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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 20, 1997
First Lehigh Corporation
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(Exact name of registrant as specified in its charter)
Pennsylvania 33-71712 23-2218479
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(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
1620 Pond Road, Allentown, Pennsylvania 18104
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (610) 398-6660
N/A
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
On June 20, 1997, First Lehigh Bank (the "Bank"), the banking
subsidiary of First Lehigh Corporation (the "Registrant"), entered into a Branch
Purchase Agreement (the "Agreement") with The Quakertown National Bank ("QNB"),
a subsidiary of QNB Corp., pursuant to which QNB agreed to purchase from the
Bank the deposits of the Quakertown Branch (the "Branch") of the Bank located
in Quakertown, Pennsylvania. The acquisition agreement is subject to regulatory
approval and is expected to be consummated by the fourth quarter of 1997. The
Bank estimates that the amount of the deposits to be transferred to QNB
represents approximately 8.6% of the Bank's total deposit liabilities.
Statements made in this Form 8-K Current Report as to the contents of the
Agreement represent a summary of such contents. Reference is made to the text of
the Agreement, which is filed as an exhibit to this Form 8-K Report, for the
complete terms of the Agreement, and each statement made in this report is
deemed qualified in its entirety by such reference.
At closing under the Agreement, the Bank will deliver to QNB customer
records and an amount equal to specified deposit liabilities relating to the
Branch that are being assumed by QNB, and QNB will assume the specified deposit
liabilities of the Branch, consisting of savings accounts, certificates of
deposit, negotiable order of withdrawal accounts, demand deposit accounts,
money market deposit accounts, individual retirement accounts and trust deposit
accounts legally assumable by QNB and other deposits or savings accounts,
excluding the accounts of depositors outside the Branch's geographic region as
specified in the Agreement. QNB will also pay to the Bank a cash premium in an
amount equal to 7.5% of the daily average balance of the deposit liabilities to
be assumed by QNB, including accrued but unpaid interest, as indicated by the
general ledger account of the Branch over the 30-day period preceding the
closing date. No cash premium will be paid, however, on any certificates of
deposit with an original maturity of less than one year with balances (excluding
accrued interest) in excess of $100,000 per account, brokered deposits or
governmental funds on which the Bank may have contracted for or become
obligated to pay interest after June 30, 1995.
QNB represents in the Agreement that it believes that the proposed
consolidation of the Branch with one of QNB's Quakertown offices will be treated
as a relocation and not as a closing of the Branch. If, however, the Office of
the Comptroller of the Currency (the "OCC") determines that the consolidation
constitutes a branch closing, the Bank has agreed to lease the branch to QNB for
a term of not more than six months following the closing date so that QNB may
operate the Branch and provide the required notice of branch closing to the OCC
and the Pennsylvania Department of Banking.
The Agreement also provides that, for a period of two years following
the closing date, (i) the Bank will not directly or
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indirectly solicit customers whose deposit liabilities are being assumed by QNB,
except for certain excluded solicitations specified in the Agreement, and (ii)
the Bank will not expand or relocate any retail banking branch located as of the
closing date within an area of seven miles surrounding the Branch to a location
that is closer in distance to the Branch, or open or establish any other
physical banking facility, which offers products or services that compete with
the deposit, consumer loan or mortgage business of the Branch, including any
loan production office or loan or mortgage origination office within an area of
seven miles surrounding the Branch.
Item 7. Financial Statements and Exhibits.
The following exhibits are being filed by the Registrant with this
Form 8-K report:
Exhibit No. Description
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2.1 Branch Purchase Agreement between First
Lehigh Bank and The Quakertown National
Bank dated as of June 20, 1997. (Pursu-
ant to Item 601 of Regulation S-B, the
schedules and attachments listed in the
Table of Contents to the Branch Purchase
Agreement have been omitted and will be
provided to the Commission upon
request.)
99.1 A copy of the Joint Press Release of QNB
Corp. and the Registrant dated June
20, 1997.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
FIRST LEHIGH CORPORATION
By: /s/ James L. Leuthe
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James L. Leuthe, Chairman and
Chief Executive Officer
Dated: July 3, 1997
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EXHIBIT INDEX
(Pursuant to Item 601 of Regulation S-K)
Exhibit No. Description
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2.2 Branch Purchase Agreement between
First Lehigh Bank and The
Quakertown National Bank dated as
of June 20, 1997. (Pursuant to
Item 601 of Regulation S-B, the
schedules and attachments listed
in the Table of Contents to the
Branch Purchase Agreement have
been omitted and will be provided
to the Commission upon request.)
99.1 A copy of the Joint Press Release
of QNB Corp. and the Registrant
dated June 20, 1997.
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BRANCH PURCHASE AGREEMENT
between
FIRST LEHIGH BANK
as the Seller
and
THE QUAKERTOWN NATIONAL BANK
as the Purchaser
dated as of
June 20, 1997
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TABLE OF CONTENTS
Article I - Transfer of Assets and Assumption of Liabilities
1.1 Transfer of Assets and Consideration........ 5
1.2 Payment of Premium.......................... 6
1.3 Obligations of the Seller................... 6
1.4 Short Term Lease of Branch.................. 7
1.5 Assumption Agreement........................ 8
1.6 Customer Records............................ 8
Article II - Certain Transitional Matters
2.1 Certain Transitional Matters................... 8
2.2 Prorations..................................... 10
Article III - Indemnification
3.1 Indemnification................................ 10
Article IV - Representations and Warranties of Seller
4.1 Corporate Organization and Power............ 12
4.2 No Violation................................ 12
4.3 Corporate Authority......................... 12
4.4 Disclosure.................................. 12
4.5 Limitation of Warranties.................... 12
4.6 Internal Revenue Service Reports............ 12
4.7 Taxes....................................... 13
4.8 Brokers' Fees.............................. 13
4.9 TIN Certification.......................... 13
4.10 Deposit Liabilities........................ 13
4.11 Deposit Insurance.......................... 13
4.12 No Adverse Litigation...................... 13
4.13 Title to Customer Records ................. 13
Article V - Representations and Warranties of the Purchaser
5.1 Corporate Organization .................... 14
5.2 No Violation .............................. 14
5.3 Corporate Authority ....................... 14
5.4 No Litigation ............................. 14
5.5 Disclosure ................................ 14
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5.6 Internal Revenue Service Reports............ 14
5.7 Brokers' Fees............................... 15
Article VI - Conduct of Business Pending the Closing Date
6.1 Conduct of Business......................... 15
Article VII - Obligations of the Parties Prior to and After Closing Date
7.1 Full Access................................. 16
7.2 Requirements of Regulatory Authorities...... 16
7.3 Regulatory Application to Effect the
Purchase of Customer Records and
Assumption of Liabilities................... 16
7.4 Further Assurances.......................... 16
7.5 Communications.............................. 16
7.6 Covenant Not To Compete..................... 17
7.7 Restriction on New Branch................... 18
7.8 Restriction on Sale of Real Estate.......... 18
7.9 Retirement Plan Accounts.................... 18
Article VIII - Conditions to Purchaser's Obligations
8.1 Representations and Warranties True......... 18
8.2 Obligations Performed....................... 19
8.3 No Adverse Litigation....................... 19
8.4 Certificate of Compliance................... 19
8.5 Regulatory Approval......................... 19
8.6 Opinion of Counsel.......................... 19
8.7 No Material and Adverse Changes............. 19
8.8 Trustee Substitution and Acceptance......... 20
Article IX - Conditions to the Seller's Obligations
9.1 Representations and Warranties True......... 20
9.2 Obligations Perfonned....................... 20
9.3 No Adverse Litigation....................... 20
9.4 Certificate of Compliance................... 20
9.5 Regulatory Approval......................... 20
9.6 Opinion of Counsel.......................... 20
Article X - Closing Procedures
10.1 Closing Date and Place...................... 21
10.2 Procedure at the Closing; Adjustments....... 21
10.3 Change of Name; Notification of Customers... 22
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Article XI - Termination
11.1 Methods of Termination...................... 23
11.2 Procedure Upon Termination.................. 23
11.3 Payment of Expenses......................... 24
Article XII - Miscellaneous Provisions
12.1 Amendment and Modification.................. 24
12.2 Assignment.................................. 24
12.3 Counterparts................................ 24
12.4 Headings.................................... 25
12.5 Survival of Representations and Warranties.. 25
12.6 Payment of Expenses......................... 25
12.7 Governing Law............................... 25
12.8 Press Releases, Public Announcements........ 25
12.9 Waiver or Extension......................... 25
12.10 Addresses for Notices, etc.................. 25
Exhibit A Bill of Sale
Exhibit B Instrument of Assumption of Certain Liabilities
Schedule 1 Zip Code Areas
Schedule 2 Deposit Liabilities
Schedule 3 Form of Customer Records
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PROPOSED
BRANCH SALE AGREEMENT
THIS BRANCH SALE AGREEMENT (the "Agreement") is entered into this 20th
day of June, 1997, between First Lehigh Bank, a Pennsylvania chartered bank
having its principal office at 500 Main Street, Walnutport, Pennsylvania (the
"Seller"), and The Quakertown National Bank, a national banking association
having its principal office at 10 North Third Street, Quakertown, Pennsylvania
(the "Purchaser").
WHEREAS, the Seller wishes to sell certain assets and transfer the
deposits and certain other liabilities of the branch office operated by it
located in Quakertown, Pennsylvania (referred to herein as the "Branch"); and
WHEREAS, the Seller has established deposit relationships with certain
individuals and certain commercial and other entities at the Branch; and
WHEREAS, the Purchaser wishes to purchase certain assets and assume the
deposits and certain other liabilities of the Branch.
NOW, THEREFORE, in consideration of the foregoing, of the mutual
agreements, covenants, representations, warranties and conditions contained
herein, and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Seller and the Purchaser,
intending to be legally bound hereby, have agreed and do agree as follows:
ARTICLE I
TRANSFER OF ASSETS AND ASSUMPTION OF LIABILITIES
1.1 Transfer of Assets and Consideration.
(a) The Seller agrees that, subject to the terms and conditions of
this Agreement, it will sell, assign, transfer, convey and
deliver to the Purchaser, on the Closing Date (as hereinafter
defined), a list of customer information (the "Customer
Records") as more fully set forth in Section 1.6 of this
Agreement.
(b) The Purchaser agrees that on the Closing Date, subject to the
terms and conditions of this Agreement, and in consideration
for the aforesaid sale, assignment, transfer, conveyance and
delivery, the Purchaser will assume and agree to pay, perform
and discharge deposit liabilities of the Seller that the
Purchaser may legally assume which shall consist of:
(i) savings accounts;
(ii) certificates of deposit;
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(iii) negotiable order of withdrawal accounts;
(iv) demand deposit accounts;
(v) money market deposit accounts;
(vi) individual retirement accounts and trust
deposit accounts that Purchaser may legally
assume; and
(vii) other deposits or savings accounts
maintained at the Branch, according to their respective terms,
as of the close of business on the Closing Date (the "Deposit
Liabilities"). The Deposit Liabilities shall exclude (i)
deposit accounts maintained at the Branch by deposit holders
located outside the geographic service area of Purchaser as
described by the list of zip codes attached hereto as Schedule
1, but may include such other deposit accounts as
Purchaser shall agree; (ii) deposit accounts identified as
having uncollected funds; and (iii) such other accounts as
Purchaser, in its discretion, chooses to exclude. Attached
hereto as Schedule 2 is a listing of the Deposit Liabilities.
(c) In consideration of Purchaser's assumption of the Deposit
Liabilities on the Closing Date as provided is Section 1.1(b) hereof, on the
Closing Date, Seller shall pay to Purchaser that amount (the "Settlement
Amount") as is equal to the amount of the Deposit Liabilities, all as more
particularly provided in Section 10.2 hereof.
1.2 Payment of Premium. The Purchaser further agrees that on the Closing Date,
subject to the terms and conditions of this Agreement, it also shall pay to the
Seller a cash premium (the "Cash Premium") in an amount equal to seven and
one-half percent (7.5%) of the daily average balance of Deposit Liabilities,
including accrued but unpaid interest, as indicated by the general ledger
account of the Branch over the thirty (30) day period next preceding the Closing
Date, to be assumed by the Purchaser as of the Closing Date. Provided, however,
that Purchaser shall pay no Cash Premium on any certificates of deposit with an
original maturity of less than one (1) year with balances (excluding accrued
interest) in excess of $100,000 per account, brokered deposits, or governmental
funds that Seller may have contracted for or become obligated to pay interest on
after June 30, 1995. It being expressly understood that such certificates of
deposit, brokered deposits, or governmental funds referred to above shall not be
subject to the Cash Premium provided for herein.
1.3 Obligations of the Seller. On the Closing Date, the Seller will:
(a) execute, acknowledge (if appropriate) and deliver to the
Purchaser a Bill of Sale, as set forth in Exhibit A, hereto
and all such deeds, endorsements, assignments or other
instruments of conveyance, assignment end transfer es shall
be reasonably necessary or advisable to consummate the sale of
the Customer Records to the Purchaser,
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including without limitation, prepaid expenses and the records
of the Branch;
(b) assign, transfer end deliver to the Purchaser such of the
following records pertaining to the Deposit Liabilities to be
assumed by the Purchaser and any other records related to the
operations of the Branch:
(i) Signature cards, orders and contracts between the
Seller and customers of accounts to be transferred
hereunder, taxpayer identification number
certifications and records relating thereto;
(ii) The form of rules and regulations applicable to the
accounts to be transferred hereunder;
(iii) Powers of attorney and Trust Agreements;
(iv) Signature authorizations, copies of corporate
resolutions and partnership agreements; and
(v) Notices of back-up withholding arrangements.
The Purchaser agrees that it will preserve and safely keep, for as long
as may be required by applicable law, all of the signature cards, orders,
contracts, forms, taxpayer identification number certifications, and records
hereinabove referred to for the joint benefit of itself and the Seller, and that
it will permit the Seller and its representatives to inspect, and make extracts
from or copies of, any such signature cards, orders, contracts, forms, taxpayer
identification number certifications or records, at any reasonable time with
prior notice, and at the expense of the Seller, as shall be reasonably necessary
to the Seller for purposes of its records. The Seller agrees that it will
preserve and safely keep, for as long as may be required by applicable law, all
of the files, books of accounts and records as exist and are in Seller's
possession pertaining to the past history of the accounts transferred hereunder,
including deposits slips, canceled checks or withdrawal orders, for the joint
benefit of itself and the Purchaser, and that it will permit the Purchaser and
its representatives to inspect, and make extracts from or copies of, any such
files, books of accounts or records, at any reasonable time and at the expense
of the Purchaser, as shall be reasonably necessary to the Purchaser for purposes
of its records; and
1.4 Short Term Lease of Branch. Purchaser believes that the proposed
consolidation of the Branch with and into Purchaser's Quakertown office should
be treated as a relocation of the Branch and not as a closing of the branch
subject to the 90 day notice requirements and other requirements set forth in he
branch closing regulations of the Comptroller of the Currency (the "Branch
Closing Regulations"). Accordingly, Purchaser intends to consolidate the Branch
with and into its Quakertown office on the Closing Date. However, if the
Comptroller of the Currency determines that the proposed consolidation
constitutes a closing of the Branch subject to the Branch Closing Regulations,
then, in that event, Seller will lease the branch to Purchaser for a term of not
more than
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six (6) months following the Closing Date so that Purchaser will be able to
operate the Branch and to provide the 90 day notice required under the Branch
Closing Regulations prior to consolidating the branch with and into the
Quakertown office. The parties will in this connection enter into a lease (the
"Lease") on the Closing Date which will provide for monthly rental payments of
$3,120 each (plus utilities and a pro-rated share of real estate taxes,
insurance and other expenses required to be paid by Seller) and which will
contain such other terms and conditions as may be mutually agreed upon by the
parties.
1.5 Assumption Agreement. To evidence the assumption by the Purchaser of the
Liabilities end obligations of the Seller assumed pursuant to this Agreement,
the Purchaser will execute, acknowledge, and deliver to the Seller, on the
Closing Date, an assumption agreement attached hereto as Exhibit B "Instrument
of Assumption of Certain Liabilities".
1.6 Customer Records. Seller will provide Purchaser with Customer Records
consisting of information in substantially the form of as that shown in Schedule
3 attached hereto.
ARTICLE II
CERTAIN TRANSITIONAL MATTERS
2.1 Certain Transitional Matters. Following the Closing Date:
(a) The Purchaser agrees to pay in accordance with law, up to the collected
amount on deposit (and any other funds available by reason of any
agreement between the depositor and the Purchaser), all properly drawn
and presented checks, drafts and withdrawal orders presented to the
Purchaser by mail, over its counters or through the check clearing
system of the banking industry, by depositors of the Deposit
Liabilities assumed, whether drawn on the checks, withdrawal or draft
forms provided by the Seller, or by the Purchaser, and in all other
respects to discharge, in the usual course of the banking business, the
duties and obligations of the Seller with respect to the balances due
and owing to the depositors whose accounts are assumed by the
Purchaser.
(b) If any of such depositors, instead of accepting the obligation of the
Purchaser to pay the Deposit Liabilities assumed, shall demand
payment from the Seller for all or any part of any such assumed Deposit
Liabilities, the Seller shall not be liable or responsible for making
such payments. Instead, the Seller shall assume custody of the check or
other item presented for payment on an account which has been
transferred (including electronic debits), batch such items and make
them available to the Purchaser for pick-up at the Seller's location at
1:00 p.m. of the next business day after receipt thereof by the Seller.
The Seller shall not, at any time, be liable or responsible for making
payment on such items by reason of its obtaining custody of them for
transmittal to the Purchaser. Nothing herein shall, however, be
construed
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to relieve the Seller of any liability which it may have for accepting
custody of any check or other item presented for payment on any account
which has been transferred with the Branch and which the Seller does
not timely batch or make such check or items available for pick-up by
the Purchaser in accordance with the provisions of this Section. In
order to reduce the continuing charges to the Seller through the check
clearing system of the banking industry which will result from check
forms of the Seller being used after the Closing Date by the depositors
whose accounts are assumed, the Purchaser agrees, at its cost and
expense, not less than thirty (30) calendar days prior to the Closing
Date, to notify depositors, by letter in a form mutually acceptable to
Seller and Purchaser, of the Purchaser's assumption of Deposit
Liabilities and, at its sole cost and expense and without cost: to
depositors, to furnish each depositor of an assumed account with not
less than fifty (50) checks on the forms of the Purchaser, with
instructions to utilize the Purchaser's checks and to destroy unused
checks of the Seller as of the Closing Date. The Seller hereby agrees
that after the 30th calendar day following the Closing Date, it shall,
with respect to any check or other item presented to it for payment on
an account which has been transferred with the Branch, at its sole
option either: (i) return such check or other item with reference to
the maker thereof; or (ii) assume custody thereof, batch the same and
make it available to the Purchaser for pick-up in the manner aforesaid
and telephone the Purchaser of the availability of the same for pick-up
prior to 1:00 p.m. of the next business day after receipt thereof by
the Seller. Purchaser and Seller agree that any courier or telephone
cost associated with this processing shall be borne by Purchaser.
(c) The Purchaser will settle with the Seller any such checks, drafts or
orders of withdrawal presented for reimbursement no later than 3:00
p.m. on the business day they are presented by the Seller to the
Purchaser.
(d) For a period of sixty (60) calendar days after the Closing Date, Seller
agrees to continue to receive after the Closing on behalf of Purchaser
federal recurring payments or ACH transfers currently directed to
Seller. Seller agrees to send notice of change with regard to the
deposit accounts to which the federal recurring payments or ACH
transfers are directed to the sender, upon each receipt of a
mis-directed transfer, for a period of sixty (60) days following the
Closing Date. Seller also agrees that any daily magnetic tapes or
electronic transmissions provided to Purchaser pursuant to Section
2.1(a) herein shall include a record of all such recurring federal
payments or ACH transfers received the same day by Seller. Purchaser
agrees to reimburse Seller for any reasonable telephone costs incurred
by Seller in the provision of this service.
(e) The parties shall cooperate in good faith and in a commercially
reasonable manner, such that the transitional matters described above
and provided for in this Agreement are undertaken and accomplished.
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2.2 Prorations. It is the intention of the parties that Seller shall operate for
its own account the business being transferred pursuant to this Agreement until
the close of business on the Closing Date, and that the Purchaser shall operate
for its own account the business being transferred pursuant to this Agreement
from and after the Closing Date. Thus, except as otherwise specifically
provided in this Agreement, items of income and expense shall be prorated or
adjusted between the parties as of the close of business on the Closing Date,
whether or not such adjustment would normally be made as of such time. The
obligations of the parties under this paragraph shall survive the Closing Date;
provided, however, that no proration shall occur for any Bank Insurance Fund
("BIF") premium assessment end any other tax or related assessment paid or
payable relating to the Deposit Liabilities, or any rebate or refund of such
premium assessment.
ARTICLE III
INDEMNIFICATION
3.1 Indemnification.
(a) The Seller shall indemnify, hold harmless and defend the Purchaser at
all times after the Closing Date from and against any and all losses,
claims, damages, costs, expenses, liabilities, demands and obligations
(including, without limitation, reasonable legal fees and expenses)
arising out of any actions, suits or proceedings commenced on or prior
to the Closing Date (other than proceedings to prevent or limit the
consummation of this Agreement) relating to operations at the Branch;
and the Seller shall indemnify, hold harmless and defend the Purchaser
from and against all losses, claims, damages, costs, expenses and
liabilities (including, without limitation, reasonable legal fees)
arising out of any actions, suits or proceedings commenced on or after
the Closing Date but which relate to operations at the Branch on or
prior to the Closing Date or resulting from real estate, sales and use,
social security and unemployment taxes, all accounts payable and
operating expenses including salaries, rents and utility charges, which
the Purchaser may receive, suffer or incur in connection with
operations and transactions occurring prior to the Closing Date, and
which involve the Branch or the Customer Records transferred or Deposit
Liabilities assumed pursuant to this Agreement. The Seller agrees
further to defend, indemnify, and hold harmless the Purchaser against
all losses, claims, damages, costs, expenses and liabilities (including
without limitation reasonable legal fees) and obligations resulting
from any material breach of this Agreement, representation, or warranty
made by the Seller in this Agreement or in any certificate delivered to
the Purchaser hereunder. The Purchaser will give the Seller written
notice of a threatened or pending claim within fifteen (15) calendar
days (except in the case where the Purchaser's first notice is its
receipt of a Complaint, in which such time for giving notice shall be
five (5) calender days) of its learning about such threatened or
pending claim, together with a statement of facts known to it regarding
such threatened or pending claim. The Seller will then have fifteen
(15) calendar days
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from the date it receives such notice to investigate the threatened or
pending claim to determine whether it will elect to assume the defense
of the matter involving such threatened or pending claim. If it does so
elect, the Seller will be given the Purchaser's full cooperation and
assistance in maintaining such defense. The Seller shall not be liable
for any amounts in settlement of a claim or action as described above
if such settlement is effected without the Seller's written consent,
which consent shall not be unreasonably withheld. It is understood that
the obligations of the Seller under this paragraph shall survive the
Closing Date.
(b) The Purchaser shall indemnify, hold harmless and defend the Seller at
all times after the Closing Date from and against any and all losses,
claims, damages, costs, expenses, liabilities, demands and obligations
(including, without limitation, reasonable legal fees and expenses)
arising out of any actions, suits or proceedings commenced after the
closing Date (other than proceedings to prevent or limit the
consummation of this Agreement) relating to operations at the Branch;
or resulting from real estate, sales and use, social security and
unemployment taxes, all accounts payable and operating expenses
including salaries, rents and utility charges, which the Seller may
receive, suffer or incur in connection with operations and transactions
occurring after the Closing Date, and which involve the Branch or the
Customer Records transferred or Deposit Liabilities assumed pursuant to
this Agreement. The Purchaser agrees further to defend, indemnify, and
hold harmless the Seller against all losses, claims, damages, costs,
expenses and liabilities (including, without limitation, reasonable
legal fees) and obligations resulting from any breach of this
Agreement, representation, or warranty made by the Purchaser in this
Agreement or in any certificate delivered to the Seller hereunder. The
Seller will give the Purchaser written notice of a threatened or
pending claim within fifteen (15) calendar days (except in the case
where the Seller's first notice is its receipt of a Complaint, in which
such time for giving notice shall be five (5) calendar days) of its
learning about such threatened or pending claim, together with a
statement of facts known to it regarding such threatened or pending
claim. The Purchaser will then have fifteen (15) calendar days from the
date it receives such notice to investigate the threatened or pending
claim to determine whether it will elect to assume the defense of the
matter involving such threatened or pending claim. If it does so elect,
the Purchaser will be given the Seller's full cooperation and
assistance in maintaining such defense. The Purchaser shall not be
liable for any amounts in settlement of a claim or action as described
above if such settlement is effected without the Purchaser's written
consent, which consent shall not be unreasonably withheld. It is
understood that the obligations of the Purchaser under this paragraph
shall survive the Closing Date.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
The Seller hereby represents and warrants to the Purchaser as follows:
4.1 Corporate Organization and Power. The Seller is a Pennsylvania banking
institution duly organized, validly existing and in good standing under the laws
of the Commonwealth of Pennsylvania. The Seller has the corporate power and
authority to own its properties, to effect this transaction and carry on its
business as presently conducted. The Seller's deposits are insured by the
Federal Deposit Insurance Corporation ("FDIC") to the current maximum permitted
by applicable law. Seller has full corporate power to carry on the business of
the Branch as presently conducted and to own or lease the properties used in
connection with the business of the Branch.
4.2 No Violation. Neither the execution and delivery of this Agreement, nor the
consummation of this sale, will violate or conflict: (i) the Charter,
Certificate of Incorporation or Articles of Association (whichever is
applicable) or Bylaws of the Seller; (ii) any provision of any agreement or any
other restriction of any kind to which the Seller is a party or by which the
Seller is bound under any material lease: or (iii) any statute, law, decree,
regulation or order of any governmental authority known to the Seller, once the
governmental consents referred to in this Agreement are obtained; or (iv) will
result in a default under or cause the acceleration of the maturity of, any
obligation or loan to which the Seller is a party.
4.3 Corporate Authority. The execution and delivery of this Agreement, and the
consummation of this sale, have been duly authorized by the Board of Directors
of the Seller. No further corporate authorization on the part of the Seller is
necessary to consummate the transaction.
4.4 Disclosure. No representation or warranty of the Seller contained in this
Agreement, nor any schedule, exhibit or other document furnished or to be
furnished by the Seller, contains or will contain any untrue statement of a
material fact or omits or will omit a material fact necessary in order to make
the statements contained therein not misleading.
4.5 Limitation of Warranties. Except as may be expressly represented or
warranted in this Agreement by the Seller, the Seller makes no representations
or warranties whatsoever with regard to any assets being transferred to the
Purchaser, or liability or obligation being assumed by the Purchaser.
4.6 Internal Revenue Service Report. After the Closing Date, to the extent
required under existing laws and regulations, the Seller shall report to the
Internal Revenue Service and the account holders all interest actually paid or
posted accounts from January 1 of the current calendar year through the Closing
Date.
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4.7 Taxes. All federal, county and local taxes of Seller with respect to the
Branch, including, but not limited to, income, withholding, social security,
unemployment, franchise, excise, personal property, real property and gross
receipt taxes, have been paid or accrued, including interest and penalties
related thereto. The consummation of the transactions contemplated by this
Agreement will not result in any claim or assessment of any additional taxes of
any kind or character by any governmental authority against the Purchaser other
than with respect to the operations of the Branch after Closing.
4.8 Brokers' Fees. Seller has not employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finder's fees in connection
with the transactions contemplated by this Agreement and hereby agrees to
indemnify Purchaser against any claim for brokerage fees, commissions, finder's
fees or other payment of a similar nature arising as a result of Seller's
actions.
4.9 TIN Certification. Seller has complied in all material respects with all
applicable laws in obtaining, maintaining and servicing the Deposit Liabilities,
including the use of due diligence relating to taxpayer identification number
compliance with respect to depositors.
4.10 Deposit Liabilities. The Deposit Liabilities to be transferred pursuant to
this Agreement are fully enforceable and in material compliance with all
applicable laws and rules and regulations in all material respects including, by
way of illustration and not limitation, their terms, interest rates and
administration.
4.11 Deposit Insurance. The Deposit Liabilities to be transferred pursuant to
this Agreement are insured by the BIF of the FDIC up to the maximum extent
permitted by law. Seller has filed all reports and paid all premiums required
under the Federal Deposit Insurance Act.
4.12 No Adverse Litigation. There is no action, arbitration, suit, proceeding or
claim pending or, to the best of Seller's knowledge, threatened, against Seller
with respect to, or adversely affecting, the Branch or Customer Records being
purchased hereunder or the liabilities being assumed hereunder before or by any
federal, state, municipal or other governmental department, commission, board,
agency or instrumentality.
4.13 Title to Customer Records. Seller owns the Customer Records, free and clear
of any mortgage, pledge, lien, security interest, conditional sales agreement,
lease, encumbrance or charge of any nature whatsoever, except (i) liens for
current taxes or assessments which are not yet due and payable or are being
contested by Seller in good faith, (ii) builders', mechanics', materialmen's, or
other similar liens arising and continuing in the ordinary course of business
for obligations which are not yet due and payable and (iii) statutory and other
similar liens which are not yet due and payable and which do not materially
affect the value of the Customer Records subject thereto or the usefulness of
such Customer Records to the business of the Branch. At the Closing Date,
Purchaser will obtain good and marketable title, free and clear of any lien,
claim or encumbrance (except as described in the preceding sentence) to all of
the Customer Records.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser hereby represents and warrants to the Seller the
following:
5.1 Corporate Organization. The Purchaser is a national banking association duly
organized, validly existing and in good standing under the laws of the United
States of America and the rules and regulations of the Office of the
Comptroller of the Currency ("OCC"). The Purchaser has the corporate power and
authority to own or lease its properties, to effect the transactions
contemplated hereby and to carry on its business as presently being conducted.
The Purchaser is a member of the Federal Reserve System and its deposits are
insured by the Federal Deposit Insurance Corporation.
5.2 No Violation. Neither the execution and delivery of this Agreement nor the
consummation of this sale will violate or conflict with: (i) the Articles of
Association or the Bylaws of the Purchaser; (ii) any provision of any agreement
or any other restriction of any kind to which the Purchaser is a party or by
which the Purchaser is bound; or (iii) any statute, law, decree, regulation or
order of any governmental authority known to the Purchaser, once the
governmental consents referred to in this Agreement are obtained; or (iv) will
result in a default under, or cause the acceleration of the maturity of, any
obligation or loan to which the Purchaser is a party.
5.3 Corporate Authority. The execution and delivery of this Agreement, and the
consummation of this sale, have been duly authorized by the Board of Directors
of the Purchaser. No further corporate authorization on the part of the
Purchaser is necessary to consummate this transaction.
5.4 No Litigation. There is no action, suit, proceeding, inquiry or
investigation, at law or in equity, or before any court, public board or body
pending, or to the knowledge of the Purchaser threatened against the Purchaser,
wherein an unfavorable decision, ruling or finding would materially and
adversely affect the transactions contemplated by this Agreement or adversely
affect the validly or enforceability of this Agreement or any document necessary
to consummate the transactions contemplated herein or any approval, consent or
permission required to be obtained by the Purchaser hereunder.
5.5 Disclosure. Neither this Agreement nor any schedule, exhibit, certificate or
other document furnished or to be furnished by the Purchaser on the Closing Date
contains or will contain any untrue statement of a material fact or omits or
will omit a material fact necessary in order to make the statement contained
therein not misleading.
5.6 Internal Revenue Service Reports. After the Closing Date, the Purchaser
shall report to the Internal Revenue Service and the account holders all
interest actually paid or posted to deposit accounts comprising the Deposit
Liabilities from the Closing Date through December 31 of the calendar year in
which the Closing occurs.
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5.7 Brokers' Fees. Purchaser has not employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finder's fees in connection
with the transactions contemplated by this Agreement and hereby agrees to
indemnify Seller against any claim for brokerage fees, commissions, finder's
fees or other payment of a similar nature arising as a result of Purchaser's
actions.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE CLOSING DATE
6.1 Conduct of Business. Pending the Closing Date, and except as otherwise
consented to by the Purchaser:
(a) The Seller will carry on the business of the Branch diligently and
substantially in the same manner as on the date hereof, and the Seller
will not, with regard to the Branch, engage in any one or more
activities or transactions which shall be outside of the ordinary
course of the business of the Branch as conducted as of the date
hereof, except for activities or transactions contemplated by this
Agreement; and
(b) The Seller will use commercially reasonable efforts to preserve intact
its business operations as conducted at the Branch. The Seller further
agrees to use commercially reasonable efforts to preserve for the
Purchaser the goodwill of the Customers and others having relations
with the business normally conducted at the Branch, and to cooperate
with and assist the Purchaser in assuring the orderly transition of
such business from the Seller to the Purchaser. Nothing in this
paragraph shall be construed as requiring the Seller to engage in any
activities or efforts outside of the ordinary course of business as
presently conducted.
(c) Between the date hereof and the Closing Date, Seller shall maintain the
Branch in customary repair, order and condition, and maintain its
books, accounts and records concerning the Branch in the ordinary and
usual manner on a basis consistent with past practice.
(d) Between the date hereof and the Closing Date, Seller shall not, without
the prior consent of the Purchaser: (i) cause or permit the transfer
from or to the Branch of any Deposit Liabilities, except upon the
unsolicited request of a depositor or otherwise in the ordinary course
of business; (ii) offer to or pay rates on Deposit Liabilities higher
or lower than those offered or paid at other Branches of Seller located
in the zip code areas listed on Schedule l; or (iii) offer to modify or
modify any of the contractual terms on the Deposit Liabilities at the
Branch.
(e) For a period of fourteen (14) days prior to the Closing Date, Seller
shall decline to accept unsolicited requests for new Negotiable Order
of Withdrawal ("NOW") and
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demand deposit accounts at the Branch. Seller shall, for such fourteen
day period, refer unsolicited requests for new NOW and demand deposit
accounts at the Branch to Purchaser's Country Square office located at
240 S. West End Boulevard, Quakertown, PA 18951-1181.
ARTICLE VII
OBLIGATIONS OF THE PARTIES PRIOR TO AND AFTER CLOSING DATE
7.1 Full Access. The Seller shall afford to the officers and authorized
representatives of the Purchaser access to properties, books and records
pertaining to the Branch in order that the Purchaser may have full opportunity
to make such reasonable investigations at such reasonable times as it shall
desire, of the affairs of the Seller relating to the Branch, and the officers of
the Seller will furnish the Purchaser with such additional financial and
operating data, including test tapes, and other information as to its business
and properties at the Branch as the Purchaser shall from time to time reasonably
request and as shall be available, including, without limitation, information
required for inclusion in all governmental applications necessary to effect this
sale. Nothing in this Section 7.1 shall be deemed to require the Seller to
breach any obligation of confidentiality. Purchaser shall maintain the
confidentiality of all information furnished to it by Seller pursuant to the
Section 7.1 and if the transactions contemplated by this Agreement are not
consummated for any reason, Purchaser agrees, at the option of Seller, either to
return all such information and any copies thereof, including any extracts
therefrom or memoranda relating thereto prepared by Purchaser, or to destroy all
such information.
7.2 Requirements of Regulatory Authorities. The Seller shall, as soon as is
practicable, notify the proper regulatory authorities of its intent to terminate
operation of the Branch and to consummate the transactions contemplated hereby
and thereafter shall: (i) comply with the normal and usual requirements
imposed by such authority applicable to effectuate this sale; and (ii) use
commercially reasonable good faith efforts to obtain any required approval of
such regulatory authority to cease operating the Branch.
7.3 Regulatory Application to Effect the Purchase of Customer Records and
Assumption of Liabilities. The Purchaser shall prepare and file, with the
assistance of the Seller, as soon as practicable following the date of execution
of this Agreement, an application, as required by law, to the appropriate
Federal regulatory authorities for approval to effect the transactions
contemplated hereby, and the parties hereto shall, if required by applicable
statute or regulation, publish appropriate notice of the sale. The Purchaser
agrees that it shall pay all regulatory application fee(s) together with the
cost of preparing the application (including any legal fees), referable to
documents it is required to file. The Seller agrees that it shall pay all
regulatory application fees together with the cost of preparing the application
(including any legal fees), referable to documents it is required to file.
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7.4 Further Assurances. Both parties hereby agree to execute and deliver such
instruments and take such other actions as the other party may reasonably
require in order to carry out the intent of this Agreement, and the Seller
agrees to give such bills of sale, acknowledgments and other instruments or
conveyance and transfer as, in the reasonable judgment of the Purchaser, shall
be necessary and appropriate to vest in the Purchaser legal and equitable title
to the Customer Records of the Seller being sold hereunder, free and clear of
all liens and encumbrances.
7.5 Communications. During the period from the execution of this Agreement to
the Closing, Purchaser and Seller shall not communicate with the employees,
depositors, or customers of the Branch, except as required by the relevant
regulatory agencies as part of their approval process, or as provided for
herein:
(a) As soon as practicable after execution of this Agreement, Purchaser and
Seller shall jointly communicate at Purchaser's and Seller's equal
expense with the employees, depositors and other customers of the
Branch, advising them of the transfers to be completed hereunder. Such
communication shall be in a form and substance mutually satisfactory to
the parties hereto. Either of the parties hereto also may issue a press
release announcing this transaction in a form and substance
satisfactory to the other party.
(b) Purchaser may not communicate with the employees, depositors and other
customers of the Branch in any manner which interrupts or interferes
with the normal operations of the Branch, but may make such other
communications as Purchaser shall determine, provided that Purchaser
gives Seller prior notice thereof, none of the communications reflect
adversely on Seller and such communications shall be at Purchaser's
sole cost and expense.
(c) Seller, at its own cost and expense, may communicate with the
employees, depositors and other customers of the Branch at such times
and in such form as it deems appropriate; provided, that no such
communication shall recommend any actions by any person that shall be
in contravention with the terms of this Agreement or reflect adversely
upon Purchaser.
(d) As required by Seller in connection with the operation of the Branch in
the ordinary course of business pending the Closing Date.
7.6 Covenant Not To Compete. In order that the Purchaser may have and enjoy the
full benefit of the transactions contemplated by this Agreement, Seller agrees
that it will not, for a period of two (2) years following the Closing Date,
directly or indirectly, solicit customers whose Deposit Liabilities and/or
banking relationships are acquired by the Purchaser pursuant to this Agreement.
Provided, however, that the foregoing shall not limit solicitations (i) as may
occur in connection with advertising or solicitations directed to the public
generally; or (ii) as may occur in connection with direct mailings from mailing
lists purchased from sources outside the Seller; or (iii) as may occur
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as a result of Seller's solicitation of deposits or loans outside of an area of
seven (7) miles surrounding the Branch (hereinafter referred to as the
"Restricted Area"); or (iv) as may occur as a result of any existing lending,
deposit, trust, or other banking relationships domiciled at any of the Seller's
branch offices or other facilities which are not transferred to the Purchaser
hereunder.
7.7 Restriction on New Branches.
(a) Seller shall not open or establish a new retail banking branch
(excluding automated teller machines) within Restricted Area for a
period of two (2) years from the Closing Date. Seller shall not expand
or relocate a retail banking branch which is located within the
Restricted Area as of the date of this Agreement to a location that is
closer in distance to the Branch acquired by Purchaser hereunder for a
period of two (2) years from the Closing Date. This restriction shall
not preclude the Seller, or any affiliate, from acquiring or merging
with another financial institution which may have branches within the
Restricted Area.
(b) Seller shall not open or establish any other physical facility,
including but not limited to any loan production office or loan or
mortgage origination office, which is located within the Restricted
Area and which offers products or services that compete with the
deposit, consumer loan or mortgage business of the Branch for a period
of two (2) years from the Closing Date.
7.8 Restriction on Sale of Real Estate. Prior to the Closing Date, Seller shall
not offer or advertise for sale Seller's rights, title and interest in the
Quakertown Branch building located at Broad Street and Route 309, Quakertown,
Pennsylvania.
7.9 Retirement Plan Accounts.
(a) If required by the account agreement, Seller will send to each
depositor holding a deposit under a retirement plan account or
individual retirement account a notice pursuant to the applicable
trustee or custodial agreement stating that the Seller is transferring
or substituting the trustee of the plan and that, in the absence of
objection by the participant, Purchaser will become successor trustee
on the Closing Date; and
(b) Seller will provide Purchaser on the Closing Date with the original
trust documents for any retirement plan or individual retirement
account assumed by the Purchaser.
ARTICLE VIII
CONDITIONS TO PURCHASER'S OBLIGATIONS
Each and every obligation of the Purchaser under the Agreement to be
performed on or before the Closing Date shall be subject to the satisfaction, on
or before the Closing Date, of the following conditions:
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8.1 Representations and Warranties True. The representations and warranties made
by the Seller in this Agreement shall be true at and as of the Closing Date as
though such representations and warranties were made at and as of such time,
except for any changes permitted by the terms hereof or consented to by the
Purchaser in writing.
8.2 Obligations Performed. The Seller shall have performed and complied in all
material respects with all obligations and agreements required by this Agreement
to be performed or complied with by it prior to or at the Closing Date.
8.3 No Adverse Litigation. On the Closing Date, no action, suit or proceeding
shall be pending or threatened against the Seller which might materially and
adversely affect the business, properties and Customer Records of the Branch or
which seeks to restrain, prevent, rescind or change the terms of this Agreement
or the transactions contemplated hereby which, in the reasonable opinion of
Seller, makes it inadvisable to proceed with the transactions contemplated
hereby.
8.4 Certificate of Compliance. The Seller shall have delivered to the Purchaser
a certification of its President, dated the Closing Date, certifying to the
fulfillment of all the conditions of this Article VIII.
8.5 Regulatory Approval. The Purchaser and Seller shall each have received from
the appropriate regulatory authorities unconditional approval: to effect the
transactions contemplated hereby.
8.6 Opinion of Counsel. The Purchaser shall have received the opinion of Duane,
Morris & Heckscher LLP, counsel for the Seller, dated the Closing Date and
addressed to the Purchaser, to the effect that (i) the Seller has been duly
organized and is validly existing; (ii) the Seller has duly authorized the
execution and delivery of this Agreement and the other instruments contemplated
hereby and the performance by the Seller of each of its obligations hereunder;
(iii) this Agreement and the instruments delivered by the Seller pursuant hereto
are, assuming due execution hereof and thereof by Purchaser, valid, binding and
enforceable against the Seller in accordance with their respective terms except
that such enforcement may be subject to bankruptcy, rehabilitation, liquidation,
conservation, dissolution, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights or
contractual obligations generally and the remedy of specific performance and
other forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought;
(iv) any consents, approvals, permissions or authorizations required to be
obtained under any law, rule or regulation from any governmental body, agency or
authority for the consummation by the Seller of its obligations hereunder and
the transactions contemplated by the Seller herein have been obtained; and (v)
such counsel does not have knowledge of any action, suit, proceeding, inquiry,
or investigation, at law or in equity, or before any court, public board or
body, pending or threatened, against the Seller wherein an unfavorable decision,
ruling or finding would materially and adversely affect the consummation,
validity or enforceability of the transactions contemplated hereby.
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8.7 No Material and Adverse Change of Condition. On the Closing Date, there
shall have been no material and adverse change in the condition (financial or
otherwise), assets, liabilities, business operations or future prospects of the
Branch, including, but not limited to, a material adverse change in the Branch's
Deposit Liabilities, their composition, terms or rates in the aggregate.
Provided, however, it is specifically understood and agreed upon by the parties
hereto that Seller is not guaranteeing to Purchaser any minimum amount of
Deposit Liabilities at the Branch as of the Closing Date and that any reduction
in the amount of Deposit Liabilities at the Closing Date from the amount thereof
at the date hereof shall not constitute a material and adverse change of
condition.
8.8 Trustee Substitution and Acceptance. A Trustee Substitution and Acceptance
shall have been executed by Seller and Purchaser in form and substance mutually
acceptable to Seller and Purchaser. All necessary substitution acceptances or
assignment forms necessary by Seller shall have been obtained from any Depositor
of a retirement plan account or individual retirement account of the Seller
included in the Deposit Liabilities to the extent such Depositor has not
objected to the substitution of the Purchaser for Seller as trustee or
custodian.
ARTICLE IX
CONDITIONS TO THE SELLER'S OBLIGATIONS
Each and every obligation of the Seller under this Agreement to be
performed on or before the Closing Date shall be subject to the satisfaction, on
or before the Closing Date, of the following conditions:
9.1 Representations and Warranties True. The representations and warranties made
by the Purchaser in this Agreement shall be true at and as of the Closing Date
as though such representations end warranties were made at and as of such time,
except for any changes permitted by the terms hereof or consented to by the
Seller in writing.
9.2 Obligations Performed. The Purchaser shall have performed and complied in
all material respects with all obligations and agreements required by this
Agreement to be performed or complied with by it prior to or at the Closing
Date.
9.3 No Adverse Litigation. On the Closing Date, no action, suit or proceeding
shall be pending or threatened against the Purchaser which challenges the
validity or consummation of the transactions contemplated under this Agreement
or which seeks to restrain, prevent, rescind or change the terms of this
Agreement or the transactions contemplated hereby which, in the reasonable
opinion of Seller, makes it inadvisable to proceed with the transactions
contemplated hereby.
9.4 Certificate of Compliance. The Purchaser shall have delivered to the Seller
a certification of its President dated the Closing Date, certifying to the
fulfillment of the conditions of this Article IX.
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9.5 Regulatory Approval. The Seller and the Purchaser shall each have received
from the appropriate regulatory authorities any approval necessary to effect the
transaction contemplated hereby.
9.6 Opinion of Counsel. The Seller shall have received an opinion of counsel for
the Purchaser, dated the Closing Date, and addressed to the Seller to the effect
that (i) the Purchaser is validly existing; (ii) the Purchaser has duly
authorized the execution and delivery of this Agreement and the other
instruments contemplated hereby and the performance by the Purchaser of each of
its respective obligations hereunder; (iii) this Agreement and the instruments
delivered by the Purchaser pursuant hereto are, assuming due execution hereof
and thereof by the Seller, valid, binding and enforceable against the Purchaser
in accordance with their respective terms (subject only to applicable bankruptcy
laws and principles of equity); (iv) other than the approval of agencies
regulating the Purchaser to buy the Customer Records and assume the Deposit
Liabilities pursuant to this Agreement [and to establish the Branch contemplated
hereby,] no other consents, approvals, permissions or authorizations are
required to be obtained under any law, rule or regulation from any governmental
body, agency or authority for the consummation by the Purchaser herein, and the
aforesaid approvals have been obtained and are in full force and effect; and (v)
such counsel has no knowledge of any action, suit, proceeding, inquiry, or
investigational law or in equity, or before any court, public board or body,
pending or threatened against the Purchaser wherein an unfavorable decision,
ruling or finding would materially and adversely affect any such approval,
consent or permission or the consummation, validity or enforceability or the
transactions contemplated hereby.
ARTICLE X
CLOSING PROCEDURES
10.1 Closing Date and Place. Except as otherwise provided herein, and subject to
the satisfaction or waiver of the conditions precedent specified in Articles
VIII and IX hereof, the closing of the transactions contemplated hereby
(hereinafter referred to as the "Closing") shall be held at the offices of
Purchaser at 320 West Broad Street, Quakertown, Pennsylvania on a Friday
mutually acceptable to Seller and Purchaser promptly following the date on which
the transaction contemplated by this Agreement can close without violating any
applicable law, rule, regulation, or condition of approval or such other date as
may be mutually agreed to by the parties (the "Closing Date").
10.2 Procedure at the Closing; Adjustments.
(a) At the Closing, Seller shall make the required payment to the Purchaser
pursuant to Section 1.2 (the "Settlement Payment").
(b) The Settlement Payment, specified in Section 1.2 hereof, due to Seller,
shall be calculated and adjusted as provided in this Section 10.2, and
payment shall be made in immediately available United States Federal
Funds to the account of the respective party at a commercial bank
(located in the Commonwealth of Pennsylvania),
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designated by such party, pursuant to wire transfer through a Federal
Reserve Bank from a national banking association located in the
Commonwealth of Pennsylvania. At least two business days prior to the
Closing, each party hereto shall provide written notice to the other
party hereto indicating the account and bank to which such funds shall
be wire transferred. Unless otherwise mutually agreed by such parties,
prorations and expenses required to be paid by Seller or Purchaser
pursuant to this Agreement shall be settled between the parties and
paid at the Closing pursuant to corporate check(s) issued by the
applicable party and drawn on a bank located in the Commonwealth of
Pennsylvania. Prorations and expenses that cannot be reasonably
calculated at the Closing shall be settled and paid in the same manner
as soon as practicable after the Closing. In order to facilitate the
Closing, the parties agree:
(i) that the Settlement Payment to be paid by Purchaser on the Closing
Date shall be computed as described in Section 1.2; and
(ii) Purchaser assumes and agrees to perform all duties associated with
the Deposit Liabilities as of the close of business on the Closing
Date.
(c) The documents proposed to be used and delivered at the Closing shall be
made available for examination by the respective parties not later than
12:00 noon, Pennsylvania time, on the fifth (5th) business day prior to
the Closing Date.
(d) Within five (5) business days after the Closing Date, Seller shall
deliver to Purchaser a revised schedule setting forth the Customer
Records and Deposit Liabilities as of the close of business on the
Closing Date, and within fifteen (15) calendar days after the Closing,
Seller shall deliver to Purchaser a final statement (the "Final
Statement"). The Settlement Payment shall be recalculated based on such
Final Statement (hereinafter referred to as the "Final Settlement
Payment"). Other than for a breach of a representation or warranty
under this Agreement, the Final Statement shall become final and
binding on Purchaser and Seller ten (10) calendar days after its
delivery to Purchaser, unless Purchaser gives written notice to Seller
of its disagreement with respect to any item included in such
Statement. Seller and Purchaser shall use their best efforts to resolve
any such disagreement during the ten (10) calendar day period following
receipt by Seller of the notice. If the disagreement is not resolved
during such ten-day period, the dispute shall be referred to an
independent accounting firm mutually acceptable to Purchaser and Seller
to act as a dispute resolver, such Final Statement shall be modified by
any such resolution and thereupon such Final Statement shall become
final and binding. Purchaser and Seller shall share equally in the cost
of any dispute resolver.
(e) A supplemental closing (the "Supplemental Closing") will be held within
four (4) business days after the Final Statement becomes final and
binding pursuant to Section 10.2(d). At the Supplemental Closing,
Seller shall pay to the Purchaser an
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amount equal to the excess, if any, of the Final Settlement Payment over the
Settlement Payment, or the Purchaser shall pay to Seller an amount equal to the
excess, if any, of the Settlement Payment over the Final Settlement Payment, in
either case in cash or certified check. In addition to the payment provided for
herein, at the Supplemental Closing the party making the payment shall pay to
the party receiving the payment interest on the amount of such payment at the
Federal Funds, Rate. As used herein, the term "Federal Funds Rate" shall mean
the Federal Funds Rate published by the Federal Reserve Bank of New York from
the Closing Date to the date of the Supplemental closing.
10.3 Change of Name: Notification of Customers. Purchaser shall: (a) on the
Closing Date, change the name on all documents and facilities relating to the
Branch to Purchaser's name; (b) promptly take any other actions required by law
of regulation or court or regulatory authority to notify customers or depositors
of the Branch or residents of the community in which such office is located of
the transfers and assumptions occurring pursuant to this Agreement; (c) use its
best efforts to cause all materials previously issued with respect to the
Deposit Liabilities transferred to Purchaser at Closing to be legended or
replaced within thirty (30) calendar days of the Closing Date to reflect the
name of Purchaser; and (d) in conjunction with the Seller's obligations as
described in Section 2.1(d) hereof, cause all agreements relating to any federal
recurring payments or ACH transfers covered by Section 2.1(d) hereof to be
amended to designate Purchaser within thirty (30) calendar days of the Closing
Date. Nothing in this Section shall require Purchaser to undertake to reissue
deposits assumed by or assigned to Purchaser on the Closing Date, except in the
ordinary course of business, it being understood, however, that reasonable
efforts will be used to change names in accordance with the provisions of the
first sentence of this Section.
ARTICLE XI
TERMINATION
11.1 Methods of Termination. This Agreement may be terminated at any time, but
not later than the Closing Date:
(a) By mutual agreement of the Purchaser and the Seller; or
(b) By the Purchaser if any of the conditions provided for in Article VIII
of this Agreement shall not have been met or waived in writing by the
Purchaser; or
(c) By the Seller if any of the conditions provided for in Article IX of
this Agreement shall not have been met or waived in writing by the
Seller; or
(d) By the Seller if Closing does not occur by October 31, 997; provided,
however, with respect to required approvals of the applicable
governmental authorities, the Seller shall grant an extension to the
Closing Date, of up to 30 days, if Seller or Purchaser
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has not received a required approval, but is diligently and in good
faith attempting to obtain such approval and has otherwise satisfied
all of its obligations under this Agreement with respect to seeking
regulatory approval and has provided any information requested by the
appropriate Federal and/or State regulatory authorities within the time
period specified by such authorities within the time period specified
by such authorities.
11.2 Procedure Upon Termination. In the event of termination pursuant to Section
ll.l hereof, written notice thereof shall be given by the terminating party to
the other party, and this Agreement shall terminate immediately upon receipt of
such notice, unless an extension is consented to by the party or parties having
the right to terminate. If this Agreement is terminated as provided herein:
(a) Each party will redeliver all documents, work papers and other
materials of the party relating to this transaction, whether so
obtained before or after the execution hereof, to the party furnishing
the same; and
(b) All information received by either party with respect to the business
of the other party (other than information which is a matter of public
knowledge or which has been or is hereafter published in any
publication for public distribution or filed as public information with
any governmental authority) shall not at any time be used for business
advantage by such party or disclosed by such party to third persons to
the detriment of the party furnishing such information or if otherwise
prohibited by state or federal law.
(c) Nothing contained in this Article shall be deemed to excuse either
party for a breach of any of its obligations or agreements undertaken
or made in this Agreement.
11.3 Payment of Expenses. Except as otherwise expressly provided herein and in
any exhibits hereto, each party hereto shall bear and pay all costs and expenses
incurred by it or on its behalf in connection with the transactions contemplated
hereunder, including without limitation any expenses, fees, and costs necessary
for any approvals of the appropriate Federal and/or State regulatory
authorities, or for any notice to depositors of the assumption of Deposit
Liabilities provided for in this Agreement which shall be paid by the parties
seeking such approval or giving such notice. Any notices which are provided
jointly shall be a joint expense equally borne by both parties.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1 Amendment and Modification. The parties hereto, by mutual consent of their
respective duly authorized officers, may amend, modify and supplement this
Agreement in such manner as may be agreed upon by them in writing.
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<PAGE>
12.2 Assignment. This Agreement and all of the provisions hereof shall be
binding upon, and shall inure to the benefit of, the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned, prior to
the Closing Date, by either of the parties hereto without the prior written
consent of the other.
12.3 Counterparts. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.4 Headings. The headings of the Sections and Articles of this Agreement are
inserted for convenience only and shall not constitute a part hereof.
12.6 Payment of Expenses. Except as otherwise specifically provided in this
Agreement, each party herein shall pay for its own expenses and costs in
connection with the carrying out of this Agreement.
12.7 Governing Law. The Agreement shall be governed by and construed in
accordance with the law of the Commonwealth of Pennsylvania.
12.8 Press Releases; Public Announcements. Prior to the Closing Date, neither
Purchaser nor Seller shall directly or indirectly, make, or cause to be made,
any press release for general circulation, public announcement or disclosure
(except in the event and to the extent this Agreement must be disclosed to
comply with federal securities disclosure laws) or issue any notice or general
communication to employees with respect to any of the transactions contemplated
hereby without the prior consent of the other party, which consent shall not
be unreasonably withheld. Consent shall be deemed granted by the party from
which it is sought unless such party objects within five (5) business days after
receipt of the press release or other announcement from the party requesting
consent.
12.9 Waiver or Extension. Except with respect to required approvals of the
applicable governmental authorities, either party, by written instrument signed
by its President, may extend the time for the performance of any of the
obligations or other acts of the other party and may waive (a) any inaccuracies
in the representations or warranties in any document delivered pursuant hereto
or (b) compliance with any of the undertakings, obligations, covenants or the
acts contained herein. The failure of any party hereto to enforce at any time
any provision of this Agreement shall not be deemed to be a waiver of any such
provision nor in any way to affect the validity of this Agreement or any part
hereof or the right of such party to enforce each such provision.
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12.10 Addresses for Notices. etc. All notices, requests, demands and other
conununications provided for hereunder and under the related documents shall be
in writing (including telegraphic communications) and mailed (by registered or
certified mail) or telegraphed or delivered in person to the applicable party at
the addresses indicated below:
If to the Seller: First Lehigh Bank
1620 Pond Road
Allentown, PA 18104
Attention: Wilbur R. Roat, President
With a copy to: Duane, Morris & Heckscher LLP
4200 One Liberty Place
Philadelphia, PA 19103
Attention: Frederick W. Dreher, Esq.
If to the Purchaser: Robert C. Werner
Executive Vice President
The Quakertown National Bank
320 West Broad Street
P.O. Box 9005
Quakertown, Pennsylvania
With a copy to: Ruth A. Courtney, Esq.
Shumaker Williams, P.C.
P.O. Box 88
Harrisburg, PA 17108
or, as to each party, at such other address as shall be designated by such party
in a written notice to each other party complying as to delivery with the terms
of this Section.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers and their corporate seals to be
affixed as of the date first written above.
ATTEST: FIRST LEHIGH BANK
/s/ George M. Baltozu By: /s/ Wilbur R. Roat
- --------------------------------- ----------------------------
Executive Vice President Wilbur R. Roat, President
(Corporate Seal)
ATTEST; THE QUAKERTOWN NATIONAL BANK
/s/ Robert C. Werner By: /s/ Thomas J. Bisko
- --------------------------------- ---------------------------
Executive Vice President, Thomas J. Bisko, President
Chief Operating Officer
(Corporate Seal)
[QUAKERTOWN NATIONAL BANK LOGO]
[FIRST LEHIGH BANK LOGO]
P.O. Box 9005
Quakertown PA 18951-9005
TEL (215) 538-5600
FAX (215) 538-5790
1620 Pond Road
Allentown PA 18104-2255
TEL (610) 398-6660
FAX (610) 398-6690
FOR IMMEDIATE RELEASE
QNB TO ACQUIRE DEPOSITS OF FIRST LEHIGH'S QUAKERTOWN BRANCH
QUAKERTOWN, PA (20 June 1997) QNB Corp. and First Lehigh Corporation jointly
announce that their respective subsidiaries have signed an agreement, on June
20, 1997, for The Quakertown National Bank (QNB), the sole subsidiary of QNB
Corp., to purchase the deposits of First Lehigh's Quakertown branch. The premium
paid on the deposits was not disclosed. The acquisition agreement is subject to
regulatory approval and is expected to close by the fourth quarter of 1997.
The purchase will add approximately 1,050 new accounts and $9 million in
deposits to QNB. Thomas J. Bisko, President and CEO of QNB, stated "The Bank is
extremely pleased to have reached this agreement. This purchase demonstrates
QNB's strategy of focusing on our local market and serving area consumers and
businesses. We look forward to welcoming the new customers to our QNB family."
First Lehigh Bank President and CEO, Wilbur R. Roat, stated "The sale of the
Quakertown Branch deposits will allow First Lehigh Bank to concentrate its
marketing efforts on its Allentown/Bethlehem/Wainutport operations and its newly
opened branch at 1620 Pond Road (South Whitehall), Allentown, PA. We are pleased
that The Quakertown National Bank has
<PAGE>
agreed to acquire these deposits and provide ongoing service to our customers in
the Quakertown marketplace."
The Quakertown National Bank currently operates six branches with
locations in Quakertown, Dublin, Coopersburg, Pennsburg and Perkasie. QNB
Corp.'s total assets exceed $290 million.
First Lehigh Bank will continue to operate its five other branch
locations in Walnutport, Cherryville, Allentown, Bethlehem and South Whitehall.
First Lehigh Corporation's total assets exceed $111 million.
Contact: QNB Corp.
Thomas J. Bisko, (215) 538-5612
First Lehigh Bank
Wilbur R. Roat, (610) 398-6660
