SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
November 26, 1996
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(Date of earliest event reported)
First Financial Corporation of Western Maryland
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(Exact name of registrant as specified in its charter)
Delaware 0-19837 52-1700036
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
118 Baltimore Street, Cumberland, Maryland 21502
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(Address of principal executive offices) (Zip Code)
(301) 724-3363
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former fiscal year,
if changed since last report)
Page 1 of 5 Pages
Exhibit Index appears on Page 3
Item 5. OTHER EVENTS
On November 26, 1996, First Financial Corporation of Western Maryland (the
"Company") and Keystone Financial, Inc. ("Keystone") entered into an Agreement
and Plan of Merger (the "Agreement") which sets forth the terms and conditions
under which the Company will merge with and into Keystone (the "Merger").
The Agreement provides that upon consummation of the Merger, each
outstanding share of common stock of the Company (other than (i) any dissenting
shares under Delaware law and (ii) any shares held by Keystone other than in a
fiduciary capacity or in satisfaction of a debt previously contracted) shall, by
virtue of the Merger and without any action on the part of the holder thereof,
be converted into the right to receive either (i) 1.29 shares of common stock of
Keystone (subject to possible adjustment in the manner set forth in the
Agreement, the "Exchange Ratio"), plus cash in lieu of any fractional share
interest, or (ii) an amount in cash equal to the Exchange Ratio multiplied by
the average of the closing bid prices for the common stock of Keystone on the
Nasdaq Stock Market's National Market for the 20 consecutive trading days ending
with (and including) the sixth trading day preceding the effective time of the
Merger, provided that Keystone common stock shall constitute not less than 55%
and not more than 60% of the total consideration.
In connection with the execution of the Agreement, First Federal Savings
Bank of Western Maryland (the "Savings Bank"), a wholly-owned subsidiary of the
Company, and American Trust Bank, N.A. (the "Bank"), a wholly-owned subsidiary
of Keystone, entered into an Agreement and Plan of Merger, dated as of November
26, 1996 (the "Bank Merger Agreement"). The Bank Merger Agreement sets forth
the terms and conditions under which the Savings Bank will merge with and into
the Bank immediately prior to consummation of the Merger (the "Bank Merger").
Concurrently with the execution and delivery of the Agreement, the Company
and Keystone entered into a Stock Option Agreement whereby the Company granted
to Keystone an option to purchase up to 423,600 shares of common stock of the
Company, representing 19.9% of the outstanding shares of common stock of the
Company, at a price of $34.19 per share, which is exercisable only upon the
occurrence of certain events. The Stock Option Agreement also provides Keystone
(i) the right, in certain circumstances, to require the Company to repurchase
the option and any shares acquired by exercise of the option and (ii) with the
right to require the Company to register the common stock acquired by or
issuable upon exercise of the option under the Securities Act of 1933.
Concurrently with the execution and delivery of the Agreement, Keystone
also entered into an agreement with each director of the Company (the
"Stockholder Agreement"), pursuant to which, among other things, such persons
agreed in their personal capacities to vote their shares of common stock of the
Company (which amount to 6.63% of the shares of such stock outstanding) in favor
of the Agreement.
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Consummation of the Merger and the Bank Merger is subject to the receipt of
all required regulatory approvals and the approval of the shareholders of the
Company of the Agreement, as well as other customary conditions.
The Agreement (including the form of Stockholder Agreement), the Stock
Option Agreement and the press release issued by Keystone on November 26, 1996
regarding the Merger are included as exhibits to this report and are
incorporated herein by reference. The foregoing summaries of the Agreement, the
Stock Option Agreement and the Stockholder Agreement do not purport to be
complete and are qualified in their entirety by reference to such agreements.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
Not applicable.
(b) PRO FORMA FINANCIAL INFORMATION
Not applicable.
(c) EXHIBITS
EXHIBIT NUMBER DESCRIPTION
2 Agreement and Plan of Merger, dated as of November 26, 1996,
between the Company and Keystone
10(a) Stock Option Agreement, dated as of November 26, 1996,
between the Company and Keystone
20 Press Release issued by Keystone on November 26, 1996 with
respect to the Agreement
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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.
FIRST FINANCIAL CORPORATION
OF WESTERN MARYLAND
Date: December 2, 1996 By: /s/William C. Marsh
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William C. Marsh
Executive Vice President and
Chief Financial Officer
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