PURCHASE AND ASSUMPTION AGREEMENT
between
NEW YORK COMMUNITY BANK
and
SUN NATIONAL BANK
dated as of September 3, 2003
Table of Contents
Page
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Article 1 Defined Terms................................................................................1
Section 1.1. Defined Terms................................................................................1
Article 2 Transfer of Assets and Liabilities...........................................................5
Section 2.1. Transferred Assets and Liabilities...........................................................5
Section 2.2. Purchase Price...............................................................................7
Section 2.3. Deposit Liabilities..........................................................................8
Section 2.4. Loans Transferred...........................................................................11
Section 2.5. Employee Matters............................................................................12
Section 2.6. Records and Data Processing, etc............................................................12
Section 2.7. Security and Insurance......................................................................13
Section 2.8. Tax Matters; Proration of Certain Expenses..................................................13
Section 2.9. Transition..................................................................................15
Section 2.10 Title Insurance and Survey for Real Property................................................17
Article 3 Closing and Effective Time..................................................................17
Section 3.1. Effective Time..............................................................................17
Section 3.2. Closing.....................................................................................18
Section 3.3. Post-Closing Adjustments....................................................................19
Article 4 Indemnification.............................................................................20
Section 4.1. Seller's Indemnification of Purchaser.......................................................20
Section 4.2. Purchaser's Indemnification of Seller.......................................................21
Section 4.3. Claims for Indemnity........................................................................21
Section 4.4. Limitations on Indemnification..............................................................22
Section 4.5. Investigation...............................................................................22
Article 5 Representations and Warranties of Seller....................................................22
Section 5.1. Corporate Organization......................................................................23
Section 5.2. Authority...................................................................................23
Section 5.3. Non-Contravention...........................................................................23
Section 5.4. Compliance with Law; Permits................................................................23
Section 5.5. Legal Proceedings...........................................................................24
Section 5.6. Brokers.....................................................................................24
Section 5.7. Personal Property and Leasehold Improvements................................................24
Section 5.8. Branch Offices..............................................................................24
Section 5.9. Employees...................................................................................25
Section 5.10. Assumed Contracts...........................................................................25
Section 5.11. Loans.......................................................................................26
Section 5.12. Environmental Matters.......................................................................26
Section 5.13. Financing Available.........................................................................27
Section 5.14. Fiduciary Obligations.......................................................................27
Section 5.15. Regulatory Matters..........................................................................27
Article 6 Representations and Warranties of Purchaser.................................................28
Section 6.1. Corporate Organization......................................................................28
Section 6.2. Authority...................................................................................28
Section 6.3. Non-Contravention...........................................................................28
Section 6.4. Legal Proceedings...........................................................................28
Section 6.5. No Brokers..................................................................................28
Section 6.6. Regulatory Matters..........................................................................29
Section 6.7. Financing Available.........................................................................29
Article 7 Obligations of Parties Prior to and After Effective Time....................................29
Section 7.1. Access to Branch Offices....................................................................29
Section 7.2. Regulatory Approvals and Real Property Lease Approvals......................................30
Section 7.3. Conduct of Business; Maintenance of Properties..............................................30
Section 7.4. Branch Office Operations....................................................................30
Section 7.5. Corporate and Other Consents................................................................31
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Section 7.6. Data Processing Services; Delivery of Records...............................................32
Section 7.7. Public Announcements........................................................................32
Section 7.8. Tax Reporting...............................................................................32
Section 7.9. Excluded Asset Removal; Change of Name......................................................33
Section 7.10. Further Assurances..........................................................................33
Section 7.11. Insurance...................................................................................33
Section 7.12. Notices of Default..........................................................................33
Section 7.13. Covenant of Non-solicitation and Non-Competition............................................33
Section 7.14. Settlement Operations after Closing.........................................................34
Section 7.15. XXX and Xxxxx Accounts......................................................................35
Section 7.16. Training and Customer Assistance............................................................34
Section 7.17. Due Diligence/Environmental Matters/Building Systems........................................35
Section 7.18. Damage or Destruction.......................................................................37
Article 8 Conditions to Purchaser's Obligations.......................................................37
Section 8.1. Representations and Warranties True.........................................................37
Section 8.2. Obligations Performed.......................................................................38
Section 8.3. Regulatory Approvals, Real Property Lease Agreements and Other
Non-Regulatory Consents.....................................................................38
Section 8.4. Orders......................................................................................38
Section 8.5. Receipt of Occupancy Permits................................................................37
Article 9 Conditions to Seller's Obligations..........................................................38
Section 9.1. Representations and Warranties True.........................................................38
Section 9.2. Obligations Performed.......................................................................39
Section 9.3. Regulatory Approvals, Real Property Lease Agreements and Other
Non-Regulatory Consents.....................................................................39
Article 10 Termination.................................................................................39
Section 10.1. Methods of Termination......................................................................39
Section 10.2. Procedure Upon and Effect of Termination....................................................39
Article 11 Miscellaneous Provisions....................................................................40
Section 11.1. Expenses....................................................................................40
Section 11.2. Amendment and Modification..................................................................40
Section 11.3. Waiver or Extension.........................................................................40
Section 11.4. Successors and Assigns......................................................................40
Section 11.5. Confidentiality.............................................................................40
Section 11.6. Addresses for Notices, Etc..................................................................41
Section 11.7. Counterparts; Facsimile.....................................................................42
Section 11.8. Headings....................................................................................42
Section 11.9. Governing Law...............................................................................42
Section 11.10. Sole Agreement..............................................................................42
Section 11.11. Parties in Interest.........................................................................42
Section 11.12. Specific Performance........................................................................42
Section 11.13. No Jury Trial...............................................................................42
Section 11.14. Bulk Sales..................................................................................43
Section 11.15. Calendar Days and Business Days.............................................................43
Schedules
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1.1 Branch Offices
2.1(a)(i) Purchased Real Property
2.1(a)(ii) Leasehold Improvements
2.1(a)(iii) Furniture, Fixtures, Equipment and Other Tangible Personal Property
2.1(a)(iv) Real Property Lease Agreements
2.1(b) Excluded Assets
2.3(a) Deposit Liabilities
2.4(a) Loans
ii
5.3 Consents
5.8(d) Documentation
5.8(f) Expiration Dates
5.9 Employees
5.10 Assumed Contracts
6.3 Consents
7.7 Press Releases
Exhibits
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3.2(b)(i) Lease Assignment
3.2(b)(ii) Xxxx of Sale
3.2(b)(iii) Assignment and Assumption Agreement
3.2(b)(iv) Officer's Certificate - Seller
3.2(c) Officer's Certificate - Purchaser
7.2(b) Form of Real Property Lease Consent
iii
PURCHASE AND ASSUMPTION AGREEMENT
Purchase and Assumption Agreement (the "Agreement"), dated as of
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September 3, 2003, between New York Community Bank ("Seller"), a New York
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State chartered stock savings bank having its principal place of business at 000
Xxxxxxx Xxxxxx, Xxxxxxxx, XX 00000, and Sun National Bank ("Purchaser"), a
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national banking association having its principal place of business at 000
Xxxxxx Xxxxxx, Xxxxxxxx, XX 00000.
W I T N E S S E T H:
--------------------
WHEREAS, Seller desires to sell certain assets of, and transfer certain
liabilities assigned to, certain Branch Offices of Seller; and
WHEREAS, Purchaser wishes to purchase such assets and assume such
liabilities upon the terms and conditions set forth herein;
NOW THEREFORE, in consideration of the promises and mutual agreements
hereinafter set forth, Seller and Purchaser agree as follows:
Article 1 Defined Terms
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Section 1.1 Defined Terms.
The following terms shall have the meanings ascribed to them for all purposes of
this Agreement:
"Accepting Employee" has the meaning set forth in Section 2.5.
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"ACH Accounts" means deposit accounts subject to arrangements between
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the owners of such accounts and a third party (each such third party, an "ACH
---
Originator", to be identified as an "ACH Originator" in the test conversion
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tapes to be provided by Seller to Purchaser prior to the Closing and the actual
conversion tapes to be provided the day after Closing pursuant to the terms of
this Agreement) which directly makes automated clearing house debits and
credits, including, but not limited to, social security payments, Federal
recurring payments, and other payments debited and/or credited on a regularly
scheduled basis to or from such accounts (such payments debited or credited by
ACH Originators being referred to herein as "ACH Items").
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"Acquisition Proposal" has the meaning set forth in Section 7.4
--------------------
"ADA" shall mean the United States Americans with Disabilities Act.
---
"Affiliate" of a person means any person directly or indirectly
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controlling or controlled by or under direct or indirect common control with
such person. An entity which is not an "Affiliate" at the time of the execution
of this Agreement will become an "Affiliate" if, at the time in question, such
entity satisfies the definition of "Affiliate".
"Agreed Property Value" has the meaning set forth in Section 2.2(e).
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"Agreement" has the meaning set forth in the opening paragraph of this
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Agreement.
"Allocation" has the meaning set forth in Section 2.2(f)(ii).
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"Assignment and Assumption Agreement" has the meaning set forth in
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Section 3.2(b)(v).
"Assumed Contracts" shall have the meaning set forth in Section 5.10.
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"ATMs" means automated teller machines.
----
"BIF" means the Bank Insurance Fund.
---
"Xxxx of Sale" has the meaning set forth in Section 3.2(b)(iv).
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"Branch Employees" has the meaning set forth in Section 5.9.
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"Branch Offices" means Seller's Branch Offices listed on Schedule 1.1
---------------
attached hereto and made a part hereof.
"Business day" means a day on which Seller is open for business which
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is not a Saturday or Sunday or days which are typical banking holidays in the
State of New Jersey.
"Building Systems" has the meaning set forth in Section 7.17(b).
----------------
"Closing" and "Closing Date" have the meanings set forth in Section 3.1
--------------------------
"Code" has the meaning set forth in Section 2.2(f).
----
"Coins and Currency" has the meaning set forth in Section 2.1(a)(ix).
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"Damages" has the meaning set forth in Section 4.1(a).
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"Deposit Liabilities" has the meaning set forth in Section 2.3(a).
-------------------
"Deposit Premium" has the meaning set forth in Section 2.2(a)(i).
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"Disputed Physical Defects" has the meaning set forth in Section
---------------------------
7.17(b).
"Dispute Resolver" means an independent accounting firm or other
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independent third-party mutually acceptable to Purchaser and Seller to act as
Dispute Resolver.
"Effective Time" has the meaning set forth in Section 3.1.
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"Encumbrances" means all mortgages, claims, charges, liens,
------------
encumbrances, easements, limitations, restrictions, commitments, security
interests, pledges or other similar charges or liabilities, whether accrued,
absolute, contingent or otherwise, except any of foregoing: (i) for Taxes not
yet due or being contested in good faith, (ii) that is a lien of a landlord,
licensor, carrier, warehouseman, mechanic, materialsman, or any other statutory
lien, in each case arising in the ordinary course of business, (iii) that
otherwise does not materially detract from the value of the property as now used
or materially interfere with the present use or anticipated continuance of such
use of the property, or (iv) to the extent created by or arising from actions of
Purchaser. With respect to Real Property, Encumbrance shall not include zoning
and subdivision laws and regulations and landmark, historic or wetlands
designation, provided that they are not violated by the existing buildings and
improvements erected on the property or their use; covenants and easements of
record, provided same do not prohibit continued existing use of the premises;
consents for the erection of any structure on, under or above any streets on
which the Real Property abuts; encroachments of xxxxxx, areas, cellar steps,
trim and cornices, if any, upon any street or highway or adjoining property,
deminimous encroachments by adjourning upon the Real Property and real estate
taxes that are a lien, but are not yet due and payable.
"Environment Audit" has the meaning set forth in Section 7.17(c).
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"Environmental Laws" has the meaning set forth in Section 5.12.
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"Escheatable Deposits" means deposits held on the Last Close of
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Business at the Branch Offices which, in the absence of any claim by the
depositor thereof, are or will become subject to escheat, in the calendar year
in which the Closing occurs, to the State of New Jersey or any other state
pursuant to applicable escheat and unclaimed property laws.
"Excluded Assets" has the meaning set forth in Section 2.1(b).
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"Excluded Branch" has the meaning set forth in Section 7.17(c).
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"Excluded Deposit Liabilities" has the meaning set forth in Section
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2.3(a).
"Fair Market Value" has the meaning set forth in Section 2.2 (d).
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"FDIA" has the meaning set forth in Section 5.1.
----
"FDIC" means the Federal Deposit Insurance Corporation.
----
"Federal Funds Rate" has the meaning set forth in Section 3.3(d).
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"Final Allocation" has the meaning set forth in Section 2.2(f)(iii).
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"Indemnified Party" and "Indemnitor" have the meaning set forth in
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Section 4.3(b).
"Initial Closing Statement" has the meanings set forth in Section
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2.2(c).
"Interest" has the meaning set forth in Section 2.8(d).
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"XXX" shall mean an "individual retirement account" or similar account
---
created by a trust for the benefit of any individual or his beneficiaries in
accordance with the provisions of Section 408 of the Code.
"IRS" means the Internal Revenue Service.
---
"ISRA" has the meaning set forth in Section 7.17(a).
----
"Xxxxx Account" shall mean an account created by a trust for the
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benefit of one or more employees or owners or their beneficiaries in accordance
with the provisions of Section 401(c) and (d) of the Code.
"Last Close of Business" has the meaning set forth in Section
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2.2(a)(i).
"Leasehold Improvements" has the meaning set forth in Section
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2.1(a)(ii).
"Lease Assignment" has the meaning set forth in Section 3.2(b)(ii).
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"Landlord" has the meaning set forth in Section 7.2(b).
--------
"LNA" has the meaning set forth in Section 7.17(a).
---
"Loans" has the meaning set forth in Section 2.4(a).
-----
"Marketable" has the meaning set forth in Section 3.2(b)(i).
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"Net Book Value" has the meaning set forth in Section 2.2(e).
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"Non-conforming Loan" has the meaning set forth in Section 4.1(b).
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3
"Non-Regulatory Consents" has the meaning set forth in Section 7.5.
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"Overdrafts" means those overdrafts of the book balance of any accounts
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constituting Deposit Liabilities and all consumer lines of credit made available
to customers of the Branch Offices as protection against the overdrafts of such
accounts, which in each instance are evidenced by a pre-approval of such credit
and an obligation by the customer to repay such borrowing plus applicable
accrued interest.
"Permitted Exception" has the meaning set forth in Section 5.8(h).
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"Permitted Liens" has the meaning set forth in Section 3.2(b)(i).
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"Personal Property" has the meaning set forth in Section 2.1(a)(iii).
-----------------
"Physical Defects" has the meaning set forth in Section 7.17(b).
----------------
"Post-Closing Balance Sheet" and "Post-Closing Balance Sheet Delivery
--------------------------- ------------------------------------
Date" have the meanings set forth in Section 3.3(a).
----
"Pre-Closing Balance Sheet" and "Pre-Closing Balance Sheet Date" have
-------------------------- -------------------------------
the meanings set forth in Section 2.2(c).
"Purchase Price" has the meaning set forth in Section 2.2(a).
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"Purchaser" has the meaning set forth in the opening paragraph of this
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Agreement.
"Real Property" has the meaning set forth in Section 2.1(a)(i).
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"Real Property Lease Consents" has the meaning set forth in Section
-------------------------------
7.2(b).
"Real Property Lease Agreements" has the meaning set forth in Section
-------------------------------
2.1(a)(iv).
"Records" means originals or copies of all records and documents in
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Seller's possession which pertain to and are utilized by Seller to administer,
reflect, monitor, evidence or record information respecting (i) the Transferred
Assets or (ii) the Deposit Liabilities, including all such records maintained on
electronic or magnetic media in the electronic data base system of Seller, or to
comply with applicable laws and governmental regulations to which the Deposit
Liabilities are subject, including but not limited to Federal Reserve Board
Regulation E (12 C.F.R. ss. 205), Federal Reserve Board Regulation CC (12 C.F.R.
ss. 229) and applicable unclaimed property and escheat laws.
"Regulatory Approvals" has the meaning set forth in Section 7.2(a).
--------------------
"Repair Estimate" has the meaning set forth in Section 7.17(b).
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"Safe Deposit Contracts" has the meaning set forth in Section
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2.1(a)(vii).
"Seller" has the meaning set forth in the opening paragraph of this
------
Agreement.
"Seller Consents" has the meaning set forth in Section 7.5.
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"Tax" or "Taxes" shall include any of the following imposed by or
--- -----
payable to any governmental authority: any income, gross receipts, license,
payroll, employment, excise, severance, stamp, business, occupation, premium,
windfall profits, environmental (including taxes under Section 59A of the Code),
capital stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, or value added tax, any alternative or add-on minimum
tax, any estimated tax, and any levy, impost, duty, assessment, withholding or
any other governmental charge of any kind whatsoever, in each case including any
interest, penalty, or addition thereto, whether disputed or not.
4
"Tax Returns" means any return or other report required to be filed
------------
with respect to any Taxes, including declaration of estimated tax and
information returns.
"Title Company" has the meaning set forth in Section 2.10.
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"Transaction" means the transactions contemplated by this Agreement.
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"Transferred Assets" has the meaning set forth in Section 2.1(a)(ix).
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Article 2 Transfer of Assets and Liabilities
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Section 2.1. Transferred Assets and Liabilities.
(a) As of the Effective Time and upon the terms and conditions set
forth herein, Seller will sell, assign, transfer, convey and deliver to
Purchaser free and clear of all Encumbrances, and Purchaser will purchase (or in
the case of Deposit Liabilities, assume) from Seller free and clear of all
Encumbrances, the following assets and liabilities located at each of the Branch
Offices, except as otherwise excluded from sale pursuant to the provisions of
subsection (b) below:
5
(i) Marketable (as defined below) fee simple right, title
and interest in and to the real estate located at the
Branch Offices listed on Schedule 2.1(a)(i) hereto,
together with all assignable real property rights and
appurtenances pertaining thereto (collectively, the
"Real Property");
(ii) all leasehold improvements listed on Schedule
2.1(a)(ii) at the Branch Offices ("Leasehold
---------
Improvements"), in an AS IS condition and subject to
------------
ordinary wear and tear;
(iii)furniture, fixtures, equipment and other tangible
personal property, if any, listed on Schedule
2.1(a)(iii), in an AS IS condition and subject to
ordinary wear and tear (collectively, the "Personal
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Property");
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(iv) true copies of the lease agreements and all amendments
for the Atlantic City North and Northfield Branch
Offices as set forth on Schedule 2.1(a)(iv) (the "Real
----
Property Lease Agreements");
-------------------------
(v) all Loans, if any, transferred pursuant to Section 2.4;
(vi) the Records;
(vii)all lease contracts related to rental of safe deposit
boxes at the Branch Offices ("Safe Deposit Contracts")
and the rented and unrented safe deposit boxes at the
Branch Offices including two keys to each unrented safe
deposit box;
(viii) all Assumed Contracts as set forth at Schedule 5.10;
(ix) all coins and currency located at the Branch Offices as
of the Effective Time, which shall include any coins
and currency in ATMs at the Branch Offices at the
Effective Time (the "Coins and Currency") (the assets
-------------------
referred to in Subsections (i) through (ix),
collectively, the "Transferred Assets"); and
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(x) the Deposit Liabilities, as set forth on Schedule
2.3(a).
(b) Excluded from the assets, properties and rights being transferred,
conveyed and assigned to Purchaser under this Agreement are (i) all proprietary
merchandising equipment listed on Schedule 2.1(b) and other assets listed on
Schedule 2.1(b), (ii) Seller's rights in and to its name and the name of its
divisions and any of Seller's corporate logos, trademarks, trade names, signs,
paper stock, forms and other supplies containing any such logos, trademarks or
trade names, (iii) any regulatory licenses or any other licenses and permits
identified as nonassignable licenses on Schedule 2.1(b), and (iv) any Loan or
Loans which are not the subject of this Agreement pursuant to the operation of
Section 5.11(g) hereof (collectively, the "Excluded Assets"). Seller shall
----------------
coordinate with Purchaser to remove the Excluded Assets from the Branch Offices
pursuant to Section 7.9 hereof.
6
(c) Except for data provided pursuant to Sections 2.1(a), 2.3, 2.4,
2.5, 2.6 and 2.9, all internal reports and data relating to, containing or
derived from the operating results of Seller and its affiliates or any
subsidiary or division or line of business thereof, whether contained in books,
records or other paper format, accessed through the computer and data processing
systems of Seller and its affiliates, or otherwise in the possession of Seller,
shall remain solely the property of Seller, and nothing contained in this
Agreement shall be construed as transferring to or vesting in Purchaser any
right or interest in or to such data and information. Purchaser acknowledges
that Seller shall be entitled to take all such steps prior to or following the
Effective Time as shall be reasonably necessary to effect the foregoing,
including taking such actions as are reasonably necessary to ensure that all
access to such information at the office of Seller shall be terminated as of the
Closing.
Section 2.2. Purchase Price.
(a) As consideration for the purchase of the Branch Offices, Purchaser
shall pay Seller a purchase price equal to the sum of the following (the
"Purchase Price"):
(i) an amount equal to eleven percent (11%) (the "Deposit
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Premium"), of the Deposit Liabilities allocated on the
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records of Seller to the Branch Offices as of the close
of business on the last business day preceding the
Closing Date (the "Last Close of Business").
----------------------
(ii) the Fair Market Value of the Real Property;
(iii)the Agreed Property Value of Personal Property and
Leasehold Improvements;
(iv) the Net Book Value of the Loans as of the Last Close of
Business;
(v) Seller's prorata prepaid portion of real estate taxes
and water and sewer charges, if any, determined as of
midnight of the Closing Date for each Branch Office;
(vi) any security deposit and prepaid portion of lease fees
paid by Seller under the Real Property Lease
Agreements, determined as of midnight of the Closing
Date for each Branch Office; and
(vii)less the amount of the Deposit Liabilities as of the
Last Close of Business; and
(viii) less the aggregate of the pro rata pre-paid rental
fees collected by Seller related to the Safe Deposit
Contracts.
(b) In addition, Purchaser shall assume, as of the Effective Time, all
of the duties, obligations and liabilities of Seller relating to the Deposit
Liabilities transferred as of the Effective Time, excluding any matters
associated with such Deposit Liabilities, if any, arising from actions taken or
not taken prior to the Effective Time, other than the balances payable as of the
Effective Time, and all of the duties, obligations and liabilities of Seller
accruing or arising under the Real Property Lease Agreements on or after the
Effective Time, but excluding any additional or incremental obligations or
liabilities arising from or relating to any breach or violation of such duties,
obligations or liabilities.
(c) Seller shall, in good faith, (i) prepare a balance sheet (the
"Pre-Closing Balance Sheet") in accordance with generally accepted accounting
--------------------------
principles consistently applied (except to the extent that this Agreement
provides for any item to be accounted for in a manner other than as consistently
applied by Seller) as of a date not earlier than ten (10) business days prior to
the Effective Time anticipated by the parties (the "Pre-Closing Balance Sheet
--------------------------
Date") and a related initial closing statement (the "Initial Closing Statement")
---- -------------------------
reflecting the assets to be sold and assigned hereunder and the liabilities to
be transferred and assumed hereunder and (ii) update the appropriate Schedules
to this Agreement to reflect changes in the ordinary course of business of the
Branch Offices between the date hereof and the Pre-Closing Balance Sheet Date.
Such Initial Closing Statement shall be presented to the Purchaser for review
not later than five business days prior to the anticipated Effective Time. If
the Purchase Price amount to be paid by the Purchaser to the Seller pursuant to
Section 2.2(a), as reflected on the Initial Closing
7
Statement represents a negative amount, then Seller agrees to pay to Purchaser
at the Closing, in immediately available funds by 2:00 P.M. local time by wire
transfer, such amount, as reflected on the Initial Closing Statement. If the
Purchase Price amount to be paid by the Purchaser to the Seller pursuant to
Section 2.2(a), as reflected on the Initial Closing Statement represents a
positive amount, then Purchaser agrees to pay to Seller at the Closing, in
immediately available funds by 2:00 P.M. local time by wire transfer, such
amount, as reflected on the Initial Closing Statement. Amounts paid at Closing
pursuant to this Section 2.2(c) shall be subject to subsequent adjustment based
on the Post-Closing Balance Sheet and the Final Closing Statement.
(d) With respect to Real Property, Fair Market Value shall be the value
of each parcel of Real Property listed on Schedule 2.1(a)(i) that is mutually
agreed upon by the Seller and Purchaser to be determined within forty-five days
of the date of the Agreement. Purchaser and its agents may undertake an
inspection of such Real Property and make reasonable requests of information
from Seller related to such properties in order to facilitate its determination
of such Fair Market Value. In the event the Seller and Purchaser are unable to
agree upon the value of any property, the Seller and Purchaser shall each select
a qualified licensed appraiser who will in turn select a third licensed
appraiser qualified to appraise the properties of the type listed on Schedule
2.1(a)(i). The third licensed appraiser shall appraise the property or
properties that the Seller and Purchaser are unable to agree upon and the
appraised amount of such third licensed appraiser shall be deemed the Fair
Market Value.
(e) The Personal Property and Leasehold Improvements shall be deemed to
have a value of Two Hundred Eighty Thousand Dollars ($280,000) (the "Agreed
------
Property Value"), which for all purposes hereof shall be divided equally among
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the Branch Offices. With respect to Loans, Net Book Value is the aggregate
principal amount of the Loans, plus accrued and unpaid interest, reduced by any
write-downs of loan principal previously taken on such Loans, but such value
shall not include any loan loss reserves or general reserves.
(f) (i) Seller and Purchaser agree to allocate the consideration
under this Agreement in such a manner as reasonably determined by Purchaser in
accordance with the rules under Section 1060 of the Internal Revenue Code of
1986, as amended (the "Code"), subject to Seller's consent (which consent shall
not be unreasonably withheld).
(ii) Within ninety (90) days following the Closing, Purchaser
shall deliver to Seller a statement setting forth an allocation of the Purchase
Price (the "Allocation"). Seller shall have a period of thirty (30) days
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following receipt of the Allocation in which to review the Allocation and raise
any objections that Seller may have. Unless Seller timely objects, the
Allocation shall become binding on the parties without further adjustment.
(iii) If Seller timely objects to Purchaser's proposed
Allocation, Seller and Purchaser shall use their best efforts to resolve the
disagreement during the ten-day period following Seller's notice of objection.
If the disagreement is not resolved during such ten-day period, the dispute
shall be referred to a Dispute Resolver, which shall be asked (A) to determine
whether it was unreasonable for Seller to withhold its consent to the Allocation
proposed by Purchaser and (B) if the Dispute Resolver determines that it was not
unreasonable for Seller to withhold such consent, to specify those modifications
required to be made so that Purchaser's proposed Allocation would be in
accordance with the rules under Section 1060 of the Code. The Allocation
proposed by Purchaser, as modified by negotiation between Seller and Purchaser
and by any modifications implemented pursuant to the immediately preceding
sentence, shall be deemed to be the "Final Allocation". All determinations under
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this Section 2.2(f)(iii) made by a Dispute Resolver shall be binding upon
Purchaser and Seller. Purchaser and Seller shall share equally in the cost of
any Dispute Resolver.
(iv) Purchaser shall prepare Form 8594 in a manner that
reflects the Final Allocation. Seller and Purchaser shall each file such Form
8594 when due.
(v) To the extent consistent with applicable law, Seller and
Purchaser shall not file any Tax return or other documents or otherwise take any
position with respect to Taxes that is inconsistent with the Final Allocation;
provided, however, that neither Seller nor Purchaser shall be obligated to
------------------
litigate any challenge by a governmental authority to the Final Allocation.
8
(vi) Seller and Purchaser shall promptly inform one another of
any challenge by any governmental authority to any allocation made pursuant to
this Section 2.2(f) and agree to consult with and keep one another informed with
respect to the state of, and any discussion, proposal or submission with respect
to, such challenge.
Section 2.3 Deposit Liabilities.
(a) For purposes of this Agreement, "Deposit Liabilities" shall mean
--------------------
those deposit liabilities, if any, of Seller that (a) are allocated on the
records of Seller to the Branch Offices, (b) Purchaser may legally assume and
(c) are listed on Schedule 2.3(a), subject to change in the ordinary course of
business of the Branch Offices between the date as of which such Schedule 2.3(a)
is prepared and the Last Business Day, which may consist of (i) demand deposit
accounts, excluding any amounts therein that may be temporarily swept into other
accounts or investments, (ii) savings deposit accounts, (iii) money market
accounts, (iv) certificates of deposit, (v) negotiable order of withdrawal
accounts, and (vi) other deposit or savings accounts allocated on the records of
Seller to the Branch Offices according to their respective terms as of the Last
Close of Business (including Deposit Liabilities with respect to the deposit
accounts listed on Schedule 2.3(a) which remain such as of the Last Close of
Business), in each case together with interest accrued thereon but unpaid as of
the Last Close of Business, provided that Deposit Liabilities shall not include
the Excluded Deposit Liabilities. For purposes of this Agreement, "Excluded
Deposit Liabilities" shall mean (i) Deposit Liabilities with respect to accounts
which are booked by Seller at the Branch Offices and are held by Seller under or
pursuant to any judgment, decree or order of any court, (iii) deposits that were
erroneously credited to the Branch Offices by Seller, (iv) any deposits subject
to or involved in any form of litigation, (v) any deposits as to which assets of
Seller have been pledged as security for amounts in excess of the FDIC insured
limits, (vi) any Escheatable Deposits, and (vii) Deposit Liabilities not listed
on Schedule 2.3(a) (other than Deposit Liabilities which are not listed due to
changes in the ordinary course of business of the Branch Offices from the date
of such Schedule through the Last Close of Business). Schedule 2.3(a) sets forth
the Deposit Liabilities, if any, as of the date set forth on such Schedule,
which are subject to changes thereafter in the ordinary course of business of
the Branch Offices. For purposes of Section 2.2(a)(i), Deposit Liabilities shall
also not include: (i) deposits of federal, state, county, municipal or local
governments or governmental agencies and (ii) brokered deposits.
(b) Except as otherwise expressly provided in this Agreement, neither
Purchaser nor any of its Affiliates shall assume pursuant hereto any
liabilities, obligations or duties of Seller or any of its Affiliates of any
kind or nature, whether or not accrued or fixed, absolute or contingent,
existing at the time of or arising out of or relating to acts, events or
omissions to act that occurred at or prior to the Closing. Seller shall retain
and duly perform any and all such liabilities, obligations or duties other than
the Deposit Liabilities and other liabilities expressly assumed by Purchaser at
the Closing pursuant to this Agreement.
(c) Purchaser agrees to pay in accordance with law and customary
banking practices all properly drawn and presented checks, drafts and withdrawal
orders presented to Purchaser by mail, over the counter or through the check
clearing system of the banking industry, by depositors of the accounts assumed
by Purchaser hereunder, whether drawn on the checks, withdrawal orders or draft
forms provided by Seller or by Purchaser, and in all other respects to
discharge, in the usual course of the banking business, the duties and
obligations of Seller with respect to the balances due and owing to the
depositors whose accounts are assumed by Purchaser hereunder.
(d) If, after the Effective Time, any depositor, instead of accepting
the obligation of Purchaser to pay the Deposit Liabilities assumed hereunder,
shall demand payment from Seller for all or any part of any such assumed Deposit
Liabilities, Seller shall not be liable or responsible for making any such
payment, except as provided by law. However, if Seller shall pay the same,
Purchaser agrees to reimburse Seller for any such payments except to the extent
that Purchaser has theretofore also made payments to such depositor with respect
to such Deposit Liabilities, has theretofore offset such Deposit Liabilities
against amounts owed by such depositor to Purchaser or such claim exceeds the
Deposit Liabilities for such depositor based upon records maintained by the
Purchaser. Seller and Purchaser shall make arrangements to provide for the daily
settlement by electronic wire of immediately available funds by Purchaser of
checks, drafts, withdrawal orders, returns and other items, which checks,
drafts, withdrawal orders, returns and other items are presented to and paid by
Seller within the first ninety (90) days after the Effective Time and drawn on
or chargeable to accounts that have been assumed by Purchaser hereunder.
Purchaser shall remit the immediately available funds to Seller within the same
business day that Seller
9
provides a detailed list of such checks, drafts, withdrawal orders, returns and
other items presented to and paid by Seller, provided Seller presents said list
to Purchaser by 2:30 P.M. eastern standard time. Any errors will be corrected
the following business day by Seller's electronically wiring immediately
available funds to Purchaser in the event Seller has been over-reimbursed or
Purchase's wiring immediately available funds to Seller in the event Seller has
been under-reimbursed. Any amounts to be paid by Purchaser to Seller shall be
netted daily against any amounts to be paid by Seller to Purchaser, and vice
versa, such that only one amount, representing the net amount due, shall be
transferred on a daily basis by the party with the higher amount of remittances
for such day.
(e) Purchaser agrees, at its cost and expense, (1) to assign new
account numbers to depositors of assumed Deposit Liabilities, provided that
Purchaser need not take such actions if in its business judgment it is advisable
not to do so, (2) to notify such depositors, on or before the Effective Time but
after receipt of all Regulatory Approvals (exclusive of applicable waiting
periods), in a form and on a date mutually acceptable to Seller and Purchaser
and in accordance with the requirements of applicable laws and regulations, of
Purchaser's assumption of the Deposit Liabilities, (3) to furnish such
depositors with checks on the forms of Purchaser and with instructions to
utilize Purchaser's checks and to destroy unused check, draft and withdrawal
order forms of Seller (it being understood that if Purchaser so elects,
Purchaser may offer to buy from such depositors their unused Seller's check,
draft and withdrawal order forms), (4) to reissue all ATM and debit cards (with
new PIN numbers) associated with the depositors of assumed Deposit Liabilities
and (5) to replace all line of credit checks with checks on the forms of
Purchaser, with instructions to utilize Purchaser's checks and to destroy the
unused checks on the forms of Seller.
(f) (i) Purchaser agrees to pay promptly to Seller an amount
equivalent to the amount of any checks, drafts or withdrawal orders credited to
any assumed Deposit Liabilities as of the Effective Time that are returned to
Seller after the Effective Time as uncollectible, but only to the extent that
the collected balance of the relevant account is sufficient to permit payment
thereof, less the applicable deposit premium previously paid by the Purchaser in
accordance with Section 2.2(a)(i).
(ii) During the thirty (30) days after the Effective Time,
Purchaser agrees to pay promptly to Seller an amount equivalent to the amount of
any ATM or point-of-sale withdrawal from a Deposit Liability pursuant to a debit
card of Purchaser authorized prior to the Effective Time, which has not been
received and processed by Seller as of the Effective Time.
(g) As of the Effective Time, Purchaser will assume and discharge
Seller's duties and obligations in accordance with the terms and conditions and
laws, rules and regulations that apply to the Deposit Liabilities assumed under
this Agreement.
(h) As of the Effective Time, Purchaser will maintain and safeguard in
accordance with applicable law all account documents, deposit contracts,
signature cards, deposit slips, canceled items and other Records assumed under
this Agreement to the extent that such documents, contracts, cards, slips, items
and records are delivered to Purchaser, subject to Seller's right of access to
such records as provided in this Agreement.
(i) Prior to the Closing Date, Purchaser shall, at Purchaser's expense,
notify the ACH Originators identified by Seller in its composite tapes of the
transfers and assumptions made pursuant to this Agreement. For a period of
ninety (90) days beginning on the Effective Time, Seller will honor all ACH
Items related to accounts assumed under this Agreement, which are mistakenly
routed or presented to Seller. Seller will make no charge to Purchaser for
honoring such items. Seller will make available to Purchaser at Seller's
operations center receiving ACH Items all information reasonably necessary to
identify each of the related accounts, the owners of each such account, the ACH
Originators which directly make automated clearing house debits and credits to
each such account and the amounts of such debits and credits. Items mistakenly
routed or presented to Seller after such ninety (90) day period will be returned
to the presenting party. Seller and Purchaser shall make arrangements to provide
for the daily settlement with immediately available funds by Purchaser of any
ACH Items honored by Seller pursuant to this Section 2.3(i).
(j) As of the Effective Time, Seller shall transfer and assign all
files, documents and records related to the Deposit Liabilities in its
possession to Purchaser, including such information held in electronic form, and
10
Purchaser will be responsible for maintaining and safeguarding all such
materials in accordance with applicable law and sound banking practices.
(k) In case of any dispute with or inquiry by any customer whose
Deposit Liability account is subject to this Agreement, which dispute or inquiry
relates to the servicing of such account by Seller prior to the date for which a
deposit history has been provided to Purchaser, Seller will provide Purchaser,
where available and to the extent reasonably requested by Purchaser and not
already provided to Purchaser, information regarding the Deposit Liability
account and copies of pertinent documents or instruments with respect to such
dispute or inquiry so as to permit Purchaser to respond to the Deposit Liability
account holder within a period of time and in a manner which would comply with
standard banking practices and customs. Purchaser shall not be liable for any
claims related thereto pertaining to the period prior to the Effective Time.
(l) Seller shall deliver on the Closing Date to Purchaser a schedule of
stop payment orders that have been placed by Seller on particular Deposit
Liabilities or on individual checks, drafts or other items or instruments. If
following receipt of appropriate stop order documentation Purchaser makes any
payment in violation of any such stop payment order, Purchaser shall be solely
liable for any such payment.
Section 2.4. Loans Transferred.
(a) Subject to Section 5.11(g) hereof, Seller shall transfer to Purchaser as of
the Effective Time, subject to the terms and conditions of this Agreement, all
of Seller's right, title and interest (including accrued but unpaid interest and
collateral relating thereto) in (i) those loans identified on Schedule 2.4(a)
attached hereto and secured by deposit accounts, including but not limited to
savings accounts and certificates of deposit, and unsecured loans created by
writing a check or similar instrument on an existing and previously approved
overdraft line of credit (determined after taking into account reconciliations
of temporary overdrafts cleared by automatic deposits or otherwise during the
ten (10) business days following the Effective Time), in each case allocated on
the records of Seller to the Branch Offices, (ii) those consumer installment
loans and consumer lines of credit, if any, set forth on Schedule 2.4(a) and
which are allocated on the records of Seller to the Branch Offices, and (iii)
commercial real estate loans and commercial business loans identified on
Schedule 2.4(a) attached hereto; (in the case of each loan referred to in
clauses (i), (ii) and (iii) only as listed on Schedule 2.4(a), subject to
adjustment as a result of changes in the ordinary course of business of the
Branch Offices and pursuant to Section 5.11(g) hereof) (the "Loans"). The Loans
(as well as any lien or security interest related thereto) shall be transferred
by means of a blanket (collective) assignment and not individually (except as
may be otherwise required by law). Seller shall permit the Purchaser to inspect
all files and payment histories related to such Loans, and Purchaser reserves
the right within its sole good faith discretion to reject any such Loans,
provided notice of such rejection is given not less than thirty (30) days prior
to the Effective Time. Any Loans that are (i) more than 30 days past due with
respect to the payment of principal or interest, (ii) subject to a pending legal
proceeding or (iii) subject to a bankruptcy proceeding as of the Effective Time
may be unconditionally returned by the Purchaser to the Seller within thirty
(30) days after the Effective Time, and Seller shall refund Purchaser the
purchase price of such Loans. Purchaser intends to purchase performing loans
identified on Schedule 2.4(a) that a reasonable purchaser of loans would
purchase.
(b) Seller and Purchaser agree that Purchaser will become the
beneficiary of credit life insurance written on Loans and coverage will continue
to be the obligation of the current insurer after the Effective Time and for the
duration of such insurance as provided under the terms of the policy or
certificate. If Purchaser becomes the beneficiary of credit life insurance
written on Loans, Seller and Purchaser agree to cooperate in good faith to
develop a mutually satisfactory method by which the current insurer will make
rebate payments to and satisfy claims of the holders of such certificates of
insurance after the Effective Time. After the Effective Time, Seller will
promptly deliver to Purchaser the proceeds of any credit life insurance relating
to Loans inadvertently received by it. The parties' obligations in this Section
2.4(b) are subject to any restrictions contained in existing insurance contracts
as well as applicable laws and regulations.
(c) In connection with the transfer of any Loans requiring notice to
the borrower and the servicer, Purchaser and Seller will comply with all notice
and reporting requirements of the loan documents or of any law or regulation.
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(d) All Loans will be transferred without any warranties or
representations as to their collectability or the creditworthiness of any of the
obligors of the Loans, except as set forth at Section 5.11 herein.
(e) Promptly after the Effective Time, Purchaser will at its expense
issue new coupon books or other forms of payment identification for payment of
Loans for which Seller provides coupon books, with instructions to utilize
Purchaser coupons or forms and to destroy coupons furnished by Seller.
(f) After the Effective Time, Seller will forward to Purchaser, Loan
payments received by Seller. If the balance due on any Loan has been reduced by
Seller as a result of a payment by check or other instrument received prior to
the Effective Time, and if such instrument is returned to Seller after the
Effective Time as uncollectible, an amount in cash equal to such reduction shall
be paid by Purchaser to Seller upon collection by Purchaser of such sums, and
Seller shall assign promptly all right, title and interest in such uncollectible
item to Purchaser. Purchaser shall apply the first Loan payments received to the
amount due Seller.
(g) As of the Effective Time, Seller shall transfer and assign all
files, documents and records related to the Loans to Purchaser, including such
information held in electronic form, and Purchaser will be responsible for
maintaining and safeguarding all such materials in accordance with applicable
law and sound banking practices.
Section 2.5. Employee Matters.
Purchaser in their sole and absolute discretion, may hire, or not hire,
on the Effective Time, any, all or none of Seller's employees in the Branch
Offices. Purchaser will notify Seller, not later than thirty (30) days prior to
the Effective Time, which employees of Seller it intends to offer to employ as
of the Effective Time and which such employees actually commence employment with
the Purchaser ("Accepting Employees"). Purchaser agrees not to contact Seller's
employees unless Seller has given approval for the employee contact. Seller
shall make payment to all Accepting Employees as of the Effective Time for all
salary and wages earned for time worked or paid time off for all periods prior
to the Effective Time, including payment for all accrued but unused vacation and
leave in accordance with Seller's normal policies and practices for payment of
such vacation and leave to its terminating employees. Seller shall be
responsible for retaining or terminating the employment of its employees whom
the Purchaser does not hire, and Seller shall make payment of any severance and
other payments due such Seller's Branch Office employees that are not hired by
Purchaser. Purchaser will indemnify Seller for any claim for compensation,
including commissions and incentive pay, earned by any Accepting Employees after
the Effective Time as a result of such Accepting Employees' employment by
Purchaser, provided that Purchaser shall have no obligation with respect to any
severance obligations that may exist with respect to any person's employment by
Seller. Purchaser shall have no responsibility or liability with respect to the
employment of any of Seller's employees with respect to any period prior to the
Effective Time. Seller will indemnify Purchaser for any claim for compensation,
including commissions and incentive pay, earned by any employee of Seller with
respect to any period prior to the Effective Time.
Section 2.6. Records and Data Processing, etc.
(a) Through the Effective Time, Seller will maintain the Records in
accordance with safe and sound banking practices and in a manner consistent with
past practice. After the Effective Time, Purchaser will maintain the Records in
accordance with safe and sound banking practices and in a manner consistent with
past practice. All original Records, whether held by Purchaser or Seller, shall
be maintained for such periods as are required by law, unless the parties shall,
applicable law permitting, agree in writing to a different period. From and
after the Effective Time, each of the parties shall permit the other reasonable
access to any applicable Records or other documents in its possession relating
to matters arising on or before the Effective Time and reasonably necessary in
connection with any claim, action, litigation or other proceeding involving the
party requesting access to such Records or other documents or in connection with
any legal obligation owed by such party to any present or former depositor or
other customer and shall use reasonable commercial efforts to provide access to
employees having knowledge with respect to the matters covered by such Records
and other documents.
(b) For a period of 6 months after the Effective Time, the party
providing copies of Records or other documents shall do so without charge;
thereafter it may charge its customary rate for such copies.
12
(c) It is understood that certain of Seller's records, including
certificates of deposit, may be available only in electronic form or in the form
of photocopies, film copies or other non-original and non-paper media.
Section 2.7. Security and Insurance.
As of the Effective Time, Purchaser shall be solely
responsible for the security of and insurance on all persons and property
located in or about the Branch Offices. Seller will maintain in effect until the
Effective Time casualty and public liability insurance policies relating to the
Branch Offices consistent with that which it maintains in connection with its
other branch offices, including without limitation casualty damage insurance
covering the Real Property for its full replacement value (subject to a
commercially reasonable deductible) and business interruption insurance.
Section 2.8. Tax Matters; Proration of Certain Expenses.
(a) Tax Representations. Seller represents and warrants to Purchaser as
-------------------
follows:
(i) All Tax Returns with respect to the Transferred Assets or
income therefrom, the Deposit Liabilities or payments in respect thereof or the
operation of the Branch Offices, that are required to be filed on or before the
Closing Date have been or will be duly filed by Closing, and all Taxes shown to
be due on such Tax Returns have been paid in full or will be paid in full by
Closing.
(ii) With respect to the Deposit Liabilities, Seller is in
compliance with the law and IRS regulations relating to (i) obtaining from
depositors of the Deposit Liabilities executed IRS Forms W-8 and W-9 when
appropriate and (ii) reporting of interest. With respect to the Deposit
Liabilities opened after December 31, 1983, Seller has either obtained a
properly completed Form W-8 or W-9 when appropriate (and renewals of such forms,
where required) or is back-up withholding on such account.
(iii) No Tax is required to be withheld by Purchaser from the
Purchase Price as a result of the transfers contemplated by this Agreement
pursuant to the Code or any other provision of federal, state or local Tax law.
(b) Liability for Taxes.
-------------------
(i) Liability of Seller. With respect to the Transferred
--------------------
Assets, the liabilities assumed by Purchaser hereunder and the Branch Offices,
Seller shall be liable for and indemnify Purchaser for all Taxes imposed on the
Transferred Assets or income therefrom, such liabilities or payments in respect
thereof, or the operation of the Branch Offices for (i) any taxable year or
period that ends on or before the Closing Date and (ii), with respect to any
taxable year or period beginning before and ending after the Closing Date, the
portion of such taxable year or period ending on and including the Closing Date.
(ii) Liability of Purchaser. Except as set forth in Section
-----------------------
2.8(d), with respect to the Transferred Assets, the liabilities assumed by
Purchaser hereunder and the Branch Offices, Purchaser shall be liable for and
indemnify Seller for all Taxes imposed on the Transferred Assets or income
therefrom, such liabilities or payments in respect thereof, or the operation of
such Branch Offices for (i) any taxable year or period that begins after the
Closing Date and (ii), with respect to any taxable year or period beginning
before and ending after the Closing Date, the portion of such taxable year
beginning after the Closing Date.
(iii) Proration of Taxes. Except as otherwise agreed to by the
------------------
parties, whenever it is necessary to determine the liability for Taxes for a
portion of a taxable year or period that begins before and ends after the
Closing Date, the determination of the Taxes for the portion of the year or
period ending on, and the portion of the year or period beginning after, the
Closing Date shall be determined by assuming that the taxable year or period
ended at the close of business on the Closing Date.
(iv) Limitation on Liability of Purchaser. Seller and
----------------------------------------
Purchaser expressly acknowledge and agree that (i) Purchaser's liability for
Taxes arising out of the consummation of the purchases and sales contemplated by
this Agreement is limited to the Taxes described in Section 2.8(b)(ii) and
Section 2.8(c), (ii)
13
Purchaser is not assuming, expressly or by implication, any other Taxes of
Seller (and specifically is not assuming liability for any income or franchise
taxes measured by Seller's or Seller's Affiliates' net income) attributable to
the conduct of Seller's business or to its assets or liabilities and (iii)
Seller shall indemnify and hold Purchaser harmless from and against any Taxes
not described in Section 2.8(b)(ii) or Section 2.8(c).
(c) Sales and Transfer Taxes. All excise, sales, use and transfer Taxes
------------------------
that are payable or that arise as a result of the consummation of the purchase
and sale contemplated by this Agreement, including such Taxes associated with
the transfer and sale of the Real Property, shall be paid one-half by the
Purchaser and one-half by the Seller. Purchaser shall prepare and file any Tax
Returns that are required to be filed in connection with transfer taxes. Seller
agrees it shall be responsible for payment of all applicable taxes in connection
with the operation of its business, including at the Branch Offices through the
Effective Time and hereby agrees to indemnify and hold harmless Purchaser for
any of such taxes or any penalties associated therewith. Purchaser agrees it
shall be responsible for payment of all applicable taxes in connection with the
operation of its business, including at the Branch Offices after the Effective
Time and hereby agrees to indemnify and hold harmless Seller for any of such
taxes or any penalties associated therewith. Seller shall be responsible for the
payment of any taxes or fees that may be due and payable to the State of New
York related to the Transaction and any taxes due pursuant to Section 11.14. The
provisions of this section shall survive the Closing Date.
(d) Information Returns. At the Closing or as soon thereafter as is
--------------------
practicable, Seller shall provide Purchaser with a list of all Deposit
Liabilities for which Seller has not received a properly completed and currently
valid Form W-8 or W-9 or on which Seller is back-up withholding as of the
Closing Date. With respect to information returns filed and similar reporting
made by Purchaser within 12 months after the Closing Date, Seller agrees to
indemnify Purchaser in an amount equal to any penalty and interest imposed upon
Purchaser by the IRS or other Tax authorities or self-assessed by Purchaser
which Purchaser is thereafter required to, and does, pay to the IRS where such
penalty and interest arises out of actions taken or omitted to be taken by
Purchaser in reasonable reliance upon the representation provided by Seller
under Section 2.8(a)(ii), and such penalty and interest does not result from an
act or omission of Purchaser not made in reliance upon such information. The
term "interest" for purposes of this Section 2.8(d) means interest accrued prior
to the receipt by Purchaser of a notice of penalty from the IRS regarding Form
W-8 or W-9 (or other Tax authorities regarding similar forms) for the Assumed
Deposits.
(e) Payment of Amount Due under Section 2.8. Any payment by Seller to
----------------------------------------
Purchaser, or to Seller from Purchaser, under this Section 2.8 (other than
payments required by Section 2.8(c)) to the extent due at the Closing may be
offset against any payment due the other party at the Closing. All subsequent
payments under this Section 2.8 shall be made as soon as determinable and shall
be made and bear interest from the date due to the date of payment at a rate
equal to the federal funds rate per annum.
(f) Tax Returns. With respect to the Transferred Assets, the
------------
liabilities assumed by Purchaser hereunder and the Branch Offices, (a) Seller
shall file or cause to be filed when due all Tax Returns that are required to be
filed with respect to the Transferred Assets or income therefrom, such
liabilities or payments in respect thereof, or the operation of the Branch
Offices for taxable years or periods ending on or before the Closing Date
(including Tax Returns for such years or periods that are required to be filed
after the Closing Date) and shall pay any Taxes due in respect of such Tax
Returns, and (b) Purchaser shall file or cause to be filed when due all Tax
Returns with respect to the Transferred Assets or income therefrom, such
Liabilities or payments in respect thereof, or the operation of the Branch
Offices for taxable years or periods ending after the Closing Date and shall
remit any Taxes due in respect of such Tax Returns. If Seller (or Purchaser)
shall be liable hereunder for any portion of the Tax shown due on any Tax Return
prepared by the other party, the party preparing the Tax Return shall deliver a
copy to the party so liable for its review not less than thirty (30) days prior
to the date on which such Tax Return is due to be filed (taking into account any
applicable extensions). Seller (or Purchaser) shall pay in immediately available
funds the Taxes for which it is liable pursuant to Section 2.8(b)(i) or
2.8(b)(ii) but which are payable with Tax Returns to be filed by the other party
pursuant to the previous sentence at least ten (10) days prior to the due date
for the payment of such Taxes.
(g) Assistance and Cooperation. After the Closing Date, each of Seller
--------------------------
and Purchaser shall:
(i) Provide reasonable assistance to the other party in
preparing any Tax Returns which such other party is responsible for preparing
and filing in accordance with this Section 2.8;
14
(ii) Cooperate fully in preparing for any audits of, or
disputes with Tax authorities regarding, any Tax Returns with respect to the
Transferred Assets or income therefrom, the liabilities assumed by Purchaser
hereunder or payments in respect thereof, or the operation of the Branch
Offices;
(iii) Make available to the other and to any taxing authority
as reasonably requested all relevant information, records, and documents
relating to Taxes with respect to the Transferred Assets or income therefrom,
the liabilities assumed by Purchaser hereunder or payments in respect thereof,
or the operation of the Branch Offices;
(iv) Provide timely notice to the other in writing of any
pending or proposed Tax audits (with copies of all relevant correspondence
received from any Tax authority in connection with any Tax audit or information
request) or assessments with respect to the Transferred Assets or income
therefrom, the liabilities assumed by Purchaser hereunder or payments in respect
thereof, or the operation of the Branch Offices, for taxable periods for which
the other may have a liability under this Section 2.8;
(v) Furnish the other with copies of all relevant
correspondence received from any Tax authority in connection with any Tax audit
or information request with respect to any taxable period referred to in
subsection (iv) above; and
(vi) If requesting assistance or cooperation from the other
party, bear the other party's out-of-pocket expenses in complying with such
request to the extent that those expenses are attributable to fees and other
costs of unaffiliated third-party service providers; provided, however, that
------------------
such other party shall obtain a quotation from any such third-party service
providers prior to engagement and obtain approval thereof from the party
requesting assistance.
(h) Notices, Etc. Without limiting the provisions of Section 2.8(g),
-------------
the notification and contest provisions of Section 4.3 shall apply to claims for
indemnification under Sections 2.8(a) - 2.8(g), inclusive. The representations
of Seller in Section 2.8(a) shall similarly survive the Closing until the
expiration of the relevant limitations period for the assertion of claims by the
relevant Tax authority.
(i) Other Prorations. (1) Utility payments, fuel, telephone charges,
----------------
rent, salaries maintenance items, other ordinary operating expenses of the
Branch Offices and other expenses related to the liabilities assumed or assets
purchased hereunder shall be prorated between the parties as of the Effective
Time. To the extent any such item has been prepaid by Seller for a period
extending beyond the Effective Time, there shall be a proportionate monetary
adjustment in favor of Seller. Seller and Purchaser shall each be responsible
for their own costs with respect to the preparation and filing of any tax
returns, as well as the preparation, review and analysis of the allocation
statements and any forms or statements prepared in connection with the
allocation of the final Purchase Price. (2) FDIC deposit insurance premiums or
assessments shall be prorated on the basis of aggregate Deposit Liabilities
transferred as of the Effective Time multiplied by the deposit liability
assessment rate actually paid for such assessment quarter by the Purchaser,
times, in the case of the Purchaser the number of days from and including the
Closing Date until and including the last day in the calendar quarter ending on
or after the Closing Date, divided by 365, and in the case of Seller, the number
of days from the beginning of such calendar quarter until, but not including,
the Closing Date, divided by 365.
Section 2.9. Transition.
(a) Certain Procedures. Promptly after the execution of this Agreement,
------------------
Seller will meet with Purchaser to investigate, confirm and agree upon mutually
acceptable procedures for transaction settlement and data processing services,
to the extent necessary for orderly consummation of the transactions
contemplated hereby.
(b) Customers.
---------
(i) As soon as practicable after the receipt of Regulatory
Approvals, but no later than thirty (30) days before the Closing Date, Seller
will, at its sole cost and expense, notify the depositors of the deposit
accounts to be assigned to Purchaser and borrowers under the Loans of the
transactions contemplated hereby. Seller shall
15
provide Purchaser with a list of the persons and their addresses to whom such
notice shall be sent. Seller and Purchaser shall agree upon, to the extent
reasonably practicable, the content of such notice of Seller within three (3)
business days after Purchaser's receipt of Seller's proposed notice. Purchaser
will be permitted to notify the depositors of the Deposit Liabilities assumed by
Purchaser hereunder of the transactions contemplated hereby prior to the Closing
Date, provided that Purchaser and Seller shall agree upon, to the extent
reasonably practicable, the content of such notice of Purchaser within three (3)
business days after Seller's receipt of Purchaser's proposed notice.
(ii) As promptly as practicable after the date hereof, Seller
will provide Purchaser with magnetic media Records containing sample data in
lieu of actual data in each field for system testing purposes, in a format
useable by Purchaser.
(iii) Anything herein to the contrary notwithstanding, for a
period of sixty (60) days following the Closing, neither Purchaser nor Seller
shall object to the use by depositors of the Deposit Liabilities assumed
hereunder of checks and similar instruments issued to or ordered by such
depositors on or prior to the Closing Date, which instruments may bear Seller's
name, or any logo, trademark, service xxxx, trade name or other proprietary xxxx
of Seller.
(iv) Seller shall designate an appropriate employee or
employees to be responsible for the necessary cooperation of the parties
following the Closing and to act as an initial contact for responding to
questions and requests for information following the Closing. In case of dispute
with or inquiry by an account holder whose Deposit Liabilities or Loan are
subject to this Agreement, which dispute or inquiry relates to the servicing of
such Deposit Liabilities or Loan prior to the date for which a deposit or loan
history has been provided to Purchaser, Seller will make a good faith effort to
provide Purchaser with the appropriate information regarding the applicable
Deposit Liabilities or Loan and copies of pertinent documents or instruments
with respect to such matter which would comply with reasonable banking practices
and customs. Seller shall provide such information to Purchaser at no charge for
one (1) year following the Closing Date, and thereafter may charge Purchaser
reasonable industry rates for such information. Notwithstanding the foregoing
one (1) year time period, Seller shall be able to charge Purchaser reasonable
industry rates for any research done for Purchaser's customers and for which
Purchaser customarily charges its customers in other similarly situated branch
offices.
(v) As soon as practicable after the receipt of Regulatory
Approvals, but no later than thirty (30) days before the Closing Date, Seller
will deliver to Purchaser a copy of the magnetic media Records.
(c) Maintenance of Records. Through the Closing Date, Seller will
-----------------------
maintain the Records in accordance with safe and sound banking practices and in
a manner consistent with past practice. All original Records, whether held by
Purchaser or Seller, shall be maintained for such periods as are required by
law, unless the parties shall, applicable law permitting, agree in writing to a
different period. From and after the Closing Date, each of the parties shall
permit the other reasonable access to any applicable Records in its possession
relating to matters arising on or before the Closing Date and reasonably
necessary in connection with any claim, action, litigation or other proceeding
involving the party requesting access to such Records or in connection with any
legal obligation owed by such party to any present or former depositor or other
customer.
(d) Interest Reporting and Withholding.
----------------------------------
(i) Unless otherwise agreed by the parties, Seller will report
to applicable taxing authorities and holders of Deposit Liabilities assumed by
Purchaser hereunder, with respect to the period from January 1 of the year in
which the Closing occurs through the Closing Date, all interest credited to,
withheld from and any early withdrawal penalties imposed upon such Deposit
Liabilities. Purchaser will report to the applicable taxing authorities and
holders of Deposit Liabilities assumed by Purchaser hereunder, with respect to
all periods from the day after the Closing Date, all such interest credited to,
withheld from and early withdrawal penalties imposed upon such Deposit
Liabilities. Any amounts required by any governmental agencies to be withheld
from any of the Deposit Liabilities through the Closing Date will be withheld by
Seller in accordance with applicable law or appropriate notice from any
governmental agency and will be remitted by Seller to the appropriate agency on
or prior to the applicable due date. Any such withholding required to be made
subsequent to the Closing Date shall be
16
withheld by Purchaser in accordance with applicable law or appropriate notice
from any governmental agency and will be remitted by Purchaser to the
appropriate agency on or prior to the applicable due date.
(ii) Unless otherwise agreed by the parties, Seller shall be
responsible for delivering to payees all IRS notices with respect to information
reporting and tax identification numbers required to be delivered for the period
through the Closing Date which occur with respect to the Deposit Liabilities
assumed by Purchaser hereunder.
(iii) Unless otherwise agreed by the parties, Seller will make
all required reports to applicable Tax authorities and to obligors on Loans
concerning all interest and points received by Seller through the Closing Date.
Purchaser will make all required reports to applicable Tax authorities and to
obligors on Loans concerning all such interest and points received after the
Closing Date.
(e) Negotiable Instruments. Seller will destroy or remove any supply of
----------------------
Seller's money orders, official checks, gift checks or any other negotiable
instruments, including travelers' checks, located at each of the Branch Offices
on the Closing Date.
Section 2.10 Title Insurance and Survey for Real Property.
---------------------------------------------
Seller shall deliver to Purchaser within fifteen (15) days after the
date of this Agreement a copy of any surveys in its possession for the Real
Property. Within ten (10) days following the date hereof, Purchaser will order a
report of title to the Real Property from a title insurer selected by Purchaser
and licensed to do business in the State of New Jersey (the "Title Company") and
-------------
will order a survey (or survey update, if acceptable to the Title Company) of
the Real Property to be certified to each of Seller and Purchaser and insured by
the Title Company, and will furnish to Seller's attorneys copies thereof within
thirty (30) days after the date hereof, together with a statement identifying
the title exceptions noted therein that do not constitute Permitted Liens or
Permitted Exceptions. Seller shall be entitled to reasonable adjournments of the
Closing, not to exceed one hundred twenty (120) days in the aggregate, for the
purpose of eliminating any objections to title, but nothing herein contained
shall require Seller to bring any action or proceeding, or incur any expense
(except to the extent provided in the next succeeding sentence) in order to
render the title to be in accordance with this Agreement. In the case of any
exceptions to title which can be removed or insured against by the Title Company
solely by the payment of a liquidated sum of money, of which as of the date of
this Agreement Seller is unaware of such condition, provided such liquidated sum
does not, in the aggregate, exceed $20,000.00 (other than mortgages, tax liens
and other assessments and money judgments, as to which such limit shall not
apply), Seller shall be obligated to pay, or deposit with the Title Company,
such liquidated sum for the removal of such title exceptions and for the Title
Company to insure against same, and Seller shall not be entitled to an
adjournment of the Closing for such purpose.
Article 3 Closing and Effective Time
--------- --------------------------
Section 3.1. Effective Time.
The purchase of assets and assumption of liabilities provided for in this
Agreement shall occur at a closing (the "Closing") to be held at the executive
office of Seller in Westbury, New York at 10:00 A.M., local time, on the first
Friday, or in the event the first Friday is in January 2004, then the earliest
possible day in December 2003, that is after the later of (x) at fifteen (15)
days after the conditions for regulatory approval set forth in Sections 8.3 and
9.3 shall have been satisfied, (y) two days after the conditions set forth in
Sections 8 and 9, other than regulatory approvals as set forth in Sections 8.3
and 9.3, have been satisfied, and (z) thirty (30) days after Seller has sent the
notice to customers described in Section 2.9(b)(i), unless otherwise mutually
agreed upon by the parties. The effective time of the transactions contemplated
by this Agreement (the "Effective Time") shall be 5:00 P.M., local time, on the
---------------
day on which the Closing occurs (the "Closing Date"), unless otherwise mutually
------------
agreed upon by the parties; provided that the transfer of funds detailed at
Section 2.2 shall occur as set forth therein. The parties hereof anticipate that
that the Closing shall occur in the month of December 2003, although the precise
date cannot be set on the date hereof. It is the intention of the parties that
the closing shall occur by December 31, 2003. The parties
17
agree that system deconversion shall not be a basis to postpone Closing. In the
event that the system deconversion cannot be accomplished during 2003, and all
other conditions to closing have been satisfied or waived, Closing shall occur
in 2003 and Seller shall service the Deposit Liabilities and Loans, until such
time as system deconversion shall occur. Purchaser shall reimburse Seller for
the reasonable cost of Seller's services.
Section 3.2. Closing.
(a) All actions taken and documents delivered at the Closing shall be
deemed to have been taken and executed simultaneously, and no action shall be
deemed taken nor any document delivered until all have been taken and delivered.
(b) At the Closing, subject to all the terms and conditions of this
Agreement, Seller shall execute and deliver to Purchaser or, in the case of
subsections (b) (vi) and (vii), make reasonably available to Purchaser:
(i) a Bargain and Sale Deed with Covenants against
Grantor's Acts, conveying fee simple title and interest
in the Real Property, free and clear of all liens and
Encumbrances, except encumbrances that do not affect
the aggregate value of, or interfere with the past or
future use or ability to convey the property subject
thereto or affected thereby and liens for current taxes
and special assessments not yet due and payable
(collectively, the "Permitted Liens") and Permitted
Exceptions (defined hereinafter) and insurable at
regular rates by a title company licensed to do
business in the State of New Jersey (the Permitted
Exceptions and Permitted Liens together constitute
"Marketable");
(ii) an assignment and assumption of the Real Property Lease
Agreements, in substantially the form attached hereto
as Exhibit 3.2(b)(i) (the "Lease Assignment");
----------------
(iii) the Real Property Lease Consents;
(iv) a Xxxx of Sale, in substantially the form attached
hereto as Exhibit 3.2(b)(ii) (the "Xxxx of Sale"),
-------------
transferring to Purchaser all of Seller's interest in
the Personal Property, in the Leasehold Improvements
and in the Loans;
(v) an Assignment and Assumption Agreement, in
substantially the form attached hereto as Exhibit
3.2(b)(iii) (the "Assignment and Assumption
-------------------------------
Agreement"), assigning Seller's interest in the Deposit
---------
Liabilities;
(vi) Seller's files and records related to the Loans and
related to the Deposit Liabilities assumed by
Purchaser;
(vii) all of Seller's other Records;
(viii) immediately available funds in the net amount shown
as owing to Purchaser by Seller on the Initial Closing
Statement, if any;
(ix) such of the other Transferred Assets to be purchased as
shall be capable of physical delivery;
(x) a certificate of a proper officer of Seller, dated as
of the Closing Date, in the form of Exhibit 3.2(b)(iv),
certifying to the fulfillment of the conditions to the
obligation of Purchaser contained in Sections 8.1 and
8.2;
(xi) a copy of a resolution of the Board of Directors of
Seller approving this Agreement and the transactions
contemplated hereby;
(xii)the Initial Closing Statement and the Pre-Closing
Balance Sheet;
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(xiii) Seller's resignation as trustee or custodian, as
applicable, with respect to each XXX or Xxxxx Plan
account included in the Deposit Liabilities, if any,
and designation of Purchaser as successor trustee or
custodian with respect thereto;
(xiv)a certificate from the Secretary or Assistant
Secretary of Seller as to the incumbency and signatures
of officers attesting to the authority of such officers
to execute and deliver this Agreement and all related
documents;
(xv) such other assignments, bills of sale, deeds,
acknowledgments and other instruments of conveyance and
transfer as shall at any time be necessary or
appropriate to vest in Purchaser the full legal and
equitable title to the Transferred Assets being sold
hereunder, free and clear of all Encumbrances;
(xvi)such certificates and other documents as Purchaser and
its counsel may reasonably require (i) to evidence
receipt by Seller of all necessary Regulatory Approvals
for the consummation by Seller of the transactions
provided for in this Agreement and (ii) to effect the
transactions provided for in this Agreement; and
(c) At the Closing, subject to all the terms and conditions of this
Agreement, Purchaser shall execute and deliver to Seller:
(i) the Assignment and Assumption Agreement;
(ii) a certificate and receipt acknowledging the delivery
and receipt of possession of the Transferred Assets;
(iii)immediately available funds in the net amount shown as
owing to Seller by Purchaser on the Initial Closing
Statement, if any;
(iv) a certificate of a proper officer of Purchaser, dated
as of the Closing Date, in the form of Exhibit 3.2(c),
certifying to the fulfillment of the conditions to the
obligation of Seller contained in Sections 9.1 and 9.2;
(v) a copy of a resolution of the Board of Directors of
Purchaser approving this Agreement and the transactions
contemplated hereby; and
(vi) such certificates and other documents as Seller and its
counsel may reasonably require (i) to evidence the
receipt by Purchaser of all necessary Regulatory
Approvals for the consummation by Purchaser of the
transactions provided for in this Agreement and (ii) to
effect the transactions provided for in this Agreement.
(d) All instruments, agreements and certificates described in this
Section 3.2 shall be in form and substance reasonably satisfactory to the
parties' respective legal counsel.
Section 3.3. Post-Closing Adjustments.
(a) Not later than thirty (30) days after the Effective Time (the
"Post-Closing Balance Sheet Delivery Date"), Seller shall deliver to Purchaser a
----------------------------------------
balance sheet dated as of the Effective Time and prepared in accordance with
generally accepted accounting principles consistently applied (except to the
extent that this Agreement provides for any item to be accounted for in a manner
other than as consistently applied by Seller) reflecting the assets sold and
assigned and the liabilities transferred and assumed hereunder (the
"Post-Closing Balance Sheet"), together with a copy of Seller's calculation of
---------------------------
the adjusted Purchase Price and amounts payable thereunder, as reflected in a
final closing statement (the "Final Closing Statement"). Concurrent with the
------------------------
delivery of the Post-Closing Balance Sheet to Purchaser, Seller shall afford
Purchaser and its accountants and attorneys the opportunity to review all work
19
papers and documentation used by Seller in preparing the Post-Closing Balance
Sheet and the Final Closing Statement.
(b) The Final Closing Statement and Post-Closing Balance Sheet shall
become final and binding on Purchaser and Seller ten (10) business days after
its delivery to Purchaser, unless Purchaser gives written notice to Seller of
its disagreement with respect to any item included in such Statement and Balance
Sheet within such ten (10) business day period. Seller and Purchaser shall use
their best efforts to resolve the disagreement during the fifteen (15) day
period following receipt by Seller of such notice. If the disagreement is not
resolved during such fifteen (15) day period, the dispute shall be referred to a
Dispute Resolver, and such Final Closing Statement shall be modified by any such
resolution and thereupon such Final Closing Statement shall become final and
binding on Purchaser and Seller provided, however, for any claim that does not
exceed $5,000 that in the event the fees of such Dispute Resolver as estimated
by such firm would exceed fifty percent (50%) of the net amount in dispute, the
parties agree that such firm will not be engaged by either party and that such
net amount in dispute will be equally apportioned between Seller, on the one
hand, and Purchaser, on the other hand. Such Dispute Resolver shall be
instructed to resolve the disputed items within ten (10) Business Days of
engagement, to the extent reasonably practicable. All determinations under this
Agreement made by a Dispute Resolver shall be binding upon Purchaser and Seller.
Purchaser and Seller shall share equally in the cost of any Dispute Resolver.
(c) Within three (3) business days following the date on which the Final Closing
Statement shall become final and binding on Purchaser and Seller pursuant to
Section 3.3(b), Seller and Purchaser shall effect the transfer of any funds as
may be necessary to reflect changes in assets and liabilities between the
Pre-Closing Balance Sheet and the Post-Closing Balance Sheet and resulting
changes in the Purchase Price, as reflected in the Final Closing Statement,
together with interest thereon computed from the Effective Time to the date(s)
on which such transfer of funds occurs, at the applicable Federal Funds Rate (as
hereinafter defined Any errors in calculation of the Deposit Liabilities or
accrued interest thereon, or other amounts ("Mistakes-in-Fact") which are
determined as of the date of the Final Closing Statement shall be reconciled as
of such date and appropriate adjustments of payments shall be made to the Seller
or the Purchaser, as appropriate, at such time. Notwithstanding the foregoing,
or anything else herein to the contrary, any Mistakes-in-Fact which shall be
determined by the Seller or the Purchaser thereafter related to the Transaction
shall nevertheless be reconciled by adjustment or payment to the Seller or the
Purchaser, as appropriate, within thirty (30) days of such determination,
provided that any such Mistakes-in-Fact must be determined within one year after
the Effective Time in order for a claim to be made with respect thereto.
(d) The "Federal Funds Rate" shall be the mean of the high and low
--------------------
rates quoted for Federal Funds in the Money Rates Column of The Wall Street
Journal adjusted as such mean may increase or decrease during the period between
the Effective Time and the date such transfer of funds occurs.
(e) If Seller accepts an item before the Effective Time, which item is
returned as uncollectible, and no offset of funds is available to the Purchaser,
then, provided Purchaser did not release funds prior to being required to
release funds under Regulation CC, Seller shall be liable for such item in an
amount equal to the portion not covered by offset. Adjustment to the Final
Closing Statement will be made as necessary to reflect such Seller's liability.
Purchaser shall use commercially reasonable efforts to collect the amount of
Seller's shortfall and will promptly forward to Seller all amounts collected,
less reasonable third party collection costs.
Article 4 Indemnification
--------- ---------------
Section 4.1. Seller's Indemnification of Purchaser.
(a) Subject to any limitations in Section 4.1(b), Seller shall
indemnify, hold harmless and defend Purchaser and its Affiliates from and
against (i) all damages, claims, losses, liabilities, demands, obligations,
expenses, including reasonable attorneys' fees and expenses (collectively,
"Damages") arising out of any breach by Seller of any agreement, covenant,
-------
representation or warranty contained herein, (ii) all Damages arising out of any
actions, suits or proceedings commenced or pertaining to the period prior to the
Effective Time (other than
20
proceedings to prevent or limit the consummation of this transaction) relating
to Seller's operations at the Branch Offices and (iii) all Damages relating to
any liabilities of Seller which are not assumed by Purchaser hereunder; and,
except as otherwise provided in this Agreement, Seller shall further indemnify,
hold harmless and defend Purchaser and its Affiliates from and against all
Damages, real estate Taxes, intangibles and franchise Taxes, sales and use
Taxes, social security and unemployment Taxes, deposit insurance assessments,
all accounts payable and operating expenses (including salaries, rents and
utility charges) incurred by Seller prior to the Effective Time and which are
claimed or demanded on or after the Effective Time, or which arise out of any
actions, suits or proceedings commenced on or after the Effective Time, in
connection with operations or transactions occurring prior to the Effective Time
and which involve the Branch Offices, Seller's employees, the Transferred
Assets, the Deposit Liabilities, any other liabilities assumed by Purchaser
hereunder or any other liabilities retained by Seller pursuant to this
Agreement.
(b) Purchaser's sole remedy after the Effective Time for a breach of
the representations and warranties contained in Section 5.11 shall be as set
forth in this Section 4.1(b). If Purchaser shall discover within one (1) year
after the Effective Time that (a) any Loan, except those loans secured by
deposit accounts, including but not limited to savings accounts and certificates
of deposit, and unsecured loans created by writing a check or similar instrument
on an overdraft line of credit, was more than sixty (60) days past due or
otherwise in default as of the Effective Time, (b) the documentation or customer
disclosure relating to a particular Loan were not materially correct and
substantially complete and in substantial compliance with applicable law or (c)
the representations and warranties in Section 5.11 were materially inaccurate
with respect to a particular Loan (a "Non-conforming Loan"), and if Purchaser so
-------------------
notifies Seller specifying the particular non-conformity with respect to each
such Loan, then Seller shall have the opportunity for a period of ninety (90)
days from the date of such notification to cure any such non-conformity.
Purchaser shall cooperate with Seller in Seller's attempts to cure any such
non-conformity. If Seller elects not to, or is not able to, cure any such
non-conformity within such ninety (90) day period, Seller agrees, if so
requested by Purchaser, to repurchase any Loan that remains non-conforming at
book value, plus accrued and unpaid interest (excluding any late charges, fees,
penalties, loan loss reserves or general reserve), as carried on the books of
Purchaser in accordance with generally accepted accounting principles as of the
date of repurchase. Not later than ten (10) business days after Seller receives
notice of Purchaser's election to resell a non-conforming Loan or Loans, Seller
and Purchaser shall close such resale with Purchaser delivering such bills of
sale and other documents necessary to transfer such Non-conforming Loan or Loans
against delivery of the repurchase price by Seller. This provision shall not be
deemed to impose any obligation on Seller to review any Loan to determine
conformity or non-conformity as defined in this Section 4.1(b).
Section 4.2. Purchaser's Indemnification of Seller.
Purchaser shall indemnify, hold harmless and defend Seller and its
Affiliates from and against (i) all Damages arising out of any breach by
Purchaser of any agreement, covenant, representation or warranty contained
herein and (ii) all Damages, real estate Taxes, intangibles and franchise Taxes,
sales and use Taxes, deposit insurance assessments, social security and
unemployment Taxes, all accounts payable and operating expenses (including
salaries, rents and utility charges), in either case, which Seller may receive,
suffer or incur in connection with operations and transactions occurring or
pertaining to the period after the Effective Time and which involve the
operation of the Branch Offices, the Transferred Assets or the liabilities
assumed by Purchaser pursuant to this Agreement.
Section 4.3. Claims for Indemnity.
(a) Except as otherwise provided in Section 4.1(b), a claim for
indemnity under Sections 4.1 or 4.2 of this Agreement relating to a breach of
any representation or warranty may be made by the claiming party at any time
prior to two (2) years after the Effective Time by the giving of written notice
thereof to the other party; provided that, with respect to claims arising from a
breach of representation or warranty made in Section 2.8, the notice of claim
for indemnification pursuant to Section 2.8 shall be given prior to the
expiration of the applicable statute of limitations (as extended) for the
assertion of the claims for Taxes by the relevant Tax authority. In the event
that any such claim is made within the prescribed period, the indemnity relating
to such claim shall survive until such claim is resolved. Any such claim
relating to a breach of any representation or warranty not made within such
period shall cease and no indemnity shall be made therefore.
21
(b) Promptly after receipt by either party of notice of the assertion
of any claim or the commencement of any action, suit or proceeding with respect
to which a claim for indemnification will be made under this Agreement, such
party (the "Indemnified Party") shall give written notice thereof to the other
------------------
party (the "Indemnitor") and will thereafter keep the Indemnitor reasonably
----------
informed with respect thereto, provided that failure of the Indemnified Party to
give the Indemnitor prompt notice as provided herein shall not relieve the
Indemnitor of its obligations hereunder except to the extent, if any, it shall
have been materially prejudiced thereby. In case any such action, suit or
proceeding is brought against an Indemnified Party, the Indemnitor shall be
entitled to participate in (and, in its discretion, to assume) the defense
thereof with counsel reasonably satisfactory to the Indemnified Party; provided,
--------
however, that the Indemnified Party shall be entitled to participate in any such
-------
action, suit or proceeding with counsel of its own choice at the expense of the
Indemnitor if, in the good faith judgment of the Indemnified Party's counsel,
representation by the Indemnitor's counsel may present a conflict of interest or
that there may be defenses available to the Indemnified Party which are
different from or in addition to those available to the Indemnitor. The
Indemnitor will not settle any claim, action, suit or proceeding which would
give rise to the Indemnitor's liability under its indemnity unless (x) the
Indemnified Party consents in writing to such settlement or (y) such claim,
action, suit or proceeding consists solely of a demand for monetary damages and
such settlement includes as an unconditional term thereof the giving by the
claimant or plaintiff of a release of the Indemnified Party, in form and
substance reasonably satisfactory to the Indemnified Party, from all liability
with respect to such claim, action, suit or proceeding. If the Indemnitor
assumes the defense of any claim, action, suit or proceeding as provided in this
Section 4.3, the Indemnified Party shall be permitted to join in the defense
thereof with counsel of its own selection and at its own expense. If the
Indemnitor shall not assume the defense of any claim, action, suit or
proceeding, the Indemnified Party may defend against such claim, action, suit or
proceeding in such manner as it may deem appropriate, provided that an
Indemnified Party shall not settle any claim, action, suit or proceeding which
would give rise to the Indemnitor's liability under its indemnity without the
prior written consent of the Indemnitor which consent shall not be unnecessarily
withheld, conditioned or delayed.
Section 4.4. Limitations on Indemnification.
(a) Notwithstanding anything to the contrary contained in this Article 4,
no indemnification shall be required to be made by either party until
the aggregate amount of all such claims by a party exceeds $5,000 Once
such aggregate amount exceeds $5,000, such party shall thereupon be
entitled to indemnification for all amounts.
(b) Following the Closing, the sole and exclusive remedy of the parties
hereto with respect to any and all claims relating to the matters
addressed in Article IV (other than claims of common law fraud) shall
be pursuant to the indemnification provisions set forth in this
Article IV; provided however that the parties may seek to enforce
specifically this Agreement and the terms and conditions hereof.
(c) Nothing in this Article IV shall affect the rights and remedies of
Purchaser or Seller with respect to any breach by the other of any of
their covenants or agreements to be performed at or after the
Effective Time.
Section 4.5. Investigation.
Notwithstanding anything to the contrary contained in this Article 4,
no investigation by an indemnified party at or prior to the Closing shall
relieve an indemnifying party of any liability hereunder.
Article 5 Representations and Warranties of Seller
--------- ----------------------------------------
Seller hereby represents and warrants to Purchaser as follows:
22
Section 5.1. Corporate Organization.
(a) Seller is an "insured depository institution," as defined in
--------------------------------
Section 3(c)(2) of the Federal Deposit Insurance Act, as amended (the "FDIA"),
----
duly organized, validly existing and in good standing under the laws of the
State of New York. Seller is a member of BIF and its deposits maintained at the
Branch Offices are insured by BIF, subject to applicable FDIC coverage
limitations. Seller has the requisite power and authority to conduct the
business now being conducted at the Branch Offices, to accept and maintain the
deposits to be assumed by Purchaser hereunder and to own the Transferred Assets.
(b) Seller acquired all rights, title and interest in and to the Branch
Offices, including but not limited to the associated Transferred Assets and
Deposit Liabilities, by virtue of the merger of Richmond County Savings Bank
with and into Seller on July 31, 2001. Seller currently operates six divisions
under its one New York State banking charter, including South Jersey Bank.
Section 5.2. Authority.
Seller has the requisite power and authority to enter into and perform
each of its obligations under this Agreement. This Agreement and the execution,
delivery and performance hereof have been duly authorized and approved by the
Board of Directors of Seller, and this Agreement constitutes a valid and binding
obligation of Seller, enforceable against Seller in accordance with its terms,
except as enforcement may be limited by federal and state regulators of Seller
or by bankruptcy, insolvency, reorganization, moratorium or other laws of
general applicability relating to or affecting creditors' rights, or the
limiting effect of rules of law governing specific performance, equitable relief
and other equitable remedies or the waiver of rights or remedies. Seller has
taken all corporate action necessary in order to execute and deliver this
Agreement, to consummate the transactions contemplated hereby, to convey and
transfer the Deposit Liabilities, to sell, assign and transfer the Transferred
Assets, and to cease to operate the Branch Offices.
Section 5.3. Non-Contravention.
The execution and delivery of this Agreement by Seller does not and, subject to
the receipt of the approvals and consents described in Schedule 5.3 attached
hereto, the consummation of the transactions contemplated by this Agreement will
not constitute (i) a breach or violation of or default under any law, rule,
regulation, judgment, order, governmental permit or license, agreement,
indenture or instrument of Seller or to which Seller, any of the Transferred
Assets, any of the liabilities assumed hereunder or any of the Branch Offices is
subject, which breach, violation or default could have a material and adverse
effect on Seller or the assets, liabilities, business or properties of the
Branch Offices, or (ii) a breach or violation of or a default under the charter
or bylaws of Seller or any material contract or other instrument to which Seller
is a party or by which Seller is bound. Except for the approvals and consents
described in Schedule 5.3 attached hereto, no notices, reports or other filings
are required to be made by Seller with, nor are any consents, registrations,
approvals, permits or authorizations required to be obtained by Seller from, any
governmental or regulatory authorities or other person or entity in connection
with the execution and delivery of this Agreement by Seller and the consummation
by Seller of the transactions contemplated hereby.
Section 5.4. Compliance with Law; Permits.
The business and operations of the Branch Offices have been and are
being conducted in accordance with all applicable laws, rules and regulations of
all authorities, including without limitation, informational reporting, currency
transaction reporting, truth in lending, truth in savings and consumer credit
laws and regulations. Seller has all material licenses, franchises, permits,
certificates of public convenience, orders and other authorizations of all
federal, state and local governments and governmental authorities necessary for
the lawful conduct of its business at each of the Branch Offices as now
conducted, and all such licenses, franchises, permits, certificates of public
convenience, orders and other authorizations are valid and in good standing and
are not subject to any suspension, modification or revocation or proceedings
related thereto.
23
Section 5.5. Legal Proceedings.
There are no actions, suits or proceedings, whether civil, criminal or
administrative, pending or, to Seller's knowledge, threatened against or
affecting Seller which would be reasonably likely to have a material adverse
effect on the Branch Offices, Transferred Assets, Deposit Liabilities or
consummation of the transactions contemplated hereby.
Section 5.6. Brokers.
All negotiations relative to this Agreement and the transactions
contemplated hereby have been carried on by Seller and Purchaser, and there has
been no participation or intervention by any other person, firm or corporation
employed or engaged by or on behalf of Seller in such a manner as to give rise
to any valid claim against Seller for a brokerage commission, finder's fee or
like commission.
Section 5.7. Personal Property and Leasehold Improvements.
Seller owns and has good and marketable title to, and will convey to
Purchaser at the Closing all of Seller's right, title and interest to, all of
the Personal Property and Leasehold Improvements, free and clear of any
Encumbrances. Seller does not make any representation or warranty, express or
implied as to the physical condition, merchantability or fitness of the Personal
Property or Leasehold Improvements, all of which are being sold "AS IS", "WHERE
IS", without recourse and with all faults at the Effective Time.
Section 5.8. Branch Offices.
(a) Seller has not received any notice of any condemnation or eminent
domain proceedings or negotiations for the purchase of the Real Property and the
property subject to the Real Property Lease Agreements in lieu of condemnation,
and to the best of Seller's knowledge and belief, no condemnation or eminent
domain proceedings or negotiations have been commenced or threatened in
connection with the Branch Offices.
(b) None of the Branch Offices is subject to any claim, demand, suit,
proceeding or litigation of any kind, pending or outstanding, which would
materially affect or limit Purchaser's use and enjoyment of the Branch Offices'
locations or which would materially affect or restrict Seller's right or ability
to enter into this Agreement and consummate the transactions contemplated
hereby.
(c) No fact or condition exists which would result in the permanent
termination or material impairment of access to the Branch Offices' locations
from adjoining public streets or highways or in the permanent discontinuance of
necessary utilities services to the Branch Offices' locations, and all
sanitation, plumbing, refuse disposal and similar facilities servicing the
Branch Offices are in material compliance with all applicable governmental
regulations.
(d) To the extent Seller has the documentation, copies of the
Certificate of Occupancy, Certificate of Completion, Board of Fire Underwriters
Certificate or other appropriate documents issued by the applicable
municipality, for each Branch Office is annexed hereto as Schedule 5.8(d), or
upon discovery will be promptly forwarded to Purchaser, and Seller has made no
improvements to the property subsequent thereto which would require any
amendment thereto or be in violation thereof.
(e) Seller has made available to Purchaser true and complete copies of
each Real Property Lease Agreement, each Real Property Lease Agreement is
presently in full force and effect and, as of the Closing Date, will not have
been modified or amended in any material respect since such delivery. Seller is
not in default in any material respect of any of its obligations thereunder and
has no knowledge of any material default on the part of the other parties
thereto thereunder. Each Real Property Lease Agreement represents the complete
agreement between Seller and such parties as to the services to be performed
thereunder and the compensation to be paid for such services, and to Seller's
knowledge, such parties possess no unsatisfied claim against Seller. Each Real
Property Lease Agreement is a valid and existing agreement of Seller.
24
(f) The expiration dates of the respective Real Property Lease
Agreements (exclusive of renewal options) are as set forth in Schedule 5.8(f)
attached hereto.
(g) There are no tenants or other occupants of the Branches owned by
Seller.
(h) Seller owns and has Marketable title to, and will convey to
Purchaser at the Closing Marketable title to, all of the Real Property, in the
form of a "Bargain and Sale Deed with Covenants against Grantor's Acts",
Notwithstanding the foregoing, the Real Property shall be conveyed subject to,
and the following conditions shall not be deemed to render title unmarketable:
(i) Zoning and subdivision laws and regulations and
landmark, historic or wetlands designation, provided
that they are not violated by the existing buildings
and improvements erected on the property or their
continued use;
(ii) Covenants and easements of record, provided same do not
prohibit continued existing use of the premises;
(iii)Consents for the erection of any structure on, under
or above any streets on which the Real Property abuts;
(iv) Encroachments of xxxxxx, areas, cellar steps, trim and
cornices, if any, upon any street or highway;
(v) Real estate taxes that are a lien, but are not yet due
and payable; and
(vi) any state of facts which would be shown by an accurate
survey and inspection of the property, provided that
none of same would interfere with the use of the
premises ((i) though (vi), the "Permitted Exceptions").
--------------------
(i) With respect to the Branch Offices, Seller does not do business
with any ACH Originator other than the ACH Originators listed in the mock
conversion tapes to be provided by Seller to Purchaser prior to the Closing
pursuant to the terms of this Agreement.
(j) To the extent Seller has the files Seller has delivered, or upon
discovery will promptly deliver, to Purchaser on or prior to the date hereof any
title insurance policies or related title abstract information applicable to the
Real Property.
Section 5.9. Employees.
No employee located in the Branch Offices is a party to any collective
bargaining, employment, severance, termination or change of control agreement
(other than Seller's established terms of employment and severance policies) or
represented by a labor organization of any type. Seller is unaware of any
efforts during the past three years to unionize or organize the employees of the
Branch Offices. There is no strike or other labor dispute pending or, to
Seller's knowledge threatened, at any of the Branch Offices. Schedule 5.9 is a
true, complete and correct listing of the name, title, salary and length of
service of each employee of the Branch Offices (the "Branch Employees").
----------------
Section 5.10. Assumed Contracts.
Each third party contract related to the Branch Offices and which will
not be terminated prior to the Closing are set forth at Schedule 5.10 attached
hereto (the "Assumed Contract"). Each Assumed Contract is valid and subsisting
in full force and effect and Seller and, to Seller's knowledge, each other party
thereto, has performed in all material respects all obligations required to be
performed thereunder, and no condition exists which constitutes, or with notice
or lapse of time, or both, would constitute, a material default. Except as noted
on such Schedule 5.10, each Assumed Contract may be terminated by the Seller or
the Purchaser upon not more than 30
25
days notice without penalty or premium. Each Assumed Contract is assignable
without the consent of any third party other than the consents listed on
Schedule 5.3.
Section 5.11. Loans.
(a) Seller owns, and will convey to Purchaser at the Closing, all of
Seller's right, title and interest to, all of the Loans free and clear of any
Encumbrances.
(b) The collateral documents, evidence of security interest, notes,
guarantees and other documentation relating to the Loans are sufficient to
enforce such Loans against the obligors and any guarantors thereof in accordance
with the terms of such Loans, subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and that the remedy of specific performance and
injunctive relief or other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceedings
therefore may be brought. Each Loan was made in the ordinary course of business
and, unless approved by Seller in writing and documented in its files, no
material provision of a Loan has been waived.
(c) Each Loan (such term to include, for purposes of this paragraph,
the principal documents relating in any way to such Loans, including notes,
mortgages, security instruments and guarantees) was solicited, originated and
exists in material compliance with all requirements of applicable federal, state
and local laws and regulations, including, without limitation, usury,
truth-in-lending, real estate settlement procedures, consumer credit, equal
credit opportunity and disclosure laws (for purposes of this clause (c), a Loan
would not be in material compliance if the non-compliance adversely affects the
value or collectability of such Loan).
(d) Each Loan that is secured by collateral is secured by a perfected
mortgage or security interest in the collateral in favor of Seller as mortgagee
or secured party. No collateral has been released from the interest granted to
Seller, unless approved by Seller and documented in its files.
(e) As of the Effective Time, each Loan, except those loans secured by
deposit accounts, including but not limited to savings accounts and certificates
of deposit, and unsecured loans created by writing a check or similar instrument
on an overdraft line of credit, will be not more than sixty (60) days past due
and not otherwise in material default.
(f) Under existing law, there is no valid claim or valid defense to the
enforcement of any Loan and Seller is aware of no acts or omissions that would
give rise to any claim or right of rescission, setoff, counterclaim or defense
by borrowers, obligors or any other person obligated to perform under any
related Loan documents.
(g) Purchaser's sole remedy for a breach of the representations and
warranties in this Section 5.11 with respect to a Loan or Loans on the Closing
Date shall be Purchaser's right to exclude such Loan or Loans from Schedule
2.4(a) of this Agreement and, in such event, such Loans or Loans shall not be
transferred by Seller to Purchaser pursuant to this Agreement. Purchaser's sole
remedy for a breach of the representations and warranties in this Section 5.11
after the Closing Date shall be as provided in Section 4.1(b).
Section 5.12. Environmental Matters.
There is no legal, administrative, arbitration or other proceeding, claim,
action, cause of action or governmental investigation of any nature seeking to
impose on Seller in connection with the Branch Offices or the Transferred Assets
any liability arising under any Environmental Laws (as defined below) pending,
and Seller has not received any written notice or is otherwise aware of any
threatened such proceeding, claim, action or governmental investigation; there
is no reasonable basis of which Seller has knowledge for any such proceeding,
claim, action or governmental investigation; and Seller is not subject to any
agreement, order, judgment, decree or memorandum by or with any court,
governmental authority, regulatory agency or third party imposing any such
liability with respect to any real property. Should Seller receive knowledge for
any such proceeding, claim, action or governmental investigation, including
locating information on a past proceeding, claim, action or governmental
investigation, if any, Seller will promptly furnish such information to the
Purchaser. For purposes of this Agreement, "Environmental Law" means all
------------------
applicable federal, state and local environmental laws, including the Resource
26
Conservation and Recovery Act, the Comprehensive Environmental Response,
Compensation, and Liability Act, the Clean Water Act, the Federal Clean Air Act,
and the Occupational Safety and Health Act, each as amended, regulations
promulgated thereunder, and state counterparts, and obligations under the common
law, ordinances, rules and regulations, as any of the foregoing may have been or
may be from time to time amended, supplemented or supplanted, now or hereafter
existing, relating to responsibility (or potential responsibility) for the
cleanup or other remediation of any pollutants, contaminants, or hazardous or
toxic wastes, substances or materials at, on, beneath, or originating from any
such property.
Section 5.13. Financing Available.
Seller's ability to consummate the transactions contemplated hereby is
not contingent on raising any equity capital, obtaining specific financing
therefore, consent of any lender or other matter, other than receipt of consents
of third parties to the Real Property Lease Agreements and receipt of applicable
Regulatory Approvals and/or notices as described in Schedule 5.3 attached
hereto.
Section 5.14. Fiduciary Obligations.
Except for IRAs, Seller has no trust or fiduciary relationship or
obligations in respect of any of the Deposit Liabilities or in respect of any
other Transferred Assets or liabilities to be assumed by Purchaser hereunder.
Section 5.15. Regulatory Matters.
(a) There are no pending, or, to the knowledge of Seller, threatened,
disputes or controversies between Seller or any of its Affiliates and any
federal, state or local governmental authority with respect to the Branch
Offices, the Transferred Assets or the liabilities to be assumed by Purchaser
hereunder. Seller is not a party to any written order, decree, agreement or
memorandum of understanding with, or commitment letter or similar submission to,
any federal or state governmental agency or authority charged with the
supervision or regulation of depository institutions or engaged in the insurance
of deposits nor has Seller been advised by any such authority that such
authority is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree, agreement,
memorandum of understanding, commitment letter or similar submission, which
order, decree, agreement, memorandum of understanding, commitment letter or
submission either (i) could reasonably be expected to prevent or impair the
ability of Seller to perform its obligations under this Agreement in any
material respect or to have a material adverse effect on Seller or (ii) could
impair the validity or consummation of this Agreement or the transactions
contemplated hereby. The books, accounts and records of the Branch Offices have
been maintained in accordance with safe and sound banking practices and in a
manner consistent with past practice.
(b) As of the date hereof, without giving effect to the transactions
contemplated hereby, and following the consummation of the transactions
contemplated hereby, on a pro forma basis, Seller will remain "well
capitalized," as defined in Section 38(b)(1)(A) of the FDIA and the regulations
of the applicable federal banking agency thereunder.
(c) Seller was rated "Satisfactory" or "Outstanding" following its most
recent Community Reinvestment Act examination by the regulatory agency
responsible for its supervision.
(d) As of the date hereof, Seller is not aware of any reason relating
to Seller or any Affiliate of Seller why any Regulatory Approval shall not be
obtained in a timely manner.
(e) The Deposit Liabilities and the Loans were opened, extended or
made, and have been maintained, in accordance with all material federal and
state laws, regulations, rules and orders, and the Branch Offices have been
operated in substantial compliance with Seller's policies and procedures and all
applicable federal and state laws, regulations, rules and orders.
27
(f) The Deposit Liabilities are insured by the Federal Deposit
Insurance Corporation through the Bank Insurance Fund and the Savings
Association Insurance Fund to the extent permitted by law, and all premiums and
assessments required to be paid in connection therewith have been paid when due
by Seller.
Article 6 Representations and Warranties of Purchaser
--------- -------------------------------------------
Purchaser hereby represents and warrants to Seller as follows:
Section 6.1. Corporate Organization.
Purchaser is an "insured depository institution," as defined in Section
------------------------------
3(c)(2) of the FDIA, duly organized, validly existing and in good standing under
the laws of the United States of America.
Section 6.2. Authority.
Purchaser has the power and authority to enter into and perform each of
its obligations under this Agreement. This Agreement constitutes a valid and
binding obligation of Purchaser, enforceable against Purchaser in accordance
with its terms, except as enforcement may be limited by federal and state
regulators of Purchaser or by bankruptcy, insolvency, reorganization, moratorium
or other laws of general applicability relating to or affecting creditors'
rights, or the limiting effect of rules of law governing specific performance,
equitable relief and other equitable remedies or the waiver of rights or
remedies. Purchaser has taken all corporate action necessary in order to execute
and deliver this Agreement, to consummate the transactions contemplated hereby,
to assume the Deposit Liabilities, to purchase the Transferred Assets, and to
operate the Branch Offices.
Section 6.3. Non-Contravention.
The execution and delivery of this Agreement by Purchaser does not,
and, subject to the receipt of the approvals and consents described in Schedule
6.3 attached hereto, the consummation of the transactions contemplated by this
Agreement will not, constitute (i) a breach or violation of or default under any
law, rule, regulation, judgment, order, governmental permit or license,
agreement, indenture or instrument of Purchaser or to which Purchaser is
subject, which breach, violation or default could have a material and adverse
effect on Purchaser, or (ii) a breach or violation of or a default under the
articles of incorporation or bylaws of Purchaser or any material contract or
other instrument to which Purchaser is a party or by which Purchaser is bound.
Except for the approvals and consents described in Schedule 6.3 attached hereto,
no notices, reports or other filings are required to be made by Purchaser with,
nor are any consents, registrations, approvals, permits or authorizations
required to be obtained by Purchaser from, any governmental or regulatory
authorities in connection with the execution and delivery of this Agreement by
Purchaser and the consummation by Purchaser of the transactions contemplated
hereby.
Section 6.4. Legal Proceedings.
There are no actions, suits or proceedings, whether civil, criminal or
administrative, pending or, to Purchaser's knowledge, threatened against or
affecting Purchaser which would be reasonably likely to have a material adverse
effect on Purchaser or consummation of the transactions contemplated hereby.
Section 6.5. No Brokers.
Purchaser has engaged the services of Sandler X'Xxxxx & Partners L.P. and will
pay any and all commissions due. Except for Purchaser's engagement of Sandler
X'Xxxxx, all negotiations relative to this Agreement and the transactions
contemplated hereby have been carried on by Seller and Purchaser, and there has
been no participation or intervention by any other person, firm or corporation
employed or engaged by or on behalf of Purchaser in such a manner as to give
rise to any valid claim against Purchaser for a brokerage commission, finder's
fee or like commission.
28
Section 6.6. Regulatory Matters.
(a) As of the date hereof, without giving effect to the transactions
contemplated hereby is, and upon the consummation of the transactions
contemplated hereby, on a pro forma basis, Purchaser will continue to satisfy
all of its regulatory capital requirements under the minimum capital ratios of
the Office of the Comptroller of the Currency, 12 C.F.R. Part 3.
(b) Purchaser was rated "Satisfactory" or "Outstanding" following its
most recent Community Reinvestment Act examination by the regulatory agency
responsible for its supervision.
(c) As of the date hereof, Purchaser is not aware of any reason
relating to Purchaser or any Affiliate of Purchaser why any Regulatory Approval
shall not be obtained in a timely manner.
Section 6.7. Financing Available.
Purchaser's ability to consummate the transactions contemplated hereby
is not contingent on raising any equity capital, obtaining specific financing
therefore, consent of any lender or any other matter, other than receipt of
consents of third parties to the Real Property Lease Agreements and receipt of
any applicable Regulatory Approval and/or notices.
Article 7 Obligations of Parties Prior to and After Effective Time
--------- --------------------------------------------------------
Section 7.1. Access to Branch Offices.
As soon as practicable after the date of this Agreement, Seller shall
afford to Purchaser and its officers, employees, agents and representatives,
upon prior notice and subject to Seller's normal security requirements, at
reasonable times without interfering with the normal business and operations of
the Branch Offices or the affairs of Seller relating to the Branch Offices,
reasonable access to the properties (including without limitation, access on
business days and weekends to survey and measure the facilities) and, with the
exception of the Loan files and customer information (except as otherwise
provided herein with respect to testing), all other books, records, contracts,
documents, files and other information of or relating to the Branch Offices, the
Transferred Assets and the liabilities to be assumed by Purchaser hereunder.
Upon Purchaser's receipt of Regulatory Approvals, Purchaser shall then be given
access to the Loan files and customer information. Seller shall cause personnel
to be reasonably available during normal business hours, to an extent not
disruptive of ongoing operations, to provide information and assistance in
connection with Purchaser's investigation of matters relating to the Branch
Offices, the Transferred Assets and the liabilities to be assumed by Purchaser
hereunder and to familiarize Purchaser with basic policies and operational
procedures of Seller relating to the Branch Offices. Seller shall furnish
Purchaser with such additional financial and operating data and other
information about its business operations at the Branch Offices as may be
reasonably necessary for the orderly transfer of the business operations of the
Branch Offices. Notwithstanding any other provision hereof, unless prohibited
under applicable law, Seller shall make available to Purchaser the employment
records of persons employed at the Branch Offices.
29
Section 7.2. Regulatory Approvals and Real Property Lease Approvals.
(a) Purchaser and Seller shall cooperate with each other and use their
reasonable commercial efforts to prepare and file within twenty (20) days after
the date hereof all necessary applications, notices, petitions and filings, and
to obtain as promptly as practicable all permits, consents, approvals and
authorizations of all federal and state regulatory authorities or
instrumentalities which are necessary or advisable to consummate the
transactions contemplated by this Agreement (collectively, the "Regulatory
----------
Approvals"). It is understood and agreed that Purchaser, as the applicant, shall
---------
have primary responsibility for the preparation and prosecution of all
applications for the Regulatory Approvals.
(b) Seller shall also use its reasonable commercial efforts to contact
each of the landlords under the respective Real Property Lease Agreements (each,
a "Landlord") within ten (10) business days after the date hereof and to obtain
--------
as promptly as practicable a letter substantially in the form of Exhibit 7.2(b)
and signed on behalf of each Landlord, by which such Landlord unconditionally
consents to the assignment and assumption of the relevant Real Property Lease
Agreement as contemplated hereby and provides certain assurances to Purchaser
with respect to the validity and enforceability of such Real Property Lease
Agreement and that under each such Real Property Lease Agreement there is no
default by the tenant under the respective Real Property Lease Agreement,
including without limitation defaults that may occur upon notice, the passage of
time, or both (collectively, the "Real Property Lease Consents"). Purchaser
------------------------------
shall fully cooperate with and assist Seller in obtaining the Real Property
Lease Consents, provided that Purchaser shall not be obligated to incur any
out-of-pocket expenses in connection therewith.
Section 7.3. Conduct of Business; Maintenance of Properties.
From the date hereof until the Effective Time, Seller shall:
(a) conduct the business of the Branch Offices in the ordinary and
usual course following substantially the same practices and standards,
including, without limitation, employment practices, collection practices and
practices with respect to the keeping of books, accounts and records;
(b) cooperate with and assist Purchaser in ensuring the orderly
transition of the business of the Branch Offices to Purchaser from Seller;
(c) maintain the Real Property, Leasehold Improvements and Personal
Property in their current condition, ordinary wear end tear excepted; and
(d) exercise any renewal options with respect to the Real Property
Lease Agreements, subject to prior consultation with the Purchaser.
Section 7.4. Branch Office Operations.
Notwithstanding the foregoing, between the date of this Agreement and
the Effective Time, and except as may be otherwise required by a governmental or
regulatory authority, Seller shall not, without the prior written consent of
Purchaser, which consent shall not be unreasonably withheld:
(a) permit the Branch Offices to engage or participate in any material
transaction or incur or sustain any obligation which is material to its
business, condition or operation;
(b) permit the Branch Offices to transfer to Seller's other operations
or to a third party (other than Purchaser) any Loans or other Transferred
Assets, except for (i) supplies, if any, which have a unique function in
Seller's business and ordinarily would not be useful to Purchaser, (ii) cash and
other normal intra-bank transfers which may be transferred in the ordinary
course of business in accordance with normal banking practices and (iii) signs,
or those parts thereof, bearing the name and/or logo of Seller or financial
institutions acquired by Seller;
30
(c) except in the ordinary course of business at the unsolicited
request of depositors (i) permit the Branch Offices to transfer to Seller's
other operations or to a third party (other than Purchaser) any Deposit
Liabilities or (ii) cause any of Seller's other operations to transfer to the
Branch Offices any Deposit Liabilities;
(d) invest in any fixed assets on behalf of any Branch Offices and in
replacements of furniture, furnishings and equipment or make or contract to make
any improvements in any Branch Office, except for normal maintenance and
refurbishing purchased or made in the ordinary course of business;
(e) enter into or amend any continuing contract (other than Deposit
Liabilities and Loans) relating to the Branch Offices, which cannot be
terminated without cause and without payment of any amounts as a penalty, bonus,
premium or other compensation for termination, or which is not made in the
ordinary course of business;
(f) amend or modify any of its deposit account or Loan practices at the
Branch Offices, other than amendments or modifications in the ordinary course of
business in accordance with amendments or modifications undertaken at Seller's
branches other than the Branch Offices;
(g) reduce the service charges on any deposit product or fee-based
product (e.g. safe deposit boxes, money orders, cashier's checks), unless such
reduction is implemented generally in Seller's other branches;
(h) Lease or sublease any space of the Branch Offices or file any
application to relocate any Branch Office or enter into any commitment,
agreement, understanding or other arrangements to transfer, assign, encumber or
otherwise dispose of any of the Branch Offices or terminate the operations of
any of the Branch Offices;
(i) offer interest rates or terms on any category of deposits at any of
the Branch Offices that are not determined in a manner consistent with past
practice and procedure, provided that such Branch Offices shall not offer or
continue promotional rates and programs without the prior consent on the
Purchaser;
(j) except in the ordinary course of business, sell, transfer, assign,
encumber or otherwise dispose of or enter into any contract, agreement or
understanding to sell, transfer, assign, encumber or dispose of any material
Transferred Asset;
(k) modify the compensation of any of the employees of the Branch
Offices, except for changes occurring in the ordinary course of business
consistent with past practices; or
(l) take, or permit its Affiliates to take, any action (A) impairing
Purchaser's rights in any Deposit Liabilities or Transferred Asset, (B)
impairing in any way the ability of Purchaser to collect upon any Loan or (C)
except in the ordinary course of servicing, waiving any material right, whether
in equity or at law, that it may have with respect to any Loan or similar
obligation.
In addition, Seller agrees that neither it nor any of its Affiliates nor any of
the respective officers and directors of Seller or its Affiliates will, and
Seller will use reasonable commercial efforts to cause its employees, agents and
representatives (including, without limitation, any investment banker, attorney
or accountant retained by it or any of its subsidiaries) not to, solicit or
initiate, directly or indirectly, negotiations or discussions with any person or
entity other than Purchaser or a representative thereof with respect to an
acquisition of the Branches, or the transfer to any person or entity of all or
part of the Transferred Assets or the Deposit Liabilities (an "Acquisition
-----------
Proposal"), or engage in any negotiations concerning, or provide any non-public
--------
information or data to, or have any discussions with, any person relating to an
Acquisition Proposal, approve or accept an Acquisition Proposal or otherwise
facilitate any effort or attempt to make or implement an Acquisition Proposal.
Seller will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to an Acquisition Proposal.
Section 7.5. Corporate and Other Consents.
Seller shall use reasonable commercial efforts to secure all corporate
and other non-regulatory consents which are necessary or advisable to consummate
the transactions contemplated hereby, except those involving
31
Purchaser ("Seller Consents"), and Purchaser shall use reasonable commercial
----------------
efforts to secure all corporate and other non-regulatory consents which are
necessary or advisable to consummate the transactions contemplated hereby,
except those involving Seller (together with Seller Consents, the
"Non-Regulatory Consents"). Notwithstanding any other provision hereof, in the
------------------------
event that any Real Property Lease Consent cannot be obtained in the manner
contemplated by Section 8.3 for any Real Property Lease Agreement relating to a
Branch Office, then Purchaser shall have the option of (i) accepting the
Transferred Assets and liabilities (including Deposit Liabilities) of such
Branch Office without assuming the respective Real Property Lease Agreement or
purchasing the Personal Property for that respective Branch Office or (ii) not
accepting the Transferred Assets and liabilities (including Deposit Liabilities)
of such Branch Office, which shall not be transferred to Purchaser at the
Closing. All other provisions of this Agreement will apply to the remaining
Branch Offices.
Section 7.6. Data Processing Services; Delivery of Records.
(a) Subject to applicable laws, each party hereto agrees to provide to
the other data processing and transfer services as shall be reasonably necessary
for the conversion and transfer of information concerning the Deposit
Liabilities and the Loans into Purchaser's data processing system. Upon
Purchaser's receipt of Regulatory Approvals, each party hereto shall provide to
the other computer file instructions, which maintain information on the deposit
and loan accounts, together with operational procedures necessary to implement
the transfer of the information to Purchaser. Seller and Purchaser shall each
designate an individual to serve as liaison from the date hereto through the
Closing Date concerning operational matters. Seller shall continue to provide
post-closing assistance to Purchaser as may be reasonably necessary for a
one-year period following the Closing Date.
(b) On the Closing Date, Seller shall deliver to Purchaser all Records
or copies of Records maintained at the premises of the Branch Offices in the
normal course of business. No later than ten (10) business days after the
Closing Date, Seller shall deliver to Purchaser all Records or copies of Records
maintained at locations other than the premises of the Branch Offices in the
normal course of business. On the Closing Date, Seller shall deliver to
Purchaser the magnetic media Records current as of the Closing Date.
Section 7.7. Public Announcements.
Seller and Purchaser agree that, from the date hereof through the
Effective Time, and except as otherwise required by law or upon the advise of
counsel, neither shall issue any press release or make any other public
announcement regarding this Agreement or the transactions contemplated hereby
without first consulting with the other party hereto upon the substance and
timing of such announcement or comment. Seller and Purchaser further agree, that
they will not unreasonably withhold or delay the other party from issuing a
press release or making any other public announcement regarding this Agreement
or the transaction contemplated hereby. Notwithstanding the foregoing, Seller
and Purchaser may issue public announcements only in the form annexed hereto as
Schedule 7.7. In consultation with the other party, each party may file a
Current Report on Form 8-K in accordance with the Securities and Exchange Act of
1934, as amended, with the United States Securities Exchange Commission
following execution of this Agreement, and at such other times as each party and
their counsel shall deem necessary and appropriate.
Section 7.8. Tax Reporting.
Except as otherwise required by applicable laws and regulations,
Purchaser shall comply with all tax reporting obligations in connection with the
Transferred Assets, Deposit Liabilities and other liabilities transferred
pursuant to this Agreement with respect to the calendar year in which the
Closing Date occurs. With respect to interest bearing Deposit Liabilities and
with respect to other matters to the extent that Purchaser is not permitted to
make such reports, Seller shall so report with respect to the period from
January 1 of the year in which the Closing occurs through the Closing Date and
Purchaser shall so report with respect to all periods from the day after the
Closing Date. Any amounts required by any governmental entity to be withheld
from any of the Deposit Liabilities through the Closing Date shall be withheld
by Seller in accordance with applicable laws and regulations and shall be
remitted by Seller to the appropriate governmental entity on or prior to the
applicable due date. Any such withholding required to be made subsequent to the
Closing Date shall be withheld by Purchaser in accordance with applicable laws
and regulations and shall be remitted by Purchaser to the appropriate
governmental entity on or prior to the applicable due date. Purchaser and Seller
shall, prior to the Closing Date, consult with each other, and Seller
32
shall take such actions as are reasonably necessary, to permit Purchaser timely
to comply with its obligations pursuant to this Section 7.8.
Section 7.9. Excluded Asset Removal; Change of Name.
By the close of business on the Closing Date, Seller will remove, at
its own expense and in a manner which does not unreasonably interfere with
Purchaser's rights to possess and operate the Branch Offices, all Excluded
Assets, including, without limitation, all of its identifying signs relating to
the Branch Offices, which it desires to retain. Purchaser and Seller shall
coordinate such signage removal with Purchaser's installation of replacement
signage so as to minimize cost and conflict. By the close of business of the
first business day following the Closing Date, Purchaser shall change to its
name the name on all signs and facilities relating to the Branch Offices and, as
of the opening of business on the first business day following the Closing Date,
Purchaser shall discontinue the use of Seller's name in connection with the
Branch Offices, the Deposit Liabilities and the Transferred Assets on all
documents, forms, brochures and papers.
Section 7.10. Further Assurances.
Each of Purchaser and Seller shall use its best efforts in good faith
to take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary or advisable under applicable laws and regulations or otherwise
so as to permit consummation of the transactions contemplated hereby as promptly
as reasonably practicable and to otherwise enable consummation of the
transactions contemplated hereby, and shall cooperate fully with each other to
that end. Each of Seller and Purchaser will execute, acknowledge and deliver
such instruments and take such other actions as the other party may reasonably
require in order to carry out the intent of this Agreement. Seller will duly
execute and deliver such assignments, bills of sale, deeds, acknowledgments and
other instruments of conveyance and transfer as shall at any time be necessary
or appropriate to vest in Purchaser the full legal and equitable title to the
Transferred Assets, free and clear of all Encumbrances. For a period of six (6)
months after the Closing Date, each party will promptly deliver to the other all
mail and other communications that are properly addressable or deliverable to
the other as a consequence of the transactions pursuant to this Agreement.
Section 7.11. Insurance.
Seller will maintain in effect until and including the Closing Date
casualty and public liability insurance policies relating to the Branch Offices
consistent with that which it maintains in connection with its other branch
offices.
Section 7.12. Notices of Default.
Seller and Purchaser shall each promptly give written notice to the
other upon becoming aware of the impending or threatened occurrence of any event
which could reasonably be expected to cause or constitute a breach of any of
their respective representations, warranties, covenants or agreements contained
in this Agreement.
Section 7.13. Covenant of Non-solicitation and Non-Competition.
(a) For a period of eighteen (18) months after the Closing Date, Seller
shall not, and Seller shall cause its Affiliates not to, (i) solicit any
borrower, depositor or other customer of any Branch Office for the purpose of
causing such customer to close or transfer an account which is the subject of
this Agreement or (ii) seek to entice any borrower, depositor or other customer
to open accounts or otherwise transact business with Seller, provided however
----------------
that the foregoing shall not apply to (i) customary general advertising and
marketing practices not specifically directed at the borrowers, depositors or
other customers of the Branch Offices (including solicitations made from mailing
lists that are not intended to target customers of the Branches) or (ii)
solicitations of customers of the Branch Offices who are also customers of
Seller or an Affiliate of Seller at a location other than the Branch Offices.
(b) If any of the restrictions set forth in Section 7.13 (a) should,
for any reason whatsoever, be declared invalid by a court of competent
jurisdiction, the validity or enforcement of the remainder of such
33
restrictions and covenants shall not thereby be adversely affected. Each of
Seller and Purchaser agree that, if any provision of this Section 7.13 should be
adjudicated to be invalid or unenforceable, such provision shall be deemed
deleted herefrom with respect, and only with respect, to the operation of such
provision in the particular jurisdiction in which such adjudication was made;
provided, however, that to the extent any such provision may be made valid and
------------------
enforceable in such jurisdiction by limitations on the scope of the activities,
geographical area or time period covered, Seller and Purchaser agree that such
provision instead shall be deemed limited to the extent, and only to the extent,
necessary to make such provision enforceable to the fullest extent permissible
under the laws and public policies applied in such jurisdiction.
(c) Seller hereby agrees not to purchase or open a de novo brick and
mortar branch facility within the counties of Camden, Gloucester and Atlantic in
New Jersey for a period of eighteen months following the Closing Date; provided,
however, that Seller, and its affiliates, shall be expressly permitted to
acquire a financial institution consisting of not less than three banking branch
offices notwithstanding the fact that such financial institution to be acquired
has a branch or other facility in such location.
Section 7.14. Settlement Operations after Closing.
For a period of ninety (90) days after the Closing Date, or, with the
prior written consent of Seller, for such longer period as Purchaser may
reasonably determine to be necessary:
(a) Seller shall remit to Purchaser all payments received by Seller
intended for deposit to accounts which are Deposit Liabilities.
(b) Seller shall cooperate with Purchaser and take all reasonable steps
required by Purchaser to ensure that, with respect to checks or drafts drawn
against accounts which are Deposit Liabilities assumed by Purchaser hereunder,
each such item which is coded for presentment to Seller is available for
delivery to Purchaser's messenger at Seller's agent's offices located in Glen
Rock, New Jersey as soon as possible but no later than 11:59 A.M. of the next
business day following presentment to Seller, it being understood that Seller
shall be under no obligation with respect to any such items after their
delivery, if the items are timely delivered in the agreed upon manner. Purchaser
and Seller hereby acknowledge that time is of the essence with respect to the
foregoing.
(c) Seller shall, on the same business day that request is made by
Purchaser (provided that a written request is made by 2:30 P.M. on such business
day), remit to Purchaser electronic funds transfer deposits and deposits made
through automated clearing house transactions made after the Effective Time with
respect to accounts allocated to the Branch Offices. Following the Closing,
Seller and Purchaser shall cooperate to obtain all consents necessary to enable
electronic funds transfer deposits and automated clearing house transactions
with respect to the Deposit Liabilities to be made directly to Purchaser.
(d) To the extent permitted by law and the applicable deposit
contracts, Purchaser agrees that it will honor all properly drawn checks,
drafts, withdrawal orders and similar items drawn on the checks, drafts or
withdrawal forms of Seller by Seller's depositors whose Deposit Liabilities are
assumed by Purchaser and which are timely presented to Purchaser by mail, or
over its counters or through clearing houses, and, if applicable, to reimburse
Seller, in full, on the same business day of Seller's written request for
reimbursement (provided such request is made by 2:30 P.M. of such business day),
should Seller make payment on any such check or draft. Request for reimbursement
may be made prior to Seller's making a physical delivery to Purchaser of checks,
drafts, withdrawal orders or similar items, provided that such physical delivery
is made as promptly as practicable. Purchaser further agrees that it will in all
other respects discharge, in the ordinary course of business, the duties and
obligations of Seller with respect to balances due and owing to the depositors
whose Deposit Liabilities are assumed by Purchaser hereunder.
(e) Purchaser and Seller agree that all amounts required to be remitted
by either such party to the other party hereto pursuant to this Section 7.14
shall be settled on a daily basis. Any amounts to be paid by Seller to Purchaser
shall be netted daily against any amounts to be paid by Purchaser to Seller,
such that only one amount, representing the net amount due, shall be transferred
on a daily basis by the party with the higher amount of remittances for such
day.
34
Section 7.15. XXX and Xxxxx Accounts.
On or before the Closing Date, Seller shall (i) resign as of the close
of business on the Closing Date as the trustee or custodian, as applicable, of
each XXX and Xxxxx Account of which it is the trustee or custodian, (ii) to the
extent permitted by the documentation governing each such XXX and Xxxxx Account
and applicable law, appoint Purchaser as successor trustee or custodian, as
applicable, of each such XXX and Xxxxx Account, and Purchaser hereby accepts
each such trusteeship or custodianship under the terms and conditions of
Purchaser's plan documents for its XXX and Xxxxx Accounts , and assumes all
fiduciary and custodial obligations with respect thereto as of the close of
business on the Closing Date, and (iii) deliver to the XXX grantor or Xxxxx
Account named fiduciary of each such XXX or Xxxxx Account such notice of the
foregoing as is required by the documentation governing each such XXX or Xxxxx
Account or applicable law. Purchaser shall be solely responsible for delivering
its XXX and Xxxxx Account documents to the applicable XXX grantor and Xxxxx
Account named fiduciary, including but not limited to a beneficiary designation
form to be completed by the applicable XXX grantor or Xxxxx Account participant;
provided, however, that in the event that an XXX grantor or Xxxxx Account or
------------------
participant dies before such time as Purchaser receives a properly completed
beneficiary designation form, Seller shall make available to Purchaser such
information as may exist in Seller files regarding any beneficiary designation
it may have regarding such decedent. If, pursuant to the terms of the
documentation governing any such XXX or Xxxxx Account or applicable law, the
Seller is not permitted to appoint Purchaser as successor trustee or custodian,
or the XXX grantor or Xxxxx Account named fiduciary objects in writing to such
designation, or is entitled to, and does, in fact, name a successor trustee or
custodian other than Purchaser and the assumption of such deposit liabilities
included in such XXX or Xxxxx Account would result in a loss of qualification of
such XXX or Xxxxx Account under the Code or applicable IRS regulations, all
deposit liabilities of such Seller held under such XXX or Xxxxx Account shall be
excluded from the Deposit Liabilities. Upon appointment as a successor custodian
for such XXX Deposit Liabilities or as a successor trustee for such IRAs or
Xxxxx Accounts, Purchaser shall perform the services and carry out the duties
and obligations required of it under the applicable plans, the Code and
applicable Federal and state laws and regulations.
Section 7.16 Training and Customer Assistance.
(a) Seller shall permit Purchaser to train the Seller's Accepting
Employees during the two-week period before the Effective Time with regard to
Purchaser's operations, policies and procedures at Purchaser's sole cost and
expense. This training may take place at the Branch Offices at such times to be
determined in cooperation with Seller and shall be conducted in a manner so as
to not interfere with the business operations of the Branch Offices. Seller
shall permit Purchaser to establish and staff a customer representative help
desk and information telephone line at the Branch Offices commencing ten (10)
days prior to the anticipated Effective Time to assist Branch Offices customers
and shall be conducted in a manner so as to not interfere with the business
operations of the Branch Offices.
(b) Seller shall permit Purchaser or Purchaser's agents, during normal
business hours and upon at least twenty-four (24) hours' prior written notice to
Seller, (i) during the thirty (30) day period prior to the Effective Time, to
install telecommunications lines, electrical lines and networking connections at
the Branch Offices and (ii) during the fourteen (14) day period prior to the
Effective Time, to deliver and test computer and telecommunications equipment
installed by or on behalf of Purchaser at the Branch Offices, provided, however,
that (a) Purchaser shall comply with all laws and, in the case of any leased
Branch Offices, the terms and conditions of the applicable Real Property Lease
Agreement, including without limitation any requirement to obtain the landlord's
consent, (b) Purchaser may store equipment only to the extent that space is
available and Purchaser shall store equipment only in the areas designated by
Seller in its discretion, which areas shall not include any portion of the
banking area or any other operational area of the Branch office, (c) any items
stored by Seller on behalf of Purchaser in or around the Branch Offices shall be
at Purchaser's sole risk and Seller shall have no liability for any loss or
damage thereto, (d) Purchaser shall not access, disrupt or otherwise interfere
with Seller's telecommunications and computer equipment and network. and (e)
Purchaser shall not interfere with Seller's operations in the Branch Offices.
Purchaser agrees to indemnify, save, defend and hold Seller, its agents,
officers, employees and representatives, harmless from any and all causes of
action, claims, demands, losses, liabilities, judgments, costs and expenses
(including reasonable attorney's fees) relating to any injury or death to person
or damage to property resulting from Purchaser's activities at the Branch
Offices pursuant to this Section
35
7.16, except and to the extent that same arises out of the negligence or willful
misconduct of Seller, its agents, employees, contractors or licensees.
Section 7.17 Due Diligence/Environmental Matters/Building Systems,
(a) Seller will make an application for a letter of non-applicability
("LNA") pursuant to the State of New Jersey Industrial Site Recovery Act
---
("ISRA") as set forth in N.J.S.A. 13:1K-6 et. Seq., as amended, with respect to
----
the Real Property and this transaction and Seller shall furnish copies of said
application to Purchaser. In the event Seller is unable to procure a LNA by the
Effective Time, the Purchaser will have the option of (i) postponing the
Effective Time until the Seller receives the LNA, but in no event may Purchaser
postpone the Effective Time beyond December 31, 2003, or (ii) may consummate the
Transaction without receiving the LNA.
(b) Purchaser may, within twenty (20) days from the date of this
Agreement, at its sole cost and expense, arrange for an engineering inspection
and report with respect to the plumbing, electrical, HVAC, roof, structure, air
transport systems, foundations, drainage, sewage, underground storage tanks and
parking facilities (collectively, the "Building Systems") at the Branch Offices
----------------
to ensure that the Building Systems are in reasonably good working condition,
ordinary wear and tear excepted, and in compliance in all material respects with
the ADA. Conditions that may not be in compliance with current ADA standards,
shall be deemed in compliance with the ADA to the extent the ADA allows
preexisting conditions to remain. If the inspection reveals the existence of
defects in the Building Systems which materially interfere with the use of any
of the Branch Offices for its intended purposes (collectively, the "Physical
--------
Defects"), the Purchaser shall so notify Seller in writing (the "Defect Notice")
-------
no later than thirty-five (35) days following the date hereof, citing such
Physical Defects with specificity and providing Seller with a copy of the
engineer's report. No later than twenty-five (25) days following the date on
which Seller receives the Defect Notice, Seller shall notify Purchaser in
writing, as to which of the Physical Defects, if any, Seller disputes (the
"Disputed Physical Defects") and which Physical Defects, if any, the Seller will
-------------------------
agree to correct prior to the Effective Time. To the extent Seller notifies
Purchaser of Disputed Physical Defects, Seller and Purchaser shall promptly meet
to resolve any disagreement as to the Disputed Physical Defects. If the
disagreement is not resolved within a thirty (30) day period, the dispute shall
be referred to a Dispute Resolver, which shall be asked (A) to determine whether
the Disputed Physical Defect is in fact a Physical Defect, (B) whether the
appraisal has taken into consideration the Disputed Physical Defect and (C) how
much, if any, should be the Repair Estimate to be apportioned as defined below.
To the extent Seller does not agree to correct the agreed upon Physical Defects,
and the defect is not already factored into the appraised value of the
respective Real Property and the Physical Defects are reasonably estimated to
cost more than $10,000 per any individual facility, as set forth in a written
estimate (the "Repair Estimate") prepared by a registered architect or licensed
---------------
professional engineer selected by Purchaser and Seller, then (i) Purchaser shall
be entitled to a reduction in the Purchase Price equal to (A) fifty percent
(50%) times (B) the excess of the estimated cost to correct the agreed upon
Physical Defects over $10,000 per any individual facility and (ii) at the
Effective Time, Purchaser shall accept possession of the Branch Offices premises
in their then "As Is" condition and Seller shall not be obligated to take any
corrective action with respect to such agreed upon Physical Defects. This
provision shall not apply to any Physical Defects for leased property which the
respective Landlord is responsible for maintaining.
(c) Notwithstanding the provisions of Section 7.17(b) herein, the
Purchaser shall have the following rights under this Agreement: Purchaser shall
have thirty (30) days from the date of execution of this Agreement to cause an
independent environmental consultant of its choice to inspect and audit the
buildings, leasehold improvements and real property related to the Branch
Offices for the existence of any and all environmental conditions and any and
all violations of environmental laws, as is commonly referred to as a Phase I
environmental study (the "Environmental Audit"). The Purchaser shall pay the
--------------------
cost of such Environmental Audit. If such Environmental Audit discovers any
environmental condition that constitutes a violation of current laws and/or
regulations ("Environmental Condition"), the Purchaser may deliver written
------------------------
notice of exclusion of the affected branch office ("Excluded Branch") on or
----------------
before the day which is forty (40) days from the date of the Agreement, which
notice shall identify such Environmental Condition. Seller shall have
twenty-five (25) days from the receipt of such notice of exclusion to notify
Purchaser in writing that Seller agrees to undertake such actions as are
necessary to cure such defects or conditions to the satisfaction of the New
Jersey Department of Environmental Protection and/or any other governmental
authorities having jurisdiction, in which case such notice of exclusion shall be
deemed withdrawn. Alternatively, if Seller does not agree in writing within such
twenty-five (25) day time
36
period to remedy such Environmental Condition, then the Purchaser shall have the
right to proceed with the Transaction without inclusion of the Branch Office
related to such Environmental Condition being a part of the Transaction, in
which case the Purchase Price shall not include the Fair Market Value of the
Branch Office if said Branch Office consists of Real Property, and
alternatively, the Seller and Purchaser shall enter into a long-term lease of
such Branch Office on terms commercially reasonable in order to facilitate the
Transaction. In the event Purchaser elects not to accept or lease, pursuant to
this section, two or more Branch Offices, Seller shall have the right to
terminate this Agreement. The Purchaser shall furnish the Seller with a copy of
the results of such Environmental Audit within three (3) business days of
receipt of such report. The result of such Environmental Audit shall not be
disclosed to any third party without the prior written consent of the Parties.
(d) No information or the contents of any environmental audits, nor the
results of any investigation of the real estate conducted pursuant to this
section, including, but not limited to, the contents of the report issued in
connection therewith, shall be disclosed by Purchaser or its agents, consultants
or employees to any third party without Seller's prior written approval, unless
and until Purchaser is legally compelled to make such disclosure under
applicable laws or until Purchaser completes the transaction contemplated by
this Agreement. Notwithstanding the foregoing, Purchaser may disclose such
matters to its directors, executive officers, legal counsel and such employees
who are reasonably required to receive such disclosure (such parties being
referred to as "Purchaser" for purposes of this section), the specific
identities of whom shall be supplied to Seller prior to any permitted disclosure
to such party by Purchaser. If this Agreement is terminated for any reason,
Purchaser shall immediately deliver and/or return to Seller any and all
documents, plans and other items furnished to Purchaser pursuant to this
Section.
(e) As of the Effective Time, Purchaser will have examined and
inspected the physical nature and condition of the Real Property and will
purchase the same "AS IS" on the date thereof, subject to reasonable wear and
tear and the provisions of this Section 7.17. Neither Seller nor any agent,
partner, employee, or representative of Seller has made any representation
whatsoever regarding the Real Property or any part thereof, or anything relating
to the subject matter of this Agreement, except as expressly set forth in this
Agreement; and Purchaser, in executing, delivering and performing this
Agreement, has not and does not rely upon any statement, information, or
representation to whomsoever made or given, whether to Purchaser or others, and
whether directly or indirectly, verbally or in writing, made by any person, firm
or corporation, except as expressly set forth in this Agreement.
Section 7.18. Damage or Destruction.
If, prior to the Closing, the Real Property is damaged by fire, vandalism, acts
of God, or other casualty or cause, and the Real Property is not repaired to
substantially the same condition as existed immediately before such casualty,
then Purchaser shall have the option of (a) proceeding with the Closing and
accepting the Real Property as it is together with the insurance proceeds, if
any, and the right to receive the same and Purchaser shall receive a credit at
the Closing in the amount of any deductible, or (b) if the reasonable cost of
repair and/or replacement (as determined by an architect or engineer selected by
Seller and reasonably satisfactory to Purchaser) exceeds 25% of the Fair Market
Value thereof, excluding such Real Property from this Transaction. If Purchaser
elects option (a) above, Seller agrees to cooperate with Purchaser in any loss
adjustment negotiations, legal actions and agreements with the insurance
company, and to assign to Purchaser at Closing, in form and substance reasonable
satisfactory to Purchaser, its rights to such insurance proceeds (and pay over
to Purchaser any such proceeds already received), and Seller will not settle any
insurance claims or legal actions relating thereto without Purchaser's prior
written consent.
Article 8 Conditions to Purchaser's Obligations
--------- -------------------------------------
Unless waived in writing by Purchaser, the obligation of Purchaser to
complete the transactions contemplated in this Agreement are conditioned upon
fulfillment, on or before the Closing, of each of the following conditions.
Section 8.1. Representations and Warranties True.
The representations and warranties made by Seller in this Agreement
shall be true and correct in all material respects (other than representations
or warranties qualified by materiality which shall be true and correct in
37
all respects) on and as of the Closing Date as though such representations and
warranties were made on and as of the Closing Date, except for any
representation and warranty which specifically relates to an earlier date and
any changes permitted by the terms hereof or consented to in writing by
Purchaser.
Section 8.2. Obligations Performed.
Seller shall have (i) delivered or made available to Purchaser all of
those items required by Section 3.2(b) hereof and (ii) performed and complied in
all material respects with all obligations and agreements required by this
Agreement to be performed or complied with by it prior to or on the Effective
Time.
Section 8.3. Regulatory Approvals, Real Property Lease Agreements and Other
Non-Regulatory Consents.
Subject to Section 7.5, all Regulatory Approvals and all other
consents, approvals and authorizations required to be obtained prior to the
Closing from governmental and regulatory authorities in connection with the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, and all of the Real Property Lease Consents
and all of the other Seller Consents shall have been obtained, and shall remain
in full force and effect, all waiting periods applicable to the consummation of
the transactions contemplated hereby, shall have expired or been terminated and
all required regulatory filings shall have been made; provided, however, that no
-----------------
Regulatory Approval, Real Property Lease Consents or other Seller Consents shall
have imposed any condition, commitment or requirement that would adversely
affect in a material way (i) Purchaser's operation of all the Branch Offices or
(ii) Purchaser or any of its Affiliates with respect to their present businesses
or activities.
Section 8.4. Orders.
No court or governmental or regulatory authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in effect which would adversely
affect in a material way (i) Purchaser's operation of all the Branch Offices or
(ii) Purchaser or any of its Affiliates with respect to their present businesses
or activities.
Section 8.5 Receipt of Occupancy Permits.
Purchaser shall receive all necessary Certificates of Occupancy, Certificates of
Completion, Board of Fire Underwriters Certificates or other appropriate
documents issued by the applicable municipality, for each Branch Office as
deemed necessary to continue operations of each Branch Office in accordance with
its intended use; provided that subject to the provisions of Section 7.17(b),
any repairs or improvements to such Branch Offices required as a condition to
issuance of such certificates or other appropriate documents shall be contracted
for and paid by the Seller or an appropriate credit shall be given in favor of
the Purchaser on the Initial Closing Statement related to such necessary
expenditures.
Article 9 Conditions to Seller's Obligations
--------- ----------------------------------
Unless waived in writing by Seller, the obligation of Seller to
complete the transactions contemplated in this Agreement are conditioned upon
fulfillment, on or before the Closing, of each of the following conditions.
Section 9.1. Representations and Warranties True.
The representations and warranties made by Purchaser in this Agreement
shall be true and correct in all material respects (other than representations
or warranties qualified by materiality which shall be true and correct in all
respects) on and as of the Closing Date as though such representations and
warranties were made on and as of the Closing Date, except for any
representation and warranty which specifically relates to an earlier date and
any changes permitted by the terms hereof or consented to by Seller.
38
Section 9.2. Obligations Performed.
Purchaser shall have (i) delivered to Seller those items required by
Section 3.2(c) hereof and (ii) performed and complied in all material respects
with all obligations and agreements required by this Agreement to be performed
or complied with by it prior to or on the Effective Time.
Section 9.3. Regulatory Approvals, Real Property Lease Agreements and Other
Non-Regulatory Consents.
The condition set forth in Section 8.3 shall have been satisfied.
Article 10 Termination
---------- -----------
Section 10.1. Methods of Termination.
This Agreement may be terminated in any of the following ways:
(a) by Seller or Purchaser if the Closing has not occurred on or before
the 200th day following the date hereof, provided that this right to terminate
shall not be available to any party whose failure to perform an obligation in
breach of such party's obligations under this Agreement has been the cause of,
or resulted in, the failure of the Effective Time to occur by such time;
(b) at any time on or prior to the Effective Time by the mutual consent
in writing of Purchaser and Seller;
(c) by Purchaser in writing if the conditions set forth in Article 8 of
this Agreement shall not have been met by Seller or waived in writing by
Purchaser prior to the date fixed for Closing, plus any reasonable adjournment
thereof, provided that Purchaser's failure to perform an obligation in breach of
its obligations under this Agreement was not the cause of, or resulted in,
Seller's failure to fulfill any such condition;
(d) by Seller in writing if the conditions set forth in Article 9 of
this Agreement shall not have been met by Purchaser or waived in writing by
Seller prior to the date fixed for Closing, plus any reasonable adjournment
thereof, provided that Seller's failure to perform an obligation in breach of
its obligations under this Agreement was not the cause of, or resulted in,
Purchaser's failure to fulfill any such condition;
(e) any time prior to the Effective Time, by Seller or Purchaser in
writing if the other shall have been in breach of any representation and
warranty in any material respect (as if such representation and warranty had
been made on and as of the date hereof and on the date of the notice of breach
referred to below), or in breach in any material respect of any covenant,
undertaking or obligation contained herein, and such breach has not been cured
by the earlier of fifteen (15) days after the giving of notice to the breaching
party of such breach or the Effective Time; or
(f) by Seller or Purchaser in writing at any time after any applicable
regulatory authority has denied approval of any application for a Regulatory
Approval (it being understood that a request for additional information shall
not constitute a denial of approval) or by Purchaser if any condition,
commitment or requirement is imposed in connection with any Regulatory Approval
that would adversely affect in a material way (i) Purchaser's operation of all
the Branch Offices or (ii) Purchaser or any of its Affiliates with respect to
their present businesses or activities.
Section 10.2. Procedure Upon and Effect of Termination.
In the event of termination pursuant to Section 10.1 hereof, and except
as otherwise stated therein, written notice thereof shall be given to the other
party, and this Agreement shall terminate immediately upon receipt of such
notice unless an extension is consented to by the party having the right to
terminate, provided that (i) Sections 11.1, 11.5 and this Section 10.2 shall
survive any such termination and (ii) a termination shall not relieve a
breaching
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party from liability for an intentional or grossly negligent breach of any
covenant, undertaking, representation or warranty giving rise to such
termination.
Article 11 Miscellaneous Provisions
---------- ------------------------
Section 11.1. Expenses.
Except as otherwise provided herein, Seller and Purchaser each shall
pay all of their own out-of-pocket expenses in connection with this Agreement,
including, accounting, consulting, professional and legal fees, if any, whether
or not the transactions contemplated by this Agreement are consummated.
Purchaser shall also pay costs and expenses relating to the assignments of
mortgages, financing statements, notes, security agreements or other instruments
applicable to or arising in connection with the transfer, assignment or
assumption of the Loans (and mortgages, financing statements, notes, security
agreements and other instruments relating thereto) or the Personal Property.
Section 11.2. Amendment and Modification.
The parties hereto, by mutual consent, may amend, modify and supplement
this Agreement in such manner as may be agreed upon by them in writing.
Section 11.3. Waiver or Extension.
Except with respect to the Regulatory Approvals, either party, by
written instrument signed by a duly authorized officer, may extend the time for
the performance of any of the obligations or other acts of the other party and
may waive (a) any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto or (b) compliance with any
of the undertakings, obligations, covenants or other acts contained herein.
Section 11.4. Successors and Assigns.
This Agreement and all of the provisions hereof shall be binding upon,
and shall inure to the benefit of, the parties hereto and their permitted
assigns, but neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by either of the parties hereto without
the prior notice to the other.
Section 11.5. Confidentiality.
(a) All information furnished previously in connection with the
transactions contemplated by this Agreement or pursuant hereto shall be treated
as the sole property of the party furnishing the information until consummation
of the transactions contemplated hereby and, if such transactions shall not
occur, the party receiving the information shall return to the party which
furnished such information or destroy all documents or other materials
containing, reflecting or referring to such information, shall use its best
efforts to keep confidential all such information, and shall not use such
information for any competitive or other commercial purposes. The obligation to
keep such information confidential shall continue for three years from the date
the proposed transaction is consummated or abandoned but shall not apply to (i)
any information which (x) was already in the receiving party's possession prior
to the disclosure thereof by the party furnishing the information; (y) was then
generally known to the public; or (z) became known to the public through no
fault of the party receiving the information; or (ii) disclosures pursuant to a
legal requirement or in accordance with an order of a court of competent
jurisdiction, provided that the party which is the subject of any such legal
requirement or order shall use its reasonable efforts to give the other party at
least ten (10) business days prior notice thereof.
(b) Seller and Purchaser, and Seller and Purchaser will cause their
respective Affiliates to, agree to keep confidential the terms of this
Agreement, including but not limited to the Purchase Price, and the negotiations
relating hereto, except as detailed at Section 7.7 herein or (i) to the extent
this Agreement and negotiations need to
40
be disclosed to obtain Regulatory Approvals, (ii) for disclosures made in
accordance with the terms of this Agreement, and (iii) for disclosures pursuant
to a legal requirement or in accordance with an order of a court of competent
jurisdiction or to satisfy a party's reporting obligations, provided that the
party which is the subject of any such legal requirement or order shall use its
reasonable efforts to give the other party at least two (2) business days prior
notice thereof.
Section 11.6. Addresses for Notices, Etc.
All notices, consents, waivers and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) five (5) days
after being deposited in the United States Mail by registered or certified mail,
return receipt requested, (c) sent by telecopy (with electronic confirmation of
receipt), provided that a copy is mailed by registered or certified mail, return
receipt requested, or (d) when received by the addressee, if sent by a
nationally recognized overnight delivery service (receipt requested), in each
case to the appropriate addresses and telecopy numbers set forth below (or to
such other addresses and telecopy numbers as a party may designate by notice to
the other parties):
If to Seller:
New York Community Bank
000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxxx, Chief Executive Officer
Fax: 000-000-0000
With a copy to:
New York Community Bank
000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxx, General Counsel
Fax: 000-000-0000
And a copy to:
Xxxxxxxxxx Xxxxxxx PC
00 Xxxxxxxxxx Xxx.
Xxxxxxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxxxxx, Esq.
Fax: 000-000-0000
If to Purchaser:
Sun National Bank
000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx, President and Chief Executive Officer
Fax: 000-000-0000
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With a copy to:
Xxxxxxx Spidi & Xxxxx, PC
000 Xxx Xxxx Xxxxxx, XX
Xxxxx 000 Xxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxx, Esq.
Fax: 000-000-0000
Section 11.7. Counterparts; Facsimile.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Execution and delivery of
this Agreement by facsimile transmission shall constitute execution and delivery
of this Agreement for all purposes, with the same force and effect as execution
and delivery of an original manually signed copy hereof.
Section 11.8. Headings.
The headings of the Sections and Articles of this Agreement are
inserted for convenience only and shall not constitute a part thereof or affect
in any way the meaning or interpretation of this Agreement.
Section 11.9. Governing Law.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New Jersey (without regard to principles of conflicts
of law).
Section 11.10. Sole Agreement.
This Agreement and the schedules and exhibits hereto represent the
entire agreement between the parties hereto respecting the transactions
contemplated hereby and all prior or contemporaneous written or oral proposals,
agreements in principle, representations, warranties and understandings between
the parties with respect to such matters are superseded hereby and merged
herein.
Section 11.11. Parties in Interest.
Nothing in this Agreement, express or implied, is intended or shall be
construed to confer upon or give to any person (other than the parties hereto,
their successors and permitted assigns) any rights or remedies under or by
reason of this Agreement, or any term, provision, condition, undertaking,
warranty, representation, indemnity, covenant or agreement contained herein.
Section 11.12. Specific Performance.
The parties hereto acknowledge that monetary damages could not
adequately compensate either party hereto in the event of a breach of this
Agreement by the other, that the non-breaching party would suffer irreparable
harm in the event of such breach and that the non-breaching party shall have, in
addition to any other rights or remedies it may have at law or in equity,
specific performance and injunctive relief as a remedy for the enforcement
hereof.
Section 11.13. No Jury Trial.
Each party hereto acknowledges and agrees that any controversy which
may arise under this Agreement or any of the agreements contemplated by this
Agreement is likely to involve complicated and difficult issues, and therefore
each such party hereby irrevocably and unconditionally waives any right such
party may have to a trial by jury in respect to any litigation directly or
indirectly arising out of or relating to this Agreement or the transactions
42
contemplated by this Agreement. Each party certifies and acknowledges that (i)
no representative, agent or attorney of any other party has represented,
expressly or otherwise, that such other party would not, in the event of
litigation, seek to enforce the foregoing waiver, (ii) each such party
understands and has considered the implications of this waiver, (iii) each such
party makes this waiver voluntarily, and (iv) each such party has been induced
to enter into this Agreement by, among other things, the waivers and
certifications in this Section 11.13.
Section 11.14. Bulk Sales
Seller and Purchaser hereby waive compliance with any bulk sale
notification provisions or laws, including without limitation those contained in
Section 1141(C) Article 28 of the New York State Sales and Use Tax Law
applicable to the transactions contemplated by this Agreement. Seller (and its
successors and assigns) shall indemnify and hold harmless Purchaser from and
against any liability of Seller asserted against Purchaser as a result of
non-compliance with such bulk sales law, other than liability for sales or use
tax imposed upon the sale of the assets transferred pursuant to this Agreement,
the payment of which shall be made as provided in Section 2.8(c). This provision
shall survive the Closing.
Section 11.15. Calendar Days and Business Days
Unless specified specifically, all references to "days" shall refer to
calendar days.
[THE REMAINDER OF THIS PAGE WAS INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers as of the date first above
written.
SUN NATIONAL BANK
By: /s/Xxxxxx X. Xxxxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President and Chief Executive Officer
NEW YORK COMMUNITY BANK
By: /s/Xxxxxx X. Xxxxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Executive Vice President
44
