Exhibit 10.1
BRANCH PURCHASE AND ASSUMPTION AGREEMENT
dated as of
August 13, 2003
between
RBC CENTURA BANK
as Seller,
and
UNITED COMMUNITY BANK
as Purchaser
TABLE OF CONTENTS
PAGE
ARTICLE 1 CERTAIN DEFINITIONS
1.1 Certain Definitions.............................................................................1
1.2 Accounting Terms................................................................................6
1.3 Use and Application of Terms....................................................................6
ARTICLE 2 THE TRANSACTIONS
2.1 Transfer and Consideration......................................................................7
2.2 Adjustment of Expenses and Fees.................................................................8
2.3 Allocation of Consideration.....................................................................8
2.4 Trade and Service Marks.........................................................................8
2.5 Sale and Transfer of Servicing and Escrows......................................................8
2.6 Assumption of XXX Account Deposits..............................................................8
2.7 Purchaser's Right to Reject Loans...............................................................9
2.8 Loan Accounts Secured by Deposit Accounts......................................................10
ARTICLE 3 CLOSING PROCEDURES
3.1 Closing Date and Place; Notifications..........................................................10
3.2 Procedure at the Closing; Adjustments..........................................................10
ARTICLE 4 TRANSITIONAL MATTERS
4.1 Certain Procedures.............................................................................12
4.2 Customers......................................................................................12
4.3 Assumption of Obligations......................................................................13
4.4 Maintenance of Records.........................................................................13
4.5 Interest Reporting and Withholding.............................................................13
4.6 Negotiable Instruments.........................................................................14
4.7 Leasing of Furniture, Fixtures and Equipment...................................................14
4.8 ATM/Debit Cards................................................................................14
4.9 Delivery of the Loan Documents.................................................................14
4.10 Collateral Assignments and Filing..............................................................15
4.11 Training.......................................................................................15
4.12 Collateral for Public Funds Deposits...........................................................15
4.13 Telephone Numbers..............................................................................15
4.14 Change of Name.................................................................................15
4.15 Credit Insurance...............................................................................15
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF SELLER
5.1 Corporate Organization and Authority...........................................................15
5.2 No Conflict; Licenses and Permits; Compliance with Laws and Regulations........................16
5.3 Approvals and Consents.........................................................................16
5.4 Title to Assets................................................................................16
5.5 Utilities Complete.............................................................................16
5.6 Condemnation Proceedings.......................................................................16
5.7 Contracts......................................................................................16
5.8 Fiduciary Obligations..........................................................................17
5.9 Employees......................................................................................17
5.10 Litigation and Liabilities.....................................................................17
5.11 Regulatory Matters.............................................................................17
5.12 Brokers' Fees..................................................................................17
5.13 Compliance With Laws...........................................................................17
5.14 Absence of Certain Changes, Etc................................................................17
i
5.15 Books and Records..............................................................................18
5.16 Loans..........................................................................................18
5.17 No Other Representations or Warranties.........................................................18
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF PURCHASER
6.1 Corporate Organization and Authority...........................................................18
6.2 No Conflict; Licenses and Permits; Compliance with Laws and Regulations........................19
6.3 Approvals and Consents.........................................................................19
6.4 Brokers' Fees..................................................................................19
6.5 Regulatory Matters.............................................................................19
6.6 Financing Available............................................................................20
6.7 Litigation and Undisclosed Liabilities.........................................................20
6.8 No Other Representations or Warranties.........................................................20
ARTICLE 7 COVENANTS OF THE PARTIES
7.1 Activity in the Ordinary Course................................................................20
7.2 Access and Confidentiality.....................................................................21
7.3 Regulatory Approvals...........................................................................22
7.4 Assumed Contracts..............................................................................23
7.5 Delivery of Records at Closing.................................................................23
7.6 Further Assurances.............................................................................23
7.7 Insurance; Risk of Loss........................................................................23
7.8 Notices of Default.............................................................................24
7.9 New Account Numbers and Checks.................................................................24
7.10 Settlement Operations after Closing............................................................24
7.11 Covenant of Seller Not to Solicit..............................................................26
7.12 Real Property Matters..........................................................................26
7.13 Defects in Assets..............................................................................28
ARTICLE 8 TAX AND EMPLOYEE MATTERS
8.1 Tax Representations............................................................................29
8.2 Allocation Between Pre and Post Closing Periods................................................29
8.3 Transfer Taxes.................................................................................29
8.4 Assistance and Cooperation.....................................................................29
8.5 Notices, Etc...................................................................................30
8.6 Employees and Employee Benefits................................................................30
ARTICLE 9 CONDITIONS TO CLOSING
9.1 Conditions to Obligations of Purchaser.........................................................32
9.2 Conditions to Obligations of Seller............................................................34
9.3 Other Documents................................................................................35
ARTICLE 10 TERMINATION
10.1 Termination....................................................................................35
10.2 Effect of Termination..........................................................................36
ARTICLE 11 INDEMNIFICATION
11.1 Indemnification................................................................................36
11.2 AS-IS Sale; Waiver of Warranties...............................................................37
ARTICLE 12 MISCELLANEOUS
12.1 Survival.......................................................................................38
12.2 Assignment.....................................................................................38
12.3 Binding Effect.................................................................................38
12.4 Public Notice..................................................................................38
12.5 Notices........................................................................................39
12.6 Incorporation..................................................................................39
12.7 Governing Law..................................................................................39
ii
12.8 Entire Agreement...............................................................................39
12.9 Counterparts...................................................................................40
12.10 Headings.......................................................................................40
12.11 Waiver and Amendment...........................................................................40
12.12 Expenses.......................................................................................40
12.13 Severability...................................................................................40
12.14 Third Party Beneficiaries......................................................................40
EXHIBITS
Exhibit A - Form of Xxxx of Sale and Instrument of Assignment and Assumption
SCHEDULES
1.1 Closing Statement
1.1A List of Deposits
1.2 Excluded Employees
1.4 Excluded Loans
1.4A Loans
5.4 Title to Assets
5.10 Litigation
5.16(e) Ownership of Loans
7.1 Commitments for Material Improvements
8.6(g) Employees
iii
BRANCH PURCHASE AND ASSUMPTION AGREEMENT, dated as of August 13, 2003,
among United Community Bank, a North Carolina state-chartered bank ("PURCHASER")
and RBC CENTURA BANK, a North Carolina state-chartered bank ("SELLER").
RECITALS
A. SELLER. Seller is a bank chartered under the laws of the State of
North Carolina and is a member primarily of the Bank Insurance Fund ("BIF") of
the Federal Deposit Insurance Corporation (the "FDIC") with its main office
located in Rocky Mount, North Carolina.
B. PURCHASER. Purchaser is a bank organized under the laws of the State
of North Carolina with its principal office located in Murphy, North Carolina.
C. THE TRANSACTION. Purchaser desires to assume and purchase from
Seller, and Seller desires to assign and sell to Purchaser, certain of Seller's
liabilities and assets, currently held and allocated by Seller to its branch
offices located at 00 Xxxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxx Xxxxxxxx (the
"BAKERSVILLE BRANCH"), at 000 Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxx Xxxxxxxx (the
"NEWLAND BRANCH") and at 000 Xxxxxx Xxx Xxxxxx, Xxxxxxxxxxxx, Xxxxx Xxxxxxxx
(the "ROBBINSVILLE BRANCH" and together with the Bakersville Branch and the
Newland Branch, collectively, the "BRANCHES" and individually, a "BRANCH").
NOW, THEREFORE, in consideration of their mutual promises and
obligations and intending to be legally bound hereby, the parties agree as
follows:
ARTICLE 1
CERTAIN DEFINITIONS
1.1 CERTAIN DEFINITIONS. As used in this Agreement, the terms below
shall have the meanings set forth.
"ACCRUED EXPENSES" means the accrued and unpaid expenses appearing as a
Liability on a Closing Statement or a Final Closing Statement.
"ACCRUED INTEREST" with respect to (i) Deposits at any date means
interest which is accrued on such Deposits to such date and not yet posted to
such deposit accounts or paid to the depositor and (ii) Loans at any date means
interest which is accrued on such Loan to such date and not yet paid.
"ADJUSTMENT DATE" means a date, which shall be a Business Day as soon
as practicable after the Closing Date but in no event later than thirty (30)
calendar days after the Closing Date, as agreed to by the parties in accordance
with Section 3.2.
"AFFILIATE" of a person means any person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such person.
"AGREEMENT" means this Branch Purchase and Assumption Agreement,
including all schedules, exhibits and addenda as modified, amended or extended
from time to time.
"ALLOCATION" has the meaning specified in Section 2.3.
"APPLICABLE EMPLOYEES" has the meaning specified in Section 8.6(a).
"ASSETS" means the (i) Furniture, Fixtures and Equipment, (ii)
Improvements, (iii) Cash on Hand, (iv) Prepaid Expenses, (v) Real Property, (vi)
Records, (vii) Loans, the servicing rights thereto and the collateral for the
Loans, (viii) Seller's benefits and rights under Safe Deposit Agreements, (ix)
Seller's benefits and rights under Assumed Contracts; and (x) any fee or expense
adjustment required in accordance with Section 2.2; PROVIDED, HOWEVER, Assets do
not include any deferred Tax assets, refunds for Taxes relating to the period
prior to the Closing Date and prepaid Taxes. The allocation provisions of
Section 8.2 shall apply for the purposes of determining to what extent any
Taxes, deferred Tax assets and Tax refunds relate to the period prior to the
Closing Date. PROVIDED, FURTHER, Assets do not include any credit card
receivables or accounts.
"ASSUMED CONTRACTS" means all service or similar contracts, including
personal property leases, in effect as of the Closing Date, that relate to the
Branches and the Assets at the Branches and that Purchaser will assume as of the
Closing pursuant to Section 7.4.
"ASSUMED DEPOSITS" means all Deposits existing on the Closing Date,
together with all Accrued Interest thereon as of the Closing Date, but excluding
any Deposits excluded pursuant to Section 2.6, 2.8 and 4.12 or excluded by
mutual agreement of Seller and Purchaser.
"ATM" means any automated teller machine owned or leased by Seller and
located at the Branches.
"BANK MERGER ACT" means Section 18(c) of the Federal Deposit Insurance
Act, as amended.
"BIF" has the meaning specified in Recital A.
"BRANCH" or "BRANCHES" means the branches of Seller located at the
addresses specified in Recital C.
"BUSINESS DAY" means a day on which Seller and Purchaser are open for
business in the State of North Carolina which is not a Saturday, Sunday or legal
holiday recognized generally by commercial banks in the State of North Carolina.
"CASH ON HAND" means, as of any date, all xxxxx cash, vault cash,
teller cash and prepaid postage maintained at the Branches, including at ATMs.
"CLOSE OF BUSINESS" means 2:00 p.m. on the Closing Date.
"CLOSING" and "CLOSING DATE" means one or more closings of the sale,
purchase and assumption provided for herein to be held at such time(s) and
date(s) as provided for in Article 3 hereof.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMISSIONER" means the Commissioner of Banks of the State of North
Carolina.
"DELIVERY RECORDS" means all Records other than transaction tickets and
records for closed accounts, but may be copies of original Records.
"DEPOSITS" means, as of any date, all deposit liabilities of Seller
booked, maintained or primarily serviced at the Branches, which constitute
"deposits" for purposes of the Federal Deposit Insurance Act, 12 U.S.C. ss.
1813, including all uncollected items included in depositors' balances
2
(including Overdrafts that Purchaser has accepted or is obligated to accept as
provided in Section 7.10(h)), any Accrued Interest and any IRAs assigned to
Purchaser under Section 2.6, together with Seller's rights and responsibilities
under any customer agreement evidencing or relating thereto, but excluding (i)
deposits specifically securing, pursuant to express terms of loan documents,
loans or other extensions of credit by Seller where such loans or other
extensions of credit are not being transferred under this Agreement, (ii)
deposits held in accounts for which Seller acts as fiduciary (other than IRAs
assigned to Purchaser under Section 2.6); (iii) deposits subject to legal
process as shown on Records, (iv) deposits which have been reported as abandoned
property under the abandoned property laws of any jurisdiction, (v) deposits
held in any XXX where the account holder has notified Seller or Purchaser of
his, her or its objection to Purchaser acting as custodian of such XXX, (vi)
deposits held in the name of Seller or any of its affiliated entities as
depositor, (vii) deposits represented by official checks, travelers checks,
money orders, or certified checks of Seller, and (viii) accounts designated as
"closed" on the books and records of Seller. Deposits also shall include any
dealer reserve associated with Loans, whether or not the dealer reserve or
similar accounts is maintained or primarily serviced at the Branches. A list of
the Deposits as of the date of this Agreement are attached hereto as SCHEDULE
1.1A. This list will be updated as of the Closing Date and will be used in
determining the Assumed Deposits.
"DISPUTE RESOLVER" means an independent accounting firm or other
independent consultant mutually acceptable to the Seller and the Purchaser. All
determinations under this Agreement made by a Dispute Resolver shall be binding
upon Purchaser and Seller.
"EMPLOYEES" means any employee employed by Seller on the Closing Date
at the Branches, other than those employees identified in SCHEDULE 1.2.
"ENCUMBRANCES" means all mortgages, claims, charges, liens,
encumbrances, easements, limitations, restrictions, commitments, security
interests, pledges or other similar charges or liabilities, whether accrued,
absolute, contingent or otherwise, except for statutory liens for ad valorem tax
payments securing payments not yet due.
"ENVIRONMENTAL LAW" has the meaning set forth in Section 7.12(e).
"ERISA" has the meaning assigned in Section 5.9.
"FDIC" means the Federal Deposit Insurance Corporation.
"FEDERAL FUNDS RATE" on any day means the per annum rate of interest
(rounded upward to the nearest 1/100 of 1%) which is the weighted average of the
rates on overnight federal funds transactions arranged on such day or, if such
day is not a banking day, the previous banking day, by federal funds brokers
computed and released by the Federal Reserve Bank of Richmond (or any successor)
in substantially the same manner as such Federal Reserve Bank currently computes
and releases the weighted average it refers to as the "Federal Funds Effective
Rate" at the date of this Agreement.
"FINAL CLOSING STATEMENT" means the Statement, as of the Adjustment
Date, delivered by Seller to Purchaser in accordance with SCHEDULE 1.1 and
Section 3.2(c), setting forth the Assets and Liabilities.
"FINAL SETTLEMENT PAYMENT" has the meaning specified in Section 3.2(c).
"FURNITURE, FIXTURES AND EQUIPMENT" means all furniture, fixtures, and
equipment, including ATMs accepted by Purchaser, trade fixtures, telephone
3
systems, security equipment, safe deposit boxes (exclusive of contents), vaults
and supplies (excluding any items consumed or disposed of, but including new
items acquired or obtained, in the ordinary course of business of the Branches
through the Closing Date) that are located at the Branches, but excluding
signage or other advertising or blank paper stock, forms, or supplies bearing
Seller's corporate logos, trade names, or trademarks and computers and computer
software.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"HAZARDOUS MATERIAL" has the meaning set forth in Section 7.12(f).
"IMPROVEMENTS" means all improvements to the Real Property in respect
of the Branches which shall have been purchased, installed or constructed and
used in connection with the operation or maintenance of such Branches.
"XXX" means an "individual retirement account" or similar Deposit
account established in accordance with the provisions of Section 408 of the Code
for which Seller acts as custodian or trustee but as to which Seller may not
exercise investment discretion.
"IRS" means the Internal Revenue Service.
"INFORMATION" shall have the meaning specified in Section 7.2(b).
"LIABILITIES" means the (i) Assumed Deposits and all terms and
agreements relating to the Assumed Deposits, (ii) Seller's obligations with
respect to the Loans, the servicing of the Loans and the collateral for the
Loans, (iii) Seller's obligations under Assumed Contracts, (iv) Seller's
obligations under the Safe Deposit Agreements, including any prepaid rent
thereunder, (v) Seller's obligations to provide customer services from and after
the Closing Date in connection with the Assets and the Assumed Deposits, (vi)
all other liabilities of Seller with respect to the operations of the Branches,
including accounts payable and Accrued Expenses, recorded as liabilities on the
books of the Branches as of the Closing Date; (vii) any fee or expense
adjustment required in accordance with Section 2.2, and (viii) liabilities that
arise from the operation of the Branches after the Closing Date; PROVIDED,
HOWEVER, that Liabilities shall not include any Liability for Taxes for any
period prior to the Closing Date nor any other Liability of Seller not
specifically assumed hereunder. The allocation provisions of Section 8.2 shall
apply for purposes of determining to what extent a liability for Taxes is with
respect to a period prior to the Closing Date.
"LOAN DOCUMENTS" means all material Records with respect to a Loan,
including, without limitation, applications, notes, security agreements, deeds
of trust, mortgages, assignment of leases, loan agreements, including building
and loan agreements, guarantees, sureties and insurance policies (including
title insurance policies), flood hazard certifications, and all modifications,
waivers and consents relating to any of the foregoing. Loan Documents also
includes all underwriting files, financing statements, collateral files and
documentation and escrow account agreements.
"LOANS" means all loans (including loan commitments, but excluding the
interest of any participants in such Loans) which are recorded on the books of
the Branches at the Close of Business, including Overdraft Loans, but excluding
those loans listed on SCHEDULE 1.4 as "Excluded Loans." A list of Loans as of
the date of this Agreement is attached hereto as SCHEDULE 1.4A, and it will be
updated as of the Closing Date. Loans shall also exclude (i) loans in
4
non-accrual status on Seller's books, loans in which the collateral securing the
same has been repossessed or as to which collection efforts have been instituted
or claim and delivery or foreclosure proceedings have been filed, or loans as to
which insurance on the loan collateral has been force-placed; (ii) mortgage
loans not designated to the Branches, and those mortgage loans designated to the
Branches but centrally-serviced by Seller; (iii) loans ninety (90) days or more
past due as to principal or interest; (iv) loans which have been classified
adversely by any governmental authority or regulatory agency or placed by Seller
on any internal "watch list" or similar list of loans causing concern; (v) loans
in connection with which the obligor has filed a petition for relief under the
United States Bankruptcy Code, or otherwise has indicated an inability or
refusal to pay the Loan as it becomes due, prior to the Closing; (vi) letters of
credit, or loans in which Seller participates with another lender, except as
specifically offered by Seller and accepted by Purchaser; (vii) loans to
borrowers known by Seller to be deceased, as reflected in Records relating to
such loans; (viii) loans rejected by Purchaser pursuant to Section 2.7; and (ix)
loans excluded pursuant to Section 2.8.
"LOAN VALUE" means, with respect to a Loan and as of a date, the unpaid
principal balance of any such Loan plus Accrued Interest thereon, net of the
interest in such Loan of any participant, as of such date, and excluding
accumulated but unpaid late charges as of such date.
"LOSSES" means losses, liabilities, damages (including forgiveness or
cancellation of obligations), expenses, costs, legal fees and disbursements,
collectively.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the
condition, financial or otherwise, or results of operations of the Branches, or
on the ability of Seller or Purchaser to consummate timely the transactions
contemplated hereby. Notwithstanding the foregoing, a Material Adverse Effect
shall not be deemed to exist as a result of general economic conditions or
conditions generally affecting the industry in which the Branches operate, or
changes thereto (it being agreed that such items shall never be considered
material).
"OVERDRAFT" means the amount by which any Deposit account at the
Branches is overdrawn as of the Closing Date on account of checks, drafts or
other items that have been presented against such account for payment against
insufficient funds and that, under applicable rules of the Federal Reserve Bank
or other check collection rules or procedures, cannot be returned and charged
back as a matter of right to the presenting or collecting bank.
"OVERDRAFT LOANS" means unsecured overdraft Loans, including negotiable
order of withdrawal line of credit accounts, relating to the Assumed Deposits,
as of the Close of Business, plus accrued interest, which do not exceed the
applicable credit limit by more than 10% of that limit and are linked to an open
account.
"PRELIMINARY CLOSING STATEMENT" means the statement reflecting the
Assets and Liabilities as of the end of the third Business Day prior to the
Closing Date, which statement shall be prepared by Seller, in consultation with
Purchaser, substantially in the format of Schedule 1.1.
"PREPAID EXPENSES" means the prepaid expenses appearing as an asset in
respect of the Branches on a Closing Statement or a Final Closing Statement, as
the case may be, that (i) have been recorded in accordance with GAAP, (ii) are
not intercompany or interoffice accounts and (iii) provide future benefit to the
business conducted at the Branches.
"PURCHASE PRICE" has the meaning specified in Section 2.1(b).
"REAL PROPERTY" means the real properties owned by Seller and
identified by the street addresses set forth in Recital C above and the
buildings thereon, including any Improvements thereon and all fixtures not
5
included in the property described in the definition of Furniture, Fixtures and
Equipment, and if the context so requires, Real Property can mean just one or
more, but less than all of the Real Property.
"RECORDS" means all records and original documents in Seller's
possession (including records maintained electronically) which pertain to and
are utilized by Seller to administer, reflect, monitor, evidence or record
information respecting the business or conduct of the Branches (including
transaction tickets through the Closing Date and all records for closed accounts
located in the Branches) and all such records and original documents respecting
(i) the Assumed Contracts, (ii) the Assets, (iii) the Assumed Deposits and (iv)
the Loans, the servicing rights to the Loans and the collateral for the Loans
(including the Loan Documents).
"REGULATORY APPROVALS" means all approvals, permits, authorizations,
waivers or consents of governmental or regulatory agencies or authorities
necessary or appropriate to permit consummation of the transactions contemplated
herein and includes, without limitation, the following: (i) approval of
cognizant regulatory agencies under the Bank Merger Act; (ii) approvals of the
Commissioner under applicable law; and (iii) expiration of the waiting period
provided for in the Bank Merger Act without commencement of any action
challenging Purchaser's acquisition of the Branches hereunder by the United
States Department of Justice or any other person.
"SAFE DEPOSIT AGREEMENTS" means any agreements, including rental
agreements, related to the safe deposit boxes, if any, located in the Branches.
"SETTLEMENT PAYMENT" means a payment made pursuant to Section 2.1(c).
"TAX RETURNS" means all returns or other reports required to be filed
with respect to any Taxes, including information returns.
"TAX or TAXES" refers to all federal, state, local, or foreign income,
gross receipts, windfall profits, severance, property, production, sales, use,
excise, transfer, license, franchise, employment, withholding or similar taxes
or amounts required to be withheld and paid over to any government in respect of
any tax or governmental fee or charge, including any interest, penalties, or
additions to tax on the foregoing.
"TRANSACTION ACCOUNT" means any account at the Branches in respect of
which deposits are withdrawable in practice upon demand or upon which third
party drafts may be drawn by the depositor, including checking accounts,
negotiable order of withdrawal accounts and money market deposit accounts.
"TRANSFERRED EMPLOYEE" has the meaning specified in Section 8.6(a).
"WELFARE PLANS" has the meaning specified in Section 8.6(d).
1.2 ACCOUNTING TERMS. To the extent that any accounting terms used in
this Agreement are not defined in Section 1.1 or elsewhere herein, they shall be
defined under GAAP.
1.3 USE AND APPLICATION OF TERMS. In using and applying the various
terms, provisions and conditions in this Agreement, the following shall apply:
(1) the terms "hereby", "hereof", "herein", "hereunder", and any similar words,
refer to this Agreement; (2) words in the masculine gender mean and include
correlative words of the feminine and neuter genders and words importing the
singular numbered meaning include the plural number, and vice versa; (3) words
importing persons include firms, companies, associations, general partnerships,
limited partnerships, limited liability partnerships, limited liability limited
6
partnerships, limited liability companies, trusts, business trusts, corporations
and other legal organizations, including public and quasi-public bodies, as well
as individuals; (4) the use of the terms "including" or "included in", or the
use of examples generally, are not intended to be limiting, but shall mean,
without limitation, the examples provided and others that are not listed,
whether similar or dissimilar; (5) the phrase "costs and expenses", or
variations thereof, shall include, without limitation, reasonable attorneys'
fees and fees of legal assistants, and reasonable fees of accountants,
engineers, surveyors, appraisers and other professionals or experts - and all
references to attorneys' fees or fees of legal assistants, or fees of
accountants, engineers, surveyors, appraisers or other professionals or experts
shall mean reasonable fees; (6) as the context requires, the word "and" may have
a joint meaning or a several meaning and the word "or" may have an inclusive
meaning or an exclusive meaning; (7) any reference contained in this Agreement
to specific statutes or laws shall include any successor statutes or laws, as
the case may be; and (8) this Agreement shall not be applied, interpreted and
construed more strictly against a person because that person or that person's
attorney drafted this Agreement.
ARTICLE 2
THE TRANSACTIONS
2.1 TRANSFER AND CONSIDERATION.
(a) Subject to the terms and conditions set forth in this Agreement, at
the Closing, Purchaser shall (i) purchase the Assets and (ii) assume the
Liabilities, and Seller shall sell, assign, transfer, convey and deliver to
Purchaser, free and clear of all Encumbrances (except as described in Section
5.4), all of Seller's right, title and interest in and to the Assets and the
Liabilities.
(b) The purchase price for the Assets shall be an amount (the "PURCHASE
PRICE") computed as follows:
(i) An amount equal to 10.7% of the average daily balance
(excluding Accrued Interest) of Assumed Deposits for the period
commencing thirty (30) calendar days prior to and inclusive of the day
prior to the Closing Date and ending on the day prior to the Closing
Date for the Bakersville Branch and the Xxxxxxx Branch; PLUS
(ii) An amount equal to 7% of the average daily balance
(excluding Accrued Interest) of Assumed Deposits for the period
commencing thirty (30) calendar days prior to and inclusive of the day
prior to the Closing Date and ending on the day prior to the Closing
Date for the Robbinsville Branch, which payment will be inclusive of
the net book value of the Robbinsville Real Estate and the Robbinsville
Furniture, Fixtures and Equipment; PLUS
(iii) The aggregate amount of Cash on Hand as of the Closing
Date; PLUS
(iv) The aggregate net book value of the Assets (other than
Cash on Hand, Loans and the Robbinsville Real Estate and Robbinsville
Furniture, Fixtures and Equipment), as reflected on the books of Seller
as of the Closing Date; PLUS
(v) The aggregate Loan Value of the Loans as of the Closing
Date.
(c) On the Closing Date, Seller shall transfer to Purchaser cash in an
amount (the "SETTLEMENT PAYMENT") equal to the excess of (i) the sum of (A) the
Assumed Deposits plus (B) the Accrued Expenses, over (ii) the Purchase Price as
calculated based on the Preliminary Closing Statement.
2.2 ADJUSTMENT OF EXPENSES AND FEES. All operating expenses and fees
accrued or pre-paid prior to the Closing Date, including, without limitation,
rents, utility payments, and FDIC assessments, but not including those related
to Taxes
7
(except as provided in Section 8.2 below), relating to the Branches, transferred
at Closing, shall be pro-rated between the parties. To the extent that Seller
has prepaid expenses that are expenses allocable to Purchaser pursuant to this
Section 2.2, such expenses shall appear as an Asset on the Closing Statement and
the Final Closing Statement. To the extent that expenses have been accrued and
not paid by Seller or prepaid by customers prior to the Closing Date, they shall
appear as a Liability on the Closing Statement and the Final Closing Statement.
2.3 ALLOCATION OF CONSIDERATION. Purchaser and Seller agree that the
consideration payable hereunder at the Closing shall be allocated among the
Assets, tangible and intangible, on the basis of an allocation (the
"ALLOCATION") to be reasonably determined by Purchaser and Seller in accordance
with applicable Treasury regulations and the Code. Purchaser and Seller agree
(i) to timely file a mutually acceptable appropriate IRS form in accordance with
the Allocation and (ii) that the Allocation shall be binding on Purchaser and
Seller for all tax reporting purposes, except that either party may change any
such report in the event of a dispute with any taxing authority or take any
other step to settle or resolve such a dispute; PROVIDED, HOWEVER, that a party
shall not make any such change without first obtaining the consent of the other
party, which consent will not be unreasonably withheld or delayed.
2.4 TRADE AND SERVICE MARKS. Notwithstanding anything to the contrary
in this Agreement, Purchaser shall not acquire hereunder any right to the use of
any trade name, trade xxxx or service xxxx, if any, of Seller or any of its
Affiliates.
2.5 SALE AND TRANSFER OF SERVICING AND ESCROWS.
(a) The Loans shall be sold on a servicing released basis. As of the
Closing Date, all rights, obligations, liabilities and responsibilities with
respect to the servicing of the Loans on and after the Closing Date will be
assumed by Purchaser. Seller shall be discharged and indemnified by Purchaser
from all liability with respect to servicing of the Loans on and after the
Closing Date, and Purchaser shall be indemnified by Seller from all liability
with respect to servicing the Loans prior to the Closing Date.
(b) As of the Closing Date, Purchaser will assume, and agrees to
undertake and discharge, any and all obligations of the holder and servicer of
any Loans that are mortgage Loans, if any, as such obligations may relate to the
escrow, maintenance of escrow and payments from escrow of moneys paid by or on
account of the applicable mortgagor. On or before the fifth (5th) Business Day
after the Closing Date, Seller shall remit by wire transfer of immediately
available funds to Purchaser any and all funds held in escrow that were
collected and received pursuant to a mortgage Loan for the payment of taxes,
assessments, hazard insurance premiums, primary mortgage insurance policy
premiums, if applicable, or comparable items prior to the Closing Date plus any
Accrued Interest. Seller makes no warranties or representations of any kind or
nature as to the sufficiency of such sum to discharge any obligations with
respect to mortgage Loans.
2.6 ASSUMPTION OF XXX ACCOUNT DEPOSITS.
(a) With respect to Assumed Deposits in IRAs, Seller will use
reasonable efforts and will cooperate with Purchaser in taking any action
reasonably necessary or appropriate to accomplish or accompany the appointment
of Purchaser (or an Affiliate of Purchaser designated by Purchaser) as successor
custodian or the delegation to Purchaser (or an Affiliate of Purchaser) of
Seller's authority and responsibility as custodian of all such XXX deposits
except self-directed XXX deposits, including, but not limited to, sending to the
depositors thereof appropriate notices, cooperating with Purchaser (or such
Affiliate) in soliciting consents from such depositors, executing assignments
reasonably satisfactory to Purchaser, and filing any appropriate applications
with applicable regulatory authorities. If any such delegation is made to
Purchaser (or such Affiliate), Purchaser (or such Affiliate) will perform all of
the duties so delegated and comply with the terms of Seller's agreement with the
depositor of the XXX deposits affected thereby.
(b) If, notwithstanding the foregoing, as of the Closing Date,
Purchaser shall be unable to retain deposit liabilities in respect of an XXX or
the account holder has notified Seller or Purchaser of the account holder's
objection to Purchaser acting as custodian or trustee of such XXX, such deposit
liabilities shall be excluded from Assumed Deposits for purposes of this
Agreement.
2.7 PURCHASER'S RIGHT TO REJECT LOANS.
(a) During the period beginning on the date of this Agreement and
ending on the tenth (10th) Business Day after such date in the case of Loans
carried on the books of Seller as of the date of this Agreement (the "Review
Period") and, with respect to new Loans associated with the Branches and made
after the date of this Agreement, during a subsequent five (5) Business Day
period beginning on a mutually-agreed date at least forty five (45) calendar
days prior to the Closing Date (the "Supplemental Review Period"), Seller shall
afford to the officers and authorized representatives of Purchaser, subject to
Seller's normal security requirements, access to all necessary Loan Documents
relating to such Loans in order that Purchaser may have full opportunity to make
reasonable investigations of the Loans, the Loan Documents and the Loan
collateral. With respect to the Supplemental Review Period, Seller shall provide
8
a listing of new Loans upon Purchaser's request and any such supplemental review
shall be completed at least thirty-five (35) calendar days before the Closing.
Notwithstanding the foregoing, Seller shall not be required to provide access to
or disclose information where such access or disclosure would violate or
prejudice the legal rights of any customer or employee or attorney-client
privilege or would be contrary to law, rule, regulation or any legal or
regulatory order or process or any fiduciary duty or binding agreement entered
into prior to the date of this Agreement. Following the Closing and during a
five (5) Business Day period beginning on the date on which Seller has delivered
to Purchaser all Loan Documents pertaining to Loans transferred to Purchaser at
the Closing as provided in Section 4.9 below, together with a listing of those
Loans transferred to Purchaser at the Closing which were made by Seller
subsequent to the beginning of the Supplemental Review Period and prior to
Closing, Purchaser shall have the right to review the Loan Documents relating to
Loans made within that period and to any other Loans with respect to which
Seller withheld any Loan Documents or information from Purchaser prior to the
Closing pursuant to the preceding sentence (the "Post-Closing Review Period").
(b) No later than five (5) Business Days following the expiration of
the Review Period, the Supplemental Review Period, or the Post-Closing Review
Period, as applicable, Purchaser shall notify Seller in writing of the existence
of any of the following defects relating to the Loans (any such Loan being
called an "Identified Loan"):
(i) Loan Documents, which are material to the enforceability
of a Loan, have been lost or are missing;
(ii) a Loan was not originated or has not been administered in
compliance in all material respects with applicable laws or the Loan
Documents pertaining to such Loan are not legal, valid and binding or
do not contain the true signature of an obligor; or
(iii) Seller's rights in any collateral are not perfected or
enforceable, or the priority of such rights are not as reflected on
Seller's Records; PROVIDED, HOWEVEr, that the absence of any such right
of Seller in the collateral securing such a Loan must have a material
impact on the ability to recover full payment of the Loan.
9
(c) Following receipt of any such notice with respect to defects
identified during the Review Period or the Supplemental Review Period, and at
any time prior to the date of notification to the customers of the assignment of
the Loans pursuant to applicable law, Seller may in its sole discretion attempt
to cure any such defect described in Section 2.7(b)(i) through (iii) to
Purchaser's reasonable satisfaction. If Seller is unable or unwilling to cure
such defect to Purchaser's reasonable satisfaction, Purchaser shall have the
right to reject such Identified Loan in which case such Identified Loan will be
excluded from this Agreement. Promptly following its receipt of any such notice
with respect to defects identified during the Post-Closing Review Period, Seller
will repurchase each Identified Loan from Purchaser at its net book value on
Purchaser's books on the date of repurchase.
2.8 LOAN ACCOUNTS SECURED BY DEPOSIT ACCOUNTS. In the event that a loan
account at one of the Branches is specifically secured by a Deposit or security
account that is assigned by Seller to another of Seller's branches, or where a
Deposit account at one of the Branches secures a loan account assigned by Seller
to another of Seller's branches, such loan account, Deposit account and/or
security account shall not be an Assumed Deposit or a Loan.
ARTICLE 3
CLOSING PROCEDURES
3.1 CLOSING DATE AND PLACE; NOTIFICATIONS. The closing of the
transactions provided for herein (the "CLOSING") will be held at the offices of
Seller at 0000 Xxxxxxx Xxxxxxx, Xxxxx Xxxxx, Xxxxx Xxxxxxxx 00000, or at another
place agreed to by the parties, on or before October 31, 2003 (the "CLOSING
DATE"), unless all Regulatory Approvals are not yet received despite the best
efforts of Purchaser and Seller or unless a later date and time are agreed to by
the parties. Notwithstanding anything contained in this Agreement to the
contrary, Seller agrees that, if Purchaser receives all necessary Regulatory
Approvals related to its purchase of Assets and assumption of Liabilities
related to some of the Branches prior to its receipt of necessary Regulatory
Approvals related to all of the Branches, and if it reasonably appears that
necessary Regulatory Approvals related to the remaining Branches will not be
obtained by a time that would permit a Closing related to all of the Branches to
occur on or before October 31, 2003, then, at Purchaser's option exercised by
written notice to Seller, separate Closings of the transactions related to each
of the Branches shall be held. In the event of separate Closings, the Closing of
the transactions related to Branches for which Regulatory Approvals are first
received shall occur as soon as reasonably practical following Purchaser's
receipt of those necessary Regulatory Approvals, its giving of the above written
notice, and the satisfaction of all other conditions to Closing described herein
that are related to those Branches, and the Closing of the transactions related
to the remaining Branches shall occur at a later date as provided herein. In
that event, this Agreement shall be deemed to be separate agreements with
respect to each separate Closing and the provisions of this Agreement that apply
in the case of transactions related to all Branches shall apply separately to
each Branch and to each Closing, and the provisions that apply only to the
transactions related to one of the Branches shall apply only to that Branch and
the Closing of the transactions related to that Branch. Following the Closing of
the transactions related to some but not all of the Branches, this Agreement
shall remain in full force and effect separately with respect to the remaining
Branches, and neither Purchaser's inability to obtain any necessary Regulatory
Approval with respect to the transactions related to the remaining Branches, the
inability of either party to satisfy any other conditions to the Closing of the
transactions related to the remaining Branches, nor either party's breach of or
termination of this Agreement with respect to the transactions related to the
remaining Branches, shall have any effect on the transactions or obligations of
the parties hereunder related to the Branches for which Regulatory Approvals
have been obtained.
3.2 PROCEDURE AT THE CLOSING; ADJUSTMENTS.
10
(a) No later than one (1) Business Day prior to the Closing Date,
Seller shall deliver to Purchaser the Preliminary Closing Statement prepared in
the format set forth on SCHEDULE 1.1 and based on figures as of the end of the
third (3rd) Business Day immediately preceding the Closing Date. At the Closing,
the parties shall deliver the documents referred to in Sections 9.1(d), 9.2(d)
and 9.3. On the Closing Date, Seller shall deliver to Purchaser the required
Settlement Payment.
(b) The sales, purchases, transfers, assumptions, leases and other acts
made or taken at the Closing will be made or taken to be effective as of the
Close of Business although the Settlement Payment may be paid at any time on the
Closing Date. Seller shall be responsible for the Branches and the operation
thereof until the Close of Business. The Close of Business shall be the relevant
cutoff time for purposes of the proration described in Section 2.2, and any
amounts to be paid in accordance with Section 2.2 shall be paid
contemporaneously with the Final Settlement Payment on the Adjustment Date.
(c) Within thirty (30) calendar days after the Closing, Seller shall
deliver to Purchaser the Final Closing Statement. The Purchase Price and
Settlement Payment shall be recalculated in accordance with Section 2.1 based on
such Final Closing Statement. The "FINAL SETTLEMENT PAYMENT" shall be (i) paid
on the Adjustment Date by Seller to Purchaser in the amount by which (A) the
Assumed Deposits and the Accrued Expenses exceed (B) the Purchase Price and the
Settlement Payment or (ii) paid on the Adjustment Date by Purchaser to Seller in
the amount by which (A) the Purchase Price and the Settlement Payment exceed (B)
the Assumed Deposits and Accrued Expenses, each as on the Final Closing
Statement. In either case, interest at the Federal Funds Rate from the Closing
Date to, but excluding, the Adjustment Date shall be included in the Final
Settlement Payment. The Final Closing Statement shall become final and binding
on Purchaser and Seller on the earlier of (i) the date it is approved by
Purchaser by written notice to Seller or (ii) at 5:00 p.m. North Carolina time
on the tenth (10th) Business Day after it is delivered by Seller to Purchaser
unless, within such ten (10) Business Day period, Purchaser gives written notice
to Seller of its actual or potential disagreement with respect to any item
included in such Final Closing Statement. Seller and Purchaser shall use their
reasonable best efforts to resolve the disagreement or concern during the ten
(10) Business Day period following receipt by Seller of such notice. If the
disagreement or concern is not resolved during such ten (10) Business Day
period, the dispute shall be referred to a Dispute Resolver, and such Final
Closing Statement shall be modified, if required, by the Dispute Resolver and
thereupon such Final Closing Statement shall become final and binding. Purchaser
and Seller shall share equally the cost of any Dispute Resolver.
(d) The Adjustment Date shall occur within four (4) Business Days after
the Final Closing Statement becomes final and binding pursuant to subsection (c)
of this Section. The Final Settlement Payment shall be made in cash as provided
in Section 3.2(e). The Final Settlement Payment shall, for all purposes, be
considered an adjustment to the Purchase Price.
(e) All payments to be made hereunder by one party to the other shall
be made by wire transfer of immediately available funds on or before 4:00 p.m.
local time on the date of payment to an account specified by the receiving party
at least two (2) calendar days prior to the date of payment.
(f) If any instrument of transfer contemplated herein shall be recorded
in any public record before the Closing and thereafter the Closing is not
completed, then at the request of such transferring party the other party will
deliver (or execute and deliver) such instruments and take such other action as
such transferring party shall reasonably request to revoke or record such
purported transfer.
11
ARTICLE 4
TRANSITIONAL MATTERS
4.1 CERTAIN PROCEDURES. Seller and Purchaser shall cooperate with each
other and shall use their reasonable efforts to cause the timely transfer of
information concerning the Deposits and the Loans which is maintained on
Seller's data processing systems in accordance with a working agreement to be
developed and mutually agreed upon by Purchaser and Seller within forty-five
(45) calendar days of the date of this Agreement (the "Working Agreement").
Within five (5) Business Days after the date of this Agreement, Seller and
Purchaser shall each designate appropriate and qualified personnel to be
responsible for this cooperation of the parties in developing and implementing
the Working Agreement, and to act as an initial contact for responding to
questions and requests for information. The parties acknowledge that the goal of
the Working Agreement, and its implementation, is to enable Purchaser to obtain
and confirm data prior to the Closing Date so that such back office conversion
is completed and Purchaser is processing all data relating to the operations of
the Branches on the Business Day after the Closing Date. Within twenty (20)
calendar days of the date of this Agreement, appropriate personnel of Seller and
Purchaser shall meet to discuss products and data mapping.
Following execution of this Agreement, Purchaser will pick up from
Seller at Seller's Operations Center in Rocky Mount, North Carolina, three sets
of electronic data files, corresponding layouts, and applicable balancing
reports, with respect to the Deposits and loans proposed to be Loans. The first
set will be created after a night's processing as soon as possible following the
date of this Agreement. The second set will be created after a night's
processing approximately seven weeks prior to the Closing Date. The third set
will be the live conversion set and will be created after processing on the
night of the Closing Date and will be delivered to Purchaser no later than noon
on the day following the Closing Date, or as of another time set forth in a plan
of conversion. This third set will be accompanied by a backup set.
In connection with its processing on the night of the Closing, Seller
will produce interim statements on any Deposit or Loan account normally
receiving a statement.
4.2 CUSTOMERS.
(a) Prior to Closing, (i) Seller and Purchaser jointly will notify the
customers of the Branches of the transactions contemplated hereby and (ii) each
of Seller and Purchaser shall provide, or join in providing where appropriate,
with the cooperation of the other party, all notices to such customers and other
persons that Seller or Purchaser, as the case may be, is required to give by any
regulatory authority having jurisdiction or under applicable law, including but
not limited to any notice required by the Real Estate Settlement Procedures Act
of 1974, as amended, or the terms of any other agreement between Seller and any
customer in connection with the transactions contemplated hereby. All costs and
expenses of any notice or communication sent or published under this Agreement
by Purchaser or Seller shall be the responsibility of the party sending such
notice or communication and all costs and expenses of any joint notice or joint
communication shall be shared equally by Seller and Purchaser.
(b) Anything herein to the contrary notwithstanding, but subject to the
provisions of Section 7.9, neither Purchaser nor Seller shall object to the use
by depositors of the Assumed Deposits of checks and similar instruments issued
to or ordered by such depositors on or prior to the Closing Date, which
instruments may bear Seller's name, or any logo, trademark, service xxxx, trade
name or other proprietary xxxx of Seller. As provided in Section 7.9, Seller and
Purchaser will agree on a mutually acceptable method to notify customers who
use, and to transfer funds and authorization relating to, direct deposit and
direct debit arrangements related to the Assumed Deposits.
12
4.3 ASSUMPTION OF OBLIGATIONS. Upon the Closing Date, Purchaser shall
assume and thereafter fully and timely discharge the duties and obligations of
Seller relating to all periods from and after the Closing Date with respect to
the Assumed Deposits, Assumed Contracts and other Liabilities as may arise under
applicable laws, regulations, agreements and rules of automated clearing houses
and other payment systems which relate thereto, and in accordance with the terms
of account agreements or other agreements with depositors applicable to such
accounts as such terms and agreements are in effect on the Closing Date, except
such terms as, under applicable law and agreement, may be changed after the
Closing Date.
4.4 MAINTENANCE OF RECORDS. Through the Closing Date, Seller will
maintain the Records in accordance with safe and sound banking practices and in
a manner consistent with past practice, which, with respect to financial
accounting matters, is understood by Seller to be generally in accordance with
GAAP. Purchaser may upon reasonable notice, at its own expense and during normal
business hours, make such copies of and excerpts from the Records as it may deem
desirable. All Records, whether held by Purchaser or Seller, shall be maintained
for such periods following the Closing as are required by law, unless the
parties shall, applicable law permitting, agree in writing to a different
period. From and after the Closing Date, (a) each of the parties shall permit
the other reasonable access to any applicable Records in its possession relating
to matters arising on or before the Closing Date and (b) the Purchaser shall
permit the Seller reasonable access (which may include insisting on appropriate
legal process) to any applicable Records in its possession relating to matters
arising after the Closing Date, in either case, reasonably necessary in
connection with any request for information, claim, action, litigation or other
proceeding involving the party requesting access to such Records or in
connection with any legal obligation owed by such party to any present or former
depositor or other customer.
4.5 INTEREST REPORTING AND WITHHOLDING.
(a) Unless otherwise agreed by the parties, Seller will report to
applicable taxing authorities and holders of Assumed Deposits, with respect to
the period from January 1 of the year in which the Closing occurs through the
Closing Date, all interest credited to, withheld from and any early withdrawal
penalties imposed upon the Assumed Deposits. Purchaser will report to the
applicable taxing authorities and holders of Assumed Deposits, with respect to
all periods from the day after the Closing Date, all such interest credited to,
withheld from and early withdrawal penalties imposed upon such Assumed Deposits.
Any amounts required by any governmental agencies to be withheld from any of the
Assumed Deposits 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 Date shall be withheld by Purchaser in accordance with applicable
law or appropriate notice from any governmental agency and will be remitted by
Purchaser to the appropriate agency on or prior to the applicable due date.
(b) 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 the period through
the Closing Date which occur with respect to the Assumed Deposits. Purchaser
shall be responsible for delivering to payees all such IRS notices required to
be delivered for the period from the day after the Closing Date.
(c) 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 the period from January 1 of the
13
year in which the Closing occurs 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 from the day after the Closing Date,
concerning all such interest and points received.
4.6 NEGOTIABLE INSTRUMENTS. Seller will destroy or remove any supply of
Seller's money orders, official checks, gift checks or any other negotiable
instruments, including travelers' checks, located at the Branches on the Closing
Date.
4.7 LEASING OF FURNITURE, FIXTURES AND EQUIPMENT. Seller shall use
reasonable efforts to renew or extend on a month-to-month basis, any lease
relating to Furniture, Fixtures or Equipment, that is currently in effect but
that would otherwise expire on or prior to the Closing Date and will promptly
notify Purchaser if it is unable to do so.
4.8 ATM/DEBIT CARDS.
(a) Seller will provide Purchaser with a list of ATM access/debit cards
issued by Seller to depositors of any Assumed Deposits, and a data processing
record in a format reasonably agreed to by the parties containing all addresses
therefor, no later than forty-five (45) calendar days after the date of this
Agreement. At or promptly after the Closing, Seller will provide Purchaser with
a revised data processing record. Seller shall render ATM/Debit cards issued by
Seller inactive as of the Closing. Purchaser shall reissue ATM access/debit
cards to depositors of any Assumed Deposits prior to the Closing Date, which
cards shall be effective as of the Closing Date.
(b) Seller will not be required to disclose to Purchaser customers'
PINs or algorithms or logic used to generate PINs.
4.9 DELIVERY OF THE LOAN DOCUMENTS.
(a) In connection with the sale hereunder, as soon as reasonably
practicable after the Closing Date, Seller shall deliver to Purchaser or its
designee the Loan Documents actually in the possession of Seller, including
electronic Records, or at Purchaser's election, Purchaser shall pick up the Loan
Documents from Seller at the places where Seller currently maintains the Loan
Documents. Seller makes no representation or warranty to Purchaser regarding the
condition of the Loan Documents or any single document included therein, or
Seller's interest in any collateral securing any Loan, except as specifically
set forth herein. Seller shall have no responsibility or liability for the Loan
Documents from and after the time such files are delivered by Seller to an
independent third party designated by Purchaser for shipment to Purchaser, the
cost of which shall be the sole responsibility of Purchaser.
(b) Promptly upon the execution of this Agreement, Purchaser shall
provide Seller the exact name to which the Loans are to be endorsed, or whether
any Loans should be endorsed in blank. Seller shall complete such endorsements
and deliver the Loan Documents within thirty (30) calendar days after Closing
and thereafter Seller will honor in a timely manner any further reasonable
requests by Purchaser relative to additional endorsements, assignments or
similar matters with respect to the Loan Documents; PROVIDED, HOWEVER, with
respect to specific Loan Documents, Seller may require additional time to
effectively transfer title thereto and Purchaser shall not hold Seller liable
for any reasonable delays in the delivery of such Loan Documents; and FURTHER
PROVIDED, HOWEVER, that Seller shall be given immediate access to any Loan
Documents reasonably requested to address a Loan delinquency, payoff, customer
inquiry, or similar contingency. Purchaser further acknowledges and agrees that
Seller may execute or endorse any Loan Document by way of facsimile signature,
other than documents which must be recorded in public registries or other
documents on which Purchaser deems it necessary or advisable to have original
signatures.
14
4.10 COLLATERAL ASSIGNMENTS AND FILING. As reasonably requested by
Purchaser, Seller shall take all such reasonable actions to assist Purchaser in
obtaining the valid perfection of a first priority lien or security interest in
the collateral, if any, securing each Loan sold on the Closing Date in favor of
Purchaser or its designated assignee as secured party. Any such action shall be
at the sole expense of Purchaser, and Purchaser shall reimburse Seller for all
reasonable actual costs of third-party services incurred in connection
therewith, provided any such costs that exceed $1,000 in the aggregate are
approved in advance by Purchaser.
4.11 TRAINING. Seller shall permit Purchaser to train employees of the
Branches before Closing with regard to Purchaser's operations, policies and
procedures at Purchaser's sole cost and expense, and Purchaser shall reimburse
Seller for all employee overtime compensation costs related to periods of time
during which the employees are trained. This training may, as mutually agreed
upon by Seller and Purchaser, take place at the Branches and may take place
during business hours; provided, however, that any training that occurs shall be
conducted in a manner not disruptive to operations of the Branches.
4.12 COLLATERAL FOR PUBLIC FUNDS DEPOSITS. At least thirty (30)
Business Days prior to the Closing, Seller shall provide Purchaser with a
listing of any pledge of collateral by Seller with respect to any deposit
proposed to be an Assumed Deposit that constitutes public funds or otherwise
requires collateral. Purchaser shall use its best efforts to make arrangements
acceptable to such customer prior to the Closing Date to replace Seller's
collateral with collateral belonging to Purchaser. If such deposit cannot be
collateralized in a manner acceptable to the deposit customer, it shall not
become an Assumed Deposit.
4.13 TELEPHONE NUMBERS. Except for toll-free numbers and call center
numbers, Seller shall take all steps reasonably necessary to enable Purchaser,
after the Closing, to continue to use the telephone numbers used at the Branches
on the date of this Agreement.
4.14 CHANGE OF NAME. Seller shall remove from the Branches all items
that are not being transferred to Purchaser under this Agreement, including but
not limited to signage (which, at the election of Purchaser, shall include all
structures supporting such signage) that bears Seller's logos, trade names, or
trademarks, on or prior to the Closing, at Seller's own expense. Seller shall
have the option to remove and retain, or provide to Purchaser, signage apparatus
at the Branches that does not bear Seller's logos, trade names, or trademarks.
Seller shall give notice to Purchaser, at least twenty (20) calendar days before
Closing, of its decision so as to allow Purchaser to make plans for signage.
4.15 CREDIT INSURANCE. Seller will remit all proceeds it receives on
account of credit insurance on the Loans to Purchaser, and Seller will use its
best efforts to assign policies of credit insurance associated with the Loans to
Purchaser. Purchaser will remit any insurance premiums paid to it in connection
with the Loans to appropriate credit insurance company.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants as follows:
5.1 CORPORATE ORGANIZATION AND AUTHORITY. Seller is a bank duly
organized, validly existing and in good standing under the laws of the State of
North Carolina and has the requisite power and authority to conduct the business
now being conducted at the Branches, to accept and maintain the Assumed Deposits
and to own the Assets. Seller is a member of BIF and its Deposits maintained at
15
the Branches are insured by BIF, subject to applicable FDIC coverage
limitations. Seller has the requisite corporate power and authority and has
taken all corporate action necessary in order to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. This Agreement
is a valid and binding agreement of Seller enforceable against 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 creditors' rights and to general equity
principles.
5.2 NO CONFLICT; LICENSES AND PERMITS; COMPLIANCE WITH LAWS AND
REGULATIONS. The execution, delivery and performance of this Agreement by Seller
does not, and will not, (i) violate any provision of its charter or by-laws or
(ii) subject to the receipt of the Regulatory Approvals, violate or constitute a
breach of, or default under, any law, rule, regulation, judgment, decree, ruling
or order of any court, government or governmental agency to which Seller is
subject or under any agreement or instrument of Seller, or to which Seller is
subject or is a party or by which Seller is otherwise bound, or to which any of
the Assets, Assumed Deposits, or Assumed Contracts (except for any required
consents under Assumed Contracts in respect of the transactions herein
contemplated) or the Branches are subject, which violation, breach,
contravention or default referred to in this clause would have a Material
Adverse Effect, individually or in the aggregate. Seller has all material
licenses, franchises, permits, certificates of public convenience, orders and
other authorizations of all foreign, federal, state and local governments and
governmental authorities necessary for the lawful conduct of its business at the
Branches as now conducted and all such licenses, franchises, permits,
certificates of public convenience, orders and other authorizations are valid
and in good standing and are not subject to any suspension, modification or
revocation or proceedings related thereto.
5.3 APPROVALS AND CONSENTS. Except as required to obtain the Regulatory
Approvals, no notices, reports or other filings are required to be made, as of
the date hereof, by Seller with, nor are any consents, registrations, approvals,
permits or authorizations required to be obtained, as of the date hereof, by
Seller from, any governmental or regulatory authorities in connection with the
execution and delivery of this Agreement by Seller and the consummation by
Seller of the transactions contemplated hereby.
5.4 TITLE TO ASSETS. Except as set forth in SCHEDULE 5.4, Seller has
good and marketable fee title to the Assets, free and clear of all Encumbrances;
PROVIDED, HOWEVER, that this representation does not cover the Real Property.
5.5 UTILITIES COMPLETE. To Seller's knowledge, all utility services,
including sewer, water, gas and electric power and telephone service, as
applicable, are available to the Branches.
5.6 CONDEMNATION PROCEEDINGS. Seller has not received any notice of any
condemnation or eminent domain proceedings or negotiations for the purchase of
the Real Property in lieu of condemnation, and to Seller's knowledge, no
condemnation or eminent domain proceedings or negotiations have been commenced
or threatened in connection with the Branches.
5.7 CONTRACTS. Each Assumed Contract constitutes a valid and binding
obligation of the Seller and there does not exist, with respect to Seller's
obligations thereunder, any material default, or event or condition which
constitutes, or after notice or passage of time or both would constitute, a
material default on the part of Seller under any Assumed Contract. Each lease
relating to Furniture, Fixtures and Equipment used in a Branch is current and
all rents, expenses and charges payable by Seller have been paid or accrued in
accordance with the terms thereof.
16
5.8 FIDUCIARY OBLIGATIONS. Other than in respect of IRAs, Seller has no
trust or fiduciary relationship or obligations in respect of any of the Assumed
Deposits or in respect of any other Assets or Liabilities.
5.9 EMPLOYEES. Seller has complied, and is currently in compliance, in
all material respects with applicable law (including, without limitation, the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")), rules
and regulations relating to the employment of labor, including without
limitation those relating to wages, hours, unfair labor practices, employment
discrimination and payment of social security and similar taxes with respect to
Employees.
5.10 LITIGATION AND LIABILITIES. SCHEDULE 5.10 sets forth each action,
suit, proceeding or investigation pending, or to Seller's knowledge, threatened
against Seller at law, in equity or otherwise, in, before or by any court or
governmental agency or authority, related to the Assets, the Assumed Deposits or
the Branches. There is no action, suit, proceeding or investigation pending or,
to Seller's knowledge, threatened against Seller at law, in equity or otherwise,
in, before, or by any court or governmental agency or authority related to the
Assets, the Assumed Deposits or the Branches and which, individually or in the
aggregate, could have a Material Adverse Effect.
5.11 REGULATORY MATTERS. There are no pending, or, to the knowledge of
Seller, threatened, disputes or controversies between Seller and any federal,
state or local governmental authority (i) with respect to the Branches or (ii)
that, individually or in the aggregate, reasonably could be expected to have a
Material Adverse Effect. Except for the possibility that a Branch purchase may
not be approved due to competitive issues relating to deposit concentration in
the relevant market, Seller is unaware of any reason why the Regulatory
Approvals and, to the extent necessary to consummate the transaction described
herein, any other approvals, authorization or filings, registrations and notices
cannot be obtained.
5.12 BROKERS' FEES. Except for Trident Securities, Seller has not
employed any broker or finder or incurred any liability for any brokerage fees,
commissions or finders' fees in connection with the transactions contemplated by
this Agreement.
5.13 COMPLIANCE WITH LAWS. Seller's business at the Branches has been
conducted in material compliance with all federal, state and local laws,
regulations and ordinances applicable thereto, including without limitation,
informational reporting, truth in lending, truth in savings and consumer credit
laws and regulations, currency transaction reporting and Environmental Laws,
except for any failure to comply that would not, individually or in the
aggregate, result in a Material Adverse Effect.
5.14 ABSENCE OF CERTAIN CHANGES, ETC. Except in connection with the
transaction contemplated hereby, since December 31, 2002, Seller's business at
the Branches has been conducted only in, and there has not been any material
transaction other than according to, the ordinary and usual course of such
business and (a) there has not been any material adverse change in the condition
(financial or otherwise), properties, business or results of operations of the
Branches, or any development or combination of developments (other than those
related to general economic conditions or conditions generally affecting the
industry and/or areas in which the Branches operate) which, individually or in
the aggregate, is reasonably likely to result in any such change; PROVIDED THAT,
Seller makes no representation or warranty that there will be no material
adverse change in the level of Deposits prior to the Closing Date or that there
will be any certain level of Deposits on the Closing Date, or (b) except as the
parties may otherwise agree in writing, there has not been any material change
by Seller in accounting principles, practices or methods that would affect the
items reflected in the Closing Statement or the Final Closing Statement, except
as may be required by changes in GAAP.
17
5.15 BOOKS AND RECORDS. Since December 31, 2002, the books, accounts
and records of the Branches have been maintained in accordance with safe and
sound banking practices and in a manner consistent with past practice, which, as
they relate to financial accounting, is in accordance with GAAP.
5.16 LOANS. With respect to each Loan:
(a) Such Loan was solicited and originated in material compliance with
all applicable requirements of federal, state, and local laws and regulations in
effect at the time of such solicitation and origination; and there was no fraud
on the part of the Seller with respect to the origination of any Loan;
(b) To Seller's knowledge, each note evidencing a Loan and any related
security instrument (including, without limitation, any guaranty or similar
instrument) constitutes a valid and legally binding obligation of the obligor
thereunder enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfers, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles;
(c) The collateral for each secured Loan is (i) the collateral
described in the related Loan Documents and (ii) subject to a valid, enforceable
and perfected lien with the priority reflected in the Loan Documents;
(d) Such Loan was made substantially in accordance with Seller's
standard underwriting and documentation guidelines, which are generally
consistent with prudent and customary industry standards, as in effect at the
time of its origination and has been administered substantially in accordance
with the Loan Documents and Seller's standard loan servicing procedures, which
are generally consistent with prudent and customary industry standards, as in
effect from time to time;
(e) Except as set forth in SCHEDULE 5.16(E), immediately prior to the
Closing the Seller will be the sole owner of each Loan, free and clear of any
Encumbrance.
5.17 NO OTHER REPRESENTATIONS OR WARRANTIES. Except for the
representations and warranties expressly contained in this Agreement, none of
the Seller, any Affiliate of Seller or any other person has made or makes any
other express or implied representation or warranty, either written or oral, on
behalf of the Seller.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants as follows:
6.1 CORPORATE ORGANIZATION AND AUTHORITY. Purchaser is a bank duly
organized, validly existing and in good standing under the laws of the State of
North Carolina. Purchaser has the requisite corporate power and authority and
has taken all corporate action necessary in order to execute and deliver this
Agreement, to consummate the transactions contemplated hereby, to accept and
maintain the Assumed Deposits, to own the Assets and to operate the Branches.
18
This Agreement is a valid and binding agreement of Purchaser enforceable against
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 creditors' rights
and to general equity principles. Purchaser is a member of BIF and its deposits
are insured by the FDIC, subject to applicable FDIC coverage limitations.
6.2 NO CONFLICT; LICENSES AND PERMITS; COMPLIANCE WITH LAWS AND
REGULATIONS. The execution, delivery and performance of this Agreement by
Purchaser does not, and will not, violate any provision of its charter or
by-laws or, subject to the receipt of the Regulatory Approvals, violate or
constitute a breach or contravention of or default under any law, rule,
regulation, order, judgment, decree or filing of any government, governmental
authority or court to which Purchaser is subject or under any agreement or
instrument of Purchaser, or by which Purchaser is otherwise bound, which
violation, breach, contravention or default, individually or in the aggregate,
(i) could be expected to result in a Material Adverse Effect or (ii) could
impair the validity or consummation of this Agreement or the transactions
contemplated hereby. On the Closing Date Purchaser shall have all material
licenses, franchises, permits, certificates of public convenience, orders and
other authorizations of all foreign, federal, state and local governments and
governmental authorities necessary for the lawful conduct of its business at the
Branches and all such licenses, franchises, permits, certificates of public
convenience, orders and other authorizations will be valid and in good standing
and not subject to any suspension, modification or revocation or proceedings
related thereto.
6.3 APPROVALS AND CONSENTS. Except as required to obtain the Regulatory
Approvals, no notices, reports or other filing are required to be made by
Purchaser with, nor are any consents, registrations, approvals, permits or
authorizations required to be obtained by Purchaser from, any governmental or
regulatory authorities in connection with the execution and delivery of this
Agreement by Purchaser and the consummation of the transactions contemplated
hereby by Purchaser.
6.4 BROKERS' FEES. Purchaser has not employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated by this Agreement.
6.5 REGULATORY MATTERS.
(a) There are no pending, or, to the knowledge of Purchaser,
threatened, disputes or controversies between Purchaser or any of its Affiliates
and any federal, state or local governmental authority that, individually or in
the aggregate, reasonably could be expected to have a Material Adverse Effect.
Except for the possibility that a Branch purchase may not be approved due to
competitive issues relating to deposit concentration in the relevant market,
Purchaser is unaware of any reason why the Regulatory Approvals and, to the
extent necessary to consummate the transaction described herein, any other
approvals, authorization or filings, registrations and notices cannot be
obtained.
(b) Purchaser has at least a "satisfactory" rating under the Community
Reinvestment Act of 1977, and is (and on a pro forma basis giving effect to the
transaction contemplated by this Agreement will be) at least "adequately
capitalized," as defined for purposes of the Federal Deposit Insurance Act.
(c) Purchaser is not a party to any written order, decree, agreement or
memorandum of understanding with, or commitment letter or similar submission to,
any federal or state governmental agency or authority charged with the
supervision or regulation of depository institutions or engaged in the insurance
of deposits nor has Purchaser been advised by any such regulatory authority that
such authority is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree, agreement,
memorandum of understanding, commitment letter or submission, in each case which
order, decree, agreement, memorandum of understanding, commitment letter or
submission (i) could reasonably be expected to result in a Material Adverse
Effect or (ii) could impair the validity or consummation of this Agreement or
the transactions contemplated hereby.
19
6.6 FINANCING AVAILABLE. Not later than the Closing Date, Purchaser
will have available sufficient cash or other liquid assets or financing pursuant
to binding agreements or commitments which may be used to fund the transactions
contemplated by this Agreement; and Purchaser's ability to consummate the
transactions contemplated by this Agreement is not contingent on raising any
equity capital, obtaining specific financing, consent of any lender or any other
matter.
6.7 LITIGATION AND UNDISCLOSED LIABILITIES. There are no actions, suits
or proceedings pending or, to Purchaser's knowledge, threatened against
Purchaser, or obligations or liabilities (whether or not accrued, contingent or
otherwise) or facts or circumstances that could reasonably be expected to result
in any claims against or obligations or liabilities of Purchaser that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
6.8 NO OTHER REPRESENTATIONS OR WARRANTIES. Except for the
representations and warranties expressly contained in this Agreement, none of
the Purchaser, any Affiliate of Purchaser or any other person has made or makes
any other express or implied representation or warranty, either written or oral,
on behalf of the Purchaser.
ARTICLE 7
COVENANTS OF THE PARTIES
7.1 ACTIVITY IN THE ORDINARY COURSE.
(a) From the date hereof to and including the Closing Date, Seller
shall conduct the business of the Branches in the ordinary and usual course
consistent with past practices and standards, and Seller shall not, without the
prior written consent of Purchaser:
(i) Permit the Branches to engage or participate in any
material transaction or incur or sustain any material obligation except
in the ordinary course of Branch business;
(ii) Offer interest rates or terms on any category of Deposits
or loans at the Branches which are not determined in a manner
consistent with past practice and procedure and which, in any event,
are materially either over or under what would be considered market
rates (i.e., rates generally offered by similarly situated banks in the
municipalities and immediately surrounding areas of the branches) at
the time of the offer;
(iii) Except as expressly contemplated herein, transfer to or
from the Branches to or from any of Seller's other operations or
branches any Assets or Deposits, except upon the unsolicited request of
a depositor or customer in the ordinary course of business or if such
deposit is pledged as security for a loan or similar obligation that is
not an Asset;
(iv) Except in the ordinary course of business, sell,
transfer, assign, encumber or otherwise dispose of or enter into any
contract, agreement or understanding to sell, transfer, assign,
encumber or dispose of any Asset;
20
(v) Make or agree to make any material improvements to the
Branches or the Real Property except with respect to commitments for
such made on or before the date of this Agreement and disclosed on
SCHEDULE 7.1or normal maintenance purchased or made in the ordinary
course of business;
(vi) Terminate the operations of the Branches or file any
application to relocate or close the Branches;
(vii) Enter into any commitment, agreement, understanding or
other arrangements to transfer, assign, encumber or otherwise dispose
of the Branches, except in a manner consistent with Seller's
obligations under this Agreement; or
(viii) except for those employees of the Branches listed on
SCHEDULE 1.2, transfer any employee employed at one of the Branches to
any other branch of Seller, nor will Seller permit any employee of one
of the Branches to post for positions outside such Branch, nor will
Seller grant any increase in the salary or wages of any of the
employees of the Branches other than normal increases at times and
amounts consistent with Seller's past practices.
(b) Between the date of this Agreement and the Closing Date, neither
Seller nor Purchaser shall, and each shall cause its respective officers,
directors, agents and employees not to, take any action that is intended to
induce, or is reasonably likely to induce, the transfer of banking business from
the Branches; PROVIDED, HOWEVER, that nothing in this paragraph shall limit the
right of either party to advertise or market its products in the ordinary course
of business.
(c) From the date hereof until twelve (12) months after (i) the Closing
Date or (ii) the date of termination of this Agreement, whichever is applicable
(the "Non-Solicitation Period"), Seller agrees that it will not solicit any
individual that Seller knows is an employee of Purchaser who is employed in a
Branch or whose place of employment is within the traditional and primary market
area of a Branch. Likewise, except as explicitly contemplated hereby with
respect to the Transferred Employees, Purchaser agrees that during the
Non-Solicitation Period, Purchaser will not solicit for employment any
individual that Purchaser knows is an employee of Seller in a Branch or whose
place of employment is within the traditional and primary market area of a
Branch . The parties agree, however, that general recruiting advertisements not
targeted specifically at the other's employees shall not be considered a
solicitation under this Section 7.1(c). Seller also agrees that for a period of
twenty-four (24) months after the Closing Date (or if more than one, the first)
it will not open or otherwise operate either directly or through a subsidiary a
branch banking facility in the municipal limits of any of the cities or towns in
which any of the Branches are now located, or within a distance of five (5)
miles of each of such municipal limits ("Restricted Area"), PROVIDED, HOWEVER,
if Seller, or any of its subsidiaries or affiliates, merges with or into or
acquires or is acquired by another bank or financial institution that operates
or maintains either directly or indirectly a branch banking facility or
facilities in the Restricted Area, the continued operation or maintaining of
that branch or those branches by Seller or any other person shall not constitute
a breach by Seller or any other person of Seller's agreement as set forth in
this part of Section 7.1(c).
7.2 ACCESS AND CONFIDENTIALITY.
(a) Between the date of this Agreement and the Closing Date, Seller
shall afford to Purchaser and its officers, employees, agents and
representatives full access to the properties, books, records, contracts,
documents, files (including Loan files) and other information of or relating to
21
the Branches, the Assets, the Assumed Contracts and the Assumed Deposits upon
reasonable advance notice during normal business hours; PROVIDED, HOWEVER, that
any inspection shall be conducted in a manner that does not unreasonably
interfere with Seller's normal business operations or its relations with its
customers. Seller shall cause its personnel to be reasonably available during
normal business hours, to an extent not disruptive of ongoing operations, to
provide information and assistance in connection with Purchaser's investigation
of matters relating to the Branches, the Assets, the Assumed Contracts and the
Assumed Deposits and to familiarize Purchaser with basic policies and
operational procedures of Seller relating to the Branches. Seller shall furnish
Purchaser with such additional financial and operating data and other
information about its business operations at the Branches as may be reasonably
necessary for the orderly transfer of the business operations of the Branches.
(b) Subject to Section 12.4 hereof, each party to this Agreement shall
hold, and shall cause its respective directors, officers, employees, agents,
consultants and advisors to hold, in strict confidence (unless disclosure to a
bank regulatory authority is necessary in connection with any Regulatory
Approval or unless compelled to disclose by judicial or administrative process
or, in the written opinion of its counsel, by other requirements of law or the
applicable requirements of any regulatory agency or relevant stock exchange) all
discussions and information related to the Branches (or, if required under a
contract with a third party, concerning such third party) and, with respect to
Purchaser, all non-public records, books, contracts, instruments, computer data,
system requirements and other data and information (collectively, "INFORMATION")
furnished to it by Seller or Seller's representatives pursuant to this Agreement
(except to the extent that such Information can be shown to have been (i)
previously known by such party on a non-confidential basis, (ii) in the public
domain through no fault of such party or (iii) later lawfully acquired from
other sources by the party to which it was furnished and such other source is
not subject to a confidentiality restriction with regard to such Information),
and neither party shall release or disclose such Information to any other
person, except, upon the same conditions of confidentiality, its auditors,
attorneys, financial advisors, bankers, other consultants and advisors and, to
the extent permitted above, bank regulatory authorities.
(c) This Section shall not prohibit disclosure of Information required
by applicable law to be disclosed, but such additional disclosure shall be
limited to that actually required by law, and the party making disclosure shall
give the other party as much notice as is practicable of such obligation (except
where prohibited by applicable law) so that the other party may seek a
protective order or other similar or appropriate relief, and also shall
undertake in good faith to have the Information disclosed treated confidentially
by the party to whom the disclosure is made.
(d) Notwithstanding any other express or implied agreement, arrangement
or understanding to the contrary, Purchaser and Seller may disclose to any third
party (i) the tax treatment and tax structure of this Agreement; (ii) any fact
that may be relevant to understanding the tax treatment and the tax structure of
this Agreement; and (iii) any materials that are provided to Purchaser and/or
Seller relating to the tax treatment and tax structure of this Agreement.
Purchaser and Seller may, however, keep confidential any information relating to
the tax treatment and tax structure of this Agreement to the extent required to
be kept confidential to comply with applicable federal and state securities
laws.
7.3 REGULATORY APPROVALS. As soon as practicable after the date of this
Agreement and no later than five (5) Business Days after the date of this
Agreement, Purchaser shall prepare and file any applications to federal or state
regulatory authorities for approvals necessary, including all Regulatory
Approvals, to consummate the transactions contemplated by this Agreement. Seller
shall cooperate fully and promptly with Purchaser in connection with Purchaser's
applications, and will prepare and file any such applications required by
regulatory authorities to be filed by Seller. Purchaser shall use its reasonable
22
best efforts to obtain each such approval as promptly as practicable, and
Purchaser and Seller will cooperate in connection therewith and provide the
other with copies of any applications relating thereto prior to filing, other
than material filed in connection therewith under a claim of confidentiality.
7.4 ASSUMED CONTRACTS.
(a) Seller agrees to provide to Purchaser as soon as reasonably
possible, but no later than thirty (30) calendar days after the date hereof, a
conformed copy of all potential Assumed Contracts, to be in effect as of the
Closing Date. Within ten (10) calendar days thereafter, Purchaser shall notify
Seller of all such contracts that are to be Assumed Contracts. Purchaser shall
have no obligation or liability to any person under any contract that is not an
Assumed Contract.
(b) Seller shall use reasonable efforts (such efforts not to include
making payments to third parties), and Purchaser shall cooperate to, obtain from
any parties to any Assumed Contracts any required consents to the assignment of
the Assumed Contracts to Purchaser, under the existing terms and conditions
contained in the Assumed Contracts on the Closing Date; PROVIDED, HOWEVER, that
Seller shall not obtain any consent that imposes a condition, commitment or
requirement that would, after consultation with Purchaser and in Purchaser's
reasonable judgment, adversely affect the operations of the Branches. Any such
Assumed Contract for which consent has not been obtained as of the Closing Date
shall not be an Assumed Contract and the Seller shall have no obligation to
continue attempting to obtain such consent. For any contract for which a
required consent is not obtained and satisfactory alternatives are not
available, Purchaser shall have the right to terminate this Agreement if the
Purchaser reasonably believes such contract is material to the operations of the
Branches.
7.5 DELIVERY OF RECORDS AT CLOSING. At or prior to the Closing,
Purchaser shall pick up from Seller at Seller's Operations Center in Rocky
Mount, North Carolina all Delivery Records as well as all the data which is
reasonably necessary for the conversion of the Assumed Deposits to Purchaser's
data processing system; provided, however, that Seller and Purchaser each shall
pay for their own expenses incurred in the conversion.
7.6 FURTHER ASSURANCES. Purchaser and Seller agree to use all
reasonable efforts to satisfy or cause to be satisfied as soon as practicable
their respective obligations hereunder and the conditions precedent to the
Closing. Each of Seller and Purchaser will execute, acknowledge and deliver such
instruments and take such other actions as the other party may reasonably
require in order to carry out the intent of this Agreement. Seller will duly
execute and deliver such assignments, bills of sale, deeds, acknowledgment and
other instruments of conveyance and transfer as shall at any time be necessary
or appropriate to vest in Purchaser the full legal and equitable title to the
Assets being sold hereunder, free and clear of all Encumbrances, except as set
forth on SCHEDULE 5.4. For a reasonable period of time after the Closing Date,
each party will promptly deliver to the other all mail and other communications
which are properly addressable or deliverable to the other as a consequence of
the transactions pursuant to this Agreement; and without limitation of the
foregoing, on and after the Closing Date, Seller shall promptly forward any
mail, communications or other material relating to the Assumed Deposits or the
Assets, to such employees of Purchaser at such addresses as may from time to
time be specified by Purchaser in writing.
7.7 INSURANCE; RISK OF LOSS. Seller shall maintain the Assets in
customary repair, order, and condition, reasonable wear and tear and damage by
fire or other unavoidable casualty excepted. Until the effectiveness of the
Closing, Seller shall maintain insurance on the Assets consistent with its
historical practices and all risk of loss shall be on the Seller. Seller shall
remain in substantial compliance with any obligations it has under the Assumed
Contracts or otherwise relating to maintenance of and insurance upon the Assets.
As of the Closing, Seller shall discontinue its insurance coverage maintained in
connection with the Assets and risk of loss thereafter shall be on the
Purchaser.
23
7.8 NOTICES OF DEFAULT. Seller and Purchaser shall each 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.
7.9 NEW ACCOUNT NUMBERS AND CHECKS. Purchaser agrees, at its cost and
expense, (1) to assign new account numbers to depositors of Assumed Deposits,
(2) to notify such depositors, on or before the Closing Date, in a form and on a
date reasonably and mutually acceptable to Seller and Purchaser, of Purchaser's
assumption of the Deposit, and (3) to furnish such depositors with checks on the
forms of Purchaser and with instructions to utilize Purchaser's checks and to
destroy unused check, draft and withdrawal order forms of Seller. Purchaser
shall not provide checks to depositors more than ten (10) calendar days prior to
the Closing Date. If Purchaser so elects, Purchaser may offer to buy from such
depositors their unused Seller check, draft and withdrawal order forms. In
addition, Seller will notify its affected customers by letter of the pending
assignment of Assumed Deposits to Purchaser, which notice shall be at Seller's
cost and expense and shall be in a form and mailed at a time reasonably and
mutually agreeable to Seller and Purchaser.
7.10 SETTLEMENT OPERATIONS AFTER CLOSING. Seller and Purchaser hereby
agree that, except as provided below, for a period of ninety (90) calendar days
after the Closing Date, or such shorter period as agreed to in writing by the
parties, or, only with the prior written consent of Seller, for such longer
period as Purchaser may reasonably determine to be necessary:
(a) Seller agrees that it will transfer, convey, and assign to
Purchaser all deposits received by Seller after the Closing for credit to any of
the Assumed Deposit accounts, and all payments received by Seller after the
Closing for application to or on account of any of the Assets.
(b) Seller agrees to notify Purchaser of the return to it of any items
deposited in, or cashed at, the Branches prior to the Closing Date and shall
expeditiously forward any such items to Purchaser. If Purchaser cannot recover
on such returned items after making a good faith effort to do so, Seller shall
reimburse Purchaser for such return items upon assignment of such items by
Purchaser to Seller. Purchaser's good faith effort shall include collection
efforts consistent with Purchaser's existing collection policies in effect from
time to time but shall not include institution of any legal action with respect
to such recovery.
(c) To the extent permitted by law and the applicable Deposit
contracts, Purchaser agrees that it will honor all properly payable checks,
drafts, withdrawal orders and similar items drawn on Seller's forms against
Assumed Deposits which are presented to Purchaser by mail, over its counters, or
through clearing houses.
(d) Provided that such items have been timely delivered to Purchaser by
Seller, Purchaser shall pay the items referred to in Section 7.10(c). Seller
shall make such checks and drafts available for pickup by Purchaser at EDS's
Charlotte Item Processing Center no later than 10:00 a.m. on the Business Day
following the day they were processed by Seller. Purchaser shall promptly
reimburse Seller on a daily basis for the amount of all such checks and drafts
paid by Seller. Seller shall be under no obligation with respect to any such
checks or drafts after their delivery, including late returns, if the items are
made available to Purchaser in the agreed upon manner. Purchaser shall not
return any such checks or drafts to Seller, but shall handle any returns
directly with the depositary bank or other parties in the clearing process.
(e) As of the Closing Date, Purchaser, at its expense, will notify all
Automated Clearing House ("ACH") originators of the transfers and assumptions
24
made pursuant to the Agreement; provided, however, that Seller may, at its
option, notify all such originators itself (on behalf of Purchaser). For a
period of one hundred twenty (120) calendar days beginning on the Closing Date,
Seller will honor all ACH items related to accounts assumed under this Agreement
which are mistakenly routed or presented to Seller. Seller will make no charge
to Purchaser for honoring such items, and will electronically transmit such ACH
data to Purchaser on a daily basis. If Purchaser cannot receive an electronic
transmission, Seller will make available daily to Purchaser at Seller's
operations Center receiving items from the Automated Clearing House tapes
containing such ACH data. Any ACH items presented to Purchaser by Seller which
are not posted by the Purchaser shall be the responsibility of the Purchaser to
return through its normal ACH return process. Items mistakenly routed or
presented after the one hundred twenty (120) calendar day period should be
returned to the presenting party. Seller and Purchaser shall make arrangements
to provide for the daily settlement with immediately available funds by
Purchaser of any ACH items honored by Seller, and Seller shall be held harmless
and indemnified by Purchaser for acting in accordance with this arrangement to
accept ACH items. Seller agrees to settle any and all ATM transactions effected
on or before the Closing Date, but processed after the Closing Date, as soon as
practicable. Purchaser and Seller agree to remit the total net balance of such
transactions to Seller or Purchaser, as the case may be, on the same date the
transactions are settled. In instances where a depositor of a Deposit made an
assertion of error regarding an account constituting an Assumed Deposit pursuant
to the Electronic Funds Transfer Act and Federal Reserve Board Regulation E, and
Seller, prior to the Closing, recredited the disputed amount to the relevant
account during the conduct of the error investigation, Purchaser agrees to
comply with a written request from Seller to debit such account in a stated
amount and remit such amount to Seller, to the extent of the balance of funds
available in the accounts.
(f) Seller shall provide Purchaser with a listing of each stop payment
order (but not the orders themselves) in effect as to a Deposit or Loan on the
Closing Date. Purchaser shall honor all stop payment orders relating to the
Deposits or the Loans initiated prior to the Closing and reflected in the
magnetic tape made available by Seller to Purchaser on the Closing Date. In the
event that Purchaser shall make any payment in violation of a stop payment order
initiated prior to the Closing but not reflected in stop payment documents and
the magnetic tape made available by Seller to Purchaser prior to such payment,
then Seller shall indemnify, hold harmless and defend Purchaser from and against
all claims, losses and liabilities, including reasonable attorneys' fees and
expenses, arising out of any such payment. In the event that Purchaser shall
make any payment in violation of a stop payment order initiated prior to the
Closing that is reflected in stop payment documents and the magnetic tape made
available by Seller to Purchaser prior to such payment, then Purchaser shall
indemnify, hold harmless and defend Seller from and against all claims, losses
and liabilities, including reasonable attorneys' fees and expenses, arising out
of any such payment.
(g) After the Closing Date, Purchaser hereby agrees to accept, assume
and process any and all "charge-back items" received subsequent to the Closing
Date but arising prior thereto against MasterCard and/or Visa debit card Assumed
Deposit accounts, as covered under Visa charge-back regulations. "Charge-back
items" shall include, but not be limited to, disputed items, purchases over
limit, fraudulent use of card, late presentations of sales slips, unpresented
credit on sales returns and other adjustments as specified under the rules and
regulations of MasterCard and/or Visa. If Purchaser cannot recover on any such
charge-back items after making a good faith effort to do so, Seller shall
reimburse Purchaser for such items upon assignment of such items by Purchaser to
Seller. Purchaser's good faith effort to recover on any such items shall not
require that Purchaser take any legal action against any person.
(h) All overdrawn Deposit accounts will be assigned to Purchaser at
Closing and the Overdrafts represented thereby will be included in the Assets
purchased by the Purchaser at Closing. Purchaser will use good faith efforts
25
consistent with its normal collection practices to collect the Overdrafts;
Purchaser's good faith efforts to collect Overdrafts shall not require, however,
that it institute any legal action against any person. Seller will reimburse
Purchaser for any Overdrafts deemed uncollectable by Purchaser following such
good faith collection efforts and an assignment of the rights to pursue such
Overdrafts to Seller. Seller agrees that, following the date of this Agreement,
Seller will not alter or change any business practice at the Branches related to
overdrawn Deposit accounts.
(i) Purchaser and Seller agree that all amounts required to be remitted
by either such party to the other party hereto pursuant to this Section shall be
settled on a daily basis. Any amounts to be paid by Seller to Purchaser shall be
netted daily against any amounts to be paid by Purchaser to Seller, such that
only one amount, representing the net amount due, shall be transferred on a
daily basis by the party with the higher amount of remittances for such day in
immediately available funds. Seller shall provide Purchaser with a daily net
settlement figure for all such transactions from the immediately preceding
Business Day by 12:00 noon Eastern Time on each Business Day and the party
obligated to remit any funds thereunder shall do so in immediately available
funds by wire transfer by 2:00 p.m. Eastern Time on such day or by any other
method of payment agreed upon by the parties; any such settlement shall be
provisional pending receipt or review by the parties of the physical items
relating to such settlement; the next daily settlement to reflect any
adjustments resulting from a parties receipt and examination of the physical
items.
7.11 COVENANT OF SELLER NOT TO SOLICIT. Seller hereby agrees that for a
period of one year from the Closing Date, Seller shall not specifically target
and solicit customers of the Branches whose Deposits or Loans are being assumed
or purchased by Purchaser; provided, however, that nothing in this Section 7.11
shall (i) restrict general mass mailings, telemarketing calls, statement
stuffers, advertisements or other similar communications whether in print, on
radio, television, the Internet, or by other means that are directed to the
general public or to a group of customers who may include customers of the
Branches, provided that such group is defined by criteria other than primarily
as customers of the Branches or customers who reside in the traditional and
primary market area of the Branches, (ii) otherwise prevent Seller from taking
such actions as may be required to comply with applicable federal or state laws,
rules or regulations or from servicing or communicating with the then-current
customers of Seller, including customers of Seller with whom Seller maintains
account relationships either centrally or at other branches.
7.12 REAL PROPERTY MATTERS.
(a) Seller agrees to deliver to Purchaser, as soon as reasonably
possible after the execution of this Agreement, not to exceed ten (10) Business
Days from the date of this Agreement, copies of all (i) title information in
possession of Seller, including, but not limited to, title insurance policies,
attorneys' opinions on title, surveys, covenants, deeds, notes and mortgages and
easements relating to the Real Property, and (ii) reports, surveys, notices,
correspondence or other information known to Seller and reasonably retrievable
by Seller, or in Seller's possession, which relate to the environmental
condition of the Real Property or existing or potential violations of laws or
regulations relating to the environment. Such delivery shall constitute no
warranty by Seller as to the accuracy or completeness thereof or that Purchaser
is entitled to rely thereon.
(b) At its option and expense, Purchaser may cause to be conducted
within forty-five (45) calendar days after the date of this Agreement (the
"Study Period") (i) a title examination, physical survey, zoning compliance
review, and structural inspection of the Real Property and Improvements thereon
(the "Property Examination") and (ii) site inspections, regulatory analyses, and
Phase 1 environmental assessments of the Real Property, together with such other
studies and analyses as Purchaser shall deem necessary or desirable
(collectively, the "Environmental Survey"); provided, however, that, without the
26
prior written consent of Seller, Purchaser shall not conduct any soil, surface
water or ground water sampling ("Intrusive Testing").
(c) If in the course of the Property Examination or Environmental
Survey Purchaser discovers a "Material Defect" (as defined in Subsection (d)
below) with respect to the Real Property, Purchaser will give prompt written
notice thereof to Seller (but in any event prior to 5:00 p.m. on the last day of
the Study Period) describing the facts or conditions constituting the Material
Defect and the measures which Purchaser reasonably believes are necessary to
correct such Material Defect. If Purchaser fails to give such written notice of
a Material Defect to Seller within the Study Period, Purchaser shall be deemed
to have waived the right to assert the existence of any Material Defect for
which notice was not so provided. If Purchaser provides Seller with written
notice of a Material Defect within the Study Period, Seller and Purchaser shall
promptly discuss and seek to reach agreement as to an acceptable cure or other
resolution of the asserted Material Defect. Seller shall respond to Purchaser's
notice before 5:00 p.m. on the twentieth (20th) Business Day after its receipt
advising Purchaser whether Seller elects to cure the Material Defect. Absent
such a response, Seller shall be deemed to have declined to cure such Material
Defect. If Seller elects to cure, then Seller shall proceed with such cure and
shall complete such cure within forty-five (45) calendar days thereafter or such
additional period as shall be agreed upon by Seller and Purchaser, provided that
completion of the cure shall be a condition to Purchaser's obligation to close.
If Seller elects not to cure or is not able to cure any Material Defect
with respect to the Real Property and Purchaser and Seller are otherwise unable
to agree on how the Material Defect will be addressed in order to effect Closing
on the Real Property, or if Seller does not consent to any Intrusive Testing
reasonably proposed by Purchaser, then Purchaser shall have the option
exercisable upon written notice to Seller delivered at least ten (10) Business
Days prior to the Closing to (i) waive the Material Defect; or (ii) purchase the
Assets (other than the Real Property) and assume the Deposits associated with
the affected Branch, but lease such Real Property "as is" without any
representation or warranty or any liability for existing environmental damage,
maintenance, taxes or insurance for a period of up to twelve (12) months, on a
month-by-month basis, at a reasonable cost and with reasonable terms to be
agreed upon by Seller and Purchaser, in order to allow for relocation of the
business of such Branch to another facility.
(d) For purposes of this Agreement, a "Material Defect" with regard to
the Property Examination shall include:
(i) the existence of any lien (other than the lien of real
property taxes not yet due and payable), encumbrance, easement,
covenant, or other restriction, title imperfection or title
irregularity, or the existence of any facts or condition that
constitutes a breach of Seller's representations and warranties
contained in Section 5.4 and 5.6 above, in any such case that Purchaser
reasonably believes will materially affect its use of the Real Property
for the purpose of the operation of a branch bank or materially affects
the value or marketability of the Real Property;
(ii) the encroachment by an improvement on the Real Property
onto other property or onto any easement, a violation of any setback
requirement, the encroachment of an improvement on any other property
onto the Real Property, or the existence of a zoning restriction that
does not permit use of the Real Property as a branch banking facility
without grandfathering or variance and without site plan review or the
construction of any additional improvements; or
27
(iii) the existence of any structural defect or state of
disrepair in the improvements on the Real Property (including any
equipment, fixtures or other components related thereto) that Purchaser
reasonably believes would cost at least $20,000.00 with respect to any
one Branch.
For purposes of this Section 7.12, a "Material Defect" with
regard to the Environmental Survey shall include the existence of facts
or circumstances relating to the Branch demonstrating that any action,
including the discharge, disposal, release, or emission by any person
of any "Hazardous Material" (as defined below) detected in, on or under
the Real Property in a concentration that violates any applicable
Environmental Law (as defined below), has been taken or not taken or a
condition or event likely has occurred or exists, with respect to the
Real Property, which constitutes or would constitute a material
violation of any Environmental Law as to which Purchaser reasonably
believes, based on the advice of legal counsel or other consultants,
that Purchaser could become responsible or liable for assessment,
removal, remediation, monetary damages, or civil, criminal or
administrative penalties or other corrective action and in connection
with which the amount of expense or liability which it could incur or
for which it could become responsible or liable following consummation
of the transactions contemplated by this Agreement at any time or over
any period of time could equal or exceed $20,000 with respect to any
one Branch.
(e) For purposes of this Agreement, "Environmental Laws" shall include
all federal, state, and local statutes, regulations, ordinances, orders,
decrees, and similar provisions having the force or effect of law relating to or
imposing liability, responsibility, or standards of conduct applicable to
environmental, health, or safety conditions and/or releases of Hazardous
Materials affecting the Real Property, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act; the
Superfund Amendment and Reauthorization Act; the federal Insecticide, Fungicide
and Rodenticide Act; the Hazardous Materials Transportation Act; the Resource
Conservation and Recovery Act; the Clean Water Act; the Clean Air Act; the Toxic
Substances Control Act; the Oil Pollution Act; the Coastal Zone Management Act;
the North Carolina Oil Pollution and Hazardous Substances Control Act; the North
Carolina Solid Waste Management Act; and the North Carolina Water and Air
Resources Act; including any amendments thereto from time to time.
(f) For purposes of this Agreement, "Hazardous Material" means any
materials, substances, wastes, chemical substances, or mixtures presently
listed, defined, designated, or classified as hazardous, toxic, or dangerous, or
otherwise regulated, under any Environmental Law, whether by type or quantity,
including, but not limited to, any pesticides, pollutants, contaminants, toxic
chemicals, oil or other petroleum products or byproducts, asbestos or materials
containing asbestos, polychlorinated biphenyls, urea formaldehyde foam
insulation, lead or lead-containing paint, radon, or radioactive material.
7.13 DEFECTS IN ASSETS. Purchaser will be given the opportunity to
conduct such other investigations and inspections of the other Assets to be
transferred, including but not limited to the Furniture, Fixtures and Equipment,
Prepaid Expenses, Assumed Contracts, and Records, as Purchaser may reasonably
deem appropriate; provided, however, that Purchaser must conduct any such review
within forty-five (45) calendar days from the date of this Agreement or, in the
case of items that become Assets after such review, within a reasonable time
following identification of such Assets and before the Closing. If Purchaser
reasonably determines in good faith that any such Asset is unsuitable for
Purchaser's use or of materially less value than its net book value, Purchaser
shall have no obligation to accept, assume, or pay for such Assets and such
Assets shall be excluded from the Assets and the Closing Statement or the Final
Closing Statement shall be adjusted accordingly.
28
ARTICLE 8
TAX AND EMPLOYEE MATTERS
8.1 TAX REPRESENTATIONS. Seller represents and warrants to Purchaser as
follows:
(a) With respect to the Assumed Deposits, Seller is in material
compliance with the law and IRS regulations relative to (i) obtaining from
depositors of the Assumed Deposits executed IRS Forms W-8 and W-9 and (ii)
reporting of interest.
(b) There are no liens for Taxes allocated to or imposed on Seller on
any of the Assets and to the knowledge of Sellers there is no basis for the
assertion of any such liens, other than normal and recurring ad valorem tax
liens and sales and use taxes on assets being sold.
(c) Seller has paid when due Taxes in respect of the Assets.
(d) No tax is required to be withheld by Purchaser from the Purchase
Price or Settlement Payment as a result of the transfers contemplated by this
Agreement pursuant to the Code or any other provision of federal, state or local
Tax law.
8.2 ALLOCATION BETWEEN PRE AND POST CLOSING PERIODS. Whenever it is
necessary under this Agreement to allocate Taxes (including a liability for
Taxes or prepaid Tax) between periods prior to and after the Closing Date (or
determine the amount of prepaid Taxes) such Taxes shall be apportioned by
assuming that the Branches had a taxable year or period which ended at the close
of the Closing Date, except that any property Taxes or exemptions, allowances or
deductions that are calculated on an annual basis shall be apportioned based on
time. Appropriate payments shall be made between the Purchaser and the Seller
whenever necessary to effectuate the proper allocation of any Tax liability or
prepaid Tax under this Agreement.
8.3 TRANSFER TAXES. Notwithstanding anything herein to the contrary,
all excise, sales, use, transfer, documentary, stamp or similar Taxes that are
payable or that arise as a result of the consummation of the transactions
contemplated by this Agreement will be borne by Seller and any recording or
filing fees with respect thereto will be borne by the Purchaser.
8.4 ASSISTANCE AND COOPERATION. After the Closing Date, each of Seller
and Purchaser shall:
(a) Assist the other party in preparing any Tax Returns which such
other party is responsible for preparing and filing in accordance with this
Article 8;
(b) Cooperate fully in preparing for any audits of, or disputes with
taxing authorities regarding, any Tax Returns with respect to the Assets or
income therefrom, the Liabilities or payments in respect thereof, or the
operation of the Branches;
(c) Make available to the other and to any taxing authority as
reasonably requested all relevant information, records, and documents relating
to Taxes with respect to the Assets or income therefrom, the Liabilities or
payments in respect thereof, or the operation of the Branches;
(d) Provide timely notice to the other 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
29
assessments with respect to the Assets or the income therefrom, the Liabilities
or payments in respect thereof, or the operation of the Branches for taxable
periods for which the other may have a liability under this Article 8;
(e) Furnish the other with copies of all relevant correspondence
received from any taxing authority in connection with any tax audit or
information request with respect to any taxable period referred to in subsection
(d) above; and
(f) The party requesting assistance or cooperation shall bear the other
party's 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; provided, that such other party shall obtain a
quotation from any such third-party service providers prior to engagement and
obtain approval thereof from the party requesting assistance.
8.5 NOTICES, ETC. Without limiting the provisions of Section 8.4, the
notification and contest provisions of Section 11.1 shall apply to claims for
indemnification under Sections 8.1 through 8.3; PROVIDED, HOWEVER, that notice
of claim for indemnification pursuant to Sections 8.1 through 8.3 shall be given
prior to the expiration of the applicable statute of limitations (as extended)
for the assertion of the claims for taxes by the relevant tax authority. The
representations of Section 8.1 shall similarly survive until the expiration of
the relevant limitations period for the assertion of claims by the relevant tax
authority.
8.6 EMPLOYEES AND EMPLOYEE BENEFITS.
(a) Purchaser shall offer employment, within a reasonable commuting
distance from the Branch to which each Applicable Employee is assigned, in
positions requiring comparable skills and abilities (with no reduction in base
salary or weekly or hourly rate of pay) to all Applicable Employees (as defined
below). Such offer shall be effective on the Closing Date in the case of an
Applicable Employee actively employed at the Closing, or upon the return of any
such Applicable Employee to active employment in the case of any other
Applicable Employee. For purposes of this Agreement, "APPLICABLE EMPLOYEES"
means (i) all active Employees on the Closing Date, including Employees on
temporary leave for purposes of jury or annual two-week national
service/military duty, Employees on vacation and Employees on a regularly
scheduled day off from work, and (ii) Employees who on the Closing Date are on
maternity or paternity leave, educational leave, military leave with veteran's
reemployment rights under federal law, leave under the Family Medical Leave Act
of 1993, approved personal leave, short-term disability leave or medical leave,
PROVIDED, HOWEVER, that no such Employee shall be guaranteed reinstatement to
active employment if he is incapable of working in accordance with the policies,
practices and procedures of the Purchaser or if his return to employment is
contrary to the terms of his leave; and FURTHER PROVIDED, HOWEVER that Purchaser
shall not be required to offer employment to any Applicable Employee whose
employment would not be permitted under applicable law and regulation. Each
Applicable Employee who accepts Purchaser's offer of employment shall be a
"TRANSFERRED EMPLOYEE" for purposes of this Agreement effective upon the later
of the Closing Date or the return of such Applicable Employee to active
employment. A Transferred Employee's employment with Purchaser shall be on an
"at-will" basis, and nothing in this Agreement shall be deemed to constitute an
employment agreement with any such person or to obligate Purchaser to employ any
such person for any specific period of time or in any specific position or to
restrict Purchaser's right to terminate the employment of any such person at any
time and for any reason satisfactory to it.
(b) With respect to each Applicable Employee who declines Purchaser's
offer of employment, Seller shall be responsible for all severance costs
associated with terminating the employment of such employee in accordance with
the Seller's severance policies and practices. Purchaser will provide to any
30
Transferred Employee who it terminates without cause at any time within one year
following the Closing Date, severance pay in an amount equal to the product of
(i) an amount equal to the salary at termination of such Terminated Employee for
ten (10) working days and (ii) the Terminated Employee's cumulative years of
service with Seller and Purchaser. Purchaser's determination of the presence or
absence of cause under this Section 8.6(b) shall be conclusive absent bad faith,
and its calculations of severance pay shall be conclusive absent manifest error.
(c) Subject to Section 8.6(f), on and after the Closing Date and for
purposes of eligibility, vesting, vacation entitlement and severance benefits
under any "employee benefit plan," as defined in Section 3(3) of ERISA, and any
other employee benefit arrangement or payroll practice, including, without
limitation, any bonus plan, equity or equity-based compensation, or deferred
compensation arrangement, stock purchase, severance pay, sick leave, vacation
pay, paid time off, salary continuation for disability, hospitalization, medical
insurance, life insurance, scholarship program, any "employee pension plan", as
defined in Section 3(2) of ERISA, each Transferred Employee shall receive full
credit from Purchaser for all prior service properly credited under a comparable
plan or arrangement of Seller. Purchaser shall not be required to credit any
Transferred Employee with prior service for purposes of benefit accrual under
any pension plan, profit sharing plan, savings plan, or other deferred
compensation plan. The schedule referred to in Section 8.6(g) below shall list
such service of each Transferred Employee and may be conclusively relied upon by
Purchaser in crediting service in accordance with this Section.
(d) Each Transferred Employee shall cease to be covered by the employee
welfare benefit plans, including plans, programs, policies and arrangements
which provide medical and dental coverage, life and accident insurance,
disability coverage, and vacation and severance pay (collectively, "WELFARE
PLANS") of Seller and all other benefit and compensation plans of Seller on the
date the Transferred Employee becomes a Transferred Employee or on such later
date specified under the terms of an applicable Welfare Plan or other plan of
Seller.
(e) Purchaser agrees to (i) provide coverage for Transferred Employees
and their beneficiaries under its medical, dental and health plans as of the
later of the Closing Date or the date an Applicable Employee becomes a
Transferred Employee, (ii) subject to the approval of Purchaser's third party
insurance carrier, waive any waiting periods and preexisting condition
limitations or exclusions (except to the extent the waiting period or exclusion
would have been applicable under Seller's health insurance plan) under such
plans, (iii) cause such plans to honor any expenses incurred by the Transferred
Employees and their beneficiaries under similar plans of the Seller during the
portion of the calendar year in which the Closing Date occurs for purposes of
satisfying applicable deductible, co-insurance and maximum out-of-pocket
expenses, and (iv) permit Transferred Employees to participate in Purchaser's
retirement or 401(k) plans immediately following the Closing Date.
(f) Seller shall not pay out to Transferred Employees vacation pay
benefits earned but not yet used as of the Closing Date. Purchaser shall provide
Transferred Employees with credit under Purchaser's vacation pay plan for the
earned but not yet used vacation pay benefits accrued since January 1, 2003 and
attributable to each Transferred Employee as set forth on the written schedule
referred to in Section 8.6(g) provided prior to the Closing by Seller to
Purchaser. Liability for such amounts shall be borne by Purchaser; Seller shall
have no liability for such vacation pay benefits. Notwithstanding the foregoing
provisions of this Section, Seller shall pay out to the Transferred Employees,
and Purchaser shall not have liability for, any vacation pay benefits earned
prior to January 1, 2003.
(g) Attached as Schedule 8.6(g) is a report listing each employee
employed at the Branches as of the date the report is prepared to include name,
31
position, exempt or nonexempt status, date of hire and total years of service,
present salary, date of last salary increase, employment status (permanent or
temporary, full-time or part-time, active or leave recipient and type of leave)
and other information required by Sections 8.6(c) and 8.6(f) above. Seller
represents and warrants to Purchaser that the report and all information
delivered in connection with this Section 8.6(g) will be complete and accurate
in all material respects. The report will be updated within twenty (20) calendar
days of Closing. Purchaser shall maintain in confidence the information on the
employees and shall use it only for legitimate business purposes in connection
with its purchase of the Branches under this Agreement.
ARTICLE 9
CONDITIONS TO CLOSING
9.1 CONDITIONS TO OBLIGATIONS OF PURCHASER. Unless waived in writing by
Purchaser, the obligation of Purchaser to consummate the transactions
contemplated by this Agreement to be consummated at the Closing is conditioned
upon fulfillment, at or before the Closing, of each of the following conditions:
(a) All consents, approvals and authorizations required to be obtained
prior to the Closing from governmental and regulatory authorities in connection
with the performance and consummation of the transactions contemplated hereby,
including the Regulatory Approvals, shall have been made or obtained, and shall
remain in full force and effect, all waiting periods applicable to the
consummation of the transactions contemplated hereby shall have expired or been
terminated and all required regulatory filings shall have been made.
(b) 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 and which would result
in a Material Adverse Effect, and no proceeding seeking the enactment of such a
judgment, decree, injunction or other order shall have been announced or
commenced.
(c) Each of the representations and warranties of Seller contained in
this Agreement shall be true in all material respects when made and as of the
Closing Date, with the same effect as though such representations and warranties
had been made on and as of the Closing Date (except that representations and
warranties that are made as of a specific date need be true in all material
respects only on and as of such date); each of the covenants and agreements of
Seller to be performed on or prior to the Closing Date shall have been duly
performed in all material respects.
(d) Purchaser shall have received each of the following documents:
(i) Resolutions of Seller's Board of Directors, certified by
its Secretary or Assistant Secretary, authorizing the signing and
delivery of this Agreement and all related documents and the
consummation of the transactions contemplated hereby and thereby;
(ii) A certificate from the Secretary or Assistant Secretary
of Seller as to the incumbency and signatures of officers;
(iii) A certificate signed by a duly authorized officer of
Seller stating that the conditions set forth in Sections 9.1(a), (b)
and (c) have been satisfied;
(iv) A Xxxx of Sale and Instrument of Assignment and
Assumption, signed by the Seller, substantially in the form of EXHIBIT
A hereto, pursuant to which the Assets other than the Real Property
shall be transferred to Purchaser "AS IS", "WHERE IS" and with all
faults, except as provided in this Agreement;
32
(v) A special warranty deed with appropriate documentary
stamps affixed conveying the Real Property to the Purchaser subject to
all Material Defects and other matters of record in the public
registries of the counties in which each parcel of Real Property is
located, other than those Material Defects which Seller cures or agrees
to cure as provided in Section 7.12(c), together with such other
instruments and documents as may be reasonably required by Purchaser's
title insurance company in order to meet its requirements to issue a
commercial title insurance policy with respect to the Real Property
PROVIDED, HOWEVER, Seller shall not be required to make any
representations or warranties in connection therewith beyond those
representations and warranties made by Seller in this Agreement; and
Seller shall have filed or recorded (or provided to Purchaser for
filing and recording) any and all documents necessary to duly vest an
equitable title in the Real Property in Purchaser;
(vi) Such other bills of sale, assignments of management,
maintenance, service or servicing contracts, security deposits under
leases, guaranties, warranties, utilities security deposits, and such
other instruments and documents as Purchaser may reasonably require as
necessary for transferring, assigning and conveying to Purchaser good,
marketable and insurable title to the Assets free and clear of any
Encumbrances, and permitting assumption of Liabilities by Purchaser;
(vii) The Delivery Records;
(viii) An original, fully executed counterpart of each written
Assumed Contract in effect on the Closing Date and, subject to Section
7.4, such consents as shall be required pursuant to the terms of any
Assumed Contracts in connection with the assignments of such Assumed
Contracts to Purchaser;
(iv) A complete set of keys of the Branches, including but not
limited to keys for all vaults and automated teller machines,
appropriately tagged for identification and any vault manuals or
specifications with respect to vaults and automated teller machines, if
any;
(x) The Closing Statement and the required Settlement Payment,
if any;
(xi) Seller's resignation as trustee or custodian, as
applicable, with respect to each XXX included in the Assumed Deposits,
and designation of the Purchaser as successor trustee or custodian with
respect thereto, subject to Section 2.6;
(xii) All documentation required to exempt Seller from the
withholding requirement of Section 1445 of the Code, consisting of an
affidavit from Seller to Purchaser that Seller is not a foreign person
and providing Seller's U.S. taxpayer identification number; and
(xiii) An assignment in recordable form reflecting the
transfer and assignment to Purchaser of deeds of trust, mortgages,
assignments of rents and profits and other real property related Loan
Documents recorded in the real property records in applicable public
registries (e.g. real property records in the offices of Registers of
Deeds in North Carolina).
33
(e) The following events or conditions shall be absent or shall not
have occurred:
(i) Subject to Sections 5.14 and 7.1(b) above, there shall not
have occurred any material adverse change in the business of the
Branches, and no circumstances shall exist which, with the passage of
time or otherwise, likely will result in any such material adverse
change;
(ii) There shall not have been any significant damage to or
destruction of the improvements located on the Real Property which (1)
is not covered by property insurance (or a payment from Seller) in an
amount necessary to fully repair such damage or destruction or replace
the property destroyed with property of like kind and quality,
including coverage for a temporary facility during the repair period,
and the proceeds of which have been either used for such repair or
replacement or assigned to Purchaser or (2) would materially interfere
with its use as a bank branch; and
(iii) In the event that Seller has agreed to cure a Material
Defect as provided in Section 7.12 above, such Material Defect shall
have been corrected in the manner agreed upon by Purchaser and Seller.
(f) The form and substance of all legal matters described in this
Agreement or related to the transactions contemplated by this Agreement shall be
reasonably acceptable to Purchaser's legal counsel.
9.2 CONDITIONS TO OBLIGATIONS OF SELLER. Unless waived in writing by
Seller, the obligation of Seller to consummate the transactions contemplated by
this Agreement to be consummated at the Closing is conditioned upon fulfillment,
at or before the Closing, of each of the following conditions:
(a) All consents, approvals, permits and authorizations required to be
obtained prior to the Closing from governmental and regulatory authorities in
connection with the performance and consummation of the transactions
contemplated hereby, including the Regulatory Approvals, shall have been made or
obtained and shall remain in full force and effect; and all waiting periods
applicable to the consummation of the transactions contemplated hereby shall
have expired or been terminated and all required regulatory filings shall have
been made.
(b) 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 and would result in a
Material Adverse Effect, and no proceeding seeking the enactment of such a
judgment, decree, injunction or other order that would have a Material Adverse
Effect shall have been announced or commenced.
(c) Each of the representations and warranties of Purchaser contained
in this Agreement shall be true in all material respects when made and as of the
Closing Date, with the same effect as though such representations and warranties
had been made on and as of the Closing Date (except that representations and
warranties that are made as of a specific date need be true in all material
respects only on and as of such date); each of the covenants and agreements of
Purchaser to be performed on or prior to the Closing Date shall have been duly
performed in all material respects.
34
(d) Seller shall have received each of the following documents, which
shall be delivered in a manner agreed to between Purchaser and Seller and shall
be in form and substance reasonably satisfactory to Seller:
(i) Resolutions of Purchaser's Board of Directors or an
authorized committee thereof, certified by its Secretary or Assistant
Secretary, authorizing the signing and delivery of this Agreement and
all related documents and the consummation of the transactions
contemplated hereby and thereby;
(ii) A certificate of the Secretary or Assistant Secretary of
Purchaser as to the incumbency and signatures of officers;
(iii) A certificate signed by a duly authorized officer of
Purchaser stating that the conditions set forth in Sections 9.2(a), (b)
and (c) have been fulfilled;
(iv) A Xxxx of Sale and Instrument of Assignment and
Assumption, signed by the Purchaser, substantially in the form of
EXHIBIT A hereto;
(v) Purchaser's acceptance of its appointment as successor
trustee or custodian, as applicable, of the XXX accounts included in
the Assumed Deposits and assumption of the fiduciary obligations of the
trustee or custodian with respect thereto, subject to Section 2.6.
(e) The form and substance of all legal matters described in this
Agreement or related to the transactions contemplated by this Agreement shall be
reasonably acceptable to Seller's legal counsel.
9.3 OTHER DOCUMENTS. The parties agree to execute and deliver such
other documents as the parties determine are reasonably necessary to consummate
the transactions contemplated by this Agreement.
ARTICLE 10
TERMINATION
10.1 TERMINATION. This Agreement may be terminated at any time prior to
the Closing Date:
(a) By the mutual written consent of Purchaser and Seller;
(b) By Seller or Purchaser, in the event of a material breach by the
other of any representation, warranty or agreement contained herein which is not
cured or cannot be cured within thirty (30) calendar days after written notice
of such breach has been delivered to the breaching party; PROVIDED, HOWEVER,
that termination pursuant to this Section 10.1(b) shall not relieve the
breaching party of liability for such breach or otherwise;
(c) Notwithstanding any other provision of this Agreement, by Seller or
Purchaser, in the event that the Closing has not occurred by December 31, 2003
unless the failure to so consummate by such time is due to a breach of this
Agreement by the party seeking to terminate; or
35
(d) By Seller or Purchaser at any time after the denial or revocation
of any Regulatory Approval, unless such denial or revocation was caused by the
failure of the party seeking to terminate to act in a timely manner with respect
to such Regulatory Approval or such party's negligence or willful misconduct or
by the breach of this Agreement.
10.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement and abandonment of the transactions contemplated hereby pursuant to
Section 10.1, no party hereto (or any of its directors, officers, employees,
agents or Affiliates) shall have any liability or further obligation to any
other party, except as provided in Section 7.2(b), and except that nothing
herein will relieve any party from liability for any breach of this Agreement.
ARTICLE 11
INDEMNIFICATION
11.1 INDEMNIFICATION.
(a) Subject to Section 11.1(c) below, Seller shall indemnify and hold
harmless Purchaser and any person directly or indirectly controlling Purchaser
from and against any and all Losses which Purchaser may suffer, incur or sustain
arising out of or attributable to (i) any breach of any representation or
warranty made by Seller pursuant to this Agreement, (ii) any breach of any
agreement to be performed by Seller pursuant to this Agreement, (iii) any third
party claim, penalty asserted, legal action or administrative proceeding based
upon any action taken or omitted to be taken by Seller prior to the Closing or
resulting from any transaction or event occurring prior to the Closing, relating
in any such case to the Branches, the Assets, the Assumed Deposits or the
Assumed Contracts, or (iv) any liabilities, obligations or duties of Seller that
are not Liabilities but are related to the Branches, the Assets, the Assumed
Deposits or the Assumed Contracts.
(b) Subject to Section 11.1(d) below, Purchaser shall indemnify and
hold harmless Seller and any person directly or indirectly controlling Seller
from and against any and all Losses which Seller may suffer, incur or sustain
arising out of or attributable to (i) any breach of any representation or
warranty made by Purchaser pursuant to this Agreement, (ii) any breach of any
agreement to be performed by Purchaser pursuant to this Agreement, (iii) any
third party claim, penalty asserted, legal action or administrative proceeding
based upon any action taken or omitted to be taken by Purchaser or resulting
from any transaction or event occurring after the Closing, relating in any such
case to the operation of the Branches, the Assets, the Assumed Deposits or the
Assumed Contracts or (iv) any of the Liabilities assumed by Purchaser at the
Closing.
(c) Seller shall not have any liability whatsoever under Section
11.1(a)(i) and (ii) for any Loss until the aggregate of all Losses for which
Seller would be liable under Section 11.1(a)(i) and (ii) (excluding for this
purpose each and every individual Loss that is less than $100) exceeds on a
cumulative basis an amount equal to $10,000, and then only to the extent of any
such excess. The maximum liability of Seller under Section 11.1(a)(i) and (ii)
shall be 50% of the Purchase Price.
(d) Purchaser shall not have any liability whatsoever under Section
11.1(b)(i) and (ii) for any Loss until the aggregate of all Losses for which
Purchaser would be liable under Section 11.1(b)(i) and (ii) (excluding for this
purpose each and every individual Loss that is less than $100) exceeds on a
cumulative basis an amount equal to $10,000, and then only to the extent of any
such excess. The maximum liability of Purchaser under Section 11.1(b)(i) and
(ii) shall be 50% of the Purchase Price.
36
(e) To exercise its indemnification rights under this Section 11.1 as
the result of an assertion against it of any claim or potential liability for
which indemnification is provided, the indemnified party shall promptly notify
the indemnifying party of the assertion of such claim, discovery of any such
potential liability or the commencement of any action or proceeding in respect
of which indemnity may be sought hereunder; PROVIDED that notice of an original
claim for indemnification must be given prior to the expiration of thirty-six
(36) months from the Closing Date, after which time the right to such
indemnification will expire; PROVIDED FURTHER, that, with respect to claims
arising from a breach of representation or warranty made in Article 8, the
provisions of Section 8.5 regarding the time by which notice must be given shall
govern. Notwithstanding the foregoing, notice of any claim for indemnification
arising out of a third party lawsuit or other similar legal action shall be made
within ten (10) calendar days after the indemnified party receives the summons
and complaint or similar documents in connection therewith, provided, however,
that a party's failure to timely give such notice shall not affect its right to
indemnification in connection therewith except to the extent the indemnifying
party is prejudiced as a result of such failure to timely give such notice. The
indemnified party shall advise the indemnifying party of all facts relating to
such assertion within the knowledge of the indemnified party, and shall afford
the indemnifying party the opportunity, at the indemnifying party's sole cost
and expense, to defend against such claims for liability. In any such action or
proceeding, the indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at its own expense
unless the indemnifying party and the indemnified party mutually agree to the
retention of such counsel.
(f) The indemnified party shall have the right to settle or compromise
any claim or liability subject to indemnification under this Section 11.1, and
to be indemnified from and against all Losses resulting therefrom, unless the
indemnifying party, within sixty (60)calendar days after receiving written
notice of the claim or liability in accordance with Section 11.1(e) above,
notifies the indemnified party that it intends to defend against such claim or
liability and undertakes such defense, or, if required in a shorter time than
sixty (60) calendar days, the indemnifying party makes the requisite response to
such claim or liability asserted.
(g) An indemnified party shall, subject to its reasonable business
needs, use reasonable efforts to minimize the amount of any Losses for which
indemnification is sought from the indemnifying party hereunder.
(h) Notwithstanding any other provision of this Agreement: The
indemnified party shall have the right to participate in such defense at its own
expense. If the indemnified party reasonably determines in its judgment that the
counsel selected by the indemnifying party is not capable of properly defending
the third party claim or would have a conflict of interest in doing so, then the
indemnified party may employ separate counsel to represent or defend it in any
such third party claim and the indemnifying party shall pay the reasonable fees
and disbursements of such separate counsel. The indemnifying party shall consult
with the indemnified party at reasonable intervals, upon the indemnified party's
reasonable request for such consultation, with respect to such third party
claims. The indemnifying party shall have no right in connection with any such
defense or the resolution of any such third party claim to impose any cost,
restriction, limitation or condition of any kind that compromises the
indemnified party hereunder.
(i) Except for claims based on fraud, the indemnification provisions of
this Article 11 shall be the sole and exclusive monetary remedies of Seller and
Purchaser with respect to any matters for which indemnification is provided in
this Article 11 and shall preclude any indemnified party from seeking any other
monetary remedy in respect of any such matters.
11.2 AS-IS SALE; WAIVER OF WARRANTIES. EXCEPT AS SET FORTH IN THIS
AGREEMENT, Purchaser expressly acknowledges that the Assets and Liabilities are
37
being sold and accepted on an "AS IS, WHERE IS" basis, and are being accepted
without any representation or warranty other than as set forth herein. As part
of Purchaser's agreement to purchase and accept the Assets and Liabilities AS
IS, WHERE IS, and not as a limitation on such agreement, TO THE FULLEST EXTENT
PERMITTED BY LAW AND EXCEPT AS SET FORTH IN THIS AGREEMENT, PURCHASER HEREBY
UNCONDITIONALLY AND IRREVOCABLY WAIVES AND RELEASES ANY AND ALL ACTUAL OR
POTENTIAL RIGHTS PURCHASER MIGHT HAVE AGAINST SELLER REGARDING ANY FORM OF
WARRANTY, EXPRESS OR IMPLIED, OF ANY KIND OR TYPE, RELATING TO THE ASSETS AND
LIABILITIES. SUCH WAIVER AND RELEASE IS, TO THE FULLEST EXTENT PERMITTED BY LAW
AND EXCEPT AS SET FORTH IN THIS AGREEMENT, ABSOLUTE, COMPLETE, TOTAL AND
UNLIMITED IN EVERY WAY. SUCH WAIVER AND RELEASE INCLUDES TO THE FULLEST EXTENT
PERMITTED BY LAW AND EXCEPT AS SET FORTH IN THIS AGREEMENT, BUT IS NOT LIMITED
TO, A WAIVER AND RELEASE OF EXPRESS WARRANTIES (EXCEPT THOSE SET FORTH IN THIS
AGREEMENT), IMPLIED WARRANTIES, WARRANTIES OF FITNESS FOR A PARTICULAR USE,
WARRANTIES OF MERCHANTABILITY, WARRANTIES OF HABITABILITY, STRICT LIABILITY
RIGHTS AND CLAIMS OF EVERY KIND AND TYPE, INCLUDING BUT NOT LIMITED TO CLAIMS
REGARDING DEFECTS WHICH WERE NOT OR ARE NOT DISCOVERABLE, ALL OTHER EXTANT OR
LATER CREATED OR CONCEIVED OF STRICT LIABILITY OR STRICT LIABILITY TYPE CLAIMS
AND RIGHTS.
ARTICLE 12
MISCELLANEOUS
12.1 SURVIVAL. The parties' respective representations and warranties
contained in this Agreement shall survive until expiration of the times
prescribed for claims for indemnification under Article 11, and thereafter
neither party may claim any damage for breach thereof. The covenants contained
in this Agreement shall survive until the end of the time period stated in such
covenant, and for purposes of the following sections, shall survive
indefinitely: Sections 2.3, 2.4, 3.2, 4.3, 7.2(b) and 11.1.
12.2 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations of either party hereunder may be assigned by either of
the parties hereto without the prior written consent of the other party.
12.3 BINDING EFFECT. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Except as expressly provided in
Section 11.1, the parties hereto intend that nothing in this Agreement, express
or implied, is intended to or shall confer upon any other person, including,
without limitation, any employee or former employee of Seller, any legal or
equitable right, benefit or remedy of any nature whatsoever, including without
limitation, any rights of employment or benefits for any specified period, under
or by reason of this Agreement.
12.4 PUBLIC NOTICE. From and after the date hereof until the Closing
Date, neither Purchaser nor Seller shall directly or indirectly, make, or cause
to be made, any press release for general circulation, public announcement or
disclosure or issue any notice or communication generally to employees with
respect to any of the transactions contemplated hereby without the prior consent
of the other party, which consent shall not be unreasonably withheld or delayed.
Consent shall be deemed granted by the party from which it is sought unless such
party objects within two (2) Business Days after receipt of the proposed press
release or other announcement from the party requesting consent. Seller and
Purchaser shall cooperate reasonably to produce public announcements to be
38
released simultaneously within five (5) calendar days after the date of this
Agreement. Nothing herein shall limit the right of Seller's or Purchaser's
parent, after the initial press release regarding the transaction, to refer to
this transaction in any document required to be filed with the Securities and
Exchange Commission or in its annual report to shareholders. Nothing in this
Agreement shall limit the right of either party to make any disclosure required
by law, subject to the provisions of Section 7.2(c) or (d).
12.5 NOTICES. All notices, requests, demands, consents and other
communications
given or required to be given under this Agreement and under the related
documents shall be in writing and delivered to the applicable party at the
address indicated below:
If to Seller: RBC Centura Bank
0000 Xxxxxxx Xxxxxxx
Xxxxx Xxxxx, XX 00000
Attention: Xxxx Xxxxxxx, Assistant General Counsel
Facsimile No. 000-000-0000
If to Purchaser: C/o United Community Banks, Inc.
00 Xxxxxxx 000
X.X. Xxx 000
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx, General Counsel
Facsimile No. 000-000-0000
With copies to: Xxxxxxxxxx Xxxxxxxx LLP
0000 Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx
Facsimile No. 000-000-0000
or, as to each party at such other address as shall be designated by such party
in a written notice to the other party complying as to delivery with the terms
of this Section. Any notices shall be in writing, including telegraphic or
facsimile communication, and may be sent by registered or certified mail, return
receipt requested, postage prepaid, or by fax, or by overnight delivery service.
Notice shall be effective upon actual receipt thereof.
12.6 INCORPORATION. All Exhibits and Schedules attached hereto and to
which reference is made herein are incorporated by reference as if fully set
forth herein and shall be part of the defined term "Agreement".
12.7 GOVERNING LAW. This Agreement and the legal relations between the
parties shall be governed by and interpreted in accordance with the laws of the
State of North Carolina applicable to contracts made and to be performed
entirely within the State of North Carolina.
12.8 ENTIRE AGREEMENT. This Agreement contains the entire understanding
of and all agreements between the parties hereto with respect to the subject
matter hereof and supersedes any prior or contemporaneous agreement or
understanding, oral or written, pertaining to any such matters which agreements
or understandings shall be of no force or effect for any purpose. Following the
execution of this Agreement, representatives of Purchaser and Seller may prepare
39
an operating agreement, conversion plan, or similar document relating to the
methods of consummating the transactions contemplated by this Agreement, but no
such document shall amend this Agreement or waive any of its provisions unless
it (a) explicitly describes a "waiver" or "amendment" and refers to the
particular provision of this Agreement being waived or amended, and (b) is
executed in the manner provided in Section 12.11. Unless there is an effective
amendment or waiver under the standards of this Section 12.8, the provisions of
this Agreement shall prevail if there is any inconsistency between this
Agreement and any operating agreement, conversion plan, or similar document
relating to the methods of consummating the transactions contemplated by this
Agreement.
12.9 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.10 HEADINGS. The headings used in this Agreement are inserted for
purposes of convenience of reference only and shall not limit or define the
meaning of any provisions of this Agreement.
12.11 WAIVER AND AMENDMENT. The waiver of any breach of any provision
under this Agreement by any party shall not be deemed to be a waiver of any
preceding or subsequent breach under this Agreement. No such waiver shall be
effective unless in writing. This Agreement may not be amended or supplemented
in any manner except by mutual agreement of the parties and as set forth in a
writing signed by the parties hereto or their respective successors in interest.
12.12 EXPENSES. Except as specifically provided otherwise in this
Agreement, each party shall bear and pay all costs and expenses, including
without limitation brokerage and legal fees, which it incurs, or which may be
incurred on its behalf in connection with the preparation of this Agreement and
consummation of the transactions described herein, and the expenses, fees, and
costs necessary for any approvals of the appropriate regulatory authorities.
12.13 SEVERABILITY. If any provision of this Agreement or the
application of any such provision to any person or circumstance shall be held
invalid, illegal or unenforceable in any respect by a court of competent
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision hereof.
12.14 THIRD PARTY BENEFICIARIES. Except as specifically provided in
Article 11 with respect to indemnification, no provision of this Agreement shall
be deemed to create any third party beneficiary right in anyone not a party to
this Agreement, including any employee or former employee of Seller (including
any beneficiary or dependent thereof). Nothing contained in this Agreement shall
be construed to affect or limit any right Purchaser or its affiliates may have
after the Closing with respect to the terms and conditions of employment of any
Transferred Employees (including, but not limited to, provisions of employee
benefits different from those provided through the employee benefit plans) or to
terminate the employment of a Transferred Employee at any time or to modify the
benefits provided to employees through any employee benefit plan.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
40
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers as of the date first
above written.
RBC CENTURA BANK
By: /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Early
Title: Vice President
UNITED COMMUNITY BANK
By: /s/ Xxx X. Xxxxxxx
Name: Xxx X. Xxxxxxx
Title: Executive Vice President
Exhibit A
XXXX OF SALE AND INSTRUMENT OF
ASSIGNMENT AND ASSUMPTION
THIS XXXX OF SALE AND INSTRUMENT OF ASSIGNMENT AND ASSUMPTION is dated
as of ______________, 2003, between UNITED COMMUNITY BANK, a bank organized
under the laws of _____________ ("Purchaser") and RBC CENTURA BANK, a bank
organized under the laws of North Carolina ("Seller").
W I T N E S S E T H:
WHEREAS, Purchaser and Seller are parties to a certain Branch Purchase
and Assumption Agreement, dated as of ____________, 2003 (the "Purchase and
Assumption Agreement");
WHEREAS, pursuant to the Purchase and Assumption Agreement, Seller has
agreed to sell the Assets to Purchaser, and Purchaser has agreed to purchase the
Assets and to assume the Liabilities and Accrued Expenses, as such terms are
defined in the Purchase and Assumption Agreement;
WHEREAS, the Assets include the Furniture, Fixtures and Equipment,
Improvements, Cash on Hand, Prepaid Expenses, Real Property, Records, Seller's
benefits and rights under Safe Deposit Agreements and Seller's benefits and
rights under Assumed Contracts (as such terms are defined in the Purchase and
Assumption Agreement); the Liabilities include, among other things, the Assumed
Deposits and all terms and agreements relating to the Assumed Deposits, Seller's
obligations under the Assumed Contracts, Seller's obligations under the Safe
Deposit Agreements, and Seller's obligation to provide customer service from and
after the Closing Date in connection with the Assets or the Assumed Deposits (as
such terms are defined in the Purchase and Assumption Agreement); and
WHEREAS, Accrued Expenses means the accrued and unpaid expenses
appearing as a liability in a Closing Statement or a Final Closing Statement (as
such terms are defined in the Purchase and Assumption Agreement);
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter set forth, each of Purchaser and Seller
agrees as follows:
1. ASSIGNMENT OF ASSETS. Effective as of the date hereof, Seller does
hereby sell, convey and assign unto Purchaser upon the terms and conditions set
forth in the Purchase and Assumption Agreement, all of Seller's right, title and
interest in, to and under the Assets (other than the Real Property) and
Purchaser hereby accepts the foregoing assignment of the Assets (other than the
Real Property).
2. ASSUMPTION OF LIABILITIES AND ACCRUED EXPENSES. Effective as of the
date hereof, Purchaser does hereby assume, and agrees to timely pay, defend,
discharge and perform in accordance with their terms all Liabilities and Accrued
Expenses, as such terms are defined in the Purchase and Assumption Agreement.
3. AS IS, WHERE IS. Except as provided in the Purchase and Assumption
Agreement, this Xxxx of Sale and Instrument of Assignment and Assumption is made
such that Purchaser accepts the Assets and assumes the Liabilities without
warranty or representation, express or implied, or recourse to, the Seller, and
such Assets are delivered "AS IS", "WHERE IS" and with all faults, except as
provided in the Purchase and Assumption Agreement.
A-1
4. GOVERNING LAW. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of North Carolina applicable to
contracts made and to be performed entirely with the State of North Carolina.
5. COUNTERPARTS. This Agreement may be executed in one or more
counterparts all of which shall together constitute one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been signed on behalf of each of
the parties hereto as of the day and year first above written.
RBC CENTURA BANK
By: _____________________________
Name: __________________
Title: __________________
UNITED COMMUNITY BANK
By: _____________________________
Name: __________________
Title: __________________
Schedule 1.1
CLOSING STATEMENT
ASSETS $
------
Cash on Hand $
Prepaid Expenses (excluding interoffice/intercompany items) $
Furniture, Fixtures, Equipment and Improvements $
Real Property $
Loan Value $
Safe Deposit Agreements $
Assumed Contracts $
Other Assets $
TOTAL $
LIABILITIES
Assumed Deposits $
Plus Accrued Interest on Assumed Deposits $
TOTAL ASSUMED DEPOSITS $
Assumed Safe Deposit Agreements
$
Assumed Contracts
$
Accrued Expenses
$
Other Liabilities
$
TOTAL
COMPUTATION OF SETTLEMENT PAYMENT
Assumed Deposits $
Accrued Expenses $_______
TOTAL $_______
Less Purchase Price
11% of Assumed Deposits for Bakersville $
Branch and Xxxxxxx Branch
7% of Assumed Deposits for Robbinsville $
Branch
Cash on Hand $
Net Book Value of Assets, other
than Cash on Hand and Loans $
Loan Value $
$_______
Adjustment for Allocation of
Expenses and Fees (perss.2.2) $_______
$_______
Schedule 1.1A
LIST OF DEPOSITS
See attached
Schedule 1.2
EXCLUDED EMPLOYEES
None
Schedule 1.4
EXCLUDED LOANS
To follow per terms of Agreement
Schedule 1.4A
LOANS
See attached
Schedule 5.4
TITLE TO ASSETS
None
Schedule 5.10
LITIGATION
None
Schedule 5.16(e)
OWNERSHIP OF LOANS
N/A
Schedule 7.1
COMMITMENTS FOR MATERIAL IMPROVEMENTS
None
Schedule 8.6(g)
EMPLOYEES
See attached
