1
EXHIBIT 10.14
AGREEMENT
TO
ASSUME LIABILITIES AND
TO ACQUIRE ASSETS OF
BRANCH BANKING OFFICE
Dated as of January 22, 0000
Xxxxxxx
XXXX XXXXXX NATIONAL BANK
as Seller
and
VALLEY INDEPENDENT BANK
as Buyer
2
INDEX
Page
ARTICLE I
Definitions
1.1 Agreement.................................................................1
1.2 Assets....................................................................1
1.3 Assumption Price..........................................................1
1.4 Branch....................................................................1
1.5 Branch Account Trial Balance Report.......................................1
1.6 Branch Loan Trial Balance Report..........................................2
1.7 Business Day..............................................................2
1.8 Claim.....................................................................2
1.9 Closing Date and Closing..................................................2
1.10 Commissioner..............................................................2
1.11 Deposits..................................................................2
1.12 Environmental Law.........................................................2
1.13 FRB.......................................................................3
1.14 Governmental Body.........................................................3
1.15 Hazardous Substances......................................................3
1.16 Lease.....................................................................3
1.17 Liabilities...............................................................3
1.18 Loans.....................................................................3
1.19 Personal Property.........................................................4
1.20 Premises..................................................................4
1.21 Retained Assets...........................................................4
1.22 Retained Liabilities......................................................4
ARTICLE II
Assumption of Liabilities and Acquisition of Assets
2.1 Assumption of Deposits, Interest and Certain Other Liabilities............4
2.2 Assumption of Obligations.................................................4
2.3 Retained Liabilities......................................................4
2.4 Transfer of Assets........................................................6
2.5 Assignment of Leases; Etc.................................................7
2.6 Retained Assets...........................................................7
2.7 Individual Retirement Accounts............................................7
ARTICLE III
Assumption Price; Allocation
3.1 Determination and Payment of Assumption Price.............................8
3.2 Allocation of the Consideration for Acquisition of the Branch.............8
i
3
ARTICLE IV
Representations, Warranties and Covenants
4.1 Representations, Warranties and Covenants of the Seller...................8
4.1.1 Powers and Authority...........................................8
4.1.2 Other Agreements...............................................9
4.1.3 Branch Reports.................................................9
4.1.4 Branch Information.............................................9
4.1.5 Personal Property..............................................9
4.1.6 Premises......................................................10
4.1.7 Contracts and Agreements......................................10
4.1.8 Pending Litigation............................................10
4.1.9 Compliance with the Law.......................................10
4.1.10 Employees.....................................................11
4.1.11 Environmental Liabilities.....................................11
4.1.12 Deposits at the Branch........................................11
4.1.13 Loans at the Branch...........................................11
4.1.14 No Material Adverse Change....................................12
4.1.15 Branch Employees..............................................12
4.1.16 Representations and Warranties................................12
4.2 Representations, Warranties and Covenants of the Buyer...................12
4.2.1 Powers and Authority..........................................12
4.2.2 Other Agreements..............................................13
4.2.3 Pending Litigation............................................13
4.2.4 Branch Employees..............................................13
4.2.5 Representations and Warranties................................13
ARTICLE V
Obligations of the Parties Before Closing Date
5.1 Obligations of Both Parties..............................................13
5.1.1 Administrative Approvals......................................14
5.1.2 Best Efforts..................................................14
5.2 Obligations of Seller....................................................14
5.2.1 Shareholder Approval of Agreement.............................14
5.2.2 Access to Information.........................................14
5.2.3 Conduct of Business...........................................14
5.2.4 Ordinary Course and Other Activities..........................14
5.2.5 Condition of Assets...........................................15
5.2.6 Consents......................................................15
5.2.7 Personal Property Report......................................15
5.2.8 Deposit Update................................................15
5.2.9 Loan Update...................................................15
5.2.10 Data Conversion...............................................15
ii
4
5.2.11 No Breach.....................................................15
5.3 Obligations of Buyer.....................................................16
5.3.1 Shareholder Approval of Agreement.............................16
5.3.2 Notification of Deposits and Loans Rejected...................16
5.3.3 No Breach.....................................................16
ARTICLE VI
Conditions Precedent to Closing
6.1 Conditions Precedent to Performance by Both Parties......................16
6.1.1 Shareholder Approval..........................................16
6.1.2 Approval of the Commissioner..................................17
6.1.3 Approval of the FRB...........................................17
6.1.4 Other Regulatory Approvals....................................17
6.1.5 No Claim......................................................17
6.1.6 Closing Date..................................................17
6.2 Conditions Precedent to Buyer's Performance..............................17
6.2.1 Accuracy of Warranties and Performance of Obligations.........17
6.2.2 Copies of Documents...........................................17
6.2.3 Consents and Approvals........................................17
6.2.4 Matters Relating to the Premises..............................17
6.2.5 Books and Records.............................................18
6.2.6 Force Majeure.................................................18
6.2.7 Assumption of Safe Deposit Box Business.......................18
6.2.8 Disclosure of Employee Matters................................18
6.2.9 Material Changes..............................................18
6.2.10 Deposits........................................................
6.3 Conditions Precedent to Seller's Performance.............................18
6.3.1 Accuracy of Warranties and Performance of Obligations.........18
6.3.2 Copies of Documents...........................................18
ARTICLE VII
Closing
7.1 Closing..................................................................19
7.2 Seller's Obligations at the Closing......................................19
7.2.1 Transfer of Assets............................................19
7.2.2 Certificates and Further Documents............................19
7.2.3 Premises, Books and Records...................................19
7.2.4 Payment of Assumption Price...................................19
7.2.5 Deposits......................................................19
iii
5
7.3 Buyer's Obligations at the Closing.......................................19
7.3.1 Assumption of Liabilities.....................................19
7.3.2 Further Documents.............................................20
ARTICLE VIII
Obligations of the Parties After the Closing
8.1 Seller's Obligations.....................................................20
8.1.1 Business Relationships........................................20
8.1.2 Banking Relationships.........................................20
8.1.3 Confidentiality...............................................20
8.1.4 Notification of Customers.....................................20
8.1.5 Right to Hire Branch Employees................................21
8.1.6 Removal of the Seller's Property..............................21
8.1.7 Restrictive Covenant..........................................21
8.2 Obligations of Both Parties After the Closing............................21
8.2.1 Transfer of Credits by the Seller.............................21
8.2.2 Transit Items.................................................21
8.2.3 Further Documents.............................................21
8.2.4 Prorations; Unresolved Transit Items; Sales and Use Taxes;
Insurance.....................................................21
8.2.5 Adjustment of Assumption Price................................22
8.2.6 Other Transitional Matters....................................23
ARTICLE IX
Remedies
9.1 Termination..............................................................22
9.2 Litigation Costs.........................................................23
ARTICLE X
Miscellaneous Provisions
10.2 Entire Agreement.........................................................24
10.3 Third-Party Rights.......................................................24
10.4 Successors and Assigns...................................................24
10.5 Brokers..................................................................24
10.6 Survival of Warranties and Obligations...................................24
10.7 Severability.............................................................24
10.8 Expenses.................................................................25
10.9 Counterparts.............................................................25
10.10 Headings and Construction................................................25
10.11 Governing Law............................................................25
10.12 Indemnification..........................................................25
iv
6
Section
EXHIBITS Reference
-------- ---------
A Branch Account Trial Balance Report Section 1.5
B Branch Loan Trial Balance Report Section 1.6
C Branch Lease Section 1.16
D List of Contracts, Commitments and Agreements Section 2.2(b)
Applicable to the Branch (with designations of
those items for which copies are not available)
E List of Personal Property of Seller Section 2.4(b)
F Employee Information Section 4.1.10
G List of Material Adverse Changes in Seller's Business Section 4.1.12
H Assignment of Lease and Consent of Lessor Section 5.2.6
I Transitional Matters Section 5.2.10;
Section 8.1;
Section 8.2
J ATM Locations Section 8.1.7
SCHEDULE
1 Method of Determination of Assumption Price Section 3.1
v
7
THIS AGREEMENT TO ASSUME LIABILITIES AND TO ACQUIRE ASSETS OF BRANCH
BANKING OFFICE is entered into as of January 22, 1998 between Palm Desert
National Bank, a national banking association (the "Seller") having its main
office and principal place of business in Palm Desert, California, and Valley
Independent Bank, a California banking corporation (the "Buyer") having its main
office and principal place of business in El Centro, California, with reference
to the following:
RECITALS
A. WHEREAS, the Seller owns and operates a branch banking office (the
"Branch") located at 000 Xxxx Xxxxxxxx Xxxxxx Xxx, Xxxx Xxxxxxx, Xxxxxxxxxx
00000 and conducts a commercial banking business at the Branch;
B. WHEREAS, the Seller is willing to transfer to the Buyer certain
assets and business of the Branch and the Buyer is willing to assume certain
liabilities, duties and obligations of the Seller in respect of the Branch, in
consideration for the payment of certain sums and all upon the terms and subject
to the conditions set forth herein; and
C. WHEREAS, the Buyer is willing to purchase, receive and acquire said
assets, to assume said liabilities, duties and obligations of the Seller, and to
commence a banking business at the Branch in consideration for the receipt of
certain sums and upon the terms and subject to the conditions set forth herein;
AGREEMENT
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, conditions, representations and warranties contained in this
Agreement, the Buyer and the Seller agree as follows:
ARTICLE I
DEFINITIONS
Unless the context otherwise specifies and requires, each of the terms
defined in this Article I shall, for all purposes of this Agreement to Assume
Liabilities and to Acquire Assets of Branch Banking Office, have the meaning set
forth herein, and all of the following definitions shall be equally applicable
to both the singular and the plural forms of the terms defined:
1.1 Agreement. The term "Agreement" means this Agreement to Assume
Liabilities and to Acquire Assets of Branch Banking Office.
1.2 Assets. The term "Assets" means only those certain assets and
properties owned, held or used by the Seller set forth in Section 2.4 as assets,
tangible and intangible, real, personal and mixed, which are to be transferred
to and purchased by the Buyer.
1.3 Assumption Price. The term "Assumption Price" shall have the
meaning assigned to it in Section 3.1.
1.4 Branch. The term "Branch" means the branch banking office operated
by Seller located at 000 Xxxx Xxxxxxxx Xxxxxx Xxx, Xxxx Xxxxxxx, Xxxxxxxxxx
00000.
1.5 Branch Account Trial Balance Report. The term "Branch Account Trial
Balance Report" means the internally prepared schedules of Deposits setting
forth the name and address
1
8
of the account holder, the account number, the type, rate and balance or
principal amount of the deposit account, and the accrued but unpaid interest
thereon, duly certified by the Chief Financial Officer of the Seller to be in
accordance with the representations and warranties set forth in Section 4.1.3.
The Branch Account Trial Balance Report as of December 31, 1997, is attached
hereto as Exhibit A.
1.6 Branch Loan Trial Balance Report. The term "Branch Loan Trial
Balance Report" means the internally prepared schedule of loans setting forth
the name and address of the borrower, the account number, the type, rate and
balance or principal amount of the loan outstanding or committed, or both, and
the accrued but unpaid interest thereon, duly certified by the Chief Financial
Officer of the Seller to be in accordance with the representation and warranties
set forth in Section 4.1.3. The Branch Loan Trial Balance Report as of December
31, 1997, is attached hereto as Exhibit B.
1.7 Business Day. The term "Business Day" means each Monday, Tuesday,
Wednesday, Thursday or Friday that banks in California are not required or
permitted by law to be closed.
1.8 Claim. The term "Claim" shall have the meaning assigned to it in
Section 4.1.8.
1.9 Closing Date and Closing. The term "Closing Date" means the date
when the transactions contemplated by this Agreement shall be consummated, as
set forth in Section 7.1, and the term "Closing" means the consummation of the
transactions contemplated in this Agreement, as provided in Article VII hereof.
1.10 Commissioner. The term "Commissioner" shall have the meaning
assigned to it in Section 5.1.1.
1.11 Deposits. The term "Deposits," for any given date, means all
liabilities of the Seller carried on the books of the Branch to customers
arising from deposits which are demand deposits, savings deposits, Treasury Plus
deposits, money market or NOW deposits, or time certificates of deposit, and
which are included on a Branch Account Trial Balance Report for that date
excluding, however: (i) any such liabilities relating to deposits maintained as
compensating balances for loans not included in the Assets; (ii) interbranch
deposits; (iii) any such liabilities assumed after the date of this Agreement at
rates in excess of market rates in Riverside County for bank deposits for the
type and maturity of the deposit instrument as reported by Bisys Information
Services Group; and (iv) any additional such liabilities as may be determined by
the Buyer such that the aggregate amount of Deposits is less than ten percent
(10%) of the Buyer's total deposits on December 31, 1997 as of the Closing Date.
1.12 Environmental Law. The term "Environmental Law" means any federal,
state, county, or local statute, law, ordinance, rule, regulation, order,
consent, decree, judicial or administrative decision or directive of the United
States or other jurisdiction whether now existing or as hereinafter promulgated,
issued or enacted relating to: (i) pollution or protection of the environment,
including natural resources; (ii) exposure of persons, including employees, to
Hazardous Substances or other products, materials or chemicals; (iii) protection
of the public health or welfare from the effects of products, by-products,
wastes, emissions, discharges or releases of chemical or other substances from
industrial or commercial activities; or (iv) regulation of the manufacture, use
or introduction into commerce of substances, including, without limitation,
their manufacture, formulation, packaging, labeling, distribution,
transportation, handling, storage and disposal. For the purposes of this
definition, the term "Environmental Law" shall include, without limiting the
foregoing, the following statutes, as amended from time to
2
9
time: (1) the Clean Air Act, as amended, 42 U.S.C. Section 7401 et seq.; (2) the
Federal Water Pollution Control Act, as amended, 33 U.S.C. Section 1251 et seq.;
(3) the Resource Conservation and Recovery Act of 1976, as amended, 42 U.S.C.
Section 6901 et seq.; (4) the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended (including the Superfund Amendments and
Reauthorization Act of 1986), 42 U.S.C. Section 2601 et seq.; (5) the Toxic
Substances Control Act, as amended, 15 U.S.C. Section 2601 et seq.; (6) the
Occupational Safety and Health Act, as amended, 29 U.S.C. Section 651; (7) the
Emergency Planning and Community Right-To-Know Act of 1986, 42 U.S.C. Section
1101 et seq.; (8) the Mine Safety and Health Act of 1977, as amended, 30 U.S.C.
Section 801 et seq.; (9) the Safe Drinking Water Act, 42 U.S.C. Section 300f et
seq.; and (10) all comparable state and local laws, laws of other applicable
jurisdiction or orders and regulations including, but not limited to, the
Xxxxxxxxx-Xxxxxxx-Xxxxxx Hazardous Substance Account Act, California Health &
Safety Code Section 25300 et seq.
1.13 FRB. The term "FRB" means the Board of Governors of the Federal
Reserve System and for the Federal Reserve Bank of San Francisco.
1.14 Governmental Body. The term "Governmental Body" shall have the
meaning assigned to it in Section 4.1.8.
1.15 Hazardous Substances. The term "Hazardous Substances" means: (i)
substances that are defined or listed in, or otherwise classified pursuant to,
or the use or disposal of which are regulated by, any Environmental Law as
"hazardous substances," "hazardous materials," "hazardous wastes," "toxic
substances," or any other formulation intended to define, list or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity"; (ii) oil or petroleum derived from substances and drilling fluids,
produced waters, and other wastes associated with the exploration, development,
or production of crude oil, natural gas, or geothermal resources; (iii) any
flammable substances or explosives, any radioactive materials, any hazardous
wastes or substances, any toxic wastes or substances or any other materials or
pollutants which pose a hazard to any property or to individuals or entities on
or about such property; and (iv) asbestos in any form or electrical equipment
which contains any oil or dielectric fluid containing levels of polychlorinated
biphenyls in excess of 50 parts per million.
1.16 Lease. The term "Lease" means that certain Office Lease dated
December 1, 1994 by and between 901 Tahquitz, a California General Partnership,
lessor, and Palm Desert National Bank, lessee, covering the Branch Premises and
providing for a term of four (4) years and eight (8) months and one (1) five
(5)-year option to extend, a copy of which is attached hereto as Exhibit C.
1.17 Liabilities. The term "Liabilities" means only those certain
liabilities, duties and obligations of the Seller in connection, in whole or in
part, with the business or affairs of the Branch which are to be assumed by the
Buyer pursuant to Sections 2.1 and 2.2.
1.18 Loans. The term "Loans," for any given date, means all commercial
loans and lease receivables, all installment loans and lease receivables, all
real estate loans and all other loans and lease receivables, including
overdrafts and loan and lease receivable commitments, carried on the books and
records of the Branch, together with all guarantees given with respect thereto
and all stocks, bonds and other property, both real and personal, held as
security or collateral therefor and all of the Seller's rights and interest
therein and thereto, the right to receive the unpaid principal and interest on
such acquired loans, all checks, drafts, notes, instruments, contracts and other
evidences of the respective borrowers' obligations to repay and provide security
or collateral therefor, and all files, books, and records with respect thereto.
3
10
1.19 Personal Property. The term "Personal Property" shall have the
meaning assigned to it in Section 4.1.5.
1.20 Premises. The terms "Premises" or "Branch Premises" shall mean the
leasehold interest located at Xxxxx X-000 through B-104, inclusive, 000 Xxxx
Xxxxxxxx Xxxxxx Xxx, Xxxx Xxxxxxx, Xxxxxxxxxx 00000, consisting of approximately
3,767 rentable square feet.
1.21 Retained Assets. The term "Retained Assets" means the assets of
the Seller which are referred to in Section 2.6.
1.22 Retained Liabilities. The term "Retained Liabilities" means all
liabilities and obligations of the Seller, of any kind or description, whether
known, unknown, disclosed, undisclosed, direct, indirect, absolute, fixed,
contingent or otherwise, other than the Liabilities.
ARTICLE II
ASSUMPTION OF LIABILITIES AND ACQUISITION OF ASSETS
2.1 Assumption of Deposits, Interest and Certain Other Liabilities. In
reliance on the covenants, conditions, representations and warranties of the
Seller included herein, at the Closing the Buyer shall assume and agree to pay,
perform and discharge, as and when such payments or performances are due:
(a) all Deposits as of the Closing Date, including (as
provided in Paragraph 1 of Schedule 1 hereto) accrued interest thereon
to the Closing Date; subject, however, to any right the Buyer may have
to change applicable interest rates as legally permitted or required;
and subject, further, to the Buyer's unconditional right to reject and
not assume: (i) any time certificates of deposit in excess of $100,000;
(ii) any "brokered" time certificates of deposit (as defined by the
rules and regulations of the FDIC); and (iii) any public deposits; and
(b) only such other liabilities of the Seller pertaining to
the Branch as the Buyer shall have agreed in writing, with the written
consent of the Seller, on or before the Closing Date, to assume.
2.2 Assumption of Obligations. At the Closing, the Buyer shall also
assume and agree to pay and discharge, but only if and to the extent that the
Buyer succeeds to the rights and benefits of the Seller under the terms thereof,
all of the obligations of the Seller arising after the Closing Date or to be
performed after the Closing Date under the following contracts, commitments and
agreements, subject to the provisions of Section 2.3:
(a) the Lease;
(b) the contracts, commitments and agreements, if any, set
forth on Exhibit D hereto, to the extent that such contracts,
commitments and agreements are applicable to the Branch; and
(c) all of the obligations of the Seller in respect of the
Branch not reflected in Exhibit D, but only to the extent that such
obligations are applicable to the Branch and are incurred subsequent to
the date of this Agreement and, as permitted by the terms of this
Agreement, are approved in writing by the Buyer.
2.3 Retained Liabilities. The Seller agrees that the Buyer has not
agreed to assume or pay, shall not be required to assume or be obligated to pay,
perform or discharge, and shall have
4
11
no liability or obligation with respect to, whether on the Closing Date or
otherwise, the Retained Liabilities, including, but not limited to:
(a) any liability or obligation of the Seller to the extent
the same shall have been paid, performed or discharged or which by its
terms was required to be paid, performed or discharged on or prior to
the Closing Date, except that certain expenses in connection with the
operation of the Branch are to be prorated in accordance with the
provisions of Section 8.2.4;
(b) any liability or obligation under any lease, contract,
commitment or agreement which is not either set forth in Exhibits C or
D or referred to in Section 2.2(c) or any lease, contract, commitment
or agreement, whether or not set forth in Exhibits C or D hereto or
referred to in Section 2.2(c) to the extent not applicable to the
Branch; any liability or obligation of the Seller with respect to any
insurance policy maintained by the Seller with respect to the Branch;
any liability, obligation, cost or expense arising out of or in
connection with any Claim whether commenced before, on or after the
Closing Date, with respect to any condition, transaction or event which
relates to or involves the business, properties, assets, liabilities or
affairs of the Branch or the Seller's conduct of business at the Branch
on or prior to the Closing Date except to the extent such liability,
obligation, cost or expense is expressly assumed in writing by the
Buyer; and any liability or obligation with respect to any employees of
the Seller arising on or prior to the Closing Date or in connection
with their employment by the Seller including any liability for any
"employee pension benefit plan," as that term is defined in Section
3(2) of the Employee Retirement Income Security Act of 1974;
(c) any liability or obligation of the Seller arising
subsequent to the Closing Date arising out of or in connection with any
transactions or events which occurred on or prior to the Closing Date
except to the extent that such liability or obligation is expressly
assumed in writing by the Buyer;
(d) any liability or obligation of the Seller for federal,
state or local taxes on or measured by income;
(e) any liability or obligation of the Seller arising out of
or in connection with any lease, contract, agreement or commitment
which is not assigned to or expressly assumed in writing by the Buyer;
(f) any liability or obligation of the Seller arising out of
activities or omissions of the Seller taking place after the Closing
Date;
(g) any liability or obligation the Seller may have under or
in respect of any deposit at the Branch and excluded from the
definition of "Deposits" pursuant to Section 1.11, except as expressly
assumed by the Buyer in writing prior to or at the Closing;
(h) any liability or obligation the Seller may have under or
in respect of any deposit at the Branch and excluded from the Deposits
assumed by the Buyer pursuant to Section 2.1(a);
(i) any liability of the Seller relating to the ownership,
operation or utilization of real property in violation of any
Environmental Law; and
(j) any other liability or obligation the Seller may have
incurred or may incur prior to, on or following the Closing Date in
connection with the operations, business or
5
12
affairs of the Branch, except as specifically provided in Sections 2.1
and 2.2 or to the extent such liability or obligation is expressly
assumed in writing by the Buyer.
2.4 Transfer of Assets. In consideration of assumption of the
Liabilities and payment of the amounts called for by Article III at the Closing,
the Seller shall irrevocably sell, transfer, assign and deliver to the Buyer and
the Buyer shall purchase and accept delivery of the following Assets:
(a) all Loans, including (as provided in Paragraph 3 of
Schedule 1 hereto) accrued interest thereon to the Closing Date;
provided, however the Buyer has the right to reject any loans upon
notice to the Seller at least two (2) Business Days prior to the
Closing Date;
(b) all of the Seller's right, title and interest in and to
the Personal Property set forth on Exhibit E attached hereto and
incorporated herein by this reference, other than any such Personal
Property disposed of in the ordinary course of business prior to the
Closing Date and in accordance with the provisions of this Agreement
and other than any signs or proprietary items; plus any and all
substitutions therefor and replacements and additions thereto which are
purchased by the Seller prior to the Closing Date and which are agreed
to by the Buyer, together with the Seller's books and records with
respect thereto;
(c) all of the Seller's right, title and interest in and to
the Lease and all contracts, commitments and agreements which the Buyer
is assuming pursuant to Sections 2.1 and 2.2, together with Seller's
books and records with respect thereto, and all right, title and
interest to all deposits, prepayments and payments, whether as an
advance, deposit or otherwise, with respect thereto. To the extent such
contracts, commitments or other agreements relate to the conduct of
business by the Seller at the Branch and at locations other than the
Branch, such contracts, commitments or agreements shall be assigned to
the Buyer only to the extent the same are applicable to the Branch. If
the Seller shall have received, on or prior to the Closing Date, any
payments under any such contract, commitment or agreement (whether as
an advance, deposit or otherwise) which relate to the conduct of
business at the Branch after the Closing Date, then an amount equal to
the aggregate of such payments shall be deemed to be a Liability
assumed by the Buyer for the purpose of calculating the Assumption
Price pursuant to Article III hereof;
(d) all of the Seller's right, title and interest in and to
all cash on hand at the Branch and cash due from banks to the Branch
with respect to Deposits assumed on the Closing Date and all of the
Seller's rights in and to the Deposits as of the Closing Date, subject,
in the case of the Deposits, to the individual depositors' continuing
right of withdrawal;
(e) all assets of the Seller used at the Branch as of December
31, 1997 or acquired thereafter in the ordinary and regular course of
business of the Branch and which have not been disposed of in the
ordinary and regular course of business of the Branch and in accordance
with this Agreement on or prior to the Closing Date, except for the
Retained Assets;
(f) all of the Seller's right, title and interest in the
Branch Premises, together with the Seller's books and records with
respect thereto;
(g) all claims and causes of action the Seller has or might
have against any third party arising out of, in connection with or with
respect to the Assets or the Liabilities,
6
13
including, but not limited to, claims under the Seller's insurance
policies with respect to the Assets or the Liabilities;
(h) all of the business connected with the Assets and
Liabilities being transferred hereunder and goodwill, if any, of the
Branch; and
(i) all other assets of the Branch not listed in this Section
2.4, including all items in transit and routine suspense resources, but
not including any asset set forth in Section 2.6 herein. The Seller
shall hold the Buyer harmless from any loss regarding any items in
transit which are rejected if it creates an overdraft in an account
which does not have adequate funds on deposit at the time of the
Closing to cover said items.
Notwithstanding the foregoing provisions of this Section 2.4, if the
assignment or attempted assignment of any Asset would be invalid or would
constitute a breach of any lease, contract, agreement or commitment to which the
Seller is a party or by which it may be bound, that Asset shall be used, held
and/or received by the Seller for the benefit of the Buyer in accordance with
the Buyer's instructions and at the Buyer's expense, and the Seller shall,
without further consideration, convey, transfer, assign and deliver to the Buyer
all such Assets at the earliest time practicable. The Seller shall not be liable
to the Buyer for any loss or liability incurred in connection with any such
Asset or the Seller's handling of any such Asset, except to the extent that such
loss or liability is due to the Seller's gross negligence or intentional
misconduct.
All such sales, conveyances, transfers, assignments and deliveries
shall be effected by such assignments, deeds, bills of sale and other
instruments as shall be reasonably requested by counsel for the Buyer.
2.5 Assignment of Leases; Etc. The Seller shall obtain the consents
necessary for the assignment of the Lease and the contracts, commitments and
agreements set forth on Exhibit D.
2.6 Retained Assets. Notwithstanding any provision of this Agreement to
the contrary, the following assets and the Seller's right, title and interest
therein shall not be transferred to or purchased by the Buyer at the Closing:
(a) all Loans of the Branch rejected by the Buyer;
(b) all funds relating to retirement and pension plans or
programs benefitting employees employed by the Seller at the Branch;
(c) all of the Seller's insurance policies maintained with
respect to the Branch;
(d) any tangible personal property not listed on Exhibit E,
except for such tangible personal property substituted for, replaced
for, or added to the Personal Property set forth on Exhibit E which are
purchased by the Seller prior to the Closing Date and which are agreed
to by the Buyer; and
(e) any non-routine suspense resources.
2.7 Individual Retirement Accounts. With respect to Branch Deposits
which are Individual Retirement Accounts ("IRAs"), the Seller will use its best
efforts and will cooperate with the Buyer, both before and after the Closing, in
taking whatever actions are reasonably necessary to accomplish either the
appointment of the Buyer as successor custodian or the delegation to the Buyer
of the Seller's authority and responsibility as custodian of all such XXX
7
14
deposits except self-directed XXX deposits, including but not limited to,
sending to the depositors thereof appropriate notices, cooperating with the
Buyer in soliciting consents from such depositors, and filing any appropriate
applications with applicable regulatory authorities. If any such delegation is
made to the Buyer, the Buyer will perform all of the duties to delegated and
comply with the terms of the Seller's agreement with the depositor of the XXX
deposits affected thereby.
ARTICLE III
ASSUMPTION PRICE; ALLOCATION
3.1 Determination and Payment of Assumption Price. The Seller and the
Buyer agree that on the Closing Date the Seller will pay to the Buyer, by
official bank or clearing house check or by wire transfer of immediately
available funds to an account at the Buyer's main office at El Centro,
California, in the manner directed by the Buyer in a notice to the Seller on the
day next preceding the Closing Date, an amount (the "Assumption Price") equal
to: (i) the aggregate amount of the Liabilities to be assumed by the Buyer
pursuant hereto determined in accordance with Schedule 1 attached hereto; less
(ii) the sum of (a) the cash on hand and due from banks at the Branch
transferred to the Buyer hereunder, plus (b) the book value of the Personal
Property acquired pursuant to Section 2.4(b), plus (c) the book value of the
Loans acquired pursuant to Section 2.4(a) determined in accordance with Schedule
1 attached hereto, plus (d) the amount of $1,225,000. The aggregate amount of
the Liabilities shall be determined in accordance with Schedule 1 in good faith
by an accounting to be conducted jointly by the Buyer and the Seller based upon
the Branch Account Trial Balance Report prepared by the Seller. The book value
of the Loans acquired shall be determined in accordance with Schedule 1 in good
faith by an accounting to be conducted jointly by the Buyer and the Seller based
upon the Branch Loan Trial Balance Report prepared by the Seller. The book value
of the Personal Property acquired pursuant to Section 2.4(b) shall be determined
in accordance with Schedule 1 in good faith by an accounting to be conducted
jointly by the Buyer and the Seller based upon the books and records of the
Branch. The Buyer and the Seller shall complete their provisional accounting on
the Business Day next preceding the Closing Date and shall jointly execute, and
deliver to each other on the Closing Date, a certificate setting forth the
amount of cash on hand and due from banks at the Branch transferred to the Buyer
hereunder, the amount of such Liabilities, the book value of the Loans and
Personal Property acquired, and stating the Assumption Price to be paid by the
Seller to the Buyer on the Closing Date. Final determination of the Assumption
Price and final settlement of any payment or refund shall be made in accordance
with Section 8.2.5.
3.2 Allocation of the Consideration for Acquisition of the Branch. The
Buyer and the Seller hereby agree that the amount paid by the Buyer for the
Assets, business and properties acquired by the Buyer hereunder, including the
Premises and the Personal Property, shall be allocated as determined in Section
3.1. The Buyer and the Seller agree that the valuations set forth in Section 3.1
were determined by the Buyer and the Seller in good faith and at arm's length
and that the Assumption Price to be paid by the Seller to the Buyer pursuant to
the terms of this Agreement has been agreed upon and established, and the
respective parties have entered into this Agreement, on the basis of the
valuations as determined herein and in Schedule 1.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS
4.1 Representations, Warranties and Covenants of the Seller. The Seller
hereby represents, warrants and covenants to the Buyer as follows:
4.1.1 Powers and Authority. The Seller is a national banking
association duly organized, validly existing and in good standing under the laws
of the United States of America
8
15
with full power and authority to conduct a commercial banking business at the
Branch as now conducted by it, to own and lease all of the assets owned or held
under lease by it at the Branch and to sell the Branch (except to the extent
that the approvals contemplated by Sections 6.1.1, 6.1.2, 6.1.3 and 6.1.4 have
not yet been obtained). The Seller conducts, and on the Closing Date will
conduct, a commercial banking business at the Branch and does not, and will not
on the Closing Date, operate a trust department at the Branch. The execution and
delivery of this Agreement by the Seller have been duly authorized by all
necessary corporate action on the part of the Seller, which authorization will
not have been altered, amended, modified or revoked before the Closing Date,
and, upon execution and delivery, this Agreement will constitute a valid and
binding obligation of the Seller enforceable in accordance with its terms.
Further, provided all of the conditions specified in Sections 6.1.1. through
6.1.4 have been satisfied prior to the Closing Date, on the Closing Date the
Seller will have the full power and authority to grant, sell and assign all
rights and properties to be sold and assigned hereunder and to perform its
obligations hereunder, without shareholder approval.
4.1.2 Other Agreements. Provided all of the conditions
specified in Section 6.1 have been satisfied prior to the Closing Date, the
execution and delivery of this Agreement by the Seller and the consummation of
the transactions contemplated herein will not:
(a) result in breach of or violate any of the terms
or conditions of, or constitute a default under, the Seller's
articles of association or bylaws or any contract, agreement,
commitment, indenture, note, bond, license, mortgage, deed of
trust or other instrument or obligation to which the Seller is
a party or by which it or any of its properties or assets may
be bound or affected; or
(b) violate any law, or any rule or regulation of any
Governmental Body, or any order, writ, injunction, judgment or
decree of any court or Governmental Body applicable to the
Seller, the Assets or the business of the Branch.
4.1.3 Branch Reports. The Branch Account Trial Balance Report
included in Exhibit A and to be provided to the Buyer pursuant to Section 5.2.8
and the Branch Loan Trial Balance Report included in Exhibit B and to be
provided to the Buyer pursuant to Section 5.2.9: (i) are or will be prepared in
accordance with the books and records of the Seller maintained by the Seller in
the ordinary and regular course of its business relating to the conduct of
business at the Branch; and (ii) are or will be correct and complete and fairly
present the information required pursuant to Sections 1.5 and 1.6, respectively.
4.1.4 Branch Information. The financial information used in
determining the aggregate amount of the Liabilities, the cash on hand at the
Branch, the book value of the Loans acquired, the book value of the Personal
Property acquired, and the Assumption Price in accordance with the provisions of
Section 3.1 will be prepared in accordance with the books and records of the
Seller maintained by the Seller in the ordinary and regular course of its
business relating to the conduct of business at the Branch, will be complete and
correct and will fairly present the financial and other data regarding the
Branch. The books and records of the Seller maintained by the Seller with
respect to its business at the Branch are, and until the Closing Date will be,
kept and prepared in accordance with the accounting principles applied by the
Seller with respect to its other branch offices.
4.1.5 Personal Property. Exhibit E attached hereto and
incorporated herein contains an itemized list of all equipment, furniture and
other tangible personal property leased or owned by the Seller which is to be
transferred or sold to the Buyer pursuant to this Agreement (the "Personal
Property"). Unless otherwise indicated on Exhibit E, the Seller has, and on the
9
16
Closing Date will have, good and marketable title to all of the Personal
Property, in each case free and clear of all mortgages, pledges, liens, security
interests, conditional sale agreements, charges, encumbrances and restrictions
of every kind and nature.
4.1.6 Premises. The Seller will delivery the Premises to the
Buyer at the Closing in substantially the same condition as it is in on the date
hereof; except for reasonable wear and tear and repairs which are the
responsibility of the landlord. As of this date there are no repairs to be
completed by the landlord. With respect to the Lease, neither the Seller nor the
landlord is, and on the Closing date neither the Seller nor the landlord will
be, in default under the Lease and the Lease has not been amended and is
currently in full force and effect in the form attached hereto as Exhibit C. On
the Closing Date, there will be no additional premises leased to or owned by the
Seller in connection, in whole or in part, with the business of the Branch.
4.1.7 Contracts and Agreements. Exhibit D attached hereto and
incorporated herein is, to the best of the Seller's knowledge, after due
inquiry, a complete and correct list of all contracts, agreements and other
commitments (other than policies of insurance and retirement, pension, bonus,
profit-sharing, stock option, stock purchase and other fringe benefit plans),
entered into in connection, in whole or in part, with the business of the
Branch, whether written or oral, and of all proposed or uncompleted capital
expenditures or major maintenance projects heretofore authorized in connection,
in whole or in part, with the business of the Branch. Each contract, agreement
and other commitment set forth in Exhibit D is, and on the Closing Date will be,
and each contract, agreement or other commitment referred to in Section 2.2(c)
on the Closing Date will be, valid and enforceable in accordance with its terms.
To the extent available (and, if not available after diligent search, clearly
indicated on Exhibit D as not available), a complete and correct copy of each
written contract, agreement and other commitment will be delivered to the Buyer
within thirty (30) days from the date hereof, and a complete and correct
detailed summary of each oral contract, agreement and other commitment and of
each uncompleted and proposed capital expenditure or major maintenance project
listed in Exhibit D is set forth in Exhibit D. Except as otherwise set forth in
Exhibit D, each contract, agreement and other commitment listed therein is, and
on the Closing Date will be, assignable to the Buyer by the Seller without the
consent of any third party and without any payment or penalty, and the Seller
has not taken any action which impairs the right of further assignment thereof
by any immediate or remote assignee of the Seller. The Seller is not, and on the
Closing Date will not be, in default in any respect under any contract,
agreement or commitment set forth in Exhibit D or referred to in Section 2.2(c)
and, to the best of the Seller's knowledge, after due inquiry, no other party
under any such lease, contract agreement or commitment is in default in any
material respect thereunder, and all of the same are free and clear of all
mortgages, pledges, liens, security interests, conditional sale agreements,
charges, encumbrances and restrictions of any kind and nature created by or on
behalf of the Seller.
4.1.8 Pending Litigation. There is no action, suit, claim,
charge, complaint, proceeding or investigation (each a "Claim") pending or, to
the best of the Seller's knowledge, after due inquiry, threatened against the
Seller affecting the business of the Branch, any of the Assets or the Seller's
ability to perform its obligation hereunder, at law or in equity, in any court,
before any arbitrator or arbitration tribunal or before or by any federal,
state, municipal or other domestic or international governmental authority,
department, commission, board, agency or other instrumentality (collectively, a
"Governmental Body"). There is no outstanding judgment, order, writ, injunction
or decree of any court, any arbitrator or arbitration tribunal or any
Governmental Body against or affecting the business of the Branch or any of the
assets used in connection, in whole or in part, with the business of the Branch.
4.1.9 Compliance with the Law. Other than a banking charter
issued by the Comptroller of the Currency and an authorization to establish a
branch facility issued by the
10
17
Comptroller of the Currency, to the best of the Seller's knowledge, after due
inquiry, the Seller is not required to obtain or maintain any license, permit,
authorization or approval from any Governmental Body in order to conduct its
banking business at the Branch as now conducted by it and to own and operate the
properties and assets utilized by it in such business. No Claim is pending nor
has the Seller been threatened with any Claim wherein the remedy sought is the
revocation or limitation of any governmental license or permit and the Seller
does not know of any basis or grounds for any such revocation or limitation. The
Seller has complied with all laws, rules, regulations, ordinances, codes,
orders, licenses and permits relating to and materially affecting the conduct of
its banking business at the Branch.
4.1.10 Employees. Exhibit F attached hereto and incorporated
herein contains a complete and accurate list of the names and titles of all
officers and employees of the Seller employed at the Branch. The Buyer may, on a
confidential basis, review the salaries, wages, and all other forms of
compensation and benefits provided to the Branch officers and employees and any
existing employment agreements, contracts or commitments with any such officers
and employees. With respect to the Branch there are at present, and on the
Closing Date except as previously disclosed to the Buyer in writing, there will
be no disputes or controversies with any union, no pending or threatened union
organization drives or representation elections, no known threats of strikes or
work stoppages, and no payments due from the Seller to, and no collective
bargaining contracts with, any union.
4.1.11 Environmental Liabilities. To the best of the Seller's
knowledge, the Seller is conducting and has conducted the business of the
Branch, and is using and has used the Premises in compliance with all applicable
Environmental Laws. To the best of the Seller's knowledge, the Premises and all
real property in which there is a security interest for a Loan are not subject
to any existing, pending or threatened investigation, action or proceeding,
including any notice of violation, by any Governmental Body regarding
contamination of any part of thereof or infractions of any law, statute,
ordinance or regulation or any license or permit issued by any Governmental Body
pertaining to health, industrial hygiene or environmental safety or
environmental conditions on, under or about the Premises or such real estate,
except for such investigations, actions, proceedings, notifications or
infractions which, in the aggregate, have not caused and could not cause a
material adverse change in the business condition or results of operations of
the Branch. To the best of the Seller's knowledge, there has not been any
generation, use, handling, transportation, treatment or disposal of any
Hazardous Substances in connection with the conduct of the business of the
Branch or such real estate that has or might result in any material liability
under any Environmental Law.
4.1.12 Deposits at the Branch. During the six-month period
prior to the date hereof the Seller has not transferred, and between the date
hereof and the Closing Date, the Seller will not transfer, any Deposits to any
of the Seller's other branches, except in accordance with the express request of
the depositor in the ordinary and regular course of business, or except as may
be agreed in writing by the Buyer or as may be provided for in this Agreement.
4.1.13 Loans at the Branch. All of the Loans represent actual
loan transactions, are legal, valid and enforceable, except pursuant to
bankruptcy and similar laws, and are authorized under applicable federal and
state laws and, except as set forth on Exhibit B hereto, the Seller's books and
records accurately reflect the payment history and present balance as to each
such loan. Except as set forth in Exhibit B, none of the borrowers on said loans
has notified the Seller of any offset or defense, valid or invalid, to its
obligations under said loans and none of said loans is in default, classified by
any examining authority, specifically reserved against (as compared to general
reserves) or nonperforming. The Seller makes no representation or warranty
concerning the collectability of any loan acquired by the Buyer hereunder.
11
18
4.1.14 No Material Adverse Change. Since September 30, 1997,
and except as to the Retained Assets and the Retained Liabilities and except as
to the effects of this transaction, to the best of the Seller's knowledge: (i)
the Seller has conducted the business of the Branch in the ordinary and regular
course thereof; (ii) except as otherwise set forth in Exhibit G hereto, there
has not been any: 1) material adverse change in the business, operations or
prospects of the Branch or in its condition, financial or otherwise, or in its
assets or liabilities as reflected on Exhibits A and B; 2) damage, destruction
or loss affecting the Branch Premises, business or assets, whether or not
covered by insurance, which, either singly or in the aggregate, has materially
affected said business or assets or which is substantial in amount; 3) material
change in the nature of or in the condition, other than financial, of the
business of the Branch; 4) event or condition of any character whatsoever the
occurrence of which materially and adversely affected the business, operations,
prospects, Premises, or assets of the Branch; or 5) event or condition of any
character whatsoever which is reasonably likely to result in a material change
in the nature of the business of the Branch or a material adverse change in the
condition, financial or otherwise, of said business or is reasonably likely
materially and adversely to affect said business, operations, prospects,
Premises, liabilities or assets, other than any event or condition which is
generally known and understood by persons knowledgeable in the banking industry
to affect the banking industry or the economy in general and other than as
contemplated by this Agreement; and (iii) in its conduct of the business of the
Branch, the Seller has not, except in the ordinary and regular course of the
business of the Branch, incurred any liabilities or obligations, or purchased or
otherwise acquired, mortgaged, pledged or subjected to any lien, charge or other
encumbrance, or sold or transferred any assets, or canceled any debts or claims,
or suffered any extraordinary losses, or breached any contract or commitment, or
waived any rights of value.
4.1.15 Branch Employees. The seller agrees to use its best
efforts to assist the Buyer in retaining the services of all of the Branch
employees the Buyer desires to retain pursuant to Section 4.2.4 and the Seller
shall not compete with the Buyer for those Branch employees; provided, however,
nothing contained herein shall preclude a Branch employee from requesting the
Seller to continue his or her employment with the Seller.
4.1.16 Representations and Warranties. No representation or
warranty by the Seller contained in this Agreement or any exhibit hereto or in
any written statements, certificates or other documents furnished to the Buyer
pursuant to this Agreement or in connection with the transactions contemplated
hereby contains or will contain any untrue statement of a material fact nor will
all of such representations and warranties and all of the contents of this
Agreement and all of such statements, certificates and other documents, taken as
a whole, omit to state any fact necessary to make the statements herein or
therein not misleading. Each and all of the foregoing warranties and
representations are deemed made as of the date hereof and at the Closing.
4.2 Representations, Warranties and Covenants of the Buyer. The Buyer
hereby represents, warrants and covenants to Seller as follows:
4.2.1 Powers and Authority. The Buyer is a state banking
corporation duly organized, validly existing and in good standing under the laws
of the State of California with full power and authority to conduct a commercial
banking business as now conducted by it. The execution and delivery of this
Agreement by the Buyer have been duly authorized by all necessary corporation
action on the part of the Buyer (other than approval of this Agreement and the
transactions contemplated hereby by the Buyer's shareholders, if required by
law), which authorization will not have been altered, amended, modified or
revoked before the Closing Date, and, upon execution and delivery, this
Agreement, subject to its approval by the Buyer's shareholders, if required by
law, will constitute a valid and binding obligation of the Buyer enforceable in
accordance with its terms. Further, provided all of the conditions specified in
Sections 6.1.1. through 6.1.4 have been satisfied prior to the Closing Date, on
the Closing Date
12
19
the Buyer will have the full power and authority to purchase and assume all
rights and properties to be purchased and assigned hereunder and to perform its
obligations hereunder and to operate a branch facility on the Premises. The
Deposits contemplated to be assumed hereunder will not be more than ten percent
(10%) of the Buyer's total deposits as of December 31, 1997 and, therefore, the
Buyer may perform its obligations pursuant to this Agreement without shareholder
approval.
4.2.2 Other Agreements. Provided all of the conditions
specified in Section 6.1 have been satisfied prior to the Closing Date, the
execution and delivery of this Agreement on behalf of the Buyer and the
consummation of the transactions contemplated herein will not:
(a) result in the breach of or violate any of the
terms or conditions of, or constitute a default under, the
Buyer's articles of incorporation or bylaws or any contract,
agreement, commitment, indenture, note, bond, license,
mortgage, deed of trust or other instrument or obligation to
which the Buyer is a party or by which it or any of its
properties or assets may be bound or affected; or
(b) violate any law, or any rule or regulation of any
Governmental Body, or any order, writ, injunction, judgment or
decree of any court or Governmental Body applicable to the
Buyer, the Assets, the Liabilities or the business of the
Branch.
4.2.3 Pending Litigation. There is no pending or threatened
Claim involving the Buyer which would materially adversely affect the
transactions contemplated hereby or the Buyer's ability to perform its
obligations hereunder.
4.2.4 Branch Employees. The Buyer agrees to use its best
efforts to retain all the employees of the Branch as listed on Exhibit F
attached hereto and agrees to notify the Seller ten (10) Business Days prior to
the Closing of any employees the Buyer will not employ; provided, however, that
nothing contained herein shall preclude the termination of any employee by the
Buyer for cause or for other reasons such as Branch staff reduction(s). The
Buyer further agrees that all Employees of the Branch hired by the Buyer will be
entitled to any and all rights and benefits, and be subject to any and all
obligations of any other employee of the Buyer, and for purposes of any existing
employee benefit plan of the Buyer, such former employees of Seller retained by
the Buyer will be considered employees of the Buyer from the date the employee
was employed by the Seller, to the extent permissible under the terms of the
Buyer's plan or policy.
4.2.5 Representations and Warranties. No representation or
warranty of the Buyer contained in this Agreement or any exhibit hereto or in
any written statement, certificate or other document furnished to the Seller
pursuant to this Agreement or in connection with the transactions contemplated
hereby contains or will contain any untrue statement of a material fact nor will
all such representations and warranties and all of the contents of this
Agreement and all of such statements, certificates and other documents omit to
state any fact necessary to make the statements herein or therein not
misleading. Each and all of the foregoing warranties and representations are
deemed made as of the date hereof and at the Closing.
ARTICLE V
OBLIGATIONS OF THE PARTIES BEFORE CLOSING DATE
5.1 Obligations of Both Parties. The Seller and the Buyer agree that
subsequent to the date hereof and prior to the Closing Date:
13
20
5.1.1 Administrative Approvals. Promptly following execution
of this Agreement, the parties shall, with copies to the other of all submitted
material, submit this Agreement to the California Commissioner of Financial
Institutions (the "Commissioner") for approval, as required in Section 4879.09
of the California Financial Code, and the Buyer shall submit this Agreement to
the FRB for approval, as required by 12 U.S.C. Section 1828(c)(2). The parties
hereto shall also promptly file, either individually or jointly, as may be
required, all other applications, amendments thereto, supporting documents and
affidavits, and shall publish all other notices and perform all other acts which
may be required by law or regulation to obtain the final approvals of the
Commissioner, the FRB and any other Governmental Body whose approval is a
prerequisite to the consummation of the transactions contemplated herein. The
Seller and the Buyer shall furnish the other upon request all such information
and material concerning the Branch, the Seller or the Buyer, as the case may be,
required for inclusion in, or preparation of, any applications required to be
made for any regulatory approvals to the acquisition by the Buyer of the Branch
from the Seller hereunder and the transactions hereby contemplated, and shall
keep each other apprised on a current basis of the processing and status of all
such filings and applications for regulatory approvals.
5.1.2 Best Efforts. Each party hereto will use its best
efforts to effectuate the transactions hereby contemplated and to fulfill the
conditions of its obligations under this Agreement.
5.2 Obligations of Seller. The Seller agrees that subsequent to the
date hereof and prior to the Closing Date:
5.2.1 Shareholder Approval of Agreement. If required, the
Seller agrees to seek requisite shareholder approval, in conformance with all
appropriate legal requirements, accompanied by the favorable recommendations of
its management.
5.2.2 Access to Information. Without interfering with the
normal course of business at the Branch, the Buyer and its counsel, accountants
and other representatives shall have full access, upon reasonable notice and
mutual convenience, to all properties, assets, books, accounts, records,
contracts and documents of the Seller related to the conduct of business at the
Branch contemplated to be transferred or assigned hereunder and, in addition
thereto, the Seller shall furnish or cause to be furnished to the Buyer and its
representatives, at the Buyer's expense, such copies of said copies of said
books, accounts, records, contracts and documents as may be reasonably
requested.
5.2.3 Conduct of Business. The Seller shall, except as to the
Retained Assets and the Retained Liabilities: (i) conduct business at the Branch
only in the ordinary course, consistent with past practices; (ii) carry on the
Branch's business practices and keep the Branch's books of account, records and
files in substantially the same manner as heretofore; (iii) use its best efforts
to preserve the Branch's business organization intact, to retain the services of
the Branch's present officers and employees and to preserve the goodwill of the
Branch's depositors, customers and suppliers and others having business
relations with the Branch; and (iv) duly and timely file all reports and returns
required to be filed with any Governmental Body with respect to the business of
the Branch.
5.2.4 Ordinary Course and Other Activities. Except as set
forth in this Agreement, the Seller shall not, without the prior written consent
of the Buyer: (i) sell, lease, abandon, assign, transfer, license, encumber or
otherwise dispose of any Personal Property or Assets other than in the ordinary
course of business, or enter into any agreement to do so; (ii) except as
otherwise expressly provided herein, transfer any Assets or Deposits from the
Branch to the Seller's other branches or operations, subject, in the case of
Deposits, to the individual
14
21
depositor's continuing right of withdrawal; (iii) enter into any leases,
contracts, agreements or other commitments, whether written or oral, in
connection, in whole or in part, with the business of the Branch other than
leases, as lessee, of personal property (copies of which shall be provided to
the Buyer) under which the Seller is not liable or obligated in an amount in
excess of $5,000 in the aggregate and all such leases, contracts, agreements and
commitments so entered into by the Seller shall be assignable to the Buyer by
the Seller without the consent of any third party and without any payment or
penalty, and the Seller will not take any action which impairs the right of
further assignment thereof by any immediate or remote assignee of the Seller;
(iv) increase the compensation or the annual rate of compensation or change the
method of determining the compensation of any employee listed in Exhibit F
hereto except in accordance with the Seller's existing policies and practices
with respect to compensation and bonuses at the Branch and only in the ordinary
course; provided, however, the Seller may pay a one-time bonus to the Branch
employees employed as of December 31, 1997 on a basis to be determined by the
Seller. The total amount to be paid by the Seller will not exceed $20,000. In
order to qualify for this one-time bonus, the identified employees must be
employed by the Seller on the Closing Date and must remain employed by the Buyer
for a period of six (6) months after the Closing. The Seller agrees to open a
non interest-bearing depository account with the Buyer as of the Closing Date
with sufficient funds to cover the maximum liability for these bonuses. The
Seller may retain any remaining balance after payment of these bonuses; (v)
relocate, or file any application to relocate, the Branch, except as such an
application may be necessary to relocate the Branch as a result of a fire or
other natural disaster, and except as may be necessary to transfer the Retained
Assets and the Retained Liabilities after the Closing Date; or (vi) enter into
any contract, agreement, commitment, understanding or other arrangement to
dispose of the Branch or the Assets or Liabilities other than pursuant to the
terms of this Agreement.
5.2.5 Condition of Assets. The Seller shall keep and maintain
the Premises, all Personal Property and all of the Assets in good operating
condition and repair, subject to reasonable wear and tear and further subject to
the provisions of Section 6.2.6.
5.2.6 Consents. The Seller will obtain and deliver to the
Buyer on or prior to the Closing Date all required consents authorizing the
transfer and assignment to the Buyer of, or the substitution of the Buyer for
the Seller under, the Lease and all contracts, agreements and commitments that
are to be sold, conveyed, transferred, assigned and delivered to the Buyer
hereunder, including, but not limited to, those set forth in Exhibit D hereto
and all other Assets, each such consent to be effective prior to or as of the
Closing Date. The assignment of the Lease and the landlord's consent shall be in
substantially in the form of Exhibit H. All such other consents shall be in form
and substance reasonably satisfactory to counsel for the Buyer.
5.2.7 Personal Property Report. On the day next preceding the
Closing Date the Seller will prepare and furnish to the Buyer an update of the
Personal Property Exhibit E as of the day next preceding the Closing Date. Such
final Exhibit E shall comply with the representations and warranties set forth
in Section 4.1.5.
5.2.8 Deposit Update. Not later than five (5) Business Days
prior to the Closing Date the Seller shall deliver to the Buyer a Branch Account
Trial Balance Report listing the Deposits to be assumed by the Buyer. On the day
next preceding the Closing Date the Seller shall deliver to the Buyer an updated
Branch Account Trial Balance Report.
5.2.9 Loan Update. Not later than five (5) Business Days prior
to the Closing Date the Seller shall deliver to the Buyer a Branch Loan Trial
Balance Report listing the Loans to be purchased by the Buyer. On the day next
preceding the Closing Date the Seller shall deliver to the Buyer an updated
Branch Loan Trial Balance Report.
15
22
5.2.10 Data Conversion. At the Buyer's reasonable request, and
in accordance with the procedures outlined in Exhibit I, the Seller shall
cooperate with the Buyer in its data conversion for the Branch prior to the
Closing and for sixty (60) days thereafter, including but not limited to all
reasonable assistance in converting loan and deposit accounts, merchant account
relationships, and ATM cards.
5.2.11 No Breach. The Seller shall not take or fail to take
any action which taking or failure would cause or constitute a breach, or would,
if it had been taken or failed to be taken prior to the date hereof, have caused
or constituted a breach, of any of the representations and warranties set forth
in Section 4.1; the Seller will, in the event of, or promptly after becoming
aware of the occurrence of, or the impending or threatened occurrence of, any
event which would cause or constitute a breach or would, if it had occurred
prior to the date hereof, have caused or constituted a breach of any of the
representations and warranties set forth in Section 4.1 or the covenants set
forth in Sections 5.1 or 5.2, or which may result in the nonfulfillment of any
condition set forth in Sections 6.1 or 6.2, give detailed notice thereof to the
Buyer; and the Seller will use its best efforts to prevent or promptly to remedy
such breach or failure to fulfill such covenant or condition.
5.3 Obligations of Buyer. The Buyer agrees that subsequent to the date
hereof and prior to the Closing Date:
5.3.1 Shareholder Approval of Agreement. This Agreement will
be submitted to the shareholders of the Buyer for approval to the extent
necessary under Section 4879.04 of the California Financial Code. If required,
the Buyer agrees to seek shareholder approval, in conformance with all
appropriate legal requirements, accompanied by the favorable recommendations of
its board of directors.
5.3.2 Notification of Deposits and Loans Rejected. The Buyer
agrees that, at least two (2) Business Days prior to the Closing the Buyer will
notify the Seller, in writing, identifying: (i) the Deposits included on the
Branch Account Trial Balance Report provided pursuant to the first sentence of
Section 5.2.8 which the Buyer is rejecting pursuant to Section 2.1(a); and (ii)
the Loans included on the Branch Loan Trial Balance Report provided pursuant to
the first sentence of Section 5.2.9 which the Buyer is rejecting pursuant to
Section 2.4(a).
5.3.3 No Breach. The Buyer shall not take or fail to take any
action which taking or failure would cause or constitute a breach, or would, if
it had been taken or failed to be taken prior to the date hereof, have caused or
constituted a breach, of any of the representations and warranties set forth in
Section 4.2; the Buyer will, in the event of, or promptly after becoming aware
of the occurrence of, or the impending or threatened occurrence of, any event
which would cause or constitute a breach or would, if it had occurred prior to
the date hereof, have caused or constituted a breach of any of the
representations and warranties set forth in Section 4.2 or the covenants set
forth in Sections 5.1 or 5.3, or which may result in the nonfulfillment of any
condition set forth in Sections 6.1 or 6.3, give detailed notice thereof to the
Seller; and the Buyer will use its best efforts to prevent or promptly to remedy
such breach or failure to fulfill such covenant or condition.
ARTICLE VI
CONDITIONS PRECEDENT TO CLOSING
6.1 Conditions Precedent to Performance by Both Parties. The
obligations of the Buyer and the Seller to consummate the transactions
contemplated in this Agreement are expressly subject to the satisfaction, on or
before the Closing Date, of each and all of the conditions set forth below,
which conditions may not be waived by either party:
16
23
6.1.1 Shareholder Approval. This Agreement shall have been
duly approved by the shareholders of the Buyer if and to the extent required and
in any manner permitted by Section 4879.04 of the California Financial Code;
such approval being evidenced either by a vote at a shareholders' meeting
validly called for such purpose or by a writing duly executed by the required
number of shareholders.
6.1.2 Approval of the Commissioner. The Commissioner shall
have given all necessary approvals of this Agreement, including approval of a
partial business unit sale as set forth in Section 4879.02 of the California
Financial Code on terms and conditions which are not materially adverse to
either party hereto.
6.1.3 Approval of the FRB. The FRB shall have given all
necessary consents to the consummation of the transactions contemplated in this
Agreement, including the consent required pursuant to 12 U.S.C.
Section 1828(c)(2), on terms and conditions which are not materially adverse to
either party hereto.
6.1.4 Other Regulatory Approvals. All other regulatory
approvals and actions shall have been obtained and taken as necessary to permit
consummation of the transactions contemplated herein in accordance with all
applicable laws, regulations and orders, on terms which are not materially
adverse to either party hereto.
6.1.5 No Claim. No Claim shall have been instituted by any
Governmental Body challenging the transactions hereby contemplated or seeking to
restrain their consummation and no Claim shall have been instituted or, to the
knowledge of either party hereto, threatened, challenging the legality of such
transactions or seeking to restrain their consummation which, in the opinion of
counsel for either party hereto, would make it impossible or inadvisable for the
parties to consummate such transactions.
6.1.6 Closing Date. The Closing shall occur on or prior to
March 31, 1998, unless the date for the Closing is extended by mutual agreement.
6.2 Conditions Precedent to Buyer's Performance. The obligations of the
Buyer to perform its obligations under this Agreement are subject to the
satisfaction, on or before the Closing Date, of each and all of the conditions
set forth below in this Section 6.2. The Buyer may waive any or all of these
conditions in whole or in part without prior notice; provided, however, that if
the Seller shall be in default of any of its representations, warranties or
covenants under this Agreement, no such waiver of a condition shall constitute a
waiver by the Buyer of any of its rights or remedies at law or in equity.
6.2.1 Accuracy of Warranties and Performance of Obligations.
The representations and warranties of the Seller contained in Section 4.1 shall
be true and correct as of the Closing Date as if made on such date, and the
obligations set forth in Sections 5.1 and 5.2 to be performed by the Seller on
or before the Closing Date shall have been so performed in all material
respects; and the Seller shall have delivered to the Buyer a certificate of its
President and its Chief Financial Officer to such effect.
6.2.2 Copies of Documents. True and complete copies of all
documents reasonably requested by the Buyer shall have been furnished to the
Buyer promptly after request therefore and, in any event, in advance of the
Closing Date.
6.2.3 Consents and Approvals. The Buyer shall have received
the consents the Seller is required to use its best efforts to obtain and
deliver to the Buyer on or before the Closing
17
24
Date pursuant to Section 5.2.6 and all licenses, permits, authorizations and
approvals required by any Governmental Body in connection with its conduct of
business at the Branch.
6.2.4 Matters Relating to the Premises. The Seller shall have
delivered to the Buyer a duly executed Assignment of Lease and a duly executed
Consent of Lessor substantially in the form set forth as Exhibit H.
6.2.5 Books and Records. The Seller shall have made available
to the Buyer its Branch books and records as required under Section 5.2.2.
6.2.6 Force Majeure. The Seller shall maintain insurance as
presently in force on the Assets of the Branch including the Premises. In the
event the Seller suffers a loss due to earthquake, fire, flood, accident or
other casualty which adversely affects the value of any of the Assets or conduct
of the business at the Branch being acquired by the Buyer hereunder, the Buyer
shall have fifteen (15) Business Days from the date of written notice of such
event within which to terminate this Agreement by giving written notice to the
Seller. Should the Buyer not terminate this Agreement pursuant to this Section
6.2.6 within such fifteen (15) Business Day period, at the Closing the Buyer
shall take the Assets and business acquired hereunder as is, together with the
insurance proceeds or the Seller's right to the insurance proceeds relating to
the damaged Assets and business.
6.2.7 Assumption of Safe Deposit Box Business. The Buyer and
the Seller shall do all things necessary to transfer any safe deposit box
business at the Branch to the Buyer.
6.2.8 Disclosure of Employee Matters. There shall not have
been disclosed to the Buyer any matter pursuant to the third sentence of Section
4.1.10.
6.2.9 Material Changes. Except with respect to the Retained
Assets and the Retained Liabilities and the effects of this transaction, there
shall not have been any material change in the business or operations of the
Branch from that as of September 30, 1997.
6.2.10 Deposits. At the Closing the Deposits to be assumed by
the Buyer pursuant to Section 2.1(a) shall total at least $14,500,000, of which
non interest-bearing Deposits shall total at least $6,500,000. If non
interest-bearing Deposits total less than $6,500,000 the Seller, at the Closing,
shall open a non interest-bearing demand deposit for the amount of the shortfall
at the Buyer and maintain that account for a period of one (1) year. If
interest-bearing Deposits total less than $8,000,000 the Seller, at the Closing,
shall place a 3% interest-bearing time certificate of deposit for the amount of
the shortfall at the Buyer for a period of one (1) year.
6.3 Conditions Precedent to Seller's Performance. The obligations of
the Seller to perform its obligations under this Agreement are subject to the
satisfaction, on or before the Closing Date, of each and all of the conditions
set forth below in this Section 6.3. The Seller may waive any or all of these
conditions in whole or in part without prior notice; provided, however, that if
the Buyer shall be in default of any of its representations, warranties or
covenants under this Agreement, no such waiver of a condition shall constitute a
waiver by the Seller of any of its rights or remedies at law or in equity.
6.3.1 Accuracy of Warranties and Performance of Obligations.
The representations and warranties of the Buyer contained in Section 4.2 shall
be true and correct as of the Closing Date as if made on such date, and the
obligations set forth in Sections 5.1 and 5.3 to be performed by the Buyer on or
before the Closing Date shall have been so performed in all material respects;
and the Buyer shall have delivered to the Seller a certificate of its President
and its Chief Financial Officer to such effect.
18
25
6.3.2 Copies of Documents. True and complete copies of all
documents reasonably requested by the Seller shall have been furnished to the
Seller promptly after request therefore and, in any event, in advance of the
Closing Date.
ARTICLE VII
CLOSING
7.1 Closing. The closing (the "Closing") of the transactions
contemplated by this Agreement shall take place at the Branch at 5:00 p.m.,
Pacific time, on the first Friday which is a Business Day following the date on
which the last to occur of the following events shall have occurred: (i) receipt
of written approval of the transactions hereby contemplated by the FRB and the
expiration of the applicable waiting period under the Bank Merger Act; (ii) such
written approvals of this Agreement and the transactions hereby contemplated as
may be required under the California Financial Code have been given by the
Commissioner and have become effective; and (iii) receipt of any other approvals
required from any Governmental Body; or at such time or such other date as the
Buyer and the Seller agree, at the Branch or such other place as the Buyer and
the Seller may agree.
7.2 Seller's Obligations at the Closing. At the Closing, the Seller
shall do the following:
7.2.1 Transfer of Assets. The Seller shall convey, transfer,
assign and deliver to the Buyer, by instruments satisfactory in form and
substance to the Buyer and its counsel, good and marketable title to the Assets,
free and clear of any mortgages, pledges, liens, security interests, conditional
sale agreements, charges and encumbrances and restrictions of any kind and
nature whatsoever except as permitted in this Agreement, and shall execute,
acknowledge and deliver such grant deeds, bills of sale, assignments,
conveyances and other assurances, documents and instruments of transfer as may
reasonably be requested by the Buyer for the purpose of assigning, transferring,
granting, conveying and confirming to the Buyer and reducing to its possession,
any and all property to be conveyed and transferred under this Agreement.
7.2.2 Certificates and Further Documents. The Seller shall
deliver to the Buyer all of the Documents and other instruments to be delivered
to the Buyer pursuant to Sections 6.1 and 6.2 and not previously furnished to
the Buyer and such other certificates and documents as may reasonably be
requested by the Buyer with respect to the fulfillment of the conditions
specified in Sections 6.1 and 6.2.
7.2.3 Premises, Books and Records. The Seller shall deliver
physical possession of the Branch and all of the files, documents, papers,
agreements, books of account and records pertaining to the Assets and
Liabilities being transferred and assumed hereunder. The Seller agrees to make
available any records kept by the Seller relating to the Branch and not
delivered hereunder.
7.2.4 Payment of Assumption Price. Pursuant to Section 3.1, at
the Closing the Seller shall credit or pay to the Buyer in the manner directed
by the Buyer on the Business Day next preceding the Closing Date the amount of
the Assumption Price to be paid to the Buyer hereunder.
7.2.5 Deposits. The Seller shall place a deposit or deposits
at the Buyer to the extent required pursuant to Section 6.2.10.
7.3 Buyer's Obligations at the Closing. At the Closing, the Buyer shall
do the following:
19
26
7.3.1 Assumption of Liabilities. The Buyer shall deliver to
the Seller an undertaking in form and substance satisfactory to the Seller and
its counsel whereby the Buyer assumes and agrees to perform and discharge: (i)
all of the Liabilities set forth in Section 2.1; and (ii) all of the obligations
which are set forth in Section 2.2 and which arise after the Closing Date or are
to be performed after the Closing Date, except those obligations set forth in
Sections 2.2(b) or (c), if any, which cannot be transferred without the consent
of third parties and as to which the Seller shall have been unable to obtain
such consent.
7.3.2 Further Documents. The Buyer shall deliver to the Seller
all of the documents and other instruments to be delivered to the Seller
pursuant to Sections 6.1 and 6.3 and not previously furnished to the Seller and
such other certificates and documents as may reasonably be requested by the
Seller with respect to the fulfillment of the conditions set forth in Sections
6.1 and 6.3.
ARTICLE VIII
OBLIGATIONS OF THE PARTIES AFTER THE CLOSING
8.1 Seller's Obligations. The Seller agrees that, after the Closing
Date:
8.1.1 Business Relationships. The Seller shall not cause, or
attempt to cause or induce, any person or firm now or hereafter supplying goods,
services or credit to the Branch to cease or diminish the furnishing of such
goods, services or credit.
8.1.2 Banking Relationships. For a period of three (3) years
following the Closing Date, the Seller will not directly or indirectly solicit
deposits from or loans to persons who were Branch customers or depositors on the
date hereof, on the Closing Date or during the period between the date hereof
and the Closing Date; provided, however, that nothing in this Section 8.1.2
shall prevent the Seller from: (i) soliciting deposits or loans in connection
with advertising or solicitations directed to the public generally; (ii)
soliciting deposits from or loans to a major or statewide depositor which has
deposits at locations other than the Branch (such as, for example, a company
with more than one location or public entity); (iii) soliciting deposits or
loans outside the State of California; (iv) continuing any existing lending or
deposit relationships domiciled at any of the Seller's banking offices other
than the Branch; (v) making loans or accepting deposits applied for or made by
such Branch customers or depositors in the absence of such solicitation; or (vi)
making loans or accepting deposits applied for or made by such Branch customers
or depositors who represent Retained Assets or Retained Liabilities.
8.1.3 Confidentiality. Neither party shall divulge or
communicate, except as may be required by applicable law, use to the detriment
of the other or for the benefit of any other person or persons, or misuse in any
way, any confidential information or trade secrets of the other acquired in
connection with or in any manner relating to this Agreement and the transactions
contemplated herein; provided, however, that the foregoing shall not apply to
any information: (i) that was or is otherwise available to the public; (ii) that
was readily available to the other party on a non-confidential basis prior to
disclosure pursuant to this Agreement; (iii) that was already lawfully in the
possession of the other party; (iv) that becomes available to a party on a non-
confidential basis after disclosure pursuant to this Agreement; or (v) that is
requested or required by oral questions, interrogatories, requests for
information or documents, subpoena, civil investigation demand or similar
process by or of any Governmental Body. The foregoing provisions of this Section
8.1.2 shall not prohibit or limit the Buyer's use of any such information in its
conduct of its business at the Branch.
8.1.4 Notification of Customers. Promptly after the Closing
Date and in accordance with the procedures outlined in Exhibit I: (i) the Seller
shall notify all persons
20
27
obligated to make payments under loans that are Retained Assets to make all
future payments in respect to said obligations to a specified address other than
that of the Branch; (ii) the Seller shall notify all persons whose deposit
accounts are Retained Liabilities that all deposits and withdrawals pertaining
thereto shall be made at a specified address other than that of the Branch; and
(iii) the parties shall jointly notify all other customers of the Branch of the
change of ownership of the Branch.
8.1.5 Right to Hire Branch Employees. Pursuant to Section
4.2.4, the Buyer shall have the right to employ all persons who are employees of
the Branch on the Closing Date, subject only to the right of any such employee
to terminate his or her employment. For a period of three (3) years after the
Closing Date, the Seller shall not solicit any employee that the Buyer has
agreed to hire.
8.1.6 Removal of the Seller's Property. Not later than five
(5) Business Days after the Closing Date, the Seller will remove from the Branch
premises, at the Seller's expense, all of its personal property not being
transferred to the Buyer, including but not limited to, negotiable instruments,
stationery, forms, labels, logos, building signs, shipping materials, brochures
and advertising material. If the Seller does not do so, the Buyer may dispose of
same in any manner.
8.1.7 Restrictive Covenant. For a period of three (3) years
after the Closing Date the Seller and its successors and assigns shall not
operate a branch office or a loan production office within a five (5) mile
radius of the Branch. The parties acknowledge and agree that the Seller
currently has deployed stand-alone automated teller machines within a five (5)
mile radius of the Branch, as noted on Exhibit J. The parties agree that these
locations do not constitute branch offices for purposes of this Agreement, so
long as the Seller restricts the activities of these locations to that of
dispensing cash and other products or services and does not allow these
locations to accept deposits and/or any loan related activities. The Seller also
agrees to keep any signage to a minimal nature consistent with the current
practices in place at the identified locations. The Seller may expand the number
of ATMs in these locations or relocate to other locations controlled by the same
parties. Any additional ATMs may only provide services and products on a basis
consistent with the existing ATMs.
8.2 Obligations of Both Parties After the Closing.
8.2.1 Transfer of Credits by the Seller. In accordance with
the procedures outlined in Exhibit I, the Seller agrees that it will transfer to
the Buyer any deposits and loan payments received by it after the Closing Date
for credit to transferred accounts, but it shall be under no obligation to
accept such deposits or loan payments.
8.2.2 Transit Items. In accordance with the procedures
outlined in Exhibit I, after the Closing, each party hereto will assist the
other party in the adjustment and delivery of all overages and shortages of
documentary and cash items in transit, items in collection, and any ACH, POS,
wire transfers and ATM transactions ("Transit Items") as of the Closing Date, as
the interest in such Transit Items of the respective parties hereto may appear.
8.2.3 Further Documents. After the Closing: (i) each of the
parties hereto shall execute and deliver, or cause to be executed and delivered,
all such deeds, documents and other instruments, and will take or cause to be
taken all further or other action, as the other party or its counsel may
reasonably deem necessary or desirable in order to vest in and confirm to the
Buyer title to and possession of all of the Assets and to carry out the full
intent and purpose of this Agreement; and (ii) each of the parties will permit
the other access to and the right to inspect and copy the books and records of
such party as may be reasonably necessary or appropriate to enable
21
28
such other party to prepare such further document, instruments, reports or tax
returns as such other party or its counsel determine to be necessary.
8.2.4 Prorations; Unresolved Transit Items; Sales and Use
Taxes; Insurance.
(a) The Seller and the Buyer agree that all expenses
of operating the Branch prior to, on or after the Closing Date,
including but not limited to, state and local personal property taxes,
expenses for utilities, rent, wages, salaries, accrued vacations and
payments in respect of the leases, contracts, commitments and
agreements referred to in Section 2.2, shall, to the extent possible,
be determined and prorated as of the Closing Date in connection with
the determination of the Assumption Price pursuant hereto. To the
extent that such expenses are not capable of being prorated as of the
Closing Date, such expenses shall, to the extent possible, be prorated
by the Buyer and the Seller and all unresolved Transit Items shall be
allocated between the Buyer and the Seller in accordance with Section
8.2.2 within ninety (90) days after the Closing Date and (i) all such
expenses paid by the Seller on or prior to the Closing Date and
attributable to the operation of the Branch after the Closing Date
(including any payments by the Seller in respect of the Lease and any
of the contracts, commitments and agreements referred to in Section
2.2) shall be paid by the Buyer to the Seller within ten (10) Business
Days after notice from the Seller to the Buyer of the amount thereof
not prorated as of the Closing Date in connection with the
determination of the Assumption Price, and (ii) all such expenses
unpaid at the Closing Date and attributable to the operation of the
Branch on or prior to the Closing Date (including any payments by the
Buyer in respect of the Lease and any of the contracts, commitments and
agreements referred to in Section 2.2) and any payments by the Buyer in
respect of any of the Retained Liabilities shall be paid by the Seller
to the Buyer within ten (10) Business Days after notice from the Buyer
to the Seller of the amount thereof, and (iii) all remaining Transit
Items shall be finally settled and paid within ten (10) Business Days.
The Buyer shall, after the Closing, hold the Seller harmless from any
liability on account of and shall pay to the Seller, within ten (10)
Business Days after notice from the Seller to the Buyer of the amount
thereof, any payments by the Seller on account of any amounts to be
paid by the Buyer pursuant to clause (i) of the immediately preceding
sentence, and the Seller shall, after the Closing, hold the Buyer
harmless from any liability on account of and shall pay to the Buyer,
within ten (10) Business Days after notice from the Buyer to the Seller
of the amount thereof, any payments by the Buyer on account of any
amounts to be paid by the Seller pursuant to clause (ii) of the
immediately preceding sentence. The party making any such reimbursement
pursuant to the provisions of this Section 8.2.4(a) shall be deemed to
have made such payment to the ultimate recipient of the payment.
(b) The Buyer and the Seller agree that all sales and
use taxes, if any, payable in connection with this Agreement and the
transactions hereby contemplated, shall be paid by the Seller.
(c) The Buyer and the Seller agree that no insurance
policies are to be prorated and that the Buyer will procure or maintain
its own insurance with respect to the Branch effective as of the
Closing Date.
8.2.5 Adjustment of Assumption Price. The Buyer and the Seller
acknowledge and agree that the payment of the Assumption Price at the Closing
pursuant to Section 7.2.4 will be based on pre-Closing amounts of the Deposits,
Loans, cash on hand, etc. Within five (5) Business Days after the Closing Date
the Buyer and the Seller shall re-calculate the Assumption Price in accordance
with Section 3.1 and Schedule 1, utilizing final amounts for the Deposits,
Loans, cash on hand, etc. as of the Closing Date. Any balance or refund due to
the Buyer or to
22
29
the Seller, respectively, shall be paid in the manner directed by the recipient
on the next Business Day.
8.2.6 Other Transitional Matters. The Buyer and the Seller
agree to cooperate with respect to all transitional matters to effect the
orderly transfer fo the business of the Branch, including taking the actions
outlined in Exhibit I.
ARTICLE IX
REMEDIES
9.1 Termination
(a) Notwithstanding any provision to the contrary herein, and
notwithstanding the fact that the shareholders of the Buyer may have
approved this Agreement, this Agreement may be terminated at any time
at or prior to the Closing Date: (i) by mutual written agreement
authorized by the boards of directors of the Seller and the Buyer; (ii)
by either the Seller or the Buyer if the Closing shall not have taken
place prior to March 31, 1998; (iii) by the Seller if (a) any of the
conditions set forth in Sections 6.1 or 6.3 shall not have been
fulfilled on or prior to the Closing Date or shall become incapable of
fulfillment by such date; or (b) a Claim of the type referred to in
Section 6.1.5 shall have been instituted; and (iv) by the Buyer if (a)
any of the conditions set forth in Sections 6.1 or 6.2 shall not have
been fulfilled on or prior to the Closing Date or shall become
incapable of fulfillment by such date; or (b) a Claim of the type
referred to in Section 6.1.5 shall have been instituted.
(b) If any party hereto breaches or defaults any
representation, warranty, covenant or agreement made by it hereunder in
any material respect, the non-defaulting party may, on or before the
Closing Date, give notice of termination of this Agreement in the
manner provided in Section 10.1. Such notice shall specify with
particularity the breach or default upon which such notice is based,
and termination shall be effective ten (10) Business Days after the
date of such notice unless the specified breach or default has been
cured on or before such effective date. Notwithstanding anything to the
contrary herein, no party hereto shall have the right to terminate this
Agreement on account of its own breach or because of any non-material
breach by any party hereto of any of its or their covenants,
agreements, representations, warranties, duties or obligations
hereunder.
9.2 Litigation Costs. If any legal action or other proceeding is
brought for the enforcement of this Agreement, or because of an alleged dispute,
breach, default or misrepresentation in connection with any of its provisions,
the successful or prevailing party shall be entitled to recover reasonable
attorneys' fees and other costs incurred in such action or proceeding, in
addition to any other relief to which it may be entitled. The Seller shall
defend, hold harmless and pay to the Buyer the amount of any damages, costs or
expenses with respect to any Claim arising out of a condition, transaction or
event with respect to the Branch occurring on or before the Closing Date,
provided, however, that the Seller shall not be required to so defend, hold
harmless or pay if said Claim is based upon a liability or obligation which the
Buyer expressly has assumed in writing, whether pursuant to this Agreement or
otherwise. The Buyer shall defend, hold harmless and pay to the Seller the
amount of any damages, costs or expenses with respect to any Claim arising out
of a condition, transaction or event with respect to the Branch occurring after
the Closing Date; provided, however, that the Buyer shall not be required to so
defend, hold harmless or pay if said claim is based upon a liability or
obligation which the Seller has retained, whether pursuant to this Agreement or
otherwise.
23
30
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Notices. All notices, requests, demands, waivers or other
communications hereunder must be in writing and shall be deemed given if
delivered personally or if sent by registered or certified mail, return receipt
requested, proper postage prepaid, to the parties at the following addresses or
at such other addresses as may be specified by a like notice:
If to the Buyer: Valley Independent Bank
0000 Xxxx Xxxxxx
Xx Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxx,
President and CEO
With a copy to: Horgan, Rosen, Beckham & Coren, LLP
00000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000-0000
Attention: S. Xxxx Xxxxx, Esq.
If to the Seller: Palm Desert National Bank
00-000 Xx Xxxxx
Xxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. XxXxxxx,
President and CEO
With a copy to: Horgan, Rosen, Beckham & Coren, LLP
00000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000-0000
Attention: S. Xxxx Xxxxx, Esq.
10.2 Entire Agreement. This Agreement constitutes the entire agreement
between the parties pertaining to the subject matter hereof and supersedes any
and all prior and contemporaneous agreements, representations and understandings
of the parties with respect to the subject matter hereof. No supplement,
modification or amendment of this Agreement shall be binding unless executed in
writing by all of the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed, or shall constitute, a waiver of any other provision,
whether or not similar, nor shall any waiver constitute a continuing waiver. No
waiver shall be binding unless in a writing executed by the party making the
waiver.
10.3 Third-Party Rights. Nothing in the Agreement, whether expressed or
implied, is intended to confer any rights or remedies upon any persons other
than the parties hereto and their respective legal representatives, successors
and assigns; nor is any thing in this Agreement intended to relieve or discharge
the obligations or liabilities of any third persons to any party to this
Agreement; nor shall any provision hereof give any third person any right of
subrogation or action over against any party to this Agreement.
10.4 Successors and Assigns. This Agreement shall be binding on, and
shall inure to the benefit of, the parties hereto and their legal
representatives, successors and assigns; provided, however, that no assignment
of this Agreement or any rights or obligations hereunder may be made by any
party hereto without the prior written consent of the other party and no
assignment by any party hereunder shall relieve said party of any of its
obligations or duties hereunder.
24
31
10.5 Brokers. The parties hereby represent and warrant to each other
that all negotiations relating to this Agreement have been carried on between
and on behalf of the Buyer and the Seller directly, without the intervention of
any agent or broker, and each party hereby agrees to indemnify the other party
and hold it harmless from and against any claims for any commissions relating to
this Agreement or to the transactions contemplated hereby resulting from any
actions by such indemnifying party.
10.6 Survival of Warranties and Obligations. All statements,
certifications, indemnifications, representations and warranties made herein by
the parties to this Agreement, and their respective covenants, agreements and
obligations to be performed pursuant to the terms hereof, shall survive the
Closing Date, notwithstanding any examination by or on behalf of any party
hereto, notwithstanding any notice of a breach or of a failure to perform not
waived in writing and notwithstanding the consummation of the transactions
hereby contemplated with knowledge of such breach or failure.
10.7 Severability. If any provision of this Agreement, as applied to
any party or to any circumstance, shall be adjudged by a court to be void,
invalid or unenforceable, the same shall in no way affect any other provision of
this Agreement, the application of any such provision in any other circumstance,
or the validity of enforceability of the other provisions of this Agreement.
10.8 Expenses. Except as otherwise specifically provided herein, all
expenses incurred by the Buyer in connection with this Agreement shall be paid
and discharged by the Buyer and all expenses incurred by the Seller in
connection with this Agreement shall be paid and discharged by the Seller and
none of the Seller's expenses in connection herewith shall be charged to the
Branch.
10.9 Counterparts. The Agreement may be executed simultaneously or in
one or more counterparts, each of which may be deemed an original, but all of
which together shall constitute one and the same instrument, it not being
necessary in making proof of this Agreement to produce or account for more than
one counterpart executed by each party hereto.
10.10 Headings and Construction. All section headings are included only
for convenience and are not intended to be a full and accurate description of
the contents of the Sections hereof and in no way limit, define or describe the
scope or intent of this Agreement or any provision hereof.
10.11 Governing Law. This Agreement shall be construed in accordance
with, and governed by, the laws of the State of California.
10.12 Indemnification. The Buyer and the Seller each agree to indemnify
and hold harmless the other and its affiliates and their officers, directors,
agents, servants and employees from and against any and all claims, actions,
demands, enforcement proceedings, causes of action, damages, liabilities,
expenses (including, without limitation, reasonable attorney's fees), costs and
fines which may be incurred, suffered, sustained or paid arising out of or
related to the breach by either the Buyer or the Seller, as the case may be, of
any representation, warranty, covenant or agreement in this Agreement. Without
limiting the generality of the foregoing, each party shall promptly indemnify
and hold harmless the other party for any liabilities assumed or retained by
such party in the event such liabilities are asserted against such other party.
25
32
IN WITNESS WHEREOF, the Seller and the Buyer have cause this Agreement
to be executed in counterparts by their respective Presidents and Secretaries as
of the date first above written.
VALLEY INDEPENDENT BANK PALM DESERT NATIONAL BANK
By: /s/ Xxxxxx X. Xxxx By: /s/ Xxxxx X. XxXxxxx
----------------------------- -------------------------------------
Xxxxxx X. Xxxx, President Xxxxx X. XxXxxxx, President
By: /s/ Xxxxxxxxx Xxxxxx By: /s/ Xxxxx Xxxxxx
----------------------------- -------------------------------------
Xxxxxxxxx Xxxxxx, Secretary Xxxxx Xxxxxx, Secretary
26
