PURCHASE AND ASSUMPTION AGREEMENT
BETWEEN
KEYSTONE FINANCIAL BANK, NATIONAL ASSOCIATION
as Seller
and
DOWNINGTOWN NATIONAL BANK
as Purchaser
as of
January 6, 1999
TABLE OF CONTENTS
Page
ARTICLE I PURCHASE OF ASSETS AND ASSUMPTION OF LIABILITIES 6
1.0 Definitions 6
1.1 Effective Date 8
1.2 Transfer 8
1.3 Additional Obligations of the Purchaser 9
1.4 Additional Obligations of the Seller 12
1.5 Certain Transitional Matters 14
1.6 Indemnification 18
1.7 Prorations 19
1.8 Settlement Procedure 20
1.9 Employees 21
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER 22
2.1 Corporate Organization 23
2.2 Real Estate 23
2.3 Title to Personal Property; Encumbrances 23
2.4 No Violation 24
2.5 True Statements 25
2.6 Limitation of Warranties 25
2.7 Deposits 25
2.8 Deposit Insurance 25
2.9 Status of Loans 25
2.10 No Adverse Litigation 26
2.11 Environmental Matters 26
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER 28
3.1 Corporate Organization 28
3.2 No Violation 28
3.3 Broker 29
3.4 Environmental Matters 29
3.5 Confidentiality 30
ARTICLE IV CONDUCT OF BUSINESS PENDING THE EFFECTIVE DATE 30
4.1 Activity in the Ordinary Course 30
ARTICLE V OBLIGATIONS OF PARTIES PRIOR TO AND AFTER
EFFECTIVE DATE 32
5.1 Access 32
2
5.2 Requirements to Obtain Approval of Regulatory Authorities 32
5.3 Use of Seller's Name 33
5.4 Return of Information 33
5.5 Non-Solicitation of Branch Based Business 34
5.6 Further Assurance 34
ARTICLE VI CONDITIONS TO PURCHASER'S OBLIGATIONS 35
6.1 Information and Investigation 35
6.2 Representations and Warranties True 35
6.3 Corporate Authority 36
6.4 Obligations Performed 36
6.5 No Adverse Litigation 36
6.6 No Material and Adverse Change of Condition 36
6.7 Regulatory Approval 37
ARTICLE VII CONDITIONS TO THE SELLER'S OBLIGATIONS 37
7.1 Representations and Warranties True 37
7.2 Corporate Authority and Validity 37
7.3 Obligations Performed 38
7.4 No Adverse Litigation 38
7.5 Regulatory Approval 38
ARTICLE VIII TERMINATION 39
8.1 Methods of Termination 39
8.2 Procedure Upon Termination 40
8.3 Automatic Termination 40
ARTICLE IX MISCELLANEOUS PROVISIONS 41
9.1 Amendment and Modification 41
9.2 Waiver or Extension 41
9.3 Assignment 42
9.4 Survival of Representations, Warranties, Indemnities and Covenants 42
9.5 Payment of Expenses 42
9.6 Addresses for Notice, etc. 43
9.7 Press Releases, Public Disclosures 43
9.8 Counterparts 44
9.9 Headings 44
9.10 Governing Law 44
9.11 Entire Agreement 44
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EXHIBIT A Real Estate Description
EXHIBIT B Tangible Personal Property Excluded from Sale
EXHIBIT C Employees to Transfer Employment
EXHIBIT D Core Deposits, Excluding Accrued Interest, as of December 17, 1998
EXHIBIT E Instrument of Assumption of Certain Liabilities
EXHIBIT F List of Loans Purchased
EXHIBIT G Letter Dated April 23, 1998 from Pennsylvania Department of
Environmental Protection to Xx. Xxxxxxxx Fish of Sun Company, Inc.
EXHIBIT H Indemnity Agreement between Elmwood Federal Savings Bank
and Sun Company, Inc. (R&M)
EXHIBIT I List of Documents Relating to the Previously Disclosed Environmental Issue
EXHIBIT J Exceptions to Title
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PURCHASE AND ASSUMPTION AGREEMENT
THIS PURCHASE AND ASSUMPTION AGREEMENT is made on the 6th day of
January, 1999, between Keystone Financial Bank, National Association ("Keystone
Bank"), a National Banking Association organized and existing under the laws of
the United States, having its principal office at One Keystone Plaza, North
Front and Xxxxxx Xxxxxxx, Xxxxxxxxxx, XX 00000 (the "Seller"), and Downingtown
National Bank ("Downingtown Bank"), a National Banking Association organized and
existing under the laws of the United States, having its principal office at 0
Xxxxxxxxxx Xxxxxx, X.X. Xxx 0000, Xxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000 (the
"Purchaser").
WHEREAS, the Seller desires to sell certain assets and deposit
liabilities as herein defined, associated with its community office located at
000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxx Xxxxxx, Xxxxxxxxxxxx 00000 (the "Branch) to
Purchaser; and
WHEREAS, Purchaser desires to buy such assets and assume such
liabilities of the Branch upon the terms and conditions hereinafter set forth;
and
NOW, THEREFORE, IN CONSIDERATION of the premises and the mutual
covenants contained herein, and for other good and valuable consideration the
receipt and sufficiency of which is hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
ARTICLE I
PURCHASE OF ASSETS AND ASSUMPTION OF LIABILITIES
1.0 Definitions
The terms defined in this Section 1.0 shall have the meanings herein
specified, unless the context clearly requires otherwise.
"Agreement" means this Agreement.
"Assets" means all right, title and interest of Seller in and to each
of the following:
(a) all right, title and interest of Seller in and to the real estate
identified on Exhibit A ("Real Estate");
(b) other than the tangible personal property described on Exhibit B,
the furniture, fixtures, equipment and leasehold improvements
owned or leased by Seller which are used at the Branch, together
with any manufacturer's warranties that are assignable and are in
effect (the "Tangible Personal Property");
(c) the Ready Cash Loans tied to deposit accounts (as detailed in
Exhibit F) attributable and booked at the Branch as of the close
of business on the Effective Date, except for:
(i) those loans rejected by Purchaser on the Effective Date on
the basis that they are then thirty (30) days or more past
due as of the close of business on the Effective Date.
(d) cash on hand at the Branch at the Effective Date.
"Core Deposits," or sometimes "Core Deposit," means any and all deposit
liabilities of Seller as shown on the books and records of Seller as being
allocated to the Branch, including amounts not yet collected, attributable to
the depositors together with accrued interest thereon, including demand
accounts, checking accounts, money market demand accounts, savings accounts,
IRAs and retail CDs.
"Depositors" means account holders having Core Deposits at the Branch.
"Effective Date" is defined in Section 1.1.
"Employees" means, prior to the effective date, persons employed at the
Branch as of the date of this Agreement who are expected to transfer to
Purchaser and, thereafter, employees of the Branch who in fact transferred to
Purchaser. Attached as Exhibit C is a list of employees expected to transfer.
"Previously Disclosed Environmental Issue" as used in this Agreement
refers to the soil and groundwater contamination which resulted from the
presence of underground gasoline storage tanks left by the previous owner of the
real estate, Sunoco, Inc. (R&M), of which
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Purchaser has been informed, as set forth in section 2.11A, below. As used
herein Sunoco, Inc. (R&M) ("Sun"), includes, Sun Company, Inc. (R&M) and Sun Oil
Company of Pennsylvania, Inc., corporate names under which Sunoco, Inc. (R&M)
previously was known, and Sunmark Industries, a division of Sun Oil Company of
Pennsylvania , Inc.
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1.1 Effective Date
Except as otherwise provided herein, the closing date for the purchase
and assumption herein described (the "Effective Date") shall be on a date that
is mutually acceptable to the Seller and Purchaser and that is within 30 days of
the day on which all regulatory approvals required by law and this Agreement
have been obtained and all applicable waiting periods have expired, but no later
than April 30, 1999. The Effective Date shall be established for a Friday
(unless a legal holiday and in that event the prior business day), and the
closing shall commence at a time sufficient to conclude the closing prior to the
time established for the normal close of business at the Branch.
1.2 Transfer
A. The Seller agrees, subject to the terms and conditions of this
agreement, to validly sell, assign, transfer, convey and deliver, on the
Effective Date:
(i) to the Purchaser or a nominee of Purchaser which is
affiliated with it by common control (the "Nominee") by special warranty deed
all of its rights, title and interest in and to the Real Estate as shown on
Exhibit A attached to and made a part hereof, together with all improvements
thereon. Seller shall convey to Purchaser or its Nominee such title to the Real
Estate that would be marketable and free and clear of all liens, encumbrances,
easements, covenants, restrictions and objections (except solely those
identified in Exhibit J, attached hereto and made part hereof) and readily
insurable as such by a recognized reputable title insurance company doing
business in the Commonwealth of Pennsylvania at normal commercially reasonable
rates. All real estate taxes (other than transfer taxes) shall be apportioned
between Seller and Purchaser or its Nominee as of the Effective Date. Transfer
taxes shall be equally divided between Purchaser or its Nominee and Seller;
(ii) to Purchaser by xxxx of sale with special
warranty, all right, title, and interest in and to the Tangible Personal
Property;
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(iii) to Purchaser by separate assignment, all Core
Deposits maintained at the Branch and all vault cash on hand at the Branch.
(iv) to Purchaser, all right, title and interest to the
loans listed in Exhibit F.
B. Purchaser agrees that on the Effective Date, subject to terms and
conditions of this Agreement and as consideration for the aforesaid sale,
assignment, transfer, conveyance and delivery:
(i) Purchaser will pay to the Seller on the Effective
Date:
(a) a cash premium equal to 8% of the principal
amount of the Core Deposits as of the Effective Date. The Core Deposits at the
Branch, excluding accrued interest, as of December 17, 1998 are set forth in
Exhibit D attached hereto and made a part hereof;
(b) a sum of One Hundred Eighty Thousand Dollars
($180,000) on the Effective Date for the Real Estate and the Tangible Personal
Property;
(c) an amount equal to the dollar value of vault
cash on hand at the Branch as of the close of business on the day immediately
preceding the Effective Date;
(ii) Purchaser will assume and agree to discharge and
pay all Core Deposits purchased by it, with accrued interest.
(iii) Purchaser will assume and agree to discharge all
of Seller's obligations and liabilities related to the loans listed on Exhibit
F, except such as arise from Seller's violation of any law or regulations, or
Seller's breaches of obligations to the borrower or third parties, as to which
Seller agrees to assume and discharge.
1.3 Additional Obligations of the Purchaser
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A. To evidence the assumption by Purchaser of the liabilities and
obligations of the Seller which are assumed pursuant to this Agreement,
Purchaser shall execute, acknowledge and deliver to the Seller, on the Effective
Date, an instrument of assumption in the form annexed hereto as Exhibit E.
B. Purchaser agrees that it will preserve and safely keep, for as long
as may be required by applicable law, all of the files, books of account and the
records referred to in Sections 1.4D and 1.4F below for the joint benefit of
itself and the Seller, and that it will provide to Seller or its
representatives, at any reasonable time and at the Seller's expense, copies (or
originals, if originals exist and are required for purposes of legal
proceedings) of, any such files, books of account, or records as the Seller
shall reasonably deem necessary; provided, however, nothing herein shall require
Purchaser to breach any obligation of confidentiality of any customer.
C. For a period of thirty (30) days from the date this Agreement is
signed and delivered by both parties (the "Due Diligence Period"), Purchaser,
and its agents, at its sole cost and expense, shall have the right to inspect,
test, evaluate and investigate each of the Core Deposits and Assets (including
without limitation title to Tangible Personal Property and the condition and
zoning and code compliance of the Real Estate) and Seller's documents and
records relating thereto and Seller agrees to make the Assets, documents and
records available to Purchaser at reasonable times and on reasonable prior
notice for such purposes. Except for the environmental assessments discussed
below in Section 1.3D, if for any reason Purchaser is dissatisfied with any of
the Assets, or their condition or title thereto, Purchaser may, within ten (10)
days after expiration of the Due Diligence Period, elect to void the entire sale
contemplated by this Agreement, and neither party shall have any further
liability to the other arising out of this Agreement.
D. With respect to the Real Estate, Purchaser may have a Phase I, and
where required, Phase II Site Assessment conducted ("Assessment(s)") which shall
be completed within 45 days from the date of this Agreement. In the event that
the Assessment(s) reveal(s) the presence of contaminated soil and/or groundwater
in amounts and/or levels substantially
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greater or higher than those revealed by past sampling and monitoring performed
by Seller, Sun, and/or its consultants, such that the Real Estate is not
eligible for a release of liability for remediation to statewide health
standards and/or site specific standards for Benzene, Toluene, Ethyl Benzene,
and Xylene, as set forth in a letter from the Pennsylvania Department of
Environmental Protection (PADEP) to Xx. Xxxxxxxx Fish, Sun Company, Inc., dated
April 23, 1998 (Exhibit G), the Purchaser shall notify Seller by sending Seller
a copy of the Assessment(s) within 10 days of its receipt by Purchaser. Seller
shall then have 10 days to advise Sun of the results of the Assessment(s).
Seller shall then make reasonable efforts to work with both Sun and Purchaser to
develop and implement a remediation plan which is mutually acceptable to Seller,
Purchaser, and Sun. In the event that the Seller, Purchaser, and Sun are unable
to agree on such a remediation plan within 30 days of Sun's receipt of the
Assessment(s), either party may, within 10 days after this 30 day period
expires, elect to void the entire sale contemplated by this Agreement, and
neither party shall have any further liability to the other arising out of this
Agreement.
E. If Purchaser fails to exercise its option to void the entire sale
pursuant to Section 1.3 D of this Agreement, then Purchaser, after the Effective
Date, at its sole cost and expense, shall cooperate with Seller and Sun:
(1) to provide access to Sun and its employees, consultants, and
agents, and to Seller and its employees, consultants and
agents, for the purpose of conducting such sampling, testing,
or monitoring, as required in connection with the remediation
described in Section 2.11 A, any related application submitted
to PADEP pursuant to Act 2 (the Land Recycling and
Environmental Remediation Standards Act), or any remediation
undertaken pursuant to Section 1.3 D;
(2) to assist Sun and Seller in obtaining a release of liability
from the PADEP pursuant to Act 2, in connection with the
remediation described in Section 2.11A.
(3) by providing Seller with copies of all documents (excluding
any which may be protected by attorney client privilege) which
are (1) prepared before or after the
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Due Diligence Period and prior to the Effective Date relating
to the Previously Disclosed Environmental Issue, including but
not limited to any Phase I or Phase II Site Assessment or
other due diligence investigation, whether prepared by
Purchaser, its assignee, or their consultants or agents, or
(2) prepared or received before or after the Effective Date
and which relate to the process of attempting to obtain Act 2
agreements relating to the Real Estate. In the event that
after the Effective Date of this Agreement any third party
makes any claim against Purchaser in connection with the
Previously Disclosed Environmental Issue, Purchaser shall
provide Seller with notice of such claim within fifteen (15)
days, and shall consult with Seller. Purchaser and Seller
shall cooperate with respect to determining an appropriate
course of action to investigate, respond to, and/or resolve
such claim.
F. Purchaser understands and agrees that any issues and concerns
involving the effect of environmental remediation on the Real Estate after the
Effective Date should be discussed and resolved with Sun during the assessment
period discussed in Section 1.3D and that this includes, but is not limited to,
issues concerning operation of the Branch for banking and financial services by
Purchaser including parking and access to the Branch.
1.4 Additional Obligations of the Seller
On the Effective Date, the Seller shall:
A. deliver to Purchaser at least two (2) full sets of keys to the
Branch, and such of the Assets purchased as shall be capable of physical
delivery, including, without limitation, the Tangible Personal Property
purchased hereunder;
B. execute, acknowledge and deliver to Purchaser all such
endorsements, assignments, bills of sale, and other instruments of conveyance,
assignment and transfer as shall be reasonably necessary or advisable to
consummate the sale and transfer of the Assets to Purchaser;
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C. make available to Purchaser immediately available funds equal
to the amount of Core Deposits with accrued interest assumed by Purchaser under
Section 1.2 B(ii) less the sum of the payments to be made to the Seller as
described in Section 1.2 B(i);
D. transfer, assign and deliver to Purchaser such of the following
records pertaining to the Core Deposits as exist and are in Seller's possession
in whatever form or medium as are maintained by Seller on the Effective Date:
(i) signature cards, orders and contracts between the
Seller and Depositors, and records of similar
character;
(ii) negotiated deposit slips and canceled checks or
withdrawal orders representing charges to depositors;
(iii) XXX documents and authorization for XXX customers;
(iv) special customer authorizations, including stop
payments, other account holds and automatic
transfers;
(v) organization and business account resolutions and
authorizations;
(vi) overdraft line of credit contracts and related
documents;
(vii) copies of tax identification notices received prior
to closing;
(viii) all unpaid tax assessments;
(ix) documents authorizing and supporting holds, cautions
and levies;
(x) copies of ACH origination forms and records; and,
(xi) such other documents as may be necessary to permit
proper accounting for and recording of the Core
Deposits and to comply with any applicable tax
withholding requirements related thereto as may be
reasonably requested by Purchaser.
From and after the Effective Date, the Seller agrees that it will
preserve and safely keep, for as long as may be required by applicable law, all
of the historical books and records of account pertaining to the Core Deposits
assumed by Purchaser and not otherwise transferred to
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Purchaser on the Effective Date for the joint benefit of itself and Purchaser,
and that it will provide to the Purchaser or its representatives, at any
reasonable time and at Purchaser's expense, copies (or originals, if originals
exist and are required for purposes of legal proceedings) of any such books and
records as Purchaser shall reasonably deem necessary; provided, however, nothing
herein shall require the Seller to breach any obligation of confidentiality of
any customer;
E. arrange with Sun for Sun to enter into a written Indemnity Agreement
with Purchaser, in form and substance reasonably satisfactory to Purchaser,
providing Purchaser with rights to indemnification from Sun substantially
equivalent to the rights provided by Sun to Seller (as successor to Elmwood
Federal Savings Bank ["Elmwood"]), under an Indemnity Agreement between Elmwood
and Sun attached hereto as Exhibit H;
F. On the Effective Date, in addition to the special warranty deed, any
bills of sale and any other documents reasonably required by Purchaser's title
company in order to insure Purchaser's title to the Real Estate, Seller shall
deliver, assign and transfer to Purchaser:
(i) the originals, if originals exist, of all documents, reports,
correspondence and agreements relating in any way to the
environmental condition of the Real Estate or to the
Previously Disclosed Environmental Issue or Sun's remediation
of PADEP's agreements or positions with respect to the Real
Estate or its conditions, which are in the possession of
Seller or any of its agents; (
ii) originals, if originals exist, of any agreements relating in
any way to the Real Estate; and
(iii) originals, if originals exist, of all surveys, plans and
specifications relating in any way to the Real Estate.
1.5 Certain Transitional Matters
A. In order to reduce the continuing charges to Seller through the
check clearing system of the banking industry which will result from check forms
of Seller being used after the
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Effective Date by depositors or holders of the Core Deposits, Purchaser, at its
cost and expense, on or prior to the Effective Date, shall prepare and mail to
each depositor or other holder of a Core Deposit, as appropriate: (i) a letter
prepared by Purchaser and reasonably acceptable to Seller notifying each such
depositor or account holder of the transfer of his or her account pursuant to
this Agreement and requesting where appropriate that upon the receipt of the
enclosed temporary checks or withdrawal forms such depositor or holder cease
writing checks, drafts and withdrawal orders on forms provided by Seller and
carrying its imprint (including name and transit routing number) against any
such account, and that such depositor or holder immediately destroy unused
checks and withdrawal orders of Seller; (ii) and as appropriate, signature cards
and checks and withdrawal order forms of Purchaser with instructions to utilize
the checks or withdrawal orders of Purchaser from the Effective Date forward.
Seller shall co-operate with Purchaser in accomplishing this customer
notification.
B. On or before the Effective Date, Seller and Purchaser shall
cooperate and shall take all such action as is necessary to arrange for the
direct routing to Purchaser through the check clearing system of the banking
industry, effective immediately after the Effective Date, of all checks, drafts
and withdrawal orders on forms provided by the Seller and carrying its imprint
(including name and transit routing number) and relating to the Core Deposits.
In the event that within 60 days after the Effective Date, Seller shall receive
any such checks, drafts or withdrawal orders through the check clearing system
of the banking industry, Seller shall immediately forward to Purchaser or
Purchaser's agent, at the cost and expense of Purchaser, by courier service,
overnight delivery service, or such other means as Purchaser shall reasonably
request, all such checks, drafts, and withdrawal orders for processing by
Purchaser.
C. Following the Effective Date, Purchaser agrees to pay in accordance
with the law and customary banking practices all properly payable checks, drafts
and withdrawal orders or proper withdrawals effected through a shared automated
teller system of which Seller is a participant, which are presented to Purchaser
by mail, over the counter, through the check clearing system of the banking
industry, and/or in the manner set forth herein, by depositors or holders of the
Core Deposits, whether drawn on the checks, drafts, withdrawal order forms or
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automated teller machine cards provided by Seller or by Purchaser, and in all
other respects, to discharge after the Effective Date, in the usual course of
the banking business, all duties and obligations with respect to the balances
due and owing to the depositors or holders of the Core Deposits.
D. If, instead of accepting the obligation of Purchaser to pay the Core
Deposits assumed by Purchaser pursuant to this Agreement, any such depositors or
holders shall demand payment from Seller for all or any part of such assumed
Core Deposits, Seller shall refer all such depositors or holders to Purchaser in
the manner and with such instructions, if any, as shall be hereafter established
by Seller and Purchaser, and Purchaser shall thereupon be responsible for making
such payment (if still demanded) to such depositor or holder. If, after the
Effective Date, any of such depositors or holders shall present to Seller,
whether in person, by mail, or otherwise, a check, draft or withdrawal order
drawn against any of the Core Deposits, Seller shall refer such depositor or
holder, or deliver such check, draft or withdrawal order, to Purchaser as set
forth above. Purchaser shall pay all such properly payable checks, drafts and
withdrawal orders as set forth above and shall promptly reimburse Seller for all
expenses paid and charges incurred, if any, by Seller with respect to all such
properly drawn checks, drafts and withdrawal orders.
E. Seller shall provide all information and take all steps required to
be taken by it that are reasonably necessary for Purchaser to effect the
transfer of any direct deposit arrangement affecting any of the Core Deposits
and shall pay to Purchaser, within the applicable midnight deadline, any funds
received by Seller which are intended to be credited to any of the Core
Deposits. Purchaser shall use its best efforts to complete all actions necessary
to effect the transfer of such direct deposit arrangements within 30 days of the
Effective Date. Seller shall have the right to return to the payor any direct
deposit item received by it subsequent to 90 days after the Effective Date or
such other time period as Purchaser and Seller may mutually agree upon.
F. Seller shall cooperate with Purchaser and use its best efforts to
assist in the transfer to Purchaser of the Core Deposits and shall take all
reasonable actions necessary to
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accomplish such transfer, including but not limited to the provision of any
required notices to customers with respect to the Core Deposits. Seller shall
supply Purchaser with such information and records in its possession and control
relating to the Core Deposits as Purchaser may reasonably request, including,
but not limited to, periodic portfolio reports and computer tapes setting forth
current account information in machine-readable format and any information
required for inclusion in all applications to regulatory authorities necessary
to consummate the transactions contemplated by this Agreement
G. Prior to Effective Date, Purchaser shall designate a successor
trustee, which may be Purchaser ("Successor Trustee"), as to any XXX account
constituting a Core Deposit. Both parties will cooperate with the Successor
Trustee. Seller will transfer the trusteeship of all such XXX accounts to the
Successor Trustee on the Effective Date, subject to the Successor Trustee's
written acceptance of its duties as Successor Trustee in form and substance
acceptable to Seller.
H. Promptly after the execution of this Agreement, Seller will deliver
to Purchaser a list of holds, cautions and levies that have been placed by
Seller on particular accounts or on individual checks, drafts, or other
instruments, specifically describing such holds, cautions and levies. Purchaser
shall not be obligated to accept or purchase any Core Deposits which are subject
thereto, but shall identify any such rejected Core Deposits prior to the
expiration of the Due Diligence Period. Such listed holds, cautions and levies
will be continued by Purchaser under the same terms to the extent practicable or
required by law.
I. Subsequent to regulatory approval of the transaction proposed
hereunder, Seller will notify its affected customers by letter, in a form
mutually agreeable to Seller and Purchaser, of the pending assignment of
Seller's Core Deposits to Purchaser, which notice shall be at Seller's cost and
expense.
J. Purchaser agrees to indemnify Seller against liabilities Seller
incurs with respect to any checks, drafts or withdrawal orders credited to a
Core Deposit as of the Effective Date which are returned to Seller after the
Effective Date, provided Seller, within the applicable
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midnight deadline, notifies Purchaser of any such returns and complies with
Purchaser's reasonable instructions with respect to such items. This indemnity
shall not apply to any acts or omissions of Seller which are (i) not pursuant to
Purchaser's reasonable instructions and (ii) not in compliance with Seller's or
Purchaser's responsibilities under applicable law or regulation.
1.6 Indemnification
A. The Seller shall indemnify the Purchaser and hold it harmless from
and against any losses, liabilities, damages or expenses (collectively,
"Losses") that the Purchaser may sustain or become subject to as a result of (i)
any material breach of any representation, warranty or agreement of Seller
contained in this Agreement, (ii) any claim, legal action or administrative
proceeding based on any conduct of Seller or resulting from or arising in
connection with the operation or ownership of the Branch or Real Estate or any
of the Core Deposits or other Assets transferred hereunder on or prior to the
Effective Date, or (iii) the assertion against Purchaser of any liability or
obligation with respect to Taxes (as defined below) attributable to the Assets,
the Branch or the Real Estate on or prior to the Effective Date or that Seller
is obligated to pay hereunder. Notwithstanding the foregoing, Seller shall have
no obligation to indemnify Purchaser against any Losses below an aggregate
amount of $10,000. The foregoing limitations on the obligation of Seller to
indemnify Purchaser shall not apply to any claim, legal action, or
administrative proceeding arising from or relating to the Previously Disclosed
Environmental Issue.
B. The Purchaser shall indemnify the Seller and hold it harmless from
and against any losses, liabilities, damages or expenses (collectively,
"Losses") that the Seller may sustain or become subject to as a result of (i)
any material breach of any representation, warranty or agreement of the
Purchaser contained in this Agreement, (ii) any claim, legal action or
administrative proceeding based on any conduct of the Purchaser or resulting
from or arising in connection with the operation or ownership of the Branch or
Real Estate or any of the Core Deposits or other Assets transferred hereunder
from and after the Effective Date, or (iii) the assertion against Seller of any
liability or obligation with respect to Taxes (as defined below)
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attributable to the Assets, the Branch or the Real Estate from and after the
Effective Date or that Purchaser is obligated to pay hereunder. Notwithstanding
the foregoing, the Purchaser shall have no obligation to indemnify Seller
against any Losses below an aggregate amount of $10,000.
C. "Taxes" shall include, but not be limited to any federal, state,
local, foreign and other income, franchise, capital stock, employees' income
withholding, non-resident alien withholding, social security, unemployment,
disability, real property, personal property, sales, use, excise, transfer,
business privilege, loans and other taxes or governmental assessments, fees or
charges, including any interest, penalties or additions to tax on the foregoing.
D. To exercise its indemnification rights under this Section 1.6 as a
result of the assertion against it of any claim or liability for which
indemnification is provided, the indemnified party shall promptly notify the
indemnifying party of all facts relating thereto within the knowledge of the
indemnified party, and shall afford the indemnifying party the opportunity, at
the indemnifying party's sole cost and expense, to defend against such claim or
liability (in which event the indemnified party may participate in the defense
at its own sole expense). The indemnified party shall have the right to settle
or compromise any such claim or liability and to be indemnified from and against
all Losses resulting therefrom, unless the indemnifying party, within thirty
(30) days after receiving notice of the claim or liability in accordance with
this Section 1.6 D, notifies the indemnified party that it intends to defend
against such claim or liability and undertakes such defense.
1.7 Prorations
A. Any deposit insurance premium assessment and other tax or related
assessment paid or payable relating to the Core Deposits shall be prorated
between the parties as of the Effective Date. To the extent that such premium,
tax or assessment has been prepaid by Seller for a period extending beyond the
Effective Date, Purchaser shall pay Seller at Closing the amount applicable to
the period after the Effective Date
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calculated at the premium rate paid by the Seller.
B. It is the intention of the parties that Seller shall operate for its
own account the business being transferred pursuant to this Agreement until the
close of business on the Effective Date, and that the Purchaser shall operate
for its own account the business being transferred pursuant to this Agreement
from and after the Effective Date. Thus, except as otherwise specifically
provided in this Agreement, items of income and expense shall be prorated or
adjusted between the parties as of the close of business on the Effective Date,
whether or not such adjustment would normally be made as of such time, including
without limitation, rents applicable to real estate leases, contract payments,
utility payments, real and personal property taxes, similar expenses and
charges, and security and utility deposits. The obligations of the parties under
this paragraph shall survive the Effective Date.
1.8 Settlement Procedure
Notwithstanding the transaction herein described occurring on the
Effective Date, the settlement for the purchase and assumption and the transfer
of the Assets and Core Deposits shall occur as follows:
A. On or prior to the Effective Date, the parties will conduct a
preliminary settlement using data accumulated through the close of business at
the Branch on a date no more than five (5) days prior to the Effective Date as
mutually agreed to by the parties. Based upon such preliminary data, the amount
due Purchaser and the amount due the Seller shall be netted, and the netted
difference will be paid to the Purchaser by the Seller or to the Seller by the
Purchaser, as the case may be, on the Effective Date.
B. Title to the Real Estate and Tangible Personal Property shall be
transferred on the Effective Date.
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C. Promptly following the Effective Date, once all Branch data up to
and including the close of business on the day immediately preceding the
Effective Date is available, the parties will conduct an adjusting settlement
using such updated data. An appropriate adjusting settlement payment from the
Seller to Purchaser or from Purchaser to the Seller, as the case may be, will be
made, together with accrued interest calculated at the Federal Funds rate for
the number of days lapsed between the Effective Date and the date of such
adjusting settlement payment.
1.9 Employees
A. Purchaser intends, but is not obligated to continue the employment
of Seller's Employees for a minimum of one (1) year from the Effective Date at
the work site where they are employed as of the Effective Date and/or another
office of the Purchaser. Such employment is to be effective at the close of
business on the Effective Date. Any Employees that continue to be employed by
Purchaser will be paid a salary or wage on the same bases or scales which
Purchaser pays to its other employees for comparable positions in Purchaser's
organization. Bonuses or incentive compensation will be paid in accordance with
Purchaser's employee policies and practices, as amended from time to time. Any
employees who continue to be employed by Purchaser will be offered health,
welfare and retirement benefits as are currently being provided by Purchaser to
its employees in positions with comparable responsibilities and years of
service.
B. Purchaser has the right to terminate any Employee at any time for
acts that are illegal or are otherwise in violation of Purchaser's operating or
personnel policies or would otherwise be a basis for termination of Purchaser's
other comparable employees.
C. For the purposes of determining credit for eligibility and vesting
(but not for any other purposes including without limitation accrual of
benefits) in Purchaser's benefit plans, Purchaser agrees to use for each
Employee hired, the Employee's date of hire as shown in Seller's personnel
records.
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D. The foregoing undertakings are meant solely to mitigate any
liability risks of Seller and are only for the benefit of Seller and are not for
the benefit of any individual Employees.
E. Seller assumes all payroll and other obligations for Employees for
periods through the close of business on the Effective Date and shall make final
payments of salary and other lump sum cash payments to which the Employee may be
entitled in accordance with its regular payroll schedule. Purchaser assumes all
payroll and other obligations for Employees for periods after the Effective
Date.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
Seller hereby represents and warrants to Purchaser as follows:
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2.1 Corporate Organization
Seller is a National Banking Association validly existing and in good
standing under the laws of the United States. Seller has the corporate power and
authority to own its properties, to carry on its business as presently
conducted, and to effect this transaction. The Core Deposits are, subject only
to monetary limits established by law and regulation, insured by the Federal
Deposit Insurance Corporation ("FDIC") through its Bank Insurance Fund ("BIF").
2.2 Real Estate
On and after the execution of this Agreement, Seller shall provide to
Purchaser all information and reports in its files concerning the physical
condition of the Real Estate, including but not limited to all environmental
condition reports, all maintenance contracts and repair records and shall permit
Purchaser's agents to interview Seller's building maintenance and management
personnel and Seller's legal counsel and other professional consultants
regarding the physical condition of the Real Estate. Seller shall also provide
to Purchaser complete copies of all surveys of the Real Estate which are in the
possession or control of Seller or any of its agents.
2.3 Title to Personal Property; Encumbrances
A. Except as otherwise noted in this Agreement or the Exhibits hereto,
Seller is the owner of the Tangible Personal Property and other assets to be
transferred to Purchaser pursuant to this Agreement, and in no case are such
assets subject to any mortgage, pledge, lien, security interest, conditional
sales agreement, lease, encumbrance or charge of any nature whatsoever, except
as disclosed in the Exhibits hereto.
B. Except as otherwise expressly provided in this Agreement, the Real
Estate, and Tangible Personal Property being sold to Purchaser are being sold on
an "as is and where is" basis without recourse to Seller and with no warranties
express or implied with respect to design,
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fitness, condition or otherwise. The Tangible Personal Property to be
transferred pursuant to this Agreement is, to Seller's best knowledge and
belief, in good operating condition and repair, giving consideration to age and
use and subject to ordinary wear and tear.
C. With the exception of the Previously Disclosed Environmental Issue,
Seller has received no notice of any violation of zoning laws, building or fire
codes, or other statutes, ordinances or regulations relating to the Branch.
D. Seller has no actual knowledge (not having made any specific
investigation for this purpose) and has received no written notice of any
proposed assessments against such Branch for public improvements or any notice
that the current use of the Branch violates any law, ordinance, rule or
regulation, including zoning, lane division, building, fire, or health laws.
2.4 No Violation
The execution and delivery of this Agreement by Seller does not, and
the consummation of the transactions contemplated hereby by it will not,
constitute (i) a breach or violation of, or a default under, any law, rule,
regulation, judgment, decree, order, governmental permit or license, agreement,
indenture or instrument of Seller or to which Seller is subject, which breach,
violation or default would have a material adverse effect on the financial
condition, business or result of operation of Seller and its subsidiaries taken
as a whole or on Seller's ability to perform its obligations under this
Agreement or Purchaser's ability to operate the Branch, or (ii) a breach or
violation of, or a default under, Seller's articles of association, articles of
incorporation or by-laws, and the consummation of the transactions contemplated
hereby will not require any consent or approval under any such law, rule,
regulation, judgment, decree, order, governmental permit or license or the
consent or approval of any other party to any such agreement, indenture or
instrument, other than the approval of applicable regulatory authorities, if
any, which approval shall have been obtained prior to the Effective Date.
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2.5 True Statements
To Seller's best knowledge and belief, no exhibit hereto contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained therein, in the circumstances in which
they were made, not misleading.
2.6 Limitation of Warranties
Except as may be expressly represented or warranted in this Agreement
or any deed, xxxx of sale, assignment or other related agreement or instrument
by the Seller, the Seller makes no representations or warranties whatsoever with
regard to any Assets being transferred, assigned or delivered to the Purchaser
or any liability or obligation being assumed by the Purchaser.
2.7 Deposits
The Core Deposits to be transferred pursuant to this Agreement are
fully enforceable and are, and Seller's administration and disclosure with
respect thereto have at all times since the acquisition of Elmwood Federal
Savings Bank been, in compliance with all applicable rules and regulations in
all respects including, by way of illustration and not limitation, their terms,
interest rates and administration. The list of Core Deposits contained in
Exhibit D is true and correct as of December 17, 1998.
2.8 Deposit Insurance
The Core Deposits to be transferred pursuant to this Agreement are
insured by the Federal Deposit Insurance Corporation, by its "BIF" Fund up to
the maximum extent permitted by law. Seller has filed all reports and paid all
premiums required under the Federal Deposit Insurance Act.
2.9 Status of Loans
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With respect to each loan being purchased by the Purchaser pursuant to
this Agreement, the loan is a valid loan which is, and Seller's actions in
connection with the origination, disclosure and administration thereof at all
times since the acquisition of Elmwood Federal Savings Bank have been, in
conformity in all material respects with applicable laws and regulations. The
principal balance and accrued, unpaid interest of each loan, as shown on
Seller's books and records is true and correct as of the last date shown
thereon. Seller possesses on micro-fiche or micro-film true and complete copies
of all notes, mortgages and other loan documents and will deliver them to
Purchaser on the Effective Date. Seller had not classified any of the loans or
established any specific reserve against any of the loans.
2.10 No Adverse Litigation
Except for the Previously Disclosed Environmental Issue, there is no
action, arbitration, suit, proceeding or claim pending or, to the best knowledge
of Seller, threatened, against Seller with respect to, or adversely affecting
the Assets being purchased hereunder or the liabilities being assumed hereunder
before or by any federal, state, municipal or other governmental department,
commission, board, agency or instrumentality, or which would adversely affect
Seller's ability to perform its obligations under this Agreement.
2.11 Environmental Matters
A. Disclosure of Contamination from Underground Storage Tanks and
Related Piping, and Remedial Actions and Groundwater Monitoring.
Prior to 1980, the Real Estate was operated by a previous owner as a
retail gasoline station. In 1980, underground storage tanks on the property,
which had been used for storing gasoline and oil, were removed from service and
filled with inert material, and said tanks, along with related piping, remain on
the property. (An associated waste oil tank was removed from the property at a
later time.) Contamination of soil and groundwater at the property from
26
contaminants from gasoline have been observed, and some volatilized contaminants
were released into the building on the property. Certain remedial actions have
been taken, including the removal and disposal of piping and some contaminated
soil, and the sealing of a crack in the building's wall. Groundwater monitoring
has been conducted on the property. Some contamination remains in the soil and
groundwater. The existence of the soil and groundwater contamination at the
Branch property has been reported to the PADEP, and the PADEP has reviewed the
specific levels of contamination measured. Seller has provided to Purchaser
copies of the documents relating to this contamination, remediation, and
monitoring, which include but are not limited to the documents identified on
Exhibit I. Seller has also provided and will hereafter, on a timely basis to
permit Purchaser's evaluation within the Due Diligence Period, provide Purchaser
with the opportunity to interview its own employees regarding such
contamination, and provide access to representatives of Sun and its consultants
who have conducted the referenced remedial actions and/or monitoring, in order
to assist Purchaser in its evaluation of this contamination.
B. With the exception of remedial and investigative activities
conducted in connection with the contamination disclosed in this Section 2.11
and Exhibit I, as of the date of the Agreement, Seller has not conducted any
investigation into the existence of any other contamination of soil or
groundwater at the property. With the exception of the contamination disclosed
in this Section 2.11, Seller has no knowledge of the contamination of soil or
groundwater at the property by any hazardous substances or hazardous wastes.
C. Purchaser is not waiving or releasing any rights, by way of
indemnity, contribution or otherwise, which it may have now or hereafter against
Seller, Sun or any third party relating to the Previously Disclosed
Environmental Issue involving the Real Estate, whether under this Agreement or
otherwise.
D. Seller will cooperate with Purchaser and Sun in obtaining an Act II
release of liability from PADEP.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Seller as follows:
3.1 Corporate Organization
Purchaser is a National Banking Association duly organized, validly
existing and in good standing under the laws of the United States. Purchaser has
the corporate power and authority to own the property being acquired, to assume
the liabilities being transferred, and to effect the transactions contemplated
hereunder. Purchaser's deposits are insured by the Federal Deposit Insurance
Corporation and Purchaser is a member of BIF.
3.2 No Violation
The execution and delivery of this Agreement by Purchaser does not, and
the consummation of the transactions contemplated hereby by it will not
constitute (i) a breach or violation of, or a default under, any law, rule,
regulation, judgment, decree, order, governmental permit or license, agreement,
indenture or instrument of the Purchaser or to which the Purchaser is subject,
which breach, violation or default would have a material adverse effect on the
financial condition, business or result of operation of the Purchaser and its
subsidiaries taken as a whole or Purchaser's ability to perform its obligations
under this Agreement, or (ii) a breach or violation of, or a default under, the
Purchaser's articles of association, articles of incorporation or by-laws, and
the consummation of the transactions contemplated hereby will not require any
consent or approval under any such law, rule, regulation, judgment, decree,
order, governmental permit or license or the consent or approval of any other
party to any such agreement, indenture or instrument, other than the approval of
applicable regulatory authorities, which approval shall have been obtained prior
to the Effective Date.
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3.3 Broker
Other than Anonick Financial Corporation, Purchaser has not retained or
otherwise engaged any broker, finder or any other similarly employed person or
agreed to pay any fee or commission to any agent, broker or other similarly
employed person for or on account of this Agreement or in connection with the
transactions contemplated hereby. Purchaser is solely responsible for paying all
such fees and/or commissions to Anonick Financial Corporation.
3.4 Environmental Matters
A. Disclosure of Contamination from Underground Storage Tanks and
Related Piping, and Remedial Actions and Groundwater Monitoring.
Purchaser acknowledges that Seller has provided to Purchaser copies of
the documents relating to this contamination, remediation, and monitoring, which
are identified on Exhibit I. Purchaser further acknowledges that Seller has
provided it with access to representatives of Sun and its consultants who have
conducted the referenced remedial actions and/or monitoring, in order to assist
Purchaser in its evaluation of this contamination.
B. Inspection of the Branch and Due Diligence Investigation.
Purchaser acknowledges that Seller has agreed to provide it with full
access to the Branch for the purpose of inspecting the property in order to
allow Purchaser to conduct a "due diligence" investigation into any and all
environmental matters and compliance with applicable laws. Such access will
include the opportunity to conduct any surveys, sampling, or testing deemed
necessary by Purchaser, and to interview Seller's employees in connection with
environmental matters. If Purchaser interviews Seller's employees, Purchaser
shall provide Seller, in writing, within thirty days, a detailed summary of all
information or statements obtained from such employees in such interviews.
Purchaser acknowledges that any information or statements provided to Purchaser
by Seller's employees during interviews conducted as part of such due diligence
investigation shall not constitute representations or warranties by Seller.
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C. Acceptance of Branch Property in "As-Is" Condition.
Subject to the express provisions of this Agreement which concern the
Previously Disclosed Environmental Issue and section 1.3C of this Agreement,
Purchaser accepts the Branch and takes title to the Real Estate described in
Exhibit A, in "as-is" condition. Purchaser agrees and represents that, except as
expressly contained in this Agreement, no representations by or on behalf of
Seller have been made as to the condition of the Branch, any restrictions
related to the development of the Real Estate, the applicability of any
governmental requirements, or the suitability of the property for any purpose
whatsoever. Purchaser represents and warrants that it intends to conduct its own
independent "due diligence" investigation of environmental matters, including
the inspection of the Branch property, and except for the information contained
in Section 2.11A and Exhibit I, is relying solely on such independent
investigation.
3.5 Confidentiality
The provisions of the existing confidentiality agreement between Seller
and Purchaser shall apply to this Agreement and the confidentiality agreement is
incorporated herein by this reference.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE EFFECTIVE DATE
4.1 Activity in the Ordinary Course
A. Seller shall carry on the business of its Branch substantially in
the same manner as heretofore, and Seller shall not, with regard to such Branch,
engage in any activities or transaction outside its ordinary course of business
as conducted as of the date hereof except for activities or transactions
contemplated by this Agreement, provided, however, that Seller need
30
not, in its sole discretion advertise or promote new or substantially new
customer services in the Branch's principal market area. Seller shall use
reasonable efforts to preserve its business operation as conducted at the
Branch, to preserve for Purchaser the good will of its customers and others
doing business with the Branch, and to cooperate with and assist Purchaser in
assuring the orderly transition of such business from Seller to Purchaser.
Nothing in this paragraph shall be construed as requiring Seller to engage in
any activities or efforts outside the ordinary course of business as presently
conducted.
B. Seller shall not institute any policy changes that apply exclusively
to the Branch from the date of this Agreement to the Effective Date without the
express written approval of Purchaser.
C. Between the date hereof and the Effective Date, Seller shall
maintain all of the property at the Branch in customary repair, order and
condition, and maintain its books, accounts and records concerning the Branch in
the ordinary and usual manner on a basis consistent with past practice.
D. Between the date hereof and the Effective Date, Seller shall not,
without the prior consent of the Purchaser: (i) cause or permit the transfer
from or to the Branch of any deposits, except upon the unsolicited request of a
depositor or otherwise in the ordinary course of business; (ii) offer to or
modify any of the contractual terms on the deposits at the Branch, except in the
ordinary course of business; (iii) direct any special deposit promotions solely
within the Branch's principal market area; or (iv) otherwise materially increase
the aggregate costs of funds of the Branch.
E. Between the date hereof and the Effective Date, Seller shall not,
without prior consent of the Purchaser acquire or dispose of Tangible Personal
Property of the Branch, except for replacement of furniture, fixtures and
equipment and normal maintenance and refurbishing in the ordinary course of
business of the Branch. If any material damage is caused to the Branch by
Seller's removal of any property, Seller will repair the damage prior
31
to the Effective Date.
F. Between the date hereof and the Effective Date, Seller shall not,
without prior consent of the Purchaser (i) increase or agree to increase the
salary, remuneration or compensation of persons employed at the Branch other
than in accordance with Seller's customary policies and/or bank-wide changes, or
pay or agree to pay any uncommitted bonus to any such employees other than
regular bonuses granted based on historical practice; or (ii) enter into any
employment contracts with any officers or employees of the Branch.
ARTICLE V
OBLIGATIONS OF PARTIES PRIOR TO AND AFTER EFFECTIVE DATE
5.1 Access
At reasonable times and upon prior notice, without interfering with the
normal business and operations of the Seller relating to the Branch, Seller
shall afford to the officers and authorized representatives of the Purchaser
access to the properties, books and records pertaining to the Branch in order
that the Purchaser may have full opportunity to make reasonable investigation.
The officers of Seller shall furnish the Purchaser with such additional
financial and operating data and other information as to its business and
properties at the Branch as may be reasonably necessary for the orderly transfer
of the Branch, including, without limitation, information required for inclusion
in all governmental applications necessary to effect this transaction. Nothing
in this Section 5.1 shall be deemed to require Seller to breach any obligation
of confidentiality or to reveal any proprietary information, trade secrets or
marketing or strategic plans. Anything to the contrary notwithstanding, the
Purchaser shall not require Seller to disclose Seller's profitability analysis
of the Branch or any other proprietary financial information.
5.2 Requirements to Obtain Approval of Regulatory Authorities
32
Purchaser's Requirements. In order to consummate this Agreement,
Purchaser will be required to obtain certain approvals from proper regulatory
authorities. Purchaser shall, within 30 days of the signing of this Agreement,
file applications with the proper regulatory authorities notifying such
regulators of its intent to consummate the transaction and thereafter shall (i)
comply with the normal and usual requirements imposed by such authorities
applicable to effectuate the transaction, and (ii) use its good faith efforts to
promptly obtain any required permission of such regulatory authorities to
consummate the transaction
Seller's Requirements. Seller will cooperate with Purchaser in the
preparation and filing of all applications with the appropriate regulatory
authorities.
5.3 Use of Seller's Name
Except as contemplated hereby for the orderly transfer of the
liabilities and assets, Purchaser agrees that after the Effective Date the name
of the Seller shall not be used in any manner without the express prior written
consent of Seller. Purchaser shall not state or imply that Seller is in any way
involved as a partner, joint venturer or otherwise in the business of Purchaser.
With Seller's express prior written consent, Purchaser may use Seller's name to
describe this transaction in any public communications.
5.4 Return of Information
In the event that the transactions contemplated hereby are not
consummated for any reason, each party agrees that it will return or cause to be
returned to the other party all information obtained in connection with this
transaction and will not, except as otherwise required by law, disclose or use
such information in the conduct of Purchaser's business or otherwise.
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5.5 Non-Solicitation of Branch Based Business
In order that the Purchaser may have and enjoy the full benefit of the
transactions contemplated by this Agreement, Seller agrees that it will not, for
a period of three (3) years following the Effective Date, either (i) directly or
indirectly solicit customers whose loans and/or deposit liabilities and/or
banking relationships are acquired by the Purchaser pursuant to this Agreement;
or (ii) establish a bank branch or automated teller, cash, loan or other machine
within a five (5) mile radius of the Branch, except that an acquisition
occurring in connection with a combination of Seller or Seller's parent company
with another existing financial institution or bank holding company shall not
violate this covenant. The foregoing shall not, however, limit solicitations by
the Seller (i) as may occur in connection with advertising or solicitations
directed to the public generally by means of general circulation so long as such
mailing lists are not derived from Seller's customer lists for the Core Deposits
or loans being sold to Purchaser; or (ii) as may occur in connection with direct
mailings from mailing lists purchased from sources outside the Seller; or (iii)
as may occur as a result of Seller's solicitation of deposits or loans outside
of the Commonwealth of Pennsylvania; or (iv) of customers who have any existing
lending, deposit, trust, or other banking relationships domiciled at any of the
Seller's branch offices or other facilities which are not transferred to the
Purchaser hereunder.
5.6 Further Assurance
The parties hereto agree to execute and deliver such instruments and to
take such other actions as the other party may reasonably require in order to
carry out the intent of this Agreement. The Seller agrees to duly execute and
deliver such bills of sale, acknowledgments and other instruments of conveyance
and transfer as shall be necessary and appropriate in the reasonable judgment of
the Purchaser to vest in the Purchaser the legal and equitable title to the
Assets of the Seller being sold hereunder, free and clear of all liens and
encumbrances except as otherwise noted in the Exhibits hereto. Seller shall be
responsible for all costs of deed recordation, and Purchaser shall be
responsible for all titling fees. Purchaser shall also pay or
34
reimburse Seller for Seller's payment of Purchaser's portion of all state or
local sales or compensating use or transfer taxes payable in connection with the
transactions contemplated hereunder, other than any tax or portion thereof
calculated directly or indirectly with respect to the income of the Seller
ARTICLE VI
CONDITIONS TO PURCHASER'S OBLIGATION
The obligation of the Purchaser to complete the transactions provided
for in this Agreement are conditioned upon fulfillment, at or before the
Effective Date, of each of the following conditions:
6.1 Information and Investigation
Subject in all cases to the terms and conditions of confidentiality
provided in the Agreement, pursuant to Section 5.1, Seller will promptly afford
to Purchaser, its officers, attorneys, accountants, and other authorized
representatives, access to information concerning the property, the books and
records pertaining to the Branch, financial and operating data and such other
information as is reasonably necessary for the evaluation of the Assets, Core
Deposits and Employees. Purchaser will promptly commence any investigations it
deems necessary or desirable with respect to such information, and after a
reasonable period of time, not to exceed forty (40) days from the date hereof,
advise Seller in writing whether, on the basis of such investigation and review,
and the discussions and negotiations to such date, Purchaser intends to proceed
to consummate this transaction.
6.2 Representations and Warranties True
The representations and warranties made by Seller in this Agreement
shall be true in all material respects at and as of the Effective Date as though
such representations and warranties were made at and as of such time, except for
any changes permitted by the terms hereof or
35
consented to by Purchaser.
6.3 Corporate Authority
The execution and delivery of this Agreement, and the consummation of
this transaction, shall have been authorized by the Board of Directors of
Seller. No further corporate authorization on the part of Seller shall be
necessary to consummate this transaction. This Agreement shall be valid and
binding agreement of the Seller, enforceable against the Seller in accordance
with its terms.
6.4 Obligations Performed
Seller shall have performed and complied in all material respects with
all obligations and agreements required by this Agreement to be performed or
complied with by it within the timeframe specified herein or, where no timeframe
is specified, prior to or at the Effective Date.
6.5 No Adverse Litigation
Except as has been previously disclosed by Seller, on the Effective
Date, no action, suit or proceeding shall be pending or threatened against
Seller which might reasonably be expected to (a) materially and adversely affect
the business, properties, and Assets of the Branch, or (b) materially and
adversely affect this transaction.
6.6 No Material and Adverse Change of Condition
Except as has been previously disclosed by Seller, on the Effective
Date, there has been no material and adverse change in the condition (financial
or otherwise), assets, liabilities, business operations or future prospects of
the Branch, including, but not limited to, a material adverse change in the
Branch's deposits, their composition, terms or rates in the aggregate.
36
6.7 Regulatory Approval
All filings and registrations with and notifications to all Federal and
state authorities required for consummation of the acquisition shall have been
made. All approvals and authorizations of all Federal and state authorities
required for consummation of the acquisition shall have been received and shall
be in full force and effect, provided said approvals do not impose upon
Purchaser any material adverse condition which would materially affect
Purchaser's ability to operate the Branch, and all applicable waiting periods
shall have passed.
ARTICLE VII
CONDITIONS TO SELLER'S OBLIGATIONS
The obligation of Seller to complete the transactions provided for in
this Agreement are conditioned upon fulfillment, at or before the Effective
Date, of each of the following conditions:
7.1 Representations and Warranties True
The representations and warranties made by the Purchaser in this
Agreement shall be true in all material respects at and as of the Effective Date
as though such representations and warranties were made at and as of such time,
except for any changes permitted by the terms hereof or consented to by Seller.
7.2 Corporate Authority and Validity
The execution and delivery of this Agreement, and the consummation of
the transactions contemplated hereunder shall have been duly authorized by the
Board of Directors of Purchaser and no further corporate authorization on the
part of the Purchaser shall
37
be necessary to consummate the transactions contemplated hereunder. This
Agreement shall be a valid and binding agreement of the Purchaser enforceable
against the Purchaser in accordance with its terms.
7.3 Obligations Performed
The Purchaser shall have performed and complied in all material
respects with all obligations and agreements required by this Agreement to be
performed or complied with by it within the timeframe specified herein or, where
no timeframe is specified, prior to or at the Effective Date.
7.4 No Adverse Litigation
Except as has been previously disclosed by Purchaser, on the Effective
Date, no action, suit or proceeding shall be pending or threatened against the
Purchaser which might materially and adversely affect this transaction.
7.5 Regulatory Approval
All filings and registrations with and notifications to all Federal and
state authorities required for consummation of the acquisition shall have been
made. All approvals and authorizations of all Federal and state authorities
required for consummation of the acquisition shall have been received and shall
be in full force and effect, provided said approvals do not impose upon
Purchaser any material adverse condition which would materially affect
Purchaser's ability to operate the Branch, and all applicable waiting periods
shall have passed.
ARTICLE VIII
TERMINATION
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8.1 Methods of Termination
This Agreement may be terminated in any of the following ways:
A. at any time on or before the Effective Date by the mutual
consent in writing of the Purchaser and the Seller;
B. on or before the Effective Date, by Seller in writing, if the
conditions set forth in Article VII of this Agreement shall not have been met by
the Purchaser or waived in writing by Seller;
C. on or before the Effective Date, by the Purchaser in writing,
if the conditions set forth in Article VI of this Agreement shall not have been
met by Seller or waived in writing by the Purchaser;
D. up to forty (40) days following the date of this Agreement, by
Purchaser in writing in the event Purchaser declines to consummate the
acquisition based on the results of Purchaser's investigation, without further
obligation on the part of Purchaser to Seller.
E. at any time on or prior to the Effective Date, by the
Purchaser or Seller in writing if the other shall have been in breach of any
representation and warranty in any material respect, or is in breach of any
covenant, undertaking or obligation contained herein and such breach has not
been cured by the earlier of thirty (30) days after the giving of notice to the
breaching party of such breach or the Effective Date;
F. by the Seller, in writing, if Purchaser has failed to file the
appropriate regulatory applications within 30 days of signing of this Agreement;
and
G. by the Seller in writing at any time after any of the
regulatory authorities has denied any application of Purchaser for approval of
the transaction contemplated herein.
H. by Purchaser in writing pursuant to Section 1.3 C of this
Agreement.
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I. by Purchaser or Seller in writing pursuant to Section 1.3 D of
this Agreement.
8.2 Procedure Upon Termination
In the event of termination pursuant to Section 8.1 hereof, written
notice thereof shall be given promptly to the other party, and this Agreement
shall terminate immediately upon receipt of such notice unless an extension is
consented to by the party having the right to terminate. If this Agreement is
terminated as provided herein:
A. each party will return all documents, work papers and other
materials of the other party relating to this Agreement, whether obtained before
or after the execution hereof, to the party furnishing the same; and
B. all information received by either party hereto with respect
to the business of the other party (other than information which is a matter of
public knowledge or which has heretofore been or hereafter becomes public
through no act or omission of the receiving party) shall be deemed confidential
and shall not at any time be used for any purpose by the receiving party or
disclosed by such party to third persons.
8.3 Automatic Termination
Either party hereto may, if not then in default of any of its
obligations hereunder, upon notice to the other party terminate this Agreement
if the purchase, sale and assumption contemplated hereby is not consummated on
or before April 30, 1999. Upon such termination, all rights and obligations of
the parties hereunder shall cease; provided, however, that any such election to
terminate shall not constitute a waiver of or prejudice any right to damages,
indemnification or other remedy to which the electing party may be entitled
under law or under this Agreement as a result of any breach of the other party's
obligations hereunder.
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ARTICLE IX
MISCELLANEOUS PROVISIONS
9.1 Amendment and Modification
The parties hereto, by mutual consent of their duly authorized officers
may amend, modify and supplement this Agreement in such manner as may be agreed
upon by them in writing.
9.2 Waiver or Extension
Except with respect to required approvals of the applicable
governmental authorities, any party, by written instrument signed by its
Chairman or President, may extend the time for the performance of any of the
obligations or other acts of the parties and may waive (i) any inaccuracies in
the representations or warranties in any documents delivered by the other
pursuant hereto or (ii) compliance with any of the undertakings, obligations,
covenants or the acts contained herein by the other.
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9.3 Assignment
This Agreement and all of the provisions hereof shall be binding upon,
and shall inure to the benefit of, the parties hereto and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned, prior to the
Effective Date, by any of the parties hereto without the prior written consent
of the other party, except that Purchaser may assign its right to purchase the
Real Estate to any nominee which is affiliated with it by common control. If
Purchaser does assign its right to purchase the Real Estate to a nominee
affiliated with it by common control, Purchaser agrees and/or represents and
warrants that (1) any such assignment shall expressly require the assignee to
assume all of the Purchaser's obligations under this Agreement and (2) Purchaser
will make full and complete disclosure to any such assignee of the Previously
Disclosed Environmental Issue.
9.4 Survival of Representations, Warranties, Indemnities and Covenants
The representations, warranties, indemnities of this Agreement (and any
covenants herein referencing to, or to be performed during, periods thereafter)
shall survive the Effective Date, except as expressly provided to the contrary
herein or unless the context otherwise requires.
9.5 Payment of Expenses
Except as otherwise specifically provided in this Agreement, each party
hereto shall bear and pay all costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder. Except as otherwise
provided herein, any expenses, fees, and costs necessary for any approvals of
the appropriate Federal and/or State regulatory authorities, or for any notice
to depositors of the assumption of Core Deposits provided for in this Agreement
shall be paid by the Purchaser.
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9.6 Addresses for Notice, etc.
All notices, requests, demands, consents, and other communication
provided for hereunder and under the related documents shall be in writing
(including telegraphic communication) and mailed (by registered or certified
mail) or telegraphed or delivered to the applicable party at the address
indicated below:
If to the Seller:
Keystone Financial Bank, National Association
One Keystone Plaza
North Front and Xxxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxx, President and COO
If to the Purchaser:
Downingtown National Bank
0 Xxxxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxxxx, XX 00000-0000
Attn: Xxxxx Xxxxxx, President and CEO
or, as to each party, at such other address as shall be designated by such party
in a written notice to the other party complying as to delivery with the terms
of this Section.
9.7 Press Releases, Public Disclosure
During the period from the execution of this Agreement to the Effective
Date, Purchaser and Seller will consult with one another before issuing any
press release or otherwise making any public statements or customer notification
with respect to this Agreement and the transactions contemplated hereby, and
neither Seller nor Purchaser shall issue any such press release or make any such
public statement prior to such consultation, except as may be required by law.
As soon as practicable after execution of
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this Agreement, Purchaser and Seller shall each separately meet with the
Employees prior to jointly issuing a press release for general circulation. In
the event that any notice to Branch customers may be required by law or by
deposit contract, the party required to give such notice shall give the notice
at that party's sole expense and provide the other party with a copy of the
notice.
9.8 Counterparts
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.9 Headings
The headings of the Sections and Articles of this Agreement are
inserted for convenience only and shall not constitute a part hereof.
9.10 Governing Law
The Agreement shall be governed by, and construed in accordance with,
the laws of the Commonwealth of Pennsylvania.
9.11 Entire Agreement
This Agreement contains the entire understanding between the parties
and supersedes any prior written or oral agreements between them respecting the
subject matter of this Agreement. There are no representations, agreements,
arrangements, or understandings oral or written between and among the parties
hereto relating to the subject matter of this Agreement which are not fully
expressed herein.
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IN WITNESS THEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers and their corporate seals to be
affixed as of the date first written above.
[SEAL] Seller:
Attest KEYSTONE FINANCIAL BANK, NATIONAL ASSOCIATION
/s/ Xxx X. Xxxxx /s/ Xxxx X. Xxxxxxx
Xxx X. Xxxxx Xxxx X. Xxxxxxx
Vice Chairman, Secretary, General Counsel President and Chief Operating Officer
Purchaser:
Attest DOWNINGTOWN NATIONAL BANK
/s/ Xxxxx X. Xxxxxxx /s/ Xxxxx Xxxxxx
Xxxxx X. Xxxxxxx Xxxxx Xxxxxx
Senior Vice President and President and Chief Executive Officer
Chief Financial Officer
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AGREEMENT TO AMEND THE PURCHASE AND ASSUMPTION AGREEMENT BETWEEN KEYSTONE
FINANCIAL BANK, NATIONAL ASSOCIATION AS SELLER AND DOWNINGTOWN NATIONAL BANK AS
PURCHASER, dated JANUARY 6, 1999
WHEREAS, Keystone Financial Bank, National Association ("Keystone") and
Downingtown National Bank ("Downingtown") have entered into an agreement, titled
"PURCHASE AND ASSUMPTION AGREEMENT BETWEEN KEYSTONE FINANCIAL BANK, NATIONAL
ASSOCIATION as Seller and DOWNINGTOWN NATIONAL BANK as Purchaser as of January
6, 1999" ("the Agreement"); and
WHEREAS, pursuant to section 9.1 of the Agreement, the parties by
mutual consent of their duly authorized officers may amend the Agreement in such
manner as may be agreed upon by them in writing; and
WHEREAS, pursuant to section 1.3(C) of the Agreement, Downingtown
received a "Due Diligence Period" of thirty (30) days from the date the
Agreement was signed to inspect, test, evaluate, and investigate each of the
Core Deposits and Assets and Seller's documents and records relating thereto,
and said Due Diligence Period expires on February 5, 1999; and
WHEREAS, Downingtown has asked Keystone to extend said Due Diligence
Period,
NOW THEREFORE, this 5th day of February, 1999, the Parties hereto,
intending to be legally bound, hereby AGREE that Section 1.3(C ) of the
Agreement be amended as follows:
1. The Due Diligence Period for Downingtown to inspect, test, evaluate,
and investigate each of the Core Deposits and Assets and Seller's documents and
records relating thereto, is hereby extended until the close of business on
Wednesday, February, 10, 1999. Except for the environmental assessments
discussed in Section 1.3(D) of the Agreement, if for any reason Purchaser is
dissatisfied with any of the Assets, or their condition or title thereto,
Purchaser may, within seven (7) days after the expiration of the Due Diligence
Period (i.e., by the close of business on February 17, 1999), elect to void the
entire sale contemplated by the Agreement, and neither party shall have any
further liability to the other arising out of the Agreement.
2. No other provision of this agreement is amended or modified by this
amendment, and no other date or deadline contained in the Agreement is modified
or changed except as expressly provided herein.
3. This agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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IN WITNESS THEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers and their corporate seals to be
affixed as of the date first written above.
[SEAL] Seller:
Attest Keystone Financial Bank, National Association
------------------- /s/ Xxxx X. Xxxxxxx
(Name) Xxxx X. Xxxxxxx
Title: --------------- President and Chief Operating Officer
[SEAL] Purchaser:
Attest Downingtown National Bank
/s/ Xxxxx X. Xxxxxxx /s/ Xxxxx Xxxxxx
Xxxxx X. Xxxxxxx Xxxxx Xxxxxx
Senior Vice President and President and Chief Executive Officer
Chief Financial Officer
2
