than thirty (30) days as to payment of
principal and interest. Except as specifically disclosed in Schedule I, as of
September 30, 1997, the reserve for loan losses in Lewistown's September 30,
1997 Balance Sheet is adequate under the requirements of generally accepted
accounting principles and standard banking practice to provide for possible
losses on outstanding loans, net of recoveries. Except as disclosed in
Schedule I, there are no loans or loan commitments outstanding to executive
officers or directors of Lewistown, including their immediate families and
entities with which they are associated. All such loans and commitments to
loan were made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons and do not involve more than the normal risk of collectibility
or present other unfavorable features and, except as disclosed in Schedule I,
none of such loans and commitments to related parties disclosed in said
Audited Financial Statements or in writing to Juniata are delinquent in
payment of principal or interest.
(m) Except for pledges to secure public and trust deposits, repurchase
agreements in the Ordinary Course of Business, and other pledges required by
law, none of the
<PAGE>
investments reflected in Lewistown's September 30, 1997 Balance Sheet
under the heading "Investment Securities," and none of the investments
made since September 30, 1997, is subject to any restriction, whether
contractual or statutory, which materially impairs the ability of
Lewistown freely to dispose of such investment at any time.
(n) Except as otherwise identified and disclosed in Schedule I, Lewistown
has no pension, retirement, stock purchase, stock bonus, savings, or profit
sharing plan, any deferred compensation, consultant, bonus, life insurance,
death or survivor benefit health insurance, sickness, disability, medical,
surgical, hospital, severance, layoff, or vacation plan or group insurance
contract, or any other incentive, welfare, or employee benefit plan or
arrangement ("Benefit Plans"). With respect to each qualified retirement plan
and other Benefit Plans, included in Schedule I is an accurate and complete
copy of (a) the most recent plan documents, (b) the most recent annual report
filed with the United States Department of Labor and the Internal Revenue
Service, (c) the most recent financial and actuarial reports, (d) the most
recently issued Internal Revenue Service rulings or determination letters, and
(e) all notices to the Pension Benefit Guaranty Corporation of "Reportable
Events" as defined in the Employee Retirement Income Security Act of 1974
("ERISA"). As of January 1, 1997, all accrued contributions and other payments
to be made under each qualified retirement plan for such purpose have been set
aside therefor. Except as specifically disclosed and identified in Schedule I,
Lewistown has no contracts or other agreements with any member of management
or any management or consultation agreement not terminable at will by it
without liability, and no such contract or agreement has been requested by or
is under discussion by management with any group of employees, any member of
management or any other person.
(o) Except as specifically disclosed in Schedule I, there are no actions,
suits, investigations or proceedings instituted, pending or, to the knowledge
of Lewistown, threatened against Lewistown before any court, any arbitrator of
any kind or any government agency (including any bank regulatory authority),
and Lewistown is not subject to any potential adverse claim, the outcome of
which could involve the payment by Lewistown of an amount in excess of $25,000
or, which could materially affect Lewistown or its business or property or the
transactions contemplated hereby. Lewistown has no knowledge of any pending or
threatened claims or charges under the Community Reinvestment Act or before
the Equal Employment Opportunity Commission, the Office of Federal Contract
Compliance, any Human Relations Commission or any other federal, state or
local government agency.
(p)(1) The execution and delivery of this Agreement has been duly
authorized by the Board of Directors of Lewistown and, when the Merger has
been duly approved by the affirmative vote of the shareholders of Lewistown
owning at least two-thirds (2/3) of its capital stock outstanding at a meeting
of shareholders duly called and held in accordance with the provisions of
Pennsylvania law, this Agreement shall be duly and validly authorized by all
necessary action on the part of Lewistown.
(2) This Agreement has been duly executed and delivered by
Lewistown and (assuming due execution and delivery by Juniata) constitutes,
and, upon its execution and delivery shall constitute, a valid, binding and
enforceable obligation of Lewistown, subject to (i) bankruptcy, insolvency,
moratorium, reorganization, conservatorship, receivership or other similar
laws from time to time in effect relating to or affecting the enforcement of
creditors' rights generally or the rights of creditors of Pennsylvania state
chartered banking institutions, (ii) laws relating to the safety and soundness
of depository institutions and their holding companies, and (iii) general
principles of equity, and except that the availability of equitable remedies
or injunctive relief is within the discretion of the appropriate court.
(3) The execution and delivery by Lewistown of this Agreement and
the consummation of the transactions herein contemplated do not violate any
provision of the Articles of Incorporation or Bylaws of Lewistown, any
provisions of federal or state law or any governmental rule or regulation
assuming the appropriate filing of the Articles of Merger with the
Pennsylvania Department of Banking, the receipt of the Government Approvals,
the receipt of the requisite Lewistown shareholder approval referred to in
Section 5.1(p)(1), and the accuracy of the representations of Juniata set
forth in Sections 5.2(f) and (g)), and do not require any consent of any
person under, conflict with or result in a breach of or accelerate the
performance required by any of the terms of, any material debt instrument,
lease, license, covenant, agreement or
<PAGE>
understanding to which Lewistown is a party or by which it is bound or any
order, ruling, decree, judgment, arbitration award or stipulation to which it
is subject, or constitute a default thereunder or result in the creation of
any lien, claim, security interest, encumbrance, charge, restriction or right
of any third party of any kind whatsoever upon any of its properties or
assets.
(q) Except for RP Financial, LC., which will be entitled to a fee to be
paid by Lewistown for rendering a fairness opinion and for other services
related to the Merger, no broker, agent, finder, consultant or other party
(other than legal and accounting advisors) has been retained by Lewistown or
is entitled to be paid based upon any agreements, arrangements or
understandings made by Lewistown in connection with any of the transactions
contemplated by this Agreement.
(r) Lewistown is, and continuously since at least January 1, 1996 has
been, insured with reputable insurers against all risks normally insured
against by financial institutions, and all of the insurance policies or bonds
maintained by it are in full force and effect. Lewistown is not in default
thereunder and all material claims thereunder have been filed in due and
timely fashion.
(s) Lewistown is not in violation of, and has not received notice of a
potential or actual violation of, any applicable federal, state or local laws,
statutes, rules, regulations or ordinances relating to public health, safety
or the environment, including, without limitation, relating to releases,
discharges, emissions or disposals to air, water, land or ground water, to the
withdrawal or use of ground water, to the use, handling or disposal of
polychlorinated biphenyls (PCB's), asbestos or urea formaldehyde, to the
treatment, storage, disposal or management of hazardous substances (including,
without limitation, petroleum, crude oil or any fraction thereof, or other
hydrocarbons), pollutants or contaminants, to exposure to toxic, hazardous or
other controlled, prohibited or regulated substances which violation could
have a material adverse effect on the business, properties or financial
condition of Lewistown.
To the best knowledge of Lewistown, improvements on any real estate owned
or leased by Lewistown do not contain friable asbestos or substances containing
asbestos and deemed hazardous by any federal, state or local laws, regulations
or orders respecting such materials. Lewistown does not know of any liability or
class of liability of Lewistown under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (42 U.S.C. Section 9601 et
seq.), or the Resource Conservation and Recovery Act of 1976, as amended (42
U.S.C. Section 6901 et seq.).
(t) The information pertaining to Lewistown, which has been or will be
furnished to Juniata by or on behalf of Lewistown for inclusion in the Juniata
Registration Statement, the Prospectus or the Proxy Statement (each as
hereinafter defined in Section 7.1 hereof), or in the applications to be filed
to obtain the Government Approvals (the "Applications"), will contain no
untrue statement of any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they are made, not misleading; provided, however, that information
as of a later date shall be deemed to modify the information as of an earlier
date. All financial statements of Lewistown included in the Prospectus or the
Proxy Statement will present fairly the consolidated financial condition and
results of operations of Lewistown at the dates and for the periods covered by
such statements in accordance with generally accepted accounting principles
consistently applied throughout the periods covered by such statements.
Lewistown shall promptly advise Juniata in writing if prior to the Effective
Date it shall obtain knowledge of any facts that would make it necessary to
amend the Juniata Registration Statement, the Proxy Statement or any
Application, or to supplement the Prospectus, in order to make the statements
therein not misleading or to comply with applicable law.
(u) No representation or warranty by Lewistown and no statement by
Lewiston in any certificate, agreement, schedule or other document furnished
in connection with the transactions contemplated by this Agreement, shall
contain any untrue statement of a material fact or omit to state any material
fact necessary to make such representation, warranty or statement not
misleading to Juniata; provided, however, that information as of a later date
shall be deemed to modify information as of an earlier date.
<PAGE>
5.2 Representations, Warranties and Covenants of Juniata. Juniata, for
-----------------------------------------------------
itself and on behalf of JVB, represents and warrants to Lewistown that:
(a) Juniata is a corporation duly incorporated, validly existing and in
good standing under the Pennsylvania Business Corporation Law (BCL), and is a
registered bank holding company under the Bank Holding Company Act of 1956 as
amended (the "BHC Act"). Juniata has corporate power to own its properties and
to conduct its business as currently conducted, and Juniata has corporate
power to enter into this Agreement and to carry out all of the terms and
provisions hereof to be carried out by it, subject to receipt of Government
Approvals. As of the date hereof, the authorized capital stock of Juniata
consists of 5,000,000 shares of Juniata Common Stock, $1.00 par value, of
which 1,385,491 shares are validly authorized, issued and outstanding, fully
paid and nonassessable, and 14,898 shares are held as treasury shares, and
500,000 shares of preferred stock of which no shares have been issued. The
outstanding Juniata Common Stock has been duly and validly registered pursuant
to Section 12(g) of the 1934 Act, which registration is in full force and
effect, and is quoted in the OTC Over the Counter Bulletin Board Service. As
of the date hereof, there are outstanding no subscriptions, options, warrants,
calls or rights or other agreements or commitments of any kind obligating
Juniata to issue or dispose of any securities of Juniata or securities of
Juniata convertible into any shares of Juniata Common Stock or preferred
stock, other than the Juniata Employee Stock Purchase Plan.
(b) Juniata owns 100% of the issued and outstanding shares of JVB free and
clear of any liens, claims, security interests, encumbrances, charges,
restrictions, or rights of third parties of any kind whatsoever.
(c) JVB is a Pennsylvania state chartered banking institution that is duly
organized, validly existing, and in good standing under the laws of the
Commonwealth of Pennsylvania. JVB is an "Insured Depository Institution" as
defined in the Federal Deposit Insurance Act, as amended.
(d) The copies of the Articles of Incorporation and By-Laws of Juniata and
JVB heretofore delivered to Lewistown and which are included in Schedule II
attached hereto and made a part hereof and incorporated herein by reference
thereto are complete and accurate copies thereof as in effect on the date
hereof. The minute books of Juniata and JVB which have been made available for
inspection by Lewistown contain a complete and accurate record of all meetings
of said corporations.
(e) Juniata and JVB (i) have corporate power to own their respective
properties and to conduct their respective businesses as currently conducted,
(ii) have substantially complied with, and are not in default in any material
respect under, any laws, regulations, ordinances, orders or decrees applicable
to the conduct of their businesses and the ownership of their respective
properties, the non-compliance with which or the default under which in the
aggregate would materially adversely affect their businesses on a consolidated
basis, (iii) have not failed to file with the proper federal, state, local or
other authorities any material report or other document required to be so
filed, and (iv) have all approvals, authorizations, consents, licenses,
clearances and orders of, and have currently effective all registrations with,
all governmental and regulatory authorities, which are necessary to the
business or operations of Juniata and JVB as they are now being conducted.
(f) Except as disclosed in Schedule II and except for JVB, neither Juniata
nor JVB owns, directly or indirectly, any equity interest in any bank,
corporation, general partnership, limited partnership, or other equity, except
in a fiduciary capacity.
(g)(1) Juniata has delivered to Lewistown a copy of the following
consolidated financial statements, each of which (including any related notes
and schedules) is included in Schedule II and presents fairly the consolidated
financial condition and results of operations of Juniata and JVB at the dates
and for the periods covered by such statements in accordance with generally
accepted accounting principles consistently applied throughout the periods
covered by such statements (it being understood that Juniata's interim
financial statements are not audited and are not prepared with related notes
but reflect all adjustments which are, in the opinion of Juniata, necessary
for a fair presentation of such financial statements):
<PAGE>
(A) Consolidated Balance Sheet (the "Juniata 1996 Balance
Sheet"), Consolidated Statement of Income, Consolidated Statement of
Stockholders' Equity and Consolidated Statement of Cash Flows, together
with the notes thereto, at December 31, 1996, and for the year then ended,
audited by Beard and Company, Inc.; and
(B) Consolidated Balance Sheets, Consolidated Statements of
Income, Consolidated Statements of Stockholders' Equity, and Consolidated
Statements of Cash Flows, together with the notes thereto, at December 31,
1995 and 1994 and for the years then ended, audited by Beard and Company,
Inc.
(C) Consolidated Balance Sheets (the "Juniata September 30, 1997
Balance Sheet"), Consolidated Statements of Income, Consolidated Statements
of Stockholders' Equity, and Consolidated Statements of Cash Flows, at
September 30, 1997 and for the six months then ended.
(2) Juniata has delivered to Lewistown a copy of consolidating
balance sheets, consolidating statements of income, consolidating statements
of stockholders' equity, and consolidating statements of cash flows (the
"Consolidating Statements") for Juniata and JVB as of December 31, 1996 and
1995 and for the 12-month periods then ending, and such interim statements as
of September 30, 1997 and for the nine (9) months then ending, which are
included in Schedule II, each of which presents fairly the separate financial
condition and results of operations of Juniata and JVB at the dates and for
the periods covered by such statements.
(3) Juniata has provided Lewistown with copies of all financial
statements, proxy statements, reports and other documents issued to its
shareholders after December 31, 1996, and will provide Juniata with copies of
such statements, reports, and documents issued after the date hereof and on or
prior to the Effective Date. Juniata has delivered to Lewistown copies of:
(a) its annual report to shareholders for the years ending
December 31, 1996 and 1995;
(b) its annual report to the Securities and Exchange
Commission (the "SEC") on Form 10-K for the years ending December 31, 1996
and 1995;
(c) JVB's annual report to Pennsylvania Department of
Banking and the FDIC for the years ending December 31, 1996 and 1995;
(d) all other periodic reports filed by Juniata with the
SEC (including all quarterly reports on Form 10-Q and all current reports
on Forms 8-K, the Federal Reserve Board, the Pennsylvania Department of
Banking and the FDIC since January 1, 1995);
(e) all proxy statements and other written materials
furnished to Juniata shareholders since January 1, 1995.
True and correct copies of which are included in Schedule II. No statement
contained in any of such documents, or to be contained in any financial
statement, proxy statement, report, document or other written materials to be
provided to Lewistown as required above, as of the date of such document or
other materials, contained, or as to documents or other materials to be
delivered after the date hereof will contain, any untrue statement of material
fact, or, at the date thereof, omitted or will omit to state a material fact
necessary in order to make the statements contained therein, in light of the
circumstances under which such statements are or will be made, not misleading;
provided, however, that information as of a later date shall be deemed to
modify information as of any earlier date.
(h) Except as specifically disclosed in Schedule II and other than loans
by JVB in the Ordinary Course of Business, time deposits and leases of less
than two years' duration on which less than $25,000 in annual rental is
payable, neither Juniata nor JVB is a party to or bound by any contract or
other agreement made in the Ordinary Course of Business which involves
aggregate future payments by it of more than $100,000 and
<PAGE>
which is made for a fixed period expiring more than one year from the date
hereof, and neither Juniata nor JVB is a party to or bound by any agreement
not made in the Ordinary Course of Business which is to be performed at or
after the date hereof. Each of the contracts and agreements disclosed in
Schedule II pursuant to this Section 5.2(h) are valid, binding and enforceable
(subject to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally and subject, as to enforceability, to general
principles of equity) and no breach or default (and no condition which, with
notice or passage of time, could become a breach or default) exists with
respect thereto, except such as in the aggregate are not material to the
business or financial condition of Juniata and JVB taken as a whole.
(i) Except as specifically disclosed in Schedule II, as of September 30,
1997, there are no commercial, commercial real estate or residential real
estate loans of Juniata or JVB in excess of $25,000 that have been classified
by any financial institution examiner as "Other Loans Especially Mentioned,"
"Special Mention," "Substandard," "Doubtful" or "Loss" or internally
classified in a similar or comparable category. Except as specifically
disclosed in Schedule II, as of December 31, 1996, there are no consumer loans
that are delinquent more than thirty (30) days as to payment of principal and
interest. Except as specifically disclosed in Schedule II, as of December 31,
1996 the reserve for loan losses in the Juniata 1996 Balance Sheet is adequate
under the requirements of generally accepted accounting principles and
standard banking practice to provide for possible losses on outstanding loans,
net of recoveries. Except as disclosed in the notes to the Audited
Consolidated Financial Statements for the year ended December 31, 1996, or as
disclosed in Schedule II, there are no loans or loan commitments outstanding
to executive officers or directors of Juniata or JVB, including their
immediate families and entities with which they are associated. All such loans
and commitments to loan were made on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with other persons and do not involve more than the normal risk
of collectibility or present other unfavorable features and, except as
disclosed in Schedule II, none of such loans and commitments to related
parties disclosed in said Audited Consolidated Financial Statements or in
writing to Lewistown are delinquent in payment of principal or interest.
(j) Except for (i) Juniata's Defined Benefit Pension Plan which covers
eligible employees of Juniata and JVB, and (ii) as otherwise identified and
disclosed in Schedule II, neither Juniata nor JVB has any pension, retirement,
stock purchase, stock bonus, savings, or profit sharing plan, any deferred
compensation, consultant, bonus, life insurance, death or survivor benefit
health insurance, sickness, disability, medical, surgical, hospital,
severance, layoff, or vacation plan or group insurance contract, or any other
incentive, welfare, or employee benefit plan or arrangement ("Benefit Plans").
With respect to each qualified retirement plan and other Benefit Plans,
including but not limited to the Defined Benefit Pension Plan, included in
Schedule II is an accurate and complete copy of (a) the most recent plan
documents, (b) the most recent annual report filed with the United States
Department of Labor and the Internal Revenue Service, (c) the most recent
financial and actuarial reports, (d) the most recently issued Internal Revenue
Service rulings or determination letters, and (e) all notices to the Pension
Benefit Guaranty Corporation of "Reportable Events" as defined in the Employee
Retirement Income Security Act of 1974 ("ERISA"). As of January 1, 1997, all
accrued contributions and other payments to be made under the Defined Benefit
Group Pension Plan have been made or reserves adequate for such purpose have
been set aside therefor. As of the date hereof, there was no unfunded
liability and no funding deficiency existing with regard to the Defined
Benefit Pension Plan. Neither Juniata nor JVB has any union or collective
bargaining agreements, any contracts or other agreements with any labor
organization or, except as specifically disclosed in Schedule II, any
contracts or other agreements with any member of management or any management
or consultation agreement not terminable at will by it without liability, and
no such contract or agreement has been requested by or is under discussion by
management with any group of employees, any member of management or any other
person.
(k) Except as disclosed in Schedule II, since September 30, 1997, (i)
neither Juniata nor JVB has incurred any material liability or obligation,
accrued or contingent and whether due or to become due, other than as a result
of operations in the ordinary course of business, and (ii) there has been no
material adverse change in the business or financial condition of Juniata and
JVB on a consolidated basis.
<PAGE>
(l) Except as disclosed in Schedule II, neither Juniata nor JVB is engaged
in, or a party to, or threatened with, any legal action or other proceeding
before any court, any arbitrator of any kind or any government agency
(including any bank regulatory authority), and neither Juniata nor JVB is
subject to any potential adverse claim, the outcome of which could involve the
payment by Juniata or JVB of an amount in excess of $50,000 or which could
materially affect Juniata and JVB on a consolidated basis or its business or
property or the transactions contemplated hereby. Juniata has no knowledge of
any pending or threatened claims or charges under the Community Reinvestment
Act or before the Equal Employment Opportunity Commission, the Office of
Federal Contract Compliance, any Human Relations Commission or any other
federal, state or local government agency. There is no labor strike, dispute,
slow-down or stoppage pending or, to the best knowledge of Juniata, threatened
against Juniata or JVB. There are no outstanding orders, rulings, decrees,
judgments or stipulations, to which Juniata is a party or by which it is
bound, by or with any court, arbitrator, or government agency, involving an
amount in excess of $50,000.
(m)(1) The execution and delivery of this Agreement has been duly and
validly authorized by the Boards of Directors of Juniata and JVB, and the
Merger and this Agreement have been duly and validly authorized by all
necessary corporate action on the part of Juniata and JVB (subject to approval
of Juniata's shareholders in accordance with Juniata's Articles of
Incorporation.
(2) This Agreement has been duly executed and delivered by
Juniata and JVB and (assuming due execution and delivery by Lewistown)
constitutes, and, upon its execution and delivery this Agreement shall
constitute a valid, binding and enforceable obligation of Juniata and JVB,
subject to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally, and subject, as to enforceability, to general
principles of equity.
(3) The execution and delivery of this Agreement by Juniata and
JVB and the consummation of the transactions herein contemplated (A) do not
violate any provisions of the Articles of Incorporation or Bylaws of Juniata
or JVB, any provisions of federal or state law or any governmental rule or
regulation (assuming (i) the appropriate filing of the Articles of Merger with
the Pennsylvania Department of Banking, (ii) receipt of the Government
Approvals, (iii) the due registration of the offering of the Juniata Common
Stock under the Securities Act of 1933, as amended (the "1933 Act"), (iv) the
receipt of appropriate permits or approvals under state securities or "blue
sky" laws, (v) the receipt of the requisite Juniata shareholders' approval,
(vi) the accuracy of the representations of Lewistown set forth in Sections
5.1(t) and (u)), and (B) do not require any consent of any person under,
conflict with or result in a breach of or accelerate the performance required
by any of the terms of, any material debt instrument, lease, license,
covenant, agreement or understanding to which Juniata or JVB is a party or by
which either is bound or any order, ruling, decree, judgment, arbitration
award or stipulation to which Juniata or JVB is subject, or constitute a
default thereunder or result in the creation of any lien, claim, security
interest, encumbrance, change, restriction, or right of any third party of any
kind whatsoever upon any of their properties or assets.
(n) Neither Juniata nor JVB is in violation of, or has received notice of
a potential or actual violation of, any applicable federal, state, or local
laws, statutes, rules, regulations, or ordinances relating to public health,
safety, or the environment, including, without limitation, relating to
releases, discharges, emissions, or disposals to air, water, land, or ground
water to the withdrawal or use of ground water, to the use, handling, or
disposal of polychlorinated biphenyls ("PCB's"), asbestos, or urea
formaldehyde, to the treatment, storage, disposal or management of hazardous
substances (including, without limitation, petroleum, crude oil or any
fraction thereof, or other hydrocarbons), pollutants or contaminants, to
exposure to toxic, hazardous or other controlled, prohibited or regulated
substances which violation could have a material adverse effect on the
business, properties or financial condition of Juniata and JVB on a
consolidated basis. To the best knowledge of Juniata, any improvements on
other real estate owned or leased by Juniata or JVB do not contain friable
asbestos or substances containing asbestos and deemed hazardous by any
federal, state, or local laws, regulations, or orders respecting such
materials. Neither Juniata nor JVB knows of any liability or class of
liability of Juniata or JVB under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (42 U.S.C. Section 9601 et
seq) or the Resource Conservation and Recovery Act of 1976, as amended (42
U.S.C. Section 6901 et seq).
<PAGE>
(o) The information pertaining to Juniata and JVB which will appear in the
Juniata Registration Statement, the Prospectus or the Proxy Statement, in the
form filed with the SEC, or in the applications to be filed to obtain the
Government Approvals, will contain no untrue statement of any material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which
they are made, not misleading; provided, however, that information as of a
later date shall be deemed to modify information as of an earlier date. All
financial statements of Juniata included in the Prospectus or the Proxy
Statement will present fairly the consolidated financial condition and results
of operations of Juniata or JVB at the dates and for the periods covered by
such statements in accordance with generally accepted accounting principles
consistently applied throughout the periods covered by such statements (it
being understood that Juniata's interim financial statements are not audited
and are not prepared with related notes but reflect all adjustments which are,
in the opinion of Juniata, necessary for a fair presentation of such financial
statements).
(p)(1) Juniata and JVB have timely filed all federal, state, county and
local returns in respect of taxes, including, without limitation, estimated
tax returns, employer's withholding tax returns, other withholding tax returns
and Federal Unemployment Tax Act returns, and all other reports or other
information required or requested to be filed by it, and each such return,
report or other information is complete and accurate in all material respects.
Juniata and JVB have paid the amounts shown as owing on such returns
(collectively, "Taxes"). No waivers of statutes of limitations, and no
agreement relating to assessment or collection, are in effect in respect of
any Taxes. Except as disclosed in Schedule II, there are no claims pending
against Juniata or JVB for the alleged deficiency in the payment of any Taxes,
and neither Juniata nor JVB knows of any pending or threatened audits,
investigations or claims for unpaid Taxes or relating to any liability in
respect of Taxes.
(2) Juniata has heretofore delivered to Lewistown copies of its
consolidated United States federal and Pennsylvania corporate tax returns for
the fiscal years ended December 31, 1996, 1995, 1994, 1993 and 1992, true and
correct copies of which are included in Schedule II.
(3) The consolidated provision for current taxes payable
reflected in "Other Liabilities" in the Juniata 1996 Balance Sheet, as of the
date hereof and as of the Effective Date, is and will be adequate to cover (A)
all or substantially all accrued and unpaid Taxes of Juniata and JVB, whether
or not disputed, for the period ended December 31, 1996, and for all prior
periods, and (B) all or substantially all Taxes that may become due and
payable by Juniata and JVB in future periods (i) in respect of transactions,
sales or services occurring or performed on or prior to December 31, 1996,
which by virtue of tax or accounting treatment will not be included in income
until subsequent to such date, or (ii) in respect of deductions, costs or
other allowances taken for federal income tax purposes which Juniata's
auditors have reason to believe are likely to be disallowed by the Internal
Revenue Service if audited by such Service. The provision for applicable taxes
stated on the consolidated books of Juniata as of the date hereof and as of
the Effective Date, is and will be adequate to cover (A) all accrued and
unpaid federal, state, county, and local taxes of Juniata and JVB, whether or
not disputed, for the period ended on the date hereof or on the Effective
Date, as the case may be, and for all prior periods, and (B) all federal,
state, county and local Taxes that may become due and payable by Juniata and
JVB in future periods (i) in respect of such transactions, sales or services
occurring or performed on or prior to the date hereof or the Effective Date,
as the case may be, which by virtue of tax or accounting treatment will not be
included in income until subsequent to such dates, or (ii) in respect of
deductions, costs or other allowances taken for federal income tax purposes
which Juniata's auditors have reason to believe are likely to be disallowed by
the Internal Revenue Service if audited by such Service.
(4) No consent has been filed relating to Juniata or JVB pursuant
to Section 341(f) of the Code.
(q)(1) Each of Juniata and JVB have good and marketable title, free and
clear of all liens and encumbrances, and the right of possession subject to
existing leaseholds, to all real properties and good title to all other
property and assets, tangible and intangible, reflected in the Juniata 1996
Balance Sheet or purported to have been acquired by it since the date thereof
(except property held as lessee under leases and
<PAGE>
disclosed in writing prior to the date hereof and except real or personal
property sold or otherwise disposed of since December 31, 1996, in the Ordinary
Course of Business), except liens for taxes or assessments not delinquent,
pledges to secure deposits, repurchase agreements in the Ordinary Course of
Business and such other liens and encumbrances and imperfections of title as do
not materially affect the value of such property or as reflected in the Juniata
1996 Balance Sheet or as currently shown on the books and records of it and
which do not interfere with or impair its present and continued use. All real
properties owned or leased by Juniata or JVB which are material to the
business, operations or financial condition of Juniata or JVB are in
substantially good operating condition and repair (ordinary wear and tear
excepted).
(2) All properties held by Juniata or JVB under leases are held by it
under valid, binding and enforceable leases (subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and subject,
as to enforceability, to general principles of equity), with such exceptions as
are not material and do not interfere with the conduct of its business, as the
case may be, and it enjoys quiet and peaceful possession of such leased
properties. Neither Juniata nor JVB is in default in any material respect
under any material lease, agreement, or obligation regarding its properties to
which it is a party or by which it is bound.
(r) Each of Juniata and JVB is, and continuously since at least January 1,
1996 has been, insured with reputable insurers against all risks normally
insured against by companies of the same type and in the same line of business,
and all of the insurance policies or bonds maintained by it are in full force
and effect. Neither Juniata nor JVB is in default thereunder and all material
claims thereunder have been filed in due and timely fashion.
(s) No representation or warranty by Juniata and no statement by Juniata
in any certificate, agreement, schedule or other document furnished in
connection with the transactions contemplated by this Agreement, shall contain
any untrue statement of a material fact or omit to state any material fact
necessary to make such representation, warranty or statement not misleading to
Lewistown; provided, however, that information as of a later date shall be
deemed to modify information as of an earlier date.
(t) Other than Hopper Soliday and Co., Inc., no broker, agent, finder,
consultant or other party (other than legal accounting or financial advisors)
has been retained by Juniata or is entitled to be paid based upon any
agreements, arrangements or understandings made by Juniata in connection with
any of the transactions contemplated by this Agreement.
(u) Except for pledges to secure public and trust deposits, repurchase
agreements in the Ordinary Course of Business, and other pledges required by
laws, none of the investments reflected in Juniata's 1996 Balance Sheet under
the heading "Investment Securities," and none of the investments made since
December 31, 1996, is subject to any restriction, whether contractual or
statutory, which materially impairs the ability of Juniata freely to dispose of
such investment at any time.
ARTICLE VI
AGREEMENTS OF JUNIATA AND LEWISTOWN
6.1 Agreements of Juniata.
(a) Juniata and/or JVB has or will promptly following the execution of
this Agreement, use its best efforts in good faith to take as promptly as
practicable all such steps as shall be necessary in order to cause the Merger
to be consummated as expeditiously as possible.
(b) As the sole shareholder of JVB, Juniata has by unanimous shareholder
action ratified and confirmed the merger of Lewistown into JVB and caused the
Board of Directors of JVB to approve the Merger.
(c) Prior to the Effective Date, Juniata shall take appropriate action to
reserve a sufficient number of authorized but unissued shares of Juniata Common
Stock to be issued in accordance with this Agreement.
<PAGE>
Juniata shall issue shares of Juniata Common Stock in accordance with the
Conversion Factor, as it may be adjusted in accordance with this Agreement,
which shares will, when issued and delivered pursuant to this Agreement, be
duly authorized and legally and validly issued, fully paid and nonassessable.
(d) Prior to the Effective Date, Juniata shall appoint an Exchange Agent
for the purpose of exchanging certificates representing shares of Juniata
Common Stock for certificates representing shares of Lewistown Common Stock,
and thereafter Juniata shall issue and deliver to the Exchange Agent
certificates representing shares of Juniata Common Stock, and shall pay to the
Exchange Agent such amounts of cash as shall be required to be delivered to
holders of shares of Lewistown Common Stock entitled to cash in lieu of a
fractional share pursuant to Article II of this Agreement. Any Juniata Common
Stock and any amounts of cash delivered to the Exchange Agent and unclaimed at
the end of two years from the Effective Date shall be repaid to Juniata, in
which event the persons entitled thereto shall look only to Juniata for payment
thereof; provided, however, that if Juniata shall, as required by law, pay to
the Commonwealth of Pennsylvania any unclaimed Juniata Common Stock or monies
so repaid to Juniata, said persons shall thereafter look only to the
Commonwealth of Pennsylvania for payment thereof. All costs and expenses
associated with the foregoing surrender and exchange procedure shall be borne
by Juniata.
(e) Prior to the Effective Date, Juniata, separately and jointly with
Lewistown, shall use its best efforts in good faith to take or cause to be
taken as promptly as practicable all such steps as shall be necessary to obtain
(i) the prior approval of the Merger by the Pennsylvania Department of Banking
("PA DOB"), and the Federal Reserve Bank of Philadelphia (the "Federal
Reserve") the Federal Deposit Insurance Corporation ("FDIC"), and (ii) all
other consents and approvals of government agencies as are required by law or
otherwise (such approvals referred to in clauses (i) and (ii) of this Section
6.1(e) herein referred to as the "Government Approvals"), and shall do any and
all acts and things deemed by Juniata to be necessary or appropriate in order
to cause the Merger of Lewistown with and into JVB to be consummated on the
terms provided in this Agreement as promptly as practicable. Juniata shall
provide Lewistown and its representatives with the right to review in advance
any filing to be made with, or written material to be submitted to, any third
party or governmental body in connection with the transactions contemplated by
this Agreement. Juniata shall provide Lewistown and its counsel with a copy of
all applications and other written material filed with or provided to any such
third party or governmental body, together with a copy of all correspondence to
or from any such third party or governmental body, in each case promptly
following the filing, submission or receipt of such materials.
(f) Juniata shall promptly give written notice to Lewistown upon becoming
aware of the impending or threatened occurrence of any event which would cause
or constitute a breach of any of the agreements, representations and warranties
of Juniata contained or referred to in this Agreement and shall use its best
efforts to prevent the same or remedy the same promptly.
(g) Prior to the Effective Date, Juniata and JVB shall give Lewistown and
its counsel, financial advisor and accountants full access, during normal
business hours and upon reasonable request, to its properties, books,
contracts, commitments and records, and shall furnish Lewistown during such
period with all such information concerning its affairs as Lewistown may
reasonably request. The availability or actual delivery of information about
Juniata or JVB to Lewistown shall not affect the covenants, representations and
warranties of Juniata contained in this Agreement. Lewistown shall treat as
confidential all such information in the same manner as Lewistown treats
similar confidential information of its own, and if this Agreement is
terminated, Lewistown shall continue to treat all such information as
confidential and cause its employees and agents to keep all such information
confidential and shall return such documents theretofore delivered by Juniata
as Juniata shall request.
(h) Juniata shall cause JVB to employ as employees of JVB persons who are
employees of Lewistown immediately prior to the Effective Date and to pay
compensation to each such person that is consistent with the compensation
policies of JVB then in effect, and to provide employee benefits to each such
employee that are no less favorable than employee benefits afforded to
similarly situated employees of Juniata and JVB. For vesting and eligibility
purposes for employee benefits, former Lewistown employees shall receive credit
<PAGE>
for years of service with Lewistown. With respect to any welfare benefit plans
to which such employees may become eligible, Juniata and JVB shall cause such
plans to provide credit for any co-payments or deductibles by such employees
and waive all pre-existing condition exclusions and waiting periods. In the
event the application of Juniata/JVB compensation policies and employee
benefits to an individual Lewistown employee causes a reduction in the overall
level of compensation and benefits to such employee, Juniata shall use its
reasonable best effort to increase such employee's aggregate compensation and
benefits to the level in effect prior to the Effective Date over a period of
two (2) years. In the event JFB terminates the employment (other than
unsatisfactory performance of their respective duties) of any employee of
Lewistown within one (1) year of the effective date, Juniata shall cause JVB to
pay severance benefits to such employees in accordance with such severance
policy as established by Juniata's CEO and President agreed to by Juniata's
Chairman and President from time to time adopted.
(i) Prior to the Effective Date, Juniata and JVB shall conduct its
respective business in the ordinary course as heretofore conducted and shall
use its best efforts (i) to preserve its respective business and business
organization intact, (ii) to preserve the good will of its customers and others
having business relations with it, (iii) to maintain its properties in
customary repair, working order and condition (reasonable wear and tear
excepted), (iv) to comply with all laws applicable to it and the conduct of its
business, (v) to keep in force at not less than their present limits all
policies of insurance (including deposit insurance of the FDIC with respect to
JVB), (vi) to file in a due and timely manner all reports, tax returns and
other documents required to be filed with federal, state, local and other
authorities, and (vii) unless it is contesting the same in good faith and has
established reasonable reserves therefor, to pay when required to be paid all
Taxes (as hereinafter defined) indicated by tax returns so filed or otherwise
lawfully levied or assessed upon it or any of its properties and to withhold or
collect and pay to the proper governmental authorities or hold in separate bank
accounts for such payment all Taxes and other assessments which it believes in
good faith to be required by law to be so withheld or collected.
(j) Juniata will not take any actions or engage in any transaction
following the Merger that would cause the Merger to fail to qualify as a
reorganization within the meaning of Section 368 of the Code or fail to qualify
for pooling of interests accounting treatment. Consummation of the
transactions contemplated by this Agreement shall be conditioned upon the
Merger being accounted for under the pooling of interests method of accounting.
(k) Juniata shall cause the issues of shares of Juniata common stock in
connection with the Merger and this Agreement to be submitted promptly for the
approval of its shareholders at a meeting to be called and held in accordance
with Juniata's Articles of Incorporation and Bylaws and the BCL.
(l) Juniata shall not adopt any amendments to its charter or bylaws or
other organizational documents that would alter the terms of Juniata's Common
Stock or could reasonably be expected to have a material adverse effect on the
ability of Juniata to perform its obligations under this Agreement.
(m) Juniata shall take no action which would have the effect of causing the
Merger not to qualify for pooling-of-interests accounting treatment or
reorganization tax treatment.
6.2 Agreements of Lewistown.
(a) At or after the date hereof and on or prior to the Effective Date,
except with the prior written consent of Juniata, or as otherwise provided in
this Agreement, Lewistown shall not:
(1) Amend its Articles of Incorporation or Bylaws; enter into any
shareholder agreement, understanding or commitment relating to the right to
vote its shares of capital stock; purchase, redeem, retire or otherwise
acquire any share of, or any security convertible into shares of, its
capital stock or other equity security; or agree to do any of the
foregoing;
<PAGE>
(2) Issue, deliver or sell shares of capital stock or securities
convertible into any such shares or issue or grant any right, option or
other commitment for the issuance, delivery or sale of any such shares or
such securities (other than pursuant to subsection (4) below);
(3) Declare, set aside or pay any dividend or other distribution in
respect of its capital stock (including, without limitation, any stock
dividend or distribution) other than regular quarterly cash dividends
payable in accordance with customary dividend policy, which shall mean cash
dividends payable with respect to Lewistown's Common Stock at a semi-annual
rate not in excess of $.31 per share.
(4) Enter into or amend, or increase the contribution to or
obligation under, any employment contract or any bonus, stock option,
profit sharing, pension, retirement, savings, incentive, deferral or
similar employee benefit program or arrangement, or authorize the creation
of any new or replacement job classifications or staff positions, pay
bonuses or other extraordinary compensation, or grant any salary or wage
increase except normal individual increases in compensation to employees in
accordance with established employee procedures of Lewistown, as the case
may be.
(5) Authorize or make any material change in its business or
operations, other than in the Ordinary Course of Business as hereinafter
defined; incur any material direct or contingent liabilities or commitments
other than in the Ordinary Course of Business; sell or dispose of any
shares of its capital stock or lease, sell or dispose of any other material
part of its assets, in each case except in the Ordinary Course of Business
and for adequate value; establish any new branch banking offices, loan
production offices, or other offices, or make any capital expenditures in
excess in the aggregate of $5,000 (except for ordinary repairs, renewals or
replacements); waive or release any right or cancel or compromise any of
its debts or claims except in the Ordinary Course of Business; or otherwise
enter into any material contract, transaction or commitment on its behalf,
except in the Ordinary Course of Business. For purposes of this Agreement,
the Ordinary Course of Business shall consist of the banking business as
presently conducted by Lewistown and not prohibited by the Pennsylvania
Banking Code (herein referred to as the "Ordinary Course of Business"); or
(6) Except to the extent which the Board of Directors in good faith
believes it is required to discharge its fiduciary duties after
consultation with its legal counsel, Lewistown agrees that neither it nor
any of its officers and directors shall (and Lewistown shall direct and use
its best efforts to cause its employees, agents and representatives
including, without limitation, any investment banker, attorney or
accountant retained by it not to) initiate, solicit or encourage, directly
or indirectly, any inquiries or the making of any proposal or offer
(including, without limitation, any proposal or offer to stockholders of
Lewistown but excluding the transactions contemplated by this Agreement)
with respect to a merger, consolidation or similar transaction involving,
or any purchase of all or any significant portion of the assets or any
equity securities of, Lewistown (any such proposal or offer being
hereinafter referred to as an "Acquisition Proposal") or, engage in any
negotiations concerning, or provide any confidential information or data
to, or have any discussions with, any person relating to an Acquisition
Proposal, or otherwise facilitate any effort or attempt to make or
implement an Acquisition Proposal. Lewistown will immediately cease and
cause to be terminated any existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any of the foregoing.
Lewistown will take the necessary steps to inform the appropriate
individuals or entities referred to in the first sentence hereof of the
obligations undertaken in this Section 6.2(a)(6). Lewistown will notify
Juniata immediately if any such inquiries or proposals are received by, any
such information is requested from, or any such negotiations or discussions
are sought to be initiated or continued with or on behalf of any
corporation, partnership, person or other entity or group other than
Juniata with respect to any Acquisition Proposal.
(b) Prior to the Effective Date, Lewistown shall conduct its business in
the ordinary course as heretofore conducted and shall use its best efforts (i)
to preserve its respective business and business organization intact, (ii) to
keep available to Juniata the services of its present officers (provided,
however, that it shall have the right to terminate the employment of any such
officer for cause in accordance with its
<PAGE>
established employee procedures), (iii) to preserve the good will of its
customers and others having business relations with it, (iv) to consult with
Juniata as to the making of any decisions or the taking of any actions in
matters other than in the Ordinary Course of Business, (v) to maintain its
properties in customary repair, working order and condition (reasonable wear
and tear excepted), (vi) to comply with all laws applicable to it and the
conduct of its business, (vii) to keep in force at not less than their present
limits all policies of insurance (including deposit insurance of the FDIC with
respect to Lewistown), (viii) to make no material change in the general terms,
policies and conditions upon which it presently does business other than in the
Ordinary Course of Business, (ix) to file in a due and timely manner all
reports, tax returns and other documents required to be filed with federal,
state, local and other authorities, and (x) unless it is contesting the same in
good faith and has established reasonable reserves therefor, to pay when
required to be paid all Taxes (as hereinafter defined) indicated by tax returns
so filed or otherwise lawfully levied or assessed upon it or any of its
properties and to withhold or collect and pay to the proper governmental
authorities or hold in separate bank accounts for such payment all Taxes and
other assessments which it believes in good faith to be required by law to be
so withheld or collected.
(c) Charge-offs and charge-downs of loans will be taken against
Lewistown's allowance for loan losses in the Ordinary Course of Business when
the potential loss has been quantified by the executive officers of Lewistown.
(d) Prior to the Effective Date, Lewistown shall give Juniata and its
counsel, financial advisors, and accountants full access, during normal
business hours and upon reasonable request, to its properties, books,
contracts, commitments and records, and shall furnish Juniata during such
period with all such information concerning its affairs as Juniata may
reasonably request. The availability or actual delivery of information about
Lewistown to Juniata shall not affect the covenants, representations and
warranties of Lewistown contained in this Agreement. Juniata shall treat as
confidential all such information in the same manner as Juniata treats similar
confidential information of its own, and if this Agreement is terminated,
Juniata shall continue to treat all such information as confidential and cause
its employees and agents to keep all such information confidential and shall
return such documents theretofore delivered by Lewistown as Lewistown shall
request.
(e) Lewistown shall cause the Merger and this Agreement to be submitted
promptly for the approval of its shareholders at a meeting to be called and
held in accordance with the Pennsylvania Banking Code and the BCL. Except as
required by applicable fiduciary duties, in the opinion of counsel to
Lewistown, the Board of Directors of Lewistown shall recommend in Lewistown's
Proxy Statement that the Merger and this Agreement be approved, which
recommendation shall not be withdrawn. In addition thereto, concurrently with
the execution of this Agreement, each member of Lewistown's Board of Directors
shall execute and deliver to Juniata the Directors Letter attached hereto and
made a part hereof as Exhibit "B".
-----------
(f) After execution hereof, Lewistown shall deliver to Juniata a correct
and complete list of holders of the outstanding Lewistown's Common Stock of
record with addresses.
(g) Lewistown, separately and jointly with Juniata, shall use its best
efforts in good faith to take or cause to be taken as promptly as practicable
all such steps as shall be necessary to obtain the Government Approvals, and
shall do any and all acts and things deemed by Lewistown or Juniata to be
necessary or appropriate in order to cause the Merger to be consummated on the
terms provided in this Agreement.
(h) Lewistown shall promptly give written notice to Juniata upon becoming
aware of the impending or threatened occurrence of any event which would cause
or constitute a breach of any of the agreements, representations and warranties
of Lewistown contained or referred to in this Agreement, and shall use its best
efforts to prevent the same or remedy the same promptly.
(i) From and after the date hereof until the Effective Date of the Merger,
Lewistown shall not take any actions with respect to its business or operations
that in the reasonable judgment of Juniata or its accountants
<PAGE>
would cause the Merger or any related transaction contemplated by this
Agreement to fail to meet the relevant criteria for pooling of interests
accounting treatment.
(j) Lewistown shall cause its auditors, Beard and Company, Inc., to
perform audits of the balance sheets of Lewistown as of December 31, 1997,
1996, and 1995 and the related statements of income, changes, and stockholders'
equity and cash flows for each of the three (3) years in the period ended
December 31, 1997, in accordance with generally-accepted auditing standards,
and otherwise in a manner which will provide a reasonable basis for the
auditors rendering an opinion that the financial statements referred to above
present fairly in all material respects the financial position of Lewistown as
of December 31, 1997, 1996, and 1995 and the results of operations and cash
flows for each of the three (3) years in the period ended December 31, 1997 in
conformity with generally-accepted accounting principles.
6.3 Agreements of Juniata and Lewistown.
(a) Each party hereto shall, and shall cause its directors, officers,
attorneys and advisors, to maintain, unless otherwise required by applicable
law, the confidentiality of all information obtained in connection with this
Agreement, including the negotiation and performance thereof, which is not
otherwise publicly disclosed by the other party or publicly available, said
agreement with respect to confidentiality to survive any termination of this
Agreement pursuant to Section 11.1.
(b) Juniata and Lewistown shall agree with each other as to the form and
substance of any press release related to this Agreement or the transactions
contemplated hereby, and shall consult each other as to form and substance of
other public disclosures related thereto.
ARTICLE VII
SECURITIES ACT OF 1933;
SECURITIES EXCHANGE ACT OF 1934
7.1 Juniata shall promptly prepare and file with the SEC a registration
statement on Form S-4 (the "Juniata Registration Statement") under and pursuant
to the provisions of the 1933 Act for the purpose of registering the offering of
Juniata Common Stock. Lewistown in cooperation with Juniata shall promptly
prepare for inclusion in the Juniata Registration Statement a proxy statement
(the "Proxy Statement") for the purpose of submitting this Agreement to the
shareholders of Juniata and Lewistown for approval. The Proxy Statement in
definitive form will serve as the prospectus (the "Prospectus") to be included
in the Juniata Registration Statement. Juniata and Lewistown shall each provide
promptly to the other such information concerning its business and financial
condition and affairs as may be required or appropriate for inclusion in the
Juniata Registration Statement, the Prospectus or the Proxy Statement, and shall
cause its counsel and auditors to cooperate with the other's counsel and
auditors in the preparation of the Juniata's Registration Statement, the
Prospectus and the Proxy Statement.
7.2 Juniata and Lewistown shall use their best efforts to have the Juniata
Registration Statement declared effective under the 1933 Act as soon as may be
practicable, and thereafter Lewistown shall distribute the Proxy Statement to
its shareholders in accordance with applicable law and its Articles of
Incorporation and Bylaws, not less than twenty (20) business days prior to the
date upon which the Merger and this Agreement are submitted to its shareholders
for approval. Lewistown shall not mail or otherwise furnish the Proxy Statement
to its shareholders unless and until Juniata shall have received letters from
Beard and Company, Inc. dated the effective date of the Juniata Registration
Statement, to the effect set forth in Section 8.1(j)and 8.2(l).
7.3 Juniata shall not be required to maintain the effectiveness of the
Juniata Registration Statement for the purpose of sale or resale of Juniata
Common Stock by any person; provided, however, that Juniata shall file all
periodic reports which are required under the 1934 Act in order for Juniata to
satisfy the current public information requirement of Rule 144(c), as
promulgated under the 1933 Act, as amended.
<PAGE>
7.4 Securities representing shares of the Common Stock issued to
Affiliates (as hereinafter defined in Section 8.1(m) hereof) pursuant to this
Agreement may be subject to stop transfer orders and may bear a restrictive
legend in substantially the following form:
"The shares represented by this Certificate were issued in a transaction to
which Rule 145 promulgated under the Securities Act of 1933, as amended (the
"Act"), applies and may be sold or otherwise transferred only in compliance
with the limitations of such Rule 145, or upon receipt by Juniata of an opinion
of counsel acceptable to it that some other exemption from registration under
the Act is available, or pursuant to a registration statement under the Act."
Should an opinion of counsel indicate that the legend and any stop transfer
order then in effect with respect to the shares may be removed, Juniata will
upon request substitute unlegended securities and remove any stop transfer
orders.
ARTICLE VIII
CONDITIONS
8.1 Conditions to the Obligations of Juniata. The obligations of Juniata
under this Agreement are, at its option (subject to the provisions of Section
11.1(a)), subject to fulfillment on or prior to the Effective Date of each of
the following conditions:
(a) Except as affected by the transactions contemplated by this Agreement,
the representations and warranties of Lewistown in Section 5.1 shall be true
and correct in all material respects on and as of the Effective Date, except as
to any representation or warranty which specifically relates to an earlier
date.
(b) Lewistown shall have performed and complied in all material respects
with all terms of this Agreement required to be performed or complied with by
it on or prior to the Effective Date.
(c) No material adverse change shall have occurred since September 30,
1997 in the business or financial condition of Lewistown, and Lewistown shall
not be engaged in, or a party to or threatened with, any legal action or other
proceeding before any court, any arbitrator of any kind or any government
agency if, in the reasonable judgment of Juniata, such legal action or
proceeding could materially adversely affect the business or financial
condition of Lewistown. For purposes of this section, any change in the
business or financial condition of Lewistown on a consolidated basis which
results from any changes occurring after the date hereof in any federal or
state law, rule or regulation, in generally accepted accounting principles or
in market rates of interest, which change affects banks or their holding
companies generally, shall not be deemed to be a material adverse change.
(d) This Agreement shall have been duly approved by the affirmative vote
of the shareholders of Lewistown owning at least two-thirds (2/3) of its
capital stock outstanding at a meeting of shareholders duly called and held
after distributing the Proxy Statement to all shareholders entitled to vote at
such meeting as required by Section 6.2(e).
(e) Juniata shall have received a certificate, dated the Effective Date,
signed on behalf of Lewistown by its President certifying the fulfillment of
the conditions stated in paragraphs (a), (b), and (c) of this Section 8.1 by
Lewistown.
(f) Lewistown shall have delivered to Juniata such documents as may
reasonably be requested by Juniata to evidence compliance by Lewistown with the
provisions of this Agreement including an opinion of its counsel confirming its
representations as set forth in Subsections (a), (c) (l), (o), and (p) of
Section 5.1 (subject to appropriate assumptions and qualifications), and
setting forth counsel's opinion that the Merger has been approved by all
necessary corporate action of Lewistown, including the Lewistown shareholders.
Lewistown shall also have delivered to Juniata on the Effective Date, a letter
of its litigation counsel setting forth pending litigation involving Lewistown
which was not previously disclosed in writing to Juniata.
<PAGE>
(g) The Juniata Registration Statement shall have become effective under
the 1933 Act, no stop order suspending the effectiveness of such Registration
Statement shall be in effect and no proceedings for such purpose shall have
been initiated or threatened by or before the SEC. All state securities and
"blue sky" permits or approvals required (in the opinion of Juniata) to
consummate the transactions contemplated by this Agreement shall have been
received.
(h) All Government Approvals shall be in effect, all conditions or
requirements prescribed by law or by any such Approval shall have been
satisfied, and all required waiting periods shall have expired; provided,
however, that no approval shall be deemed to have been received if it shall
require the divestiture or cessation of any of the present businesses or
operations conducted by either of the parties hereto or of a subsidiary of or
shall impose any other nonstandard condition or requirement, which divestiture,
cessation, condition or requirement Juniata reasonably and in good faith
determines would (i) have a material adverse effect on the business or
financial condition of Juniata and JVB on a consolidated basis or (ii)
otherwise materially impair the value of Lewistown to Juniata (in which case
Juniata shall promptly notify Lewistown).
(i) Juniata shall have received an opinion of its counsel, Mette, Evans &
Woodside, substantially to the effect that, under the provisions of the Code:
(1) the Merger of Lewistown with and into JVB upon the terms and
conditions of this Agreement will constitute a reorganization within the
meaning of Section 368 of the Code and will not result in any recognized
gain or loss to Juniata, JVB, or Lewistown;
(2) except for any cash received in lieu of any fractional share, no
gain or loss will be recognized by holders of Lewistown Common Stock who
receive Juniata Common Stock in exchange for the shares of Lewistown Common
Stock which they hold. A holder of Lewistown Common Stock who receives cash
in lieu of a fractional share of Juniata Common Stock will be treated as if
he received a fractional share of Juniata Common Stock pursuant to the
reorganization and Juniata then redeemed such fractional share for the
cash. The holder of Lewistown Common Stock will recognize capital gain or
loss on the constructive redemption of the fractional share in an amount
equal to the difference between the cash received and the adjusted basis of
the fractional share;
(3) the holding period of Juniata Common Stock received in exchange
for Lewistown Common Stock will include the holding period of Lewistown
Common Stock for which it is exchanged, assuming the shares of Lewistown
Common Stock are capital assets in the hands of the holder thereof on the
Effective Date; and
(4) the basis of Juniata Common Stock received in exchange for
Lewistown Common Stock will be the basis of Lewistown Common Stock for
which it is exchanged, less any basis attributable to fractional shares for
which cash is received.
Such opinion shall be given, subject to the receipt, and the accuracy on the
Effective Date of:
(1) representations by Juniata satisfactory to such counsel; and
(2) representations by Lewistown satisfactory to such counsel.
(j) Subject to satisfaction of the requirements of Statement on Auditing
Standards No. 72 of the American Institute of Certified Public Accountants if
applicable, Juniata and its directors and officers shall have received a letter
from Beard and Company, Inc. dated the effective date of the Juniata
Registration Statement, to be in form and substance satisfactory to Juniata, to
the effect that:
(1) In their opinion, the financial statements of Lewistown examined
by them and included in the Juniata Registration Statement comply as to
form in all material respects with the applicable accounting requirements
of the 1933 Act and the published rules and regulations thereunder; and
<PAGE>
(2) On the basis of limited procedures, not constituting an audit,
including a limited review of the unaudited financial statements referred
to below, a limited review of the latest available unaudited consolidated
interim financial statements of Lewistown, inspection of the minute book of
Lewistown since December 31, 1997, inquiries of officials of Lewistown
responsible for financial and accounting matters and such other inquiries
and procedures as may be specified in such letter, nothing came to their
attention that caused them to believe that:
(A) any unaudited Balance Sheets, Statements of Income,
Statements of Stockholders' Equity and Statements of Cash Flows of
Lewistown included in the Juniata Registration Statement are not in
conformity with generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial statements
covered by their report included in the Juniata Registration Statement;
(B) as of a specified date not more than five days prior to the
date of delivery of such letter, there have been any changes in the capital
stock, decreases in capital surplus or increases in debt of Lewistown as
compared with amounts shown in the balance sheet as of December 31, 1997
included in the Juniata Registration Statement, except in each case for
such changes, increases or decreases which the Juniata Registration
Statement discloses have occurred or may occur and except for such changes,
decreases or increases as aforesaid which are immaterial; and
(C) for the period from January 1, 1998 to such specified date,
there were any decreases in the total or per share amounts of income before
securities gains or losses or net income of Lewistown as compared with the
comparable period of the preceding year, except in each case for decreases
which the Juniata Registration Statement discloses have occurred or may
occur, and except for such decreases which are immaterial.
(k) The aggregate number of shares of Lewistown Common Stock held by
persons who have taken all of the steps required prior to the Effective Date to
perfect their right (if any) to be paid the fair value of such shares under the
BCL("Dissenting Shares") shall not be more as to prevent Juniata from meeting
the continuity of business enterprise requirement of Section 368(a)(1)(A) of
the Code with respect to the Lewistown acquisition, and the number of
Dissenting Shares, the number of shares owned by Juniata or its affiliates,
together with the aggregate number of fractional shares with respect to which
persons will receive cash in lieu of Juniata Common Stock pursuant to this
Agreement, shall be less than ten (10%) percent of the number of outstanding
shares of Lewistown Common Stock or such number, if less, which will allow
Juniata to account for the Merger as a "pooling of interests".
(l) Juniata shall have received from each of the persons who, in the
opinion of counsel for Juniata, might be deemed to be affiliates of Lewistown
under Rule 145 of the Rules and Regulations under the 1933 Act (the
"Affiliates"), a signed undertaking satisfactory to Counsel for Juniata,
acknowledging and agreeing to abide by the limitations imposed by law in
respect of the sale or other disposition of the Juniata Common Stock received
by such person pursuant to the Merger. Lewistown agrees to use its best efforts
to have each Affiliate enter into the undertakings referred to in this Section
8.1(l) on or prior to the Effective Date.
(m) This Agreement and the issuance of Juniata Common Stock in connection
with the Merger shall have been duly approved by the affirmative vote of a
sixty-six and two-thirds (66 and 2/3) percent majority of Juniata's Common
Stock outstanding at a duly called meeting of the shareholders of Juniata.
(n) Juniata and JVB, as the case may be, shall have entered into an
Employment Agreement with Francis J. Evanitsky, a copy of which is attached
hereto and made a part hereof, which Employment Agreement shall be the valid
and enforceable obligations of the parties thereto.
(o) Juniata shall have received an opinion from Hopper Soliday and
Company, Inc. dated as of a date within five (5) business days of the date of
the Juniata Proxy Statement to the effect that the consideration to
<PAGE>
be paid by Juniata to the holders of Lewistown Common Stock is fair from a
financial point of view to the Juniata shareholders.
(p) The financial statements of Lewistown examined by Beard and Company
and described in Section 6.2(j) of this Agreement and included in the Juniata
Registration Statement do not vary in any material respect from the unaudited
financial statements of Lewistown for the years then ended and referred to in
Section 5.1(f) of this Agreement.
8.2 Conditions to the Obligations of Lewistown. The obligations of
Lewistown under this Agreement are, at its option (subject to the provisions of
Section 11.1(a)), subject to the fulfillment on or prior to the Effective Date
of each of the following conditions:
(a) Except as affected by the transactions contemplated by this
Agreement and as affected by events occurring or arising after the date first
above written in the ordinary course of the business of Juniata which do not
materially adversely affect the business of Juniata, the representations and
warranties of Juniata in Section 5.2 shall be true and correct in all
material respects on and as of the Effective Date, except as to any
representation or warranty which specifically relates to an earlier date.
(b) Juniata shall have performed and complied in all material
respects with all terms of this Agreement required to be performed or
complied with by it on or prior to the Effective Date. Juniata as the sole
shareholder of JVB shall have approved the merger of Juniata into JVB.
(c) No material adverse change shall have occurred since September
30, 1997 in the business or financial condition of Juniata and JVB on a
consolidated basis, and neither Juniata nor JVB shall be engaged in, or a
party to or threatened with, any legal action or other proceeding before any
court, any arbitrator of any kind or any government agency if, in the
reasonable judgment of Lewistown, such legal action or proceeding could
materially adversely affect the business or financial condition of Juniata
and JVB, considered as a whole. For purposes of this section, any change in
the business or financial condition of Juniata on a consolidated basis which
results from any changes occurring after the date hereof in any federal or
state law, rule or regulation, in generally accepted accounting principles or
in market rates of interest, which change affects banks or their holding
companies generally, shall not be deemed to be a material adverse change.
(d) This Agreement shall have been duly approved by the affirmative
vote of (i) Lewistown shareholders owning at least two-thirds (2/3) of its
capital stock outstanding and (ii) Juniata's shareholders pursuant to
Juniata's Articles of Incorporation and the listing requirements of the
American Stock Exchange.
(e) Lewistown shall have received a certificate, dated the Effective
Date, signed on behalf of Juniata by its Chairman and Chief Executive Officer
or President, certifying the fulfillment of the conditions stated in
paragraphs (a), (b), (c), and (d) of this Section 8.2.
(f) Juniata shall have delivered to Lewistown such documents as may
reasonably be requested by Lewistown to evidence compliance by Juniata with
the provisions of this Agreement including an opinion of its counsel
confirming its representation set forth in Subsections (a), (e), (i), (l),
and (m) of Section 5.2 and to the effect that the shares to be issued in the
Merger are duly and validly authorized and issued.
(g) The Juniata Registration Statement shall have become effective
under the 1933 Act, no stop order suspending the effectiveness of the Juniata
Registration Statement shall be in effect and no proceedings for such purpose
shall have been initiated or threatened by or before the SEC. All state
securities and "blue sky" permits or approvals required (in the opinion of
Lewistown) to consummate the transactions contemplated by this Agreement
shall have been received.
<PAGE>
(h) All Government Approvals shall have been received and shall be in
effect, all conditions or requirements prescribed by law or by any such
Approval shall have been satisfied, and all required waiting periods shall
have expired.
(i) Lewistown shall have received the opinion of Juniata's counsel
referred to in Section 8.1(i).
(j) the Employment Agreement shall become effective.
(k) Lewistown shall have received an opinion from RP Financial, LC.
dated as of a date within five (5) days of the date of the Lewistown Proxy
Statement to the effect that the consideration to be received by the holders
of Lewistown common stock pursuant to the Merger is fair from a financial
point of view to Lewistown shareholders.
(l) Subject to satisfaction of the requirements of Statement on
Auditing Standards No. 72 of the American Institute of Certified Public
Accountants if applicable, Lewistown and its directors and officers shall
have received a letter from Beard and Company, Inc. dated the effective date
of the Juniata Registration Statement, to be in form and substance
satisfactory to Lewistown, to the effect that:
(1) In their opinion, the consolidated financial statements of
Juniata examined by them and included in the Juniata Registration
Statement comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act and the published
rules and regulations thereunder; and
(2) On the basis of limited procedures, not constituting an
audit, including a limited review of the unaudited financial
statements referred to below, a limited review of the latest available
unaudited consolidated interim financial statements of Juniata,
inspection of the minute book of Juniata since December 31, 1997,
inquiries of officials of Juniata responsible for financial and
accounting matters and such other inquiries and procedures as may be
specified in such letter, nothing came to their attention that caused
them to believe that:
(A) any unaudited Balance Sheets, Statements of Income,
Statements of Stockholders' Equity and Statements of Cash Flows of
Juniata included in the Juniata Registration Statement are not in
conformity with generally accepted accounting principles applied on a
basis substantially consistent with that of the audited financial
statements covered by their report included in the Juniata
Registration Statement;
(B) as of a specified date not more than five days prior to
the date of delivery of such letter, there have been any changes in
the capital stock, decreases in capital surplus or increases in debt
of Juniata as compared with amounts shown in the balance sheet as of
December 31, 1997 included in the Juniata Registration Statement,
except in each case for such changes, increases or decreases which the
Juniata Registration Statement discloses have occurred or may occur
and except for such changes, decreases or increases as aforesaid which
are immaterial; and
(C) for the period from January 1, 1998 to such specified
date, there were any decreases in the total or per share amounts of
income before securities gains or losses or net income of Juniata as
compared with the comparable period of the preceding year, except in
each case for decreases which the Juniata Registration Statement
discloses have occurred or may occur, and except for such decreases
which are material.
(m) Juniata and Lewistown shall have been advised in writing by Beard
and Company, Inc. on the Effective Date that the Merger should be treated as
a pooling transaction for financial accounting purposes.
<PAGE>
(n) The election of the officers and directors of Lewistown to the
positions with Juniata set forth in Sections 3.1 and 3.2 shall become
effective.
ARTICLE IX
CLOSING
9.1 The transactions contemplated by this Agreement shall be consummated
at a closing (the "Closing") to be held at the executive offices of Juniata at
10:00 a.m. on a date to be designated by Juniata, which date shall not be later
than thirty (30) days after the receipt of all required Governmental Approvals
and Shareholder approvals and after the expiration of all applicable waiting
periods with the Merger to be consummated in such order and after such
intermediate steps as the parties hereto may agree. The Closing Date shall
(unless otherwise provided) be the Effective Date.
9.2 At the Closing, the opinions, certificates and other documents
required to be delivered by this Agreement shall be delivered.
9.3 At the Closing, Juniata and Lewistown shall instruct their respective
representatives to make or confirm such filings as shall be required in the
opinion of counsel to Juniata to give effect to the Merger.
ARTICLE X
EXPENSES
10.1 Each of the parties hereto agrees to pay, without right of
reimbursement from the other party and whether or not the transactions
contemplated by this Agreement shall be consummated, the costs incurred by it
incident to the performance of its obligations under this Agreement, including,
without limitation, costs incident to the preparation of this Agreement, the
Juniata Registration Statement, the Prospectus and the Proxy Statement
(including the audited financial statements of the parties contained therein)
and to the consummation of the Merger and of the other transactions contemplated
herein, including the fees and disbursements of counsel, accountants and
consultants employed by such party in connection therewith; except that in the
event that the transactions contemplated in this Agreement are not consummated
for any reason, Juniata and Lewistown shall each pay one-half of (a) the
aggregate costs theretofore incurred in printing the Juniata Registration
Statement, the Prospectus and the Proxy Statement, (b) the registration fee for
the Juniata Registration Statement, and (c) the fees for filing applications for
Government Approvals.
ARTICLE XI
INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE
11.1 From and after the Effective Date, JVB agrees to indemnify and hold
harmless each present and former director and officer of Lewistown and each
officer or employee of Lewistown that is serving or has served as a director or
trustee of another entity expressly at Lewistown request or direction (the
"Indemnified Parties"), against any and all costs or expenses (including
reasonable attorneys' fees), judgments, fines, losses, claims, damages or
liabilities (collectively, "Costs") incurred in connection with any and all
claims, actions, suits, proceedings or investigations, whether civil, criminal,
administrative or investigative, arising out of or pertaining to matters arising
out of or in connection with such party's position as, or actions taken as, a
director or officer of Lewistown or a subsidiary or director or trustee of
another entity at the request or direction of Lewistown, at or prior to the
Effective Date, whether asserted or claimed prior to, at or after the Effective
Date, to the fullest extent permitted by applicable law (and also advance
expenses incurred to the fullest extent permitted by applicable law); provided,
however, that JVB shall not have any obligation hereunder to any Indemnified
Party when and if a court of competent jurisdiction shall ultimately determine,
and such determination shall have become final and nonappealable, that the
indemnification of such Indemnified Party in the manner contemplated hereby is
prohibited by applicable law. If such indemnity is determined not to be
available as a matter of law
<PAGE>
with respect to any Indemnified Party, then JVB and the Indemnified Party shall
contribute to the amount payable in such proportion as is appropriate to reflect
relative faults and benefits and other relevant equitable considerations.
11.2 Any Indemnified Party wishing to claim indemnification under Section
11.1, upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify JVB thereof, but the failure to so notify
shall not relieve JVB of any liability it may have to such Indemnified Party if
such failure does not materially prejudice Juniata. In the event of any such
claim, action, suit, proceeding or investigation (whether arising before or
after the Effective Date): (i) JVB shall have the right to assume the defense
thereof and JVB shall not be liable to such Indemnified Parties for any legal
expenses of other counsel or any other expenses subsequently incurred by such
Indemnified Parties in connection with the defense thereof, except that if
Juniata elects not to assume such defense, or counsel for the Indemnified
Parties advises that there are issues which raise conflicts of interest between
JVB and the Indemnified Parties, the Indemnified Parties may retain counsel
satisfactory to them, and JVB shall pay the reasonable fees and expenses of such
counsel for the Indemnified Parties promptly as statements therefor are
received; (ii) the Indemnified Parties will cooperate in the defense of any such
matter; and (iii) JVB shall not be liable for any settlement effected without
its prior written consent which shall not be unreasonably withheld.
11.3 For a period of six years after the Effective Date, JVB shall use all
reasonable efforts to cause to be maintained in effect the current policies of
directors' and officers' liability insurance maintained by Lewistown (provided
that JVB may substitute therefor policies of at least the same coverage and
amounts containing terms and conditions which are substantially no less
advantageous to such directors and officers) with respect to claims arising from
facts or events which occurred before the Effective Date; provided, however,
that in no event shall JVB be obligated to expend, in order to maintain or
provide insurance coverage pursuant to this Section 11.3, any amount per annum
in excess of one hundred fifty percent (150%) of the amount of the annual
premiums paid as of the date hereof by Lewistown for such insurance (the
"Maximum Amount"). If the amount of the annual premiums necessary to maintain
or procure such insurance coverage exceeds the Maximum Amount, Juniata shall use
all reasonable efforts to maintain the most advantageous policies of directors'
and officers' insurance obtainable for an annual premium equal to the Maximum
Amount.
ARTICLE XII
TERMINATION
12.1 This Agreement may be terminated as follows:
(a) By the mutual consent of the Board of Directors of both Juniata and
Lewistown at any time prior to the consummation of the Merger;
(b) By the Board of Directors of Juniata on or after September 30, 1998,
if (i) any of the conditions in Section 8.1 to which the obligations of Juniata
are subject have not been fulfilled, or (ii) such conditions have been
fulfilled or waived by Juniata but Lewistown shall have failed to complete the
Merger.
(c) By the Board of Directors of Juniata if, in its reasonable opinion,
(i) a material adverse change shall have occurred since September 30, 1997, in
the business or financial condition of Lewistown, or (ii) there has been
failure on the part of Lewistown to comply with its obligations under this
Agreement, or any failure to comply with any condition set forth in Section
8.1.
(d) By the Board of Directors of Juniata if the Merger and this Agreement
are not approved by the affirmative vote of the sixty-six and two-thirds (66
and 2/3) percent majority vote of Juniata's shareholders as required by
Juniata's Articles of Incorporation;
(e) By the Board of Directors of either party if there shall be pending or
threatened any material action, proceeding or investigation before any court or
administrative agency by any governmental agency or any other person
challenging, or seeking material damages in connection with, the Merger.
<PAGE>
(f) By the Board of Directors of Lewistown on or after September 30, 1998,
if (i) any of the conditions contained in Section 8.2 to which the obligations
of Lewistown are subject have not been fulfilled (provided, however, that if
Juniata is engaged at the time in litigation or an appeal procedure relating to
an attempt to obtain one or more of the Government Approvals, such non-
fulfillment shall not give Lewistown the right to terminate this Agreement for
an additional period of three months); or (ii) such conditions have been
fulfilled or waived but Juniata shall have failed to complete the Merger.
(g) By the Board of Directors of Lewistown if, in its reasonable opinion,
(i) a material adverse change shall have occurred since September 30, 1997, in
the business or financial condition of Juniata or (ii) there has been a failure
on the part of Juniata to comply with its obligations under this Agreement, or
any failure to comply with any condition set forth in Section 8.2.
(h) By the Board of Directors of Lewistown if the Merger and this
Agreement are not approved by the affirmative vote of Lewistown shareholders
having at least two-thirds (2/3) of its capital stock, called pursuant to
Section 6.2(e) of this Agreement; provided, that Juniata and Lewistown may
mutually agree to keep this Agreement in effect and to call an additional
meeting of the shareholders of Lewistown to obtain such shareholder approval.
(i) By the Board of Directors of Lewistown if, prior to the effective
date: (1) Juniata executes a letter of intent or other evidence of commitment
by Juniata to merge with or be acquired by another financial institution; (2)
an actual "change in control" (as defined in the Employment Agreement)of
Juniata occurs; or (3) Juniata enters into any agreement relating to a
transaction which would require the approval of its shareholders under
Juniata's Articles of Incorporation or Bylaws or the BCL.
The power of termination hereunder may be exercised by Juniata and
Lewistown, as the case may be, only by giving written notice, signed on behalf
of such party by its Chairman (or President) and Chief Executive Officer, to the
other party.
12.2 Termination of this Agreement shall not terminate or affect the
obligations of the parties to pay expenses as provided in Section 10 and shall
not affect any agreement after such termination.
ARTICLE XIII
MISCELLANEOUS
13.1 Any notice or other communication required or permitted under this
Agreement or the Bank Merger Agreement shall be effective only if it is in
writing and delivered personally or sent by registered or certified mail,
postage prepaid, or by recognized overnight delivery service guaranteeing next
day delivery, addressed as follows:
If to Juniata:
Juniata Valley Financial Corp.
Box 66 - Bridge & Main Sts.
Mifflintown, PA 17059
Attention: A. Jerome Cook, President and CEO
With a copy to:
Mette, Evans & Woodside
3401 North Front Street
P. O. Box 5950
Harrisburg, PA 17110-0950
<PAGE>
Attention: James A. Ulsh, Esquire
If to Lewistown:
Lewistown Trust Company
100 East Market Street
P. O. Box 270
Lewistown, PA 17044
Attention: Francis J. Evanitsky, Executive Vice President
With a copy to:
Barley, Snyder, Senft & Cohen, LLC
126 East King Street
Lancaster, PA 17602-2893
Attention: Paul G. Mattaini, Esquire
or to such other address as either party may designate by notice to the other,
and shall be deemed to have been given upon receipt.
13.2 Subject to the provisions of Section 12.1(i), Juniata may, prior to
the Effective Date of the Merger, consolidate with or merge with or into one or
more other banks or bank holding companies so long as Juniata and JVB are the
surviving corporations. The terms and conditions of this Agreement shall not be
affected by such merger or consolidation, and the shareholders of Lewistown
shall receive the common stock of the surviving bank holding company, unless the
provisions of Section 8.2(c) or (k) hereof should apply.
13.3 This Agreement is binding upon and is for the benefit of Juniata and
Lewistown and their respective successors and permitted assigns. This Agreement
is not made for the benefit of any person, firm, corporation or association not
a party hereto and no other person, firm, corporation or association shall
acquire or have any right under or by virtue of this Agreement.
13.4 Except for the agreements of Juniata set forth herein, the
representations, warranties and agreements of Juniata and Lewistown contained in
this Agreement shall not survive the consummation of the Merger; provided,
however, that in the event of the consummation of the Merger, no such
representations, warranties or agreements shall be deemed to be terminated so as
to deprive Juniata and Lewistown (or any director, officer or controlling person
of Juniata and Lewistown) of any defense in law or in equity which otherwise
would be available against the claims of any persons, including shareholders.
13.5 This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Pennsylvania.
13.6 This Agreement may be executed in several counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
IN WITNESS WHEREOF, Juniata and Lewistown have each caused this Agreement
to be signed by its Chief Executive Officer and its corporate seal to be
hereunto affixed and attested by the signature of its Secretary, assistant
Secretary, a Vice President or its Clerk, all as of the day and year first above
written.
JUNIATA VALLEY FINANCIAL CORP.
By:
-------------------- ----------------------------------
Secretary President and Chief Executive Officer
LEWISTOWN TRUST COMPANY
By:
-------------------- ----------------------------------
Secretary President and Chief Executive Officer
<PAGE>
EXHIBIT 5
March 16, 1998
Juniata Valley Financial Corp.
Bridge and Main Streets
Mifflintown, PA 17059
Re: Juniata Valley Financial Corp.
Registration Statement on Form S-4
Gentlemen:
We have acted as counsel to Juniata Valley Financial Corp., a Pennsylvania
corporation (the "Company"), in connection with the preparation of a
registration statement on Form S-4, as amended (the "Registration Statement")
filed with the Securities and Exchange Commission under the Securities Act of
1933, as amended (the "Act"), relating to the public offering of up to 937,024
shares of the Company's common stock, par value $1.00 per share (the "Common
Stock"). The Company will offer such shares in connection with the merger (the
"Merger") provided for in that Agreement and Plan of Reorganization dated
December 30, 1997 among the Company, Juniata Valley Bank, and Lewistown Trust
Company (the "Agreement"). In this connection we have reviewed (a) the
Registration Statement, (b) the Company's Articles of Incorporation and By-laws,
(c) a copy of the Agreement, and (d) certain records of the Company's corporate
proceedings. In our examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals and
the conformity with the original of all documents submitted to us as copies
thereof.
Our opinion set forth below is limited to the Pennsylvania Business
Corporation Law of 1988, as amended.
In our opinion, the shares of Common Stock to be issued by the Company in
connection with the Merger, when issued by the Company in connection with the
Merger pursuant to the Agreement, will be legally issued, fully paid and non-
assessable.
We hereby consent to the use of this opinion as Exhibit 5 to the
Registration Statement. In giving such opinion, we do not thereby admit that we
are acting within the category of persons whose consent is required under
Section 7 of the Act or the rules or regulations of the Securities and Exchange
Commission thereunder.
Very truly yours,
/s/ James A. Ulsh
JAU:mk
<PAGE>
EXHIBIT 8
March 16, 1998
Board of Directors
Juniata Valley Financial Corp.
Bridge and Main Streets
Mifflintown, PA 17059
Board of Directors
Lewistown Trust Company
100 East Market Street
Lewistown, PA 17044
Re: Agreement and Plan of Reorganization of
Lewistown Trust Company with and into
Juniata Valley Bank,
A Wholly Owned Subsidiary of
Juniata Valley Financial Corp.
Gentlemen:
You have requested our opinion regarding certain federal income tax
consequences of a proposed reorganization involving Juniata Valley Financial
Corp. ("Juniata"), a Pennsylvania corporation; Juniata Valley Bank ("JVB"), a
Pennsylvania state chartered banking institution and wholly-owned subsidiary of
Juniata; and Lewistown Trust Company ("Lewistown"). The reorganization is
described in the Joint Proxy Statement/Prospectus and in the Agreement and Plan
of Reorganization dated December 30, 1997 (the "Reorganization Agreement").
Juniata has one class of stock outstanding, which is voting common stock.
Lewistown has only voting common stock outstanding.
Pursuant to and in accordance with the Pennsylvania Banking Code, Lewistown
will be merged into JVB (the "Merger") and the resulting entity will continue
under the name "Juniata Valley Bank". As a result of the Merger, JVB will
succeed to all of the assets of Lewistown, subject to all of the liabilities of
Lewistown.
Each share of common stock of Lewistown will be exchanged for shares of
common stock of Juniata determined in accordance with the exchange ratio
provided in the Merger Agreement, except for shares of Lewistown held by
shareholders who exercise their dissenters rights. Dissenting shareholders may
surrender their Lewistown stock to Juniata and receive cash payments
representing the fair market value of such stock, subject to the provisions of
The Pennsylvania Banking Code.
Shareholders of Lewistown who would have otherwise been entitled to a
fraction of a share of Juniata common stock will be paid an amount in cash equal
to such fraction multiplied by the "market value per share" as defined in the
Merger Agreement for one (1) whole share of Juniata common stock. The cash
received by dissenting shareholders and by shareholders who receive cash in lieu
of fractional shares will be provided by Juniata.
In connection with the proposed Merger and related transactions you have
made the following representations to us:
1. Original documents (including signatures) are authentic; documents
submitted to us as copies conform to the original documents, and there has been
(or will be by the date of the Merger)
<PAGE>
due execution and delivery of all documents where due execution and delivery are
prerequisites to the effectiveness thereof.
2. The Merger will be effective under The Pennsylvania Banking Code.
3. The total fair market value of the Juniata common stock and cash
received by Lewistown shareholders will be approximately equal to the fair
market value of the Lewistown common stock surrendered in the Merger.
4. To the best knowledge of Lewistown management, there is no plan or
intention on the part of Lewistown shareholders to sell, exchange, or otherwise
dispose of a number of shares of Juniata common stock received in the Merger
that would reduce Lewistown's shareholders' ownership of Juniata common stock to
a number of shares having a value, as of the date of the Merger of less than
eighty (80%) percent of the value of all of the formerly outstanding Lewistown
stock as of the same date. For this purpose, shares of Lewistown common stock
exchanged for cash in exercise of dissenters' rights or in lieu of fractional
shares of Juniata common stock are treated as outstanding Lewistown stock on the
date of the Merger. Moreover, Lewistown stock and Juniata stock held by
Lewistown shareholders and otherwise sold, redeemed, or disposed of prior or
subsequent to the transaction have been taken into account in making this
representation.
5. Juniata has no plan or intention to reacquire any of its stock issued
in the Merger or make any extraordinary distribution in respect of its stock.
6. JVB has no plan or intention to sell or otherwise dispose of any of its
assets or the assets of Lewistown acquired in the Merger, except for
dispositions made in the ordinary course of business.
7. The liabilities of Lewistown were incurred by Lewistown in the ordinary
course of its business.
8. Following the Merger, JVB will continue its historic business or use a
significant portion of its historic business assets in a business.
9. Juniata, Lewistown, and the Lewistown shareholders will pay their
respective expenses, if any, incurred in connection with the transaction (other
than expenses of Lewistown assumed by JVB pursuant to the Merger).
10. There is no intercorporate indebtedness existing between Lewistown and
Juniata or its subsidiaries that was issued, acquired, or will be settled at a
discount.
11. Neither Juniata nor JVB is an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Internal Revenue Code of 1986 as amended (the
"Code").
12. Neither Juniata nor Lewistown is under the jurisdiction of a court in
a Title 11 or similar case within the meaning of Section 368(a)(3)(A) of the
Code.
13. Lewistown shareholders will receive and retain a meaningful continuing
equity ownership in Juniata that is sufficient to satisfy the continuity of
interest requirement as specified in Treas. Reg. (S)1.368-1(b) and as
interpreted in certain Internal Revenue Service rulings and federal judicial
decisions.
14. After the Merger, JVB will continue to hold "substantially all" of
Lewistown properties acquired in the Merger within the meaning of Section
368(a)(2)(E) of the Code and the regulations promulgated thereunder.
<PAGE>
15. None of the compensation to be received by any Lewistown shareholder-
employee pursuant to any employment agreement or any covenants not to compete
will be separate consideration for, or allocable to, any of their shares of
Juniata stock; the compensation to be paid to any Lewistown shareholder-
employees will be for services actually rendered and will be commensurate with
amounts paid to third parties bargaining at arm's length for similar services.
16. No distributions will have been made by Lewistown with respect to its
stock preceding the proposed transaction other than distributions consistent in
amount and in effect with prior dividend policy.
17. The issuance of cash in lieu of fractional shares merely represents
the mechanical rounding off of the fractional share interests. It is undertaken
solely for the purpose of saving Juniata the expense and inconvenience of
issuing and transferring fractional shares, and is not separately bargained for
consideration. The aggregate amount of cash to be issued in lieu of fractional
shares is anticipated to be less than one (1%) percent of the total value of
Juniata common stock received by Lewistown shareholders.
18. Lewistown has not redeemed any of its capital stock within the last
three (3) years.
19. The common stock of Juniata to be received by the shareholders of
Lewistown is not subject to put or call options.
Based on our understanding of the pertinent facts as set forth above and
applicable law, as enacted and construed on the date hereof, it is our opinion
that:
(i) the Merger of Lewistown with and into JVB in accordance with the
Reorganization Agreement will constitute a reorganization within the
meaning of Section 368(a) of the Code, and each of Lewistown, JVB,
and Juniata will be a "party to a reorganization" within the meaning
of Section 368(b) of the Code;
(ii) no gain or loss will be recognized by Lewistown, JVB, or Juniata as
a result of the Merger;
(iii) except for cash received in lieu of fractional shares, no gain or
loss will be recognized by the shareholders of Lewistown who receive
solely Juniata common stock upon the exchange of their shares of
Lewistown common stock for shares of Juniata common stock;
(iv) the basis of the Juniata common stock to be received by the
Lewistown shareholders will be, in each instance, the same as the
basis of the Lewistown common stock surrendered in exchange
therefor;
(v) to the extent that Lewistown stock is held as capital asset, the
holding period of the Juniata common stock received by the
shareholders of Lewistown receiving Juniata common stock will
include the period during which the Lewistown common stock
surrendered in exchange therefor was held;
(vi) to the extent that they hold their Lewistown common stock as capital
assets, cash received by Lewistown shareholders in lieu of a
fractional share interest in Juniata common stock will be treated as
having been received as a distribution in full payment for such
fractional share interest in Juniata common stock, subject to the
provisions of Section 302(a) of the Code.
We are pleased to offer this opinion based on the federal income tax laws
as of this date. No assurances can be provided as to future changes in
administrative or judicial interpretations of
<PAGE>
these laws. No opinion is expressed with respect to state and local taxes,
federal, or state securities law and other federal or state law not expressly
referred herein.
We hereby consent to the filing of this opinion as an Exhibit to the
aforementioned Registration Statement. In giving this opinion, we do not
thereby admit that we are acting within the category of persons whose consent is
required under Section 7 of the Act or the rules or regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
/s/ James A. Ulsh
<PAGE>
EXHIBIT 23(b)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement (Form S-4) of our report, dated January 16, 1998, relating to the
consolidated financial statements of Juniata Valley Financial Corp. incorporated
by reference in its Annual Report (Form 10-K) for the year ended December 31,
1997. We also consent to the reference to our firm under the caption "Experts"
in the Joint Proxy Statement/Prospectus.
/s/ BEARD & COMPANY, INC.
Reading, Pennsylvania
March 20, 1998
We hereby consent to the use in this Registration Statement (Form S-4) of
our report, dated March 10, 1998, relating to the financial statements of
Lewistown Trust Company. We also consent to the reference to our firm under the
caption "Experts" in the Joint Proxy Statement/Prospectus.
/s/ BEARD & COMPANY, INC.
Harrisburg, Pennsylvania
March 20, 1998
<PAGE>
EXHIBIT 23(c)
CONSENT OF RP FINANCIAL, LC.
April __, 1998
Board of Directors
Lewistown Trust Company
100 East Market Street
Lewistown, Pennsylvania 17044-8106
Members of the Board:
We hereby consent to the use of our firm's name in the Form S-4
Registration Statement (Reg. No. _____________) of Juniata Valley Financial
Corporation and any amendments thereto, and the inclusion of, summary of and
references to our fairness opinion in such filings including the Joint Proxy
Statement/Prospectus of Juniata Valley Financial Corporation.
Very truly yours,
RP FINANCIAL, LC.
James J. Oren
Senior Vice President
<PAGE>
EXHIBIT 23(e)
CONSENT OF HOPPER SOLIDAY & CO., INC.
March __, 1998
Board of Directors
Juniata Valley Financial Corporation
Bridge and Main Streets
Mifflintown, Pennsylvania 17059
Dear Sirs:
We hereby consent to the use in the Registration on Form S-4 of the draft
of our opinion relating to the fairness to the shareholders of Juniata Valley
Financial Corporation, from a financial point of view, of the terms of the
merger between Juniata Valley Financial Corporation and the Lewistown Trust
Company, and the references to Hopper Soliday & Co., Inc. in the Joint Proxy
Statement/Prospectus constituting part of this Registration Statement.
HOPPER SOLIDAY & CO., INC.
By:
------------------------------
Lancaster, PA
Date: April , 1998
<PAGE>
EXHIBIT 99(a)
PROXY
Juniata Valley Financial Corp.
P.O. Box 66
Mifflintown, PA 17059
Telephone: (717) 436-8211
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF JUNIATA VALLEY FINANCIAL CORP.
The undersigned hereby appoints Kathryn G. Clark, N. Jeffrey Leonard and Thomas
S. Watkin as Proxies, each with the power to appoint his substitute, and
authorizes them to represent and vote, as designated below, all the shares of
Common Stock of Juniata Valley Financial Corp. held on record by the undersigned
on April 15, 1998 at the Annual Meeting of Shareholders to be held on May 19,
1998 or any adjournments thereof.
1. APPROVAL, RATIFICATION AND CONFIRMATION OF THE AGREEMENT AND PLAN OF
REORGANIZATION, DATED DECEMBER 30, 1997, BETWEEN JUNIATA VALLEY FINANCIAL
CORP. ("JUNIATA") AND LEWISTOWN TRUST COMPANY ("LEWISTOWN") PROVIDING FOR THE
MERGER OF LEWISTOWN WITH AND INTO JUNIATA VALLEY BANK, A STATE CHARTERED
BANKING SUBSIDIARY OF JUNIATA.
FOR AGAINST ABSTAIN
----- ----- -----
2. ELECTION OF 4 CLASS "B" DIRECTORS TO SERVE UNTIL THE 2001 ANNUAL MEETING:
For all Nominees Listed Below Withhold Authority
(except as indicated below) ----- -----
CLASS B
-------
Harry B. Fairman, Jr.
Don E. Haubert
John A. Renninger
Ronald H. Witherite
INSTRUCTION: To withhold authority to vote for any individual nominee(s),
write that nominee's name(s) in the space immediately below.
3. APPROVAL OF A PROPOSAL TO POSTPONE OR ADJOURN THE ANNUAL MEETING TO ANOTHER
TIME AND/OR PLACE FOR THE PURPOSE OF SOLICITING ADDITIONAL PROXIES IN THE
EVENT THAT THERE ARE NOT SUFFICIENT VOTES AT THE TIME OF THE SPECIAL MEETING
TO APPROVE THE MERGER AND THE AGREEMENT AND PLAN OF REORGANIZATION.
FOR AGAINST ABSTAIN
----- ----- -----
4. APPROVAL OF THE AMENDMENT OF THE JUNIATA ARTICLES OF INCORPORATION TO
INCREASE THE AUTHORIZED SHARES OF JUNIATA COMMON STOCK FROM 5,000,000 SHARES
TO 20,000,000 SHARES.
FOR AGAINST ABSTAIN
----- ----- -----
5. OTHER BUSINESS: Take action on other business which may properly come before
the meeting.
FOR AGAINST ABSTAIN
----- ----- -----
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO
SPECIFICATION OR DIRECTION IS MADE, THEY WILL BE VOTED FOR EACH OF THE PROPOSALS
LISTED ABOVE. THIS PROXY MAY BE REVOKED PRIOR TO ITS EXERCISE. PLEASE RETURN
THIS PROXY AS SOON AS POSSIBLE IN THE ENCLOSED POSTAGE PAID ENVELOPE.
Dated the day of , 1998.
(SEAL)
-------------------------------
Signature
(SEAL)
-------------------------------
Signature
Please date and sign exactly as your
name appears hereon. When signing as
an Attorney, Executor, Administrator,
Trustee or Guardian, please give full
title. If more than one Trustee, all
must sign. All joint owners must
sign.
<PAGE>
EXHIBIT 99(b)
PROXY
Lewistown Trust Company
100 E. Market Street
P.O. Box 270
Lewistown, PA 17044
Telephone: (717) 242-0381
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF LEWISTOWN TRUST COMPANY
The undersigned hereby appoints , as Proxies, each with
the power to appoint his substitute, and authorizes them to represent and vote,
as designated below, all the shares of Common Stock of Lewistown Trust Company
held on record by the undersigned on April 15, 1998 at the Special Meeting of
Shareholders to be held on May 19, 1998 or any adjournments thereof.
1. APPROVAL, RATIFICATION AND CONFIRMATION OF THE AGREEMENT AND PLAN OF
REORGANIZATION, DATED DECEMBER 30, 1997, BETWEEN JUNIATA VALLEY FINANCIAL
CORP. ("JUNIATA") AND LEWISTOWN TRUST COMPANY ("LEWISTOWN") PROVIDING FOR THE
MERGER OF LEWISTOWN WITH AND INTO JUNIATA VALLEY BANK, A STATE CHARTERED
BANKING SUBSIDIARY OF JUNIATA.
FOR AGAINST ABSTAIN
----- ----- -----
2. APPROVAL OF A PROPOSAL TO POSTPONE OR ADJOURN THE SPECIAL MEETING TO ANOTHER
TIME AND/OR PLACE FOR THE PURPOSE OF SOLICITING ADDITIONAL PROXIES IN THE
EVENT THAT THERE ARE NOT SUFFICIENT VOTES AT THE TIME OF THE SPECIAL MEETING
TO APPROVE THE MERGER AND THE AGREEMENT AND PLAN OF REORGANIZATION.
FOR AGAINST ABSTAIN
----- ----- -----
3. OTHER BUSINESS: Take action on other business which may properly come before
the meeting.
FOR AGAINST ABSTAIN
----- ----- -----
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO
SPECIFICATION OR DIRECTION IS MADE, THEY WILL BE VOTED FOR EACH OF THE PROPOSALS
LISTED ABOVE. THIS PROXY MAY BE REVOKED PRIOR TO ITS EXERCISE. PLEASE RETURN
THIS PROXY AS SOON AS POSSIBLE IN THE ENCLOSED POSTAGE PAID ENVELOPE.
Dated the day of , 1998. (SEAL)
-------------------------------
Signature
(SEAL)
-------------------------------
Signature
Please date and sign exactly as your
name appears hereon. When signing as
an Attorney, Executor, Administrator,
Trustee or Guardian, please give full
title. If more than one Trustee, all
must sign. All joint owners must
sign.
<PAGE>
EXHIBIT 99(c)
EMPLOYMENT AGREEMENT
--------------------
AGREEMENT made this 30th day of December, 1997, by and between JUNIATA
VALLEY FINANCIAL CORPORATION, a Pennsylvania bank holding company, THE JUNIATA
VALLEY BANK, a Pennsylvania banking institution, (hereinafter collectively
referred to as the "Company") and FRANCIS J. EVANITSKY, an adult individual
(hereinafter referred to as "Employee.")
WITNESSETH:
WHEREAS, Employee is currently employed by Lewistown Trust Company as its
Executive Vice President and is a party to a Change of Control Agreement with
Lewistown Trust Company dated May 13, 1996; and
WHEREAS, the Company and Lewistown Trust Company have entered into a
certain Agreement and Plan of Merger dated December 30, 1997 whereby Lewistown
Trust Company will be merged with and into the Juniata Valley Bank, a wholly
owned subsidiary of Juniata Valley Financial Corp., (the "Merger") as of the
Effective Date of the Merger (defined therein); and
WHEREAS, Employee has agreed to become an employee of Company as its
president and chief operating officer as of the Effective Date of the Merger;
and
WHEREAS, the Company believes that the future services of the Employee will
be of great value to the Company; and
WHEREAS, the Employee is willing to accept employment with the Company on a
full-time basis upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the Agreements hereinafter contained,
and intending to be legally bound hereby, the parties agree as follows:
1. Duties as Employee. Company shall employ Employee and Employee
------------------
shall serve Company as its President and Chief Operating Officer and member
of the Board of Directors of Juniata Valley Financial Corporation and the
Juniata Valley Bank. Employee shall be assigned duties consistent with the
position of President and Chief Operating Officer. During his employment by
Company, Employee shall serve Company under the direction of the Board of
Directors of Company. He shall perform his duties faithfully, diligently
and to the best of his ability and shall devote his full time and best
efforts to the affairs of Company. Company shall not, without the prior
consent of Employee, transfer or relocate the office in which Employee
performs the bulk of his duties to any location which is more than forty
(40) miles from Lewistown, Pennsylvania.
2. Compensation as Employee. As compensation for all services
------------------------
performed by Employee for Company while employed thereby, Company shall:
<PAGE>
a. pay Employee in regular installments, a salary fixed from
time to time by Company, provided that such salary shall not be less
than the sum of Ninety Six Thousand Five Hundred ($96,500) Dollars,
which sum may be increased from time to time by the Board of Directors
and, upon such increase, shall be incorporated herein by reference;
b. provide Employee with such health, accident, disability,
life insurance, retirement benefits and such other benefits as are now
in force or as may be authorized by the Board of Directors and which
shall be consistent with and equal to the benefits provided to other
executive officers of the Company. Company shall provide Employee with
an automobile for Employee's use in connection with the performance of
Employee's duties hereunder.
3. Reimbursement of Expenses. Company shall reimburse Employee
-------------------------
within thirty (30) days from billing date for necessary and properly
documented travel and business expenses, not otherwise reimbursed, incurred
by Employee on behalf of Company.
4. Terms of Agreement. The term of this Agreement shall commence on
------------------
the Effective Date of the Merger. This Agreement shall expire upon
Employee's retirement from the Company.
5. Termination of Employment by Company, Without Cause. The Company
---------------------------------------------------
may terminate Employee's employment with the Company at any time upon
written notice, with or without cause. Provided, however, that if the
Company terminates Employee's employment without cause, the Company shall
pay to Employee Severance Compensation, as calculated in accordance with
Paragraph 9. Severance Compensation, to the extent Employee elects to
receive it in cash, shall be paid in three (3) equal annual installments
commencing thirty (30) days from the date on which Employee received notice
of his termination of employment.
6. Termination of Employment by Company, With Cause. The Company may
------------------------------------------------
terminate, with cause, Employee's employment with the Company upon thirty
(30) days written notice. If Employee's employment is terminated with
cause, Employee shall not receive the Employee Severance Compensation set
forth in Item 5 of this Agreement.
7. Termination of Employment by Employee, With Cause. In the event
-------------------------------------------------
of termination of employment by Employee with cause, the Company shall pay
to Employee Severance Compensation, as calculated in accordance with
Paragraph 9. Severance Compensation, to the extent Employee elects to
receive it in cash, shall be paid in three (3) equal annual installments
commencing thirty (30) days from the date on which Employee ceases to be
employed by the Company.
8. Cause for Termination.
---------------------
a. Cause for Termination of Employment by Company. Employee
----------------------------------------------
shall be considered to have been discharged for "cause" if Employee is
discharged for any of the following reasons:
<PAGE>
(i) Negligent or willful failure or the continuing
inability to perform duties and functions reasonably assigned to
Employee by the Board of Directors of Company, which neglect or
failure is not corrected within thirty (30) days following
receipt of written notice of default;
(ii) The commission of a criminal act against the Company
by Employee.
(iii) Default by the Employee in the performance of his
obligations under this Agreement, which default is not corrected
within thirty (30) days following receipt of written notice of
default.
Provided, however, that if the Company terminates Employee's
employment with the Company within a period commencing six (6) months
before and nine (9) months after a change in control of the Company,
said termination shall, for purposes of this Agreement, be deemed a
termination without cause.
b. Cause for Termination of Employment by Employee. The
-----------------------------------------------
Employee may terminate his employment with the Company for "cause" for
any of the following reasons:
(i) Execution by the Company of a letter of intent or
other evidence of commitment by the Company to merge with or be
acquired by another financial institution, or an actual change in
control of the Company, shall be considered just cause for
Employee to terminate his employment with the Company. "Change in
control" is defined as a change in ownership or power to vote of
thirty (30%) percent or more of the outstanding voting securities
of the Company, within any twelve (12) month period, or a change
in or transfer of a substantial portion of the assets of the
Company.
(ii) Default by the Company in the performance of its
obligations under this Agreement, which default is not corrected
within thirty (30) days following receipt of written notice of
default.
9. Severance Compensation. Employee's Severance Compensation, to
----------------------
be paid in accordance with the provisions of Paragraph 5 or Paragraph 7
hereof, shall be equal to that amount which, when reduced to its present
value (determined by using a discount rate equal to one hundred twenty
(120%) percent of the applicable federal rate, as determined under Section
1274(d) of the Internal Revenue Code of 1986, as amended, compounded
semiannually) equals 2.95 times Employee's Average Annual Compensation. For
purposes of this paragraph, Employee's Average Annual Compensation, shall
be the average of Employee's annual compensation payable by the Company and
includible in Employee's gross income for the five (5) most recent taxable
years ending before the date on which Employee's employment with the
Company was terminated.
<PAGE>
The Company shall be responsible for determining Employee's Severance
Compensation within twenty (20) days of Employee's termination of
employment with the Company, and shall immediately thereafter notify
Employee in writing of the total amount of Severance Compensation. At the
same time, Company shall notify Employee in writing of the actual cost to
Company of providing Employee and his eligible dependents with such health,
medical and life insurance benefits which Company was providing to Employee
as compensation immediately prior to his termination of employment.
Employee shall have the option, to be exercised in writing, within ten
(10) days of his actual receipt of the aforementioned information, of
electing to receive a portion of his Severance Compensation in the form of
continued health, medical, or life insurance benefits or coverage for such
period(s) not to exceed one (1) year, as Employee shall determine. Any
Severance Compensation not received in the form of continued health,
medical, or life insurance benefits or coverage shall be paid in cash in
the manner provided in Paragraph 5 or Paragraph 7, as the case may be.
10. Not Salary. Any Severance Compensation payable under this
----------
Agreement shall not be deemed salary or other compensation to the Employee
for the purpose of computing benefits to which he may be entitled under any
pension plan or other arrangement of the Company for the benefit of its
employees.
11. Covenant Not to Compete. Upon any termination of employment of
-----------------------
Employee which results in the payment of the Severance Compensation
referred to in Paragraph 9, Employee shall not directly or indirectly enter
into or engage in the banking business, either as an individual, or as a
partner or joint venturer, or as an employee, agent, officer, or director
of another banking institution, for a period of two (2) years after such
termination, which would involve the performance by Employee of active
duties in the geographical area within a forty (40) mile radius of
Mifflintown, Pennsylvania.
12. No Assignment. The right of the Employee or any other person to
-------------
the payment of deferred compensation or other benefits under this Agreement
shall not be assigned, transferred, pledged, or encumbered except by Will
or by the laws of the descent and distribution.
13. Attorney's Fees and Costs. If Employee or Company breach any
-------------------------
provision of this Agreement, the non-breaching party shall be entitled to
recover all reasonable attorney's fees, costs of enforcement, amounts due
hereunder, all with interest thereon at the rate of twelve (12%) percent
per annum from the date of breach until the date of payment.
14. Binding Effect. This Agreement shall be binding upon and inure
--------------
to the benefit of the Company, its successors and assigns and the Employee
and his heirs, executors, administrators, and legal representatives.
15. Governing Law. This Agreement shall be construed in accordance
-------------
with and governed by the law of the Commonwealth of Pennsylvania.
16. Severability. If any provision of this Agreement shall be found
------------
by any court of competent jurisdiction to be unenforceable, the parties
hereby waive such provision to the
<PAGE>
extent that it is found to be unenforceable. Such provision may be modified
by such court so that it becomes enforceable, and, as modified, will be
enforced as any other provision hereof, all other provisions continuing in
full force and effect.
17. Entire Agreement. This Agreement constitutes the entire
----------------
Agreement between the parties and no prior promises, agreements or
warranties, verbal or written, shall be of any force unless embodied
herein. No modification of this Agreement shall be of any force or effect
unless reduced to writing and signed by both parties.
18. Effective Date. This Agreement shall become effective on the
--------------
Effective Date of the Merger, whereupon the existing Change of Control
Agreement between Lewistown Trust Company and Employee dated May 13, 1996
shall be terminated with no further rights or obligations thereunder due to
or from either party. This Agreement shall supersede the aforesaid Change
of Control Agreement.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officers and the Employee has hereunto set his
hand and seal as of the date first above written.
ATTEST: JUNIATA VALLEY FINANCIAL
CORPORATION:
By:
-------------------------------- ---------------------------------
Secretary
THE JUNIATA VALLEY BANK:
By:
-------------------------------- ---------------------------------
Secretary
EMPLOYEE:
------------------------------------
Francis J. Evanitsky
