Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
between
KEYSTONE SAVINGS BANK
and
FIRST COLONIAL GROUP, INC.
dated as of March 5, 2003
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS.............................................................................. 1
ARTICLE II THE MERGER............................................................................... 6
2.1 The Merger............................................................................... 6
2.2 Effective Time; Closing.................................................................. 7
2.3 Treatment of Capital Stock............................................................... 7
2.4 Shareholder Rights; Stock Transfers...................................................... 8
2.5 Fractional Shares........................................................................ 8
2.6 Options.................................................................................. 8
2.7 Exchange Procedures...................................................................... 9
2.8 Additional Actions....................................................................... 10
ARTICLE III REPRESENTATIONS AND WARRANTIES
OF THE COMPANY.......................................................................... 11
3.1 Capital Structure........................................................................ 11
3.2 Organization, Standing and Authority of the Company...................................... 11
3.3 Ownership of the Company Subsidiaries.................................................... 11
3.4 Organization, Standing and Authority of
the Company Subsidiaries............................................................... 12
3.5 Authorized and Effective Agreement....................................................... 12
3.6 Securities Documents and Regulatory Reports.............................................. 13
3.7 Financial Statements..................................................................... 14
3.8 Material Adverse Change.................................................................. 14
3.9 Environmental Matters.................................................................... 14
3.10 Tax Matters.............................................................................. 15
3.11 Legal Proceedings........................................................................ 16
3.12 Compliance with Laws..................................................................... 16
3.13 Certain Information...................................................................... 16
3.14 Employee Benefit Plans................................................................... 17
3.15 Certain Contracts........................................................................ 18
3.16 Brokers and Finders...................................................................... 19
3.17 Insurance................................................................................ 19
3.18 Properties............................................................................... 19
3.19 Labor.................................................................................... 19
3.20 Affiliates............................................................................... 19
3.21 Allowance for Loan Losses................................................................ 20
3.22 Fairness Opinion......................................................................... 20
3.23 Disclosures.............................................................................. 20
ARTICLE IV REPRESENTATIONS AND WARRANTIES
OF KEYSTONE............................................................................ 20
4.1 Capital Structure........................................................................ 20
4.2 Organization, Standing and Authority of Keystone and the Holding
Company ............................................................................... 20
4.3 Ownership of the Keystone Subsidiaries................................................... 21
4.4 Organization, Standing and Authority
of the Keystone Subsidiaries........................................................... 21
4.5 Authorized and Effective Agreement....................................................... 21
4.6 Regulatory Reports....................................................................... 23
4.7 Financial Statements..................................................................... 23
4.8 Material Adverse Change.................................................................. 23
4.9 Environmental Matters.................................................................... 23
4.10 Tax Matters.............................................................................. 24
4.11 Legal Proceedings........................................................................ 25
4.12 Compliance with Laws..................................................................... 25
4.13 Certain Information...................................................................... 25
4.14 Employee Benefit Plans................................................................... 26
4.15 Certain Contracts........................................................................ 27
4.16 Brokers and Finders...................................................................... 28
4.17 Insurance................................................................................ 28
4.18 Properties............................................................................... 28
4.19 Labor.................................................................................... 28
4.20 Ownership of Company Common Stock........................................................ 28
4.21 Allowance for Losses on Loans............................................................ 29
4.22 Disclosures.............................................................................. 29
ARTICLE V COVENANTS................................................................................ 29
5.1 Reasonable Best Efforts.................................................................. 29
5.2 Shareholder and Depositor Meetings....................................................... 29
5.3 Regulatory Matters....................................................................... 30
5.4 Investigation and Confidentiality........................................................ 31
5.5 Press Releases........................................................................... 32
5.6 Business of the Parties.................................................................. 32
5.7 Certain Actions.......................................................................... 34
5.8 Current Information...................................................................... 36
5.9 Indemnification; Insurance............................................................... 36
5.10 Directors and Executive Officers......................................................... 38
5.11 Employees and Employee Benefit Plans..................................................... 38
5.12 Bank Merger.............................................................................. 40
5.13 Organization of the Holding Company...................................................... 41
5.14 Shareholder and Depositor Agreements..................................................... 41
5.15 Integration of Policies.................................................................. 41
5.16 Disclosure Supplements................................................................... 41
5.17 Failure to Fulfill Conditions............................................................ 42
5.18 Section 16 Matters....................................................................... 42
ARTICLE VI CONDITIONS PRECEDENT..................................................................... 42
6.1 Conditions Precedent - Keystone and the Company.......................................... 42
6.2 Conditions Precedent - The Company....................................................... 43
6.3 Conditions Precedent - Keystone.......................................................... 44
ARTICLE VII TERMINATION, WAIVER AND AMENDMENT........................................................ 45
7.1 Termination.............................................................................. 45
7.2 Effect of Termination.................................................................... 46
7.3 Survival of Representations, Warranties
and Covenants.......................................................................... 46
7.4 Waiver................................................................................... 47
7.5 Amendment or Supplement.................................................................. 47
ARTICLE VIII MISCELLANEOUS.................................................................................... 47
8.1 Expenses; Termination Fees............................................................... 47
8.2 Entire Agreement......................................................................... 48
8.3 No Assignment............................................................................ 49
8.4 Notices.................................................................................. 49
8.5 Alternative Structure.................................................................... 50
8.6 Interpretation........................................................................... 50
8.7 Counterparts............................................................................. 50
8.8 Governing Law............................................................................ 50
Appendix A Form of Shareholder Agreement
Appendix B Form of Depositor Agreement
Appendix C Articles of Incorporation of KNBT Bancorp, Inc.
Appendix D Bylaws of KNBT Bancorp, Inc.
Appendix E Form of Employment Agreement with Xxxxx X. Xxxxxx
Appendix F Form of Employment Agreement with Xxxxxx X. Xxxxx
Appendix G Form of Accession to Agreement
Appendix H Form of Affiliate's Letter
AGREEMENT AND PLAN OF MERGER
Agreement and Plan of Merger (the "Agreement"), dated as of March 5, 2003,
between Keystone Savings Bank ("Keystone"), a Pennsylvania-chartered mutual
savings bank, and First Colonial Group, Inc. (the "Company"), a Pennsylvania
corporation.
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Keystone and the Company have
determined to consummate the business combination transactions provided for
herein, subject to the terms and conditions set forth herein;
WHEREAS, the parties desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with the
transactions contemplated hereby;
WHEREAS, as an inducement to Keystone to enter into this Agreement and
simultaneously with the execution of this Agreement, each director of the
Company and the Bank is entering into an agreement (the "Shareholder
Agreement"), in the form of Appendix A hereto pursuant to which they have
agreed, among other things, to vote their shares of Company Common Stock in
favor of this Agreement; and
WHEREAS, as an inducement to the Company to enter into this Agreement and
simultaneously with the execution of this Agreement, each Trustee of Keystone is
entering into an agreement (the "Depositor Agreement"), in the form of Appendix
B hereto, pursuant to which they have agreed to vote, to the extent they are
depositors of Keystone eligible to vote on the Plan of Conversion, in favor of
the Plan of Conversion.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto do hereby agree as
follows:
ARTICLE I
DEFINITIONS
The following terms shall have the meanings ascribed to them for all
purposes of this Agreement.
"Acquisition Proposal" means any proposal or offer with respect to any of
the following (other than the transactions contemplated hereunder) involving the
Company or any of its Subsidiaries: (i) any merger, consolidation, share
exchange, business combination or other similar transaction; (ii) any sale,
lease, exchange, mortgage, pledge, transfer or other disposition of 20% or more
of its consolidated assets in a single transaction or series of transactions;
(iii) any
tender offer or exchange offer for 20% or more of the outstanding shares of its
capital stock or the filing of a registration statement under the Securities Act
in connection therewith; or (iv) any public announcement of a proposal, plan or
intention to do any of the foregoing or any agreement to engage in any of the
foregoing.
"Acquisition Transaction" means any of the following (other than the
transaction contemplated hereunder) involving the Company or any of its
Subsidiaries: (i) any merger, consolidation, share exchange, business
combination or other similar transaction; (ii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition of 20% or more of its
consolidated assets in a single transaction or series of transactions; or (iii)
any tender offer or exchange offer for 20% or more of the outstanding shares of
its capital stock or the filing of a registration statement under the Securities
Act in connection therewith.
"Application for Conversion" shall mean the application submitted by
Keystone to the FDIC and the Department pursuant to the regulations of the FDIC
and the Banking Law and the regulations, if any, promulgated thereunder in
connection with the Conversion, as amended and supplemented.
"Bank" shall mean Nazareth National Bank and Trust Company, a national bank
and a wholly owned subsidiary of the Company.
"Banking Law" shall mean the Pennsylvania Banking Code of 1965, as amended.
"Bank Merger" shall have the meaning set forth in Section 5.12 hereof.
"Bank Merger Agreement" shall have the meaning set forth in Section 5.12
hereof.
"BCL" shall mean the Business Corporation Law of the Commonwealth of
Pennsylvania, as amended.
"BIF" shall mean the Bank Insurance Fund administered by the FDIC or any
successor thereto.
"Certificate of Merger" shall have the meaning set forth in Section 2.2
hereof.
"Closing" shall have the meaning set forth in Section 2.2 hereof.
"Closing Date" shall have the meaning set forth in Section 2.2 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall mean the Securities and Exchange Commission.
"Company Affiliate" shall mean any person who is deemed, for purposes of
Rule 145 under the Securities Act, to be an "affiliate" of the Company.
"Company Common Stock" shall mean the common stock, par value $5.00 per
share, of the Company.
"Company Employee Plans" shall have the meaning set forth in Section
3.14(a) hereof.
"Company Financial Statements" shall mean (i) the consolidated statements
of financial condition (including related notes and schedules, if any) of the
Company as of December 31, 2001 and 2000 and the consolidated statements of
income, changes in shareholders' equity and cash flows (including related notes
and schedules, if any) of the Company for each of the three years ended December
31, 2001, 2000 and 1999 as filed by the Company in its Securities Documents, and
(ii) the consolidated statements of financial condition of the Company
(including related notes and schedules, if any) and the consolidated statements
of income, changes in shareholders' equity and cash flows (including related
notes and schedules, if any) of the Company included in the Securities Documents
filed by the Company with respect to the periods ended subsequent to December
31, 2001.
"Company Options" shall mean options to purchase shares of Company Common
Stock granted pursuant to the Company Option Plans.
"Company Option Plan" shall mean each of the following stock option plans
of the Company, as amended and as in effect as of the date hereof: the First
Colonial Group, Inc. Stock Option Plan, the 1994 Stock Option Plan for
Non-Employee Directors, the 1996 Stock Option Plan and the 2001 Stock Option
Plan (collectively, the "Company Option Plans").
"Company Preferred Stock" shall mean the shares of preferred stock, par
value $5.00 per share, of the Company.
"Conversion" shall mean (i) the amendment of Keystone's Articles of
Incorporation to authorize the issuance of capital stock and otherwise to
conform to the requirements of a stock savings bank chartered under the laws of
the Commonwealth of Pennsylvania, (ii) the issuance of Holding Company Common
Stock to eligible depositors of Keystone and others in connection therewith and
(iii) the purchase by the Holding Company of all of the capital stock of
Keystone to be sold by Keystone in connection with its conversion from mutual to
stock form.
"Department" means the Pennsylvania Department of Banking.
"DOJ" shall mean the United States Department of Justice.
"Effective Time" shall mean the date and time specified pursuant to Section
2.2 hereof as the effective time of the Merger.
"Environmental Claim" means any written notice from any Governmental Entity
or third party alleging potential liability (including, without limitation,
potential liability for investigatory costs, cleanup costs, governmental
response costs, natural resources damages, property damages, personal injuries
or penalties) arising out of, based on, or resulting from the presence, or
release into the environment, of any Materials of Environmental Concern.
"Environmental Laws" means any federal, state or local law, statute,
ordinance, rule, regulation, code, license, permit, authorization, approval,
consent, order, judgment, decree, injunction or agreement with any governmental
entity relating to (i) the protection, preservation or restoration of the
environment (including, without limitation, air, water vapor, surface water,
groundwater, drinking water supply, surface soil, subsurface soil, plant and
animal life or any other natural resource), and/or (ii) the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, production, release or disposal of Materials of Environment Concern.
The term Environmental Law includes without limitation (i) the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C.
ss.9601, et seq; the Resource Conservation and Recovery Act, as amended, 42
U.S.C. ss.6901, et seq; the Clean Air Act, as amended, 42 U.S.C. ss.7401, et
seq; the Federal Water Pollution Control Act, as amended, 33 U.S.C. ss.1251, et
seq; the Toxic Substances Control Act, as amended, 15 U.S.C. ss.9601, et seq;
the Emergency Planning and Community Right to Know Act, 42 U.S.C. ss.1101, et
seq; the Safe Drinking Water Act, 42 U.S.C. ss.300f, et seq; and all comparable
state and local laws, and (ii) any common law (including without limitation
common law that may impose strict liability) that may impose liability or
obligations for injuries or damages due to, or threatened as a result of, the
presence of or exposure to any Materials of Environmental Concern.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"ESOP" shall mean the Bank's Employee Stock Ownership Plan and Trust.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Exchange Ratio" shall have the meaning set forth in Section 2.3 hereof.
"FDIA" shall mean the Federal Deposit Insurance Act, as amended.
"FDIC" shall mean the Federal Deposit Insurance Corporation or any
successor thereto.
"FHLB" shall mean Federal Home Loan Bank.
"Final Purchase Price" shall mean the price per share at which Holding
Company Common Stock is ultimately sold by the Holding Company to eligible
depositors of Keystone and others in connection with the Conversion.
"FRB" shall mean the Board of Governors of the Federal Reserve System.
"Form S-1" shall mean the registration statement on Form S-1 (or on any
successor or other appropriate form) to be filed by the Holding Company in
connection with the issuance of shares of Holding Company Common Stock in
connection with the Merger and the Conversion, as amended and supplemented.
"Governmental Entity" shall mean any federal or state court, administrative
agency or commission or other governmental authority or instrumentality.
"Holding Company" shall mean KNBT Bancorp, Inc., a business corporation
which shall be organized by Keystone under the BCL for the purposes of becoming
the holding company of Keystone upon consummation of the Conversion and
acquiring the Company pursuant to the terms of this Agreement.
"Holding Company Common Stock" shall mean the common stock, par value $.01
per share, of the Holding Company.
"Holding Company Preferred Stock" shall mean the preferred stock, par value
$.01 per share, of the Holding Company.
"Keystone Employee Plans" shall have the meaning set forth in Section
4.14(a) hereof.
"Keystone Financial Statements" shall mean (i) the consolidated statements
of condition (including related notes and schedules, if any) of Keystone as of
December 31, 2001 and 2000 and the consolidated statements of income, retained
income and cash flows (including related notes and schedules, if any) of
Keystone for each of the three years ended December 31, 2001, 2000 and 1999, and
(ii) the consolidated statements of condition of Keystone (including related
notes and schedules, if any) and the consolidated statements of income, retained
income and cash flows (including related notes and schedules, if any) of
Keystone with respect to the periods ended subsequent to December 31, 2001.
"Material Adverse Effect" shall mean, (i) with respect to the Company, any
effect that is material and adverse to the financial condition, results of
operations or business of the Company and its Subsidiaries taken as whole, (ii)
with respect to Keystone, any effect that is material and adverse to the
financial condition, results of operations, or business of Keystone and its
Subsidiaries taken as a whole, or (iii) materially impairs the ability of either
the Company or the Bank, on the one hand, or the Holding Company or Keystone, on
the other hand, to consummate the Merger or any of the other transactions
contemplated by this Agreement, provided, however, that Material Adverse Effect
shall not be deemed to include the impact of (a) changes in laws and regulations
or interpretations thereof that are generally applicable to the banking or
savings industries, (b) changes in generally accepted accounting principles or
regulatory accounting
requirements that are generally applicable to the banking or savings industries,
(c) expenses incurred in connection with the transactions contemplated hereby,
(d) actions or omissions of a party (or any of its Subsidiaries) taken with the
prior written consent of the other party or parties in contemplation of the
transactions contemplated hereby or (e) changes attributable to or resulting
from changes in general economic conditions, including changes in the prevailing
level of interest rates.
"Materials of Environmental Concern" means pollutants, contaminants,
wastes, toxic substances, petroleum and petroleum products and any other
materials regulated under Environmental Laws.
"Merger" shall have the meaning set forth in Section 2.1(a) hereof.
"Merger Consideration" shall have the meaning set forth in Section 2.3(iii)
hereof.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"OCC" shall mean the Office of the Comptroller of the Currency of the U.S.
Department of the Treasury or any successor thereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Party" shall mean either Keystone or the Company, whichever is
applicable.
"Person" shall mean any individual, bank, corporation, partnership,
association, joint stock company, business trust, limited liability company or
unincorporated organization.
"Plan of Conversion" shall mean the written plan adopted by the Board of
Trustees of Keystone pursuant to which the Conversion will be effected.
"Previously Disclosed" shall mean disclosed (i) in a disclosure schedule
dated the date hereof delivered from the disclosing party to the other party
specifically referring to the appropriate section of this Agreement and
describing in reasonable detail the matters contained therein, or (ii) a
supplement to the disclosure schedule dated after the date hereof from the
disclosing party specifically referring to this Agreement and describing in
reasonable detail the matters contained therein and delivered by the other party
pursuant to Section 5.16 hereof.
"Prospectus" shall mean the prospectus to be delivered to (i) shareholders
of the Company in connection with the offering of Holding Company Common Stock
in connection with the Merger pursuant to this Agreement and (ii) eligible
depositors of Keystone and others in connection with the offering of Holding
Company Common Stock in connection with the Conversion, as amended and
supplemented.
"Proxy Statements" shall mean the proxy statements to be delivered to (i)
shareholders of the Company in connection with the solicitation of their
approval of this Agreement and the transactions contemplated hereby and (ii)
depositors of Keystone in connection with the solicitation of their approval of
the Conversion and the transactions contemplated thereby, as amended and
supplemented.
"Rights" shall mean warrants, options, rights, convertible securities and
other arrangements or commitments which obligate an entity to issue or dispose
of any of its capital stock or other ownership interests.
"SAIF" shall mean the Savings Association Insurance Fund administered
by the FDIC or any successor thereto.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securities Documents" shall mean all reports, offering circulars, proxy
statements, registration statements and all similar documents filed, or required
to be filed, pursuant to the Securities Laws.
"Securities Laws" shall mean the Securities Act; the Exchange Act; the
Investment Company Act of 1940, as amended; the Investment Advisers Act of 1940,
as amended; the Trust Indenture Act of 1939, as amended, and the rules and
regulations of the Commission promulgated thereunder.
"Subsidiary" and "Significant Subsidiary" shall have the meanings set forth
in Rule 1-02 of Regulation S-X of the Commission.
"Surviving Bank" shall have the meaning set forth in section 5.12 hereof.
Other terms used herein are defined in the preamble and elsewhere in this
Agreement.
ARTICLE II
THE MERGER
2.1 The Merger
----------
(a) Subject to the terms and conditions of this Agreement, at the Effective
Time (as defined in Section 2.2 hereof), the Company shall be merged with and
into the Holding Company (the "Merger") in accordance with the provisions of
Section 1921 et. seq. of the BCL. The Holding Company shall be the surviving
corporation (hereinafter sometimes called the "Surviving Corporation") of the
Merger, and shall continue its corporate existence under the laws of the
Commonwealth of Pennsylvania. The name of the Surviving Corporation shall be
"KNBT Bancorp, Inc." as stated in the Articles of Incorporation of the Holding
Company immediately prior to the Effective Time. Upon consummation of the
Merger, the separate corporate existence of the Company shall terminate.
(b) From and after the Effective Time, the Merger shall have the effects
set forth in Section 1929 of the BCL.
(c) The Articles of Incorporation and Bylaws of the Holding Company in the
forms attached hereto as Appendices C and D hereto, respectively, as in effect
as of the Effective Time, shall be the Articles of Incorporation and Bylaws of
the Surviving Corporation, respectively, until altered, amended or repealed in
accordance with their terms and applicable law.
(d) The authorized capital stock of the Surviving Corporation shall be as
stated in the Articles of Incorporation of the Holding Company immediately prior
to the Effective Time.
(e) The directors and officers of the Holding Company immediately prior to
the Effective Time, together with the directors and officers elected pursuant to
Section 5.10 hereof, shall be the directors and officers of the Surviving
Corporation, each to hold office in accordance with the Articles of
Incorporation and Bylaws of the Surviving Corporation as well as the provisions
hereof.
2.2 Effective Time; Closing
-----------------------
The Merger shall become effective upon the occurrence of the filing of
articles of merger with the Secretary of State of the Commonwealth of
Pennsylvania (the "Articles of Merger"), unless a later date and time is
specified as the effective time in such Articles of Merger (the "Effective
Time"). The Effective Time will occur simultaneously with, or immediately after,
the consummation of the Conversion. A closing (the "Closing") shall take place
immediately prior to the Effective Time at 10:00 a.m., Eastern Time, following
the satisfaction or waiver, to the extent permitted hereunder, of the conditions
to the consummation of the Merger specified in Article VI of this Agreement
(other than the delivery of certificates, opinions and other instruments and
documents to be delivered at the Closing) (the "Closing Date"), at such place
and at such time as the parties may mutually agree upon. At the Closing, there
shall be delivered to Keystone and the Holding Company, on the one hand, and the
Company, on the other hand, the opinions, certificates and other documents
required to be delivered under Article VI hereof.
2.3 Treatment of Capital Stock
--------------------------
Subject to the provisions of this Agreement, at the Effective Time,
automatically by virtue of the Merger and without any action on the part of any
shareholder:
(i) each share of Holding Company Common Stock issued and outstanding
immediately prior to the Effective Time (consisting of shares issued or to
be issued by the Holding Company in connection with the Conversion or
contributed to the charitable foundation to be established by Keystone in
connection with the Conversion) shall be unchanged and shall remain issued
and outstanding;
(ii) each share of Company Common Stock owned by the Company
(including treasury shares) or the Holding Company or any of their
respective Subsidiaries (other than shares held in a fiduciary capacity for
the benefit of third parties or as a result of debts previously contracted)
shall be cancelled and retired and shall not represent capital stock of the
Holding Company and shall not be exchanged for shares of Holding Company
Common Stock, or other consideration; and
(iii) each share of Company Common Stock which under the terms of
Section 2.7 hereof is to be converted into the right to receive shares of
Holding Company Common Stock shall, subject to Section 2.5 hereof, be
converted into and become the right to receive a number of shares of
Holding Company Common Stock equal to the quotient (calculated to the
nearest one-thousandth) determined by dividing $37.00 by the Final Purchase
Price (or 3.7 shares assuming an Final Purchase Price of $10.00 per share)
(the "Merger Consideration" or the "Exchange Ratio").
2.4 Shareholder Rights; Stock Transfers
-----------------------------------
At the Effective Time, holders of Company Common Stock shall cease to be
and shall have no rights as shareholders of the Company, other than to receive
the consideration provided under Sections 2.3 and 2.5 hereof. After the
Effective Time, there shall be no transfers on the stock transfers books of the
Company or the Surviving Corporation of shares of Company Common Stock and if
certificates evidencing such shares are presented for transfer after the
Effective Time, they shall be cancelled against delivery of certificates for
whole shares of Holding Company Common Stock (plus cash in lieu of any
fractional share interest) as herein provided.
2.5 Fractional Shares
-----------------
Notwithstanding any other provision hereof, no fractional shares of Holding
Company Common Stock shall be issued to holders of Company Common Stock. In lieu
thereof, each holder of shares of Company Common Stock entitled to a fraction of
a share of Holding Company Common Stock shall, at the time of surrender of the
certificate or certificates representing such holder's shares, receive an amount
of cash (without interest) equal to the amount determined by multiplying the
fractional share interest to which such holder would otherwise be entitled by
the Final Purchase Price. No such holder shall be entitled to dividends, voting
rights or any other rights in respect of fractional shares.
2.6 Options
-------
(a) At the Effective Time, each Company Option which is then outstanding,
whether or not exercisable, shall cease to represent a right to acquire shares
of Company Common Stock and shall be converted automatically into a right to
purchase shares of Holding Company Common Stock, and the Holding Company shall
assume each Company Option, in accordance with the terms of the applicable
Company Option Plan and stock option or other agreement by which it is
evidenced, except that from and after the Effective Time, (i) the Holding
Company and either its Board of Directors or a committee consisting solely of
two or more Non-Employee Directors, as defined in Rule 16b-3(b)(3) under the
Exchange Act, shall be substituted for the Company and the committee of the
Company's Board of Directors (including, if applicable, the entire Board of
Directors of the Company) administering such Company Option Plan, (ii) the
number of shares of Holding Company Common Stock subject to such Company Option
shall be equal to the number of shares of Company Common Stock subject to such
Company Option immediately prior to the Effective Time multiplied by the
Exchange Ratio, provided that any fractional shares of Holding Company Common
Stock resulting from such multiplication shall be rounded up or down, as the
case may be, to the nearest whole share, and (iii) the per share exercise price
under each such Company Option shall be adjusted by dividing the per share
exercise price under each such Company Option by the Exchange Ratio, provided
that such exercise price shall be rounded up to the nearest cent.
Notwithstanding clauses (ii) and (iii) of the preceding sentence, each Company
Option which is an "incentive stock option" shall be adjusted as required by
Section 424 of the Code, and the regulations promulgated thereunder, so as not
to constitute a modification, extension or renewal of the option within the
meaning of Section 424(h) of the Code. The Holding Company and the Company shall
take all necessary steps to effect the foregoing provisions of this Section
2.6(a).
(b) As soon as practicable after the Effective Time, the Holding Company
shall deliver to each participant in each Company Option Plan an appropriate
notice setting forth such participant's rights pursuant thereto and the grants
subject to such Company Option Plan shall continue in effect on the same terms
and conditions, including without limitation the duration thereof, subject to
the adjustments required by Section 2.6(a) hereof after giving effect to the
Merger. Within 30 days after the Effective Time, the Holding Company shall file
a registration statement on Form S-8 (or any successor or other appropriate
forms), with respect to the shares of Holding Company Common Stock subject to
such Company Options and shall maintain the current status of the prospectus or
prospectuses contained therein for so long as such options remain outstanding.
2.7 Exchange Procedures
-------------------
(a) The Holding Company shall designate an exchange agent, reasonably
acceptable to the Company, to act as agent (the "Exchange Agent") for purposes
of conducting the exchange procedure as described herein. No later than seven
business days following the Effective Time, the Holding Company shall cause the
Exchange Agent to mail or make available to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented issued and outstanding shares of Company Common Stock (i) a notice
and letter of transmittal (which shall specify that delivery shall be effected
and risk of loss and title to the certificates theretofore representing shares
of Company Common Stock shall pass only upon proper delivery of such
certificates to the Exchange Agent) advising such holder of the effectiveness of
the Merger and the procedure for surrendering to the Exchange Agent such
certificate or certificates which immediately prior to the Effective Time
represented issued and outstanding shares of Company Common Stock in exchange
for the consideration set forth in Section 2.3 hereof deliverable in respect
thereof pursuant to this Agreement.
(b) At the Effective Time, the Holding Company shall issue to the Exchange
Agent the number of shares of Holding Company Common Stock issuable in the
Merger, which shall be held by the Exchange Agent in trust for the holders of
Company Common Stock, as well as an amount of cash sufficient to fund any
amounts to be distributed pursuant to Section 2.5 hereof. The Exchange Agent
shall promptly distribute Holding Company Common Stock (and cash in lieu of
fractional shares pursuant to Section 2.5 hereof) as provided herein. The
Exchange Agent shall not be entitled to vote or exercise any rights of ownership
with respect to the shares of Holding Company Common Stock held by it from time
to time hereunder, except that it shall receive and hold all dividends or other
distributions paid or distributed with respect to such shares for the account of
the persons entitled thereto.
(c) Each holder of an outstanding certificate or certificates which prior
thereto represented shares of Company Common Stock who surrenders such
certificate or certificates to the Exchange Agent will, upon acceptance thereof
by the Exchange Agent, be entitled to a certificate or certificates representing
the number of full shares of Holding Company Common Stock into which the
aggregate number of shares of company Common Stock previously represented by
such certificate or certificates surrendered shall have been converted pursuant
to this Agreement and any other distribution theretofore paid with respect to
Holding Company Common Stock issuable in the Merger, in each case without
interest. The Exchange Agent shall accept such certificates upon compliance with
such reasonable terms and conditions as the Exchange Agent may impose to effect
an orderly exchange thereof in accordance with normal exchange practices. Each
outstanding certificate which prior to the Effective Time represented Company
Common Stock and which is not surrendered to the Exchange Agent in accordance
with the procedures provided for herein shall, except as otherwise herein
provided, until duly surrendered to the Exchange Agent be deemed to evidence
ownership of the number of shares of Holding Company Common Stock into which the
aggregate number of shares of Company Common Stock previously represented by
such certificate shall have been converted pursuant to
the terms of this Agreement. After the Effective Time, there shall be no further
transfer on the records of the Company of certificates representing shares of
Company Common Stock and if such certificates are presented to the Company for
transfer, they shall be cancelled against delivery of certificates for Holding
Company Common Stock and cash as hereinabove provided. No dividends which have
been declared will be remitted to any person entitled to receive shares of
Holding Company Common Stock under this Section 2.7 until such person surrenders
the certificate or certificates representing Company Common Stock, at which time
such dividends shall be remitted to such person, without interest.
(d) The Holding Company shall not be obligated to deliver a certificate or
certificates representing shares of Holding Company Common Stock to which a
holder of Company Common Stock would otherwise be entitled as a result of the
Merger until such holder surrenders the certificate or certificates representing
the shares of Company Common Stock for exchange as provided in this Section 2.7,
or, in default thereof, an appropriate affidavit of loss and indemnity agreement
and/or a bond as may be required in each case by the Holding Company. If any
certificates evidencing shares of Holding Company Common Stock are to be issued
in a name other than that in which the certificate evidencing Company Common
Stock surrendered in exchange therefor is registered, it shall be a condition of
the issuance thereof that the certificate so surrendered shall be properly
endorsed or accompanied by an executed form of assignment separate from the
certificate and otherwise in proper form for transfer and that the person
requesting such exchange pay to the Exchange Agent any transfer or other tax
required by reason of the issuance of a certificate for shares of Holding
Company Common Stock in any name other than that of the registered holder of the
certificate surrendered or otherwise establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable.
(e) Any portion of the shares of Holding Company Common Stock delivered to
the Exchange Agent by the Holding Company pursuant to Section 2.7(b) that
remains unclaimed by the shareholders of Company for six months after the
Effective Time shall be delivered by the Exchange Agent to the Holding Company.
Any shareholders of the Company who have not theretofore complied with Section
2.7(c) shall thereafter look only to the Holding Company for the consideration
deliverable in respect of each share of Company Common Stock such shareholder
holds as determined pursuant to this Agreement without any interest thereon. If
outstanding certificates for shares of Company Common Stock are not surrendered
or the payment for them is not claimed prior to the date on which such shares of
Holding Company Common Stock or cash would otherwise escheat to or become the
property of any governmental unit or agency, the unclaimed items shall, to the
extent permitted by abandoned property and any other applicable law, become the
property of the Holding Company (and to the extent not in its possession shall
be delivered to it), free and clear of all claims or interest of any person
previously entitled to such property. Neither the Exchange Agent nor any party
to this Agreement shall be liable to any holder of Company Common Stock
represented by any certificate for any consideration paid to a public official
pursuant to applicable abandoned property, escheat or similar laws. The Holding
Company and the Exchange Agent shall be entitled to rely upon the stock transfer
books of the Company to establish the identity of those
persons entitled to receive consideration specified in this Agreement, which
books shall be conclusive with respect thereto. In the event of a dispute with
respect to ownership of stock represented by any certificate, the Holding
Company and the Exchange Agent shall be entitled to deposit any consideration
represented thereby in escrow with an independent third party and thereafter be
relieved with respect to any claims thereto.
2.8 Additional Actions
------------------
If, at any time after the Effective Time, the Surviving Corporation shall
consider that any further assignments or assurances in law or any other acts are
necessary or desirable to (i) vest, perfect or confirm, of record or otherwise,
in the Surviving Corporation its right, title or interest in, to or under any of
the rights, properties or assets of the Company acquired or to be acquired by
the Surviving Corporation as a result of, or in connection with, the Merger, or
(ii) otherwise carry out the purposes of this Agreement, the Company and its
proper officers and directors shall be deemed to have granted to the Surviving
Corporation an irrevocable power of attorney to execute and deliver all such
proper deeds, assignments and assurances in law and to do all acts necessary or
proper to vest, perfect or confirm title to and possession of such rights,
properties or assets in the Surviving Corporation and otherwise to carry out the
purposes of this Agreement; and the proper officers and directors of the
Surviving Corporation are fully authorized in the name of the Company or
otherwise to take any and all such action.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Keystone as follows, except as
Previously Disclosed:
3.1 Capital Structure
-----------------
The authorized capital stock of the Company consists of 10,000,000 shares
of Company Common Stock and 500,000 shares of Company Preferred Stock. As of the
date hereof, 2,224,239 shares of Company Common Stock are issued and
outstanding, no shares of Company Common Stock are held in treasury, and no
shares of Company Preferred Stock are issued and outstanding. All outstanding
shares of Company Common Stock have been duly authorized and validly issued and
are fully paid and nonassessable, and none of the outstanding shares of Company
Common Stock has been issued in violation of the preemptive rights of any
person, firm or entity. Except for Company Options to acquire not more than
304,600 shares of Company Common Stock as of the date hereof and grants of
restricted shares of Company Common Stock covering 8,400 shares, a schedule of
each of which has been Previously Disclosed, there are no Rights authorized,
issued or outstanding with respect to the capital stock of the Company.
3.2 Organization, Standing and Authority of the Company
---------------------------------------------------
The Company is a corporation duly organized and, validly existing under the
laws of the Commonwealth of Pennsylvania with full corporate power and authority
to own or lease all of its properties and assets and to carry on its business as
now conducted and the Company is duly licensed or qualified to do business and
is in good standing in each jurisdiction in which its ownership or leasing of
property or the conduct of its business requires such licensing or
qualification, except where the failure to be so licensed, qualified or in good
standing would not have a Material Adverse Effect on the Company. The Company is
duly registered as a bank holding company under the Bank Holding Company Act of
1956, as amended, and the regulations of the FRB thereunder. The Company has
heretofore delivered to Keystone true and complete copies of the Articles of
Incorporation and Bylaws of the Company as in effect as of the date hereof.
3.3 Ownership of the Company Subsidiaries
-------------------------------------
The Company has Previously Disclosed the name, jurisdiction of
incorporation and percentage ownership of each direct or indirect Company
Subsidiary and identified the Bank as its only Significant Subsidiary. Except
for (x) capital stock of the Company Subsidiaries, (y) securities and other
interests held in a fiduciary capacity and beneficially owned by third parties
or taken in consideration of debts previously contracted and (z) securities and
other interests which are Previously Disclosed, the Company does not own or have
the right to acquire, directly or indirectly, any outstanding capital stock or
other voting securities or ownership interests of any corporation, bank, savings
association, savings bank, partnership, joint venture or other organization,
other than investment securities representing not more than 5% of any entity.
The outstanding shares of capital stock or other ownership interests of each
Company Subsidiary have been duly authorized and validly issued, are fully paid
and nonassessable, and are directly or indirectly owned by the Company free and
clear of all liens, claims, encumbrances, charges, pledges, restrictions or
rights of third parties of any kind whatsoever. No rights are authorized, issued
or outstanding with respect to the capital stock or other ownership interests of
the Company Subsidiaries and there are no agreements, understandings or
commitments relating to the right of the Company to vote or to dispose of such
capital stock or other ownership interests.
3.4 Organization, Standing and Authority of the Company Subsidiaries
----------------------------------------------------------------
Each of the Company Subsidiaries is a corporation or partnership duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized. Each of the Company Subsidiaries (i) has
full power and authority to own or lease all of its properties and assets and to
carry on its business as now conducted, and (ii) is duly licensed or qualified
to do business and is in good standing in each jurisdiction in which its
ownership or leasing of property or the conduct of its business requires such
qualification, except where the failure to be so licensed, qualified or in good
standing would not have a Material Adverse Effect on the Company. The deposit
accounts of the Bank are insured by the BIF to the maximum extent permitted by
the FDIA and the Bank has paid all deposit insurance premiums and assessments
required by the FDIA and the regulations thereunder. The Company has heretofore
delivered or made available to Keystone true and complete copies of the Articles
of Association and Bylaws of the Bank as in effect as of the date hereof.
3.5 Authorized and Effective Agreement
----------------------------------
(a) The Company has all requisite corporate power and authority to enter
into this Agreement and (subject to receipt of all necessary governmental
approvals and the approval of the Company's shareholders of this Agreement) to
perform all of its obligations under this Agreement. The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action in
respect thereof on the part of the Company, except for the approval of this
Agreement by the Company's shareholders. This Agreement has been duly and
validly executed and delivered by the Company and, assuming due authorization,
execution and delivery by Keystone, constitutes a legal, valid and binding
obligation of the Company which is enforceable against the Company in accordance
with its terms, subject, as to enforceability, to bankruptcy, insolvency and
other laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
(b) Neither the execution and delivery of this Agreement, nor consummation
of the transactions contemplated hereby (including the Merger and the Bank
Merger), nor compliance by the Company with any of the provisions hereof (i)
does or will conflict with or result in a breach of any provisions of the
Articles of Incorporation or Bylaws of the Company or the equivalent documents
of any Company Subsidiary, (ii) violate, conflict with or result in a breach of
any term, condition or provision of, or constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default) under, or
give rise to any right of termination, cancellation or acceleration with respect
to, or result in the creation of any lien, charge or encumbrance upon any
property or asset of the Company or a Company Subsidiary pursuant to, any
material note, bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which the Company or a Company
Subsidiary is a party, or by which any of their respective properties or assets
may be bound or affected, or (iii) subject to receipt of
all required governmental and shareholder approvals, violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Company or a
Company Subsidiary.
(c) To the best knowledge of the Company, except for (i) the filing of
applications with and the approvals of the FDIC, FRB and the Department, (ii)
the filing and effectiveness of the Form S-1 and the Proxy Statement relating to
the meeting of shareholders of the Company to be held pursuant to Section 5.2
hereof with the Commission, (iii) the approval of this Agreement by the
requisite vote of the shareholders of the Company, (iv) the filing of the
Articles of Merger with the Secretary of Commonwealth of Pennsylvania pursuant
to the BCL in connection with the Merger and, (v) the filing of Articles of
Merger with the Department and a notice with the OCC in connection with the Bank
Merger, (vi) review of the Merger by the DOJ under federal antitrust laws, no
consents or approvals of or filings or registrations with any Governmental
Entity or with any third party are necessary on the part of the Company or the
Bank in connection with (x) the execution and delivery by the Company of this
Agreement and the consummation by the Company of the transactions contemplated
hereby and (y) the execution and delivery by the Bank of the Bank Merger
Agreement and the consummation of the transactions contemplated thereby.
(d) As of the date hereof, neither the Company nor the Bank is aware of any
reasons relating to the Company or the Bank (including without limitation
Community Reinvestment Act compliance) why all consents and approvals shall not
be procured from all regulatory agencies having jurisdiction over the
transactions contemplated by this Agreement and the Bank Merger Agreement as
shall be necessary for (i) consummation of the transactions contemplated by this
Agreement and the Bank Merger Agreement and (ii) the continuation by the Holding
Company and Keystone after the Effective Time of the business of the Company and
the Bank, respectively, as such business is carried on immediately prior to the
Effective Time, free of any conditions or requirements which in the reasonable
opinion of the Company could have a Material Adverse Effect on the Company or
the Bank or materially impair the value of the Company and the Bank to the
Holding Company and Keystone, respectively.
3.6 Securities Documents and Regulatory Reports
-------------------------------------------
(a) Since January 1, 2000, the Company has timely filed with the Commission
and the NASD all Securities Documents required by the Securities Laws and such
Securities Documents complied in all material respects with the Securities Laws
and did not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(b) Since January 1, 2000, each of the Company and the Bank has duly filed
with the OCC and any other applicable federal or state banking authority, as the
case may be, the reports required to be filed under applicable laws and
regulations and such reports were in all material respects complete and accurate
and in compliance with the requirements of applicable laws and
regulations. In connection with the most recent examinations of the Company and
the Bank by the OCC, neither the Company nor the Bank was required to correct or
change any action, procedure or proceeding which the Company or the Bank
believes has not been corrected or changed as required as of the date hereof and
which could have a Material Adverse Effect on the Company.
3.7 Financial Statements
--------------------
(a) The Company has previously delivered or made available to Keystone
accurate and complete copies of the Company Financial Statements which, in the
case of the consolidated statements of financial condition of the Company as of
December 31, 2001 and 2000 and the consolidated statements of income, changes in
shareholders' equity and cash flows for each of the three years ended December
31, 2001, 2000 and 1999, are accompanied by the audit reports of Xxxxx Xxxxxxxx
LLP, independent certified public accountants with respect to the Company. The
Company Financial Statements referred to herein, as well as the Company
Financial Statements to be delivered pursuant to Section 5.8 hereof, fairly
present or will fairly present, as the case may be, the consolidated financial
condition of the Company as of the respective dates set forth therein, and the
consolidated income, changes in stockholders' equity and cash flows of the
Company for the respective periods or as of the respective dates set forth
therein.
(b) Each of the Company Financial Statements referred to in Section 3.7(a)
has been or will be, as the case may be, prepared in accordance with generally
accepted accounting principles consistently applied during the periods involved,
except as stated therein. The audits of the Company and the Company Subsidiaries
have been conducted in all material respects in accordance with generally
accepted auditing standards. The books and records of the Company and the
Company Subsidiaries are being maintained in material compliance with applicable
legal and accounting requirements, and such books and records accurately reflect
in all material respects all dealings and transactions in respect of the
business, assets, liabilities and affairs of the Company and its Subsidiaries.
(c) Except as Previously Disclosed or to the extent (i) reflected,
disclosed or provided for in the consolidated statement of financial condition
of the Company as of December 31, 2001 (including related notes), (ii) of
liabilities incurred since December 31, 2001 in the ordinary course of business
and (iii) of liabilities incurred in connection with consummation of the
transactions contemplated by this Agreement, neither the Company nor any Company
Subsidiary has any liabilities, whether absolute, accrued, contingent or
otherwise, material to the financial condition, results of operations or
business of the Company on a consolidated basis.
3.8 Material Adverse Change
-----------------------
Since September 30, 2002, (i) the Company and its Subsidiaries have
conducted their respective businesses in the ordinary and usual course
(excluding the incurrence of expenses in connection with this Agreement and the
transactions contemplated hereby) and (ii) no event has occurred or circumstance
arisen that, individually or in the aggregate, has had or is reasonably likely
to have a Material Adverse Effect on the Company.
3.9 Environmental Matters
---------------------
(a) To the best of the Company's knowledge, the Company and its
Subsidiaries are in compliance with all Environmental Laws, except for any
violations of any Environmental Law which would not, singly or in the aggregate,
have a Material Adverse Effect on the Company. Neither the Company nor a Company
Subsidiary has received any communication alleging that the Company or a Company
Subsidiary is not in such compliance and, to the best knowledge of the Company,
there are no present circumstances that would prevent or interfere with the
continuation of such compliance.
(b) To the best of the Company's knowledge, none of the properties owned,
leased or operated by the Company or a Company Subsidiary has been or is in
violation of or liable under any Environmental Law, except any such violations
or liabilities which would not singly or in the aggregate have a Material
Adverse Effect on the Company.
(c) To the best of the Company's knowledge, there are no past or present
actions, activities, circumstances, conditions, events or incidents that could
reasonably form the basis of any Environmental Claim or other claim or action or
governmental investigation that could result in the imposition of any liability
arising under any Environmental Law against the Company or a Company Subsidiary
or against any person or entity whose liability for any Environmental Claim the
Company or a Company Subsidiary has or may have retained or assumed either
contractually or by operation of law, except such which would not have a
Material Adverse Effect on the Company.
(d) The Company has not conducted any environmental studies during the past
five years with respect to any properties owned by it or a Company Subsidiary as
of the date hereof.
3.10 Tax Matters
-----------
(a) The Company and its Subsidiaries have timely filed all federal, state
and local (and, if applicable, foreign) income, franchise, bank, excise, real
property, personal property and other tax returns required by applicable law to
be filed by them (including, without limitation, estimated tax returns, income
tax returns, information returns and withholding and employment tax returns) and
have paid, or where payment is not required to have been made, have set up an
adequate reserve or accrual for the payment of, all taxes required to be paid in
respect of the periods covered by such returns and, as of the Effective Time,
will have paid, or where payment is not required to have been made, will have
set up an adequate reserve or accrual for the payment of, all material taxes for
any subsequent periods ending on or prior to the Effective Time. Neither the
Company nor a Company Subsidiary will have any material liability for any such
taxes in excess of the amounts so paid or reserves or accruals so established.
(b) All federal, state and local (and, if applicable, foreign) income,
franchise, bank, excise, real property, personal property and other tax returns
filed by the Company and its Subsidiaries are complete and accurate in all
material respects. Neither the Company nor any Company Subsidiary is delinquent
in the payment of any tax, assessment or governmental charge or has requested
any extension of time within which to file any tax returns in respect of any
fiscal year or portion thereof which have not since been filed. The federal,
state and local income tax returns of the Company and its Subsidiaries have been
examined by the applicable tax authorities (or are closed to examination due to
the expiration of the applicable statute of limitations) and no deficiencies for
any tax, assessment or governmental charge have been proposed, asserted or
assessed (tentatively or otherwise) against the Company or a Company Subsidiary
as a result of such examinations or otherwise which have not been settled and
paid. There are currently no agreements in effect with respect to the Company or
a Company Subsidiary to extend the period of limitations for the assessment or
collection of any tax. As of the date hereof, no audit, examination or
deficiency or refund litigation with respect to such return is pending or, to
the best of the Company's knowledge, threatened.
(c) Neither the Company nor any Company Subsidiary (i) is a party to any
agreement providing for the allocation or sharing of taxes, (ii) is required to
include in income any adjustment pursuant to Section 481(a) of the Code by
reason of a voluntary change in accounting method initiated by the Company or a
Company Subsidiary (nor does the Company have any knowledge that the Internal
Revenue Service has proposed any such adjustment or change of accounting method)
or (iii) has filed a consent pursuant to Section 341(f) of the Code or agreed to
have Section 341(f)(2) of the Code apply.
3.11 Legal Proceedings
-----------------
There are no actions, suits, claims, governmental investigations or
proceedings instituted, pending or, to the best knowledge of the Company,
threatened against the Company or a Company Subsidiary or against any asset,
interest or right of the Company or a Company Subsidiary, or against any
officer, director or employee of any of them that in any such case, if decided
adversely, would have a Material Adverse Effect on the Company. Neither the
Company nor any Company Subsidiary is a party to any order, judgment or decree
which has or could reasonably be expected to have a Material Adverse Effect on
the Company.
3.12 Compliance with Laws
--------------------
(a) Each of the Company and the Company Subsidiaries has all permits,
licenses, certificates of authority, orders and approvals of, and has made all
filings, applications and registrations with, federal, state, local and foreign
governmental or regulatory bodies that are required in order to permit it to
carry on its business as it is presently being conducted and the absence of
which could reasonably be expected to have a Material Adverse Effect on the
Company; all such permits, licenses, certificates of authority, orders and
approvals are in full force and effect; and to the best knowledge of the
Company, no suspension or cancellation of any of the same is threatened.
(b) Neither the Company nor any Company Subsidiary is in violation of its
respective Articles of Incorporation, Articles of Association or Bylaws, or of
any applicable federal, state or local law or ordinance or any order, rule or
regulation of any federal, state, local or other governmental agency or body
(including, without limitation, all banking (including all regulatory capital
requirements), securities, municipal securities, safety, health, environmental,
zoning, anti-discrimination, antitrust, and wage and hour laws, ordinances,
orders, rules and regulations), or in default with respect to any order, writ,
injunction or decree of any court, or in default under any order, license,
regulation or demand of any governmental agency, any of which violations or
defaults could reasonably be expected to have a Material Adverse Effect on the
Company; and neither the Company nor any Company Subsidiary has received any
notice or communication from any federal, state or local governmental authority
asserting that the Company or any Company Subsidiary is in violation of any of
the foregoing which could reasonably be expected to have a Material Adverse
Effect on the Company. Neither the Company nor a Company Subsidiary is subject
to any regulatory or supervisory cease and desist order, agreement, written
directive, memorandum of understanding or written commitment (other than those
of general applicability to national banks or holding companies thereof issued
by governmental authorities), and neither of them has received any written
communication requesting that it enter into any of the foregoing.
3.13 Certain Information
-------------------
None of the information relating to the Company and its Subsidiaries
supplied or to be supplied by them for inclusion in (i) the Form S-1, including
the Prospectus, at the time the Form S-1 and any amendment thereto becomes
effective under the Securities Act, will contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, (ii) the Application for Conversion, at the time the Application for
Conversion and any amendment thereto is not objected to by the FDIC under the
regulations thereof and approved by the Department under the Banking Law and the
regulations, if any, promulgated thereunder, will contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and (iii) the Proxy Statements, as of the date or dates such
Proxy Statements are mailed to shareholders of the Company and depositors of
Keystone and up to and including the date or dates of the meetings of
shareholders and depositors to which such Proxy Statements relate, will contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, provided that information as of a later
date shall be deemed to modify information as of an earlier date.
3.14 Employee Benefit Plans
----------------------
(a) The Company has Previously Disclosed all stock option, restricted
stock, employee stock purchase and stock bonus plans, qualified pension or
profit-sharing plans, any deferred compensation, consultant, bonus or group
insurance contract or any other incentive, health and welfare or employee
benefit plan or agreement maintained for the benefit of employees or former
employees of the Company or any Company Subsidiary (the "Company Employee
Plans"), whether written or oral, and the Company has previously furnished or
made available to Keystone accurate and complete copies of the same together
with, in the case of qualified plans, (i) the most recent actuarial and
financial reports prepared with respect thereto, (ii) the most recent annual
reports filed with any governmental agency with respect thereto, and (iii) all
rulings and determination letters and any open requests for rulings or letters
that pertain thereto.
(b) None of the Company, any Company Subsidiary, any Company Employee Plan
constituting an "employee pension benefit plan" within the meaning of Section
3(2) of ERISA ("Company Pension Plan") or, to the best of the Company's
knowledge, any fiduciary of such Company Pension Plan, has incurred any material
liability to the PBGC or the Internal Revenue Service with respect to any such
Company Pension Plan. To the best of the Company's knowledge, no reportable
event under Section 4043(b) of ERISA has occurred with respect to any Company
Pension Plan.
(c) Except as Previously Disclosed, neither the Company nor any Company
Subsidiary participates in or has incurred any liability under Section 4201 of
ERISA for a complete or partial withdrawal from a multiemployer plan (as such
term is defined in ERISA).
(d) A favorable determination letter has been issued by the Internal
Revenue Service with respect to each Company Pension Plan which is intended to
qualify under Section 401 of the Code to the effect that such Company Pension
Plan is qualified under Section 401 of the Code, and the trust associated with
such Company Pension Plan is tax exempt under Section 501 of the Code. No such
letter has been revoked or, to the best of the Company's knowledge, is
threatened to be revoked, and the Company does not know of any ground on which
such revocation may be based. Neither the Company nor any Company Subsidiary has
any liability under any such Company Pension Plan that is not reflected on the
consolidated statement of financial condition of the Company at December 31,
2001 or the notes thereto included in the Company Financial Statements, other
than liabilities incurred in the ordinary course of business in connection
therewith subsequent to the date thereof.
(e) To the best of the Company's knowledge, no prohibited transaction
(which shall mean any transaction prohibited by Section 406 of ERISA and not
exempt under Section 408 of ERISA or Section 4975 of the Code) has occurred with
respect to any Company Employee Plan which would result in the imposition,
directly or indirectly, of a material excise tax under Section 4975 of the Code
or otherwise have a Material Adverse Effect on the Company.
(f) Full payment has been made (or proper accruals have been established)
of all contributions which are required for periods prior to the date hereof,
and full payment will be so made (or proper accruals will be so established) of
all contributions which are required for periods after the date hereof and prior
to the Effective Time, under the terms of each Company Employee Plan or ERISA;
no accumulated funding deficiency (as defined in Section 302 of ERISA or Section
412 of the Code), whether or not waived, exists with respect to any Company
Pension Plan, and there is no "unfunded current liability" (as defined in
Section 412 of the Code) with respect to any Company Pension Plan.
(g) To the best of the Company's knowledge, the Company Employee Plans have
been operated in compliance in all material respects with the applicable
provisions of ERISA, the Code, all regulations, rulings and announcements
promulgated or issued thereunder and all other applicable governmental laws and
regulations.
(h) There are no pending or, to the best knowledge of the Company,
threatened claims (other than routine claims for benefits) by, on behalf of or
against any of the Company Employee Plans or any trust related thereto or any
fiduciary thereof.
3.15 Certain Contracts
-----------------
(a) Neither the Company nor a Company Subsidiary is a party to, is bound or
affected by, receives, or is obligated to pay, benefits under (i) any agreement,
arrangement or commitment, including without limitation any agreement, indenture
or other instrument, relating to the borrowing of money by the Company or a
Company Subsidiary (other than in the case of the Bank deposits, FHLB advances,
federal funds purchased and securities sold under agreements to repurchase in
the ordinary course of business) or the guarantee by the Company or a Company
Subsidiary of any obligation, other than by the Bank in the ordinary course of
its banking business, (ii) any agreement, arrangement or commitment relating to
the employment of a consultant or the employment, election or retention in
office of any present or former director, officer or employee of the Company or
a Company Subsidiary, (iii) any agreement, arrangement or understanding pursuant
to which any payment (whether of severance pay or otherwise) became or may
become due to any director, officer or employee of the Company or a Company
Subsidiary upon execution of this Agreement or upon or following consummation of
the transactions contemplated by this Agreement (either alone or in connection
with the occurrence of any additional acts or events); (iv) any agreement,
arrangement or understanding pursuant to which the Company or a Company
Subsidiary is obligated to indemnify any director, officer, employee or agent of
the Company or a Company Subsidiary; (v) any agreement, arrangement or
understanding to which the Company or a Company Subsidiary is a party or by
which any of the same is bound which limits the freedom of the Company or a
Company Subsidiary to compete in any line of business or with any person, (vi)
any assistance agreement, supervisory agreement, memorandum of understanding,
consent order, cease and desist order or condition of any regulatory order or
decree with or by the Department, the FDIC, the FRB, the OCC or any other
regulatory agency, or (vii) any other agreement, arrangement or understanding
which would be required to be filed as an exhibit to the Company's Annual Report
on Form 10-K under the Exchange Act and which has not been so filed.
(b) Neither the Company nor any Company Subsidiary is in default or in
non-compliance, which default or non-compliance could reasonably be expected to
have a Material Adverse Effect on the Company, under any contract, agreement,
commitment, arrangement, lease, insurance policy or other instrument to which it
is a party or by which its assets, business or operations may be bound or
affected, whether entered into in the ordinary course of business or otherwise
and whether written or oral, and there has not occurred any event that with the
lapse of time or the giving of notice, or both, would constitute such a default
or non-compliance.
3.16 Brokers and Finders
-------------------
Except for The Xxxxxxxx Group, Inc., neither the Company nor any Company
Subsidiary nor any of their respective directors, officers or employees, has
employed any broker or finder or incurred any liability for any broker or finder
fees or commissions in connection with the transactions contemplated hereby.
3.17 Insurance
---------
Each of the Company and its Subsidiaries is insured for reasonable amounts
with financially sound and reputable insurance companies against such risks as
companies engaged in a similar business would, in accordance with good business
practice, customarily be insured and has maintained all insurance required by
applicable laws and regulations.
3.18 Properties
----------
All real and personal property owned by the Company or its Subsidiaries or
presently used by any of them in its respective business is in an adequate
condition (ordinary wear and tear excepted) and is sufficient to carry on the
business of the Company and its Subsidiaries in the ordinary course of business
consistent with their past practices. The Company has good and marketable title
free and clear of all liens, encumbrances, charges, defaults or equities (other
than equities of redemption under applicable foreclosure laws) to all of its
material properties and assets, real and personal, except (i) liens for current
taxes not yet due or payable (ii) pledges to secure deposits and other liens
incurred in the ordinary course of its banking business, (iii) such
imperfections of title, easements and encumbrances, if any, as are not material
in character, amount or extent and (iv) as reflected on the consolidated
statement of condition of the Company as of September 30, 2002 included in the
Company Financial Statements. All real and personal property which is material
to the Company's business on a consolidated basis and leased or licensed by the
Company or a Company Subsidiary is held pursuant to leases or licenses which are
valid and enforceable in accordance with their respective terms and such leases
will not terminate or lapse prior to the Effective Time.
3.19 Labor
-----
No work stoppage involving the Company or a Company Subsidiary is pending
or, to the best knowledge of the Company, threatened. Neither the Company nor a
Company Subsidiary is involved in or affected by, or, to the best knowledge of
the Company, threatened with any labor dispute, arbitration, lawsuit or
administrative proceeding involving the employees of the Company or a Company
Subsidiary which could have a Material Adverse Effect on the Company. Employees
of the Company and the Company Subsidiaries are not represented by any labor
union nor are any collective bargaining agreements otherwise in effect with
respect to such employees, and to the best of the Company's knowledge, there
have been no efforts to unionize or organize any employees of the Company or any
of the Company Subsidiaries during the past five years.
3.20 Affiliates
----------
The Company has Previously Disclosed to Keystone a schedule of each person
that, to the best of its knowledge, is deemed to be a Company Affiliate.
3.21 Allowance for Loan Losses
-------------------------
The allowance for possible loan losses reflected on the Company's
consolidated statements of financial condition included in the September 30,
2002 Company Financial Statements is, or will be in the case of subsequently
delivered Company Financial Statements, as the case may be, in the opinion of
the Company's management, adequate in all material respects as of their
respective dates under the requirements of generally accepted accounting
principles to provide for reasonably anticipated losses on outstanding loans net
of recoveries. The other real estate owned reflected on the consolidated
statements of financial condition included in the September 30, 2002 Company
Financial Statements is, or will be in the case of subsequently delivered
Company Financial Statements, as the case may be, carried at the lower of cost
or fair value, less estimated costs to sell, as required by generally accepted
accounting principles.
3.22 Fairness Opinion
----------------
The Company has received the opinion from The Xxxxxxxx Group, Inc. to the
effect that, as of the date hereof, the consideration to be received by
shareholders of the Company pursuant to this Agreement is fair, from a financial
point of view, to such shareholders.
3.23 Disclosures
-----------
None of the representations and warranties of the Company or any of the
written information or documents furnished or to be furnished by the Company to
Keystone in connection with or pursuant to this Agreement or the consummation of
the transactions contemplated hereby, when considered as a whole, contains or
will contain any untrue statement of a material fact, or omits or will omit to
state any material fact required to be stated or necessary to make any such
information or document, in light of the circumstances, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF KEYSTONE
Keystone represents and warrants to the Company as follows, except as
Previously Disclosed:
4.1 Capital Structure
-----------------
As of the date hereof, Keystone is a Pennsylvania-chartered savings bank in
mutual form and, as a result, has no authorized or outstanding capital stock.
Upon consummation of the Conversion, Keystone will be a duly organized
Pennsylvania-chartered savings bank in stock form and will have authorized
capital stock as set forth in its Articles of Incorporation.
4.2 Organization, Standing and Authority of Keystone and the Holding Company
------------------------------------------------------------------------
(a) Keystone is a savings bank duly organized, validly existing and in good
standing under the laws of the Commonwealth of Pennsylvania, with full corporate
power and authority to own or lease all of its properties and assets and to
carry on its business as now conducted, and Keystone is duly licensed or
qualified to do business and is in good standing in each jurisdiction in which
its ownership or leasing of property or the conduct of its business requires
such licensing or qualification, except where the failure to be so licensed,
qualified or in good standing would not have a Material Adverse Effect on
Keystone. The deposit accounts of Keystone are insured by the SAIF to the
maximum extent permitted by the FDIA, and Keystone has paid all deposit
insurance premiums and assessments required by the FDIA and the regulations
thereunder. Keystone has heretofore delivered to the Company true and complete
copies of the Articles of Incorporation and Bylaws of Keystone as in effect as
of the date hereof.
(b) At the Effective Time, the Holding Company will be duly organized, and
validly existing under the BCL.
4.3 Ownership of the Keystone Subsidiaries
--------------------------------------
Keystone has Previously Disclosed the name, jurisdiction of incorporation
and percentage ownership of each direct or indirect Keystone Subsidiary. Except
for (x) capital stock of the Keystone Subsidiaries, (y) securities and other
interests held in a fiduciary capacity and beneficially owned by third parties
or taken in consideration of debts previously contracted and (z) securities and
other interests which are Previously Disclosed, Keystone does not own or have
the right to acquire, directly or indirectly, any outstanding capital stock or
other voting securities or ownership interests of any corporation, bank, savings
association, savings bank, partnership, joint venture or other organization,
other than investment securities representing not more than 5% of any entity.
The outstanding shares of capital stock or other ownership interests of each
Keystone Subsidiary have been duly authorized and validly issued, are fully paid
and nonassessable, and are directly owned by Keystone free and clear of all
liens, claims, encumbrances, charges, pledges, restrictions or rights of third
parties of any kind whatsoever.
4.4 Organization, Standing and Authority of the Keystone Subsidiaries
-----------------------------------------------------------------
Each of the Keystone Subsidiaries is a corporation or partnership duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized. Each of the Keystone Subsidiaries (i) has
full power and authority to own or lease all of its properties and assets and to
carry on its business as now conducted, and (ii) is duly licensed or qualified
to do business and is in good standing in each jurisdiction in which its
ownership or leasing of property or the conduct of its business requires such
qualification, except where the failure to be so licensed, qualified or in good
standing would not have a Material Adverse Effect on Keystone.
4.5 Authorized and Effective Agreement
----------------------------------
(a) Keystone has, and following its organization the Holding Company will
have, all requisite corporate power and authority to enter into this Agreement
and (subject to receipt of all necessary governmental approvals and the approval
of the Conversion by the depositors of Keystone) to perform all of its
respective obligations under this Agreement. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action in respect thereof
on the part of Keystone, except for the approval of the Conversion by the
depositors of Keystone, and promptly following organization of the Holding
Company and its execution and delivery of an instrument of accession pursuant to
Section 5.13 of this Agreement, the execution and delivery of this Agreement by
the Holding Company and the consummation of the transactions contemplated hereby
will have been duly and validly authorized by all necessary corporate action in
respect thereof on the part of the Holding Company. This Agreement has been duly
and validly executed and delivered by Keystone and upon its execution and
delivery of an instrument of accession pursuant to Section 5.13 of this
Agreement, this Agreement will have been duly and validly executed and delivered
by the Holding Company and, assuming due authorization, execution and delivery
by the Company, this Agreement constitutes or will constitute, as applicable, a
legal, valid and binding obligation of Keystone and the Holding Company which is
enforceable against Keystone and the Holding Company in accordance with its
terms, subject, as to enforceability, to bankruptcy, insolvency and other laws
of general applicability relating to or affecting creditors' rights and to
general equity principles.
(b) Neither the execution and delivery of this Agreement, nor consummation
of the transactions contemplated hereby (including the Merger and the Bank
Merger) nor compliance by Keystone or upon its organization the Holding Company
with any of the provisions hereof (i) does or will conflict with or result in a
breach of any provisions of the Articles of Incorporation, Bylaws or similar
organizational documents of Keystone, any Keystone Subsidiary or upon its
organization the Holding Company, except that Keystone will not be authorized to
issue capital stock until consummation of the Conversion, (ii) violate, conflict
with or result in a breach of any term, condition or provision of, or constitute
a default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or give rise to any right of termination,
cancellation or acceleration with respect to, or result in the creation of any
lien, charge or encumbrance upon any property or asset of Keystone, any Keystone
Subsidiary or upon its organization the Holding Company pursuant to, any
material note, bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which Keystone, any Keystone
Subsidiary or upon its organization the Holding Company is a party, or by which
any of their respective properties or assets may be bound or affected, or (iii)
subject to receipt of all required governmental and depositor approvals, violate
any order, writ, injunction, decree, statute, rule or regulation applicable to
Keystone, any Keystone Subsidiary or upon its organization the Holding Company.
(c) To the best knowledge of Keystone, except for (i) the filing of
applications and notices with and the approvals of the Department, the FDIC and
the FRB, (ii) the filing and effectiveness of the Form S-1 with the Commission,
(iii) compliance with applicable state securities or "blue sky" laws and the
NASD Bylaws in connection with the issuance of Holding Company Common Stock in
connection with the Merger and the Conversion, (iv) the approval of the
Conversion by the requisite vote of the depositors of Keystone, (v) the filing
of the Articles of Merger with the Secretary of State of the Commonwealth of
Pennsylvania pursuant to the BCL in connection with the Merger, (vi) review of
the Merger by the DOJ under federal antitrust laws and (vii) the filing of
Articles of Merger with the Department and notice with the OCC in connection
with the Bank Merger, no consents or approvals of or filings or registrations
with any Governmental Entity or with any third party are necessary on the part
of Keystone or the Holding Company in connection with the (x) execution and
delivery by Keystone of this Agreement, the execution and delivery by the
Holding Company of an instrument of accession to this Agreement pursuant to
Section 5.13 hereof and the consummation by Keystone and the Holding Company of
the transactions contemplated hereby and (y) the execution and delivery by
Keystone of the Bank Merger Agreement and the consummation by Keystone of the
transactions contemplated thereby.
(d) As of the date hereof, Keystone is not aware of any reasons relating to
Keystone (including without limitation Community Reinvestment Act compliance)
why all consents and approvals shall not be procured from all regulatory
agencies having jurisdiction over the transactions contemplated by this
Agreement and the Bank Merger Agreement as shall be necessary for (i)
consummation of the transactions contemplated by this Agreement and the Bank
Merger Agreement and (ii) the continuation by the Holding Company and Keystone
after the Effective Time of the business of each of the Company and the Bank as
such business is carried on immediately prior to the Effective Time, free of any
conditions or requirements which in the reasonable opinion of Keystone could
have a Material Adverse Effect on the Holding Company or Keystone or materially
impair the value of the Company and the Bank to the Holding Company and
Keystone, respectively.
4.6 Regulatory Reports
------------------
Since January 1, 2000, Keystone has duly filed with the FDIC and the
Department the reports required to be filed under applicable laws and
regulations and such reports were in all material respects complete and accurate
and in compliance with the requirements of applicable laws and regulations. In
connection with the most recent examinations of Keystone by the FDIC and the
Department, Keystone was not required to correct or change any action, procedure
or proceeding which Keystone believes has not been corrected or changed as
required as of the date hereof and which could have a Material Adverse Effect on
Keystone.
4.7 Financial Statements
--------------------
(a) Keystone has previously delivered or made available to the Company
accurate and complete copies of the Keystone Financial Statements, which are
accompanied by the audit reports of Xxxxx Xxxxxxxx LLP, independent certified
public accountants with respect to Keystone. The Keystone Financial Statements,
as well as the Keystone Financial Statements to be delivered pursuant to Section
5.8 hereof, fairly present or will fairly present, as the case may be, the
consolidated financial condition of Keystone as of the respective dates set
forth therein, and the consolidated income, changes in retained income and cash
flows of Keystone for the respective periods or as of the respective dates set
forth therein.
(b) Each of the Keystone Financial Statements and the Keystone Financial
Statements to be delivered pursuant to Section 5.8 hereof has been or will be,
as the case may be, prepared in accordance with generally accepted accounting
principles consistently applied during the periods involved, except as stated
therein. The audits of Keystone and the Keystone Subsidiaries have been
conducted in all material respects in accordance with generally accepted
auditing standards. The books and records of Keystone and the Keystone
Subsidiaries are being maintained in material compliance with applicable legal
and accounting requirements, and all such books and records accurately reflect
in all material respects all dealings and transactions in respect of the
business, assets, liabilities and affairs of Keystone and the Keystone
Subsidiaries.
(c) Except as Previously Disclosed or to the extent (i) reflected,
disclosed or provided for in the consolidated statement of condition of Keystone
as of December 31, 2001 (including related notes), (ii) of liabilities incurred
since December 31, 2001 in the ordinary course of business and (iii) of
liabilities in connection with consummation of the transactions contemplated by
this Agreement, neither Keystone nor any Keystone Subsidiary has any
liabilities, whether absolute, accrued, contingent or otherwise, material to the
financial condition, results of operations or business of Keystone on a
consolidated basis.
4.8 Material Adverse Change
-----------------------
Since September 30, 2002, (i) Keystone and its Subsidiaries have conducted
their respective businesses in the ordinary and usual course (excluding the
incurrence of expenses in connection with the Conversion and with this Agreement
and the transactions contemplated hereby) and (ii) no event has occurred or
circumstance arisen that, individually or in the aggregate, has had or is
reasonably likely to have a Material Adverse Effect on Keystone.
4.9 Environmental Matters
---------------------
(a) To the best of Keystone's knowledge, Keystone and its Subsidiaries are
in compliance with all Environmental Laws, except for any violations of any
Environmental Law which would not, singly or in the aggregate, have a Material
Adverse Effect on Keystone. Neither Keystone nor any of its Subsidiaries have
received any communication alleging that Keystone or any of is Subsidiaries is
not in such compliance and, to the best knowledge of Keystone, there are no
present circumstances that would prevent or interfere with the continuation of
such compliance.
(b) To the best of Keystone's knowledge, none of the properties owned,
leased or operated by Keystone or any of its Subsidiaries has been or is in
violation of or liable under any Environmental Law, except any such violations
or liabilities which would not singly or in the aggregate have a Material
Adverse Effect on Keystone.
(c) To the best of Keystone's knowledge, there are no past or present
actions, activities, circumstances, conditions, events or incidents that could
reasonably form the basis of any Environmental Claim or other claim or action or
governmental investigation that could result in the imposition of any liability
arising under any Environmental Law against Keystone or any of its Subsidiaries
or against any person or entity whose liability for any Environmental Claim
Keystone and its Keystone Subsidiaries has or may have retained or assumed
either contractually or by operation of law, except such which would not have a
Material Adverse Effect on Keystone.
(d) Keystone has not conducted any environmental studies during the past
five years with respect to any properties owned by it or a Keystone Subsidiary
as of the date hereof.
4.10 Tax Matters
-----------
(a) Keystone and its Subsidiaries have timely filed all federal, state and
local (and, if applicable, foreign) income, franchise, bank, excise, real
property, personal property and other tax returns required by applicable law to
be filed by them (including, without limitation, estimated tax returns, income
tax returns, information returns and withholding and employment tax returns) and
have paid, or where payment is not required to have been made, have set up an
adequate reserve or accrual for the payment of, all taxes required to be paid in
respect of the periods covered by such returns and, as of the Effective Time,
will have paid, or where payment is not required to have been made, will have
set up an adequate reserve or accrual for the payment of, all material taxes for
any subsequent periods ending on or prior to the Effective Time. Neither
Keystone nor any of its Subsidiaries will have any material liability for any
such taxes in excess of the amounts so paid or reserves or accruals so
established.
(b) All federal, state and local (and, if applicable, foreign) income,
franchise, bank, excise, real property, personal property and other tax returns
filed by Keystone and its Subsidiaries are complete and accurate in all material
respects. Neither Keystone nor any of its Subsidiaries is delinquent in the
payment of any tax, assessment or governmental charge or has
requested any extension of time within which to file any tax returns in respect
of any fiscal year or portion thereof which have not since been filed. The
federal, state and local income tax returns of Keystone and its Subsidiaries
have been examined by the applicable tax authorities (or are closed to
examination due to the expiration of the applicable statute of limitations) and
no deficiencies for any tax, assessment or governmental charge have been
proposed, asserted or assessed (tentatively or otherwise) against Keystone or
any of its Subsidiaries as a result of such examinations or otherwise which have
not been settled and paid. There are currently no agreements in effect with
respect to Keystone or any of its Subsidiaries to extend the period of
limitations for the assessment or collection of any tax. As of the date hereof,
no audit, examination or deficiency or refund litigation with respect to such
return is pending or, to the best of Keystone's knowledge, threatened.
(c) Neither Keystone nor any of its Subsidiaries (i) is a party to any
agreement providing for the allocation or sharing of taxes, (ii) is required to
include in income any adjustment pursuant to Section 481(a) of the Code by
reason of a voluntary change in accounting method initiated by Keystone or any
of its Subsidiaries (nor does Keystone have any knowledge that the Internal
Revenue Service has proposed any such adjustment or change of accounting method)
or (iii) has filed a consent pursuant to Section 341(f) of the Code or agreed to
have Section 341(f)(2) of the Code apply.
4.11 Legal Proceedings
-----------------
There are no actions, suits, claims, governmental investigations or
proceedings instituted, pending or to the best knowledge of Keystone threatened
against Keystone or any of its Subsidiaries or against any asset, interest or
right of Keystone or any of its Subsidiaries, or against any officer, director
or employee of them that in any such case, if decided adversely, would have a
Material Adverse Effect on Keystone. Neither Keystone nor any Keystone
Subsidiary is a party to any order, judgment or decree which has or could
reasonably be expected to have a Material Adverse Effect on Keystone.
4.12 Compliance with Laws
--------------------
(a) Keystone and each of its Subsidiaries have all permits, licenses,
certificates of authority, orders and approvals of, and has made all filings,
applications and registrations with, federal, state, local and foreign
governmental or regulatory bodies that are required in order to permit them to
carry on their business as it is presently being conducted and the absence of
which could reasonably be expected to have a Material Adverse Effect on
Keystone; all such permits, licenses, certificates of authority, orders and
approvals are in full force and effect; and to the best knowledge of Keystone,
no suspension or cancellation of any of the same is threatened.
(b) Neither Keystone nor any of its Subsidiaries is in violation of its
Articles of Incorporation or Bylaws, or of any applicable federal, state or
local law or ordinance or any order, rule or regulation of any federal, state,
local or other governmental agency or body
(including, without limitation, all banking (including all regulatory capital
requirements), securities, municipal securities, safety, health, environmental,
zoning, anti-discrimination, antitrust, and wage and hour laws, ordinances,
orders, rules and regulations), or in default with respect to any order, writ,
injunction or decree of any court, or in default under any order, license,
regulation or demand of any governmental agency, any of which violations or
defaults could reasonably be expected to have a Material Adverse Effect on
Keystone; and neither Keystone nor any of its Subsidiaries has received any
notice or communication from any federal, state or local governmental authority
asserting that Keystone or any of its Subsidiaries is in violation of any of the
foregoing which could reasonably be expected to have a Material Adverse Effect
on Keystone. Neither Keystone nor any of its Subsidiaries is subject to any
regulatory or supervisory cease and desist order, agreement, written directive,
memorandum of understanding or written commitment (other than those of general
applicability to all savings banks, savings associations or holding companies
thereof, as applicable, issued by governmental authorities), and neither
Keystone nor any of its Subsidiaries have received any written communication
requesting that it enter into any of the foregoing.
4.13 Certain Information
-------------------
None of the information relating to Keystone or the Holding Company
supplied by them and to be included in (i) the Form S-1, including the
Prospectus, will, at the time the Form S-1 and any amendment thereto becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, (ii)
the Application for Conversion, at the time the Application for Conversion and
any amendment thereto is not objected to by the FDIC under the regulations
thereof and approved by the Department under the Banking Law and the
regulations, if any, promulgated thereunder, will contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and (iii) the Proxy Statements, as of the date or dates such
Proxy Statements are mailed to shareholders of the Company and depositors of
Keystone and up to and including the date or dates of the meetings of
shareholders and depositors to which such Proxy Statements relate, will contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, provided that information as of a later
date shall be deemed to modify information as of an earlier date.
4.14 Employee Benefit Plans
----------------------
(a) Keystone has Previously Disclosed all qualified pension or
profit-sharing plans, any deferred compensation, consultant, bonus or group
insurance contract or any other incentive, health and welfare or employee
benefit plan or agreement maintained for the benefit of employees or former
employees of Keystone or any of its Subsidiaries(the "Keystone Employee Plans"),
whether written or oral.
(b) None of Keystone, any of its Subsidiaries, any Keystone Employee Plan
constituting an "employee pension benefit plan" within the meaning of Section
3(2) of ERISA ("Keystone Pension Plan") or to the best of Keystone's knowledge,
any fiduciary of a Keystone Pension Plan has incurred any material liability to
the PBGC or the Internal Revenue Service with respect to any such Keystone
Pension Plan. To the best of Keystone's knowledge, no reportable event under
Section 4043(b) of ERISA has occurred with respect to any Keystone Pension Plan.
(c) Except as Previously Disclosed, neither Keystone nor any of its
Subsidiaries participate in and have not incurred any liability under Section
4201 of ERISA for a complete or partial withdrawal from a multi-employer plan
(as such term is defined in ERISA).
(d) A favorable determination letter has been issued by the Internal
Revenue Service with respect to each Keystone Pension Plan which is intended to
qualify under Section 401 of the Code to the effect that the Keystone Pension
Plan is qualified under Section 401 of the Code and the trust associated with
such Keystone Pension Plan is tax exempt under Section 501 of the Code. No such
letter has been revoked or, to the best of Keystone's knowledge, is threatened
to be revoked and Keystone does not know of any ground on which such revocation
may be based. Neither Keystone nor any of its Subsidiaries have any liability
under any such Keystone Pension Plan that is not reflected on the statement of
condition of Keystone at December 31, 2001 or the notes thereto included in the
Keystone Financial Statements, other than liabilities incurred in the ordinary
course of business in connection therewith subsequent to the date thereof.
(e) To the best of Keystone's knowledge, no prohibited transaction (which
shall mean any transaction prohibited by Section 406 of ERISA and not exempt
under Section 408 of ERISA or Section 4975 of the Code) has occurred with
respect to any Employee Plan which would result in the imposition, directly or
indirectly, of a material excise tax under Section 4975 of the Code or otherwise
have a Material Adverse Effect on Keystone.
(f) Except as Previously Disclosed, full payment has been made (or proper
accruals have been established) of all contributions which are required for
periods prior to the date hereof, and full payment will be so made (or proper
accruals will be so established) of all contributions which are required for
periods after the date hereof and prior to the Effective Time, under the terms
of each Keystone Employee Plan or ERISA; no accumulated funding deficiency (as
defined in Section 302 of ERISA or Section 412 of the Code), whether or not
waived, exists with respect to any Keystone Pension Plan, and there is no
"unfunded current liability" (as defined in Section 412 of the Code) with
respect to any Keystone Pension Plan. Keystone has not incurred and does not
expect to incur any withdrawal liability with respect to a multiemployer plan
under Subtitle of Title IV of ERISA.
(g) To the best of Keystone's knowledge, the Keystone Employee Plans have
been operated in compliance in all material respects with the applicable
provisions of ERISA, the
Code, all regulations, rulings and announcements promulgated or issued
thereunder and all other applicable governmental laws and regulations.
(h) There are no pending or, to the best knowledge of Keystone, threatened
claims (other than routine claims for benefits) by, on behalf of or against any
of the Keystone Employee Plans or any trust related thereto or any fiduciary
thereof.
4.15 Certain Contracts
-----------------
(a) Neither Keystone nor a Keystone Subsidiary is a party to, is bound or
affected by, receives, or is obligated to pay, benefits under (i) any agreement,
arrangement or commitment, including without limitation any agreement, indenture
or other instrument, relating to the borrowing of money by Keystone or a
Keystone Subsidiary (other than in the case of Keystone deposits, FHLB advances,
federal funds purchased and securities sold under agreements to repurchase in
the ordinary course of business) or the guarantee by Keystone or a Keystone
Subsidiary of any obligation, other than by Keystone in the ordinary course of
its banking business, (ii) any agreement, arrangement or commitment relating to
the employment of a consultant or the employment, election or retention in
office of any present or former director, officer or employee of Keystone or a
Keystone Subsidiary, (iii) any agreement, arrangement or understanding pursuant
to which any payment (whether of severance pay or otherwise) became or may
become due to any director, officer or employee of Keystone or a Keystone
Subsidiary upon execution of this Agreement or upon or following consummation of
the transactions contemplated by this Agreement (either alone or in connection
with the occurrence of any additional acts or events); (iv) any agreement,
arrangement or understanding pursuant to which Keystone or a Keystone Subsidiary
is obligated to indemnify any director, officer, employee or agent of Keystone
or a Keystone Subsidiary; (v) any agreement, arrangement or understanding to
which Keystone or a Keystone Subsidiary is a party or by which any of the same
is bound which limits the freedom of Keystone or a Keystone Subsidiary to
compete in any line of business or with any person, (vi) any assistance
agreement, supervisory agreement, memorandum of understanding, consent order,
cease and desist order or condition of any regulatory order or decree with or by
the Department, the FDIC or any other regulatory agency, or (vii) any other
agreement, arrangement or understanding which would be required to be filed as
an exhibit to the Annual Report on Form 10-K under the Exchange Act (assuming
Keystone was required to file such reports under the Exchange Act).
(b) Neither Keystone nor any of its Subsidiaries is in default or in
non-compliance, which default or non-compliance could reasonably be expected to
have a Material Adverse Effect on Keystone, under any contract, agreement,
commitment, arrangement, lease, insurance policy or other instrument to which it
is a party or by which its assets, business or operations may be bound or
affected, whether entered into in the ordinary course of business or otherwise
and whether written or oral, and there has not occurred any event that with the
lapse of time or the giving of notice, or both, would constitute such a default
or non-compliance.
4.16 Brokers and Finders
-------------------
Except Sandler X'Xxxxx & Partners, L.P., none of Keystone, any of its
Subsidiaries, the Holding Company, nor any of their respective directors,
officers or employees, has employed any broker or finder or incurred any
liability for any broker or finder fees or commissions in connection with the
transactions contemplated hereby.
4.17 Insurance
---------
Keystone and each of its Subsidiaries is insured for reasonable amounts
with financially sound and reputable insurance companies against such risks as
companies engaged in a similar business would, in accordance with good business
practice, customarily be insured and has maintained all insurance required by
applicable laws and regulations.
4.18 Properties
----------
All real and personal property owned by Keystone or any of its Subsidiaries
or presently used by them in their business is in an adequate condition
(ordinary wear and tear excepted) and is sufficient to carry on their respective
business in the ordinary course of business consistent with its past practices.
Keystone has good and marketable title free and clear of all liens,
encumbrances, charges, defaults or equities (other than equities of redemption
under applicable foreclosure laws) to all of its material properties and assets,
real and personal, except (i) liens for current taxes not yet due or payable
(ii) pledges to secure deposits and other liens incurred in the ordinary course
of its banking business, (iii) such imperfections of title, easements and
encumbrances, if any, as are not material in character, amount or extent and
(iv) as reflected on the statement of condition of Keystone as of September 30,
2002 included in the Keystone Financial Statements. All real and personal
property which is material to Keystone's business on a consolidated basis and
leased or licensed by Keystone or any of its Subsidiaries is held pursuant to
leases or licenses which are valid and enforceable in accordance with their
respective terms and such leases will not terminate or lapse prior to the
Effective Time.
4.19 Labor
-----
No work stoppage involving Keystone or any of its Subsidiaries is pending
or, to the best knowledge of Keystone, threatened. Neither Keystone nor any of
its Subsidiaries is involved in or to the best knowledge of Keystone threatened
with or affected by, any labor dispute, arbitration, lawsuit or administrative
proceeding involving the employees of Keystone or any of its Subsidiaries which
could have a Material Adverse Effect on Keystone. Employees of Keystone and its
Subsidiaries are not represented by any labor union nor are any collective
bargaining agreements otherwise in effect with respect to such employees, and to
the best of Keystone's knowledge, there have been no efforts to unionize or
organize any employees of Keystone or any of its Subsidiaries during the past
five years.
4.20 Ownership of Company Common Stock
---------------------------------
As of the date hereof, neither Keystone nor, to its best knowledge, any of
its affiliates or associates (as such terms are defined under the Exchange Act),
(i) beneficially own, directly or indirectly, or (ii) are parties to any
agreement, arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of, in each case, shares of Company Common Stock which in
the aggregate represent 5% or more of the outstanding shares of Company Common
Stock (other than shares held in a fiduciary capacity and beneficially owned by
third parties or shares taken in consideration of debts previously contracted).
4.21 Allowance for Losses on Loans
-----------------------------
The allowance for losses on loans reflected on Keystone's consolidated
statements of condition included in the September 30, 2002 Keystone Financial
Statements is, or will be in the case of subsequently delivered Keystone
Financial Statements, as the case may be, in the opinion of Keystone's
management adequate in all material respects as of their respective dates under
the requirements of generally accepted accounting principles to provide for
reasonably anticipated losses on outstanding loans, net of recoveries. The other
real estate owned reflected on the consolidated statements of condition included
in the September 30, 2002 Keystone Financial Statements is, or will be in the
case of subsequently delivered Keystone Financial Statements, as the case may
be, carried at the lower of cost or fair value, less estimated costs to sell, as
required by generally accepted accounting principles.
4.22 Disclosures
-----------
None of the representations and warranties of Keystone or any of the
written information or documents furnished or to be furnished by Keystone to the
Company in connection with or pursuant to this Agreement or the consummation of
the transactions contemplated hereby, when considered as a whole, contains or
will contain any untrue statement of a material fact, or omits or will omit to
state any material fact required to be stated or necessary to make any such
information or document, in light of the circumstances, not misleading.
ARTICLE V
COVENANTS
5.1 Reasonable Best Efforts
-----------------------
Subject to the terms and conditions of this Agreement, each of the Company
and Keystone (i) shall use its reasonable best efforts in good faith to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
necessary or advisable under applicable laws and regulations so as to permit and
otherwise enable consummation of the Conversion and the Merger as promptly as
reasonably practicable, it being the intention of the parties that the
Conversion be consummated prior to the Effective Time and that the Bank Merger
be consummated immediately following the Effective Time in accordance with
Section 5.12 hereof, and (ii) shall cooperate fully with each other to that end.
5.2 Shareholder and Depositor Meetings
----------------------------------
(a) The Company agrees to take, in accordance with applicable law and the
Company's Articles and Incorporation and Bylaws, all action necessary to convene
as soon as reasonably practicable an annual or a special meeting of its
shareholders to consider and vote upon the approval of this Agreement and any
other matters required to be approved by the Company's shareholders for
consummation of the transactions contemplated hereby (including any adjournment
or postponement, the "Company Meeting"). Except with the prior approval of
Keystone, no other matters shall be submitted for the approval of the Company
shareholders at the Company Meeting except, if the Company Meeting is an annual
meeting, the election of directors. The Company Board shall at all times prior
to and during such meeting recommend such approval and shall take all reasonable
lawful action to solicit such approval by its shareholders; provided that
nothing in this Agreement shall prevent the Company Board from withholding,
withdrawing, amending or modifying its recommendation if the Company Board
determines, after consultation with its outside counsel, that such action is
legally required in order for the directors to comply with their fiduciary
duties to the Company shareholders under applicable law; provided, further, that
Section 5.7 shall govern the withholding, withdrawing, amending or modifying of
such recommendation in the circumstances described therein.
(b) Keystone shall take all action necessary to properly call and convene a
meeting of its depositors as soon as practicable to consider and vote upon the
Conversion and the transactions contemplated thereby after receipt of all
necessary approvals or non-objections of Governmental Entities. The Board of
Directors of Keystone will recommend that the depositors of Keystone approve the
Conversion and the transactions contemplated thereby.
5.3 Regulatory Matters
------------------
(a) The parties hereto shall promptly cooperate with each other in the
preparation and filing of the Form S-1, the Prospectus and the Proxy Statements
relating to the meetings of shareholders of the Company and the depositors of
Keystone to be held pursuant to Section 5.2 of this Agreement (the "Company
Proxy Statement" and the "Keystone Proxy Statement," respectively) under the
Securities Act and the Exchange Act, as applicable. Each of the Holding Company,
Keystone and the Company shall use its reasonable best efforts to have the Form
S-1 declared effective under the Securities Act, the Company Proxy Statement
approved for mailing in definitive form under the Exchange Act and the Keystone
Proxy Statement approved or not objected to under the Banking Law and the
regulations of the FDIC as promptly as practicable after such filings and the
receipt of non-objection or approval, as the case may be, of the Application for
Conversion by the FDIC and the Department, and thereafter the Company shall
promptly mail to its shareholders the Company Proxy Statement and Prospectus and
Keystone shall promptly mail, or in the case of the Prospectus make available,
to its depositors the Keystone Proxy Statement and the Prospectus. The Holding
Company also shall use its reasonable best efforts to obtain all necessary state
securities law or "blue sky" permits and approvals required to carry out the
issuance of Holding Company Common Stock in connection with the Merger and the
Conversion. The Company shall furnish all information concerning the Company and
the holders of the Company Common Stock as may be reasonably requested in
connection with any of the foregoing actions. In the event that the Company has
issued any securities, through its employee benefits plans or otherwise, in any
offering which should have been registered or qualified under Federal or state
securities laws which were not so registered or qualified, the Company shall
promptly take such action as the parties hereto mutually agree in order to
eliminate, reduce or mitigate, to the extent possible, any contingent or other
liability which the Company may have as a result of such offering.
(b) The parties hereto shall cooperate with each other and use their
reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, and
to obtain as promptly as practicable all permits, consents, approvals and
authorizations of all Governmental Entities and third parties which are
necessary or advisable to consummate the transactions contemplated by this
Agreement (including without limitation the Conversion, the Merger and the Bank
Merger). Keystone and the Company shall have the right to review in advance, and
to the extent practicable each will consult with the other on, in each case
subject to applicable laws relating to the exchange of information, all the
information which appears in any filing made with or written materials submitted
to any third party or any Governmental Entity in connection with the
transactions contemplated by this Agreement. In exercising the foregoing right,
each of the parties hereto shall act reasonably and as promptly as practicable.
The parties hereto agree that they will consult with each other with respect to
the obtaining of all permits, consents, approvals and authorizations of all
third parties and Governmental Entities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the other
apprised of the status of matters relating to completion of the transactions
contemplated herein.
(c) Keystone and the Company shall, upon request, furnish each other with
all information concerning themselves, their respective Subsidiaries, directors
and officers and shareholders of the Company and such other matters as may be
reasonably necessary or advisable in connection with the Form S-1 or any other
statement, filing, notice or application made by or on behalf of Keystone, the
Holding Company, the Company or the Bank to any Governmental Entity in
connection with the Conversion, the Merger, the Bank Merger and the other
transactions contemplated hereby.
(d) Keystone and the Company shall promptly furnish each other with copies
of written communications received by Keystone or the Company, as the case may
be, or any of their respective Subsidiaries from, or delivered by any of the
foregoing to, any Governmental Entity in respect of the transactions
contemplated hereby.
5.4 Investigation and Confidentiality
---------------------------------
(a) Each party shall permit the other party and its representatives
reasonable access to its properties and personnel, and shall disclose and make
available to such other party all books, papers and records relating to the
assets, stock ownership, properties, operations, obligations and liabilities of
it and its Subsidiaries, including, but not limited to, all books of account
(including the general ledger), tax records, minute books of meetings of boards
of directors (and any committees thereof) and shareholders, organizational
documents, bylaws, material contracts and agreements, filings with any
regulatory authority, accountants' work papers, litigation files, loan files,
plans affecting employees, and any other business activities or prospects in
which the other party may have a reasonable interest, provided that such access
shall be reasonably related to the transactions contemplated hereby and, in the
reasonable opinion of the respective parties providing such access, not unduly
interfere with normal operations. Each party and its Subsidiaries shall make
their respective directors, officers, employees and agents and authorized
representatives (including counsel and independent public accountants) available
to confer with the other party and its representatives, provided that such
access shall be reasonably related to the transactions contemplated hereby and
shall not unduly interfere with normal operations.
(b) All information furnished previously in connection with the
transactions contemplated by this Agreement or pursuant hereto shall be treated
as the sole property of the party furnishing the information until consummation
of the transactions contemplated hereby and, if such transactions shall not
occur, the party receiving the information shall either destroy or return to the
party which furnished such information all documents or other materials
containing, reflecting or referring to such information, shall use its best
efforts to keep confidential all such information, and shall not directly or
indirectly use such information for any competitive or other commercial
purposes. The obligation to keep such information confidential shall continue
for five years from the date the proposed transactions are abandoned but shall
not apply to (i) any information which (x) the party receiving the information
can establish was already in its possession prior to the disclosure thereof by
the party furnishing the information;
(y) was then generally known to the public; or (z) became known to the public
through no fault of the party receiving the information; or (ii) disclosures
pursuant to a legal requirement or in accordance with an order of a court of
competent jurisdiction, provided that the party which is the subject of any such
legal requirement or order shall use its best efforts to give the other party at
least ten business days prior notice thereof.
5.5 Press Releases
--------------
Keystone and the Company 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 consult with each other as to the form and substance of
other public disclosures which may relate to the transactions contemplated by
this Agreement, provided, however, that nothing contained herein shall prohibit
either party, following prior notification to the other party, from making any
disclosure which is required by law or regulation.
5.6 Business of the Parties
-----------------------
(a) During the period from the date of this Agreement and continuing until
the Effective Time, except as expressly contemplated or permitted by this
Agreement or with the prior written consent of the other Party, each Party shall
carry on their respective businesses in the ordinary course consistent with past
practice. During such period, each Party also will use, and will cause each of
is subsidiaries to use, all reasonable efforts to (x) preserve its business
organization intact, (y) keep available to itself and the other Party the
present services of its respective employees and (z) preserve for itself and the
other Party the goodwill of its respective customers and others with whom
business relationships exist. Without limiting the generality of the foregoing,
except as Previously Disclosed or with the prior written consent of the other
Party hereto, between the date hereof and the Effective Time, the Parties shall
not, and shall cause each of their respective Subsidiaries not to:
(i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of the Company Common Stock, except for regular
quarterly cash dividends at a rate per share of Company Common Stock
not in excess of $.19 per share and except, in the event the Effective
Time occurs more than 45 days after the commencement of any calendar
quarter but prior to the normal dividend payment date for such
calendar quarter, a pro rata cash dividend based on the Company's
normal quarterly cash dividend rate; provided, however, that nothing
contained herein shall be deemed to affect the ability of a Company
Subsidiary to pay dividends on its capital stock to the Company;
(ii) issue any shares of its capital stock, other than upon
exercise of the Company Options referred to in Section 3.1 hereof, or
issue, grant, modify or authorize any Rights; purchase any shares of
Company Common Stock; or effect
any recapitalization, reclassification, stock dividend, stock split or
like change in capitalization;
(iii) amend its Articles of Incorporation, Articles of
Association, Bylaws or similar organizational documents; impose, or
suffer the imposition, on any share of stock or other ownership
interest held by a Party in a Party Subsidiary of any lien, charge or
encumbrance or permit any such lien, charge or encumbrance to exist;
or waive or release any material right or cancel or compromise any
material debt or claim;
(iv) increase the rate of compensation of any of its directors,
officers or employees, or pay or agree to pay any bonus or severance
to, or provide any other new employee benefit or incentive to, any of
its directors, officers or employees, except (i) as may be required
pursuant to Previously Disclosed commitments existing on the date
hereof, (ii) as may be required by law and (iii) merit increases in
accordance with past practices, normal cost-of-living increases and
normal increases related to promotions or increased job
responsibilities;
(v) enter into or, except as may be required by law, modify any
pension, retirement, stock option, stock purchase, stock appreciation
right, savings, profit sharing, deferred compensation, supplemental
retirement, consulting, bonus, group insurance or other employee
benefit, incentive or welfare contract, plan or arrangement, or any
trust agreement related thereto, in respect of any of its directors,
officers or employees; or make any contributions to any of the
Company's or Keystone's Pension Plans or the Company's ESOP (other
than as required by law or regulation or in a manner and amount
consistent with past practices) and except as specifically provided
herein;
(vi) enter into (w) any transaction, agreement, arrangement or
commitment not made in the ordinary course of business, (x) any
agreement, indenture or other instrument relating to the borrowing of
money by the Party or a Party Subsidiary or guarantee by a Party or
any Party Subsidiary of any such obligation, except in the case of the
Bank or Keystone for deposits, FHLB advances, federal funds purchased
and securities sold under agreements to repurchase in the ordinary
course of business consistent with past practice, (y) any agreement,
arrangement or commitment relating to the employment of an employee or
consultant, or amend any such existing agreement, arrangement or
commitment, provided that the Company, the Bank and Keystone may
employ an employee or consultant in the ordinary course of business if
the employment of such employee or consultant is terminable by the
Company, the Bank or Keystone, as the case may be, at will without
liability, other than as required by law; or (z) any contract,
agreement or understanding with a labor union;
(vii) change its method of accounting in effect for the year
ended December 31, 2001, except as required by changes in laws or
regulations or generally accepted accounting principles, or change any
of its methods of reporting income and deductions for federal income
tax purposes from those employed in the preparation of its federal
income tax return for such year, except as required by changes in laws
or regulations;
(viii) make any capital expenditures in excess of $75,000
individually or $150,000 in the aggregate, other than pursuant to
binding commitments existing on the date hereof and other than
expenditures necessary to maintain existing assets in good repair; or
enter into any new lease of real property or any new lease of personal
property providing for annual payments exceeding $50,000;
(ix) file any applications or make any contract with respect to
branching or site location or relocation;
(x) acquire in any manner whatsoever (other than to realize upon
collateral for a defaulted loan) control over or any equity interest
in any business or entity, except for investments in marketable equity
securities in the ordinary course of business and not exceeding 5% of
the outstanding shares of any class;
(xi) enter or agree to enter into any agreement or arrangement
granting any preferential right to purchase any of its assets or
rights or requiring the consent of any party to the transfer and
assignment of any such assets or rights;
(xii) change or modify in any material respect any of its lending
or investment policies, except to the extent required by law or an
applicable regulatory authority;
(xiii) take any action that would prevent or impede the Merger or
the Conversion from qualifying as a reorganization within the meaning
of Section 368 of the Code;
(xiv) enter into any futures contract, option contract, interest
rate caps, interest rate floors, interest rate exchange agreement or
other agreement for purposes of hedging the exposure of its
interest-earning assets and interest-bearing liabilities to changes in
market rates of interest;
(xv) take any action that would result in any of the
representations and warranties contained in this Agreement not to be
true and correct in any material respect at the Effective Time or that
would cause any of the conditions of Sections 6.1, 6.2 or 6.3 hereof
not to be satisfied;
(xvi) materially increase or decrease the rate of interest paid
on time deposits, or certificates of deposit, except in a manner and
pursuant to policies consistent with past practices, or
(xvii) agree to do any of the foregoing.
(b) Each of the Company and Keystone shall promptly notify the other Party
in writing of the occurrence of any matter or event known to and directly
involving it or any of its Subsidiaries, other than any changes in conditions
that affect the banking or savings institution industry generally, that would
have, either individually or in the aggregate, a Material Adverse Effect on it.
5.7 Certain Actions
---------------
(a) The Company agrees that neither it nor any of its Subsidiaries shall,
and that it shall direct and use its reasonable best efforts to cause its and
each such Subsidiary's directors, officers, employees, agents and
representatives not to, directly or indirectly, initiate, solicit, knowingly
encourage or otherwise facilitate any inquiries or the making of any proposal or
offer with respect to an Acquisition Proposal. The Company further agrees that
neither the Company nor any of its Subsidiaries shall, and that it shall direct
and use its reasonable best efforts to cause its and each such Subsidiary's
directors, officers, employees, agents and representatives not to, directly or
indirectly, 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 knowingly facilitate any effort or attempt to
make or implement an Acquisition Proposal; provided, however, that nothing
contained in this Agreement shall prevent the Company or the Board of Directors
of the Company from (A) complying with its disclosure obligations under federal
or state law; (B) providing information in response to a request therefor by a
Person who has made an unsolicited bona fide written Acquisition Proposal if the
Board of Directors of the Company receives from the Person so requesting such
information an executed confidentiality agreement the terms of which are
substantially identical to those of the confidentiality agreement entered into
by the Company and Keystone dated December 31, 2002; (C) engaging in any
negotiations or discussions with any Person who has made an unsolicited bona
fide written Acquisition Proposal or (D) recommending such an Acquisition
Proposal to the shareholders of the Company, if and only to the extent that, in
each such case referred to in clause (B), (C) or (D) above, (i) the Company
Board determines in good faith (after consultation with outside legal counsel)
that such action would be required in order for its directors to comply with
their respective fiduciary duties under applicable law and (ii) the Board of
Directors of the Company determines in good faith (after consultation with its
financial advisor) that such Acquisition Proposal, if accepted, is reasonably
likely to be consummated, taking into account all legal, financial and
regulatory aspects of the proposal and the Person making the proposal and would,
if consummated, result in a transaction more favorable to the Company's
shareholders from
a financial point of view than the Merger. An Acquisition Proposal which is
received and considered by the Company in compliance with this Section 5.7 and
which meets the requirements set forth in clause (D) of the preceding sentence
is herein referred to as a "Superior Proposal." The Company agrees that it will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any Acquisition Proposals. The Company agrees that it will notify Keystone
immediately if any such inquiries, proposals or offers are received by, any such
information is requested from, or any such discussions or negotiations are
sought to be initiated or continued with, the Company or any of its
representatives.
(b) In the event that the Board of Directors of the Company determines in
good faith, after consultation with its financial advisor and upon advice from
outside counsel, that it has received a Superior Proposal, it shall notify
Keystone in writing of its intent to terminate this Agreement and concurrently
with or after such termination cause the Company to enter into an acquisition
agreement with respect to, or recommend acceptance of, the Superior Proposal.
Such notice shall specify all of the terms and conditions of such Superior
Proposal and identify the Person making such Superior Proposal. Keystone shall
have five business days to evaluate and respond to the Company's notice. If
Keystone notifies the Company in writing prior to the expiration of the five
business day period provided above that it shall increase the Merger
Consideration to an amount at least equal to that of such Superior Proposal (the
"Keystone Proposal"), then the Company shall not be permitted to enter into an
acquisition agreement with respect to, or permit its Board to recommend
acceptance to its shareholders of, such Superior Proposal. Such notice by
Keystone shall specify the new Merger Consideration. The Company shall have five
business days to evaluate the Keystone Proposal.
(c) In the event the Superior Proposal involves consideration to the
Company's shareholders consisting of securities, in whole or in part, a Keystone
Proposal shall be deemed to be at least equal to the Superior Proposal, if the
Keystone Proposal offers Merger Consideration that equals or exceeds the
consideration being offered to the Company's shareholders in the Superior
Proposal valuing any securities forming a part of the Superior Proposal at its
cash equivalent based upon (a) the average trading price of such securities for
the 20 trading days immediately preceding the date of the Keystone Proposal or
(b) the written valuation of such securities by a nationally recognized
investment banking firm selected if such securities are not traded on a
nationally recognized exchange or will be newly issued securities that are not
of a class then trading on a nationally recognized exchange. Any written
valuation shall be attached as an exhibit to the Keystone Proposal.
(d) In the event that the Board of the Company determines in good faith,
upon the advice of its financial advisor and outside counsel, that the Keystone
Proposal is not at least equal to the Superior Proposal, the Company can
terminate this Agreement in order to execute an acquisition agreement with
respect to, or to allow its Board to adopt a resolution recommending acceptance
to the Company's shareholders of, the Superior Proposal as provided in Section
7.1(h).
5.8 Current Information
-------------------
During the period from the date of this Agreement to the Effective Time,
each of Keystone and the Company shall, upon the request of the other party,
cause one or more of its designated representatives to confer on a monthly or
more frequent basis with representatives of the other party regarding its
financial condition, operations and business and matters relating to the
completion of the transactions contemplated hereby. As soon as reasonably
available, but in no event more than 45 days after the end of each calendar
quarter ending after the date of this Agreement, the Company will deliver to
Keystone its quarterly report on Form 10-Q under the Exchange Act, and, as soon
as reasonably available, but in no event more than 90 days after December 31,
2002, the Company will deliver to Keystone its Annual Report on Form 10-K for
2002. As soon as reasonably available, but in no event more than 90 days after
December 31, 2002, Keystone will deliver to the Company audited statements of
condition (including related notes and schedules, if any) of Keystone as of
December 31, 2002 and 2001 and statements of income, changes in retained income
and cash flows (including related notes and schedules, if any) of Keystone for
each of the years in the three-year period ended December 31, 2002. Keystone
also will deliver to the Company each Call Report report filed by Keystone with
the FDIC concurrently with the filing of such call report. Within 25 days after
the end of each month, the Company and Keystone will deliver to the other party
an unaudited consolidated statement of condition and an unaudited consolidated
statement of income, without related notes, for such month prepared in
accordance with generally accepted accounting principles.
5.9 Indemnification; Insurance
--------------------------
(a) From and after the Effective Time, the Holding Company (the
"Indemnifying Party") shall provide indemnification to any present or former
director, officer or employee of the Company and each Company Subsidiary, in
each case determined as of the Effective Time (the "Indemnified Parties"), with
respect to any costs or expenses (including reasonable attorneys' fees),
judgments, fines, losses, claims, damages or liabilities 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 Time, if first asserted or claimed prior
to the date hereof and Previously Disclosed, if first asserted or claimed
between the date hereof and the Effective Time and disclosed pursuant to Section
5.16 hereof or if first asserted or claimed after the Effective Time, to the
fullest extent, if any, that such Indemnified Party would have been entitled to
indemnification by the Company or any Company Subsidiary under the Articles of
Incorporation, Articles of Association or Bylaws of the Company or any Company
Subsidiary as Previously Disclosed, provided, however, that all rights to
indemnification in respect of any claim asserted or made within such period
shall continue until the final disposition of such claim, and provided, further,
that nothing contained herein shall extend or be deemed a waiver of any
applicable statute of limitations in respect of any claim or claim for
indemnification. Without limiting the foregoing, all limitations of liability
existing in favor of the Indemnified Parties in the Articles of Incorporation,
Articles of Association or Bylaws of the Company or any Company Subsidiary,
arising out of matters existing or occurring at or prior to the Effective Time
shall survive the Merger and shall continue in full force and effect.
(b) Any Indemnified Party wishing to claim indemnification under Section
5.9(a), upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify the Indemnifying Party, but the failure to
so notify shall not relieve the Indemnifying Party of any liability it may have
to such Indemnified Party if such failure does not materially prejudice the
Indemnifying Party. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (i) the
Indemnifying Party shall have the right to assume the defense thereof and the
Indemnifying Party 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 the
Indemnifying Party elects not to assume such defense or counsel for the
Indemnified Parties advises that there are issues which raise conflicts of
interest between the Indemnifying Party and the Indemnified Parties, the
Indemnified Parties may retain counsel which is reasonably satisfactory to the
Indemnifying Party, and the Indemnifying Party shall pay, promptly as statements
therefor are received, the reasonable fees and expenses of such counsel for the
Indemnified Parties (which may not exceed one firm in any jurisdiction unless
the use of one counsel for such Indemnified Parties would present such counsel
with a conflict of interest) in accordance with the obligations set forth in
Section 5.9(a) hereof, (ii) the Indemnified Parties will cooperate in the
defense of any such matter, (iii) the Indemnifying Party shall not be liable for
any settlement effected without its prior written consent, which consent shall
not be
unreasonably withheld, and (iv) the Indemnifying Party shall have no obligation
hereunder in the event a federal banking agency or a court of competent
jurisdiction shall ultimately determine, and such determination shall have
become final and nonappealable, that indemnification of an Indemnified Party in
the manner contemplated hereby is prohibited by applicable law.
(c) The Holding Company shall maintain the Company's existing directors'
and officers' liability insurance policy (or purchase an insurance policy
providing coverage on substantially the same terms and conditions) for acts or
omissions occurring prior to the Effective Time by persons who are currently
covered by such insurance policy maintained by the Company and the Company
Subsidiaries for a period of six years following the Effective Time, provided,
however, that in no event shall the Holding Company be required to expend on an
annual basis more than 150% of the amount paid by the Company and the Company
Subsidiaries as of the date hereof for such insurance coverage (the "Insurance
Amount") to maintain or procure such insurance coverage, and further provided
that if the Holding Company is unable to maintain or obtain the insurance called
for hereby, the Holding Company shall use all reasonable efforts to obtain as
much comparable insurance as is available for the Insurance Amount. At the
request of the Holding Company, the Company shall use reasonable efforts to
procure the insurance coverage referred to in the preceding sentence prior to
the Effective Time.
(d) In the event that the Holding Company or any of its respective
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then, and in each such case the successors
and assigns of such entity shall assume the obligations set forth in this
Section 5.9, which obligations are expressly intended to be for the irrevocable
benefit of, and shall be enforceable by, each director and officer covered
hereby and the heirs and estates thereof.
5.10 Directors and Executive Officers
--------------------------------
(a) On or prior to the Effective Time, each of Keystone and the Holding
Company agrees to take all action necessary to increase the size of their
respective Boards of Directors to 15 members, nine of whom shall be selected by
Keystone directors and six of whom shall be selected by the Company.
Furthermore, each of Keystone and the Holding Company shall take all action to
appoint or elect, effective as of the Effective Time such persons in the classes
as set forth below.
Class I Class II Class III
------------------------------------- ------------------------------------ ---------------------------------
(Term expiring in 2004) (Term expiring in 2005) (Term expiring in 2006)
R. Xxxxxxxx Xxxx, Jr. Xxxx X. Mountain Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxx Xxxxxx X. Xxxxxx Xxxxxxx X. Xxxxxxxx
R. Xxxxxxx Xxxxxx Xxxxxxx X. Xxxxxx Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx Xxxxxx X. Xxxxxxxxxx Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx X. Xxxxxx Xxxxxxx X. Xxxxxxx Xxxxxxx Xxxxxxx, III
(b) On or prior to the Effective Time, each of Keystone and the Holding
Company agrees to take all action necessary to elect Xxxxxxx X. Xxxxxxx as
Chairman of the Board, Xxxxx X. Xxxxxx as the President and Chief Executive
Officer and Xxxxxx X. Xxxxx as the Senior Executive Vice President and Chief
Operating Officer of Keystone and the Holding Company.
5.11 Employees and Employee Benefit Plans
------------------------------------
(a) All employees of the Company, the Bank or any other Company Subsidiary
as of the Effective Time (collectively, "Company Employees") shall become
employees of the Holding Company or a Holding Company Subsidiary as of the
Effective Time, provided that, other than as provided by Section 5.11(g) hereof,
the Holding Company or a Holding Company Subsidiary shall have no obligation to
continue the employment of any such person and nothing contained in this
Agreement shall give any employee of the Holding Company or a Holding Company
Subsidiary a right to continuing employment with the Holding Company or a
Holding Company Subsidiary after the Effective Time. To the extent that the
Holding Company or a Holding Company Subsidiary terminates the employment of any
Company, Bank or Keystone Employee (other than those employees, if any, who
receive payments pursuant to Section 5.11(d) hereof), other than for cause,
within six months following the Effective Time, the Holding Company shall, or
shall cause a Holding Company Subsidiary to, provide severance benefits in a
cash amount as mutually agreed to by Keystone and the Company, provided, however
that in no event shall the Holding Company or a Holding Company Subsidiary have
any obligation to provide severance benefits to any Company Employee whose
termination of employment occurs due to resignation or discharge for cause or
who is entitled to severance benefits or the equivalent thereof under the terms
of an individual contract with the Company or the Bank.
(b) With the exception of those individuals who are expected to enter into
new employment agreements pursuant to Section 5.11(g) hereof, each Company
Employee who remains employed by the Holding Company or a Holding Company
Subsidiary following the Effective Time (each, a "Continuing Employee") shall be
entitled to participate in (i) such of the employee benefit plans, deferred
compensation arrangements, bonus or incentive plans and other compensation and
benefit plans that the Holding Company or a Holding Company Subsidiary may
continue for the benefit of Continuing Employees following the Effective Time
and (ii) whatever employee benefit plans and other compensation and benefit
plans (other than any stock option or restricted stock grant plan implemented by
the Holding Company) that the Holding Company or a Holding Company Subsidiary
may maintain for the benefit of its similarly situated employees on an equitably
equivalent basis, if such Continuing Employee is not otherwise then
participating in a similar plan described in Section 5.11(c) hereof. The parties
hereto acknowledge that Continuing Employees shall be eligible to participate in
the stock option plan implemented by the Holding Company within one year
subsequent to the Effective Time ("New Option Plan") (subject to receipt of
necessary corporate, regulatory and stockholder approval) based upon the same
criteria as other employees of Keystone or the Holding Company and the level of
grants shall give due regard to, among other factors, relative levels of title,
duties, salary and other compensation and benefits.
(c) (i) At the Effective Time, the Holding Company or a Holding Company
Subsidiary shall become the plan sponsor of each Company Employee Plan. The
Company agrees to take or cause to be taken such actions as the Holding Company
or a Holding Company Subsidiary may reasonably request to give effect to such
assumption. The Holding Company or a Holding Company Subsidiary shall have the
right and power at any time following the Effective Time to amend or terminate
or cease benefit accruals under any Company Employee Plan or cause it to be
merged with or its assets and liabilities to be transferred to a similar plan
maintained by it.
(ii) For purposes of its employee benefit plans, the Holding Company
and a Holding Company Subsidiary shall treat Continuing Employees as new
employees, but shall amend its plans to provide credit for purposes of vesting
and eligibility to participate (but not for benefit accrual), for each
Continuing Employee's service with the Company, the Bank and any other
Subsidiary of the Company to the extent that such service was recognized for
similar purposes under the Company Employee Plans immediately prior to the
Effective Time. Continuing Employees and their covered dependents will not be
deprived of any partial or complete coverage under any employee benefit plan of
the Holding Company or a Holding Company Subsidiary (which provides the type of
benefits similar to benefits under any Company Employee Plan) because of any
waiting period or pre-existing condition or previous medical treatments, except
to the extent that such pre-existing condition or previous medical treatments
were excluded from coverage under a Company Employee Plan, in which case this
Section 5.11(c)(ii) shall not require coverage for such pre-existing condition
or previous medical treatments to the same extent such coverage was excluded
under a Company Employee Plan. To
the extent that the initial period of coverage for Continuing Employees under
any employee benefit plan of the Holding Company or a Holding Company Subsidiary
that is an "employee welfare benefit plan" as defined in Section 3(1) of ERISA
overlaps with the 12 months coverage period of an applicable Company Employee
Plan, Continuing Employees shall be given credit during the initial period of
coverage for any deductibles and coinsurance payments made by Continuing
Employees under any Company Employee Plan during any partial period.
(d) At and following the Effective Time, Keystone shall honor, and the
Holding Company shall continue to be obligated to perform, in accordance with
their terms, all benefit obligations to, and contractual rights of, current and
former employees of the Company and the Bank existing as of the Effective Time,
as well as all employment, severance, deferred compensation or
"change-in-control" agreements, plans or policies of the Company which are
Previously Disclosed. Keystone acknowledges that the consummation of the Merger
will constitute a "change-in-control" of the Company for purposes of any
employee benefit plans, agreements and arrangements of the Company and the Bank.
(e) The ESOP shall be terminated effective as of the Effective Time. As
soon as practicable after the Effective Time (but not prior to the publication
of financial results covering at least 30 days of combined operations after the
Merger), the trustees of the ESOP shall, if necessary, convert to cash a portion
of the Holding Company Common Stock received by the ESOP in the Merger with
respect to unallocated Company Common Stock in order to repay the entire
outstanding balances of the ESOP loans in accordance with ERISA, the rules and
regulations promulgated thereunder, the Code, the rules, regulations promulgated
thereunder, and any precedential rulings issued by the Internal Revenue Service
("IRS"). As soon as practicable after the retirement of the ESOP loans (but not
later than 90 days after the publication of financial results covering at least
30 days of combined operations after the Merger), the trustees of the ESOP shall
allocate the remaining Holding Company Common Stock received by the ESOP in the
Merger with respect to unallocated shares of Company Common Stock to the
accounts of all ESOP participants (whether or not such participants are then
actively employed) and beneficiaries in proportion to the account balance of
such participants and beneficiaries as they existed as of the Effective Time
(and, if required, to the accounts of former participants or their
beneficiaries) as investment earnings of the ESOP except as restricted by
applicable law. The Company and/or Keystone and the Holding Company shall
exercise best efforts to implement procedures that will assure the full
allocation of the remaining suspense account to such participants or their
beneficiaries. Upon the election of any participant, his or her benefit that
constitutes an "eligible rollover distribution" (as defined in Section
402(f)(2)(A) of the Code) under the ESOP may (i) in the sole discretion of
Keystone and the Holding Company, be rolled over to any qualified Keystone or
Holding Company (or any Subsidiary thereof) benefit plan, other than an employee
stock ownership plan of the Holding Company or Keystone, or (ii) be rolled over
to any individual retirement account and, provided further, that any such
distribution shall not occur until receipt of a favorable termination ruling
from the IRS.
The foregoing actions relating to termination of the ESOP will be adopted
conditioned upon the consummation of the Merger and upon receiving (i) a
favorable determination letter from the IRS with regard to the continued
qualification of the ESOP after any required amendments necessary to implement
the actions thereof set forth above and (ii) the receipt of a favorable
termination letter as to the termination of the ESOP. The Company, the Bank, and
the Holding Company will cooperate in submitting appropriate requests for any
such determination and termination letters to the IRS and will use their best
efforts to seek the issuance of such letters as soon as practicable following
the date hereof. The Bank and the Holding Company will adopt such additional
amendments to the ESOP as may be reasonably required by the IRS as a condition
to granting such favorable determination and termination letters provided that
such amendments do not substantially change the terms outlined herein or would
result in a material adverse change in the business, operations, assets,
financial condition or prospects of the Company or the Bank or result in an
additional material liability to the Holding Company or Keystone.
(g) Concurrently with the execution of this Agreement by Keystone and the
Company, Keystone shall enter into employment agreements with Messrs. Xxxxx X.
Xxxxxx and Xxxxxx X. Xxxxx in the forms attached hereto as Appendices E and F,
respectively. Upon execution of the Accession Agreement (as hereinafter defined)
by the Holding Company, it shall join in the employment agreements with Messrs.
Fainor and Xxxxx.
5.12 Bank Merger
-----------
Keystone, the Holding Company and the Company shall take, and the Company
shall cause the Bank to take, all necessary and appropriate actions, including
causing the Bank and Keystone to enter into a merger agreement (the "Bank Merger
Agreement"), to cause the Bank to merge with and into Keystone (the "Bank
Merger") immediately after the Effective Time in accordance with the
requirements of all applicable laws of the Commonwealth of Pennsylvania and
regulations of the Department thereunder. Keystone shall be the surviving
corporation in the Bank Merger (the "Surviving Bank"), and shall continue its
corporate existence under the laws of the Commonwealth of Pennsylvania as a
wholly-owned subsidiary of the Holding Company. The name of the Surviving Bank
shall be "Keystone Nazareth Bank & Trust Company." The directors and executive
officers of the Surviving Bank upon consummation of the Bank Merger shall be the
directors and executive officers of Keystone immediately prior to the
consummation of the Bank Merger, except as provided in Section 5.10 of this
Agreement. Upon consummation of the Bank Merger, the separate corporate
existence of the Bank shall cease.
5.13 Organization of the Holding Company
-----------------------------------
Prior to the Effective Time, Keystone shall cause the Holding Company to be
organized under the BCL. Following the organization of the Holding Company and
prior to the Effective Time, the Board of Directors shall approve this Agreement
and the transactions contemplated hereby, and Keystone shall cause the Holding
Company to execute and deliver an appropriate instrument of accession to this
Agreement in the form attached hereto as Appendix G ("Accession Agreement"),
whereupon the Holding Company shall become a party to, and be bound by, this
Agreement.
5.14 Shareholder and Depositor Agreements
------------------------------------
Shareholder Agreements, in the form attached as Appendix A hereto, shall
have been executed and delivered by each director of the Company and the Bank in
connection with the Company's execution and delivery of this Agreement.
Furthermore, the Company shall use its reasonable best efforts to cause such
person who is a Company Affiliate to execute and deliver to the Holding Company
within 60 days of the date hereof an agreement in the form of Appendix H hereto.
In addition, the Depositor Agreements, in the form attached as Appendix B
hereto, shall have been executed and delivered by each director of Keystone in
connection with Keystone's execution and delivery of this Agreement.
5.15 Integration of Policies
-----------------------
During the period from the date of this Agreement to the Effective Time,
the Company and the Bank shall, and shall cause their directors, officers and
employees to, cooperate and assist Keystone in the formulation of a plan of
integration for Keystone and the Company and the Bank with respect to their
combined operations subsequent to the Effective Time.
5.16 Disclosure Supplements
----------------------
From time to time prior to the Effective Time, each party shall promptly
supplement or amend any materials Previously Disclosed and delivered to the
other party pursuant hereto with respect to any matter hereafter arising which,
if existing, occurring or known at the date of this Agreement, would have been
required to be set forth or described in materials Previously Disclosed to the
other party or which is necessary to correct any information in such materials
which has been rendered materially inaccurate thereby; no such supplement or
amendment to such materials shall be deemed to have modified the
representations, warranties and covenants of the parties for the purpose of
determining whether the conditions set forth in Article VI hereof have been
satisfied.
5.17 Failure to Fulfill Conditions
-----------------------------
In the event that either of the Parties hereto determines that a condition
to its respective obligations to consummate the transactions contemplated may
not be fulfilled on or prior to the termination of this Agreement, it will
promptly notify the other party. Each Party will promptly inform the other party
of any facts applicable to it that would be likely to prevent or materially
delay approval of the Merger, the Conversion or any of the other transactions
contemplated hereby by any Governmental Entity or third party or which would
otherwise prevent or materially delay consummation of such transactions.
5.18 Section 16 Matters.
-------------------
Prior to the Effective Time, the Holding Company and the Company shall take
all such steps as may be required to cause any dispositions of Company Common
Stock (including derivative securities with respect to Company Common Stock) or
acquisitions of Holding Company Common Stock resulting from the transactions
contemplated by this Agreement by each individual who is subject to the
reporting requirements of Section 16(a) of the Exchange Act with respect to the
Company to be exempt under Rule 16b-3 promulgated under the Exchange Act.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions Precedent - Keystone and the Company
-----------------------------------------------
The respective obligations of Keystone and the Company to effect the Merger
shall be subject to satisfaction of the following conditions at or prior to the
Effective Time.
(a) All corporate action necessary to authorize the execution and
delivery of this Agreement and consummation of the Merger, the Bank Merger and
the other transactions contemplated hereby shall have been duly and validly
taken by Keystone, the Holding Company, and the Company, including without
limitation approval of this Agreement by the requisite vote of the shareholders
of the Company.
(b) All approvals and consents from any Governmental Entity the
approval or consent of which is required for the consummation of the Merger, the
Bank Merger and the other transactions contemplated hereby shall have been
received and all statutory waiting periods in respect thereof shall have
expired; and Keystone, the Holding Company, the Company and the Bank shall have
procured all other approvals, consents and waivers of each person (other than
the Governmental Entities referred to above) whose approval, consent or waiver
is necessary to the consummation of the Merger and the other transactions
contemplated hereby and the failure of which to obtain would have the effects
set forth in the following proviso clause; provided, however, that no approval
or consent referred to in this Section 6.1(b) shall be deemed to have been
received if it shall include any condition or requirement that, individually or
in the
aggregate, would so materially reduce the economic or business benefits of the
transactions contemplated by this Agreement to Keystone that had such condition
or requirement been known, Keystone, in its reasonable judgment, would not have
entered into this Agreement.
(c) None of Keystone, the Holding Company, the Company or the Bank
shall be subject to any statute, rule, regulation, injunction or other order or
decree which shall have been enacted, entered, promulgated or enforced by any
governmental or judicial authority which prohibits, restricts or makes illegal
consummation of the Merger or the other transactions contemplated hereby.
(d) The Form S-1 shall have become effective under the Securities Act,
and Keystone shall have received all state securities laws or "blue sky" permits
and other authorizations or there shall be exemptions from registration
requirements necessary to issue the Holding Company Common Stock in connection
with the Merger, and neither the Form S-1 nor any such permit, authorization or
exemption shall be subject to a stop order or threatened stop order by the
Commission or any state securities authority.
(e) The shares of Holding Company Common Stock to be issued in
connection with the Merger and the Conversion shall have been approved for
listing on the Nasdaq Stock Market's National Market. In addition, Keystone and
the Holding Company shall use their reasonable best efforts to have the trading
symbol of the Holding Company Common Stock be "KNBT" or such other available
symbol mutually agreed to by the Parties and the Holding Company.
(f) Each of Keystone and the Company shall have received the written
opinion of Elias, Matz, Xxxxxxx & Xxxxxxx L.L.P., in form and substance
reasonably satisfactory to both the Company and Keystone, dated as of the
Effective Time, substantially to the effect that, on the basis of the facts,
representations and assumptions set forth in such opinion which are consistent
with the state of facts existing at the Effective Time, the Merger will be
treated for Federal income tax purposes as constituting a reorganization within
the meaning of Section 368(a) of the Code. If such legal counsel does not render
such opinion, this condition may be satisfied if Xxxxx Xxxxxxxx LLP, independent
auditors of Keystone and the Company, renders such opinion, relying on such
facts, representations and assumptions. In rendering such opinion, such counsel
or auditors may require and rely upon representations and covenants, including
those contained in certificates of officers of Keystone, the Company and others,
reasonably satisfactory in form and substance to such counsel.
(g) The Conversion shall have been consummated.
6.2 Conditions Precedent - The Company
----------------------------------
The obligations of the Company to effect the Merger shall be subject to
satisfaction of the following conditions at or prior to the Effective Time
unless waived by the Company pursuant to Section 7.4 hereof.
(a) The representations and warranties of Keystone set forth in Article
IV hereof shall be true and correct in all material respects as of the date of
this Agreement and as of the Closing Date as though made on and as of the
Closing Date, or on the date when made in the case of a representation and
warranty which specifically relates to an earlier date. Notwithstanding the
preceding sentence, except for the representations and warranties contained in
the first sentence of Section 4.13, any inaccuracies in the representations and
warranties of Keystone shall not prevent the satisfaction of the condition
contained in this Section 6.2(a) unless the cumulative effect of all such
inaccuracies, taken in the aggregate, represent a Material Adverse Effect on
Keystone. In applying the preceding sentence, the determination of whether a
representation and warranty of Keystone is inaccurate shall be made without
regard to any language in Article IV which would otherwise qualify such
representation and warranty individually by reference to materiality or a
Material Adverse Effect.
(b) Keystone shall have performed in all material respects all
obligations and complied with all covenants required to be performed and
complied with by it pursuant to this Agreement on or prior to the Effective
Time.
(c) Keystone shall have delivered to the Company a certificate, dated
the date of the Closing and signed by its Chairman and by its Chief Financial
Officer, to the effect that the conditions set forth in Sections 6.2(a) and
6.2(b) have been satisfied.
(d) No proceeding initiated by any Governmental Entity seeking an
order, injunction or decree issued by any court or agency of competent
jurisdiction or other legal restraint or prohibition preventing the consummation
of the Merger or the other transactions contemplated hereby shall be pending.
(e) Keystone shall have furnished the Company with such certificates of
its respective officers or others and such other documents to evidence
fulfillment of the conditions set forth in Sections 6.1 and 6.2 as such
conditions relate to Keystone as the Company may reasonably request.
6.3 Conditions Precedent - Keystone
-------------------------------
The obligations of Keystone to effect the Merger shall be subject to
satisfaction of the following conditions at or prior to the Effective Time
unless waived by Keystone pursuant to Section 7.4 hereof.
(a) The representations and warranties of the Company set forth in
Article III hereof shall be true and correct in all material respects as of the
date of this Agreement and as of the Closing Date as though made on and as of
the Closing Date, or on the date when made in the case of a representation and
warranty which specifically relates to an earlier date. Notwithstanding the
preceding sentence, except for the representations and warranties contained in
the second and fourth sentences of Section 3.1 and the first sentence of Section
3.13, any inaccuracies in the representations and warranties of the Company
shall not prevent the satisfaction of the condition contained in this Section
6.3(a) unless the cumulative effect of all such inaccuracies, taken in the
aggregate, represent a Material Adverse Effect on the Company. In applying the
preceding sentence, the determination of whether a representation and warranty
of the Company is inaccurate shall be made without regard to any language in
Article III which would otherwise qualify such representation and warranty
individually by reference to materiality or a Material Adverse Effect.
(b) The Company shall have performed in all material respects all
obligations and covenants required to be performed by it pursuant to this
Agreement on or prior to the Effective Time.
(c) The Company shall have delivered to Keystone a certificate, dated
the date of the Closing and signed by its President and Chief Executive Officer
and by its Chief Financial Officer, to the effect that the conditions set forth
in Sections 6.3(a) and 6.3(b) have been satisfied.
(d) No proceeding initiated by any Governmental Entity seeking an
order, injunction or decree issued by any court or agency of competent
jurisdiction or other legal restraint or prohibition preventing the consummation
of the Merger or the other transactions contemplated hereby shall be pending.
(e) The Company shall have furnished Keystone with such certificates of
its officers or others and such other documents to evidence fulfillment of the
conditions set forth in Sections 6.1 and 6.3 as such conditions relate to the
Company as Keystone may reasonably request.
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT
7.1 Termination
-----------
This Agreement may be terminated:
(a) at any time on or prior to the Effective Time, by the mutual consent in
writing of the parties hereto;
(b) at any time on or prior to the Effective Time, by Keystone in writing
if the Company has, or by the Company in writing if Keystone has, in any
material respect, breached (i) any material covenant or undertaking contained
herein or (ii) any representation or warranty contained herein, in any case if
such breach would have a Material Adverse Effect on the party and has not been
cured by the earlier of 30 days after the date on which written notice of such
breach is given to the party committing such breach or the Effective Time;
(c) at any time, by either Keystone or the Company in writing, (i) if any
application for prior approval of a Governmental Entity which is necessary to
consummate the Merger, the Conversion or the other transactions contemplated
hereby is denied or withdrawn at the request or recommendation of the
Governmental Entity which must grant such approval, unless within the 25-day
period following such denial or withdrawal a petition for rehearing or an
amended application has been filed with the applicable Governmental Entity,
provided, however, that no party shall have the right to terminate this
Agreement pursuant to this Section 7(c)(i) if such denial or request or
recommendation for withdrawal shall be due to the failure of the party seeking
to terminate this Agreement to perform or observe the covenants and agreements
of such party set forth herein, or (ii) if any Governmental Entity of competent
jurisdiction shall have issued a final nonappealable order enjoining or
otherwise prohibiting the consummation of the Merger, the Conversion or the
other transactions contemplated by this Agreement;
(d) at any time, by either Keystone or the Company in writing, if (i) the
shareholders of the Company do not approve this Agreement after a vote taken
thereon at a meeting duly called for such purpose (or at any adjournment
thereof) or (ii) the depositors of Keystone do not approve the Conversion after
a vote taken thereon at a meeting duly called for such purpose (or at any
adjournment thereof), unless in either case the failure of such occurrence shall
be due to the failure of the party seeking to terminate to perform or observe in
any material respect its agreements set forth herein to be performed or observed
by such party at or before the Effective Time; and
(e) by either Keystone or the Company in writing if the Effective Time has
not occurred by the close of business on March 31, 2004, of the date hereof,
provided that this right to terminate shall not be available to any party whose
failure to perform an obligation in breach of such party's obligations under
this Agreement has been the cause of, or resulted in, the failure of the Merger
to be consummated by such date.
(f) At any time prior to the Company Meeting, by Keystone if (i) the
Company shall have breached Section 5.7, (ii) the Company Board shall have
failed to make its recommendation referred to in Section 5.2(a), withdrawn such
recommendation or modified or changed such recommendation in a manner adverse in
any respect to the interests of Keystone or (iii) the Company shall have
materially breached its obligations under Section 5.2(a) by failing to call,
give notice of, convene and hold the Company Meeting in accordance with Section
5.2(a).
(g) By Keystone if a tender offer or exchange offer for 20% or more of the
outstanding shares of Company Common Stock is commenced (other than by Keystone
or a Subsidiary thereof), and the Company Board recommends that the shareholders
of the Company tender their shares in such tender or exchange offer or otherwise
fails to recommend that such shareholders reject such tender offer or exchange
offer within the ten-Business Day period specified in Rule 14e-2(a) under the
Exchange Act.
(h) At any time prior to the Company Meeting, by the Company in order to
concurrently enter into an acquisition agreement or similar agreement (each, an
"Acquisition Agreement") with respect to a Superior Proposal which has been
received and considered by the Company and the Company Board in compliance with
Section 5.7 hereof, provided, however, that this Agreement may be terminated by
the Company pursuant to this Section 7.1(h) only after the fifth Business Day
following Keystone's receipt of written notice from the Company in accordance
with Section 5.7(b) advising Keystone that the Company is prepared to enter into
an Acquisition Agreement with respect to a Superior Proposal, and only if,
during such five-Business Day period, Keystone does not, in its sole discretion,
make an offer to the Company that the Company Board determines in good faith,
after consultation with its financial and legal advisors, is at least equal to
the Superior Proposal.
(i) At any time prior to the Depositor Meeting, by the Company if (i) the
Keystone Board shall have failed to make its recommendation referred to in
Section 5.2(b), withdrawn such recommendation or modified or changed such
recommendation in a manner adverse in any respect to the interests of the
Company or (ii) Keystone shall have materially breached its obligations under
Section 5.2(b) by failing to call, give notice of, convene and hold the
Depositor Meeting in accordance with Section 5.2(b).
For purposes of this Section 7.1, termination by Keystone also shall be
deemed to be a termination on behalf of the Holding Company.
7.2 Effect of Termination
---------------------
In the event that this Agreement is terminated pursuant to Section 7.1
hereof, this Agreement shall become void and have no effect, except that (i) the
provisions relating to confidentiality set forth in Section 5.4(b) and expenses
and the termination fees set forth in Section 8.1, and this Section 7.2, shall
survive any such termination and (ii) a termination pursuant to Section 7.1(b),
(c), (d), (e), (f), (g) or (h) shall not relieve the breaching party from
liability for willful breach of any covenant, undertaking, representation or
warranty giving rise to such termination.
7.3 Survival of Representations, Warranties and Covenants
-----------------------------------------------------
All representations, warranties and covenants in this Agreement or in any
instrument delivered pursuant hereto or thereto shall expire on, and be
terminated and extinguished at, the Effective Time other than covenants that by
their terms are to be performed after the Effective Time (including without
limitation the covenants set forth in Sections 5.9, 5.10, 5.11 and 5.12 hereof),
provided that no such representations, warranties or covenants shall be deemed
to be terminated or extinguished so as to deprive Keystone or the Company (or
any director, officer or controlling person of either thereof) of any defense at
law or in equity which otherwise would be available against the claims of any
person, including, without limitation, any shareholder or former shareholder of
either Keystone or the Company.
7.4 Waiver
------
Each party hereto by written instrument signed by an executive officer of
such party, may at any time (whether before or after approval of this Agreement
by the shareholders of the Company) extend the time for the performance of any
of the obligations or other acts of the other party hereto and may waive (i) any
inaccuracies of the other party in the representations or warranties contained
in this Agreement or any document delivered pursuant hereto, (ii) compliance
with any of the covenants, undertakings or agreements of the other party, (iii)
to the extent permitted by law, satisfaction of any of the conditions precedent
to its obligations contained herein or (iv) the performance by the other party
of any of its obligations set forth herein, provided that any such waiver
granted, or any amendment or supplement pursuant to Section 7.5 hereof executed
after shareholders of the Company have approved this Agreement shall not modify
either the amount or form of the consideration to be provided hereby to the
holders of Company Common Stock upon consummation of the Merger or otherwise
materially adversely affect such shareholders without the approval of the
shareholders who would be so affected.
7.5 Amendment or Supplement
-----------------------
This Agreement may be amended or supplemented at any time by mutual
agreement of the parties hereto, subject to the proviso to Section 7.4 hereof.
Any such amendment or supplement must be in writing and authorized by or under
the direction of their respective Boards of Directors.
ARTICLE VIII
MISCELLANEOUS
8.1 Expenses; Termination Fees
--------------------------
(a) Each party hereto shall bear and pay all costs and expenses incurred by
it in connection with the transactions contemplated by this Agreement, including
fees and expenses of its own financial consultants, investment bankers,
accountants and counsel, provided that notwithstanding anything to the contrary
contained in this Agreement, neither Keystone nor the Company shall be released
from any liabilities or damages arising out of its willful breach of any
provision of this Agreement.
(b) In recognition of the efforts, expenses and other opportunities
foregone by Keystone while structuring and pursuing the Merger, the parties
hereto agree that the Company shall pay to Keystone a termination fee of $4.0
million (the "Termination Fee") in the manner set forth below if:
(i) this Agreement is terminated by Keystone pursuant to Section
7.1(f) or (g);
(ii) this Agreement is terminated by (A) Keystone pursuant to
Section 7.1(b), (B) by either Keystone or the Company pursuant to
Section 7.1(e), or (C) by either Keystone or the Company pursuant to
Section 7.1(d)(i) (other than by reason of any breach by Keystone or
the Company, respectively), and in the case of any termination
pursuant to clause (A), (B) or (C) an Acquisition Proposal shall have
been publicly announced or otherwise communicated or made known to the
senior management of the Company or the Board of Directors of the
Company (or any Person shall have publicly announced, communicated or
made known an intention, whether or not conditional, to make an
Acquisition Proposal) at any time after the date of this Agreement and
prior to the taking of the vote of the shareholders of the Company
contemplated by this Agreement at the Company Meeting, in the case of
clause (C), or the date of termination of this Agreement, in the case
of clause (A) or (B); or
(iii) this Agreement is terminated by the Company pursuant to
Section 7.1(h).
In the event the Termination Fee shall become payable pursuant to Section
8.1(b)(i) or (ii), (x) the Company shall pay to Keystone an amount equal to $1.5
million on the first Business Day following termination of this Agreement, and
(y) if within 24 months after such termination the Company or a Subsidiary of
the Company enters into any agreement with respect to, or consummates, any
Acquisition Transaction, the Company shall pay to Keystone the Termination Fee
(net of any payment made pursuant to clause (x) above) on
the date of execution of such agreement or consummation of the Acquisition
Transaction. In the event the Termination Fee shall become payable pursuant to
Section 8.1(b)(iii), the Company shall pay to Keystone the entire Termination
Fee within two Business Days following the date of termination of this
Agreement. Any amount that becomes payable pursuant to this Section 8.1(b) shall
be paid by wire transfer of immediately available funds to an account designated
by Keystone.
(c) The Company and Keystone agree that the agreements contained in
paragraphs (b) and (d) of this Section 8.1 are an integral part of the
transactions contemplated by this Agreement, that without such agreement either
Party would not have entered into this Agreement and that such amounts do not
constitute a penalty or liquidated damages in the event of a breach of this
Agreement by either Party. If either Party fails to pay the other Party hereto
the amounts due thereto under paragraphs (b) and (d) above, as the case may be,
within the time periods specified therein, such Party shall pay the costs and
expenses (including reasonable legal fees and expenses) incurred by the other
Party in connection with any action in which the other Party prevails, including
the filing of any lawsuit, taken to collect payment of such amounts, together
with interest on the amount of any such unpaid amounts at the prime lending rate
prevailing during such period as published in The Wall Street Journal,
calculated on a daily basis from the date such amounts were required to be paid
until the date of actual payment.
(d) In the event that this Agreement is terminated by the Company pursuant
to Section 7.1(c), 7.1(d)(ii) or 7.1(i), then Keystone shall pay to the Company,
within five business days of such termination, a termination fee of $1.0 million
plus the documented out-of pocket expenses incurred by the Company in connection
with the transactions contemplated by this Agreement not to exceed $1.0 million
in the aggregate; provided, however, that Keystone shall not be required to pay
the termination fee or to reimburse the Company for such expenses if at the time
of such termination the Company had materially breached its representations,
warranties or covenants or if the failure to obtain such approvals, waivers or
authorizations of any Governmental Entity resulted as a consequence of facts or
circumstances relating to the Company or its Subsidiaries.
8.2 Entire Agreement
----------------
This Agreement contains the entire agreement among the parties with respect
to the transactions contemplated hereby and supersedes all prior arrangements or
understandings with respect thereto, written or oral, other than documents
referred to herein and therein. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the parties hereto and thereto and
their respective successors. Nothing in this Agreement, expressed or implied, is
intended to confer upon any party, other than the parties hereto, and their
respective successors, any rights, remedies, obligations or liabilities other
than as set forth in Sections 5.9, 5.10 and 5.11 hereof.
8.3 No Assignment
-------------
None of the parties hereto may assign any of its rights or obligations
under this Agreement to any other person.
8.4 Notices
-------
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally, telecopied
(with confirmation) or sent by overnight mail service or by registered or
certified mail (return receipt requested), postage prepaid, addressed as
follows:
If to Keystone:
Keystone Savings Bank
Xxxxx 000 xxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx
Chairman
Fax: (000) 000-0000
With a required copy to:
Elias, Matz, Xxxxxxx & Xxxxxxx L.L.P.
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq. or Xxxxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
If to the Company:
First Colonial Group, Inc.
00 Xxxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx
President and Chief Executive Officer
Fax: (000) 000-0000
With a required copy to:
Blank Rome LLP
Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn: Xxxxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
8.5 Alternative Structure
---------------------
Notwithstanding any provision of this Agreement to the contrary, Keystone
may, with the written consent of the Company, which shall not be unreasonably
withheld, elect, subject to the filing of all necessary applications and the
receipt of all required regulatory approvals, to modify the structure of the
acquisition of the Company set forth herein, provided that (i) such modification
will not adversely affect the tax treatment of the Company's shareholders as a
result of receiving shares of Company Common Stock (ii) consideration to be paid
to the holders of the Company Common Stock is not thereby changed in kind or
reduced in amount as a result of such modification and (iii) such modification
will not materially delay or jeopardize receipt of any required regulatory
approvals or impair or prevent the satisfaction of any other condition to the
obligations of Keystone set forth in Sections 6.1 and 6.3 hereof.
8.6 Interpretation
--------------
The captions contained in this Agreement are for reference purposes only
and are not part of this Agreement.
8.7 Counterparts
------------
This Agreement may be executed in any number of counterparts, and each such
counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
8.8 Governing Law
-------------
This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Pennsylvania applicable to agreements made and
entirely to be performed within such jurisdiction. Any dispute arising hereunder
shall be brought before a court located in the Commonwealth of Pennsylvania.
Each of the Parties hereto waives all rights to a trial by jury in any action,
proceeding or counteraction related to or arising out of this Agreement and the
transactions contemplated hereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers and their corporate
seal to be hereunto affixed and attested by their officers thereunto duly
authorized, all as of the day and year first above written.
KEYSTONE SAVINGS BANK
Attest:
/s/ Xxxxxxx X. Xxxxxx By:/s/ Xxxxxxx X. Xxxxxxx
---------------------------------- ------------------------------
Name: Xxxxxxx X. Xxxxxx Name: Xxxxxxx X. Xxxxxxx
Title: Corporate Secretary Title: Chairman of the Board
FIRST COLONIAL GROUP, INC
Attest:
/s/Xxx Xxxx By: /s/ Xxxxx X. Xxxxxx
---------------------------------- ------------------------------
Name: Xxx Xxxx Name: Xxxxx X. Xxxxxx
Title: Corporate Secretary Title: President and Chief
Executive Officer
