<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
-----------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________ to __________________
Commission file number 0-17894
-----------------------------
FIRSTFEDERAL FINANCIAL SERVICES CORP
(Exact name of registrant as specified in its charter)
Ohio 34-1622711
- ---------------------------------- ---------------------------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
135 East Liberty Street, Wooster, Ohio 44691
- ---------------------------------- ---------------------------
(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code (330) 264-8001
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $1.00 par value 5,227,886
- ----------------------------- ------------------------------------------
(Class) (Shares Outstanding at September 30, 1997)
This Form 10-Q contains 15 pages.
(No Exhibit Index)
<PAGE> 2
Explanatory Note Form 10-Q Amendment as of September 30, 1997:
FirstFederal Financial Services Corp. previously reported net earnings
of $4.2 million or $.71 per common share ($.55 diluted) for the third quarter
of 1997 on Form 10-Q which have been restated by amendment to Form 10-Q to $3.2
million or $.52 per common share ($.42 diluted) to reflect Summit Bank N.A.
(Summit) acquisition transaction costs of $1 million net of tax. These costs
originally were not included in the Company's third quarter 1997 earnings as
Summit had accrued for acquisition transaction costs in its second quarter
prior to Summit's inclusion in the Company's consolidated earnings.
<PAGE> 3
FIRSTFEDERAL FINANCIAL SERVICES CORP
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
<S> <C>
Consolidated Balance Sheets as of September 30, 1997 and
December 31, 1996 3
Consolidated Statements of Income for the Three Months and Nine Months
Ended September 30, 1997 and 1996 4
Consolidated Statements of Cash Flows for the Nine Months Ended September, 1997 and 1996 5
Notes to Consolidated Financial Statements 6-8
Management's Discussion and Analysis of Financial Condition and Results of
Operations 9-11
PART II. OTHER INFORMATION 12
Signatures 13
Exhibit 10 Material Contract
Exhibit 27 Financial Data Schedule
</TABLE>
- --------------------------------------------------------------------------------
2
<PAGE> 4
FIRSTFEDERAL FINANCIAL SERVICES CORP
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997 DECEMBER 31,
ASSETS (UNAUDITED) 1996 (1)
- ------ --------------- --------------
<S> <C> <C>
Cash and due from banks $ 33,788 $ 26,012
Securities available for sale 2 252,760 141,548
Securities held to maturity 3 74,255 84,984
Other short-term investments 37,546 9,000
Retained interest 27,632 6,491
Loans held for sale (Note 5) 72,087 87,071
Loans and Leases:
Residential Mortgage Loans 522,595 534,046
Commercial Loans 45,408 4,850
Commercial Mortgage Loans 53,043 17,370
Commercial Lease Financing 24,832 -
Finance Contracts 2,408 -
Manufactured Housing Loans 47,539 38,840
Consumer Loans 133,587 77,507
Allowance for credit losses (5,662) (2,916)
--------- --------
Net Loans and Leases 823,750 669,697
Bank premises and equipment 15,346 10,386
Goodwill (Note 6) 30,528 10,572
Other Assets 60,449 34,622
--------- --------
$1,428,141 $1,080,383
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non-interest bearing $ 46,122 $ 21,268
Interest bearing 878,005 650,650
--------- --------
Total Deposits 924,127 671,918
--------- --------
Short-term borrowings 124,366 122,281
Long term debt 210,048 190,132
Other Liabilities 27,979 10,765
Subordinated Debt 40,500 -
--------- --------
Total Liabilities 1,327,020 995,096
========= --------
Shareholders' Equity:
Preferred Stock, no par value:
authorized 1,500,000 shares;
series A 488,086 and 498,287
series B 429,892 and 479,327
issued and outstanding, respectively 21,277 22,693
Common Stock, $1.00 par value; authorized
20,000,000 shares; 5,614,621 and
4,053,194 issued and outstanding, respectively 5,614 4,053
Additional paid-in capital 34,620 29,568
Retained earnings 42,039 32,796
Treasury stock, at cost (386,735 and 428,484 shares, respectively) (2,023) (2,677)
Securities equity valuation account ( 406) (1,146)
---------- ----------
$ 101,121 $ 85,287
---------- ----------
(1) Derived from audited financial statements at December 31, 1996. $1,428,141 $1,080,383
========== ==========
(2) Amortized cost $249,514 and $143,310 for September 30, 1997 and
December 31, 1996, respectively.
(3) Market value $73,555 and $83,958 for September 30, 1997 and December 31,
1996, respectively.
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 5
FIRSTFEDERAL FINANCIAL SERVICES CORP
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------ -----------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
INTEREST INCOME:
Loans and leases $ 18,383 $ 15,076 $ 48,082 $ 40,700
Securities available for sale 4,932 2,088 10,893 8,353
Securities held to maturity 1,221 1,451 3,949 4,303
Other 352 266 974 763
---------- ---------- ---------- ----------
TOTAL INTEREST INCOME 24,888 18,881 63,898 54,119
---------- ---------- ---------- ----------
INTEREST EXPENSE:
Deposits 9,114 7,412 24,434 21,408
Short-term borrowings 2,562 1,740 6,448 3,503
Long-term debt 4,974 3,230 11,975 9,969
---------- ---------- ---------- ----------
TOTAL INTEREST EXPENSE 16,650 12,382 42,857 34,880
---------- ---------- ---------- ----------
NET INTEREST INCOME 8,238 6,499 21,041 19,239
Provision for credit losses 265 90 542 270
---------- ---------- ---------- ----------
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 7,973 6,409 20,499 18,969
---------- ---------- ---------- ----------
NON-INTEREST INCOME:
Manufactured housing income 5,057 3,718 12,739 7,732
Mortgage banking income 1,886 120 3,366 1,525
Customer service fee income 971 576 2,984 1,727
Net securities gains 279 -- 353 326
Other 421 468 1,409 438
---------- ---------- ---------- ----------
TOTAL NON-INTEREST INCOME 8,614 4,882 20,851 11,748
---------- ---------- ---------- ----------
NON-INTEREST EXPENSE:
Personnel 4,613 2,784 11,301 7,149
Net occupancy expense 874 538 2,033 1,455
Outside services, data processing & communications 1,052 569 2,444 1,708
Professional fees 414 228 927 683
Amortization of goodwill 354 339 1,019 761
Non-Recurring Charges 1,209 3,341 1,209 3,341
Other 2,844 2,203 6,054 5,117
---------- ---------- ---------- ----------
TOTAL NON-INTEREST EXPENSE 11,360 10,002 24,987 20,214
---------- ---------- ---------- ----------
Income before income taxes 5,227 1,289 16,363 10,503
Provision for income taxes 2,021 507 5,896 3,818
---------- ---------- ---------- ----------
NET INCOME $ 3,206 $ 782 $ 10,467 $ 6,685
========== ========== ========== ==========
NET INCOME APPLICABLE TO COMMON STOCK $ 2,816 $ 365 $ 9,268 $ 5,403
========== ========== ========== ==========
NET INCOME PER COMMON SHARE
PRIMARY $ .52 $ .08 $ 1.88 $ 1.22
DILUTED $ .42 $ .11 $ 1.45 $ .98
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
PRIMARY 5,398,730 4,590,346 4,938,700 4,426,294
DILUTED 7,608,282 6,951,208 7,212,879 6,875,215
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 6
FIRSTFEDERAL FINANCIAL SERVICES CORP
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------------
1997 1996
--------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 10,467 $ 6,685
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for credit losses 542 270
Net gains from sales (8,064) (1,415)
Accretion of discounts, amortization of premiums and depreciation, net 2,460 1,353
Proceeds from sale of loans held for sale 217,978 58,798
Disbursements for loans held for sale (213,807) (31,897)
Other (16,470) (16,477)
--------- ---------
Net cash provided by operating activities 26,046 17,317
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Loans originated (336,076) (396,584)
Loan principal payments 245,542 143,930
Proceeds from sales of:
Securities available for sale 43,177 87,779
Proceeds from maturities of:
Available for sale securities 47,612 47,449
Held to maturity securities 13,987 7,113
Net change in repossessed assets (362) 283
Purchases of:
Available for sale securities (139,338) (41,895)
Held to maturity securities (47,979) (9,638)
Net change in other short-term investments (28,546) 6,872
Net cash received in acquisitions 108,239 24,606
Net change in retained interest - -
Purchase of premises and equipment, net (3,394) (2,233)
--------- ---------
Net cash used by investing activities (97,138) (132,268)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in deposits, excluding acquisitions 28,618 37,925
Proceeds from Federal Home Loan Bank advances 214,821 244,000
Repayments on Federal Home Loan Bank advances (275,913) (177,748)
Net proceeds from subordinated debt and other borrowings 115,593 18,193
Net decrease in advance payments by borrowers for taxes and insurance (1,793) (2,220)
Repurchase of common and preferred stock - (2,375)
Proceeds from common stock transactions 256 5,883
Payment of cash dividends (2,714) (2,515)
--------- ---------
Net cash provided by financing activities 78,868 121,143
--------- ---------
Net increase in cash & due from banks 7,776 6,192
Cash and due from banks at beginning of year 26,012 18,621
--------- ---------
Cash and due from banks at end of period $ 33,788 $ 24,813
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 7
FIRSTFEDERAL FINANCIAL SERVICES CORP
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Basis of Presentation
The accompanying unaudited Consolidated Financial Statements have been
prepared in accordance with generally accepted accounting principals for interim
financial information and the instructions to Form 10-Q. It is assumed that the
readers of these interim financial statements have read or have access to the
1996 Annual Report of FirstFederal Financial Services Corp ("FirstFederal" or
the "Company"). Therefore, only material changes in financial condition and
results of operations are discussed in Management's Discussion and Analysis. The
interim consolidated financial statements include the accounts of FirstFederal,
its subsidiaries, Mobile Consultants, Inc. ("MCI") and Signal Bank, N.A.
("Signal") and the Bank's subsidiaries including Alliance Corprate Resources
("ACR"), which was acquired during the third quarter of 1997. Also included in
the interim consolidated financial statements is Summit Bank, N.A. ("Summit"),
which was acquired in the third quarter of 1997. All significant intercompany
transactions have been eliminated.
In the opinion of management, the Consolidated Financial Statements
contain all adjustments (consisting only of normal recurring adjustments)
necessary to present fairly the financial condition of FirstFederal as of
September 30, 1997 and December 31, 1996, and the results of its operations for
the nine months ended September 30, 1997 and 1996, and its cash flows for the
nine months ended September 30, 1997 and 1996. The results of operations for the
interim period reported herein are not necessarily indicative of results of
operations to be expected for the entire year. Financial statement
reclassifications have been made for 1996 to conform to classifications used in
1997.
(2) Earnings Per Share of Common Stock
Primary earnings per share were computed based on the weighted average
number of common shares and common stock equivalent shares outstanding during
the period, after giving effect to the reduction of earnings by the dividend
paid on the Series A and Series B cumulative serial preferred stock. Exercisable
stock options are included as common share equivalents. The fully diluted
earnings per share assume the conversion of the Series A and Series B cumulative
serial preferred stock. On April 16, 1997, the Board of Directors declared a
five-for-four stock split, effected as a 25% stock dividend, granted to
shareholders of record on May 2, 1997. All share and per share data presented
herein have been restated for the effect of the stock dividends in 1997 and
1996. Primary earnings per share and diluted earnings per share for the three
months ended September 30, 1997 were $.71 and $.55, respectively.
(3) Cash Dividends on Common and Preferred Stock
In addition to the stock dividend discussed previously, the Company
announced a quarterly cash dividend of $.11 per common share. The dividend was
paid on August 22, 1997 to shareholders of record as of August 4, 1997 on
post-split shares. The Board also declared dividends of $ .4375 per share on the
Cumulative Convertible, Series A, Preferred stock and $.40625 per share on the
Cumulative Convertible, Series B, Preferred stock. These dividends were paid on
September 2, 1997 to shareholders of record as of August 11, 1997.
6
<PAGE> 8
(4) Recently Issued Accounting Standards
In February 1997, the FASB issued SFAS No. 128, Earnings per Share, which
supersedes Accounting Principles Board (APB) No. 15, Earnings per Share, and
replaces the presentation of primary and fully diluted earnings per share with
basic and diluted earnings per share. SFAS No. 128 was issued to simplify the
computation of earnings per share and make the U. S. Standard more compatible
with the earnings per share standards of other countries and that of the
International Accounting Standards Committee (ISAC). SFAS No. 128 is effective
for financial statements for both interim and annual periods ending after
December 15, 1997. Earlier application is not permitted, however, pro forma
earnings per share is permitted for periods prior to required adoption. The
following table discloses pro forma EPS pursuant to SFAS No. 128 for the nine
months ended September 30, 1997 and September 30, 1996.
<TABLE>
<CAPTION>
Nine months ended September 30,
1997 1996
----------------------------------------------------------
Income Shares Per Share Income Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
---------------------------------- ------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS
Income available to
common stockholders $ 9,268 4,796 $1.93 $5,403 4,426 $1.22
Effect of Dilutive Securities
Stock options 171 0.04 62 0.02
Convertible Preferred Stock 2,246 0.44 2,387 0.22
Diluted EPS
Income available to
common stockholders 9,268 5,403
Convertible Preferred Divid 1,199 1,282
------- ----- ----- ------ ----- -----
Net Earnings $10,467 7,213 $1.45 $6,685 6,875 $0.98
</TABLE>
SFAS No. 130, "Reporting Comprehensive Income" was issued in June, 1997 and is
effective for fiscal years beginning after December 15, 1997. The Statement
requires additional reporting of items that affect comprehensive income but not
net income. Examples of these items relevant to the Company include unrealized
gains and losses on securities. Upon its adoption, this statement will result in
additional financial statement disclosures.
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information" was issued in June, 1997 and is effective for fiscal years
beginning after December 15, 1997. The statement requires financial disclosure
and descriptive information about reportable operating segments. Upon its
adoption, this statement will result in additional financial statement
disclosures.
(5) Loans Held for Sale
Loans held for sale include $22.1 million of residential mortgage loans
and $50 million of manufactured housing loans as of September 30, 1997 compared
to $37.1 million of residential mortgage loans and $50 million of manufactured
housing loans as of December 31, 1996.
7
<PAGE> 9
(6) Acquisitions
On July 1, 1997, the Bank completed the acquisition of the stock of
Alliance Corporate Resources, Inc. ("ACR"). ACR originates lease financing of
information technology equipment and provides information technology management
consulting services. ACR has office locations in Columbus, Ohio and Richmond,
Virginia. ACR shareholders received a payment of $2 million for 100% of their
shares and will participate in future ACR earnings for five years. The
acquisition was accounted for under the purchase of stock method. ACR originated
$21 million in lease transactions for the year ended December 31, 1996. At June
30, 1997, ACR had total assets of $22.8 million.
On July 8, 1997, the Company completed the acquisition of the stock
of Summit Bancorp (Summit) which has two subsidiaries, Summit Bank, N.A. and
Summit Bank Investments Corp. Under the terms of the agreement, FirstFederal
exchanged 2.3375 shares, of its common stock for each of the 234,891 shares of
Summit stock. Based on the average of FirstFederal's closing bid and ask price
of $40.50 on July 8, 1997, the transaction value was approximately $24.4
million. The merger was accounted for as a pooling of interests. Summit merger
transaction costs of $1.2 million ($1 million net of tax) were recorded by the
Company in the third quarter ended September 30, 1997. Summit Bancorp's
subsidiary, Summit Bank, has two commercial banking offices located in Summit
County, Ohio. At June 30, 1997, Summit had total assets of $88.6 million,
deposits of $72.8 million, and shareholders equity of $6.0 million.
On September 15, 1997, Signal Bank completed the acquisition of seven
branches of KeyBank, National Association, which have approximately $158 million
in deposits and are located in the cities of Bucyrus, Crestline, Cygnet, Galion,
Tiffin, Wayne and Willard in north central and north western Ohio. The purchase
price was equal to 12.15% of average deposits measured just prior to closing
resulting in approximately $19 million in goodwill which will be amortized over
ten years.
8
<PAGE> 10
'
FIRSTFEDERAL FINANCIAL SERVICES CORP
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations
- ---------------------
The Company had net earnings of $3.2 million, or $0.52 per common
share, and $10.5 million, or $1.88 per common share, for the three and nine
month periods ended September 30, 1997, respectively. This compares favorably to
$3.0 million, or $0.55 per common share, and $8.9 million, or $1.71 per common
share for the respective three and nine month periods ended September 30, 1996.
Excluding non-recurring charges recorded in the third quarter of both years,
net earnings for the three month period ended September 30, 1997 were $4.2
million, or $.71 per common share ($.55 fully diluted) compared to $3 million
or $.64 per common share ($.42 fully diluted) for 1996. FirstFederal continues
to provide value to shareholders by generating higher levels of non-interest
income, while controlling operating expenses. Increased earnings year-to-date
in 1997 compared to 1996 reflect higher net interest income of $1.8 million,
higher manufactured housing income of $5.1 million and higher mortgage banking
income of $1.8 million partially offset by an increase in non-interest expense
of $4.8 million related to a higher volume of asset originations.
Return on average assets (ROA) before non-recurring charges for the
quarter and nine months ended September 30, 1997, was 1.26% and 1.27% as
compared to 1.10% and 1.15%, for the comparable periods of 1996, respectively.
Return on average shareholders' equity (ROE) before non-recurring charges for
the quarter and nine months ended September 30, 1997 was 17.0% and 16.7% as
compared to 14.1% and 14.7%, for the comparable periods in 1996, respectively.
The Company's ratio of shareholders' equity to total assets decreased from
7.89% at December 31, 1996 to 7.08% at September 30, 1997. Total assets of the
Company grew 32% to $1.43 billion at September 30, 1997, as compared to $1.08
billion at December 31, 1996.
Net interest income increased $1.7 million from $6.5 million in the third
quarter of 1996 to $8.2 million in the third quarter of 1997. This increase
reflects growth in average loan and lease balances of $102 million and a $156
million increase in the average securities balances for the three month period
ended September 30, 1997 compared to 1996. Increased loan and lease balances in
the third quarter of 1997 include $66.3 million and $20.1 million reflecting the
acquisition of Summit and ACR, respectively. The net interest margin increased 2
basis points from 2.59% to 2.61% for the three months ended September 30, 1996
and 1997 respectively. The improved margin is attributed primarily to the
acquisition of Summit in the third quarter of 1997. Summit, on a stand alone
basis, has a net interest margin of 4.0%. Yields on average interest-earning
assets increased 36 basis points in the third quarter of 1997 compared to those
in the third quarter of 1996, primarily due to a favorable change in the mix of
loans and leases to higher yielding assets and the acquisitions of Summit and
ACR. The average cost of interest-bearing liabilities increased 30 basis points
to 5.45% for the three months ended September 30, 1997 compared to 5.15% for the
similar period in 1996. This increase in cost of funds was primarily due to
increased rates paid on borrowings, particularly the subordinated notes.
The provision for credit losses was $265,000 in the third quarter of 1997
and $90,000 in the third quarter of 1996. The increased provision was due
primarily to a continuing increase in commercial and consumer loan originations
which inherently have a higher risk level than residential mortgage loans. Net
chargeoffs for the third quarter were .02 % of average loans and leases,
compared with .01% for last quarter and .01% for the third quarter of 1996.
Nonperforming assets as a percentage of total assets was .31% at September 30,
1997 and .16% at September 30, 1996.
9
<PAGE> 11
Non-interest income increased $3.7 million for the third quarter of 1997
versus third quarter 1996 reflecting a $1.3 million increase in manufactured
housing income, the majority of which was contributed by a $1.8 million gain on
the Company's fourth $50 million asset-backed securitization of manufactured
housing loans sold in August 1997. The additional increase in non-interest
income for the quarter is primarily higher gains on sales of mortgage loans.
Non-interest expense before non-recurring charges increased $3.5
million to $10.2 million for the quarter ended September 30, 1997 as compared
to the third quarter of 1996. The increase is comprised primarily of higher
compensation expense generated from the increase in staff associated with the
Company's investments in Summit, ACR and additional commercial and manufactured
housing loan origination capacity. While the dollar amount of non-interest
expense has increased, FirstFederal's efficiency ratio before non-recurring
charges remains fairly consistent at 58.14% for the third quarter of 1997 as
compared to 56.05% for the same quarter in 1996.
Material Changes in Financial Condition
- ---------------------------------------
The material changes that have occurred in the Company's financial
condition during 1997 are as follows ($000's):
<TABLE>
<CAPTION>
Sept. 30 Dec. 31,
1997 1996 $ +/- % +/-
--------- --------- ------- ------
<S> <C> <C> <C> <C>
Securities available for sale $252,760 $141,548 $111,212 78.6%
Retained interest 27,632 6,491 21,141 325.7%
Net loans and leases 823,750 669,697 154,053 23.0%
Goodwill 30,528 10,572 19,956 188.8%
Deposits 924,127 671,918 252,209 37.5%
</TABLE>
The increase in securities available for sale reflects efforts to leverage the
proceeds of the subordinated debt offering using a wholesale strategy whereby
approximately $100 million of short duration mortgage-backed securities were
purchased using short-term borrowings at a positive spread.
Retained interest increased reflecting completion of three asset-backed
securitizations (ABS) of manufactured housing loans totaling $150 million sold
in 1997. In such transactions, the Company receives a fee for servicing the
loans and receives net interest revenues generated by the loans removed from the
balance sheet which exceed the interest due investors and net credit losses. The
excess interest revenues are recognized as servicing income. As a result of such
securitizations, the Company has recorded an asset known as "retained interest",
which consists of an over collateralization of loans in the various securitized
pools and the unamortized balance of the present value of the interest rate
differential resulting from the sale of loans with servicing rights retained.
The retained interest is amortized over the estimated life of the underlying
loans sold. The carrying value of the retained interest is analyzed quarterly by
management to determine whether prepayment and default experience has any impact
on the carrying value.
Net loans and leases increased reflecting the acquisitions of Summit and ACR as
well as 1997 loan originations, net of loan sales. The Summit acquisition
contributed a loan portfolio of $66.3 million. The ACR acquisition contributed a
lease portfolio of $20.1 million. Loan originations for 1997 were as follows:
residential mortgage loans $172.8 million, manufactured housing loans $227.5
million, consumer loans $70.6 million, commercial mortgage loans $24.2 million
and commercial loans $43.9 million.
10
<PAGE> 12
Goodwill increased reflecting the acquisition of seven branches from KeyBank,
N.A. on September 15, 1997 and the acquisition of ACR.
The increase in deposits reflects $150.6 million in deposits obtained from the
KeyBank branch acquisition and $73.6 million of deposits obtained with the
Summit acquisition.
Liquidity and Capital Resources
- -------------------------------
The maintenance of an adequate level of liquidity is necessary to ensure that
sufficient funds are available to meet customers' loan demand and deposit
withdrawals. The banking subsidiaries' liquidity sources consist of short-term
marketable securities, maturing loans and selected securitizable loan assets.
Liquidity has also been obtained through liabilities such as customer-related
core deposits, funds borrowed, certificates of deposit and public funds
deposits. The Company has additional borrowing capacity with the Federal Home
Loan Bank of Cincinnati and additional collateral eligible for repurchase
agreements in the event internally generated funds are insufficient to meet
liquidity needs. The Company anticipates that it has adequate liquidity and
additional sources of funds to meet all of its foreseeable commitments.
At September 30, 1997, shareholders' equity was $101 million, compared to $ 85
million at December 31, 1996, an increase of $16 million, or 18.8%, primarily
reflecting the Summit acquisition as well as net income for the nine months
ending September 30, 1997, net of dividends. Shareholders' equity as a
percentage of total assets as of September 30, 1997 was 7.08% compared to 7.89%
as of December 31, 1996. The Federal Reserve Board has adopted risk-based
capital guidelines which assign risk weightings to assets and off-balance sheet
items and also define and set minimum capital requirements (risk-based capital
ratios). The guidelines also define "well capitalized" ratios of Tier 1, total
capital and leverage as 6%, 10% and 5%, respectively. The Company exceeded these
"well capitalized" ratios as of September 30, 1997 and December 31, 1996. At
September 30, 1997, the Company had a Tier 1 risk-based capital ratio of 10.23%,
a total risk-based capital ratio of 10.79% and a leverage ratio of 6.85%. At
December 31, 1996, the Company had a Tier 1 risk-based capital ratio of 11.1%,
a total risk-based capital ratio of 11.53% and a leverage ratio of 6.42%.
The Company issued $40.5 million in 9.125% subordinated debt in March 1997 which
was used to pay down short-term borrowings, provide funds for loan originations
and as a source of additional capital to support future growth activities.
Interest on the subordinated debt is payable semiannually beginning in September
1997, and the debt is redeemable at the option of the Company any time after
June 30, 2002 until its maturity date of June 30, 2004.
11
<PAGE> 13
PART II. OTHER INFORMATION
- --------------------------------------------------------------------------------
Item 5. Other Information
----- -----------
Change in Directors
-------------------
On July 2, 1997, Director Robert F. Belden resigned from the Board
due to his equity investment in the Company exceeding limits
mandated by federal banking regulators.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
--------
Exhibit 10 - Material Contract - Branch Purchase and
Assumption Agreement by and between KeyBank National
Association and First Federal Savings and Loan Association
of Wooster, dated as of May 16, 1997.
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
-------------------
One report on Form 8-K was filed on July 10, 1997. This
report discussed the acquisitions of Summit Bancorp and
Alliance Corporate Resources, which both closed during the
third quarter of 1997.
All other items have been omitted as not required and not applicable under the
instructions.
12
<PAGE> 14
SIGNATURES
----------
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.
FIRSTFEDERAL
FINANCIAL SERVICES CORP
-----------------------
(Registrant)
Date November 14, 1997 /s/ Gary G. Clark
------------------------- --------------------------------
Gary G. Clark
Chairman and
Chief Executive Officer
(Duly Authorized Representative)
Date November 14, 1997 /s/ James J. Little
------------------------- --------------------------------
James J. Little
Executive Vice President,
Chief Financial Officer
(Principal Financial and Accounting Officer)
13
<PAGE> 1
BRANCH PURCHASE AND ASSUMPTION AGREEMENT
BY AND BETWEEN
KEYBANK NATIONAL ASSOCIATION
AND
FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF WOOSTER
DATED AS OF
MAY 16, 1997
(North Central Ohio)
<PAGE> 2
INDEX OF DEFINITIONS
--------------------
AGREED VALUE shall mean, with regard to the Owned Real Estate and the Leasehold
Estate, its value as reflected by the Appraisal. Agreed Value shall mean, with
regard to the furniture, fixture and equipment which constitute part of the
Assets, the net book value determined as of the most recent month end preceding
the Closing Date under generally accepted accounting principles (the "Net Book
Value") of such furniture, fixture and equipment. In no event shall the Agreed
Value of the furniture, fixtures and equipment at any Branch be less than
$5,000.00.
APPRAISAL shall mean, with regard to the Owned Real Estate and the Leasehold
Estate, a limited summary format appraisal of its Fair Market Value furnished by
an Appraiser reasonably acceptable to Seller and Purchaser. For purposes of this
Agreement, "APPRAISER" shall mean a reputable appraiser certified as an MIA
appraiser with at least five (5) years' experience within the previous ten (10)
years as a real estate appraiser working in the geographic region in which the
Owned Real Estate or Leasehold Estate to be appraised is located, with knowledge
of market values and practices. The cost of the Appraisal shall be paid equally
by each party hereto.
BRANCH(ES) shall mean each of Seller's branches identified on Schedule A hereto.
CODE shall mean the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder.
ENCUMBRANCE shall mean all mortgages, claims, liens, encumbrances, easements,
limitations, restrictions, commitments and security interests, except for
statutory liens securing payments not yet due, liens incurred in the ordinary
course of business and such other liens or encumbrances which do not materially
adversely affect the use of the properties or assets subject thereto or affected
thereby or which otherwise do not materially impair business operations at such
properties.
ERISA shall mean the Employee Retirement Income Security Act of 1974, as
amended.
EXCLUDED DEPOSITS shall mean: (a) any individual retirement account or similar
account created by a trust for the exclusive benefit of an individual or his
beneficiaries in accordance with the provisions of Section 408 of the Code and
any simplified employee pension account established in accordance with Section
408(k) of the Code which hold investments in non-deposit instruments; (b)
deposits which have been pledged to secure, or as to which the owner is an
obligor with regard to, any extension of credit by Seller or an affiliate of
Seller other than a Loan, (c) in the event that the Loans are rejected by
Purchaser pursuant to Section 1.08(b) hereof, deposits which have been pledged
to secure any Loan and (d) any deposits obtained directly or indirectly through
a "deposit broker" (as that term is defined in Section 337.6(a)(5) of the Rules
and Regulations of the FDIC, 12 CFR Section 337.6(a)(5)).
FAIR MARKET VALUE shall mean, with regard to the Owned Real Estate and the
Leasehold Estate, the price in terms of money which it will bring, free and
clear of all indebtedness and, in the case of the Leasehold Estate, subject to
all of the terms of the Lease creating such Leasehold Estate, if exposed to the
open market, allowing a reasonable time to find a purchaser, who buys with the
intention of using the Owned Real Estate or the Leasehold Estate for conducting
the business of banking.
FEDERAL FUNDS RATE shall mean the "near closing bid" federal funds rate
published in the WALL STREET JOURNAL on the first business day following the
Closing.
(North Central Ohio)
-1-
<PAGE> 3
KNOWLEDGE shall mean, with regard to Article X hereof, the actual present
knowledge as of the date hereof, without further investigation, of any Vice
President in KeyCorp's Corporate Real Estate Group and, with regard to Sections
3.01(j) and 5.01 hereof, the actual present knowledge as of the date hereof,
without further investigation, of any officer that holds the title of Senior
Vice President or above of Seller and has responsibility with respect to the
operations conducted at the Branches.
MEDIATOR shall mean the firm of Deloitte & Touche LLP.
PERMITTED EXCEPTIONS shall mean, with respect to the Owned Real Estate or the
Leasehold Estate, (a) those standard printed exceptions appearing as Schedule B
items in a standard American Land Title Association ("ALTA") owner's or
leasehold title insurance policy, as the case may be, (provided, however, that
if Purchaser elects to obtain a survey as to any of the Owned Real Estate or
Leasehold Estate, the Permitted Exceptions for such Owned Real Estate or
Leasehold Estate shall not include the standard exception for matters that would
be disclosed by a survey, but shall include specific exceptions, if any,
disclosed by such survey provided that such specific exceptions are otherwise
included in the definition of Permitted Exceptions), (b) statutory liens for
current real estate taxes or assessments, both general and special, not yet due,
or if due not yet delinquent, or the validity of which is being contested in
good faith by appropriate proceedings; (c) all zoning laws and rulings,
easements, rights of way, and restrictions of record; (d) such other liens,
imperfections in title, charges, easements, restrictions, and encumbrances (but
in all cases excluding those which secure borrowed money) which individually and
in the aggregate are not material in character, amount, or extent, or do not
materially detract from the value of, or materially interfere with, the present
use of, any Owned Real Estate or any Leasehold Estate subject thereto or
affected thereby; (e) any exceptions to title arising from the action, inaction,
or status of Purchaser; and (f) such other exceptions as are approved in writing
by Purchaser.
REGULATORY APPROVALS shall mean all approvals, permits, authorizations, waivers,
or consents of governmental agencies or authorities necessary or appropriate to
permit consummation of the transaction contemplated hereby.
(North Central Ohio)
-2-
<PAGE> 4
BRANCH PURCHASE AND ASSUMPTION AGREEMENT
This Branch Purchase and Assumption Agreement ("Agreement"), dated as of May 16,
1997, is made by and between KeyBank National Association, a national banking
association ("Seller"), and First Federal Savings and Loan Association of
Wooster, a federal savings association ("Purchaser"). Certain definitions used
herein are set forth in the Index of Definitions of this Agreement.
In consideration of the mutual promises hereinafter contained and other good and
valuable consideration, Seller and Purchaser hereby agree as follows:
ARTICLE I
THE TRANSACTION
1.01 THE TRANSACTION. Subject to the terms and conditions set forth in
this Agreement, at the Closing, (a) Purchaser shall purchase the Assets and
shall assume the Liabilities, and Seller shall assign, transfer, convey, and
deliver to Purchaser, free and clear of all Encumbrances, all of Seller's right,
title and interest in and to such Assets and such Liabilities and (b) Purchaser
shall assume and thereafter honor and fully and timely pay, perform and
discharge all of Seller's obligations and liabilities of every type and
character relating to the Assets and Liabilities. Purchaser understands and
agrees that it is purchasing only the Assets (and assuming only the Liabilities)
specified in this Agreement and, except as may be expressly provided for in this
Agreement, Purchaser has no interest in, right to, or obligations relating to
any other business relationship which Seller may have with any customer of any
of the Branches.
1.02 ASSETS AND LIABILITIES PURCHASED AND ASSUMED.
(a) ASSETS. For purposes of this Agreement, "ASSETS" shall mean:
(i) all real property owned by Seller on which Branches are
located, including all of Seller's rights in and to all
improvements thereon ("OWNED REAL ESTATE") and all leasehold
estates held by Seller ("LEASEHOLD ESTATE") in and to any real
estate on which any of the Branches is situated, including all
of Seller's rights in and to all improvements thereon ("LEASED
REAL ESTATE");
(ii) all furniture, fixtures and equipment that are located in
or necessary for the conduct of business in the ordinary course
at any Branch (including Automated Teller Machines ("ATMs"), if
any, and branch teller and platform automation equipment, if
any);
(iii) safe deposit agreements relating to safe deposit boxes
located at the Branches;
(iv) all loans (exclusive of any reserve for possible loan
losses) that are attributable to the Branches, including all
loans made in the ordinary course of business consistent with
Seller's credit standards between the date of this Agreement and
the Closing, including all documents executed or delivered in
connection with any loan and any and all collateral relating to
any such loan and all rights in relation thereto attributable to
the Branches at the Closing (the "LOANS") (unless the Loans are
rejected by Purchaser pursuant to Section 1.08(b) hereof);
(North Central Ohio)
-3-
<PAGE> 5
(v) all rights of Seller under any service or similar contracts in
effect as of the Closing Date with non-affiliated third-party service
providers which relate solely to the operations of the Branches to the
extent such contracts are assignable;
(vi) all cash on hand (I.E., all petty cash, vault cash, teller cash,
ATM cash, and prepaid postage) at the Branches as of the Closing; and
(vii) all prepaid expenses identified as an asset on the final closing
statement.
(b) LIABILITIES. For purposes of this Agreement, "LIABILITIES" shall mean
all of Seller's obligations and liabilities of every type and character
relating to all deposit accounts, including accrued interest, which are
reflected on the books of Seller as of the Closing and are attributable
to the Branches, including, without limitation, all passbook accounts,
statement savings accounts, checking, Money Market and NOW accounts,
certificates of deposit, individual retirement accounts, simplified
employee pension accounts, saving incentive match plan for employees
accounts, Keogh accounts, and repurchase agreements except for the
Excluded Deposits (the "ASSUMED DEPOSITS"). Liabilities shall also
include:
(i) all obligations due under any service or similar contracts, in
effect at the Closing, relating to the operations of the Branches, to
the extent such contracts are included in 1.02(a)(v);
(ii) all of Seller's obligations and liabilities, arising from and after
the Closing Date, to the extent attributable to the Assets and the
Assumed Deposits; and
(iii) all accrued and unpaid expenses identified as a liability on the
final closing statement.
1.03 PRELIMINARY CLOSING STATEMENT AND PAYMENT.
(a) PRELIMINARY CLOSING STATEMENT. Not less than five (5) days prior to the
Closing Date, Seller shall deliver to Purchaser a proposed preliminary
closing statement, in the form of Schedule B to this Agreement,
completed as at a date mutually agreed to by the parties. The parties
shall agree upon the preliminary closing statement before the Closing
Date, and it shall be the basis of a preliminary payment to be made to
Purchaser's account, or to Seller's account, as the case may be, on the
Closing Date (the "PRELIMINARY PAYMENT").
(b) PRELIMINARY PAYMENT. Subject to the terms and conditions hereof, at the
Closing, Seller shall wire transfer to Purchaser immediately available
funds equal to: (i) the sum of (A) the amount of the Assumed Deposits
(including accrued and unpaid interest thereon) reflected on the
preliminary closing statement and (B) the amount of all accrued and
unpaid expenses reflected as a liability on the preliminary closing
statement; LESS (ii) an amount equal to the sum of: (A) twelve and
fifteen hundredths percent (12.15%) of the Assumed Deposits based on a
30-day average prior to Closing; (B) the amount of cash on hand at the
Branches as of the Closing; (C) the sum of $192,000, representing the
Agreed Value of all furniture, fixtures, and equipment constituting part
of the Assets; (D) the Agreed Value of the Owned Real Estate and the
Leased Real Estate; (E) the amount of all prepaid expenses of Seller as
reflected as an asset on the preliminary closing statement; (F) the Net
Book Value of all Loans, plus accrued and unpaid interest thereon as
reflected on the preliminary closing statement; and (G) the amount of
estimated sales taxes, if any, to be paid by Purchaser in connection
with the transaction contemplated hereby.
(North Central Ohio)
-4-
<PAGE> 6
(c) PURCHASER PAYMENT. In the event that the amount equal to subclause
(b)(ii) above exceeds the amount equal to subclause (b)(i) above, the
amount of such excess shall constitute an amount due from Purchaser to
Seller and shall be paid to Seller at the Closing.
1.04 FINAL CLOSING STATEMENT AND ADJUSTMENT PAYMENT. Not more than
fifteen (15) days after the Closing Date, Seller shall provide Purchaser with a
proposed final closing statement, which shall be calculated as of the Closing
Date and the parties shall promptly agree upon the final closing statement. The
final closing statement shall be in a form consistent with the preliminary
closing statement. On the first business day after Purchaser agrees to the final
closing statement or Seller is notified of any determination as to the final
closing statement under Section 1.05 below, Seller shall wire transfer to
Purchaser (or Purchaser shall wire transfer to Seller, as the case may be) in
immediately available funds an amount equal to the amount by which the final
payment reflected on the final closing statement indicates an amount in excess
of (or any amount less than) the Preliminary Payment paid at Closing (the
"ADJUSTMENT PAYMENT"), plus interest, at a rate per annum equal to the Federal
Funds Rate.
1.05 DISPUTES AND MEDIATION; PAYMENT OR FEES. If Purchaser disagrees
with the final closing statement, then Purchaser shall contact Seller and
Purchaser and Seller shall cooperate to resolve the matters in dispute. If the
parties are unable to agree on a final closing statement, then Purchaser or
Seller may submit the matter to the Mediator which shall determine all disputed
portions of the final closing statement; provided, however, that if the fees of
the Mediator as estimated by the Mediator would exceed 50% of the net amount in
dispute, the parties agree that such firm will not be engaged by either party
and that such net amount in dispute will be equally apportioned between Seller
and Purchaser. The parties shall each pay one-half of the fees and expenses of
the Mediator. The final closing statement, as agreed upon by the parties and/or
determined under this subsection, shall be final and binding upon the parties.
1.06 PRORATION OF CERTAIN EXPENSES. All prepaid expenses and all accrued
and unpaid expenses shall be prorated between Purchaser and Seller as of the
Closing Date; provided, however, that (i) all property Taxes as to the Owned
Real Estate shall be prorated on the basis of the most recently certified tax
duplicate and rates; (ii) all real property taxes and other expenses or charges
required to be paid by Seller as tenant under any lease pursuant to which Seller
leases any of the Leased Real Property ("LEASE") shall be prorated based upon
amounts paid by Seller during the current lease year as to any period that
includes but extends after the Closing Date; (iii) all utility payments paid
(excluding any such payment paid by Seller to a landlord, which shall be covered
by clause (ii) hereof) shall be prorated on the basis of the best information
available at the Closing Date. All security deposits under any Lease, together
with any accrued but unpaid interest payable thereon, shall be credited to
Seller. All prepaid expenses that are allocable to Purchaser hereunder shall
appear as an asset on the preliminary or final closing statement. To the extent
that expenses allocable to Seller hereunder have been accrued and not paid by
Seller prior to the Closing Date, they shall appear as a liability on the
preliminary or final closing statement. There shall be no post-closing
adjustment for any of the foregoing.
1.07 ALLOCATION AND REIMBURSEMENT OF REAL ESTATE EXPENSES. All expenses
attributable to the Owned Real Estate and the Leasehold Estate incurred in
connection with the acquisition of the Branches by Purchaser shall be allocated
to and solely borne by Purchaser except for standard title insurance commitment
fees and title examination fees for the Owned Real Estate which shall be paid by
Seller.
1.08 LOANS.
(a) LOAN INFORMATION. Prior to the date hereof, Seller provided to
Purchaser certain information relating to the Loans to be
transferred to Purchaser, which included, among other data,
summary information relating to loan delinquencies.
(North Central Ohio)
-5-
<PAGE> 7
(b) OPPORTUNITY TO REVIEW AND REJECT LOANS. Following the date
hereof, Purchaser shall be provided with the opportunity to
conduct a limited due diligence review of the Loans for the
purpose of determining whether Purchaser desires to purchase the
Loans in their entirety. Within fourteen (14) days after the
date upon which Purchaser is first provided access to
documentation relating to the Loans, Purchaser shall notify
Seller as to whether Purchaser shall accept or reject the Loans,
provided however, that Purchaser shall only be permitted to
accept or reject all of the Loans other than overdraft lines
directly attributable to the Assumed Deposits. In the event that
Purchaser notifies Seller that it intends to reject the Loans,
the payment under Section 1.03(b) shall be calculated without
giving effect to any amounts described in (F) thereunder.
(c) LOAN DOCUMENTATION. Seller shall indemnify Purchaser for any and
all losses which arise as a direct result of the failure of
Seller to have delivered to Purchaser all necessary
documentation with respect to any Loan, provided, however, that
Seller shall not be obligated to indemnify Purchaser pursuant to
this Section 1.08(c) in the event that Purchaser shall not have
notified Seller of the missing documentation within sixty (60)
days following the Closing. For purposes of this provision, a
"loss" shall mean a loss of the principal balance of the
affected Loan outstanding as of the Closing Date and any
interest accrued thereon.
1.09 SUCCESSOR CUSTODIAN. Effective at the Closing, Seller hereby
appoints Purchaser as the successor custodian to Seller under the Liabilities
consisting of individual retirement accounts, simplified employee pension
accounts, saving incentive match plan for employee accounts, and Keogh accounts
and Purchaser hereby accepts from Seller the appointment to serve in such
capacity from and after the Closing Date.
ARTICLE II
OBLIGATIONS OF THE PARTIES PRIOR TO THE CLOSING DATE
2.01 COVENANTS OF SELLER. Seller hereby covenants to Purchaser that,
from the date hereof until the Closing Date or by such earlier time as may be
specified in this Agreement, it will do or cause the following to occur:
(a) OPERATION OF BRANCHES. Seller shall continue to operate and
maintain the Branches in a manner consistent with its customary
practices and in a condition substantially the same as exists on
the date hereof (ordinary wear and tear and casualty excepted).
(b) INFORMATION CONCERNING BRANCHES. Seller shall use its reasonable
efforts to furnish Purchaser, its agents, or representatives
reasonable access to, and permit Purchaser to make or cause to
be made such reasonable investigation of, information and
materials relating to the financial and physical condition of
the Branches as Purchaser reasonably deems necessary or
advisable; provided, further, that nothing in this Section
2.01(b) shall be deemed to require Seller to breach any
obligation of confidentiality or to reveal any proprietary
information, trade secrets, or marketing or strategic plans.
(c) CREATION OF ENCUMBRANCES. Seller shall not voluntarily create
any Encumbrances affecting the Owned Real Estate.
(d) INSURANCE. Seller will maintain in effect until and including
the Closing Date all casualty and public liability policies
relating to the Branches and maintained by Seller on the date
hereof or procure comparable replacement policies and maintain
such replacement policies in effect until and including the
Closing Date.
(North Central Ohio)
-6-
<PAGE> 8
(e) RIGHT TO INTERVENE. In the event that any claim, protest, suit
or other proceeding is instituted against Purchaser under this
Agreement, Seller shall have the right, at its discretion and
expense, to intervene in such litigation, and Purchaser hereby
consents to such intervention.
2.02 COVENANTS OF PURCHASER. Purchaser hereby covenants to Seller that,
from the date hereof until the Closing Date or by such earlier time as may be
specified in this Agreement, it will do or cause the following to occur:
(a) CERTAIN APPLICATIONS. Not later than fourteen (14) days after
the date hereof, Purchaser shall prepare and submit for filing,
at no expense to Seller, applications to all regulatory agencies
required by Purchaser to obtain the Regulatory Approvals.
Purchaser shall promptly deliver to Seller a copy of such
applications and any supplement, amendment, or item of
additional information in connection therewith. Purchaser shall
also promptly deliver to Seller a copy of each material notice,
order, opinion, approval or denial and other item of
correspondence received by Purchaser from the regulatory
agencies and shall keep Seller promptly informed of developments
and progress with respect to such matters. Purchaser hereby
represents that it knows of no reason why it should not obtain
all Regulatory Approvals in a timely manner.
(b) REAL ESTATE LEASE CONSENTS. In connection with the consent and
release noted in Section 2.03 hereof, Purchaser shall provide to
Seller within five (5) days after the date hereof current
financial information concerning Purchaser for Seller's
transmittal to the landlord under each Lease and shall provide
promptly to Seller any other information requested by such
landlord.
2.03 COVENANTS OF BOTH PARTIES. Seller hereby covenants to Purchaser,
and Purchaser hereby covenants to Seller, that, from the date hereof until the
Closing, such party shall cooperate fully in obtaining, and make all reasonable
efforts to obtain, any third party consents which are required to consummate the
transaction contemplated by this Agreement, including, without limitation, (a)
an estoppel certificate of each landlord in the form attached hereto as Schedule
G, if the landlord agrees to execute such estoppel certificate, (b) the written
consent of each landlord under a Lease to the assignment and assumption by
Purchaser of such Lease or, if the landlord does not so consent, and if such
consent is necessary to validly effect such assignment or assumption or
sublease, to a sublease of the premises demised by such Lease, and (c) in either
case, the release of Seller from all obligations and liabilities under any such
Lease from and after the Closing Date (provided, however, that this Section 2.03
shall not obligate Seller to make any payment or to execute any indemnification
or guaranty or other similar instrument which would render Seller liable for any
obligations, liabilities or duties of Purchaser arising out of such Lease from
and after the Closing Date). Each of Seller and Purchaser also hereby covenant
to the other that it shall cooperate fully in promptly selecting an Appraiser
and shall make all reasonable efforts to obtain an Appraisal of the Owned Real
Property and the Leasehold Estate within thirty (30) days of the date hereof.
2.04 SELLER'S AND PURCHASER'S RIGHTS AND OBLIGATIONS REGARDING TITLE MATTERS.
(a) TITLE COMMITMENTS. Seller, at its sole expense, shall deliver to
Purchaser not later than thirty (30) days after the date hereof,
with respect to the Owned Real Estate, title commitments for
issuance of ALTA Owner's Policies of Title Insurance
(collectively, the "TITLE COMMITMENTS" and individually, a
"TITLE COMMITMENT") issued not earlier than thirty (30) days
prior to the execution of this Agreement and issued by a title
insurance company authorized to do business in the state in
which the Owned Real Estate is located designated by Seller (the
"TITLE COMPANY").
(b) SURVEYS. For thirty (30) days from the date hereof, Purchaser
shall have the right, but not the obligation, to obtain, at
Purchaser's sole cost and expense, (i) surveys as to any or all
of the Owned
(North Central Ohio)
-7-
<PAGE> 9
Real Estate or the Leasehold Estate and (ii) title commitments
for issuance of ALTA Leasehold Policies of Title Insurance as to
the Leasehold Estate from the Title Company ("Leasehold Title
Commitment"). Purchaser shall cause a true and complete copy of
each survey to be promptly delivered to Seller and to the Title
Company. Purchaser shall cause a true and complete copy of each
Leasehold Title Commitment to be promptly delivered to Seller.
(c) TITLE DEFECTS. (i) Ten (10) days after receipt by Purchaser of
an original Title Commitment or any survey or Leasehold Title
Commitment obtained pursuant to Section 2.04(b) hereof,
Purchaser shall give Seller and the Title Company written notice
of any defect(s) disclosed in such Title Commitment, survey or
Leasehold Title Commitment that: (w) is (are) not included in
the exceptions specifically identified on the Title Commitment
or Leasehold Title Commitment; (x) is(are) not included in
clauses (a)-(d) of the definition of Permitted Exceptions
related to the applicable Owned Real Estate or Leased Real
Estate; (y) that materially adversely affect(s) the business of
the Branch situated upon such Owned Real Estate or Leased Real
Estate; and (z) which Purchaser does not approve. Failure of
Purchaser to provide such notice on a timely basis shall
constitute a waiver by Purchaser of any matter(s) disclosed in
such Title Commitment, survey or Leasehold Title Commitment and
thereupon such matter(s) shall be deemed included in clause (b)
of the definition of Permitted Exceptions set forth in this
Agreement.
(ii) If the notice referred to in (i) above is timely given by
Purchaser, Seller shall, within ten (10) days of such notice,
notify Purchaser and the Title Company as to whether Seller
shall cure or remove any defect(s). Following Seller's notice to
Purchaser and the Title Company that Seller elects not to cure
any defect(s), Purchaser must elect, within five (5) days, as
its sole remedy hereunder with respect to such defect(s), to
terminate this Agreement as to the Assets and Liabilities
attributable to the Branch situated upon the affected Owned Real
Estate and/or Leased Real Estate. Purchaser's failure to make
such an election shall be deemed to be a waiver of such
defect(s) and such defect(s) shall be included in the Permitted
Exceptions and shown as Permitted Exceptions in the deed and the
title policy relating to such Owned Real Estate or Leasehold
Estate.
(iii) Seller shall cause the Title Company to update the Title
Commitments and Purchaser may, at its sole cost and expense,
cause the Title Company to update Leasehold Title Commitments,
as of the business day prior to the Closing Date. In the event
that the updated Title Commitment or Leasehold Title Commitment
as to any Owned Real Estate or Leasehold Estate discloses any
defect(s) not included in the original Title Commitment, survey
or Leasehold Title Commitment, the procedure set forth in (ii)
above shall apply.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents and
warrants to Purchaser as follows:
(a) CORPORATE ORGANIZATION AND AUTHORITY. Seller is a national
banking association duly organized, validly existing, and in
good standing under the laws of the United States of America
with corporate power to carry on its business as presently
conducted at the Branches. Seller is an insured bank, as defined
in the Federal Deposit Insurance Act and applicable regulations
thereunder ("FDIA"). Seller is a member of the Bank Insurance
Fund of the FDIC ("BIF") and pays deposit insurance assessments
to BIF and the Savings Association Insurance Fund. Seller is in
compliance in all material respects with
(North Central Ohio)
-8-
<PAGE> 10
all applicable fair lending laws, rules and regulations,
including without limitation the Community Reinvestment Act of
1977, as amended. Seller has all requisite corporate power and
authority and has taken all corporate action necessary to
execute and deliver this Agreement and to consummate the
transaction contemplated hereby, and this Agreement is a valid
and binding obligation of Seller in accordance with its terms
subject, as to enforcement, to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws
of general applicability relating to or affecting creditor's
rights generally, whether applied at law or equity, and to
general equity principals.
(b) EFFECTIVE AGREEMENT. Subject to the receipt of any and all
Regulatory Approvals and required third party consents, the
execution, delivery, and performance of this Agreement by Seller
and the consummation of the transaction contemplated hereby,
will not conflict with, result in the breach of, constitute a
violation or default, result in the acceleration of payment or
other obligations, or create an Encumbrance, under any of the
provisions of the Charter or By-Laws of Seller, under any
judgment, decree, or order, under any law, rule, or regulation
of any government or agency thereof, or under any material
contract or instrument to which Seller is subject, where such
conflict, breach, violation, default, acceleration, or
Encumbrance would have a material adverse effect on the business
of any Branch or Seller's ability to perform its obligations
hereunder.
(c) INDIVIDUAL RETIREMENT ACCOUNTS. The Individual Retirement
Custodial Account Agreement (i.e. Internal Revenue Service Model
Form 5305-A with certain supplementary provisions) used at the
Branches materially meets the criteria for the establishment of
an "individual retirement account" as specified in Section
408(a) of the Code in all material respects.
(d) SIMPLIFIED EMPLOYEE PENSION ACCOUNTS. The Simplified Employee
Pension - Individual Retirement Account Agreement (i.e. Internal
Revenue Service Model Form 5305-SEP with certain supplementary
provisions) and the Salary Reduction and Other Elective
Simplified Employee Pension - Individual Retirement Account
Agreement (i.e. Internal Revenue Service Model Form 5305A-SEP
with certain supplementary provisions) used at the Branches
materially meets the criteria for the establishment of a
"simplified employee pension" as specified in Section 408(k) of
the Code in all material respects.
(e) SAVING INCENTIVE MATCH PLAN FOR EMPLOYEES ACCOUNTS. The Saving
Incentive Match Plan for Employees of Small Employers Agreement
(i.e. Internal Revenue Service Model Form 5305-SIMPLE with
certain supplementary provisions) used at the Branches
materially meets the criteria for the establishment of a "saving
incentive match plan for employees" as specified in Section
408(p) of the Code in all material respects.
(f) KEOGH ACCOUNTS. The custodial agreement for the retirement plan
for self-employed individuals used at the Branches materially
meets the criteria for the establishment of a "Keogh plan" as
specified in Section 401(a) and Section 401(c) of the Code in
all material respects.
(g) NO BROKER. No broker or finder, or other party or agent
performing similar functions, has been retained by Seller or is
entitled to be paid based upon any agreements, arrangements, or
understandings made by Seller in connection with the transaction
contemplated hereby, and no brokerage fee or other commission
has been agreed to be paid by Seller on account of such
transaction.
(h) ENVIRONMENTAL. Seller makes the representations and warranties
to Purchaser set forth in Section 10.01 hereof.
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(i) ASSETS. The fixed Assets material to the operations of each of
the Branches are in adequate working condition for the conduct
of the business at each of the Branches currently conducted by
Seller except for ordinary wear and tear.
(j) DEPOSITS. All of the Assumed Deposits have been administered
and, to Seller's knowledge, originated, in material compliance
with the documents governing the relevant type of deposit
account and all applicable laws. The Assumed Deposits are
insured by the Bank Insurance Fund or the Savings Association
Insurance Fund of the FDIC up to the current applicable maximum
limits, and no action is pending or, to Seller's knowledge,
threatened by the FDIC with respect to the termination of such
insurance.
(k) LIMITATION OF WARRANTIES. Except as otherwise specifically
provided for in this Agreement, Seller makes no representations
or warranties whatsoever with respect to the Assets or the
Liabilities, express or implied, including, without limitation,
any warranties with respect to merchantability, fitness, title,
enforceability, collectibility, documentation or freedom from
liens or encumbrances (in whole or in part).
3.02 REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents
and warrants to Seller as follows:
(a) CORPORATE ORGANIZATION, AUTHORITY AND COMPLIANCE. Purchaser is a
federal savings association duly organized, validly existing,
and in good standing under the laws of the United States of
America with corporate power to own its properties and to carry
on its business as presently conducted, except where the failure
of Purchaser to have such corporate power would not have a
material adverse effect on the ability of Purchaser to perform
its obligations hereunder. Purchaser is an insured bank, as
defined in the FDIA. Purchaser has all requisite corporate power
and authority and has taken all corporate action necessary to
execute and deliver this Agreement and to consummate the
transaction contemplated hereby, and this Agreement is a valid
and binding obligation of Purchaser in accordance with its terms
subject, as to enforcement, to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws
of general applicability relating to or affecting creditor's
rights generally, whether applied at law or equity, and to
general equity principals. Purchaser is in compliance with all
applicable fair lending laws, rules and regulations including
but not limited to the Community Reinvestment Act of 1977, as
amended.
(b) EFFECTIVE AGREEMENT. Subject to the receipt of any and all
Regulatory Approvals and required third party consents, the
execution, delivery, and performance of this Agreement by
Purchaser and the consummation of the transaction contemplated
hereby, will not conflict with, result in the breach of,
constitute a violation or default, result in the acceleration of
payment or other obligations, or create an Encumbrance, under
any of the provisions of the Articles of Association or By-Laws
of Purchaser, under any judgment, decree, or order, under any
law, rule, or regulation of any government or agency thereof, or
under any material contract or instrument to which Purchaser is
subject, where such conflict, breach, violation, default,
acceleration, or lien would have a material adverse effect on
Purchaser's ability to perform its obligations hereunder.
(c) NO BROKER. No broker or finder, or other party or agent
performing similar functions, has been retained by Purchaser or
is entitled to be paid based upon any agreements, arrangements,
or understandings made by Purchaser in connection with the
transaction contemplated hereby, and no
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brokerage fee or other commission has been agreed to be paid by
Purchaser on account of such transaction.
(d) REGULATORY MATTERS. (i) There are no pending, or, to Purchaser's
knowledge, threatened or contemplated, disputes or controversies
(including any written order, decree, agreement or memorandum of
understanding, or Commitment Letter or similar submission) with,
to or between Purchaser and any federal, state or local
governmental agency or authority that, individually or in the
aggregate, would have a material adverse effect on Purchaser's
ability to perform any of its obligations hereunder.
(ii) Purchaser is, and on a PRO FORMA basis giving effect to the
transaction contemplated hereby will be, (A) at least "well
capitalized", as defined for purposes of the FDIA, and (B) in
compliance with all capital requirements, standards and ratios
required by each state or federal bank regulator with
jurisdiction over Purchaser, including, without limitation, any
such higher requirements, standard or ratio as shall apply to
institutions engaging in the acquisition of insured institution
deposits, assets or branches, and no such regulator is likely
to, or has indicated that it will, condition any of the
Regulatory Approvals upon an increase in Purchaser's capital or
compliance with any capital requirements, standard or ratio.
(iii) Purchaser has no knowledge that it will be required to
divest deposit liabilities, branches, loans or any business or
line of business as a condition to the receipt of any of the
Regulatory Approvals.
(iv) Each of the subsidiaries or affiliates of Purchaser that is
an insured depository institution was rated "Outstanding"
following its most recent Community Reinvestment Act examination
by the regulatory agency responsible for its supervision.
Purchaser has received no notice of and has no knowledge of any
planned or threatened objection by any community group to the
transactions contemplated hereby.
(e) FINANCING AVAILABLE. Purchaser's ability to consummate the
transactions contemplated by this Agreement is not contingent on
raising any equity capital, obtaining specific financing
thereof, obtaining the consent of any lender or any other
matter.
3.03 SURVIVABILITY; NO INDEMNIFICATION. The representations and
warranties of Seller and Purchaser contained or referred to in this Agreement or
in any certificate, schedule, or other instrument delivered or to be delivered
pursuant to this Agreement shall not survive beyond the Closing and neither
Seller nor Purchaser shall have any obligation whatsoever after the Closing to
indemnify, defend, or hold the other harmless for any loss, cost, charge,
liability or expense arising as a result of the inaccuracy or breach of any such
representation or warranty. Nothing in this provision shall affect the rights
and obligations of the parties provided for in Sections 1.08(c), 4.02(a), 6.03
and 10.02 hereof.
ARTICLE IV
EMPLOYEE BENEFITS
4.01 LIST OF BRANCH EMPLOYEES; HANDBOOK. Names of all employees
(including full and part-time employees, employees on short term disability and
employees on leave of absence and excluding employees on long-term disability)
employed by the Seller and assigned to the Branches as of the date hereof (the
"BRANCH EMPLOYEES"), and, as to each Branch Employee, such employee's date of
hire and current compensation are listed on attached
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Schedule C. At least ten days prior to the Closing Date, Seller shall update
Schedule C to a date within 15 days prior to the Closing Date.
4.02 ACTIONS TO BE TAKEN BY PURCHASER WITH RESPECT TO BRANCH EMPLOYEES.
Purchaser covenants to Seller that it will do or cause the following to occur:
(a) OFFER OF EMPLOYMENT. Seller shall make available and Purchaser
shall hire, as of the Closing Date, all Branch Employees, at
salaries, or at base wages, not less than the current salaries
or base wages paid to such Branch Employees as of the Closing
Date. Purchaser shall be responsible for all obligations
(including any obligation to provide notices) or liabilities, if
any, which may arise in connection with any Branch Employee
under the Workers Adjustment and Retraining Notification Act
(the "WARN ACT") and Purchaser shall indemnify Seller for any
and all losses which Seller may incur under the WARN Act in
connection with any Branch Employee due to actions taken by
Purchaser.
(b) EMPLOYEE BENEFITS. All Branch Employees shall be eligible to
participate in Purchaser's employee benefit plans and fringe
benefit plans (including, without limitation, pension and profit
sharing plans, retirement income and post retirement welfare
benefits, health insurance benefits (medical and dental),
disability, life and accident insurance, sickness benefit,
vacation, employees' loans, and banking privileges) on the same
basis as such plans and benefits exist and are offered to
employees of Purchaser with comparable positions with Purchaser.
Purchaser shall credit such Branch Employees for their length of
service with Seller, its predecessors, or its affiliates, for
all purposes under each employee benefit and fringe benefit plan
to be provided by Purchaser to such Branch Employees and for
purposes of vesting and eligibility (but not for purposes of
benefit accrual) under any pension benefit plan as defined in
Section 3(2) of ERISA.
(c) CREDITED SICKNESS DAYS. If Purchaser offers a salary
continuation or similar program for employees unable to work for
medical reasons, the Branch Employees shall be credited under
any program of Purchaser with at least the number of sickness
and/or personal benefit days accrued under Seller's program at
the Closing Date. After the Closing Date, the Branch Employees
shall accrue additional sickness and/or personal benefit days in
accordance with the terms of Purchaser's program.
(d) PRE-EXISTING CONDITION. Purchaser agrees that any pre-existing
condition clause in any of Purchaser's health or disability
insurance coverage shall not be applicable to the Branch
Employees or their dependents.
(e) SEVERANCE PAY. Seller's severance policy and Purchaser's
severance policy, if any, are attached hereto as Schedule D.
Effective as of the Closing Date, Purchaser shall assume
liability for all severance benefits payable to any Branch
Employee who is terminated by Purchaser after the Closing Date.
For a period of one (1) year following the Closing Date,
Purchaser shall provide such benefit pursuant to either
Purchaser's severance policy or Seller's severance policy,
whichever is greater, and Purchaser shall compute severance
benefits by giving all Branch Employees full credit for all
years of service with Seller, its affiliates, and predecessors,
in accordance with Section 4.02(b). In the event that Purchaser
does not maintain a severance policy, Purchaser will adopt a
severance policy for a period of one (1) year from the Closing
Date on a basis consistent with the terms of Seller's severance
policy in existence on the Closing Date as disclosed in writing
to Purchaser by Seller on or prior to the date hereof. After the
initial one-year period, Purchaser shall provide Branch
Employees with severance benefits in accordance with Purchaser's
severance policy, if any, in accordance with their years of
service as credited under this Agreement.
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(f) SUCCESSOR EMPLOYER. Purchaser agrees it will qualify as a
successor employer of Branch Employees for withholding tax
purposes.
(g) PAYMENT OF CLAIMS. Purchaser assumes responsibility for (i)
payment of any medical, dental, health and disability claims
incurred by Branch Employees on or after the Closing Date and
(ii) Continuation Coverage (as defined in Section 4.03(d) below)
to any Branch Employee (and each Branch Employee's qualified
beneficiaries) whose qualifying event occurs on or after the
Closing Date.
4.03 ACTIONS TO BE TAKEN BY SELLER WITH RESPECT TO BRANCH EMPLOYEES.
Seller covenants to Purchaser that it will do or cause the following to occur:
(a) ACCRUED BENEFITS. Seller agrees to remain responsible for the
payment of all accrued benefits to such Branch Employees who are
participants or retirees in accordance with the terms of
Seller's retirement income plans. Purchaser shall not at any
time assume any liability for the benefits of any active or any
terminated, vested, or retired participants whose benefit
accrued prior to the Closing Date under Seller's retirement
income plans.
(b) PAYMENT OF CLAIMS. Seller shall retain the responsibility for
payment of all medical, dental, health and disability claims
incurred by a Branch Employee prior to the Closing Date, and
Purchaser shall not assume any liability with respect to such
claims.
(c) CONTINUATION COVERAGE. Seller shall be responsible for providing
any Branch Employee whose "qualifying event," within the meaning
of Section 4980B(f) of the Code, occurs prior to the Closing
Date (and such Branch Employee's "qualified beneficiaries"
within the meaning of Section 4980B(g) of the Code) with the
continuation of group health coverage required by Section
4980B(f) of the Code ("CONTINUATION COVERAGE") under the terms
of the health plan maintained by Seller.
(d) RETIRED OR TERMINATED BRANCH EMPLOYEES. Seller agrees that it
shall retain, consistent with its normal employment practices,
all liability and obligation, if any (including, without
limitation, the liability and obligation for all wages, salary,
vacation pay and unemployment, medical, dental, health and
disability benefits), for those former employees of the Branches
who retired or terminated employment prior to the Closing Date,
but shall in all other instances cease to have any liability for
Branch Employees with regard to the foregoing provisions on or
after the Closing Date, except as otherwise required by law.
4.04 SELLER'S PENSION AND SAVINGS PLAN. On and after the Closing Date,
Seller shall vest all of the Branch Employees in the KeyCorp Cash Balance
Pension Plan ("SELLER'S PENSION PLAN") and the KeyCorp 401(K) Savings Plan
("SELLER'S SAVINGS PLAN").
ARTICLE V
TAX MATTERS
5.01 DEPOSIT ACCOUNTS DOCUMENTATION. To Seller's Knowledge, with respect
to the Assumed Deposits, Seller is in compliance with the law and IRS
regulations relative to obtaining from depositors executed IRS Forms W-8 and W-9
or is back-up withholding on the applicable account.
(North Central Ohio)
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5.02 ASSISTANCE AND COOPERATION; TAX MATTERS. After the Closing Date,
each of Seller and Purchaser shall, with respect to the Assets or income
therefrom, the Assumed Deposits or payments in respect thereof, or the operation
of the Branches:
(a) TAX INFORMATION. Make available to the other and, subject to
attorney-client privilege, to any taxing authority as reasonably
requested all relevant information, records, and documents
relating to taxes.
(b) AUDITS AND ASSESSMENTS. Provide timely notice to the other party
in writing of any pending or proposed tax audits (with copies of
all relevant correspondence received from any taxing authority
in connection with any tax audit or information request) or
assessments for taxable periods for which the other party may
have a liability.
The party requesting assistance or cooperation shall bear the other
party's reasonable out-of-pocket expenses in complying with such request to the
extent that those expenses are attributable to fees and other costs of
unaffiliated third-party service providers.
ARTICLE VI
CONDITIONS PRECEDENT TO CLOSING
6.01 CONDITIONS TO BOTH PARTIES' OBLIGATIONS. The obligations of each
party to consummate the transaction contemplated hereby are subject to the
satisfaction, or the waiver by such party to the extent permitted, of each of
the following conditions at or prior to the Closing:
(a) PRIOR REGULATORY APPROVAL OF THE TRANSACTION CONTEMPLATED
HEREBY. All filings and registrations with, and notifications
to, all federal and state authorities required for consummation
of the transaction contemplated hereby and Purchaser's operation
of the Branches shall have been made, all Regulatory Approvals
shall have been received and shall be in full force and effect,
and all applicable waiting periods shall have passed. A
Regulatory Approval will be deemed to have been received, and
the condition to closing set forth in this Section 6.01 shall be
deemed to have been met notwithstanding the fact that such
Regulatory Approval requires Purchaser to effect any divestiture
of any of the Branches.
(b) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the other party set forth in this Agreement shall
be true and correct in all material respects as of the Closing
Date with the same effect as though all such representations and
warranties had been made on and as of such time (unless a
different date is specifically indicated in such representations
and warranties), and each party shall have delivered to the
other a certificate, dated as of the Closing Date, to the effect
that this condition has been satisfied with respect to such
party, provided, however, that the representation of Seller set
forth in Section 3.01(i) hereof shall be deemed to be true and
correct in accordance with this Section 6.01 unless Buyer shall
have notified Seller at least 10 days prior to the Closing Date
of any potential breach of Section 3.01(i) by Seller and Seller
shall have had sufficient opportunity to correct such potential
breach.
(e) COVENANTS. Each and all of the covenants and agreements of the
other party to be performed or complied with at or prior to the
Closing Date pursuant to this Agreement shall have been duly
performed or complied with in all material respects by such
party, or shall have been waived in accordance with the terms
hereof, and such party shall have delivered a certificate, dated
as of the Closing Date, to the effect that this condition has
been satisfied with respect to such party; provided,
(North Central Ohio)
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however, that the covenant of Seller set forth in Section
2.01(a) hereof shall be deemed to have been duly performed and
complied with in accordance with this Section 6.01(c) unless
Buyer shall have notified Seller at least 10 days prior to the
Closing Date of any potential breach of Section 2.O1(a) and
Seller shall have had sufficient opportunity to correct such
potential breach.
(d) NO PROCEEDING OR PROHIBITION. At the time of the Closing, no
court or governmental or regulatory authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced,
or entered any statute, rule, regulation, judgment, decree,
injunction or other order (whether temporary, preliminary or
permanent) which is in effect to restrain, enjoin, or prohibit
consummation of the transaction contemplated hereby or which
might result in rescission in connection with such transaction,
and Purchaser shall have delivered to Seller a certificate,
dated as of the Closing Date, to that effect.
6.02 ADDITIONAL CONDITION TO PURCHASER'S OBLIGATIONS. The Updated Title
Commitments shall have been delivered to Purchaser in accordance with Section
2.04. Subject to the provisions of Section 2.04, the Title Company shall be
ready and willing, upon the recording of the applicable deeds, to issue to
Purchaser, at Purchaser's sole cost and expense, an ALTA Owner's Policy of Title
Insurance as to each parcel of Owned Real Estate, showing as exceptions to title
only the Permitted Exceptions.
6.03 OVERRIDING PROVISIONS RELATING TO THE LEASES. Notwithstanding
anything to the contrary herein, if, by no later than five (5) days prior to the
Closing Date, a landlord under a Lease shall not have consented to the
assignment to and assumption by Purchaser of that Lease or to a sublease by
Seller to Purchaser of the Leased Real Estate demised by the Lease and such
consent is required under the terms of the Lease, the Seller shall have the
right, exercisable by written notice no later than the Closing Date, to
terminate the Agreement: (a) as to the Leasehold Estate demised by such Lease
and all furniture, fixtures and equipment located thereon; or (b) as to the
Assets and Liabilities relating to the Branch situated upon such Leased Real
Estate. Furthermore, and also notwithstanding anything to the contrary herein,
if, by not later than five (5) days prior to the Closing Date, a landlord under
a Lease shall not have agreed to the release of Seller from all obligations and
liabilities under the Lease from and after the Closing Date, but either the
landlord shall have consented to a sublease by Seller to Purchaser of the Leased
Real Estate demised by the Lease (if the Lease requires such consent) or such a
sublease does not require the landlord's consent, then Seller and Purchaser
agree to proceed with the transactions contemplated by this Agreement as to the
Branch located at the Leased Real Estate demised by such Lease, except that
Seller and Purchaser shall enter into a sublease agreement by which Seller shall
sublease the Leased Real Estate and Purchaser shall agree to indemnify Seller
for any loss, cost, charge or liability incurred by Seller as a result of the
failure to obtain the landlord's release. If the parties are to enter into a
sublease, then Seller shall provide to Purchaser promptly after the lapse of
such deadline a form of sublease which shall contain substantially the same
terms and conditions as the corresponding Lease, with appropriate modifications
to reflect the sublease nature.
ARTICLE VII
CLOSING
7.01 CLOSING AND CLOSING DATE. The transaction contemplated hereby shall
be effective at a closing (the "CLOSING") to be held in the offices of Seller,
located at 127 Public Square, Cleveland, Ohio 44107, or via courier or facsimile
transmission as Seller may designate. The Closing shall be effective at 11:59
p.m. on Friday, September 12, 1997, or such other date as Seller in its
discretion may designate, which date shall be reasonably acceptable to
Purchaser. The date on which the Closing occurs is referred to in this Agreement
as the "CLOSING DATE".
(North Central Ohio)
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7.02 PARTIES' ACTIONS AT THE CLOSING. At the Closing, Seller and
Purchaser shall, except as otherwise provided in this Agreement, take such
actions, including the execution and delivery of certain documentation, all as
set forth on Schedule E, and including the filing or recording of any and all
documents (including, without limitation, deeds) necessary in order to transfer
legal and equitable title to the Owned Real Estate to Purchaser as of the
Closing Date.
ARTICLE VIII
CERTAIN TRANSITIONAL MATTERS
TRANSITIONAL ACTION BY PURCHASER AND SELLER. Purchaser and Seller shall
cooperate in good faith and will use all reasonable efforts to comply with the
various transitional matters set forth in Schedule F hereto.
ARTICLE IX
GENERAL COVENANTS
9.01 INFORMATION. Except as otherwise set forth in this Agreement, for a
period of three (3) years following the Closing, Seller and Purchaser mutually
agree, subject to any limitations imposed by law, to provide each other, upon
written request, with reasonable access to, or copies of, information and
records relating to the Branches, including, without limitation, Branch Employee
and customer files which are in the possession or control of Purchaser or Seller
reasonably necessary to permit Seller or Purchaser or any of their affiliates to
comply with or contest any applicable legal, tax, banking, accounting, or
regulatory policies or requirements, any legal or regulatory proceedings, or
inquiries by customers or Branch Employees. The provisions of this Section 9.01
shall survive the Closing for a period of three (3) years and any claim for the
breach of this Section 9.01 must be brought within such three (3) year period.
9.02 CONFIDENTIALITY OBLIGATIONS. From and after the date hereof, each
party shall, and shall cause its affiliates to, treat all information received
from the other party concerning the business, assets, operations, and financial
condition of the other party as well as any other material which is included in
the definition of "Evaluation Material" as such term is defined under the
confidentiality agreement between Purchaser and Seller dated as of March 12,
1997 and amended on April 21, 1997 as Evaluation Material in accordance with the
terms of such confidentiality agreement. From and after the Closing Date, Seller
shall assign to Purchaser all of Seller's rights under any confidentiality
agreements executed by or on behalf of parties other than Purchaser.
9.03 ALLOCATION OF CONSIDERATION. Purchaser and Seller agree that the
consideration payable hereunder at the Closing shall be allocated among the
Assets on the basis of an allocation to be mutually agreed upon by Purchaser and
Seller within thirty (30) days after the Closing, and that is consistent with
Section 1060 of the Code.
(North Central Ohio)
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9.04 COVENANT REGARDING THE ESTABLISHMENT OF BRANCHES AND THE
RETENTION OF CUSTOMER LISTS.
(a) For two (2) years after the Closing, Seller shall not open, and
shall not permit any of its affiliates to open, any branch
office or install any ATM within the cities, villages, towns or
townships listed on Schedule H hereto; provided that the
foregoing restriction shall not apply from and after any date
that the Seller or one of its affiliates shall have completed an
acquisition transaction, including a merger of Seller or one of
Seller's affiliates, with any other financial institution
holding company or any insured depository institution which at
the time of such acquisition transaction is providing retail
branch services in the cities, villages, towns or townships
listed on Schedule H hereto.
(b) Following the Closing, neither Seller nor KeyCorp or any of its
affiliates will solicit any Branch customer except such as may
occur as a result of solicitations to (i) the public generally,
or (ii) customers of Seller or KeyCorp or any of its affiliates,
including without limitation, all customers that Seller retains
as a result of Purchaser rejecting the Loans in accordance with
Section 1.08(b).
9.05 FURTHER ASSURANCES. From and after the date hereof, each party
hereto agrees to execute and deliver such instruments and to take such other
actions as the other party hereto may reasonably request or as may be reasonably
necessary, including obtaining all required consents of third parties, in order
to carry out and implement this Agreement. Purchaser shall use its best efforts
to pursue all applications filed in connection with obtaining the Regulatory
Approvals diligently and in good faith.
9.06 OPERATION OF BRANCHES. Not later than the Closing Date, Purchaser:
(a) shall change the legal name of the Branches to a name that does not include
the word Key, and (b) except for any documents or materials in possession of the
customers of the Branches (including, but not limited to, deposit tickets and
checks), shall not use and shall cause the Branches to cease using (i) any
signage, stationery, advertising, documents, or printed or written materials
that refer to such Branches by any name that includes the word Key and (ii) any
logo, trademark or service mark or trade name registered in the name of, or
otherwise owned by Seller or any of its affiliates, except as otherwise provided
in this Agreement or permitted pursuant to any written agreement(s) between
Purchaser and Seller or its affiliates.
9.07 NOTICES OF DEFAULT. Each of Seller and Purchaser shall promptly
give written notice to the other upon becoming aware of the impending or
threatened occurrence of any event which could reasonably be expected to cause
or constitute a breach of any of their respective representations, warranties,
covenants or agreements contained in this Agreement.
9.08 FIRE, CASUALTY AND TAKINGS. If any Owned Real Estate, Leasehold
Estate or Leased Real Estate or any fixtures or leasehold improvements composing
part thereof shall be damaged by fire or other casualty and such damage
materially affects the operations of the Branch related thereto, whether insured
or uninsured, and shall not be substantially repaired or restored by the Closing
Date, or if the land where any of the Branches is located or any building
thereon or any part thereof shall be taken by condemnation or exercise of the
power of eminent domain, or if proceedings therefor have commenced or been
threatened, on or prior to the Closing Date and such taking materially affects
or would materially affect the operations of the Branch related thereto,
Purchaser shall have the right and option exercisable within 10 days of
notification of such damage or taking to elect (i) to terminate this Agreement
with respect to the affected Branch, and the purchase price shall be adjusted to
reflect the decrease in the value of the assets and liabilities of the affected
Branch assigned thereto pursuant to the terms hereof, or (ii) to cause Seller to
assign to Purchaser as of the Closing Date all of Seller's rights and claims
against any third party by reason of such fire or other casualty, including
without limitation, any insurance claims.
(North Central Ohio)
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ARTICLE X
ENVIRONMENTAL MATTERS
10.01 ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES.
(a) Prior to the date hereof, Seller shall have provided to
Purchaser Phase I audit reports, as of a date no earlier than
January 1, 1994, undertaken by Seller with respect to the Owned
Real Estate (the "Phase I Reports"). Except as set forth in the
Phase I Reports, to the Knowledge of Seller, the Branches are in
compliance with all environmental laws, rules and regulations of
the United States of America and of states and localities in
which the Branches are located, except for any such
noncompliance which, individually or in the aggregate, has not
had, and is not expected to have, to the Knowledge of Seller, a
material adverse effect on the business of any Branch.
(b) Except as may be set forth in the Phase I Reports, to the
Knowledge of Seller, Seller has no liability with respect to the
Branches which, taken singularly or as a whole, if adversely
determined, would have a material adverse effect on the business
of any Branch (i) relating to the handling, storage, treatment,
use, disposal, discharge or release into the environment of any
hazardous material or waste at, on or from the Owned Real Estate
or the Leased Real Estate, (ii) for the release or emission of
any hazardous material from, on, under, or within the Owned Real
Estate or Leased Real Estate into the air, water, surface water,
ground water, land surface, or subsurface strata, (iii) for the
disposal of any hazardous material on the Owned Real Estate or
Leased Real Estate or (iv) for the contamination of the Owned
Real Estate or Leased Real Estate with any hazardous material.
10.02 ENVIRONMENTAL INVESTIGATION.
(a) If any Phase I Report indicates the presence of any hazardous
substance with respect to any Owned Real Estate, and such
presence is a condition that requires remediation pursuant to
appropriate governmental standards, then, at Purchaser's request
made in writing to Seller within ten (10) days after the date of
this Agreement, and at Purchaser's sole cost and expense, Seller
shall arrange to cause a consultant approved by both Seller and
Purchaser to conduct a Phase II environmental audit as to such
hazardous substance and deliver to Seller and Purchaser the
results of such audit within forty-five days after the request
by Purchaser. If the Phase II audit report confirms that such
presence requires remediation pursuant to appropriate
governmental standards and if such presence, if not remediated,
would materially adversely affect the business of the Branch
situated upon the Owned Real Estate and Purchaser requests that
Seller take remedial action with respect thereto, then Purchaser
shall so notify Seller in writing promptly after receipt of the
Phase II environmental audit report, whereupon Seller shall have
the right to (i) terminate this Agreement as it relates to the
Assets and Liabilities of the affected Branch, (ii) undertake
remedial action as to such presence at its sole cost and expense
so that no material continuing violation of any environmental
law exists (provided, however, that the timing of any such
remediation shall be coordinated with Purchaser to minimize any
resulting business interruption), or (iii) agree to indemnify
Purchaser for all actual costs and expenses incurred by
Purchaser to remediate the Owned Real Estate as to such presence
so that no material continuing violation of any environmental
law exists.
(h) If Purchaser fails to request a Phase II environmental audit or
to exercise its right to make a request that Seller remediate
any Owned Real Estate in each case as and when required above,
then Purchaser shall be bound to the terms of this Agreement
without a right of termination except as provided in Article XI
and without a further right to request or to require any Seller
remediation or
(North Central Ohio)
-18-
<PAGE> 20
indemnification. Any termination by Seller under this Article X
shall neither create nor result in any liability of the
Seller to the Purchaser.
ARTICLE M
TERMINATION
11.01 METHODS OF TERMINATION. This Agreement may be terminated in any
of the following ways:
(a) By either Purchaser or Seller, in writing, if the Closing has
not occurred on or before the earlier of the nine (9) month
anniversary of this Agreement;
(b) At any time prior to the Closing Date by the mutual consent in
writing of Purchaser and Seller;
(c) By Purchaser or Seller as to the Owned Real Estate and/or
Leasehold Estate and all furniture, fixture and equipment
located thereon, all of the Assets and Liabilities relating to
the affected Branch, or as to the Agreement in its entirety, as
provided, in each case, in Section 2.04(c), 6.03 or 10.02;
(d) By Purchaser in writing if and when, at any time prior to the
Closing, any condition of its obligations hereunder set forth in
Section 6.01 of this Agreement becomes incapable of being
fulfilled and such condition has not been waived by Purchaser;
(e) By Seller in writing if and when, at any time prior to the
Closing, any condition of its obligations hereunder set forth in
Section 6.01 of this Agreement becomes incapable of being
fulfilled and such condition has not been waived by Seller;
(f) At any time prior to the Closing Date by Purchaser or Seller in
writing if the other continues to be in breach of any
representation and warranty (as if such representation and
warranty had been made on and as of the date of the notice of
breach referred to below unless a different time is specified in
any such representation and warranty), covenant, or agreement in
any material respect and such breach has not been cured within
twenty-five (25) days after the giving of notice to the
breaching party of such breach; or
(g) By Purchaser or Seller in writing at any time after any
applicable regulatory authority has denied approval of any
application of Purchaser for approval of the transaction
contemplated hereby.
11.02 EFFECT OF TERMINATION. Except as otherwise specifically provided
in this Agreement, in the event of termination of this Agreement pursuant to
this Article XI, neither Purchaser nor Seller nor their respective officers,
directors, or agents shall have any liability or obligation to the other of any
nature whatsoever except liabilities and obligations arising from Section 9.02
of this Agreement and liabilities and obligations arising from any material
breach of any provision of this Agreement occurring prior to the termination
hereof.
(North Central Ohio)
-19-
<PAGE> 21
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.01 EXPENSES. Except as otherwise specifically allocated herein, each
of the parties hereto shall bear its own expenses, whether or not the
transaction contemplated hereby is consummated.
12.02 TRANSFER OF LOANS WITHOUT RECOURSE; LIMITATION ON WARRANTIES.
Except as may be provided in Section 1.08, all Loans transferred to Purchaser
pursuant to this Agreement shall be transferred without recourse and without any
representations or warranties whatsoever (including, without limitation, any
representations or warranties as to the enforceability or collectibility of any
such Loans, the creditworthiness of any obligors or guarantors thereunder, or
the value or adequacy of such collateral). EXCEPT AS OTHERWISE SPECIFICALLY
PROVIDED FOR IN THIS AGREEMENT, SELLER MAKES NO REPRESENTATIONS OR WARRANTIES
WHATSOEVER WITH RESPECT TO THE ASSETS OR THE LIABILITIES, EXPRESS OR IMPLIED,
INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES WITH RESPECT TO MERCHANTABILITY,
FITNESS, TITLE, ENFORCEABILITY, COLLECTIBILITY, DOCUMENTATION OR FREEDOM FROM
LIENS OR ENCUMBRANCES (IN WHOLE OR IN PART).
12.03 AMENDMENT, MODIFICATIONS AND WAIVERS. The parties hereto, by
mutual consent of their duly authorized officers, may amend, modify, and
supplement this Agreement in such manner as may be agreed upon by them in
writing. Each party hereto, by written instrument signed by an officer of such
party, may extend the time for the performance of any of the obligations or
other acts of the other party hereto and may waive, but only as affects the
party signing such instrument: (a) any inaccuracies in the representations or
warranties of the other party; (b)compliance with any of the covenants or
agreements of the other party; (c) the performance by the other party of such of
its obligations set out herein; and (d) satisfaction of any condition to the
obligations of the waiving party pursuant to this Agreement.
12.04 NOTICES. Any notice or other communication required or permitted
pursuant to this Agreement shall be effective only if it is in writing and
delivered personally, by facsimile transmission, or by registered or certified
return receipt mail, postage prepaid, addressed as follows:
If to Purchaser:
First Federal Savings and Loan Association of Wooster
135 E. Liberty Street
P.O. Box 385
Wooster, Ohio 44691
Facsimile: 330-262-1057
Attention: James J. Little
with a copy to:
Critchfield, Critchfield & Johnston, Ltd.
225 North Market Street
P.O. Box 599
Wooster, Ohio 44691
Facsimile: 330-268-9278
Attention: Daniel H. Plumly
(North Central Ohio)
-20-
<PAGE> 22
If to Seller:
Key Corp
127 Public Square
Cleveland, Ohio 44114
Facsimile: 216-689-3610
Attention: Matthew M. Nickels
with a copy to the following:
KeyCorp
127 Public Square
Cleveland, Ohio 44114
Facsimile: 216-689-4121
Attention: Daniel R. Stolzer, Esq.
or such other person or address as any such party may designate by notice to the
other parties, and shall be deemed to have been given as of the date received.
12.05 PARTIES IN INTEREST; ASSIGNMENT. This Agreement is binding upon
and is for the benefit of the parties hereto and their respective successors,
legal representatives, and assigns, and no person, including a Branch Employee,
who is not a party hereto (or a successor or assignee of such party) shall have
any rights or benefits under this Agreement, either as a third party beneficiary
or otherwise. This Agreement cannot be assigned except by a written agreement
executed by the parties hereto or their respective successors and assigns.
Notwithstanding the foregoing, Seller acknowledges that Purchaser may intend to
arrange for resales of certain of the Branches simultaneously with the Closing;
provided, however, that no third party beneficiary relationship or any
contractual relationship between Seller and any other third party shall be
deemed to exist or to be created hereunder by virtue of the resale of any of the
Branches by Purchaser hereunder.
12.06 PRESS RELEASES. Seller and Purchaser shall mutually agree as to
the form, timing and substance of any press release of any matters relating to
this Agreement; provided, however, that nothing in this Section 12.06 shall be
deemed to prohibit any party hereto from making any press release which its
legal counsel deems necessary in order to fulfill such party's disclosure
obligations imposed by law.
12.07 ENTIRE AGREEMENT. This Agreement supersedes any and all oral or
written agreements and understandings heretofore made relating to the subject
matter hereof and contains the entire agreement of the parties relating to the
subject matter hereof. All Schedules to this Agreement are incorporated into
this Agreement by reference and made a part hereof.
12.08 GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Ohio. If any part of this Agreement
is declared illegal by a court of competent jurisdiction, the remaining parts
shall remain in full force and effect.
12.09 COUNTERPARTS. This Agreement and any Schedule hereto may be
executed 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.
(North Central Ohio)
-21-
<PAGE> 23
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officer whose signature
appears below as of the date first above written.
PURCHASER: SELLER:
First Federal Savings and Loan Association KeyBank National Association
of Wooster
By: /s/ James J. Little By: /s/ Matthew M. Nickels
--------------------------------------- ---------------------------
Name: James J. Little Name: Matthew M. Nickels
--------------------------------------- --------------------------
Title: Executive V.P. & C.F.O. Title: Vice President
------------------------------------ -------------------------
-22-
<PAGE> 24
<TABLE>
<CAPTION>
SCHEDULES
TO
BRANCH PURCHASE AND ASSUMPTION AGREEMENT
<S> <C> <C>
Schedule A Branches to be Purchased .....................................S-2
Schedule B Form of Preliminary Closing Statement ........................S-3
Schedule C Employee List ................................................S-4
Schedule D Severance Plans ..............................................S-5
Schedule E Actions to be Taken At Closing ...............................S-6
Attachment 1 - Instrument of Assumption ......................S-7
Attachment 2 - Bill of Sale and Receipt ......................S-8
Attachment 3 - Limited Warranty Deed for Ohio ................S-9
Attachment 4 - Assignment and Assumption of Lease ............S-12
Schedule F Transitional Matters .........................................S-14
Schedule G Landlord Estoppel Certificate ................................S-18
Schedule H Restricted Cities, Villages, Towns and Townships .............S-21
</TABLE>
(North Central Ohio)
<PAGE> 25
SCHEDULE A
NO. BRANCH LOCATION
1. Bucyrus 101 South Sandusky Street
Bucyrus, Ohio 44820
2. Crestline 900 East Main Street
Crestline, Ohio 44827
3. Cygnet 264 East Front Street
Cygnet, Ohio 43413
4. Galion 260 Portland Way North
Galion, Ohio 44883
5. Tiffin 596 West Market Street
Tiffin, Ohio 44883
6. Wayne 114 South Center Street
Wayne, Ohio 43466
7. Willard 501 Fort Ball Road
Willard, Ohio 44890
(North Central Ohio)
S-2
<PAGE> 26
SCHEDULE B
FORM OF
PRELIMINARY CLOSING STATEMENT
AMOUNT OF LIABILITIES Preliminary
- --------------------- -----------
Principal Amount of Assumed Deposits _________________
Accrued Interest _________________
Accrued and Unpaid Expenses (pro-rated) _________________
(LESS) VALUE OF ASSETS
AND AMOUNT OF PREMIUM
----------------------
Agreed Value of Owned Real Estate (_________________)
Agreed Value of Furniture, Fixtures,
and Equipment (__________________)
Cash on Hand (__________________)
Loans* (__________________)
(__________________)
Amount of Premium * (__________________)
TAXES AND PRORATED EXPENSES
---------------------------
Sales Tax (__________________)
Real Property Transfer Tax
(where applicable) __________________
Prorated Tax and Tax Expense Items * __________________
Payment Amount __________________
- --------------
*See attached Schedules for Calculations
(North Central Ohio)
S-3
<PAGE> 27
<TABLE>
<CAPTION>
SCHEDULE C
EMPLOYEE LIST
Annual Base
Hire Salary/Hourly
Branch Employee Name Date Wage
------ ------------- ---- -------------
Bucyrus
<S> <C> <C>
ACHTERMANN, MARILYN 11/18/64 $31,479
GROVES, DARLENE M. 7/6/78 20,052
KURTZ, JUDITH A. 10/4/79 18,450
LEVEQUE, MICHELLE T. 5/22/95 6.50
LONG, BEVERLEY Y. 6/21/54 24,670
TEYNOR, RUTH E. 10/26/78 33,448
Crestline
DILGARD, LINDA C. 2/27/74 24,931
EUSEY, JANET K. 3/10/82 16,516
YONTZ, BARBARA JO 2/4/87 7.94
Cygnet
BISCHOFF, STEPHEN L. 3/15/77 62,650
BOWSHER, WALTER W. 9/12/61 39,804
FOLTZ, CHERYL A. 6/4/96 6.50
HILLE, ROBYN 6/4/96 6.50
SLAGLE, BRENDA S. 11/8/95 6.83
Wayne
KNEPPER, CAROL S. 8/5/57 8.66
MORLOCK, DONNA 8/10/79 8.94
PEPPLE, MICHAEL W. 9/15/80 61,730
POLLARD, JOAN R. 6/12/79 21,217
WYANT, VIRGINIA E. 6/3/73 27,870
Galion
ALSPACH, CYNTHIA A. 2/3/75 9.09
CLEVENGER, SHERRI 9/4/79 32,826
EAGLE, LONNIE R. 6/1/78 55,334
HUNTSMAN, PAMELA S. 6/1/75 24,378
MILLER, BETTY L. 4/16/75 17,909
SMITH, JO ANN 8/3/78 20,801
WALTER, JUDITH E. 11/7/66 18,970
Tiffin Westgate
ARNOLD, JANET S. 9/7/89 7.51
KELBLEY, JOHN P. 6/6/95 6.50
LADD, MARILEE ANN 2/23/70 43,738
MILLER, HELEN R. 10/12/89 7.00
MONGEAU, TOSHA N. 1/31/96 6.70
ROSZMAN, MARY JO 12/26/79 24,846
SCHLETER, KRISTIN B. 4/15/96 14,768
SCHRAND, SANDRA J. 1/31/96 10,347
TRAN, CHI MING 1/31/96 6.70
Willard
ARNOLD, CHRISTINE A. 12/7/88 7.54
BARNETT, MARGARET EVELYN 11/13/78 30,283
DURHAM, SANDRA JEAN 8/5/68 26,063
HUTCHINSON, RITAMARIE 11/10/75 20,385
KISSEL, SUSAN JEAN 5/6/74 20,468
MCLENDON, CARI L. 10/31/81 21,882
RUSH, CHARLES EUGENE 9/1/79 54,900
SMITH, JANE A. 4/29/74 21.633
USELTON, AMANDA L. 5/4/94 6.70
</TABLE>
Employee listing updated as of March 31, 1997
<PAGE> 28
SCHEDULE D
SEVERANCE POLICIES
Seller's severance policy (See attached)
Purchaser's severance policy (See attached)
S-5
<PAGE> 29
KEYCORP
SEPARATION PAY PLAN
(January 1, 1997 Restatement)
ARTICLE I
THE PLAN
--------
The KeyCorp Separation Pay Plan (the "Plan") is hereby amended and restated in
its entirety, effective January 1, 1997. The Plan is intended to be an
"employee welfare benefit plan" within the meaning of Section 3 (1) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and
accordingly shall be administered and interpreted in a manner consistent with
the requirements of Title I of ERISA and all regulations promulgated
thereunder. The Plan is established and maintained for the primary purpose of
ameliorating the hardship and inconvenience resulting from involuntary
unemployment.
ARTICLE II
DEFINITIONS
-----------
As used herein, the following words and phrases shall have the meanings
hereinafter set forth, unless a different meaning is plainly required by the
context:
2.1 "ADJUSTED SERVICE DATE" shall mean the Employee's most recent date of
hire with an Employer, as adjusted by KeyCorp to reflect any prior periods
of service with KeyCorp.
2.2 "BASE WEEKLY SALARY" shall mean the base weekly cash compensation
payable to an Employee at the time of his employment termination. An
Employee's Weekly Salary shall not include any amount payable on account of
overtime hours worked, shift differentials, commissions, incentive
compensation, or bonuses. A part-time Employee's Base Weekly Salary shall
be determined based on the Employee's average number of hours worked during
the applicable calendar year, as determined by KeyCorp.
2.3 "BENEFICIARY" shall mean the Employee's surviving spouse, or such other
person designated by the Employee as entitled to receive the Employee's or
former Employee's separation pay benefit, in accordance with the provisions
of Article III of this Plan, if such Employee or former Employee dies
before his separation pay benefit has been distributed to him in full.
2.4 "CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time. Reference to any section of the Code shall include such
section and any comparable section(s) of any future legislation that
amends, supplements, or supersedes such section and all applicable income
tax regulations.
S-6
<PAGE> 30
2.5 "CORPORATION" shall mean KeyCorp.
2.6 "DISCHARGE FOR CAUSE" shall mean an Employee's employment termination
that is the result of the Employee's violation of the Employer's
policies, practices or procedures, violation of city, state,
or federal law, or failure to perform his assigned job duties in a
satisfactory manner. The Corporation in its sole and absolute discretion
shall determine whether an Employee has been Discharged for Cause as
provided for in this Section 2.6 hereof.
2.7 "EMPLOYEE" shall mean any common law employee employed by an Employer;
provided, however, that the term "Employee" shall not include (a) any
person who at any time during the six month period ending on the date of
his employment termination was a party to an individual written agreement
of employment, a written "golden parachute" agreement, a written
termination agreement, or any such similar written agreement of contract of
employment with his Employer, (b) any temporary, peak-time, on-call, or
occasional employee, (c) any person who provides services to an Employer as
an independent contractor or consultant basis or any employee of an
independent contractor or consultant, or (d) any person who services are
leased by an Employer through any other person or organization.
2.8 "EMPLOYER" shall mean the Corporation and any of its subsidiaries or
affiliates unless specifically excluded as an Employer for Plan purposes by
written action of the Corporation. An Employer's participation shall be
subject to any conditions or requirements made by the Corporation and each
Employer shall be deemed to appoint the Plan Administrator as its exclusive
agent under the Plan as long as it continues as an Employer.
2.9 "EMPLOYMENT SEPARATION AGREEMENT" shall mean a written agreement, in a
form satisfactory to the Employer, entered into by an Employee and his
Employer whereby in exchange for a separation pay benefit, as calculated in
accordance with Section 3.3 hereof, the Employee agrees to release his
Employer from all legal claims that are by reason of or in any manner
whatsoever connected with his employment relationship with his Employer.
2.10 "SALARY CONTINUATION" shall mean a separation pay benefit, paid on a per
pay basis, which shall be calculated in accordance with the provisions
of Section 3.3 hereof.
2.11 "TERMINATION AS A RESULT OF A REDUCTION IN STAFF" shall mean an
involuntary and permanent employment termination that is due to the
elimination by an Employer of an Employee's position when there is no other
comparable position to which the Employee is offered the opportunity to
transfer. Whether another position is comparable to an Employee's prior
position shall be determined by the Corporation in its sole and absolute
discretion, provided, however, that a position to which an Employee is
offered the opportunity to transfer shall not be deemed to be a comparable
position if the Employee's Base Weekly Salary becomes reduced by 10% or
more, or if the new workplace location
S-7
<PAGE> 31
would cause the Employee to drive 50 or more miles in the Employee's
one-way daily commuting distance to work, or if the Employee's present
commuting distance presently equals or exceeds 50 miles, would cause the
Employee's one-way commuting distance to increase. An Employee's
termination of employment with an Employer that occurs on account of or
following the sale by the Corporation or the Employer of a subsidiary, an
affiliate, a division, a branch, or a portion of its assets, or an
Employee's termination of employment that occurs in conjunction with or due
to the Employer's outsourcing of either the Employee's position or the
general functions of the Employee's department or division shall not
constitute a Termination as a Result of a Reduction in Staff if the
Employee either continues in or is offered the opportunity to continue in
his or her position or a similar position with the outsourcing service
provider, or the Employee continues in the employment of the new owner of
the subsidiary, affiliate, division, branch or assets sold, or is offered
the opportunity to continue in the employment of the new owner.
2.12 "FULL YEAR OF SERVICE" shall mean a consecutive twelve month period of
employment calculated as of an Employee's Adjusted Service Date.
2.13 "VOLUNTARY RESIGNATION" shall mean the termination of an Employee's
employment with his Employer at a time or in a manner that is determined by
the Employee, regardless of the underlying motivation or reason for the
Employee's decision. In particular, and without limiting the generality of
the forgoing, an Employee whose position has been eliminated as of a future
date and who declines to remain in his Employer's employment until such
future date shall be deemed to have terminated employment by Voluntary
Resignation.
The masculine gender includes the feminine, and singular references include
the plural, unless the context clearly requires otherwise.
ARTICLE III
BENEFITS UNDER THE PLAN
-----------------------
3.1 IN GENERAL. An Employee whose employment with an Employer ceases because
of a Termination as a Result of a Reduction in Staff shall be eligible to
receive a separation pay benefit hereunder, in either a lump sum amount or
in the form of Salary Continuation, provided the Employee executes the
required Employment Separation Agreement provided to him by his Employer.
3.2 LIMITATION. Notwithstanding Section 3.1 hereof, in no event shall an
Employee be eligible to receive a separation pay benefit under the Plan if
his employment with an Employer ceases as a result of a Discharge for Cause
or Voluntary Resignation.
S-8
<PAGE> 32
3.3 CALCULATION OF BENEFIT AMOUNT. An Employee's separation pay benefit shall be
determined as follows:
(a) An Employee employed by an Employer for less than twelve (12)
consecutive months prior to his termination date shall receive the
Minimum Separation Pay Benefit applicable to his particular salary grade
as provided in the Separation Pay Schedule contained in Section 3.3(c).
(b) An Employee employed by an Employer for more than twelve (12)
consecutive months prior to his termination date shall receive a
separation pay benefit calculated in accordance with the Separation Pay
Schedule formula, subject to the Minimum and the Maximum Separation Pay
Schedule provisions contained in Section 3.3(c).
(c) Separation Pay Schedule:
MINIMUM MAXIMUM
------- -------
EMPLOYEE SEPARATION PAY SEPARATION PAY
-------- -------------- -------------
LEVEL BENEFIT FORMULA BENEFIT
----- ------- ------- -------
NON-EXEMPT 2 weeks of Base Two (2) weeks of Base Weekly 30 weeks of Base
Weekly Salary. Salary plus one (1) week of Weekly Salary.
Base Weekly Salary for every
Full Year of Service up to and
including four (4) years, and
two (2) weeks of Base Weekly
Salary for every Full Year of
Service equal to or more than
five (5) years.
EXEMPT 6 weeks of Base Six (6) weeks of Base Weekly 30 weeks of Base
(Salary Weekly Salary. Salary plus one (1) week of Weekly Salary.
Grades Base Weekly Salary for every
73-79) Full Year of Service up to and
including four (4) years, and
two (2) weeks of Base Weekly
Salary for every Full Year of
Service equal to or more than
five (5) years.
EXEMPT 12 weeks of Base Twelve (12) weeks of Base 52 weeks of Base
(Salary Weekly Salary. Weekly Salary, plus two (2) Weekly Salary.
Grades weeks of Base Weekly Salary
80-83) for every Full Year of
Service.
S-9
<PAGE> 33
<TABLE>
<CAPTION>
MINIMUM MAXIMUM
------- -------
EMPLOYEE SEPARATION PAY SEPARATION PAY
-------- -------------- --------------
LEVEL BENEFIT FORMULA BENEFIT
----- ------- ------- -------
<S> <C> <C> <C>
EXEMPT 30 weeks of Base Thirty (30) weeks of Base 52 weeks of Base
(Salary Grades Weekly Salary. Weekly Salary up to five (5) Weekly Salary.
84-85) Full Years of Service, forty-
two (42) weeks of Base
Weekly Salary for five (5) to
nine (9) Full Years of Service,
and fifty-two (52) weeks of
Base Weekly Salary for ten
(10) or more Full Years of
Service.
EXEMPT 52 Weeks of Base Fifty-two (52) weeks of Base 52 weeks of Base
(Salary Grades Weekly Salary. Weekly Salary. Weekly Salary.
86 and above)
</TABLE>
3.4 SALARY BANDING. Employees who have not been assigned Salary Grades, for
Plan purposes, shall have their separation pay benefit calculated in
accordance with salary banding criteria utilized by the Corporation.
3.5 PAYMENT. An Employee who has executed the required Employment
Separation Agreement shall be paid his separation pay benefit in either
(1) a lump sum cash amount as soon as reasonably practicable, in
accordance with payment procedures established by the Corporation, or
(2) in the form of Salary Continuation. An Employee who elects Salary
Continuation shall receive his separation pay benefit under the Plan by
the Employer's payment of his or her separation pay benefit through the
Employer's normal payroll procedures, until such time as the full value
of Employee's separation pay benefit, as calculated in accordance with
Section 3.3 hereof, has been paid to the Employee.
3.6 PAYMENT LIMITATION. Notwithstanding any other provision of this Plan to
the contrary, an Employee's separation pay benefit shall not be
contingent, either directly or indirectly, upon the Employee's
retirement, and all payments hereunder shall conclude within one year
of the Employee's termination.
3.7 TERMINATION UPON RE-EMPLOYMENT. In the event an Employee entitled to
receive a separation pay benefit hereunder is re-employed by the
Corporation or any of its subsidiaries or affiliates prior to the full
payment of the Employee's separation pay benefit, such unpaid
separation pay benefit shall be forfeited by the Employee upon his
re-employment, and the Employee shall have no right to receive any
additional separation pay benefit.
S-10
<PAGE> 34
3.8 TERMINATION UPON EMPLOYMENT. In the event an eligible Employee elects
to receive Salary Continuation under the Plan, and thereafter becomes
employed by an employer other than the Corporation or any of its
subsidiaries or affiliates prior to the full payment of his separation
pay benefit, such Employee's separation pay benefit shall terminate as
of his new employment date, and the Employee shall immediately
thereafter receive the remaining unpaid separation pay benefit in a
lump sum amount.
3.9 PAYMENT TO BENEFICIARY. If a former Employee dies while any of such
Employee's separation pay benefit remains unpaid, the Corporation will
pay the remaining separation pay to the Employee's named Beneficiary,
in a lump sum amount as soon as practicable following receipt by the
Corporation of notice of the date of death, which notice shall be in
form and substance satisfactory to the Corporation. If the Employee
does not have a surviving spouse, and has failed to designate a
Beneficiary other than his spouse in accordance with applicable
provisions of the Plan, the Corporation shall pay the unpaid separation
pay to the Employee's estate. The Corporation will be discharged from
all liability hereunder to the extent of any such payment.
ARTICLE IV
ADMINISTRATION AND CLAIMS PROCEDURE
-----------------------------------
4.1 ADMINISTRATION. The Corporation, which shall be the "Administrator" of
the Plan for purposes of ERISA and the "Plan Administrator" for
purposes of the Code, shall be responsible for the general
administration of the Plan, for carrying out the provisions hereof, and
for making payments hereunder. The Corporation shall have the sole and
absolute discretionary authority and power to carry out the provisions
of the Plan, including, but not limited to, the authority and power (a)
to determine all questions relating to the eligibility for and the
amount of any benefit to be paid under the Plan, (b) to determine all
questions pertaining to claims for benefits and procedures for claim
review, (c) to resolve all other questions arising under the Plan,
including any questions of construction and/or interpretation, and (d)
to take such further action as the Corporation shall deem necessary or
advisable in the administration of the Plan. All findings, decisions,
and determinations of any kind made by the Plan Administrator shall not
be disturbed unless the Plan Administrator has acted in an arbitrary
and capricious manner. Subject to the requirements of law, the Plan
Administrator shall be the sole judge of the standard of proof required
in any claim for benefits and in any determination of eligibility for
a benefit. All decisions of the Plan Administrator shall be final and
binding on all parties. The Corporation may employ such attorneys,
investment counsel, agents, and accountants as it may deem necessary or
advisable to assist it in carrying out its duties hereunder. The
actions taken and the decisions made by the Corporation hereunder shall
be final and binding upon all interested parties subject, however, to
the provisions of Section 4.2. The Plan year, for purposes of Plan
administration, shall be the calendar year.
S-11
<PAGE> 35
4.2 CLAIMS REVIEW PROCEDURE. Whenever the Plan Administrator decides for
whatever reason to deny, whether in whole or in part, a claim for benefits
under this Plan filed by any person (herein referred to as the "Claimant"),
the Plan Administrator shall transmit a written notice of its decision to
the Claimant, which notice shall be written in a manner calculated to be
understood by the Claimant and shall contain a statement of the specific
reasons for the denial of the claim and a statement advising the Claimant
that, within 60 days of the date on which he receives such notice, he may
obtain review of the decision of the Plan Administrator in accordance with
the procedures hereinafter set forth. Within such 60-day period, the
Claimant or his authorized representative may request that the claim denial
be reviewed by filing with the Plan Administrator a written request
therefore, which request shall contain the following information:
(a) the date on which the request was filed with the Plan Administrator;
provided, however, that the date on which the request for review was in
fact filed with the Plan Administrator shall control in the event that
the date of the actual filing is later than the date stated by the
Claimant pursuant to this paragraph (a);
(b) the specific portions of the denial of his claim which the Claimant
requests the Plan Administrator to review;
(c) a statement by the Claimant setting forth the basis upon which he
believes the Plan Administrator should reverse its previous denial of
his claim and accept his claim as made; and
(d) any written material which the Claimant desires the Plan Administrator
to examine in its consideration of his position as stated pursuant to
paragraph (c) above.
In accordance with this Section, if the claimant requests a review of the
Plan Administrator's decision, such review shall be made by the Plan
Administrator, who shall, within ninety (90) days after receipt of the
request form, review and render a written decision on the claim containing
the specific reasons for the decision including reference to Plan
provisions upon which the decision is based. All findings, decisions, and
determinations of any kind made by the Plan Administrator shall not be
modified unless the Plan Administrator has acted in an arbitrary and
capricious manner. Subject to the requirements of a law, the Plan
Administrator shall be the sole judge of the standard of proof required in
any claim for benefits, and any determination of eligibility for a benefit.
All decisions of the Plan Administrator shall be binding on the claimant
and upon all other Persons. If the Participant, or Beneficiary shall not
file written notice with the Plan Administrator at the times set forth
above, such individual shall have waived all benefits under the Plan other
than as already provided, if any, under the Plan.
S-12
<PAGE> 36
ARTICLE V
FUNDING
-------
All benefits paid under the Plan shall be payable from the general assets of the
Corporation. The Corporation shall have no obligation to establish a trust or
fund to fund its obligation to make benefits under the Plan nor to insure any
benefits under the Plan.
ARTICLE VI
AMENDMENT AND TERMINATION
-------------------------
The Corporation reserves the right to terminate the Plan at any time, or
from time to time, and to modify or amend the Plan, in whole or in part, at any
time and for any reason. Any amendment shall be by written instrument which
shall be executed by an officer of the Corporation.
ARTICLE VII
MISCELLANEOUS PROVISIONS
------------------------
7.1 NO COMMITMENT AS TO EMPLOYMENT. Nothing herein contained shall be construed
as a commitment or agreement upon the part of any Employee hereunder to
continue his employment with an Employer, and nothing herein contained shall
be construed as a commitment on the part of any Employer to continue the
employment or rate of compensation of any Employee hereunder for any period.
7.2 BENEFITS. Nothing in the Plan shall be construed to confer any right or
claim upon any person, firm, or corporation other than former Employees who
become entitled to a separation pay benefits under the Plan or their
Beneficiaries.
7.3 ABSENCE OF LIABILITY. No member of the board of directors of the Corporation
or a subsidiary or any officer of the Corporation or a subsidiary shall be
liable for any act or action hereunder, whether of commission or omission,
taken by any other member, or by any officer, agent, or employee, or, except
in circumstances involving his bad faith or willful misconduct, for anything
done or omitted to be done by himself.
7.4 EXPENSES. The expenses of administration of the Plan shall be paid by the
Corporation.
7.5 PRECEDENT. Except as otherwise specifically provided, no action taken in
accordance with the Plan by the Corporation shall be construed or relied
upon as a precedent for similar action under similar circumstances nor will
such action be deemed a waiver of the right to enforce the terms of the Plan
to future circumstances.
S-13
<PAGE> 37
SCHEDULE E
ACTIONS TO BE TAKEN AT CLOSING
All capitalized terms shall have the meanings given to them in the Agreement.
SELLER'S ACTIONS AT THE CLOSING. At the Closing, Seller shall:
DELIVERY OF ASSETS. Deliver to Purchaser at the Branches (i) such of the
Assets as shall be capable of physical delivery, (ii) such of the files,
records, and documents (in whatever medium then maintained by Seller)
pertaining to the Assets and the Liabilities as exist and are available,
(iii) the contents of all safety deposit boxes maintained at the Branches
as of the Closing Date, (iv) all safety deposit box lease agreements and
other documents pertaining to the safety deposit business of the Branches
as of the Closing Date, (v) all safekeeping agreements, receipts, and other
documents pertaining to all safekeeping items held by the Branches for its
customers as of the Closing Date, and (vi) all safekeeping items held by
the Branches for its customers as of the Closing Date, subject to the
provisions of the applicable agreements, receipts, and other documents
pertaining thereto.
ENDORSEMENT OF LOANS. Validly endorse over to Purchaser without recourse
all promissory notes representing the outstanding indebtedness under each
Loan (unless the Loans are rejected by Purchaser pursuant to Section
1.08(b) of the Agreement).
DELIVERY OF DOCUMENTATION. Execute, acknowledge, and/or deliver to
Purchaser, dated the Closing Date, the certificates of Seller contemplated
by Section 6.01, the Bill of Sale and Receipt in the form of Attachment 2,
Limited Warranty Deed in the form of Attachment 3 for the Ohio Owned Real
Estate upon which each Branch is situated, the Assignment and Assumption of
Lease in the form of Attachment 4 for the Leased Real Estate upon which
each Branch is situated, all other documents required to be delivered to
Purchaser by Seller at the Closing pursuant to the terms of this Agreement,
and any other documents which Purchaser has identified to Seller at a
reasonable time prior to the Closing that are necessary or reasonably
advisable to consummate the transaction contemplated by the Agreement.
DELIVERY OF FUNDS. Deliver to Purchaser any funds required to be paid by
Seller to Purchaser at the Closing pursuant to the terms of the Agreement.
PURCHASER'S ACTIONS AT THE CLOSING. At the Closing, Purchaser shall:
DELIVERY OF DOCUMENTATION. Execute, acknowledge and/or deliver to Seller,
dated as of the Closing Date, the certificates of Purchaser contemplated by
Section 6.01, the Instrument of Assumption in the form of Attachment 1, the
Bill of Sale and Receipt in the form of Attachment 2, the Assignment and
Assumption of Lease in the form of Attachment 4 for the Leased Real Estate
upon which each Branch is situated, all other documents required to be
delivered to Seller by Purchaser at the Closing pursuant to the terms of
this Agreement, and any other documents which Seller has identified to
Purchaser at a reasonable time prior to the Closing that are necessary or
reasonably advisable to consummate the transaction contemplated by the
Agreement.
DELIVERY OF FUNDS. Deliver to Seller any funds required to be paid by
Purchaser to Seller at the Closing pursuant to the terms of the Agreement.
(North Central Ohio)
S-14
<PAGE> 38
ATTACHMENT 1
INSTRUMENT OF ASSUMPTION
Pursuant to the provisions of the Branch Purchase and Assumption Agreement dated
as of _______________, 199____ (the "Agreement"), by and between
__________________________("Seller") and ("Purchaser"), Purchaser:
(a) hereby assumes and hereby agrees to hereafter faithfully honor and
fully and timely pay, perform, and discharge all of the Assumed Deposit
liabilities together with all accrued interest attributed thereto; and
(b) hereby assumes and hereby agrees to hereafter faithfully honor and
fully and timely pay, perform, and discharge all of the obligations,
duties, and liabilities of Seller arising from and after the date hereof
with respect to the safety deposit box business of the Branches including,
all safety deposit box lease agreements and documents pertaining to the
safety deposit business of the Branches as of the date hereof and all
safekeeping agreements, receipts, and other documents pertaining to all
safekeeping items held by any Branch for its customers as of the Closing
Date; and
(c) hereby assumes and hereby agrees to hereafter faithfully honor and
fully and timely pay, perform, and discharge all accrued and unpaid
expenses; and
(d) hereby assumes and hereby agrees to hereafter faithfully honor and
fully and timely pay, perform, and discharge all additional obligations,
duties, and liabilities of Seller, to the extent attributable to the Assets
transferred to Purchaser by Seller pursuant to the Agreement and only to
the extent arising by reason of Purchaser's use or ownership of such Assets
from and after the date hereof.
All capitalized terms that are defined in the Agreement and are not
otherwise defined herein shall have the meaning given to them in the Agreement.
IN WITNESS WHEREOF, Purchaser has caused this instrument to be duly
executed and delivered as of _____________, 199__.
PURCHASER
--------------------------------------------
By:
-----------------------------------------
Title:
---------------------------------------
(North Central Ohio)
S-15
<PAGE> 39
ATTACHMENT 2
BILL OF SALE AND RECEIPT
FOR VALUE RECEIVED, Seller hereby absolutely and unconditionally assigns,
transfers, conveys, and delivers to Purchaser, all of Seller's right, title, and
interest in, to, and under all Assets, but without recourse and without any
representations or warranties whatsoever, except as otherwise specifically set
forth in the Branch Purchase and Assumption Agreement dated ____________ ___,
199__, between Purchaser and Seller ("Agreement").
Purchaser hereby accepts and acknowledges receipt of (a) all of the Assets
as are capable of physical delivery, (b) all files, records and documents (in
whatever form or medium presently maintained by Seller) pertaining to the Assets
and the Assumed Deposit liabilities which exist and are available, (c) the
contents of all safety deposit boxes maintained at the Branches as of the date
hereof, (d) all safety deposit box lease agreements and other documents
pertaining to the safety deposit business of the Branches as of the date hereof,
(e) all safekeeping agreements, receipts and other documents pertaining to all
safekeeping items held by the Branches for their customers as of the date
hereof, and (f) all safekeeping items held by the Branch for its customers as of
the date hereof, subject to the provisions of the applicable agreements,
receipts, and other documents pertaining thereto.
In accepting this bill of sale and the property conveyed thereby, Purchaser
acknowledges that Seller has made no representation or warranty whatsoever,
express or implied, as to the condition, quantity or quality of, or the rights,
interests, fixtures, equipment and other articles of personal property included
in the property. Purchaser agrees to accept the property and all portions
thereof "as is" on the date hereof.
All capitalized terms that are defined in the Agreement and are not
otherwise defined herein shall have the meaning given to them in the Agreement.
IN WITNESS WHEREOF, Seller and Purchaser have caused this instrument to be
duly executed and delivered as of _________ ___, 199__.
SELLER
------------------------------------------
By:
---------------------------------------
Title:
---------------------------------------
PURCHASER
------------------------------------------
By:
---------------------------------------
Title:
---------------------------------------
(North Central Ohio)
S-16
<PAGE> 40
ATTACHMENT 3
LIMITED WARRANTY DEED
---------------------
(Ohio)
__________________________________ a(n)_______________________________
("Grantor"), for valuable consideration paid, grants with limited warranty
covenants, to _____________________________ a(n) _____________ ("Grantee"),
whose tax mailing address is ______________________________________, the real
property described in EXHIBIT A attached hereto and made a part hereof, together
with all buildings and improvements situated thereon and all rights,
privileges and easements appurtenant thereto.
Title conveyed hereunder is subject to the encumbrances
listed on EXHIBIT B attached hereto and made a part hereof
IN WITNESS WHEREOF, Grantor has executed this Limited
Warranty Deed as of the ___ day of_________, 19__.
Signed and acknowledged
in the presence of:
- --------------------------------------- ---------------------------------------
Print Name: a(n)
----------------------------- -----------------------------------
By:
- --------------------------------------- ---------------------------------------
Print Name: Name:
----------------------------- ----------------------------------
Title
----------------------------------
STATE OF OHIO )
) SS:
COUNTY OF CUYAHOGA )
On this ____ day of__________, 19__, before me, a Notary Public in and for
said County and State, personally appeared ______________________________, the
___________________ of_____________________________ a(n)
__________________________, who acknowledged that _____ did sign the
foregoing Instrument on behalf of said _________________________ as such
officer.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
(SEAL)
-----------------------------------
Notary Public
My commission expires:
- ---------------------------------
This instrument prepared by:
Patrick J. Flynn, Esq.
Thompson Hine & Flory LLP
3900 Key Center
127 Public Square
Cleveland, Ohio 44114
(North Central Ohio)
S-17
<PAGE> 41
EXHIBIT A
---------
Legal Description
(North Central Ohio)
S-18
<PAGE> 42
EXHIBIT B
---------
Permitted Encumbrances
North Central Ohio
S-19
<PAGE> 43
ATTACHMENT 4
[SEPARATE DOCUMENT FOR EACH REAL ESTATE LEASE]
ASSIGNMENT AND ASSUMPTION OF LEASE
ASSIGNMENT AND ASSUMPTION
OF LEASE
THIS ASSIGNMENT AND ASSUMPTION OF LEASE, made this _______ day of
___________, 19__, by and between KeyBank National Association, a national
banking association ("Assignor") and ________________________________,
a(n)______________________________________________________ ("Assignee").
WITNESSETH:
WHEREAS, _______________________________ , as lessor, and KeyBank
National Association (1), as lessee, have entered into a certain lease dated
_______________________ (the "Lease"), [a memorandum of which was filed for
record on _________________ in Volume _____, Page ____ of ____________ County
records,] (2) pertaining to certain real property situated in the City of
_________________, County of _________________, and State of New York, and more
particularly described on Exhibit 1 attached hereto and made a part hereof
(said premises, together with all of the improvements thereon, and all
rights, privileges and appurtenances thereunto belonging being hereinafter
collectively referred to as the "Leased Premises");
WHEREAS, Assignor, as Seller, and Assignee, as Purchaser, have entered
into a Branch Purchase and Assumption Agreement, dated as of______________
__, 199__, relating to certain branch banks including, without limitation, the
branch bank located at the Leased Premises (the "Purchase Agreement");
WHEREAS, pursuant to the terms of the Purchase Agreement, Assignor
desires to assign its right, title and interest in and to the Lease and the
Leased Premises to Assignee, and Assignee desires to have Assignor's right,
title and interest in and to the Lease and the Leased Premises assigned to it;
NOW, THEREFORE, KNOW ALL MEN BY THESE PRESENTS that, in consideration
of the mutual advantage accruing to each of the parties hereto and other good
and valuable consideration, the receipt and sufficiency whereof are
acknowledged by each of the parties hereto, Assignor and Assignee do hereby
agree as follows:
1 . ASSIGNMENT. Assignor hereby gives, grants, bargains, sells,
conveys, transfers and sets over unto Assignee, its successors and assigns, as
of the Effective Date (as hereinafter defined) all of Assignor's right, title
and interest, as lessee, in and to the Lease and the Leased Premises (including,
without limitation, any rights to purchase all or any portion of the Leased
Premises or to extend or renew the term of the Lease).
2. ASSUMPTION. Assignee hereby accepts the foregoing assignment and, in
consideration thereof, Assignee hereby covenants and agrees, from and after the
Effective Date, to pay the lessee's obligations under the Lease, and assume,
observe, perform, fulfill and be bound by all terms, covenants, conditions and
obligations of the Lease which are to be assumed, observed, performed and
fulfilled by the lessee named therein in the same manner and to the same extent
as if Assignee were the lessee named therein, subject to the proration
provisions set forth in the Purchase Agreement.
3. NO MERGER. In no event shall the leasehold interest, estate or right
of Assignee, or of the holder of any mortgage upon the Lease, merge with any
interest, estate or rights of the lessor under the Lease nor to the Leased
Premises. Such leasehold interest, estate and rights of Assignee hereunder, and
of the holder of any mortgage upon the Lease, shall be deemed to be separate and
distinct from the interest, estate and rights of the lessor under the Lease in
or to the Leased Premises, notwithstanding that any such interests, estate or
rights shall at any time be held by or vested in the same person, corporation or
other entity.
4. REFERENCE TO PURCHASE AGREEMENT. This Assignment and Assumption of
Lease is entered into by the parties pursuant to the terms of the Purchase
Agreement to which reference is made for terms and provisions relating hereto,
including, without limitation, those relating to prorations and indemnification.
- ------------------------
1 IF ORIGINAL LESSEE IS PREDECESSOR TO KEYBANK NATIONAL ASSOCIATION,
INSERT "KEYBANK NATIONAL ASSOCIATION AS PREDECESSOR IN INTEREST TO
[PREDECESSOR]."
2 THERE MAY NOT BE A MEMORANDUM OF LEASE.
(North Central Ohio)
S-20
<PAGE> 44
5. EFFECTIVE DATE. This "Effective Date", as used herein, shall mean
[select one] (a) the date this Assignment and Assumption of Lease is filed for
record or (b) _________________________________, 19 .
6. SUCCESSORS AND ASSIGNS. The terms and conditions of this Assignment
and Assumption of Lease shall be binding upon and shall insure to the benefit of
the parties hereto and their respective successors and assigns.
7. COUNTERPARTS. This Assignment and Assumption of Lease may be
executed in counterparts, each of which will be deemed an original document, but
all of which will constitute a single document.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Assumption of Lease to be duly executed on the day and year first set forth
above.
Signed in the presence of ASSIGNOR:
(as to both):
KeyBank National Association
By:
- ------------------------------------- ------------------------------
Print Name: Title:
-------------------------- ---------------------------
And:
- ------------------------------------- -----------------------------
Print Name: Title:
-------------------------- ----------------------------
ASSIGNEE:
---------------------------------
By:
- ------------------------------------- ------------------------------
Print Name: Title:
-------------------------- ---------------------------
And:
- ------------------------------------- -----------------------------
Print Name: Title:
-------------------------- ----------------------------
(North Central Ohio)
S-21
<PAGE> 45
SCHEDULE F
TRANSITIONAL MATTERS
All capitalized terms shall have the meanings given to them in the Agreement.
TRANSITIONAL ACTIONS BY PURCHASER.
(a) PAYMENT OF ASSUMED DEPOSIT LIABILITIES. After the Closing
Date, Purchaser shall: (i) pay all properly drawn and
presented checks, negotiable orders of withdrawal, drafts,
debits, and other withdrawal orders presented to Purchaser by
Assumed Deposit account customers, whether drawn on checks,
negotiable orders of withdrawal, drafts, or other withdrawal
order forms provided by Seller or by Purchaser; (ii) in all
other respects discharge, in the usual course of the banking
business, the duties and obligations of Seller with respect to
the balances due and owing to the Assumed Deposit account
customers; provided, however, that Purchaser's obligations
pursuant to this paragraph to honor checks, negotiable orders
of withdrawal drafts, and other withdrawal orders on forms
provided by Seller and carrying its imprint (including its
name and transit routing number) shall not apply to any such
check, negotiable order of withdrawal draft, or other
withdrawal order presented to Purchaser more than ninety (90)
days following the Closing Date.
(b) CUSTOMER DEMAND FOR TERMINATION OF ASSUMED DEPOSIT
LIABILITIES. Purchaser hereby acknowledges that if, after the
Closing Date, any Assumed Deposit account customers, instead
of accepting the obligation of Purchaser to pay the Assumed
Deposit liabilities (including accrued interest thereon)
assumed hereunder, shall demand payment from Seller for all or
any part of any such Assumed Deposit liabilities (including
accrued interest thereon), Seller shall not be liable or
responsible for making such payment. If any such depositors
draw a check, draft, or withdrawal order against the Assumed
Deposit liabilities which is presented or delivered to Seller
not later than ninety (90) days after the Closing Date, Seller
shall use its reasonable efforts to batch all such checks,
drafts, or withdrawal orders and to deliver the same to
Purchaser at Purchaser's cost. Purchaser acknowledges that any
delay, failure, or inability on its part to comply with the
obligations imposed upon it as a depository institution under
applicable federal or state law, with regard to such checks,
drafts, or withdrawal orders shall not result in any liability
or obligation of Seller and shall not affect any of the rights
of Seller under this Agreement. In the event Seller, in its
sole discretion, should pay any such check, draft, or
withdrawal order, Purchaser shall immediately, upon demand by
Seller, reimburse Seller for such payment or charge. Seller
shall not be deemed to have made any representations or
warranties to Purchaser with respect to any such checks,
drafts, or withdrawal orders and any such representations or
warranties implied by law are hereby disclaimed and are the
responsibility of Purchaser, except that Seller shall be
chargeable with the warranties and representations implied by
law with respect to any such check, draft, or withdrawal order
which may be paid by Seller over the counter.
(c) DELIVERY OF PURCHASER'S CHECK FORMS. Purchaser shall, on or
before the Closing Date, at its sole cost and expense, notify
all such customers by letter, in a form reasonably acceptable
to Seller, of Purchaser's assumption of Assumed Deposit
liabilities (which shall include a notification to those
Assumed Deposit account customers whose accounts are then
covered by any type of overdraft protection offered by Seller,
that from and after the Closing Date all such overdraft
protection from Seller shall terminate) and furnish each
Assumed Deposit account customer with checks using the forms
of Purchaser and with instructions to the customer to utilize
such checks on Purchaser's forms on and after the Closing
Date and thereafter to destroy any unused checks on Seller's
forms; such notice and such delivery of checks by Purchaser
shall be by first class U.S. mail.
(d) UNCOLLECTED CHECKS RETURNED TO SELLER. Purchaser shall
promptly pay to Seller an amount equivalent to the amount of
any checks, negotiable orders of withdrawal drafts, or any
other withdrawal orders (net of the applicable Deposit Premium
paid by Purchaser with respect to the Assumed Deposit
liabilities represented by any such instrument) credited as
of the Closing Date to any Assumed Deposit accounts which are
returned uncollected to Seller after the Closing Date and
which shall include an amount equivalent to holds placed upon
such Assumed Deposit accounts for items cashed by Seller (net
of the applicable Deposit Premium paid by Purchaser with
respect to the Assumed Deposit liabilities represented by any
such instrument), as of the Closing Date which items are
subsequently dishonored; provided, however, that if Seller
shall have failed to make or properly reflect in the
information provided to Purchaser any provisional credit or
hold on any such Assumed Deposit accounts in respect of
uncollected funds represented by any such item, Purchaser's
obligations under this subsection (d) in respect of such item
shall be limited to the amount of collected funds in such
Assumed Deposit accounts.
(e) DEFAULT ON LOAN PAYMENTS TO SELLER. If the balance due on any
Loan which constitutes an Asset has been reduced by Seller as
a result of a payment by check or draft received prior to the
Closing Date, which item is returned to Seller after the
Closing Date, the asset value represented by such Loan shall
be correspondingly increased and an amount in cash equal to
such increase shall be promptly paid by Purchaser to Seller.
(f) NOTICES TO OBLIGORS ON LOANS. Purchaser shall, prior to the
Closing Date, prepare and transmit, at Purchaser's sole cost
and expense, to each obligor on each Loan which constitutes an
Asset, a notice to the effect that the Loan has been
transferred and directing that payments be made to Purchaser
at any address of Purchaser specified by Purchaser, with
Purchaser's name as payee
(North Central Ohio)
S-22
<PAGE> 46
on any checks or other instruments used to make such payments, and,
with respect to all such Loans on which payment notices or coupon books
have been issued, to issue new notices or coupon books reflecting the
name and an address of Purchaser as the person to whom and place at
which payments are to be made.
(g) DATA PROCESSING. All tasks and obligations concerning the provision of
data processing services to or for the Branches after the Closing Date,
other than those specifically set forth in, and to the extent assumed
by Seller pursuant to Paragraph (a) of "Transitional Actions By
Seller" herein and shall be performed solely and exclusively by, the
Purchaser. Purchaser acknowledges its assumption of all such tasks and
obligations, and further acknowledges that any delay, failure, or
inability on its part to perform such tasks or to comply with such
obligations, except as and to the extent attributable to any delay,
failure, or inability on the part of Seller in performing those tasks
or complying with those obligations specifically set forth in, and to
the extent assumed by Seller pursuant to paragraph (a) of "Transitional
Actions By Seller," shall not result in any liability or obligation of
Seller and shall not affect any of the rights of Seller under this
Agreement.
(h) NEW TELEPHONE NUMBERS. Purchaser shall, at least ten (10) days prior to
the Closing Date, obtain new telephone numbers for the Branches in
Purchaser's name.
(i) NEW ATM/DEBIT CARDS. Purchaser shall, prior to the Closing, furnish
ATM/Debit cards to Assumed Deposit account customers to replace
Seller's ATM/Debit cards. Purchaser shall notify affected customers to
destroy the old ATM/Debit cards and shall notify customers of standard
withdrawal limits for the weekend immediately following the Closing
Date.
(j) SECURITY FOR PUBLIC DEPOSITS. If public deposits constitute any of the
Assumed Deposits, Purchaser shall, not later than midnight on the
Business Day immediately following the Closing Date, supply suitable
government-backed securities as security for any deposits of
govermental units included among the Assumed Deposit liabilities for
which Seller had provided similar security.
(k) BRANCH CLOSINGS. If Purchaser intends to close any Branches after the
Closing Date, Purchaser shall be entirely and solely responsible for
the delivery of any required notices to any regulatory agencies or
customers. Purchaser shall not be permitted to deliver or otherwise
provide any notices to any regulatory agencies or customers regarding
the proposed closing of any Branch prior to the receipt of all
Regulatory Approvals. Notwithstanding this paragraph (k), the Closing
will occur as set forth in Article VII of the Agreement.
(1) NOTICES TO CUSTOMERS. Subsequent to the procurement of all Regulatory
Approvals, and at its sole cost and expense, Purchaser will notify
Assumed Deposit account customers by letter in a form reasonably
acceptable to Seller of the pending transaction utilizing Seller's
files to create the mailing.
TRANSITIONAL ACTIONS BY SELLER.
(a) SELLER'S RESPONSIBILITY REGARDING DATA PROCESSING. Not later than two
(2) months prior to the Closing Date, Seller shall provide Purchaser
with applicable product functions, file formats and the first set of
test tapes related to the accounts that will be transferred to
Purchaser hereunder. The test files defined by the file formats shall
be extracts of current master files as they exist on the Seller's
system. The number of files to be produced by Seller shall be two (2)
versions of test files and one (1) version of the
production/divestiture files.
As early as practicable after the Closing Date, Seller shall produce
the production/divestiture file tapes and a trial balance of records of
account containing the pertinent data and descriptive information
relating to the Accounts and provide such data and information to
Purchaser provided, however, that such data and information shall not
include either detailed transaction history or overdraft protection
information. Except as otherwise provided above, Seller shall bear all
normal and reasonable costs and expenses relating to the performance of
its obligations pursuant to this paragraph. Seller warrants and
represents that the information contained on such tapes is accurate and
correct in all material respects as of the time given. Seller shall
have no responsibility for the difference, if any, between its methods
of accrual of interest or other amounts payable with respect to
Accounts and Purchaser's methods of accrual of interest and other
amounts payable with respect to deposit, loan, and safety deposit
accounts and business.
(b) TRAINING OF BRANCH EMPLOYEES BY PURCHASER. Prior to the Closing Date,
Seller shall cooperate with Purchaser, at Purchaser's sole cost and
expense, in making Branch Employees available at reasonable times for
whatever program of training Purchaser deems advisable; provided,
however, that Purchaser shall conduct such training program in a manner
that does not materially interfere with or prevent the performance of
the normal duties and activities of such Branch Employees.
(c) INSTALLATION OF EQUIPMENT BY PURCHASER. During the period following
receipt of all Regulatory Approvals until the Closing Date, Seller
shall cooperate with and permit Purchaser, at Purchaser's option and
sole cost and expense, to make provision for the installation of teller
equipment in the Branches; provided, however, that Purchaser shall
arrange for the installation of such equipment at such times and in a
manner that does not significantly interfere with the normal business
activities and operation of the Branches.
(North Central Ohio)
S-23
<PAGE> 47
(d) IRA DOCUMENTATION. Seller shall cooperate with Purchaser in securing
proper documentation of change in custodian for any IRA account which
is included in the Assumed Deposit liabilities of the Branch.
(e) STATEMENTS TO CUSTOMERS. At Seller's sole cost and expense, Seller
shall issue, as of the Closing Date, standard account statements for
each statement savings, NOW, and checking account included in the
Assumed Deposit liabilities. Passbook transaction information that has
not been posted to a passbook as of the Closing Date will be passed by
Seller to Purchaser via paper report listings or magnetic tape.
Purchaser shall be responsible for posting on passbooks the
transactions reflected on such paper report listings or magnetic tape
for passbook accounts.
(f) PAYMENT OF ACCRUED INTEREST. Seller will credit the Assumed Deposit
accounts with interest earned on such Assumed Deposit accounts through
the Closing Date.
(g) DEACTIVATION OF ATMS AND ATMIDEBIT CARDS. Seller will deactivate all
ATM/Debit cards issued with respect to all Assumed Deposit accounts and
will electronically block access of those cards to the Assumed Deposit
accounts, and will deactivate the ATMs not later than 3:00 p.m. on the
Closing Date.
TRANSITIONAL ACTION BY BOTH PARTIES.
(a) COOPERATION IN TRANSACTION. Purchaser and Seller shall use their best
efforts to cooperate with each other in assuring an orderly transition
of ownership of the Assets and responsibility for the Assumed Deposit
liabilities for a period of sixty (60) days following the Closing Date,
or such longer period as may be specified in this Agreement with
respect to specific actions.
(b) AUTOMATED CLEARING HOUSE SYSTEM. After the Closing Date, Purchaser will
make every reasonable effort to notify all originators of Automated
Clearing House ("ACH") entries affecting Assumed Deposit accounts or
Loans which constitute Assets of the terms and effect of the
transaction. For a period of ninety (90) days after the Closing Date,
on each business day, Seller will deliver to Purchaser each previous
business day's transactions via an ACH format tape or paper listing of
all ACH entries received by Seller for debit or credit to such a Loan
or Assumed Deposit accounts, accompanied by either a check, or deposit
advice to a settlement account with the Seller, for the amount by
which such credits exceed debits or an invoice, or charge advice to a
settlement account with the Seller, for the amount by which such debits
exceed credits, which invoice shall be paid by Purchaser on the same
Business Day if received before 12:00 noon local time or on the next
Business Day if received after 12:00 noon local time.
(c) LOSS DUE TO LATE POSTING. In the event of loss due to the late posting
and late return to the bank of first deposit (as defined in Regulation
CC) on closed Assumed Deposit accounts, Purchaser and Seller agree to
share any such loss equally between them.
(d) ASSUMED DEPOSIT ACCOUNTS OVERDRAFTS. Assumed Deposit accounts
overdrafts approved with respect to ledger dates on or after the
Closing Date will be the responsibility and risk of Purchaser. Assumed
Deposit accounts overdrafts approved with respect to ledger dates more
than five (5) days prior to the Closing Date will be the responsibility
and risk of the Seller. Assumed Deposit accounts overdrafts approved
with respect to ledger dates during the period from five (5) days prior
to the Closing Date to the day prior to the Closing Date, inclusive,
will initially be the responsibility and risk of Purchaser; provided,
however, that Purchaser shall have the right to retransfer any such
overdrafts (other than overdrafts of customers who are specifically
identified in writing by Purchaser to Seller not less than five (5)
days prior to the Closing Date) back to Seller for its responsibility
and risk within five (5) days following the Closing Date, and Seller
will repurchase all rights in respect of such overdrafts from Purchaser
for the amount of the overdrafts outstanding at the time they
retransferred back to Seller (net of any Deposit Premium paid by
Purchaser to Seller attributable to such overdrafts), and provided
further, that Purchaser has closed all Assumed Deposit accounts on
which such overdrafts exist not later than the date of their
retransfer.
(e) SIGNAGE. During the seven (7) day period immediately preceding the
Closing Date, Seller shall cooperate with any reasonable request of
Purchaser directed to accomplishing the installation of signage of
Purchaser's choosing at the Branches prior to the Closing Date;
provided, however, that all such installations shall be at the sole
cost and expense of Purchaser, that such installations shall be
performed in such a manner that does not significantly interfere with
the normal business activities and operations of the Branches and that
all such installed signage shall be covered in such a way as to be
unreadable at all times prior to the Closing Date. Immediately
following the Closing Date, Seller shall, at its sole cost and expense,
commence activities directed to accomplishing the removal of all of
Seller's existing signage at the Branches and will diligently pursue
such activities in good faith so that such removal may be effected as
promptly as practicable following the Closing.
(f) INTEREST REPORTING AND WITHHOLDING. Unless otherwise agreed to by the
parties, Seller will report to applicable taxing authorities and
holders of Assumed Deposit accounts transferred on the Closing Date,
with respect to all periods prior to the Closing Date, all interest
credit to, withheld from and any early withdrawal penalties imposed
upon the Assumed Deposit accounts and Purchaser will report to the
applicable taxing authorities and holders of Assumed Deposit accounts,
with respect to all periods commencing after the Closing Date all such
interest credited to, withheld from and early withdrawal penalties
imposed upon such Assumed Deposit accounts. Seller will continue backup
withholding and remittance through the Closing Date. Any amounts
required by any governmental agencies to be withheld from any of the
Assumed Deposit accounts through the Closing Date will be withheld by
Seller in accordance with applicable law or appropriate notice from any
governmental agency and will be remitted by Seller to the appropriate
agency on or prior to the applicable due date. Any such withholding
required to be made subsequent to the Closing
(North Central Ohio)
S-24
<PAGE> 48
Date shall be withheld by Purchaser in accordance with applicable law or the
appropriate notice from any governmental agency and will be remitted by
Purchaser to the appropriate agency on or prior to the applicable due date.
Unless otherwise agreed by the parties, Seller shall be responsible for
delivering to payees all IRS notices with respect to information reporting and
tax identification numbers required to be delivered for all periods through the
Closing Date with respect to the Assumed Deposit accounts, and Purchaser shall
be responsible for delivery to payees all such notices required to be delivered
for all periods following the Closing Date with respect to the Assumed Deposit
accounts. Purchaser and Seller shall, prior to the Closing Date, consult (and
Seller shall take such actions as are necessary) to permit Purchaser timely to
deliver notices required to be delivered in the post-Closing period.
Unless otherwise agreed by the parties, Seller will make all required reports to
applicable tax authorities and to obligors on Loans purchased on the Closing
Date, with respect to all periods through the Closing Date, concerning all
interest and points received by the Seller. Purchaser will make all required
reports to applicable tax authorities and to obligors on Loans purchased on the
Closing Date, with respect to all periods beginning the date after the Closing
Date, concerning all such interest and points received. Seller shall bear the
responsibility and liability for and pay all penalties associated with missing
taxpayer identification numbers and U.S. Treasury reclamations, and any failures
to comply with IRS regulations that occurred prior to the Closing Date.
(North Central Ohio)
S-25
<PAGE> 49
SCHEDULE G
LANDLORD ESTOPPEL CERTIFICATE
FORM OF LESSOR ESTOPPEL CERTIFICATE
[Purchaser's name]
c/o KeyBank National Association
127 Public Square
Cleveland, Ohio 44115
Attention: _____________________
Gentlemen:
The undersigned is the lessor (the "Lessor"), under that certain lease
dated ________, a copy of which is attached hereto as Exhibit 1 (as amended as
described herein, the "Lease"), by and between Lessor, as lessor, and KeyBank
National Association(3), as lessee ("Lessee") [,a memorandum of which was
recorded in Volume __, at Page ___ of________ County Records].(4)
The undersigned understands that this certificate is requested with
respect to a proposed assignment (the "Assignment") of the lessee's interest
under the Lease and the property subject thereto, from KeyBank National
Association ("Assignor") to___________________________________________________
("Assignee") and that each of you and your successors and assigns will rely on
this certificate in making and accepting such an assignment.
In connection with the Lease and the proposed Assignment, the
undersigned hereby certify, represent and agree as follows:
l. The Lease is in full force and effect in the form attached hereto
and has not been amended, modified, supplemented, canceled or superseded except
as follows: __________________________________________________________.
2. The current term of the Lease expires on ____________. The current
base rent under the Lease is $__________ per year payable ______. In addition,
Leasee is obligated to pay to Lessor additional rent in the amount of
$____________ for operating expenses, $______________ for taxes, and
$_______________ for [please specify] __________________________________ for the
current lease year payable ________________________________. Such base rent and
other charges are the only amounts payable to Lessor under the Lease.
3. All rent and other payments required to be paid by Lessee
under the Lease has been paid through________________________________.
4. Rent and other payments and notices should be forwarded to
Lessor at the following address(es):
- --------------------
- --------------------
- --------------------
5. Lessee is not in default of any of its obligations under the
Lease, and no condition exists which, with the passage of time, the giving of
notice or otherwise, would constitute a default by Lessee of any of its
obligations under the Lease.
- --------------------
3 IF ORIGINAL LESSEE IS PREDECESSOR TO KEYBANK NATIONAL
ASSOCIATION, INSERT "KEYBANK NATIONAL ASSOCIATION AS PREDECESSOR IN INTEREST TO
[PREDECESSOR]."
4 THERE MAY NOT BE A MEMORANDUM OF LEASE.
(North Central Ohio)
S-26
<PAGE> 50
6. Lessor hereby consents to either (at Lessee's option in its
sole discretion) an assignment of the Lease or to a sublease of the property
subject to the Lease, by Lessee to the Assignee named above, provided, however,
that said consent is limited to the transaction contemplated hereby and shall
not be deemed to be a consent or a waiver of the necessity of consent to any
future assignment or sublease.
7. As of the Effective Date of the Assignment (as "Effective
Date" is defined in the Assignment and Assumption of Lease to be executed in
connection with the Assignment), Lessor shall release, and Lessor does hereby
release, Assignor from all obligations and liabilities arising under the Lease
from and after the Effective Date, provided that all such obligations and
liabilities are assumed in writing by Assignee.
Lessor
By:
---------------------------------------
Title:
-------------------------------------
And:
--------------------------------------
Title:
------------------------------------
(North Central Ohio)
S-27
<PAGE> 51
ATTACHMENT (LEASE)
EXHIBIT 1
---------
LEASE
(North Central Ohio)
S-28
<PAGE> 52
SCHEDULE H
Restricted Cities, Villages, Towns and Townships
Bucyrus
Crestline
Cygnet
Galion
Tiffin
Wayne
Willard
S-29
<PAGE> 53
AMENDMENT NO. 1
BRANCH PURCHASE AND ASSUMPTION AGREEMENT
This Amendment No.1 (this "Amendment") dated as of ____________, 1997,
is entered into by and between KeyBank National Association, a national banking
association (the "Seller") and Signal Bank, National Association (formerly,
First Federal Savings and Loan Association of Wooster) (the "Purchaser").
SECTION 1. BRANCH PURCHASE AND ASSUMPTION AGREEMENT
Reference is made to the Branch Purchase and Assumption Agreement dated
as of May 16, 1997 (the "Agreement") regarding Purchaser's purchase of certain
assets and assumption of certain liabilities of seven (7) branches from Seller.
Unless otherwise changed in this Amendment, terms used herein, which are defined
in the Agreement, are used herein with the meanings therein described to them.
The Agreement as amended by this Amendment is and shall continue to be in full
force and effect and shall not be affected by this Amendment except and only to
the extent specified herein.
The Agreement provided that the Closing of the transaction would be
effective at 11:59 p.m. on Friday, September 12, 1997. The purpose of this
Amendment is to modify the Agreement to reflect that the transaction will close
on Friday, September 12, 1997, but will have an Effective Time (as that term is
defined herein) as of 12:01 a.m. Monday, September 15, 1997.
SECTION 2. AMENDMENTS TO THE AGREEMENT
2.1. Amendments to Article I; The Transaction. Article I of
the Agreement shall be and hereby is amended as follows:
2.1.1. Section 1.01 is amended, such that the reference to the
term "Closing" is deleted and in place thereof is inserted the term
"Effective Time".
2.1.2. Section 1.02(a)(iv) is amended, such that each
reference to the term "Closing" is deleted and in place thereof, in
each instance, is inserted the term "Effective Time" .
2.1.3. Section 1.02(a)(v) is amended, such that the reference
to the term "Closing Date" is deleted and in place thereof is inserted
the term "Effective Time".
2.1.4. Section 1.02(a)(vi) is amended, such that the
reference to the term "Closing" is deleted and in place thereof is
inserted the term "Effective Time".
2.1.5. Section 1.02(b) is amended, such that the reference to
the term "Closing" is deleted and in place thereof is inserted the term
"Effective Time".
2.1.6. Section 1.02(b)(i) is amended, such that the reference
to the term "Closing" is deleted and in place thereof is inserted the
term "Effective Time".
<PAGE> 54
2.1.7. Section 1.02(b)(ii) is amended, such that the reference
to the term "Closing Date" is deleted and in place thereof is inserted
the term "Effective Time".
2.1.8. Section 1.03(a) is amended and restated as follows:
(a) PRELIMINARY CLOSING STATEMENT. Not less than five (5) days
prior to the Closing Date, Seller shall deliver to Purchaser a
proposed preliminary closing statement, in the form of Schedule
B to this Agreement, completed as at a date mutually agreed to
by the parties. The parties shall agree upon the preliminary
closing statement before the Closing, and it shall be the basis
of a preliminary payment to be made to Purchaser's account on
the Closing Date, or to Seller's account at the Closing, as the
case may be (the "Preliminary Payment").
2.1.8. Section 1.03(b) is amended and restated as follows:
(b) PRELIMINARY PAYMENT. Subject to the terms and conditions
hereof, by no later than 12:00 p.m. on the Closing Date, Seller
shall wire transfer to Purchaser immediately available funds
equal to: (i) the sum of (A) the amount of the Assumed
Deposits (including accrued and unpaid interest thereon)
reflected on the preliminary closing statement; (B) the amount
of all accrued and unpaid expenses reflected as a liability on
the preliminary closing statement; and (C) the aggregate of all
prepaid safe deposit rental payments prorated to the Effective
Time; LESS (li) an amount equal to the sum of: (A) 12.15% of
the Assumed Deposits based upon an estimated 30-day average
prior to the Effective Time; (B) the amount of cash on hand at
the Branches as reflected on the preliminary closing statement;
(C) the sum of $192,000, representing the Agreed Value of all
furniture, fixtures, and equipment constituting part of the
Assets; (D) the Agreed Value of the Owned Real Estate and the
Leased Real Estate; (E) the amount of all prepaid expenses of
Seller as reflected as an asset on the preliminary closing
statement; (F) the Net Book Value of all Loans, plus accrued
and unpaid interest thereon as reflected on the preliminary
closing statement; and (G) the amount of estimated sales taxes,
if any, to be paid by Purchaser in connection with the
transaction contemplated hereby.
2.1.9. Section 1.04 is amended, such that the reference to the
phrase to "at Closing" in the last sentence of this Section 1.04 is
deleted and in place thereof is inserted the phrase "on the Closing
Date or at the Closing, as the case may be".
2.1.10. Section 1.08(c) is amended, such that the reference to
the term "Closing" is deleted and in place thereof is inserted the
term "Closing Date"; and Section 1.08(c) is further amended, such that
the reference to the term "Closing Date" is deleted and in place
thereof is inserted the term "Effective Time".
(North Central Ohio)
2
<PAGE> 55
2.1.11. Section 1.09 is amended, such that the reference to the
term "Closing" is deleted and in place thereof is inserted the term
"Effective Time".
2.2. AMENDMENTS TO ARTICLE II; OBLIGATIONS OF THE PARTIES PRIOR TO THE
CLOSING DATE. Article II of the Agreement shall be and hereby is amended as
follows:
2.2.1. Section 2.01(d) is amended and restated in its entirety
as follows:
(d) INSURANCE. Seller will maintain in effect until the Effective Time
all casualty and public liability policies relating to the Branches and
maintained by Seller on the date hereof or procure comparable
replacement policies and maintain such replacement policies in effect
until the Effective Time.
2.2.2. Section 2.02 is amended, such that the reference to the
term "Closing Date" is deleted and in place thereof is inserted the
term "Closing".
2.3. AMENDMENTS TO ARTICLE III; REPRESENTATIONS AND WARRANTIES. Article
III of the Agreement shall be and hereby is amended as follows:
2.3.1. Section 3.03 is amended, such that each reference to the
term "Closing" is deleted and in place thereof, in each instance, is
inserted the term "Closing Date".
2.4. AMENDMENTS TO ARTICLE IV; EMPLOYEE BENEFITS. Article IV of the
Agreement shall be and hereby is amended as follows:
2.4.1. Section 4.02(c) is amended, such that each reference to
the term "Closing Date" is deleted and in place thereof, in each
instance, is inserted the term "Effective Time".
2.4.2. The second sentence of Section 4.02(e) is amended and
restated in its entirety as follows:
Effective as of the Closing Date, Purchaser shall assume liability
for all severance benefits payable to any Branch Employee who is
terminated by Purchaser on or after the Closing Date.
2.4.3. Section 4.04 is amended, such that the initial phrase "On
and after the Closing Date" is deleted and in place thereof is
inserted the phrase "Effective upon the Closing Date".
(North Central Ohio)
3
<PAGE> 56
2.5 AMENDMENTS TO ARTICLE VI; CONDITIONS PRECEDENT TO CLOSING. Article
VI of the Agreement shall be and hereby is amended as follows:
2.5.1. Section 6.01(b) is amended, such that the first and
third references to the term "Closing Date" are deleted and in place
thereof, in each instance, is inserted the term "Closing".
2.5.2. Section 6.01(c) is amended, such that the first and
third references to the term "Closing Date" are deleted and in place
thereof, in each instance, is inserted the term "Closing".
2.5.3. Section 6.03 is amended, such that each reference to
the term "Closing Date" in the first sentence of this Section 6.03 is
deleted and in place thereof, in each instance, is inserted the term
"Closing"; and Section 6.03 is further amended, such that the first
reference to the term "Closing Date" in the second sentence of this
Section 6.03 is deleted and in place thereof is inserted the term
"Closing".
2.6. AMENDMENTS TO ARTICLE VII; CLOSING. Article VII of the Agreement
shall be and hereby is amended as follows:
2.6.1. Section 7.01 is amended and restated in its
entirety to read as follows:
7.01 CLOSING, CLOSING DATE AND EFFECTIVE TIME. The
Transaction contemplated hereby shall occur at a closing (the
"Closing") to be held in the offices of Seller, located at
127 Public Square, Cleveland, Ohio 44114, or via courier or
facsimile transmission as Seller may designate, on Friday,
September 12,1997, or such other date as Seller in its
discretion may designate, which date shall be reasonably
acceptable to Purchaser. The "Closing Date" shall be Monday,
September 15,1997. The "Effective Time" of this Agreement for
purposes of making calculations and for other purposes
specifically referred to in this Agreement shall be as of
12:01 a.m. on Monday, September 15,1997. In addition, the
Closing shall be deemed to have been consummated and final as
of the Effective Time. All actions taken and documents
delivered at the Closing will be deemed to have been taken
and executed simultaneously, and no action will be deemed
taken nor any document deemed delivered until all have been
taken and delivered. Both parties acknowledge that time is of
the essence With respect to consummating the transactions
contemplated hereby.
(North Central Ohio)
4
<PAGE> 57
2.6.2. Section 7.03 is added to Article VII as follows:
7.03 RECORDED INSTRUMENTS. If any instrument of transfer
Contemplated herein shall be filed or recorded in any public
record before the Closing Date and thereafter the transaction
is not consummated, then at the request of Seller, Purchaser
will deliver (or execute and deliver) such instruments and
take such other action as Seller shall reasonably request to
revoke such purported transfer and to record any additional
transfers as are necessary to record property in the name of
the Seller.
2.7. AMENDMENTS TO ARTICLE IX; GENERAL COVENANTS. Article IX of the
Agreement shall be and hereby is amended as follows:
2.7.1. Section 9.03 is amended, such that the first reference
to the phrase "at the Closing" is deleted and in place thereof is
inserted the phrase "on the Closing Date or at the Closing, as the case
may be"; and Section 9.03 is further amended, such that the second
reference to the term "Closing" is deleted and in place thereof is
inserted the phrase "Closing Date or the Closing, respectively,".
2.7.2. Section 9.06 is amended, such that the reference to the
term "Closing Date" is deleted and in place thereof is inserted the
term "Effective Time".
2.8. AMENDMENTS TO ARTICLE XI; TERMINATION. Article XI of the Agreement
shall be and hereby is amended as follows:
2.8.1. Section 11.01(a) is amended, such that the phrase "the
earlier of" is deleted.
2.8.2. Section 11.01(d) is amended, such that the reference to
the term "Closing" is deleted and in place thereof is inserted the
term "Closing Date".
2.8.3. Section 11.01(e) is amended, such that the reference
to the term "Closing" is deleted and in place thereof is inserted
the term "Closing Date".
2.9. AMENDMENTS TO SCHEDULE E. Schedule E to the Agreement shall be and
hereby is amended as follows:
2.9. l. The paragraph entitled "Delivery of Documentation"
set forth under the Section "Seller's Actions at the Closing" is
amended and restated as follows:
DELIVEIY OF DOCUMENTATION. Execute, acknowledge, and/or
deliver to Purchaser, dated as of the Closing Date, the
certificates of Seller contemplated by Section 6.01, the Bill
of Sale and Receipt in the form of Attachment 2, Limited
Warranty Deed in the form of Attachment 3 for the Owned Real
Estate upon which each Branch is situated dated as of the
Closing and effective upon recording, the
(North Central Ohio)
5
<PAGE> 58
Assignment and Assumption of Lease in the form of
Attachment 4 for the Leased Real Estate Upon which each
Branch is situated, all other documents required to be
delivered to Purchaser by Seller at the Closing pursuant to
the terms of this Agreement, and any other documents which
Purchaser has identified to Seller at a reasonable time prior
to the Closing that are necessary or reasonably advisable to
consummate the transaction contemplated by the Agreement.
2.9.2. The paragraph entitled "Delivery of Funds" set forth
under the Section "Seller's Actions at the Closing" is amended and
restated as follows:
DELIVERY OF FUNDS. Deliver to Purchaser any funds required to
be paid by Seller to Purchaser no later than 12:00 p.m. on
the Closing Date pursuant to the terms of this Agreement.
2.9.3. Attachment 1: Instrument of Assumption, paragraph (b)
is amended, such that the reference to the term "Closing Date" is
deleted and in place thereof is inserted the term "Effective Time".
2.10. AMENDMENTS TO SCHEDULE F; TRANSITIONAL MATTERS. Schedule F to the
Agreement shall be and hereby is amended as follows:
2.10.1. Schedule F, paragraph (a) under the heading
"Transitional Actions by Purchaser" is amended, such that the first
sentence is restated as follows: "From and after the Effective Time,
Purchaser shall: (i) . . ."
2.10.2. Schedule F, paragraph (b) under the heading
"Transitional Actions by Purchaser" is amended such that the reference
to the term "Closing Date" in the first sentence is deleted and in
place thereof is inserted the term "Effective Time".
2.10.3. Schedule F, paragraph (c) under the heading
"Transitional Actions by Purchaser" is amended, such that the second
reference to the term "Closing Date" is deleted and in place thereof is
inserted the term "Effective Time".
2.10.4. Schedule F, paragraph (d) under the heading
"Transitional Actions by Purchaser" is amended, such that each
reference to the term "Closing Date" is deleted and in place thereof,
in each instance, is inserted the term "Effective Time".
2.10.5. Schedule F, paragraph (e) under the heading
"Transitional Actions by Purchaser" is amended, such that each
reference to the term "Closing Date" is deleted and in place thereof,
in each instance, is inserted the term "Effective Time" .
2.10.6. Schedule F, paragraph (g) under the heading
"Transitional Actions by Purchaser" is amended, such that the
reference to the term "Closing Date" is deleted and in place thereof is
inserted the term "Effective Time".
(North Central Ohio)
6
<PAGE> 59
2.10.7. Schedule F, paragraph (i) under the heading
"Transitional Actions by Purchaser" is amended, such that the second
sentence is restated as follows: "Purchaser shall notify affected
customers to destroy the old ATM/Debit cards and shall notify customers
of standard withdrawal limits beginning on the date of the Closing."
2.10.8. Schedule F, the second paragraph of paragraph (a)
under the heading "Transitional Actions by Seller" is amended, such
that the phrase "As early as practicable after the Closing Date" is
deleted and in place thereof is inserted the phrase "No later than the
Closing Date".
2.10.9. Schedule F, paragraph (f) under the heading
"Transitional Actions by Seller" is amended, such that the reference to
the term "Closing Date" is deleted and in place thereof is inserted the
term "Effective Time".
2.10.10. Schedule F, paragraph (g) under the heading
"Transitional Actions by Seller" is amended such that the phrase "on
the Closing Date" is deleted and in place thereof is inserted the
phrase "on the date of the Closing".
2.10.11. Schedule F under the heading "Transitional Actions by
Seller" is amended, such that a new paragraph (h) is inserted to read
as follows:
(h) OPERATION OF THE BRANCHES. During the weekend immediately
preceding the Closing Date, Seller shall not open the
Branches for the conduct of business.
2.10.12. Schedule F, paragraph (b) under the heading
"Transitional Action by Both Parties" is amended, such that the
reference to the term "Closing Date" in the first sentence is deleted
and in place thereof is inserted the term "Effective Time".
2.10.13. Schedule F, paragraph (e) under the heading
"Transitional Action by Both Parties" is amended, such that each
reference to the term "Closing Date" in the last sentence is deleted
and in place thereof, in each instance, is inserted the term "Effective
Time".
2.10.14. Schedule F, paragraph (f) under the heading
"Transitional Action by Both Parties" is amended, such that each
reference to the term "Closing Date" is deleted and in place thereof,
in each instance, is inserted the term "Effective Time".
SECTION 3. MISCELLANEOUS
3.1 COUNTERPARTS. This Amendment may be executed in two or more
counterparts, each of which shall be an original, by all of which shall
constitute one and the same agreement.
3.2 HEADINGS. The section headings set forth in this Amendment are for
convenience only and shall not affect the construction hereof.
(North central Ohio)
7
<PAGE> 60
3.3 ENTIRE AGREEMENT. This Amendment contains the entire agreement and
understanding of the parties with respect to its subject matter. This Amendment
supersedes all prior agreements and understandings between the parties, both
written and oral, with respect to its subject matter.
IN WITNESS WHEREOF, the parties have Caused this Amendment to be duly
executed as a relevant instrument by their duly authorized officer as of the day
and year first written above.
SIGNAL BANK, NATIONAL ASSOCIATION
By:_______________________________
Title:____________________________
KEYBANK NATIONAL ASSOCIATION
By:_______________________________
Title:____________________________
(North Central Ohio)
8
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S CONSOLIDATED CONDENSED BALANCE SHEET AND STATEMENT OF INCOME FOR
THE THREE MONTHS ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 33,788
<INT-BEARING-DEPOSITS> 37,546
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 252,760
<INVESTMENTS-CARRYING> 74,255
<INVESTMENTS-MARKET> 72,087
<LOANS> 829,412
<ALLOWANCE> 5,662
<TOTAL-ASSETS> 1,428,141
<DEPOSITS> 924,127
<SHORT-TERM> 124,366
<LIABILITIES-OTHER> 27,979
<LONG-TERM> 250,548
0
21,277
<COMMON> 5,614
<OTHER-SE> 74,230
<TOTAL-LIABILITIES-AND-EQUITY> 1,428,141
<INTEREST-LOAN> 18,383
<INTEREST-INVEST> 6,153
<INTEREST-OTHER> 352
<INTEREST-TOTAL> 24,888
<INTEREST-DEPOSIT> 9,114
<INTEREST-EXPENSE> 7,536
<INTEREST-INCOME-NET> 8,238
<LOAN-LOSSES> 265
<SECURITIES-GAINS> 279
<EXPENSE-OTHER> 11,360
<INCOME-PRETAX> 5,227
<INCOME-PRE-EXTRAORDINARY> 5,227
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,206
<EPS-PRIMARY> .52
<EPS-DILUTED> .42
<YIELD-ACTUAL> 2.61
<LOANS-NON> 4,784
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 5,537
<CHARGE-OFFS> 157
<RECOVERIES> 17
<ALLOWANCE-CLOSE> 5,662
<ALLOWANCE-DOMESTIC> 5,662
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
