ASSET PURCHASE AGREEMENT
BY AND AMONG
CITY HOLDING COMPANY,
CITY NATIONAL BANK,
FIRST ALLEGIANCE FINANCIAL CORPORATION
AND
XXXXXX X. XXXXX
October 9, 1997
(xxi)
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
1.1 Accounts Payable.............................................................................. 2
1.2 Accounts Receivable........................................................................... 2
1.3 Agreement..................................................................................... 2
1.4 Agreements Between Seller and Shareholder..................................................... 2
1.5 Assets........................................................................................ 2
1.6 Buyer......................................................................................... 2
1.7 Buyer's Closing Certificate................................................................... 3
1.8 Closing....................................................................................... 3
1.9 1996 Balance Sheet............................................................................ 3
1.10 Closing Date.................................................................................. 3
1.11 Contracts..................................................................................... 3
1.12 Effective Time of Closing..................................................................... 3
1.13 Employee Benefit Plans........................................................................ 3
1.14 Equipment..................................................................................... 4
1.15 Financial Statements of Buyer................................................................. 4
1.16 Financial Statements of Seller................................................................ 4
1.17 Intangibles................................................................................... 4
1.18 Knowledge of Seller........................................................................... 4
1.19 Law........................................................................................... 4
1.20 Liabilities................................................................................... 4
1.21 Licenses...................................................................................... 5
[1.22 Opinion of Buyer's and Subsidiary's Counsel................................................... 5
[1.23 Opinion of Seller's Counsel................................................................... 5
1.24 Permits....................................................................................... 5
1.25 Permitted Liens............................................................................... 5
1.26 Prepaid Expenses.............................................................................. 5
1.27 Purchase Price................................................................................. 5
1.28 Seller........................................................................................ 6
1.29 Seller's Closing Certificate.................................................................. 6
1.30 Seller's 1997 Pro Forma Budget................................................................ 6
1.31 Seller's 1998 Pro Forma Budget................................................................ 6
1.32 Shareholder................................................................................... 6
1.33 Subsidiary.................................................................................... 6
ARTICLE II
PURCHASE AND SALE
2.1 Commitment to Sell............................................................................ 6
2.2 Commitment to Purchase........................................................................ 7
2.3 Payment of the Purchase Price................................................................. 7
2.4 Assumption of Liabilities..................................................................... 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
3.1 Organization of Seller........................................................................ 7
3.2 Authorization; Enforceability................................................................. 8
3.3 No Violation or Conflict by Seller............................................................ 8
3.4 Assets; Title to Assets....................................................................... 8
3.5 No Litigation................................................................................. 9
3.6 Accounts Receivable and Accounts Payable...................................................... 9
3.7 Condition of Equipment........................................................................ 10
3.8 Intangibles................................................................................... 10
3.9 Books and Records............................................................................. 10
3.10 Contracts..................................................................................... 10
3.11 Financial Statements of Seller................................................................ 11
3.12 No Adverse Change............................................................................. 11
3.13 Taxes......................................................................................... 12
3.14 Employment Agreements and Benefits............................................................ 13
3.15 Employee Benefit Plans........................................................................ 13
3.16 Compliance with Law........................................................................... 15
3.17 Transactions With Affiliates.................................................................. 15
3.18 No Broker..................................................................................... 15
3.19 Subsidiaries.................................................................................. 16
3.20 Disclosure.................................................................................... 16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF XXXXXX X. XXXXX
4.1 Authorization; Enforceability................................................................. 16
4.2 No Violation or Conflict by Xxxxxx X. Xxxxx................................................... 16
4.3 Title to Stock................................................................................ 17
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER AND SUBSIDIARY
5.1 Organization.................................................................................. 17
5.2 Authorization; Enforceability................................................................. 17
5.3 No Violation or Conflict...................................................................... 17
5.4 No Broker..................................................................................... 18
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
6.1 Organization.................................................................................. 18
6.2 Authorization; Enforceability................................................................. 18
6.3 No Violation or Conflict...................................................................... 18
6.4 No Broker..................................................................................... 18
6.5 Financial Statements of Buyer .................................................................19
6.6 No Adverse Change............................................................................. 19
6.7 Reports....................................................................................... 19
6.8 Disclosure.................................................................................... 20
6.9 Buyer's Capitalization........................................................................ 20
ARTICLE VII
CERTAIN MATTERS PENDING THE CLOSING
7.1 Carry on in Regular Course.................................................................... 21
7.2 Indebtedness.................................................................................. 21
7.3 Compensation ..................................................................................21
7.4 Dividends..................................................................................... 22
7.5 Compliance with Law........................................................................... 22
7.6 Access........................................................................................ 22
7.7 Cooperation................................................................................... 22
7.8 Publicity..................................................................................... 22
7.9 Confidentiality............................................................................... 23
7.10 Articles of Incorporation and Bylaws.......................................................... 23
7.11 No Solicitation............................................................................... 24
7.12 Updating of Exhibits.......................................................................... 24
7.13 Operation of Seller's Business................................................................ 24
ARTICLE VIII
CONDITIONS PRECEDENT
TO THE OBLIGATIONS OF BUYER AND SUBSIDIARY
8.1 Compliance with Agreement..................................................................... 25
8.2 Proceedings and Instruments Satisfactory...................................................... 26
8.3 No Litigation................................................................................. 26
8.4 Representations and Warranties................................................................ 26
8.5 Authorization of Transaction.................................................................. 26
8.6 Material Damage to Assets; No Material Adverse Change......................................... 26
8.7 Deliveries at Closing......................................................................... 27
8.8 Approvals..................................................................................... 27
8.9 Title to Assets............................................................................... 27
8.10 Consents...................................................................................... 27
8.11 Due Diligence................................................................................. 27
ARTICLE IX
CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF SELLER AND XXXXXX X. XXXXX
9.1 Compliance with Agreement..................................................................... 28
9.2 Proceedings and Instruments Satisfactory...................................................... 28
9.3 No Litigation................................................................................. 28
9.4 Representations and Warranties................................................................ 28
9.5 Deliveries at Closing......................................................................... 28
ARTICLE X
INDEMNITIES, ESCROWS AND ADDITIONAL COVENANTS
10.1 Xxxxxx X. Xxxxx Indemnity..................................................................... 29
10.2 Buyer's Indemnity............................................................................. 30
[10.3 Employee Benefit Plans........................................................................ 32
10.4 Obligations to Employees...................................................................... 32
10.5 Transfer Taxes and Fees....................................................................... 32
10.6 Allocation of Purchase Price.................................................................. 32
10.7 Records....................................................................................... 33
10.8 Additional Instruments........................................................................ 33
10.9 Bulk Sales Compliance......................................................................... 34
10.10 Change of Name................................................................................ 34
10.11 Operation of Acquired Business................................................................ 34
10.12 Registration of Buyer=s Shares............................................................. 35
ARTICLE XI
TERMINATION
11.1 Termination................................................................................... 35
11.2 Waiver of Conditions.......................................................................... 35
ARTICLE XII
XXXXXX X. XXXXX CONSENT
12.1 Xxxxxx X. Xxxxx Consent....................................................................... 36
12.2 Buyer's Consent............................................................................... 36
ARTICLE XIII
MISCELLANEOUS
13.1 Entire Agreement; Amendment................................................................... 36
13.2 Termination of Representations and Warranties................................................. 36
13.3 Expenses...................................................................................... 37
13.4 Governing Law................................................................................. 37
13.5 Assignment.................................................................................... 37
13.6 Notices....................................................................................... 37
13.7 Counterparts; Headings........................................................................ 38
13.8 Interpretation................................................................................ 38
13.9 Severability.................................................................................. 39
13.10 No Reliance................................................................................... 39
13.11 Arbitration ..................................................................................39
EXHIBITS
EXHIBIT 1.1 Accounts Payable
EXHIBIT 1.2 Accounts Receivable
EXHIBIT 1.4 Agreements Between Seller and Xxxxxx X. Xxxxx
EXHIBIT 1.5 Assets
EXHIBIT 1.7 Buyer's Closing Certificate
EXHIBIT 1.11 Contracts
EXHIBIT 1.13 Employee Benefit Plans
EXHIBIT 1.14 Equipment
EXHIBIT 1.15 Financial Statements of Buyer
EXHIBIT 1.16 Financial Statements of Seller
EXHIBIT 1.17 Intangibles
EXHIBIT 1.21 Licenses
EXHIBIT 1.22 Opinion of Buyer's and Subsidiary's Counsel
EXHIBIT 1.23 Opinion of Seller's Counsel
EXHIBIT 1.25 Permitted Liens
EXHIBIT 1.33 Seller's Closing Certificate
EXHIBIT 3.5 Litigation
EXHIBIT 3.14 Material Adverse Changes
EXHIBIT 3.15 Taxes
EXHIBIT 3.18 Compliance with Law
EXHIBIT 3.19 Transactions With Affiliates
EXHIBIT 3.21 Subsidiaries
EXHIBIT 6.4 Dividends
EXHIBIT 6.6 Material Adverse Changes - Buyer
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, made as of the 9th day of October, 1997 by
and among CITY HOLDING COMPANY, a West Virginia corporation, CITY NATIONAL BANK,
a national banking association, FIRST ALLEGIANCE FINANCIAL CORPORATION, a
California corporation, and Xxxxxx X. Xxxxx, the sole shareholder of First
Allegiance Financial Corporation. The effective date of this Agreement is
October 1, 1997.
RECITALS
A. Seller owns the Assets, which constitute all of the assets of
Seller.
B. Seller desires to sell the Assets to Buyer and Subsidiary. Buyer
desires to purchase the Assets from Seller and assume certain liabilities of
Seller, and contribute those Assets and assign those liabilities to Subsidiary.
C. Xxxxxx X. Xxxxx desires to consent to this Agreement, and to
indemnify Buyer and Subsidiary as provided in this Agreement.
D. Buyer desires to guarantee performance of Subsidiary's obligations
to be performed under this Agreement, and to indemnify Seller and Xxxxxx X.
Xxxxx as provided in this Agreement.
NOW, THEREFORE, in consideration of the Recitals and of the mutual
covenants, conditions and agreements set forth herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, it is hereby agreed that:
ARTICLE I
DEFINITIONS
When used in this Agreement, the following terms shall have the
meanings specified:
1.1 Accounts Payable. "Accounts Payable" shall mean all accounts
payable and expenses payable arising in the ordinary course of Seller's
business, excluding payables to Affiliates (as defined in Section 3.19), and
listed on Exhibit 1.1, adjusted to reflect changes in the ordinary course
through the Effective Time of Closing, as permitted pursuant to Section 6.1.
1.2 Accounts Receivable. "Accounts Receivable" shall mean all accounts
receivable, notes receivable, and associated rights owned by Seller and arising
in the ordinary course of Seller's business and listed on Exhibit 1.2, adjusted
to reflect changes in the ordinary course through the Effective Time of Closing,
as permitted pursuant to Section 6.1.
1.3 Agreement. "Agreement" shall mean this Asset Purchase Agreement,
together with the Exhibits attached hereto, as the same may be amended from
time to time in accordance with the terms hereof.
1.4. Agreements. Between Seller and Xxxxxx X. Xxxxx "Agreements
Between Seller and Xxxxxx X. Xxxxx" shall mean those agreements between Seller
and Xxxxxx X. Xxxxx listed on Exhibit 1.4 hereto.
1.5 Assets. "Assets" shall mean all of the business, assets, properties
and rights of Seller, as of the Effective Time of Closing, and including but not
limited to (a) cash, (b) the Assets listed on Exhibit 1.5, (c) the Accounts
Receivable, (d) the Equipment, (e) the Intangibles and (f) the Inventory.
1.6 Buyer. "Buyer" shall mean City Holding Company, a West Virginia
corporation.
1.7 Buyer's Closing Certificate. "Buyer's Closing Certificate" shall
mean the certificate of Buyer in the form of Exhibit 1.7.
1.8 Closing. "Closing" shall mean the conference held at 11:00 a.m.
Eastern Time on the Closing Date, at the offices of City Holding Company or
such other time and place as the parties may mutually agree in writing;
provided, that the Closing shall be held within 10 days of the satisfaction of
the conditions precedent to Closing described in Articles VII and VIII. All
transactions occurring at the Closing shall be deemed to have occurred
simultaneously, and no one transaction shall be deemed to be complete until all
transactions are completed.
1.9 1996 Balance Sheet. "1996 Balance Sheet" shall mean the balance
sheet of Seller as of December 31, 1996 included in the Financial Statements
of Seller.
1.10 Closing Date. "Closing Date" shall mean the date this document is
executed (October 9, 1997) once all conditions precedent to closing are met with
an effective date as of October 1, 1997.
1.11 Contracts. "Contracts" shall mean the contracts, agreements, leases
and rental agreements and rights of renewal thereto, and commitments to which
Seller is a party or by which it is bound, which relate to Seller's business and
are listed on Exhibit 1.11.
1.12 Effective Time of Closing. "Effective Time of Closing" shall mean
11:00 a.m. Eastern Time on October 1, 1997.
1.13 Employee Benefit Plans. "Employee Benefit Plans" shall mean the
employee benefit plans of Seller listed on Exhibit 1.13.
1.14 Equipment. "Equipment" shall mean all machinery, vehicles,
equipment, furniture, fixtures and furnishings and other items of tangible
personal property owned by Seller and listed on Exhibit 1.14 and all appurtenant
rights, claims and interests.
1.15 Financial Statements of Buyer. "Financial Statements of Buyer"
shall mean the consolidated balance sheet and related consolidated statements of
income, of cash flows and of changes in stockholders' equity at December 31,
1996, and the results of operations and cash flows audited by Ernst & Young,
attached as Exhibit 1.15.
1.16 Financial Statements of Seller. "Financial Statements of
Seller" shall mean the Balance Sheets of Seller as of December 31, 1996 and
July 31, 1997, together with the related financial activity (balance sheets,
etc.) for the six months preceding the Closing Date.
1.17 Intangibles. "Intangibles" shall mean the corporate name of
Seller, all of those trade names, trademarks, service marks, trademark and
service xxxx registrations and patents owned by and related to the business of
Seller, including but not limited to the Intangibles listed on Exhibit 1.17.
1.18 Knowledge of Seller. "Knowledge of Seller" shall mean knowledge of
Xxxxxx X. Xxxxx.
1.19 Law. "Law" shall mean any federal, state, local or other law or
governmental regulation or requirement of any kind, and the rules, regulations
and orders promulgated thereunder.
1.20 Liabilities. "Liabilities" shall mean the Accounts Payable,
commissions and royalties, accrued interest, Notes Payable to the Buyer and
other current liabilities (excluding personal tax liabilities, but including
corporate tax liabilities) included on the 1996 Balance Sheet, increased or
decreased to reflect operations in the ordinary course of business to the
Effective Time of Closing, and liabilities of Seller arising from and after the
Effective Time of Closing under the Contracts and Licenses, but shall not
include Notes Payable to Related Parties and Management Agreements Between
Seller and Xxxxxx X. Xxxxx. .
1.21 Licenses. "Licenses" shall mean all agreements pursuant to which
Seller holds the right to use in its business, certain names, designs, slogans,
logos and other copyrighted or trademarked materials, including but not limited
to all State or local business or mortgage licenses or permits including those
Licenses listed on Exhibit 1.21.
1.22 Opinion of Buyer's and Subsidiary's Counsel. "Opinion of Buyer's
and Subsidiary's Counsel" shall mean the opinion of Hunton & Xxxxxxxx,
counsel to Buyer, in the form of Exhibit 1.22.
1.23 Opinion of Seller's Counsel. "Opinion of Seller's Counsel" shall
mean the opinion of Xxxxxx & XxXxxxx, LLP, counsel to Seller, in the form of
Exhibit 1.23.
1.24 Permits. "Permits" shall mean all governmental permits, licenses
and authorizations used in Seller's business, including but not limited to
those Permits listed on Exhibit 1.24.
1.25 Permitted Liens. "Permitted Liens" shall mean those liens,
encumbrances, mortgages, charges, claims, restrictions, pledges, security
interests, impositions and other matters affecting the Assets that are listed on
Exhibit 1.25.
1.26 Prepaid Expenses. "Prepaid Expenses" shall mean the expenses of
Seller paid in advance as of the Effective Time of Closing and listed on the
1996 Balance Sheet. Exhibit 1.26 lists the estimated amounts of expenses of
Seller expects to be prepaid as of the Effective Time of Closing.
1.27 The Purchase Price. "Purchase Price" is the combination of the
consideration described in Section 2.3.
1.28 Seller. "Seller" shall mean First Allegiance Financial
Corporation, a California corporation.
1.29 Seller's Closing Certificate. "Seller's Closing Certificate" shall
mean the certificate of Seller in the form of Exhibit 1.29.
1.30 Seller's 1997 Pro Forma Budget. "Seller's 1997 Pro Forma
Budget" shall mean the 1997 pro forma budget of Seller attached as Exhibit
1.30.
1.31 Seller's 1998 Pro Forma Budget. "Seller's 1998 Pro Forma
Budget" shall mean the 1998 pro forma budget of Seller attached as Exhibit
1.31.
1.32 Shareholder. "Shareholder" shall mean Xxxxxx X. Xxxxx.
1.33 Subsidiary. "Subsidiary" shall mean City National Bank, a
national banking association, 100% owned by Buyer.
ARTICLE II
PURCHASE AND SALE
2.1 Commitment to Sell. At the Closing, and upon all of the terms and
subject to all of the conditions of this Agreement, Seller hereby agrees to
sell, convey, transfer, assign and deliver to Buyer by deed, xxxx of sale,
assignment, or other appropriate instrument, free and clear of all liens,
claims, mortgages or encumbrances except Permitted Liens, all of the Assets. In
addition, Seller shall assign to Buyer all of Seller's rights under the
Contracts and the Licenses. At Buyer's request, Seller shall name Subsidiary as
the transferee in any such xxxx of sale, assignment or other conveyancing
instrument in order to facilitate Buyer's transfer of Assets and Contracts to
Subsidiary.
2.2 Commitment to Sell. At the Closing, and upon all of the terms and
subject to all of the conditions of this Agreement, Buyer hereby agrees to
purchase the Assets and in full payment therefor shall pay or cause to be paid
by Subsidiary to Seller the Purchase Price and assume the Liabilities as
provided in this Article II, and thereafter transfer such Assets and assign such
liabilities to Subsidiary.
2.3 Commitment to Purchase. At the Closing, Buyer shall pay the
Purchase Price to Seller by delivering to Seller or causing to have delivered by
Subsidiary, $2,793,500 cash in immediately available funds and 286,000 shares of
Buyer's Common Stock and any additional agreed upon consideration.
2.4 Payment of the Purchase Price. In addition to payment of the
Purchase Price, as provided above, at the Closing Buyer or Subsidiary shall
assume the Liabilities. Buyer does not and will not assume any liability, known
or unknown, fixed or contingent, of Seller except for the Liabilities. Buyer
shall not be a successor or alter ego of or joint employer or venturer with
Seller, except to the extent that Buyer has assumed Seller's liabilities and
obligations arising from and after the Effective Time of Closing under the
Contracts and Licenses.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer and Subsidiary that:
3.1 Organization of Seller. Seller is a corporation duly organized and
validly existing and in good standing under the laws of the State of California
and has full corporate power to enter into this Agreement and to perform its
obligations hereunder. Seller has full corporate power to carry on its business
as it is now being conducted and to own, operate and hold under lease its assets
and properties as, and in the places where, such properties and assets now are
owned, operated or held. Seller does not own nor lease real property in any
jurisdiction other than California. However, Seller does conduct lending
activities in certain other states outside of California, from its Irvine,
California offices and is, where required by the applicable state authority,
qualified as a foreign corporation to do business in said jurisdictions. All of
the outstanding equity securities of Seller are owned of record free and clear
by Xxxxxx X. Xxxxx. Any rights, options or warrants with respect to equity
securities of Seller have been extinguished, canceled and released as of
September 30, 1997.
3.2 Authorization; Enforceability. The execution, delivery and
performance by Seller of this Agreement and of all of the documents and
instruments contemplated hereby are within the corporate power of Seller and
have been duly authorized by all necessary corporate action of Seller. This
Agreement is, and the other documents and instruments required hereby will be,
when executed and delivered by the parties hereto, the valid and binding
obligations of Seller, enforceable against Seller in accordance with their
respective terms.
3.3 No Violation or Conflict by Seller. Except as listed in Exhibit
3.3, the execution, delivery and performance of this Agreement by Seller do not
and will not conflict with or violate any law, judgment, order or decree binding
on Seller, or the Articles of Incorporation or Bylaws of Seller or any contract,
security interests, lien or agreement to which Seller is a party or by which it
is bound, except that Seller makes no representation or warranty with respect to
compliance with the bulk sales laws of any state.
3.4 Assets; Title to Assets. The Assets constitute all of the business,
assets, properties and rights of Seller, except such as are specifically
excluded. Seller owns good, valid and marketable title to all the Assets, free
and clear of any and all mortgages, liens, encumbrances, charges, claims,
restrictions, pledges, security interests or impositions, except Permitted
Liens, and, upon delivery of the Assets at Closing, good, valid and marketable
title to the Assets, free and clear of all mortgages, liens, encumbrances,
charges, claims, restrictions, pledges, security interests or impositions,
except Permitted Liens, will pass to Buyer. The Assets to be conveyed at Closing
constitute all of the Assets.
3.5 No Litigation. Except as listed in Exhibit 3.5, there is no
litigation, arbitration proceeding, governmental investigation, enforcement
action, SEC or NASDAQ investigation, citation or action of any kind pending or,
to the Knowledge of Seller, proposed or threatened against Seller or management
employees of First Allegiance or relating to the Assets, Contracts, or Licenses.
The matters described in Exhibit 3.5, if adversely determined, would not have a
material adverse effect on the Seller, the Assets, the Contracts, or the
Licenses.
3.6 Accounts Receivable and Accounts Payable. The Accounts Receivable
reflected on the Financial Statements of Seller represent transactions in the
ordinary course of business, and to the knowledge of Seller are current and
collectible net of any reserves shown on the Financial Statements of Seller
(which reserves are adequate and were calculated consistent with past practice).
Exhibit 1.2 specifically identifies (i) the aging of receivables and (ii) each
receivable in an amount in excess of $10,000 that is more than 90 days past due.
Seller has disclosed to Buyer that the September, 1997 volume bonus due Seller
on October 25, 1997 is in potential jeopardy of collection in light of Seller
entering into the within transaction with Buyer and that neither Seller nor
Shareholder shall be responsible therefore. However, Seller shall use its best
efforts to collect these amounts.
The Accounts Payable reflected on the Financial Statements of Seller
reflect all amounts owed by Seller in respect of trade accounts due and other
payables, and the actual liability of Seller in respect of such obligations was
not, and will not be, on any of such dates, in excess of the amounts so
reflected on the Financial Statements of Seller, except as listed on Exhibit
3.6.
3.7 Condition of Equipment. Each piece of Equipment is in good
operating condition and repair, subject to ordinary wear and tear, and is
substantially fit for the purposes for which it is being utilized. None of the
Equipment is in need of maintenance or repairs, except for ordinary, routine
maintenance and repairs which are not material in nature or cost.
3.8 Intangibles. Seller owns the entire right, title and interest in
and to the Intangibles. To the Knowledge of Seller, there is no basis for the
invalidity or unenforceability of any Intangibles. To the Knowledge of Seller,
there are no pending or threatened proceedings or litigation or other adverse
claims affecting or with respect to the Intangibles. To the Knowledge of Seller,
except as set forth in Exhibit 1.17, no person is infringing or has
misappropriated the Intangibles.
3.9 Books and Records. The books of account of Seller are complete and
correct in all material respects. Seller understands that Buyer is relying on
the books, records and financial statements of Seller, as well as the other
items set forth herein.
3.10 Contracts. Exhibit 1.11 is a true and complete list of all
Contracts that constitute: (a) a lease of any real or personal property with (i)
aggregate annual rentals in excess of $10,000 or (ii) with a remaining term in
excess of one year and which is non-cancelable without penalty on notice of 90
days or less; (b) an agreement to purchase or sell a capital asset for a price
in excess of $25,000; (c) obligations for money borrowed; or (d) any other
agreement involving an amount in excess of $10,000. Seller has performed each
material term, covenant and condition of each of the Contracts, which is to be
performed by the Seller at or before the date hereof and will perform each
material term, covenant and condition of each of the Contracts to be performed
by it prior to Closing. No event has occurred that would, with the passage of
time or compliance with any applicable notice requirements, constitute a default
under any of the Contracts. To the Knowledge of Seller, no party to any of the
Contracts intends to cancel, terminate, or exercise any option under any of the
Contracts. Seller's execution, delivery and performance of this Agreement will
not constitute a breach of or a default under any Contract except as identified
on Exhibit 1.11. All consents required for Buyer's assumption of the Contracts
will have been received by the Closing Date. True copies of the Contracts have
been delivered to Buyer.
3.11 Financial Statements of Seller. The Financial Statements of
Seller, taken as a whole, fairly present the financial position and results of
operations of Seller as of the date thereof and the periods then ended and were
prepared in accordance with acceptable principles consistently applied for prior
years. As of the dates of the Financial Statements of Seller, Seller had or will
have, as the case may be, no material liabilities or obligations, fixed or
contingent, not adequately reflected in such statements or balance sheets, the
notes thereto or the exhibits hereto.
3.12 No Adverse Change. Except as set forth in Exhibit 3.12, since
December 31, 1996, there has not been: (a) any material adverse change in the
business of Seller; (b) any loss, damage, condemnation or destruction to the
properties of Seller materially adversely affecting Seller's business or
properties; (c) any labor dispute or disturbance, litigation or, to the
Knowledge of Seller, any event or condition that could materially adversely
affect the business of Seller; (d) any mortgage, pledge, lien or encumbrance
made on any of the properties or assets of Seller, except Permitted Liens; or
(e) any sale, transfer or other disposition of assets of Seller other than in
the ordinary course of business.
3.13 Taxes. Except as set forth in Exhibit 3.13, Seller has filed all
required tax returns and reports relating to its business and the Assets,
Contracts, and Licenses. Seller's records to be transferred to Buyer contain all
information and documents (including, without limitation, properly completed
Forms W-9) necessary to comply with all information reporting and tax
withholding requirements under federal and state laws, rules and regulations,
and such records identify with specificity all accounts subject to backup
withholding under Section 3406 of the Internal Revenue Code (the "Code"). Seller
has paid (or has made adequate provision for and will timely pay) all taxes
(including additions to tax, penalties and interest), withholdings and other
governmental charges the nonpayment of which could adversely affect any of the
Assets, Contracts, or Licenses or the use thereof or could cause Buyer to incur
any liability. Except as disclosed in the Financial Statements of Seller, no
taxing authority has asserted any claim for the assessment of any such tax
liability (including additions to tax, penalties and interest), withholding or
other governmental charges. None of the Assets is subject to, and none of the
Contracts is, a "safe harbor lease" under former Section 168(f)(8) of the Code.
Xxxxxx X. Xxxxx is responsible for all taxes on taxable earnings, profits,
assets and income generated prior to the Closing Date. Buyer shall be
responsible only for those taxes which accrue and are due after the Closing
Date. For example, if federal, state and local income taxes total $100,000 for
1997, then Xxxxxx X. Xxxxx would be responsible for any remaining portion of the
tax liability attributable to the months of January 1, 1997 - September 30,
1997. Buyer would only be responsible for taxes from October 1, 1997 forward.
Buyer assumes no tax liability relating to operations, assets or income
generated prior to September 30, 1997.
3.14 Employment Agreements and Benefits. Exhibit 1.13 is a true and
complete list of all agreements relating to the compensation and other benefits
of present and former employees, salesmen, consultants and other agents of
Seller, including collective bargaining agreements and pension, retirement,
bonus, stock option, profit sharing, health, disability, life insurance,
hospitalization, education or other similar plans or arrangements (whether or
not subject to the Employee Retirement Income Security Act of 1974 ("ERISA")),
true copies of which have been delivered to Buyer. None of the agreements listed
on Exhibit 1.13 will be breached by Seller's execution, delivery and performance
of this Agreement. No such agreements require Buyer to assume any employment,
compensation, fringe benefit, pension, profit sharing or deferred compensation
plan in respect of any employee of Seller. To the Knowledge of Seller, there are
no union organizing campaigns pending or threatened at any of Seller's
facilities. Exhibit 1.13 lists the name and current compensation for all present
employees of Seller with annual compensation in excess of $60,000, or with
projected annual compensation greater than $60,000.
3.15 Employee Benefit Plans. (a) Exhibit 1.13 identifies each "pension
plan" (as defined in Section 3(2) of ERISA (the "Pension Plans") and each
"welfare plan" (as defined in ERISA Section 3(l)) (the "Welfare Plans")
maintained by Seller or to which Seller contributes on behalf of its employees
(the Pension Plans and Welfare Plans are hereafter referred to as the "Employee
Plans"). A true and complete copy of each Employee Plan has been furnished to
Buyer.
(b) Exhibit 1.13 identifies each Pension Plan that is intended to be
qualified under Section 401(a) of the Code. Each such Pension Plan complies with
applicable Law as of the date hereof. The Internal Revenue Service has issued
favorable determination letters with respect to such Pension Plans' compliance
with Section 401(a) and related Sections of the Code or timely-filed requests
for determination letters are pending before the Internal Revenue Service. To
the Knowledge of Seller, there are no facts or circumstances that would
jeopardize or adversely affect the qualification under Code Section 401(a) of
any Pension Plan that is intended to be so qualified.
(c) As of the Closing Date, full payment has been made to each Employee
Plan of all contributions that are required under the terms thereof and under
ERISA. No "accumulated funding deficiency" (as defined in ERISA Section 302 or
Code Section 412), whether or not waived, exists with respect to any Pension
Plan. No Pension Plan is a "defined benefit plan" (as defined in Code Section
414) and Seller has not maintained or contributed to a defined benefit plan or
any other plan that is subject to the provisions of Title IV of ERISA.
(d) Each Employee Plan has been administered in accordance with its
terms and the terms of any applicable collective bargaining agreement. In
addition, each Employee Plan complies, and has been administered in accordance
with, the provisions of ERISA (including the rulings and regulations promulgated
thereunder). All reports, returns and other documentation that are required to
have been filed with the Internal Revenue Service, the Department of Labor, the
Pension Benefit Guaranty Corporation or any other governmental agency (federal,
state or local) have been filed on a timely basis. Except as set forth in
Exhibit 3.5, no lawsuits or complaints to, or by, any person or governmental
entity have been filed, or are to the Knowledge of Seller contemplated or
threatened, with respect to any Employee Plan.
(e) Seller does not and has not contributed to or maintained a
"multi-employer plan" (as defined in ERISA Section 3(37)).
3.16 Compliance with Law. Except as set forth in Exhibit 3.16 and to
the Knowledge of Seller, Seller's conduct of its business and its use of the
Assets does not violate or conflict with any Law. The Permits constitute all
governmental approvals, authorizations, permits and licenses, including those
related to environmental quality, required to conduct Seller's business, and are
in full force and effect, are being complied with in all material respects and
will remain in effect immediately following the Closing. Seller and Buyer will
cooperate in obtaining necessary consents and approvals to the transfer of the
Permits to Buyer.
3.17 Transactions With Affiliates. Except as set forth in Exhibit 3.17,
since December 31, 1996, Seller has not, in the ordinary course of business or
otherwise, purchased, leased or otherwise acquired any property or assets or
obtained any services from, or sold, leased or otherwise disposed of any
property or assets or provided any services to (except with respect to
remuneration for services rendered as a director, officer or employee of
Seller), any shareholder of Seller or any person, firm or corporation that
directly or indirectly controls, is controlled by or is under common control
with Seller or any shareholder of Seller (collectively, an "Affiliate"). Except
as set forth in Exhibit 3.17, Seller does not owe any amount or have any
contractual obligation or commitment to any Affiliate (other than compensation
for current services not yet due and payable and reimbursement of expenses
arising in the ordinary course of business), and no Affiliate owes any amount or
has any contractual obligation to Seller. Since December 31, 1996, Seller has
not declared, paid or set aside any dividend or other distribution on or with
respect to its capital stock other than as described on Exhibit 3.17.
3.18 No Broker. Seller is not committed to any liability for any
brokers' or finders' fees or any similar fees in connection with the
transactions contemplated by this Agreement.
3.19 Subsidiaries. Except as set forth on Exhibit 3.19, Seller has no
subsidiaries, and the capital stock of any such corporation is included in
the Assets.
3.20 Disclosure. Except to the extent of any subsequent correction or
supplement with respect thereto furnished prior to the date hereof, no written
statement, certificate, exhibit, list or other written information furnished by
or on behalf of Seller at any time to Buyer, in connection with this Agreement
when considered as a whole, contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary in order
to make the statements herein or therein, in light of the circumstances under
which they were made, not misleading. Each document delivered or to be delivered
by Seller to Buyer is or will be a true and complete copy of such document,
unmodified except by another document delivered by Seller to Buyer prior to the
date hereof.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF XXXXXX X. XXXXX
Xxxxxx X. Xxxxx represents and warrants to Buyer and Subsidiary that:
4.1 Authorization; Enforceability. This Agreement is, and the other
documents and instruments required hereby will be, when executed and delivered
by the parties hereto, the valid and binding obligations of Xxxxxx X. Xxxxx,
enforceable against Xxxxxx X. Xxxxx in accordance with their respective terms.
4.2 No Violation or Conflict by Xxxxxx X. Xxxxx. Except as set forth in
Exhibit 4.2, the execution, delivery and performance of this Agreement by Xxxxxx
X. Xxxxx does not and will not conflict with or violate any law, judgment,
regulation, order or decree binding on Xxxxxx X. Xxxxx or any contract or
agreement by-laws, (written or oral) to which Xxxxxx X. Xxxxx is a party or by
which he is bound.
4.3 Title to Stock. Xxxxxx X. Xxxxx has, and Xxxxxx X. Xxxxx
immediately prior to the Effective Time of Closing will have, good and valid
title to the shares and assets of Seller to be transferred by Xxxxxx X. Xxxxx
hereunder, free and clear of all liens, encumbrances, option agreements,
contract claims, litigation claims, equities or other claims.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER AND SUBSIDIARY
Buyer and Subsidiary hereby represent and warrant to Seller that:
5.1 Organization. Subsidiary is a national banking association duly
organized and validly existing and in good standing under the laws of the United
States, and has full corporate power to enter into and perform its obligations
under this Agreement.
5.2 Authorization; Enforceability. The execution, delivery and
performance of this Agreement are within the corporate power of Subsidiary and
have been duly authorized by all necessary corporate action by Subsidiary. This
Agreement is, and the other documents and instruments required hereby will be,
when executed and delivered by Subsidiary, enforceable against Subsidiary in
accordance with their respective terms.
5.3 No Violation or Conflict. The execution, delivery and performance
of this Agreement by Subsidiary do not and will not conflict with or violate any
Law, judgment, order or decree binding on Subsidiary, or the Articles of
Association or By-laws of Subsidiary or any contract or agreement to which
Subsidiary is a party or by which it is bound.
5.4 No Broker. Subsidiary has not had any dealings, negotiations or
communications with any broker or other intermediary in connection with the
transactions contemplated by this Agreement.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller that:
6.1 Organization. Buyer is a corporation duly organized and validly
existing and in good standing under the laws of the State of West Virginia, and
has full corporate power to enter into and perform its obligations under this
Agreement.
6.2 Authorization; Enforceability. The execution, delivery and
performance of this Agreement are within the corporate power of Buyer and have
been duly authorized by all necessary corporate action by Buyer. This Agreement
is, and the other documents and instruments required hereby will be, when
executed and delivered by Buyer, enforceable against Buyer in accordance with
their respective terms.
6.3 No Violation or Conflict. The execution, delivery and performance
of this Agreement by Buyer do not and will not conflict with or violate any Law,
judgment, order or decree binding on Buyer, or the Articles of Incorporation or
By-laws of Buyer or any contract or agreement to which Buyer is a party or by
which it is bound.
6.4 No Broker. Buyer has not had any dealings, negotiations or
communications with any brokeR or other intermediary in connection with the
transactions contemplated by this Agreement, except Wheat First Securities,
Inc., for whose fee Buyer shall be solely responsible.
6.5 Financial Statements of Buyer. The Financial Statements of Buyer,
taken as a whole, fairly present the consolidated financial position and results
of operations of Buyer as of the date thereof and the periods then ended and
were prepared in accordance with generally accepted accounting principles. As of
the dates of the Financial Statements of Buyer, Buyer has no material
liabilities or obligations, fixed or contingent, not adequately reflected in
such statements or balance sheets, the notes thereto or the exhibits hereto.
6.6 No Adverse Change. Except as set forth in Exhibit 6.6, since
December 31, 1996, there has not been: (a) any material adverse change in the
business of Buyer; (b) any loss, damage, condemnation or destruction to the
properties of Buyer materially adversely affecting Buyer's business or
properties; (c) any labor dispute or disturbance, litigation or, to the
knowledge of Buyer, any event or condition that could materially adversely
affect the business of Buyer; (d) any sale, transfer or other disposition of
assets of Buyer other than in the ordinary course of business or (e) any event
which would necessitate Buyer filing a Form 8-K with the Securities and Exchange
Commission ("SEC").
6.7 Reports. Since January 1, 1994, Buyer has filed all reports and
statements, together with any amendments required to be made with respect
thereto, that were required to be filed with NASDAQ and/or SEC. Each of such
reports and documents, including the financial statements, exhibits and
schedules thereto, which was filed with the SEC was in form and substance in
compliance with the Securities Act of 1933 or the Securities Exchange Act of
1934, as the case may be. No such report or statement, or any amendments
thereto, contains any statement which, at the time and in the light of the
circumstances under which it was made, was false or misleading with respect to
any material fact necessary in order to make the statements contained therein
not false or misleading.
6.8 Disclosure. Except to the extent of any subsequent correction or
supplement with respect thereto furnished prior to the date hereof, no written
statement, certificate, exhibit, list or other written information furnished by
or on behalf of Buyer at any time to Seller, in connection with this Agreement
when considered as a whole, contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary in order
to make the statements herein or therein, in light of the circumstances under
which they were made, not misleading. Each document delivered or to be delivered
by Buyer to Seller is or will be a true and complete copy of such document,
unmodified except by another document delivered by Buyer to Seller prior to the
date hereof.
6.9 Buyer's Capitalization. The capitalization of Buyer is correctly
represented in the Financial Statements of Buyer, and Buyer has available
286,000 shares of Buyer's Common Stock for issuance in accordance with the terms
of this Agreement. Buyer agrees, within ninety to one hundred twenty (90-120)
days of the Closing Date to file for registration the 300,000 shares of Buyer=s
Common Stock (286,000 of which are being remitted to Seller) paid as part of the
purchase price with the appropriate agencies.
ARTICLE VII
CERTAIN MATTERS PENDING THE CLOSING
Seller covenants and represents to Buyer in Sections 7.1-7.13 that from
December 31, 1996 until the Closing Date:
7.1 Carry on in Regular Course. Seller shall (i) carry on its business,
including transactions with any of its Affiliates, in the regular course and
substantially in the same manner as heretofore carried on, and pay its Accounts
Payable and collect its Accounts Receivable as they become due, (ii) use its
reasonable best efforts to preserve its properties, business and relationships
with suppliers and customers, (iii) not issue additional equity securities or
any rights, options or warrants with respect thereto and not declare or pay any
dividend or make any other distribution with respect to its capital stock or
repurchase its capital stock, and (iv) not agree to any material contract or
expenditure without the written consent of Buyer. Seller will advise Buyer in
writing of any material adverse change in its financial condition, business or
affairs.
7.2 Indebtedness. Except for Accounts Payable incurred in the ordinary
course of business, Seller shall not (i) create, incur or assume any
indebtedness for borrowed money, (ii) mortgage, pledge or otherwise encumber any
of its properties or assets, except for Permitted Liens, or (iii) create or
assume any other indebtedness or issue any debt securities, other than the line
of credit with Subsidiary.
7.3 Compensation. Seller shall not grant any bonuses or increases in
the rate of pay of any of its officers or employees, except for bonuses or
increases in the ordinary course of business, which shall promptly be reported
to Buyer. Seller shall not institute any new employee benefit plan or grant any
increases in employee fringe benefits other than as described in Exhibit 1.13.
7.4 Dividends and Distributions. Seller shall not declare, pay or set
aside any dividend or other distribution in respect of its capital stock.
7.5 Compliance with Law. Seller shall comply with all applicable Laws
and with all orders of any court or of any federal, state, municipal or other
governmental department, non-compliance with which could cause a material
adverse change in the Assets or the business of Seller.
7.6 Access. Buyer and its authorized agents, officers and
representatives shall have reasonable access to the properties, books, records,
contracts, information and documents of Seller to conduct such examinations and
investigations of its business as it deems necessary, provided that such
examinations and investigations: (i) shall be conducted only in the presence of
a designated representative of Seller; and (ii) shall not unreasonably interfere
with Seller's operations and activities. Seller shall cooperate in all
reasonable respects with Buyer's examinations and investigations.
7.7 Cooperation. Buyer, Subsidiary, Seller and Xxxxxx X. Xxxxx will
cooperate in all respects in connection with the giving of any notices to any
governmental authority or securing the permission, approval, determination,
consent or waiver of any governmental authority required by Law in connection
with the consummation of the transactions contemplated under this Agreement.
Subject to the terms and conditions of this Agreement, Buyer, Subsidiary, Seller
and Xxxxxx X. Xxxxx agree to use all reasonable efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, all things necessary, proper
and advisable to consummate, as soon as practicable after the date of this
Agreement, the transactions contemplated by this Agreement.
7.8 Publicity. All general notices, releases, statements and
communications to employees, suppliers, distributors and customers of Seller and
to the general public and the press relating to the transactions covered by this
Agreement shall be made only at such times and in such manner as may be mutually
agreed upon by Buyer and Seller; provided, however, that either party shall be
entitled to make a public announcement in a manner approved by the other party
of the proposed transaction if, in the opinion of its legal counsel, such
announcement is required to comply with Law. Buyer shall be allowed to make any
public announcement pertaining to this transaction as required by law or allowed
by company policy of the Buyer.
7.9 Confidentiality. If the transactions provided for herein are not
consummated, Buyer, Subsidiary and their respective officers, agents and
representatives will hold in strict confidence, and not utilize in any manner,
all information obtained from Seller and its directors, officers, agents or
representatives (hereinafter in this Section 7.9 referred to as the "Disclosing
Persons"), except, however, any such information that: (i) is now or hereafter
becomes available to the public; (ii) was in fact known to Buyer prior to
disclosure to Buyer by the Disclosing Persons; or (iii) is required to be
disclosed by Buyer by subpoena or order of a court of competent jurisdiction or
by order of a regulatory authority of competent jurisdiction. In addition, if
the transactions provided for herein are not consummated, Buyer will forthwith
cause to be returned to Seller the originals and all copies of materials
supplied by Disclosing Persons to Buyer and its directors, agents, officers and
representatives relating to the transactions contemplated hereby. The
obligations under this Section 7.9 shall survive termination of this Agreement.
7.10 Articles of Incorporation and By-laws. Prior to Closing, Seller
will not amend its Articles of Incorporation or By-laws in any manner adverse to
Buyer or the consummation of the transactions contemplated herein, or merge or
consolidate with or into any other corporation.
7.11 No Solicitation. Unless and until this Agreement shall have been
terminated pursuant to its terms, neither Seller nor any of its executive
officers, directors, representatives, agents or affiliates shall, directly or
indirectly, encourage, solicit or initiate discussions or negotiations (with any
person other than Buyer) concerning any merger, sale of substantial assets,
tender offer, sale of shares of stock or similar transaction involving Seller or
disclose, directly or indirectly, any information not customarily disclosed to
the public concerning Seller, afford to any other person access to the
properties, books or records of Seller or otherwise assist any person preparing
to make or who has made such an offer, or enter into any agreement with any
third party providing for a business combination transaction, equity investment
or sale of significant amount of assets. Seller will promptly communicate to
Buyer the terms of any proposal which it may receive in respect to any of the
foregoing transactions and keep Buyer informed of the status of any developments
in this regard.
7.12 Updating of Exhibits. Seller shall notify Buyer of any changes,
additions or events which may cause any change in or addition to any Exhibits
delivered by it under this Agreement, promptly after the occurrence of same and
at the Closing by delivery of updates of all Exhibits. No notification made
pursuant to this Section 7.12 shall be deemed to cure any breach of any
representation or warranty made in this Agreement unless Buyer specifically
agrees thereto in writing, nor shall any such notification be considered to
constitute or give rise to a waiver by Buyer of any condition set forth in this
Agreement.
7.13 Operation of Seller's Business. Seller agrees that from the date
hereof to the Closing Date, it will operate its business substantially as
presently operated and only in the ordinary course, and, consistent with such
operation, will use its best efforts to preserve intact its present business
organization and relationships with persons having business dealings with it.
Without limiting the generality of the foregoing, Seller agrees that it will
not, without the prior written consent of Buyer, (i) enter into or assume any
contract or obligation involving more than $100,000, (ii) waive any right of
substantial value, (iii) propose to take any other action which would make any
representation or warranty in this Agreement untrue, (iv) introduce any new
products or services or expand any existing products or service offerings, (v)
make any change in policies respecting extensions of credit or accounts
receivable charge-offs, (vi) change financial or tax accounting methods or
practices, or (vii) enter into any new agreement, amendment or endorsement or
make any changes relating to insurance coverage.
Seller further agrees that, between the date of this Agreement and the
Closing Date, it will consult and cooperate with Buyer regarding the operation
of its business, including expense management and preservation of customer
relationships, and will make office space and staff available to Buyer's
representatives at Seller's offices in Irvine, California.
ARTICLE VIII
CONDITIONS PRECEDENT
TO THE OBLIGATIONS OF BUYER AND SUBSIDIARY
Each and every obligation of Buyer and Subsidiary to be performed on
the Closing Date shall be subject to the satisfaction prior to or at the Closing
of the following express conditions precedent:
8.1 Compliance with Agreement. Seller shall have performed and complied
in all material respects with all of its obligations under this Agreement that
are to be performed or complied with by it and shall have prepared and delivered
all schedules pertaining to Seller or Shareholder to Buyer prior to or on the
Closing Date.
8.2 Proceedings and Instruments Satisfactory. All proceedings,
corporate or other, to be taken by Seller in connection with the transactions
contemplated by this Agreement, and all documents incident thereto, shall be
reasonably satisfactory in form and substance to Buyer and Buyer's counsel, and
Seller shall have made available to Buyer for examination the originals or true
and correct copies of all documents which Buyer may reasonably request in
connection with the transactions contemplated by this Agreement.
8.3 No Litigation. No investigation, suit, action or other proceeding
shall be threatened or pending before any court or governmental agency that
seeks restraint, prohibition, damages or other relief in connection with the
Contracts, this Agreement, any assets to be transferred herein, or the
consummation of the transactions contemplated hereby.
8.4 Representations and Warranties. The representations and warranties
made by Seller in this Agreement shall be true and correct in all material
respects as of the Closing Date with the same force and effect as though such
representations and warranties had been made on the Closing Date, and Buyer's
completion of any "due diligence" investigation shall not relieve Seller of its
obligation to satisfy this condition.
8.5 Authorization of Transaction. All action necessary to authorize
the performance of this Agreement by the Seller shall have been duly and validly
taken by Seller's shareholders.
8.6 Material Damage to Assets; No Material Adverse Change. Between the
date of this Agreement and the Closing Date, the Assets shall not have been
materially and adversely affected by reason of any loss, taking, condemnation,
destruction or physical damage, whether or not insured against. Between December
31, 1996 and the Closing Date, there shall have been no material adverse change
in the financial condition, results of operations or business of Seller in the
sole judgment of Buyer.
8.7 Deliveries at Closing. Seller shall have delivered to Buyer the
Opinion of Seller's Counsel and Seller's Closing Certificate, each properly
executed and dated as of the Closing Date.
8.8 Approvals. All approvals necessary for the consummation of the
transactions contemplated by this Agreement shall have been received.
8.9 Title to Assets. Buyer shall have received evidence
satisfactory to it as to the accuracy of the representations contained in
Section 3.4.
8.10 Consents. All consents required for Buyer's assumption of the
Contracts and Seller's transfer of the Assets to Buyer shall have been received.
8.11 Due Diligence. Completion to Buyer's satisfaction of an audit of
the Assets and Liabilities, such audit to include a review of the nature and
condition of the Assets and Liabilities to determine, such determination being
fairly made, the accuracy of the representations and warranties of Seller
regarding the Assets and Liabilities, which investigation shall have the effect
described in Section 8.4.
ARTICLE IX
CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF SELLER AND XXXXXX X. XXXXX
Each and every obligation of Seller and Xxxxxx X. Xxxxx to be performed
on the Closing Date shall be subject to the satisfaction prior to or at the
Closing of the following express conditions precedent:
9.1 Compliance with Agreement. Buyer and Subsidiary shall have
performed and complied in all material respects with all of their obligations
under this Agreement that are to be performed or complied with by it prior to or
on the Closing Date.
9.2 Proceedings and Instruments Satisfactory. All proceedings,
corporate or other, to be taken by Buyer and Subsidiary in connection with the
transactions contemplated by this Agreement, and all documents incident thereto,
shall be reasonably satisfactory in form and substance to Seller and Seller's
counsel, and Buyer and Subsidiary shall have made available to Seller for
examination the originals or true and correct copies of all documents which
Seller may reasonably request in connection with the transactions contemplated
by this Agreement.
9.3 No Litigation. No investigation, suit, action or other proceeding
shall be threatened or pending before any court or governmental agency that
seeks restraint, prohibition, damages or other relief in connection with this
Agreement or the consummation of the transactions contemplated hereby.
9.4 Representations and Warranties. The representations and warranties
made by Buyer and Subsidiary in this Agreement shall be true and correct in all
material respects as of the Closing Date with the same force and effect as
though such representations and warranties had been made on the Closing Date.
9.5 Deliveries at Closing. Buyer and Subsidiary shall have delivered to
Seller the Opinion of Buyer's and Subsidiary's Counsel and Buyer's Closing
Certificate, each properly executed and dated as of the Closing Date.
ARTICLE X
INDEMNITIES, ESCROWS AND ADDITIONAL COVENANTS
10.1 Xxxxxx X. Xxxxx Indemnity. (a) Xxxxxx X. Xxxxx hereby indemnifies
and holds Buyer and Subsidiary, their successors and assigns harmless from and
against, and agrees to defend promptly Buyer and Subsidiary, their successors
and assigns from, and reimburse Buyer and Subsidiary, their successors and
assigns for, any and all losses, damages, costs, expenses, liabilities,
obligations and claims of any kind, including, without limitation, reasonable
attorneys' fees and other legal costs and expenses, (hereinafter referred to
collectively as "Losses"), that Buyer or Subsidiary may at any time suffer or
incur, or become subject to, as a result of or in connection with (i) any breach
or inaccuracy of any of the representations and warranties made by Seller in or
pursuant to this Agreement; (ii) the conduct by Seller of its business prior to
the Closing Date; and (iii) any liability of Seller not specifically assumed by
Buyer pursuant to Section 2.4. Xxxxxx X. Xxxxx shall further indemnify Buyer and
Subsidiary to the extent that any Liability assumed by Buyer exceeds the amount
of such Liability specified on the 1996 Balance Sheet, it being acknowledged by
Buyer that Liabilities may increase or decrease between December 31, 1996 and
the Closing Date, and this indemnity shall not cover such increases in the
ordinary course of business.
(b) The amounts for which Xxxxxx X. Xxxxx shall be liable under Section
10.1(a) of this Agreement shall be: (i) net of the amount of any income tax
benefit realized or the present value (based on a discount rate of 10%) of any
income tax benefit to be realized by Buyer or Subsidiary by reason of the facts
and circumstances giving rise to Xxxxxx X. Xxxxx'x liability; (ii) calculated by
taking into account any income tax required to be paid by Buyer or Subsidiary as
a result of the accrual or receipt of any payment made to Buyer or Subsidiary
pursuant to Section 10.1(a) of this Agreement; and (iii) net of any insurance
proceeds received by Buyer or Subsidiary in connection with the facts giving
rise to the right of indemnification. For purposes of the preceding sentence,
the amount of any state or local income tax benefit or cost shall reflect the
federal income tax effect of such benefit or cost.
(c) In the event a claim against Buyer or Subsidiary arises that is
covered by the indemnity provisions of Section 10.1(a) of this Agreement, notice
shall be promptly given by Buyer to Xxxxxx X. Xxxxx, and Xxxxxx X. Xxxxx shall
have the right to control all settlements (unless Buyer agrees to assume the
cost of settlement and to forego such indemnity) and to select lead counsel to
defend any and all such claims at the sole cost and expense of Xxxxxx X. Xxxxx;
provided, however, that Xxxxxx X. Xxxxx may not effect any settlement that could
result in any cost, expense or liability to Buyer or Subsidiary unless Buyer
consents in writing to such settlement and Xxxxxx X. Xxxxx agrees to indemnify
Buyer and Subsidiary therefor. Buyer may select counsel to participate in any
defense, in which event such counsel shall be at the sole cost and expense of
Buyer or Subsidiary. In connection with any such claim, action or proceeding,
the parties shall cooperate with each other and provide each other with access
to relevant books and records in their possession.
10.2 Buyer's Indemnity. (a) Buyer hereby indemnifies and holds Xxxxxx
X. Xxxxx and Seller harmless from and against, and agrees to defend promptly
Xxxxxx X. Xxxxx and Seller from and reimburse Xxxxxx X. Xxxxx and Seller for,
any and all losses, damages, costs, expenses, liabilities, obligations and
claims of any kind, including, without limitation, reasonable attorneys' fees
and other legal costs and expenses (hereinafter referred to collectively as
"Losses"), that Xxxxxx X. Xxxxx and Seller may at any time suffer or incur, or
become subject to, as a result of or in connection with: (i) any breach or
inaccuracy of any of the representations and warranties made by Buyer in or
pursuant to this Agreement; and (ii) the operation and ownership of the Assets
by Buyer from and after the Closing Date.
(b) The amounts for which Buyer shall be liable under Section 10.2(a)
of this Agreement shall be: (i) net of the amount of any income tax benefit
realized or the present value (based on a discount rate of 10%) of any income
tax benefit to be realized by Xxxxxx X. Xxxxx and Seller by reason of the facts
and circumstances giving rise to Buyer's liability; (ii) calculated by taking
into account any income tax required to be paid by Xxxxxx X. Xxxxx and Seller as
a result of the accrual or receipt of any payment made to Xxxxxx X. Xxxxx and
Seller pursuant to Section 9.2(a) of this Agreement; and (iii) net of any
insurance proceeds received by Xxxxxx X. Xxxxx and Seller in connection with the
facts giving rise to the right of indemnification. For purposes of the preceding
sentence, the amount of any state or local income tax benefit or cost shall
reflect the federal income tax effect of such benefit or cost.
(c) In the event a claim against Xxxxxx X. Xxxxx or Seller arises that
is covered by the indemnity provisions of Section 10.1(a) of this Agreement,
notice shall be promptly given by Xxxxxx X. Xxxxx and Seller to Buyer, and Buyer
shall have the right to control all settlements (unless Xxxxxx X. Xxxxx and
Seller agree to assume the cost of settlement and to forego such indemnity) and
to select lead counsel to defend any and all such claims at the sole cost and
expense of Buyer; provided, however, that Buyer may not effect any settlement
that could result in any cost, expense or liability to Buyer unless Xxxxxx X.
Xxxxx and Seller consent in writing to such settlement and Buyer agrees to
indemnify Xxxxxx X. Xxxxx and Seller therefore. Xxxxxx X. Xxxxx and Seller may
select counsel to participate in any defense, in which event Xxxxxx X. Xxxxx and
Seller's counsel shall be at the sole cost and expense of Xxxxxx X. Xxxxx and
Seller. In connection with any such claim, action or proceeding, the parties
shall cooperate with each other and provide each other with access to relevant
books and records in their possession.
10.3 Employee Benefit Plans. After closing, Buyer will allow eligible
employees of Seller who are employed by Subsidiary to be eligible to participate
in Buyer's 401(k) Plan and will provide matching contributions at the level such
contributions are allowed under Seller's 401(k) Plan.
Seller's employees will be allowed to participate in the Buyer's 401(k)
Plan only after expiration of the applicable waiting period under the 401(k)
Plan as exclusively decided and applied by Buyer.
Seller shall provide each of its employees with the notice and
opportunity for continued coverage that is required, if any, under the Code and
ERISA, as amended by the Consolidated Omnibus Reconciliation Act of 1985 and
subsequent legislation.
10.4 Obligations to Employees. On the Closing Date, Seller shall
terminate all employees. Subsidiary will offer employment to such of Seller's
employees as it may select. Seller shall be responsible for all obligations to
employees arising on or before the Closing Date, provided that Buyer shall be
responsible for any liabilities under WARN or any wrongful termination of
employment claim arising out of Buyer's failure to offer employment to any
terminated employee or any claim by any terminated employee or employee
accepting employment by the Buyer that employment was not offered or continued
on substantially the same terms as prior employment with Seller.
10.5 Transfer Taxes and Fees. Buyer shall pay all transfer, sales,
recording and filing taxes and fees resulting from the transfer of the Assets
and Contracts to Buyer.
10.6 Allocation of Purchase Price. The sum of the Purchase Price, and
to the extent constituting part of the amount realized by Seller for income tax
purposes, the amount of Liabilities assumed by Buyer pursuant to Section 2.4
hereof shall be allocated among the Assets, Licenses and Contracts in the manner
determined by Buyer after giving due consideration to Xxxxxx X. Xxxxx comments.
This allocation is intended to comply with the allocation method required by
Section 1060 of the Code. The parties shall cooperate to comply with all
substantive and procedural requirements of Section 1060 and the regulations
thereunder, and the allocation shall be adjusted only if and to the extent
necessary to comply with the requirements of Section 1060. Neither Buyer nor
Seller will take or permit any affiliated person to take, for income tax
purposes, any position inconsistent with the allocation.
10.7 Records. Buyer and Subsidiary shall preserve and keep, free of
charge, all books, papers and records included in the Assets relating to
Seller's business for periods prior to the Closing Date for a period of no less
than seven years following the Closing Date. Buyer and Subsidiary agree to
permit Seller and its attorneys, accountants, agents and designees access to
such books, papers and records from and after the Closing Date for all
reasonable purposes. Any such examination shall be at the expense of Seller,
shall be performed at the place where such books, papers and records are
regularly maintained and shall not unreasonably interfere with Buyer's or
Subsidiary's business activities. Buyer or Subsidiary shall notify Seller at any
time that it intends to destroy any or all of such books, papers and records,
and Seller shall have the right to review and remove any of such books, papers
and records at Seller's expense.
10.8 Additional Instruments. At any time and from time to time after
the Closing, at Buyer's request and without further consideration, Seller shall
execute and deliver such other instruments of sale, transfer, conveyance,
assignment and confirmation and take such other action as Buyer may reasonably
deem necessary or desirable in order to more effectively transfer, convey and
assign to Buyer, and to confirm Buyer's or Subsidiary's title to and interest
in, the Assets and Contracts.
10.9 Bulk Sales Compliance. Buyer waives compliance by Seller with the
provisions of the bulk sales laws of any state, and Seller covenants and agrees
to pay and discharge when due all claims of creditors that could be asserted
against Buyer by reason of such non-compliance to the extent that such claims
are not specifically assumed by Buyer. Seller agrees to indemnify and hold Buyer
harmless from and against and shall on demand reimburse Buyer for any and all
losses, damages, costs, expenses, liabilities, obligations and claims of any
kind, including, without limitation, reasonable attorneys' fees and other legal
costs and expenses, suffered by Buyer by reason of Seller's failure to pay and
discharge any such claims. Notwithstanding the foregoing, Seller shall file with
state or local governmental agencies all notices and statements necessary to
limit Buyer's or Subsidiary's liability for any unpaid tax of Seller.
10.10 Change of Name. Seller covenants that, immediately after Closing,
it shall amend its Articles of Incorporation to change its name, and that in the
latter case its new name will not contain any variation of any Intangible,
specifically including "First", "Allegiance" or "Financial", or any name
confusingly similar thereto unless agreed to or requested by Buyer. Xxxxxx X.
Xxxxx and Seller agree that from and after Closing it will make no use of any
Intangible or any variation thereof in its business, unless agreed to or
requested by the Buyer.
10.11 Operation of Acquired Business. It is Buyer's intention to
contribute the business acquired from Seller to Subsidiary, and the business
will be operated as a division of Subsidiary. Buyer undertakes to keep separate
books and records (as is practical under the circumstances) of the division
created to operate the acquired business, and further agrees to make such books
and records available to Xxxxxx X. Xxxxx and his accountants to verify such
calculations. Seller agrees to cooperate in good faith with the Buyer's intent
to operate the Seller in a profitable fashion as a division and/or branch of
subsidiary and/or any other legal or accounting entity. Seller further
specifically agrees to operate its business in accordance with all rules,
regulations and desires of the OCC, State of California and Buyer. Seller
further agrees to fully comply with all federal and state laws, regulations and
rules which may govern the operations of the Seller.
10.12 Registration of Buyer's Shares. Buyer agrees, within ninety to
one hundred twenty (90-120) days of the Closing Date to file for registration
the 300,00 shares of Buyer's Common Stock (286,000 of which are being remitted
to Seller) paid as part of the Purchase Price with the appropriate agencies.
ARTICLE XI
TERMINATION
11.1 Termination. This Agreement may be terminated by mutual consent of
Buyer and Seller at any time and by either Buyer or Seller if the Closing shall
not have occurred by December 31, 1997. In the event that this Agreement shall
be terminated pursuant to this Section 11.1, this Agreement, except as provided
in Section 7.9, shall become void and shall have no effect, and all further
obligations of the parties under this Agreement shall terminate without further
liability of any party to another.
11.2 Waiver of Conditions. Subject to applicable law, (i) if any of the
conditions specified in Article VII hereof has not been satisfied, Buyer may
nevertheless elect to proceed with the transactions contemplated thereby; and
(ii) if any of the conditions specified in Article VIII hereof has not been
satisfied, Seller may nevertheless elect to proceed with the transactions
contemplated hereby.
ARTICLE XII
XXXXXX X. XXXXX'X CONSENT
12.1 Xxxxxx X. Xxxxx Consent. Xxxxxx X. Xxxxx, who owns all of the
outstanding equity securities of Seller, consents to the transactions
contemplated by this Agreement.
12.2 Buyer's Consent. Buyer, which owns all of the outstanding equity
securities of Subsidiary, consents, as the sole shareholder of Subsidiary, to
this Agreement.
ARTICLE XIII
MISCELLANEOUS
13.1 Entire Agreement; Amendment. This Agreement and the documents
referred to herein and to be delivered pursuant hereto constitute the entire
agreement between the parties pertaining to the subject matter hereof, and
supersede all prior and contemporaneous agreements, understandings, negotiations
and discussions of the parties, whether oral or written, and there are no
warranties, representations or other agreements between the parties in
connection with the subject matter hereof, except as specifically set forth
herein or therein. No amendment, supplement, modification, waiver or termination
of this Agreement shall be binding unless executed in writing by the party to be
bound thereby. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provision of this Agreement,
whether or not similar, nor shall such waiver constitute a continuing waiver
unless otherwise expressly provided.
13.2 Termination of Representations and Warranties. Seller and Xxxxxx
Xxxxx'x representations and warranties on the one hand, and Buyer's and
Subsidiary's representations and warranties on the other hand, specificially
contained in this Agreement, shall terminate 18 months after the execution of
this Agreement, and after such anniversary no party shall bear any further
liability for its representations and warranties or for contractual
indemnification except in the case of actual fraud. Buyer is authorized to
retain $50,000 from the purchase price to hold in order to satisfy any claims,
expenses or other amounts due whatsoever to Buyer which exceed $1,000. This
$50,000 will be returned to Seller with the interest minus any applicable
withholdings after the expiration of 20 months from the date of execution of
this Agreement. This 50,000 withholding is not to be construed as a cap or limit
on any claims, causes of action or even amounts owed to Buyer and shall in no
way operate to reduce any claims or causes of action whatsoever against the
Seller by the Buyer.
13.3 Expenses. Each party hereto shall pay the fees and expenses of
their respective counsel, accountants and other experts incident to the
negotiation and preparation of this Agreement and consummation of the
transactions contemplated hereby, except that, if this Agreement is consummated,
Buyer will pay all such expenses of Seller and Xxxxxx X. Xxxxx.
13.4 Governing Law and Venue. This Agreement shall be construed and
interpreted according to the laws of the State of West Virginia. All disputes
shall be resolved in the venue of Kanawha County, West Virginia.
13.5 Assignment. This Agreement and each party's respective rights
hereunder may not be assigned by either party without the prior written consent
of the other party.
13.6 Notices. All communications, notices and disclosures required or
permitted by this Agreement shall be in writing and shall be deemed to have been
given at the earlier of the date when actually delivered to an officer of the
other party or when deposited in the United States mail, certified or registered
mail, postage prepaid, return receipt requested and addressed as follows, unless
and until either of such parties notifies the other in accordance with this
Section of a change of address:
If to Seller:
First Allegiance Financial Corporation
00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxx
If to Xxxxxx X. Xxxxx:
00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx, XX 00000-0000
If to Buyer or Subsidiary:
City Holding Company
0000 XxxXxxxxx Xxxxxx, X.X.
P. O. Xxx 0000
Xxxxxxxxxx, Xxxx Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxx, III
Vice President and Chief Legal Counsel
With a copy to:
Xxxxxx X. Xxxxx, Xx.
Hunton & Xxxxxxxx
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
13.7 Counterparts; Headings. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but such counterparts
shall together constitute but one and the same Agreement. The Table of Contents
and Article and Section headings in this Agreement are inserted for convenience
of reference only and shall not constitute a part hereof.
13.8 Interpretation. Unless the context requires otherwise, all words
used in this Agreement in the singular number shall extend to and include the
plural, all words in the plural number shall extend to and include the singular
and all words in any gender shall extend to and include all genders.
13.9 Severability. If any provision, clause or part of this Agreement,
or the application thereof under certain circumstances, is held invalid, the
remainder of this Agreement, or the application of such provision, clause or
part under other circumstances, shall not be affected thereby.
13.10 No Reliance. No third party is entitled to rely on any of the
representations, warranties and agreements contained in this Agreement. Buyer
and Seller assume no liability to any third party because of any reliance on the
representations, warranties and agreements of Buyer and Seller contained in this
Agreement.
13.11 Arbitration. Any dispute regarding the terms or effect of this
Agreement or any aspect of this transaction will be resolved in accordance with
the then existing rules of the American Arbitration Association in Kanawha
County, West Virginia, as the exclusive remedy for such dispute and instead of
any court or administrative action, which is expressly waived. The parties
acknowledge that they have knowingly and voluntarily agreed to this arbitration
provision and fully understand that it is comprehensive and covers any and all
disputes between the parties including, but not limited to, any claims based on
alleged violations of this Agreement, any covenant of good faith and fair
dealing, express or implied, any violation of the West Virginia or California
Fair Employment and Housing Act or similar state statute prohibiting
discrimination and harassment in the workplace, any alleged violation of public
policy, intentional infliction of emotional distress, negligent infliction of
emotional distress, defamation, fraud and negligent misrepresentation,
negligence, intentional interference with prospective economic advantage, any
claim for wages, commissions, bonuses, separation or severance benefits, any
claims based on Title VII of the Civil Rights Act of 1964, the Equal Pay Act,
the Age Discrimination in Employment Act, the Americans with Disabilities Act,
the Employee Retirement Income Security Act of 1974, the federal Family and
Medical Leave Act, West Virginia's or California's Family Rights Act or similar
state statute, or any other statute, rule or regulation applicable.
IN WITNESS WHEREOF, the parties have caused this Asset Purchase
Agreement to be duly executed as of the day and year first above written.
CITY HOLDING COMPANY
By:___________________________
Name:
Title:
CITY NATIONAL BANK
By:____________________________
Name:
Title:
FIRST ALLEGIANCE FINANCIAL CORPORATION
By:____________________________
Name:
Title:
XXXXXX X. XXXXX OF FIRST ALLEGIANCE
FINANCIAL CORPORATION
---------------------------
Xxxxxx X. Xxxxx
