Exhibit 99.3
AMENDMENT TO AGREEMENT AND PLAN OF MERGER
THIS AMENDMENT TO AGREEMENT AND PLAN OF MERGER, dated
as of November 26, 1996, is made by and between SOVEREIGN
BANCORP, INC. ("Sovereign"), a Pennsylvania corporation, having
its principal place of business at 0000 Xxxxxxxxx Xxxxxxxxx,
Xxxxxxxxxx, Xxxxxxxxxxxx 00000, and FIRST STATE FINANCIAL
SERVICES, INC., a Delaware corporation, having its principal
place of business at 0000 Xxxxxxxxxx Xxxxxx, CN 0000, Xxxx
Xxxxxxxx, Xxx Xxxxxx 00000-0000 (FSFS").
BACKGROUND
1. Sovereign and FSFS are parties to a certain
Agreement and Plan of Merger, dated as of June 24, 1996 (the
"Merger Agreement"), providing for, among other things, the
merger (the "Merger") of FSFS with and into Sovereign, with
Sovereign surviving the merger.
2. As of the date of this Agreement, stockholders of
FSFS have not yet approved the Merger Agreement.
3. Sovereign and FSFS desire to amend the Merger
Agreement as set forth herein.
AGREEMENT
1. The date specified in the third sentence of
Section 1.02(d)(iii) of the Merger Agreement is hereby amended
from "1997" to "1998."
2. Section 1.02(e)(ii) of the Merger Agreement is
hereby amended to read in its entirety as follows:
"(ii) FSFS Common Stock.
(A) Subject to the provisions of
subparagraphs (B), (C) and (D) of this
Section 1.02(e)(ii), each share of FSFS Common Stock
issued and outstanding immediately prior to the
Effective Date (other than shares of FSFS Common Stock,
if any, then owned by Sovereign or FSFS or any FSFS
Subsidiary) shall, on the Effective Date, by reason of
the Merger and without any action on the part of the
holder thereof, be converted into and become a right to
receive:
(i) if the Sovereign Market Value
determined as of the Effective Date is greater
than or equal to $8.00 and less than or equal to
$12.04, then that number of shares of fully paid
and nonassessable shares of Sovereign Common
Stock, and the corresponding percentage of
Sovereign Stock Purchase Rights pursuant to the
Sovereign Rights Agreement, equal to $14.75
divided by the Sovereign Market Value determined
as of the Effective Date;
(ii) if the Sovereign Market Value
determined as of the Effective Date is less than
$8.00, then 1.84 shares of fully paid and
nonassessable shares of Sovereign Common Stock,
and the corresponding percentage of Sovereign
Stock Purchase Rights pursuant to the Sovereign
Rights Agreement; or
(iii) if the Sovereign Market
Value determined as of the Effective Date is
greater than $12.04, then 1.225 shares of fully
paid and nonassessable shares of Sovereign Common
Stock, and the corresponding percentage of
Sovereign Stock Purchase Rights pursuant to the
Sovereign Rights Agreement (as determined pursuant
to either Sections 1.02(e)(ii)(A)(i),
1.02(e)(ii)(A)(ii) or 1.02(e)(ii)(A)(iii), the
"Applicable Exchange Ratio")."
3. Section 5.02(f) of the Merger Agreement is hereby
amended to read in its entirety as follows:
(f) No Material Adverse Effect. Since
March 31, 1996, there shall not have occurred any Material
Adverse Effect with respect to FSFS; provided, however, that
neither (i) an increase in the provision for loan losses by
FSFS for the period ended June 30, 1996 in an amount not to
exceed $5,000,000, (ii) the existence of nonperforming
assets of FSFS in an amount up to $26,100,000, (iii) the
incurrence by FSFS of aggregate losses on the sale, exchange
or other disposition of nonperforming assets up to
$1,000,000 (for purposes of this subsection, loss will be
identified net of any portion of the allowance for loan
losses allocable to the nonperforming asset which is sold,
exchanged or otherwise disposed of by FSFS) or
(iv) provisions for loan losses taken or recognized by FSFS
after the date of this Agreement in aggregate amounts up to
$7,250,000 shall be considered a Material Adverse Effect for
purposes of this subsection (the term "nonperforming
assets," for purposes of this subsection, means (i) loans
that are "troubled debt restructurings" as defined in
Statement of Financial Accounting Standards No. 15,
"Accounting by Debtors and Creditors for Troubled Debt
Restructurings," excluding restructured loans the terms and
conditions of which were approved in writing in advance by
Sovereign, (ii) loans on nonaccrual, including loans placed
on nonaccrual that may have been previously restructured
with Sovereign's approval, (iii) real estate owned, and
(iv) all loans 90 days or more past due, except that the
term "nonperforming assets" shall not include loans
originated to finance the purchase of any one-to-four-family
residential property);
4. Section 6.01(c) of the Merger agreement is hereby
amended to read in its entirety as follows:
"(c) By FSFS if, on the Closing Date, the
Sovereign Market Value is less than $8.00 (as adjusted for
any stock splits or stock dividends); provided, however,
that if Sovereign delivers to FSFS on the Closing Date a
written notice increasing the Applicable Exchange Ratio to
an amount which, when multiplied by the Sovereign Market
Value determined as of the Closing Date, equals $14.75, then
no termination of this Agreement shall occur and the Merger
shall be completed pursuant to the terms hereof."
5. Sections 5.02(q), 6.01(d), and 6.01(e) of the
Merger Agreement are hereby deleted in their entirety.
6. Except as amended hereby, the Merger Agreement is
ratified and confirmed in all respects. All references in the
Merger Agreement to the "Merger Agreement" shall be deemed to be
references to the Merger Agreement as amended hereby.
7. This Agreement and the Merger Agreement contain
the entire agreement and understanding of the parties with
respect to the transactions contemplated herein and therein and
supersede all prior agreements or understandings with respect
hereto and thereto, whether written or oral.
8. Neither party hereto may assign any of its rights
or obligations hereunder to any other person, without the prior
written consent of the other party hereto.
9. This Agreement shall be governed and construed in
accordance with the domestic, internal law of the Commonwealth of
Pennsylvania without regard to its conflicts of laws principles.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed by their duly authorized officers as of
the day and year first above written.
SOVEREIGN BANCORP, INC.
By /s/ Xxx x. Xxxxx
(SEAL) Attest: /s/ Xxxxxxxx X. Xxxxxxxx, Xx.
FIRST STATE FINANCIAL SERVICES, INC.
By /s/ Xxxxxxx X. Xxxxxxx, III
(SEAL) Attest: /s/ Xxxxx X. Xxxxxxx
