PURCHASE AND ASSUMPTION AGREEMENT
between
FIRST STATE BANK
HAPPY, TEXAS
and
COLONIAL TRUST COMPANY
PHOENIX, ARIZONA
AND JOINED IN BY
HAPPY BANCSHARES, INC.
HAPPY, TEXAS
Dated as of December 23, 2003
Table of Contents
Page
ARTICLE 1 TERMS OF PURCHASE AND ASSUMPTION & Transfer of trust business....1
1.1 Sale of Corporate Trust Assets...........................1
1.2 Assumption of Liabilities................................2
1.3 Liabilities Not Assumed..................................3
1.4 Assignment and Fiduciary Substitution....................3
1.5 Situs of Administration of Fiduciary Accounts............4
1.6 Release of Fiduciary Duties..............................4
1.7 Purchase Price of Corporate Trust Assets.................4
1.8 Allocation of Purchase Price.............................4
ARTICLE 2 REAL ESTATE PROVISIONS...........................................4
2.1 Value of Real Estate.....................................4
2.2 Title Commitment.........................................4
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF First State Bank...............5
3.1 Organization and Related Matters.........................5
3.2 Authorization............................................6
3.3 No Breaches of Statutes or Contracts; Required Consents..6
3.4 Litigation and Related Matters...........................6
3.5 Consents.................................................6
3.6 Compliance with Laws and Regulations.....................6
3.7 Information for Regulatory Approvals.....................7
3.8 No Broker's or Finder's Fees.............................7
3.9 Financial Statements.....................................7
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF Colonial.......................8
4.1 Organization and Related Matters.........................8
4.2 Authorization............................................8
4.3 No Breaches of Statutes or Agreements; Required Consents.8
4.4 Fiduciary Accounts.......................................8
4.5 Litigation and Related Matters...........................9
4.6 Consents.................................................9
4.7 Contracts with Clients...................................9
4.8 Financial Statements.....................................9
4.9 Internal Controls.......................................10
4.10 Books and Records.......................................10
4.11 Accrued Fees............................................10
4.12 Prepaid Expenses........................................11
4.13 Equipment and Personal Property.........................11
4.14 Environmental Compliance................................11
4.15 Corporate Trust Receivables.............................12
4.16 Title to Corporate Trust Assets.........................12
4.17 Compliance with Laws and Regulations....................12
4.18 Information for Regulatory Approvals....................13
4.19 Taxes...................................................13
4.20 No Broker's or Finder's Fees............................13
4.21 Insurance on Corporate Trust Business...................13
4.22 Full Disclosure.........................................13
ARTICLE 5 COVENANTS OF First State Bank...................................14
5.1 Performance of Liabilities..............................14
5.2 Access to Transferred Records...........................14
5.3 Conditions to Closing...................................14
5.4 Untrue Representations..................................14
5.5 Litigation and Claims...................................14
5.6 Furnishing Information..................................14
ARTICLE 6 COVENANTS OF Colonial...........................................14
6.1 Preservation of Business................................14
6.2 Operations in Ordinary Course...........................15
6.3 Operations of the Corporate Trust Business..............15
6.4 Contracts...............................................15
6.5 Shareholders' Meeting...................................15
6.6 Conditions to Closing...................................16
6.7 Furnishing Information..................................16
6.8 Records.................................................16
6.9 Environmental Investigation;
Right to Terminate Agreement............................17
6.10 Real Estate.............................................18
6.11 No Negotiation with Others..............................19
ARTICLE 7 RECIPROCAL COVENANTS............................................20
7.1 Regulatory Approvals....................................20
7.2 Conveyances.............................................20
7.3 Further Assurances......................................20
7.4 Employees...............................................20
7.5 Confidentiality.........................................22
7.6 Publicity...............................................24
7.7 Tax Reporting...........................................24
7.8 Rental of Personal Trust Space..........................24
ARTICLE 8 CONDITIONS TO OBLIGATIONS OF Colonial...........................24
8.1 Corporate Approval......................................24
8.2 Absence of Litigation...................................24
8.3 Shareholder Approvals...................................25
8.4 Conditions Performed....................................25
8.5 Representations.........................................25
8.6 Documentation...........................................25
8.7 Governmental Actions and Approvals......................25
8.8 Fairness Opinion........................................25
ARTICLE 9 CONDITIONS TO OBLIGATIONS OF First State Bank...................26
9.1 Corporate Approval......................................26
9.2 Absence of Litigation...................................26
9.3 Shareholder Approvals...................................26
9.4 Minimum Value of Corporate Trust Assets.................26
9.5 Access to Information...................................26
9.6 Consents of Third Parties...............................26
9.7 Conditions Performed....................................26
9.8 Representations.........................................26
9.9 Documentation...........................................26
9.10 Governmental Actions and Approvals......................27
ARTICLE 10 THE CLOSING.....................................................27
10.1 Time and Place of Closing...............................27
10.2 Payment Due at Closing..................................27
10.3 Closing Documents to be Delivered or
Actions to be Taken by First State Bank.................27
10.4 Closing Documents to be Delivered or
Actions to be Taken by Colonial.........................28
10.5 Post Closing Adjustments................................29
ARTICLE 11 TRANSFER OF OPERATIONS..........................................30
11.1 Post Closing Mail.......................................30
11.2 Taxpayer Information....................................30
11.3 Receivable Payments.....................................30
ARTICLE 12 TERMINATION.....................................................30
12.1 Events of Termination...................................30
12.2 Manner of Termination...................................31
12.3 Effect of Termination...................................32
ARTICLE 13 INDEMNIFICATION.................................................32
13.1 Indemnification by Both Parties.........................32
13.2 Indemnification by First State Bank.....................32
13.3 Indemnification by Colonial.............................33
13.4 Procedure for Indemnification...........................33
ARTICLE 14 MISCELLANEOUS...................................................35
14.1 Survival................................................35
14.2 Notices.................................................35
14.3 Taxes; Expenses.........................................36
14.4 Entire Agreement, Modifications, Waivers, Headings......36
14.5 Successors and Assigns..................................36
14.6 Counterparts............................................36
14.7 Governing Law; Jurisdiction; Venue......................37
14.8 Time is of the Essence..................................37
14.9 Attorneys' Fees.........................................37
14.10 Severability............................................37
ARTICLE 15 DEFINITIONS.....................................................37
15.1 Certain Terms Defined...................................37
Exhibits
Settlement Statement...........................................................A
Assumption Agreement...........................................................B
General Assignment.............................................................C
Xxxx of Sale and Assignment....................................................D
Final Settlement Statement.....................................................E
Employment Agreement of Xxxx Xxxxxxx...........................................F
Employment agreement of Xxxxx Xxxxxxx..........................................G
Noncompetition Agreement of Xxxx Xxxxxxx.......................................H
Noncompetition Agreement of Xxxxx Xxxxxxx......................................I
PURCHASE AND ASSUMPTION AGREEMENT
This Purchase and Assumption Agreement ("Agreement") is effective as of the
December 23, 2003, by and between COLONIAL TRUST COMPANY, an Arizona trust
company ("Colonial"), and FIRST STATE BANK, a Texas banking association ("First
State Bank") and joined in by Happy Bancshares, Inc., a Texas corporation (the
"Company").
W I T N E S S E T H :
WHEREAS, Colonial is a nondepository trust company organized under the laws
of the State of Arizona with its principal offices in Phoenix, Arizona;
WHEREAS, First State Bank is a banking association with trust powers
organized under the laws of the State of Texas with its principal offices in
Happy, Texas;
WHEREAS, the Company is a registered bank holding company and owns
indirectly all of the outstanding common stock of First State Bank
WHEREAS, Colonial's operations include two lines of fiduciary activities,
corporate trust and personal trust, and its corporate trust operations consist
primarily of serving as trustee under various bond indentures for issuers of
bonds, primarily churches and other non-profit organizations, as well as serving
as trustee of self-directed individual retirement accounts (the "Corporate Trust
Business");
WHEREAS, Colonial desires to transfer certain assets and certain
liabilities related to the Corporate Trust Business to First State Bank;
WHEREAS, First State Bank desires to purchase such assets and assume such
liabilities related to the Corporate Trust Business from Colonial on the terms
and conditions in this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Colonial and First State Bank
hereby agree as follows:
ARTICLE 1.........
TERMS OF PURCHASE AND ASSUMPTION & Transfer of trust business
1.1 Sale of Corporate Trust Assets. On the terms and subject to the
conditions contained in this Agreement, at the Closing (as defined in Section
10.1 of this Agreement), First State Bank shall purchase from Colonial and
Colonial shall sell, convey, assign, transfer and deliver to First State Bank
all of the rights, title, and interests of Colonial in and to the following
assets of Colonial as a going concern, free and clear of all liens, security
interests, pledges, encumbrances, adverse claims and demands of every kind,
character and description whatsoever including without limitation the following
(all of which are collectively referred to herein as the "Corporate Trust
Assets"):
(a) the Accrued Fees (as defined in Section 4.11) related to the
Corporate Trust Business through the Closing Date (as defined in Section
10.1 of this Agreement);
(b) with the exception of the receivables listed on schedule 1.1(b), the
Corporate Trust Receivables (as defined in Section 4.15), including and
all of Colonial's right, title and interest in (including collateral
relating thereto, if any) receivables maintained, serviced and listed on
Colonial's general ledger as receivables of Colonial arising out of the
Corporate Trust Business, plus accrued but unpaid interest on the
Corporate Trust Receivables through the Closing Date, and any escrow
accounts and collateral related to the Corporate Trust Receivables;
(c) the real property and facilities located at 0000 Xxxxx 00xx Xxxxxx,
Xxxxxxx, Xxxxxxx including the building and land, together with
appurtenant parking, storage and service facilities owned or leased by
Colonial (collectively, the "Real Estate");
(d) the Equipment and Personal Property, (as defined in Section 4.13)
owned or used in connection with the operations of the Corporate Trust
Business, including, but not limited to, computer hardware, computer
software, telephones, and surveillance and security systems;
(e) all furniture and fixtures existing on the Real Estate owned by
Colonial, including, but not limited to, furniture, art work, carpeting,
shelving and office supplies;
(f) all Prepaid Expenses (as defined in Section 4.12) associated with
the Corporate Trust Assets that are existing at Closing, such items
including but not limited to prepaid rents, real estate taxes, security
deposits, maintenance, service and monitoring contracts; and
(g) all rights under the Contracts (defined in Section 4.7).
Notwithstanding the foregoing, (a) the Real Estate will be transferred at
the Closing to First State Bank subject to such liens, encumbrances, easements,
reservations and exceptions as are set forth in the Commitment (as defined in
Section 2.2 hereof) and accepted by First State Bank, as set forth in Section
2.2 hereof, and (b) the Equipment and Personal Property will be transferred at
the Closing to First State Bank subject to those equipment lease agreements and
other similar contracts that are reflected on Section 4.13(a). First State Bank
shall succeed to all rights, title, benefits and interests in and to the assets
and properties of Colonial to the extent included among the Corporate Trust
Assets as of the Closing Date, and shall be entitled to receive all benefits
therefrom as if First State Bank had itself originally acquired such Corporate
Trust Assets.
1.2 Assumption of Liabilities. Pursuant to the terms of this Agreement,
First State Bank shall assume at the close of business on the Closing Date the
following liabilities (as defined in Section 10.4 hereof) (collectively the
"Corporate Trust Liabilities"):
(a) The accrued expenses of Colonial relating to the Corporate Trust
Assets, except for taxes described in (c) and (d) below (the "Accrued
Expenses"). The Accrued Expenses as of September 30, 2003, are shown on
Schedule 1.2(a) hereto (the "Schedule of Accrued Expenses"). An updated
Schedule of Accrued Expenses containing information current as of the
close of business no more than five (5) Business Days prior to the
Closing Date shall be delivered to First State Bank by Colonial at the
Closing.
(b) All liabilities and obligations with respect to the Contracts after
the Closing Date; provided, however, that First State Bank specifically
does not assume any liabilities or obligations under the Contracts,
including, without limitation, liabilities or obligations resulting from
any actions or omissions by Colonial, that occurred or existed on or
prior to the Closing Date.
(c) All accrued taxes and ad valorem taxes attributable to the Real
Estate, provided, such taxes shall be prorated as of the Closing Date
based on a 365 day year and reflected on the Settlement Statement.
(d) All personal property and other taxes assessed in connection with
the Corporate Trust Assets, provided, such taxes shall be prorated as of
the Closing Date based on a 365 day year and reflected on the Settlement
Statement.
(e) Liabilities under the equipment lease agreements, hardware
maintenance agreement and other agreements listed on Schedule 1.2(e). An
updated Schedule 1.2(e) containing information current as of the close
of business no more than five (5) Business Days prior to the Closing
Date shall be delivered to First State Bank by Colonial at Closing.
With the exception of the liabilities reflected on Schedule 1.2(e), all of
the Corporate Trust Liabilities are expressly reflected on the Final Settlement
Statement (as defined in Section 10.4 hereof).
1.3 Liabilities Not Assumed. First State Bank shall not assume or take
title to the Corporate Trust Assets subject to, or in any way be liable for, any
liabilities or obligations of Colonial (whether or not referred to in any
Schedule or Exhibit hereto), except as specifically provided in Section 1.2, it
being expressly acknowledged that it is the intention of the parties hereto that
all liabilities and obligations that Colonial has or may have in the future
(whether accrued, absolute, contingent, unliquidated, or otherwise, whether
known to Colonial, and whether due or to become due), other than the Corporate
Trust Liabilities, shall be and remain the liabilities and obligations of
Colonial.
1.4 Assignment and Fiduciary Substitution. On the Closing Date, Colonial
shall transfer and assign the Corporate Trust Business to First State Bank,
without any further action on the part of either First State Bank or Colonial
(except as provided for herein) and First State Bank shall, to the full extent
provided by Arizona banking laws, be deemed the substitute fiduciary for
Colonial on each of Colonial's accounts with respect to its Corporate Trust
Business (the "Fiduciary Accounts"). Set forth on Schedule 1.4 are Colonial's
(i) Bond Proceeds Account and Sinking Fund Account, and (ii) aggregate XXX
Account balances for all of the XXX Accounts serviced by Colonial's Corporate
Trust division, both as of September 30, 2003. An updated Schedule 1.4
containing the foregoing information current as of a date no more than five (5)
business days prior to the Closing Date shall be delivered to First State by
Colonial at the Closing. At such time on such date and thereafter, First State
Bank shall, to the full extent provided by Arizona banking laws, (i) succeed to
all right, title, and interest in all property that Colonial holds as fiduciary
with respect to the Corporate Trust Business, (ii) be considered the designee
fiduciary in all instruments that have heretofore named Colonial as fiduciary
with respect to the Corporate Trust Business, and (iii) perform all the duties
and obligations and exercise all the powers and authority connected with or
incidental to that fiduciary capacity in the same manner as if First State Bank
had been originally named or designated fiduciary thereunder, all without the
necessity of any instrument of transfer or conveyances. Except for actions taken
by Colonial while it acted as fiduciary, Colonial shall have no further duties,
responsibilities or liabilities with respect to the Fiduciary Accounts.
1.5 Situs of Administration of Fiduciary Accounts. Colonial and First State
Bank do each hereby acknowledge and state that the substitution of First State
Bank for Colonial with respect to the Fiduciary Accounts pursuant to this
Agreement will not cause a transfer of the situs of the administration of such
Fiduciary Accounts.
1.6 Release of Fiduciary Duties. On and effective as of the Closing Date,
Colonial shall be released from all fiduciary duties related to the Corporate
Trust Business and shall cease to act in all such fiduciary capacities with
respect to the Corporate Trust Business.
1.7 Purchase Price of Corporate Trust Assets. The purchase price of the
Corporate Trust Assets (the "Purchase Price"), will be an amount equal to the
sum of the following as of the close of business on the Closing Date unless
otherwise indicated:
(a) Five Hundred Fifty Thousand Dollars ($550,000) in consideration for
goodwill (the "Goodwill Premium") plus
(b) the aggregate book value of the Corporate Trust Assets (excluding
the Real Estate) less the book value of the Corporate Trust Liabilities,
as reflected on the Settlement Statement, attached hereto as Exhibit "A"
plus
(c) the value of the Real Estate as determined pursuant to Section 2.1
hereof.
1.8 Allocation of Purchase Price. The parties agree to determine the
allocation of the Purchase Price in accordance with the procedures set forth in
Section 7.7; provided, however, that nothing contained in this Agreement shall
require either party or its Affiliates to violate any law, statute, or
regulation.
ARTICLE 2
REAL ESTATE PROVISIONS
2.1 Value of Real Estate. The value of the Real Estate (for purposes of
Section 1.7(a)(iii) above) shall equal $819,000.
2.2 Title Commitment
(a) Within five (5) Business Days from the date of this Agreement,
Colonial shall deliver to First State Bank (a)-title commitments
(including all documents, instruments or agreements evidencing or
creating the exceptions referenced in such commitment) (the
"Commitment") issued by Xxxxxxx Title Insurance Company (the "Title
Company") covering the Real Estate, and (b)-recent surveys of the Real
Estate (the "Surveys"). The Commitments and Surveys shall reflect that
Colonial has good and indefeasible title to the Real Estate, subject
only to (i)-any shortages in area, (ii)-taxes for the part of year
following the Closing Date and subsequent years and subsequent
assessments for prior years due to a change in land usage or ownership,
(iii)-existing building and zoning ordinances, (iv)-utility easements,
and (v)-Permitted Exceptions" (as defined herein). First State Bank
shall have until ten (10) Business Days (the "Commitment Review Period")
after First State Bank receives the latter of (i) the Surveys, or (ii)
the Commitments. If First State Bank has any objections to the Surveys
or the Commitment, First State Bank may deliver the objections to
Colonial in writing within the Commitment Review Period. Any item to
which First State Bank does not object shall be deemed a "Permitted
Exception." Items that the Title Company identifies as to be released at
closing will be deemed objections by First State Bank. First State
Bank's failure to object within the Commitment Review Period shall be a
waiver of the right to object. If there are objections by First State
Bank, Colonial shall make a good faith attempt to satisfy the objections
within ten (10) Business Days after receipt of First State Bank's
objection (the "Cure Period"). Zoning ordinances and the lien for
current taxes are deemed to be Permitted Exceptions.
(b) If Colonial cannot satisfy the objections within the Cure Period,
Colonial shall deliver a written notice to First State Bank, prior to
expiration of the Cure Period, stating whether Colonial is committed to
cure the objections at or before Closing. If Colonial does not timely
deliver the written notice, or does not commit in the written notice to
fully cure all of the objections at or before Closing, then First State
Bank may terminate this Agreement by delivering a written notice to
Colonial on or before the earlier to occur of: (i) the date which seven
(7) Business Days after the expiration of the Cure Period; or (ii) the
scheduled Closing Date. If First State Bank properly and timely
terminates this Agreement, neither party shall have any rights or
obligations under this Agreement (except for those which may expressly
survive the termination of this Contract). If First State Bank does not
properly and timely terminate this Agreement, then First State Bank
shall be deemed to have waived any uncured objections and must accept
such title as Colonial is able to convey as of Closing.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF First State Bank
First State Bank and, in those sections where specifically joined by the
Company, the Company and First State Bank, jointly and severally, represent,
warrant and agree as follows:
3.1 Organization and Related Matters. First State Bank is a Texas state
banking association with trust powers, validly existing in such capacity, and in
good standing under the laws of the State of Texas, and it has the requisite
corporate power and authority to execute, deliver and perform this Agreement,
subject to the receipt of all required regulatory approvals. First State Bank is
duly authorized to conduct the business of banking in the State of Texas. First
State Bank's deposits are insured by the Federal Deposit Insurance Corporation
(the "FDIC") to the extent permitted by applicable law.
3.2 Authorization. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby by First
State Bank and the Company have been duly and validly authorized and approved by
all requisite corporate action and such authorization is reflected in the
minutes of the Board of Directors' meetings. First State Bank shall continuously
maintain for a reasonable period of time all components of this written
Agreement as official records of First State Bank or any successor thereto. This
Agreement is a valid and binding obligation of First State Bank, enforceable in
accordance with its terms, except that the enforceability hereof may be subject
to bankruptcy, insolvency, reorganization, moratorium or other similar laws now
or hereafter in effect relating to creditors' rights generally (including
without limitation laws applicable to an institution insured by the FDIC for
which a receiver or conservator is appointed whether or not the institution is
insolvent) and that the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court (or, if applicable, the administrative agency) before
which any proceedings therefor may be brought.
3.3 No Breaches of Statutes or Contracts; Required Consents. First State
Bank and the Company hereby represent that the execution and delivery of this
Agreement by First State Bank and the Company and the consummation by First
State Bank and the Company of the transactions contemplated hereby will not (a)
conflict with any of the provisions of the charter, bylaws or other governing
instruments of First State Bank or the Company; (b) violate any laws, orders or
regulations applicable to First State Bank or the Company; or (c) conflict with
or result in a breach of any judgment, order, decree or ruling to which First
State Bank or the Company is a party, or by which it or any of its property is
bound, or any injunction of any court or governmental authority to which it or
any of its property is subject, or any material agreement to which it is a party
or by which any of its property is affected.
3.4 Litigation and Related Matters. There are no administrative or other
actions, suits, claims, proceedings or investigations pending, or, to its
knowledge, threatened against First State Bank or the Company that might impair
the consummation of the transactions contemplated hereby. Neither First State
Bank nor the Company is aware of any facts that would reasonably afford a basis
for any such action, suit, proceeding, claim or investigation.
3.5 Consents. Other than the approval of the shareholders of Colonial as
described in Sections 8.3 and 9.3, the Texas Department of Banking, the Arizona
State Banking Department, and the FDIC, and subject to the expiration of any
applicable waiting period, no consent, approval or authorization of any federal
or state governmental authority or agency is required for the execution,
delivery and performance by First State Bank of this Agreement and the
consummation by it of any transactions contemplated hereby.
3.6 Compliance with Laws and Regulations. First State Bank and the Company
have no notice of any violation of, and each is in compliance with, all
applicable laws material to the conduct of its business, a violation of which
would result in a material adverse change in the overall financial condition of
First State Bank or the Company, or adversely affect its ability to perform its
agreements under this Agreement and any judgments, orders, writs, injunctions,
and decrees of any applicable state or federal authority to which First State
Bank or the Company is subject, except for noncompliance which, individually or
in the aggregate, does not and will not materially and adversely affect the
business, assets, results of operations or condition (financial or otherwise) of
First State Bank.
3.7 Information for Regulatory Approvals. The information furnished or to
be furnished by First State Bank in any regulatory application or amendment
thereto filed by either First State Bank or Colonial pursuant to Section 7.1
will be true and complete in all material respects as of the date so furnished.
3.8 No Broker's or Finder's Fees. No Agent, broker, investment banker, or
other Person acting on behalf of or under authority of First State Bank or any
of its Affiliates is or will be entitled to any broker's or finder's fee or any
other commission or similar fee directly or indirectly in connection with any of
the transactions contemplated by this Agreement. First State Bank shall be
solely liable for the payment of any such fees and shall indemnify Colonial with
respect to such fees pursuant to ARTICLE 13 of this Agreement.
3.9 Financial Statements
(a) The Company has furnished to Colonial true and complete copies of
(i) the audited consolidated balance sheets of the Company as of
December 31, 2002, 2001 and 2000 and the related audited consolidated
statements of income, shareholders' equity and cash flows for such
fiscal years, all as certified by the Secretary of the Company, (ii) the
unaudited consolidated balance sheet of the Company as of September 30,
2003 and the related unaudited consolidated statements of income,
shareholders' equity and cash flows for the nine-month period ended
September 30, 2003, all as certified by the Secretary of the Company,
(iii) the Company's Statements of Condition and Reports of Income (the
"Call Reports") for the periods ended December 31, 2002 and September
30, 2003 (such balance sheets and the related statements of income,
shareholders' equity, cash flows and Call Reports are collectively
referred to herein as the "Company Financial Statements").
(b) The Company Financial Statements fairly present, in all material
respects, the financial position of the Company as of the respective
dates thereof and the results of operations and changes in financial
position of the Company for the periods then ended, in conformity with
United States generally accepted accounting practices ("GAAP"), unless
otherwise provided by the Instructions to the Call Reports, which
instructions represent regulatory accounting principles ("RAP") in which
instance such information is presented in conformity with RAP, applied
on a basis consistent with prior periods (subject, in the case of the
unaudited interim financial statements, to normal year-end adjustments
and the fact that all such statements do not contain all of the footnote
disclosures required by GAAP). The Company Financial Statements do not
contain any items of special or nonrecurring income or any other income
not carried in the ordinary course of business except as expressly
specified therein. The Company Financial Statements do not require any
additional disclosure to reflect accurately and fairly the financial
condition and results of operations of the Company other than those
disclosures covered by the representations and warranties contained in
this ARTICLE 3 or disclosed to Colonial in or pursuant to schedules to
this Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF Colonial
Colonial represents, warrants and agrees as follows:
4.1 Organization and Related Matters. Colonial is a nondepository trust
company, duly organized, validly existing, and in good standing under the laws
of Arizona, and it has the requisite corporate power and authority to execute,
deliver and perform this Agreement. Colonial is duly authorized to conduct trust
operations in the State of Arizona and in each other state in which it is
necessary to conduct its trust operations.
4.2 Authorization. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby by
Colonial have been duly and validly authorized and approved by all requisite
corporate action. In that connection, this Agreement and the terms and
provisions hereof have been approved by an officer of Colonial who was duly
authorized by the Board of Directors to enter into such types of transactions
and such authorization is reflected in the minutes of the Board of Directors'
meetings. Colonial shall continuously maintain for a reasonable period of time
all components of this written Agreement as official records of Colonial or any
successor thereto. This Agreement is a valid and binding obligation of Colonial,
enforceable in accordance with its terms, except that the enforceability hereof
may be 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 and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court (or, if applicable, the administrative agency) before which any
proceedings therefor may be brought.
4.3 No Breaches of Statutes or Agreements; Required Consents. Except as
disclosed on Schedule 4.3, the execution and delivery of this Agreement by
Colonial and the consummation by Colonial of the transactions contemplated
hereby will not (a) conflict with any of the provisions of the charter, bylaws
or other governing instruments of Colonial; (b) violate any material laws,
orders or regulations applicable to Colonial; (c) conflict with or result in a
breach of any judgment, order, decree or ruling to which Colonial is a party, or
by which it or any of its property is bound, or any injunction of any court or
governmental authority to which it or any of its property is subject, or any
material agreement to which it is a party or by which any of its property is
affected; or (d) require the affirmative consent or approval of any governmental
or nongovernmental third party (other than as expressly contemplated in this
Agreement).
4.4 Fiduciary Accounts. Colonial has properly administered all Fiduciary
Accounts and other accounts for which Colonial served as fiduciary with respect
to the Corporate Trust Business, including, but not limited to, accounts for
which it serves as a trustee, agent, custodian, personal agent, guardian,
conservator or investment advisor with respect to the Corporate Trust Business,
in accordance with all material terms of the governing documents and applicable
state and federal law and regulation and common law. Neither Colonial nor any of
its directors, officers or employees, has committed any material breach of trust
with respect to any Fiduciary Account, and the accountings for each such
Fiduciary Account are true and correct in all material respects and accurately
reflect the assets of such Fiduciary Account in all material respects.
4.5 Litigation and Related Matters. Except as set forth on Schedule 4.5,
there are no actions, suits, claims, proceedings or investigations pending or,
to the best of Colonial's knowledge, threatened against Colonial that would be
reasonably likely to impair the consummation of the transactions contemplated
hereby or that affect any of the Corporate Trust Assets or Corporate Trust
Liabilities being transferred to First State Bank pursuant to the terms hereof.
Colonial is not aware of any facts that would reasonably afford a basis for any
such action, suit, proceeding, claim or investigation.
4.6 Consents. Other than the approval of the shareholders of Colonial as
described in Sections 8.3 and 9.3, the Texas Department of Banking, the Arizona
State Banking Department, and the FDIC, and subject to the expiration of any
applicable waiting period, no consent, approval or authorization of any federal
or state governmental authority or agency or any third party or parties is
required for the execution, delivery and performance by Colonial of this
Agreement and the consummation by it of any transactions contemplated hereby.
4.7 Contracts with Clients. Attached hereto as Schedule 4.7 (the "Schedule
of Contracts") is a true and accurate copy of each form of Indenture,
trustee/paying agent/registrar agreement and XXX Simplifier Agreement to which
Colonial is a party with respect to its Corporate Trust Business. Colonial has
in place an indenture and a trustee/paying agent/registrar agreement in
substantially one of the forms attached as Schedule 4.7 and appropriate
collateral documents with regard to each of the church bond accounts serviced by
its Corporate Trust division and XXX Simplifier Agreement in substantially the
form attached as a part of Schedule-4.7 for each XXX account serviced by its
Corporate Trust division. The indentures, trustee/paying agent/registrar
agreements and associated collateral agreements and XXX Simplifier Agreements
are each a "Contract" for purposes hereof. Unless otherwise set forth on
Schedule 4.7, no consent is required from any third party in order for such
Contract to be assigned, assumed or otherwise transferred to First State Bank
pursuant to the transactions contemplated by this Agreement. Colonial is in
material compliance with the terms and conditions of each Contract and each
Contract is in full force and effect, enforceable in accordance with its terms
and no breach has occurred with respect to such Contracts. Except as set forth
on Schedule 4.5, there are no disputes pending, or to the best of Colonial's
knowledge, threatened with respect to any of the Contracts or with any
terminated or expired Contract. An updated Schedule of Contracts and Schedule
4.7 containing information current as of the close of business no more than five
(5) Business Days prior to the Closing Date shall be delivered to First State
Bank at the Closing and a final Schedule of Contracts and Schedule 4.7 shall be
attached to the Final Settlement Statement.
4.8 Financial Statements
(a) Colonial has furnished to First State Bank true and complete copies
of (i) the audited consolidated balance sheets of Colonial as of March
31, 2003, 2002, and 2001 and the related audited consolidated statements
of income, shareholders' equity and cash flows for such fiscal years,
all as certified by the Secretary of Colonial, (ii)-the unaudited
consolidated balance sheet of Colonial as of September 30, 2003 and the
related unaudited consolidated statements of income, shareholders'
equity and cash flows for the six-month period ended September 30, 2003,
all as certified by the Secretary of Colonial, (such balance sheets and
the related statements of income, shareholders' equity, and cash flows
are collectively referred to herein as the "Financial Statements").
(b) The Financial Statements fairly present, in all material respects,
the financial position of Colonial as of the respective dates thereof
and the results of operations and changes in financial position of
Colonial for the periods then ended, in conformity with GAAP applied on
a basis consistent with prior periods (subject, in the case of the
unaudited interim financial statements, to normal year-end adjustments
and the fact that all such statements do not contain all of the footnote
disclosures required by GAAP) and except as otherwise noted therein, the
Financial Statements accurately and fairly reflect in all material
respects the transactions of Colonial. The Financial Statements do not
contain any items of special or nonrecurring income or any other income
not earned in the ordinary course of business except as expressly
specified therein. The Financial Statements do not require any
additional disclosure to reflect accurately and fairly the financial
condition and results of operations of Colonial other than those
disclosures covered by the representations and warranties contained in
this ARTICLE 4 or disclosed to First State Bank in or pursuant to
schedules to this Agreement.
(c) In addition to the Financial Statements, Colonial will furnish to
First State Bank as soon as they are available, unaudited balance
sheets, statements of income, statements of shareholders' equity, and
statements of cash flows of Colonial for periods after those covered by
the applicable Financial Statements.
4.9 Internal Controls. Colonial has devised and maintained systems of
internal accounting controls sufficient to provide reasonable assurances that
(a) transactions are executed in accordance with management's general or
specific authorizations, (b) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
accountability for assets, (c) access to assets is permitted only in accordance
with management's general or specific authorization, and (d) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
4.10 Books and Records. All the books and records, including Financial
Statements of Colonial related to the Corporate Trust Assets and Corporate Trust
Liabilities, are substantially complete and correct, have been maintained in all
material respects in accordance with good business practice and all applicable
laws, and, in the case of the books of account, have been prepared and
maintained in all material respects in accordance with GAAP or RAP. Such books
and records accurately and fairly reflect, in all material respects, all
transactions, assets, and liabilities of Colonial in connection with its
Corporate Trust Business.
4.11 Accrued Fees. Attached hereto as Schedule 4.11 (the "Schedule of
Fees") is a true and accurate schedule of all accrued fees shown on the books of
Colonial in connection with the Corporate Trust Business ("Accrued Fees"),
including, but not limited to, fees associated with XXX maintenance, bond
printing and trust set-up. An updated Schedule of Fees and Schedule 4.11
containing information current as of the close of business no more than five (5)
Business Days prior to the Closing Date shall be delivered to First State Bank
by Colonial at the Closing.
4.12 Prepaid Expenses. Attached hereto as Schedule 4.12 (the "Schedule of
Prepaid Expenses) is a true and accurate schedule of all prepaid expenses
related to the Corporate Trust Business as shown on the books and records of
Colonial prorated on the basis of the period for which each such expense was
prepaid (e.g., a 30 day month or a 365 day year). An updated Schedule of Prepaid
Expenses and Schedule 4.12 containing information current as of the close of
business no more than five (5) Business Days prior to the Closing Date shall be
delivered to First State Bank by Colonial at the Closing.
4.13 Equipment and Personal Property. Attached hereto as Schedule 4.13(a)
(the "Schedule of Equipment and Personal Property") is a true and accurate
schedule of all furniture, fixtures, equipment, and other tangible Equipment and
Personal Property owned by Colonial that is used or is useful in the Corporate
Trust Business at the location described in Section 1.1(c) (herein together, the
"Equipment and Personal Property"), which schedule describes any security
interests therein or other liens thereon and the current value of such Equipment
and Personal Property on the books of Colonial. Except as disclosed on Schedule
4.13(b), all Equipment and Personal Property is in good operating condition,
ordinary wear and tear excepted, and conform with all material ordinances,
regulations, zoning and other laws, whether Federal, state or local. Except as
set forth on Schedule 4.13(b), none of Colonial's premises or equipment are in
need of maintenance or repairs other than ordinary routine maintenance and
repairs that are not material in nature or cost. An updated Schedule 4.13(a) and
Schedule 4.13(b) containing information current as of the close of business no
more than five (5) Business Days prior to the Closing Date shall be delivered to
First State Bank by Colonial at the Closing.
4.14 Environmental Compliance. Except as disclosed on Schedule 4.14:
(a) Colonial is in material compliance with all Environmental Laws (as
defined in Section 15.1). Colonial is not aware of, nor has Colonial
received notice of, any past, present, or future conditions, events,
activities, practices or incidents that may interfere with or prevent
the compliance of Colonial with all Environmental Laws.
(b) Colonial has obtained all material permits, licenses and
authorizations that are required under all Environmental Laws.
(c) No Hazardous Materials (as defined in Section 15.1) exist on, about
or within the Real Estate, nor have any Hazardous Materials previously
existed on, about or within or been used, generated, stored,
transported, disposed of, on or released from the Real Estate. The use
that Colonial makes and intend to make of the Real Estate will not
result in the use, generation, storage, transportation, accumulation,
disposal or release of any Hazardous Material on, in or from any of the
Real Estate.
(d) Except as set forth on Schedule 4.14(d), there is no action, suit,
proceeding, investigation, or inquiry before any court, administrative
agency or other governmental authority pending or, to the knowledge of
Colonial, threatened against Colonial relating in any way to any
Environmental Law. Colonial does not have any liability for remedial
action under any Environmental Law. Colonial has not received any
written request, or otherwise to the best knowledge of Colonial, for
information by any governmental authority with respect to the condition,
use or operation of any of the Real Estate nor has Colonial received any
written notice, or otherwise to the best knowledge of Colonial, of any
kind from any governmental authority or other person with respect to any
violation of or claimed or potential liability of any kind under any
Environmental Law (including, without limitation, any letter, notice or
inquiry from any person or governmental entity informing Colonial that
it is or may be liable in any way under CERCLA (as defined in Section
15.1) or requesting information to enable such a determination to be
made).
4.15 Corporate Trust Receivables. Attached hereto as Schedule 4.15 (the
"Schedule of Receivables") is a true and accurate schedule of all receivables
owned by Colonial in connection with the Corporate Trust Business ("Corporate
Trust Receivables"), including, but not limited to, accrued interest receivable
on the Corporate Trust Assets, sinking fund receivables, and Corporate Trust XXX
institutional maintenance fee receivables. Each receivable set forth on Schedule
4.15 is a valid and binding obligation of the maker thereof enforceable in
accordance with its terms, except that the enforceability thereof may be 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 therefor may be brought. Colonial owns each
receivable free and clear of all liens, claims and encumbrances. An updated
Schedule of Receivables and Schedule 4.15 containing information current as of
the close of business no more than five (5) Business Days prior to the Closing
Date shall be delivered to First State Bank by Colonial at the Closing.
4.16 Title to Corporate Trust Assets. Colonial is the lawful owner of and
has good and indefeasible title to the Corporate Trust Assets free and clear of
all liens, claims, encumbrances and rights of others, except as disclosed on
Schedule 4.16 (the "Schedule of Liens") attached hereto or as set forth
immediately below in this Section 4.16 with respect to the Real Estate. Delivery
to First State Bank of the instruments of transfer of ownership contemplated by
this Agreement will vest good and indefeasible title to the Corporate Trust
Assets in First State Bank, free and clear of all liens, claims, encumbrances,
and rights of others, except (a) as disclosed on the Schedule of Liens or (b)
with respect to the Real Estate, as reflected in the Commitment and accepted by
First State Bank, as set forth more completely in Section 2.2 hereof. An updated
Schedule of Liens and Schedule 4.16 containing information current as of the
close of business no more than five (5) Business Days prior to the Closing Date
shall be delivered to First State Bank at the Closing.
4.17 Compliance with Laws and Regulations. Colonial has no notice of any
violation of and to the best of its knowledge is in compliance with all
applicable laws and any judgments, orders, writs, injunctions, and decrees of
any applicable state or federal authority to which Colonial is subject and which
are applicable to the operation of its Corporate Trust Business or any of the
Corporate Trust Assets or Corporate Trust Liabilities. Colonial has not received
any notice, which has not been dismissed or otherwise disposed of, that Colonial
has not so complied. Colonial is not charged or, to the best of Colonial's
knowledge, threatened with, or under investigation with respect to, any material
violation of any applicable law or any judgment, order, writ, injunction or
decree of any applicable state or federal authority to which Colonial is subject
relating to any aspect of its Corporate Trust Business. With respect to the
information return reporting requirements and the backup withholding
requirements as modified by the Omnibus Budget Reconciliation Act of 1989 and
the regulations promulgated by the Internal Revenue Service (the "IRS") in
support thereof, Colonial (a) has exercised reasonable care, as defined in
Section 6721 through 6724 of the IRC, and the regulations thereunder, with
respect to all accounts, (b) has implemented backup withholding as required
under Section 3406 of the IRC and the regulations thereunder, and (c) will
provide taxpayer identification numbers to First State Bank at the Closing.
4.18 Information for Regulatory Approvals. The information furnished or to
be furnished by Colonial in any regulatory application or amendment thereto
filed by either Colonial or First State Bank pursuant to Section 7.1 will be
true and complete in all material respects as of the date so furnished.
4.19 Taxes. All payroll, withholding, property, excise, sales, use and
transfer taxes imposed by the United States or by any state, municipality,
subdivision or by any other taxing authority relating to the Corporate Trust
Assets that are due and payable by Colonial prior to the Closing have been paid
in full, or will be so paid prior to the Closing.
4.20 No Broker's or Finder's Fees. Except for payments that may be due and
owing to Bank Advisory Group, LLC, pursuant to that engagement letter, dated
October 30, 2003, a copy of which has been provided to First State Bank, no
agent, broker, investment banker or other Person acting on behalf of or under
authority of Colonial or any of its Affiliates is or will be entitled to any
broker's or finder's fee or any other commission or similar fee directly or
indirectly in connection with any of the transactions contemplated by this
Agreement. Colonial shall be solely liable for the payment of any such fees and
shall indemnify First State Bank with respect to such fees pursuant to ARTICLE
13 of this Agreement.
4.21 Insurance on Corporate Trust Business. Set forth on Schedule 4.21 (the
"Schedule of Insurance Policies") is a list of all policies of fire, liability,
casualty, fidelity, blanket bond, and other insurance owned or held by Colonial
which are related to the Corporate Trust Business. Such policies are in full
force and effect as of the date of this Agreement. Colonial has no knowledge of
any fact, event, or condition which would render any of such policies void or
voidable or subject any of such policies to cancellation or termination.
Colonial has given timely notice to the appropriate insurance carrier of all
pending or threatened claims against it that are insured where such notice is
required under such policies.
4.22 Full Disclosure. No representations or warranty contained in this
Agreement contains any untrue statement. Colonial is not aware of any
information that it believes, in good faith, may be material to a prospective
purchaser of the Corporate Trust Assets and Corporate Trust Liabilities that has
not been disclosed pursuant to this Agreement. The representations and
warranties contained in this ARTICLE 4 or elsewhere in this Agreement or any
documents delivered pursuant hereto shall not be affected or deemed waived by
reason of the fact that any employee, agent or representative of First State
Bank knew or should have known that any such representation or warranty is or
might be inaccurate in any respect.
ARTICLE 5
COVENANTS OF First State Bank
First State Bank hereby covenants and agrees as follows, which covenants
and agreements will remain in effect subsequent to the Closing:
5.1 Performance of Liabilities. First State Bank agrees to, from and after
the Closing Date, pay, honor, discharge and perform all of the Corporate Trust
Liabilities, as specifically set forth in Section 1.2 hereof.
5.2 Access to Transferred Records. For seven (7) years following the
Closing Date, First State Bank shall, to the extent not inconsistent with law
applicable to First State Bank, provide such copies of the records transferred
to First State Bank by Colonial as Colonial shall reasonably request, provided
that all usual and customary costs incurred in connection with requests by
Colonial for such records shall be borne and paid by Colonial.
5.3 Conditions to Closing. First State Bank shall use its Best Efforts to
satisfy by the Closing Date all of the conditions to the obligations of First
State Bank hereunder within First State Bank's direct or indirect control. First
State Bank shall use its Best Efforts to take all steps necessary , including
obtaining all consents of third parties required, to assign the Contracts to
First State Bank; provided, however, that First State Bank shall not be
obligated to pay any compensation, fee or other amount or expense in order to
obtain such consent.
5.4 Untrue Representations. First State Bank shall promptly notify Colonial
in writing if First State Bank becomes aware of any fact or condition that makes
untrue, or shows to have been untrue, in any material respect, any
representation or warranty made in this Agreement or that results in First State
Bank's failure to comply with any covenant, condition or agreement contained in
this Agreement.
5.5 Litigation and Claims. First State Bank shall promptly notify Colonial
of any legal action, suit or proceeding or judicial, administrative or
governmental investigation pending or threatened against First State Bank that
questions or might question the validity of this Agreement or any actions taken
by First State Bank pursuant hereto or seeks to enjoin or otherwise restrain the
transactions contemplated hereby.
5.6 Furnishing Information. First State Bank shall provide all information,
financial statements and documentation as Colonial shall reasonably request in
connection with the transactions contemplated by this Agreement.
ARTICLE 6
COVENANTS OF Colonial
During the period from the date hereof to the Closing Date, Colonial hereby
covenants and agrees as follows:
6.1 Preservation of Business. Colonial shall use its Best Efforts to
preserve intact its Corporate Trust Business, to keep available the services of
the present officers and employees of its Corporate Trust Business and to
preserve the present relationships of Colonial with all corporate trust
customers and with all entities having business dealings with Colonial through
its Corporate Trust Business segment, and Colonial shall promptly notify First
State Bank of any material changes in personnel or customer relations related to
its Corporate Trust Business.
6.2 Operations in Ordinary Course.
(a) Except as otherwise provided in this Agreement, without the prior
written consent of First State Bank, Colonial shall not engage in any
transaction related to its Corporate Trust Business, except in the
ordinary course of Colonial's business consistent with past practices,
and shall not take any action that would materially and adversely affect
the Corporate Trust Assets or the Corporate Trust Liabilities to be
acquired and assumed hereunder.
(b) Colonial further covenants that it shall, except with the prior
written consent of First State Bank, from the date hereof through the
Closing Date:
(i) maintain its books of accounts and records with respect to the
Corporate Trust Assets and Corporate Trust Liabilities in the usual,
regular and ordinary manner;
(ii) duly maintain compliance with all laws, regulatory requirements
and agreements to which it is subject or by which it is bound with
respect to the Corporate Trust Assets, the Corporate Trust
Liabilities and its Corporate Trust Business;
(iii) maintain any insurance related to the conduct of its Corporate
Trust Business, in such amounts and of such kinds as are maintained
as of the date of this Agreement;
(iv) not create or suffer to exist any lien, claim or encumbrance on
any of the Corporate Trust Assets except for those otherwise
permitted under this Agreement.
6.3 Operations of the Corporate Trust Business. Colonial shall operate its
Corporate Trust Business in substantially the same manner and consistent with
current practices.
6.4 Contracts. Colonial shall not enter into any material Contract or
agreement with respect to its Corporate Trust Business, the Corporate Trust
Assets or the Corporate Trust Liabilities without the prior consent of First
State Bank (which consent will not be unreasonably withheld or delayed), except
for agreements in the ordinary course of Colonial's business consistent with
past practice.
6.5 Shareholders' Meeting. Colonial, acting through its Board of Directors,
shall, in accordance with applicable law:
(a) Duly call, give notice of, convene and hold a meeting of its
shareholders (the "Shareholders' Meeting") as soon as reasonably
practicable for the purposes of approving and adopting this Purchase and
Assumption Agreement and the transactions contemplated hereby;
(b) Require no greater than the minimum vote of the outstanding shares
of Colonial common stock required by applicable Arizona law in order to
approve this Agreement and the transactions contemplated hereby;
(c) Subject to its fiduciary duties to the shareholders of Colonial,
include in the Proxy Statement (defined in (d) below) the recommendation
of its Board of Directors that the shareholders of Colonial vote in
favor of the approval and adoption of the this Agreement and the
transactions contemplated hereby; and
(d) Cause the Proxy Statement to be mailed to the shareholders of
Colonial as soon as practicable, and use its best efforts to obtain the
approval and adoption of this Agreement and the transactions
contemplated hereby by shareholders of Colonial at the Shareholders'
Meeting. The letter to shareholders, notice of meeting, proxy statement
and form of proxy to be distributed to shareholders in connection with
this Agreement and the transactions contemplated hereby shall be in form
and substance reasonably satisfactory to First State Bank and are
collectively referred to herein as the "Proxy Statement."
6.6 Conditions to Closing. Colonial shall use its Best Efforts to satisfy
by the Closing Date all of the conditions to the obligations of Colonial
hereunder within Colonial's direct or indirect control. Colonial shall promptly
file all necessary applications to obtain any necessary governmental or
regulatory approvals for the transactions described in this Agreement, shall
promptly respond to all requests for additional information requested in
connection with such applications, and shall use its Best Efforts to obtain such
approvals in a timely manner. Colonial shall use its Best Efforts to obtain all
consents of third parties required to assign the Contracts.
6.7 Furnishing Information. Colonial shall promptly furnish to First State
Bank, within ten (10) Business Days after First State Bank's request, all
information concerning Colonial required to be included in any application or
filing to be made by First State Bank to or filed by First State Bank with any
governmental body in connection with the transactions contemplated by this
Agreement, or in connection with any related transactions during the pendency of
this Agreement, and Colonial represents and warrants that, to the best of its
knowledge, all information so furnished for such statements and applications
shall be true and correct. Colonial shall otherwise fully cooperate with First
State Bank in the filing of any applications or other documents necessary to
consummate the transactions contemplated by this Agreement.
6.8 Records. Colonial agrees to deliver all files, records, documents,
computer records and instruments relating to the Corporate Trust Assets
(including without limitation original trust indentures, deeds of trust and/or
mortgages relating to notes evidencing the Corporate Trust Receivables and
manuals and maintenance records for the Equipment and Personal Property) and
Corporate Trust Liabilities (including those reasonably necessary to comply with
all applicable laws, regulations, rules and business practices with respect to
the Corporate Trust Receivables) (collectively, the "Records") to First State
Bank on the Closing Date after the close of business.
6.9 Environmental Investigation; Right to Terminate Agreement.
(a) First State Bank and its consultants, agents and representatives, at
the sole cost and expense of First State Bank, shall have the right to
the same extent that Colonial has such right, but not the obligation or
responsibility, to inspect the Real Estate, including, without
limitation, conducting asbestos surveys and sampling, environmental
assessments and investigation, and other environmental surveys and
analyses including soil and ground sampling ("Environmental
Inspections") at any time on or prior to February 5, 2004. First State
Bank shall notify Colonial prior to any physical inspections of the Real
Estate, and Colonial shall have the right to (i) approve such
investigations and inspections (which approval shall not be unreasonably
withheld) and (ii) place reasonable restrictions on the time of such
inspections. If, as a result of any such Environmental Inspection,
further investigation ("secondary investigation") including, without
limitation, test borings, soil, water and other sampling is deemed
desirable by First State Bank, First State Bank shall (i) notify
Colonial that it intends to conduct such a secondary investigation and
the reasons for such secondary investigation, and (ii) at the sole cost
and expense of First State Bank, commence such secondary investigation,
on or prior to February 26, 2004. First State Bank shall give reasonable
notice to Colonial of such secondary investigations, and Colonial shall
have the right to (i) approve such secondary investigations and
inspections (which approval shall not be unreasonably withheld) and (ii)
place reasonable time and place restrictions on such secondary
investigations.
(b) Colonial agrees to indemnify and hold harmless First State Bank for
any claims for damage to property, or injury or death to persons, made
as a result of any Environmental Inspection or secondary investigation
conducted by First State Bank or its agents, which damage or injury is
attributable to the negligent actions of Colonial or its agents. First
State Bank agrees to indemnify and hold harmless Colonial for any claims
for damage to property, or injury or death to persons, attributable to
the negligent actions of First State Bank or its agents in performing
any Environmental Inspection or secondary investigation except to the
extent caused in whole or in part by the negligence of Colonial. First
State Bank shall not have any liability or responsibility of any nature
whatsoever for the results, conclusions or other findings related to any
Environmental Inspection, secondary investigation or other environmental
survey. If this Agreement is terminated, then except as otherwise
required by law, reports to any governmental authority of the results of
any Environmental Inspection, secondary investigation or other
environmental survey shall not be made by First State Bank. First State
Bank shall make no such report prior to Closing unless required to do so
by law, and in such case will give Colonial reasonable notice of First
State Bank's intentions.
(c) First State Bank shall have the right to terminate this Agreement if
(i) the factual substance of any warranty or representation set forth in
Section 4.14 is not materially true and accurate; (ii) the results of
such Environmental Inspection, secondary investigation or other
environmental survey are in good faith disapproved by First State Bank
because the environmental inspection, secondary investigation or other
environmental survey identifies material violations or potential
violations of Environmental Laws; (iii) Colonial has refused to allow
First State Bank to conduct an Environmental Inspection or secondary
investigation in a manner that First State Bank reasonably considers
necessary; (iv) the Environmental Inspection, secondary investigation or
other environmental survey identifies any past or present event,
condition or circumstance that would or potentially would require
substantial remedial or cleanup action or result in a Material Adverse
Change; (v) the Environmental Inspection, secondary investigation or
other environmental survey identifies the presence of any underground or
above ground storage tank in, on or under any Real Estate that is not
shown to be in compliance with all Environmental Laws applicable to the
tank either now or at a future time certain, or that has had a release
of petroleum or some other Hazardous Material that has not been cleaned
up to the satisfaction of the relevant governmental authority or any
other party with a legal right to compel cleanup; or (vi) the
Environmental Inspection, secondary investigation or other environmental
survey identifies the presence of any asbestos-containing material in,
on or under any Property, the removal of which would result in a
Material Adverse Change. On or prior to March 11, 2004, First State Bank
shall advise Colonial in writing as to whether First State Bank intends
to terminate this Agreement because of any of the matters described in
this Section 6.9(c), subparts (i), (ii), (iii), (iv), (v) or (vi) above.
Colonial shall have the opportunity to correct any objected to
violations or conditions to First State Bank's reasonable satisfaction
prior to March 25, 2004. In the event that Colonial fails to demonstrate
satisfactory correction of the violations or conditions to First State
Bank in the sole discretion of First State Bank may terminate the
Agreement by providing written notice to Colonial at any time before
April 1, 2004. In the event that this Agreement is terminated in
accordance with this Section 6.9, First State Bank shall provide
Colonial with a copy of all inspection reports and surveys upon which
First State Bank has relied to terminate this Agreement.
(d) Colonial agrees to make available to First State Bank and its
consultants, agents and representatives all documents and other material
relating to environmental conditions of the Real Estate including,
without limitation, the results of other environmental inspections and
surveys in its possession. Colonial also agrees that all engineers and
consultants who prepared or furnished such reports may discuss such
reports and information with First State Bank and shall be entitled to
certify the same in favor of First State Bank and its consultants,
agents and representatives and make all other data available to First
State Bank and its consultants, agents and representatives.
6.10 Real Estate
(a) Colonial shall not lease or sublease any part of the Real Estate
without First State Bank's prior written consent (which consent may be
withheld in First State Bank's sole discretion).
(b) Colonial shall, within thirty (30) days after the date of this
Agreement, notify all merchant associations or similar entities related
to or affecting the Real Estate, of the anticipated sale of the Real
Estate, and request that such parties cooperate with First State Bank
and Colonial with respect to the execution of any necessary consents,
the replacement of signage and with respect to all other matters
necessary or desirable to facilitate such assignments and assumptions or
such sale.
(c) Colonial shall, in a timely manner, that will allow Colonial to
deliver the title reports described in Section 2.2 hereof obtain and
cause recordation of any documents required by the title company to
issue the policies of title insurance referred to in Section 10.4),
other than the documents of conveyance, transfer and assignment
described in Section 10.4.
6.11 No Negotiation with Others
(a) Colonial shall not (i) solicit, initiate, participate in discussions
or negotiations of, or encourage or take any other action to facilitate
(including by way of the disclosing or furnishing of any information
that it is not legally obligated to disclose or furnish) any inquiry or
the making of any proposal relating to any Alternative Proposal (as
defined below) with respect to the Corporate Trust Assets, or (ii) enter
into any agreement, arrangement or understanding (whether written or
oral) regarding any proposal or transaction providing for or requiring
it to abandon, terminate or fail to consummate this Agreement, under any
of the instances described in this Section 6.11. Colonial immediately
shall instruct and otherwise use its reasonable best efforts to cause
its directors, officers, employees, agents, advisors (including, without
limitation, any investment banker, attorney or accountant retained by it
or any of its subsidiaries), consultants and other representatives to
comply with such prohibitions. Notwithstanding the foregoing, Colonial
may provide information at the request of or enter into discussions or
negotiations with a third party with respect to an Alternative Proposal
or provide a recommendation to its shareholders regarding an Alternative
Proposal if the Board of Directors of Colonial determines in good faith
(following consultation with outside counsel) that the failure to do so
is, or would be reasonably likely to be, inconsistent with its fiduciary
duties under applicable law. Colonial shall promptly notify First State
Bank orally and in writing in the event it receives any such inquiry or
proposal and shall provide reasonable detail of all relevant facts
relating to such inquiries. This Section 6.11 shall not prohibit
accurate disclosure by Colonial in any document (including the Proxy
Statement) or other disclosure under applicable law if in the opinion of
the Board of Directors of Colonial, disclosure is appropriate under
applicable law.
(b) "Alternative Proposal" shall, with respect to Colonial, mean any of
the following (other than the transaction contemplated by this
Agreement): (i) a merger or consolidation or any similar transaction of
any company with Colonial, (ii) a purchase, lease or other acquisition
of a material portion of the Corporate Trust Assets of Colonial, (iii) a
purchase or other acquisition of "beneficial ownership" by any "person"
or "group" (as such terms are defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended) (including by way of
merger, consolidation, share exchange or otherwise) which would cause
such person or group to become the beneficial owner of securities
representing 25% or more of the voting power of Colonial or (iv) a
tender or exchange offer to acquire securities representing 25% or more
of the voting power of Colonial.
ARTICLE 7
RECIPROCAL COVENANTS
7.1 Regulatory Approvals. Colonial and First State Bank shall cooperate in
preparing, submitting, filing, and publishing (as applicable), and shall file as
expeditiously as possible, all applications, notification and report forms, and
notices as may be required by applicable law, with respect to the transactions
contemplated by this Agreement, including, without limitation, those of any
applicable state or federal regulatory agency, and will use their Best Efforts
to obtain such approvals and accomplish such actions as expeditiously as
possible. In the event that any information included or to be included in any
application, notification and report form, or other notice becomes inaccurate,
the party to whom the inaccurate information relates shall be obligated to
provide, as soon as practicable, such additional information as may be necessary
to correct the inaccurate information. Each party shall have the obligation to
notify the other party of any indication it receives from any regulatory or
governmental authority that it is unlikely that such authority will approve the
transactions contemplated by this Agreement. The party that receives or should
receive such notice may terminate this Agreement if it reasonably believes that
final approval by such regulatory or governmental authority is unlikely.
7.2 Conveyances. Each party shall execute and deliver to the other party
all such bills of sale and other documents or instruments of conveyance,
transfer or assignment, and all such instruments of assumption as are necessary
or appropriate to vest in First State Bank full and complete title to all the
Corporate Trust Assets and to subject First State Bank to responsibility for the
Corporate Trust Liabilities assumed hereunder as of the Closing. All of such
documents and instruments will be in form and substance reasonably satisfactory
to the parties.
7.3 Further Assurances. Each party hereto shall do all things reasonably
necessary or desirable and within its control to effect the consummation of the
transactions contemplated hereby, and at any time, and from time to time, after
the Closing Date shall, upon the request of the other, do or cause to be done
such further acts and execute, acknowledge and deliver all such further
documents, instruments, assignments, transfers, conveyances, powers of attorney
and assurances as may be necessary or reasonably desirable to vest in First
State Bank the Corporate Trust Assets intended to be sold, transferred and
assigned, and to evidence First State Bank's assumption of the Corporate Trust
Liabilities pursuant to the provisions of this Agreement.
7.4 Employees
(a) This Agreement is intended to result solely in the transfer of the
Corporate Trust Assets and Corporate Trust Liabilities in connection
with the Corporate Trust Business to First State Bank, all in accordance
with the terms of this Agreement. Except as provided in Section 7.4(b),
no transfer of employment of any employee, representative or agent of
Colonial employed in connection with the Corporate Trust Business or
otherwise is intended by the parties. Colonial shall remain solely
responsible for its employees, representatives and agents, and agrees to
indemnify First State Bank against any and all claims, losses, costs and
damages of any nature whatsoever, including, without limitation, court
costs, costs of investigation, and attorney's fees, arising out of any
claims made by such employees, representatives or agents against First
State Bank, relating in any way to their employment by, or service to,
Colonial or their termination by Colonial or the accuracy of the list of
employees provided to First State Bank. Colonial will file (or cause to
be filed) W-2s for its employees for that part of the tax year up to and
including the Closing Date. First State Bank will file W-2s for
employees of Colonial who become employees of First State Bank for that
part of the tax year following the Closing.
(b) Attached as Schedule 7.4(b) is a list of those employees associated
with its Corporate Trust Business (the "Corporate Trust Employees").
Subject to credit checks, First State Bank agrees to offer employment to
all current full-time and part-time Corporate Trust Employees of
Colonial, and agrees to offer to pay all such employees who accept
employment offers from First State Bank, on and after the date of
Closing at a base salary comparable to that presently received by such
employees and, for purposes of First State Bank's employee benefit
plans, to recognize their length of service while employed by Colonial
for all purposes, including eligibility of employees for benefits and
the determination of benefits to be paid to such individuals as
employees of First State Bank to the extent permitted by First State
Bank's employee benefit plans and applicable law and regulation, and
except as specifically provided for in Section 7.4(e).
(c) First State Bank is not hereby, and at no time hereafter will be,
adopting, accepting, or assuming any employee benefit plan of Colonial
relating to any of its employees or any other Agreement, trust, plan,
fund, or other arrangement of Colonial that provides for employee
benefits or perquisites (collectively, "Employment Arrangements"), and
First State Bank shall have no liability or obligation whatsoever under
any Employment Arrangement to Colonial or to any employees of Colonial,
whether or not any of such employees become employees of First State
Bank. Except as provided in Section 7.4(b) with respect to eligibility
for and determination of benefits under First State Bank's employee
benefit plans for employees of Colonial who accept offers of employment
by First State Bank at the time of the Closing, First State Bank is not
obligated to replace any of the Employment Arrangements for any
employees of Colonial who become employees of First State Bank.
(d) Prior to the Closing, First State Bank and Colonial shall coordinate
all communications of employment offers to the Corporate Trust
Employees; provided, however, that this paragraph shall not be construed
to require First State Bank and Colonial to act jointly at any time or
to allow Colonial any right to make any employment offers on behalf of
First State Bank or act as First State Bank's agent in any respect.
Colonial shall permit First State Bank at reasonable times prior to the
Closing to meet with the Corporate Trust Employees, and shall, at First
State Bank's request, permit First State Bank to hold and require such
employees to attend training sessions at reasonable times and places so
that First State Bank can prepare the employees to conduct business on
behalf of First State Bank immediately after the Closing.
(e) At the Closing, Colonial shall terminate its employment of each of
the full-time and part time Corporate Trust Employees on the Closing
Date. Except as otherwise provided herein, First State Bank's offers of
employment pursuant to Section 7.4(b) shall be on an "at-will" basis,
and First State Bank shall have no obligation to continue employment and
may at its option terminate employment at any time, with or without
reason. Except as may be otherwise provided in this Section 7.4, First
State Bank shall not be obligated to make any contribution to any plan
or program on behalf of any of such employees, or to otherwise provide
any compensation or benefits to any of such employees, with respect to
any period prior to the Closing. It is further provided that in no way
shall First State Bank be liable for any claims of any of the Corporate
Trust Employees which any of them may have against Colonial, and
Colonial agrees to indemnify First State Bank and hold First State Bank
harmless from and against any such claim. Colonial shall be responsible
for payments for accrued vacation not taken by an employee prior to the
Closing Date (which payments shall be made with in ten (10) days after
the Closing Date or earlier, if required by law) and for the timely
payment of all wages, salaries, bonuses, if any, and other compensation
with respect to services completed on or prior to the Closing Date.
(f) Nothing in this Section 7.4 is intended, nor shall it be construed,
to confer any rights or benefits upon any Person other than First State
Bank and Colonial.
(g) Notwithstanding the above, First State Bank agrees that Colonial
shall have reasonable access to Xxxx X. Xxxxxxx, Xxxxx Xxxxxxx and such
other employees after closing, at no cost to Colonial, as reasonably
necessary to assist in matters incident to the wrapping up of Colonial's
business affairs, dissolution and liquidation. Colonial agrees to
indemnify First State Bank, pursuant to the provisions of ARTICLE 13,
for any Loss (as defined in Section 13.1 hereof) resulting from acts or
omissions by any employee of First State Bank assisting Colonial in
matters incident to the wrapping up of Colonial's business affairs,
dissolution and liquidation. Furthermore, all of Colonial's corporate
records, shareholders' records and the "shareholder software" shall be
maintained on computer hardware purchased by First State Bank pursuant
to this Agreement for a period of time as needed by Colonial and
Colonial shall have access to same at all reasonable times. All
post-closing communications and distributions to Colonial's shareholders
shall be accomplished by use of such employees and through the use of
the hardware and equipment purchased by First State Bank. Colonial shall
provide the paper and checks and shall pay the cost of postage regarding
all such communications. As reasonably necessary, Colonial may copy from
the hardware any and all Colonial's corporate records, shareholder
records and shareholder software, subject to applicable licensing
restrictions.
7.5 Confidentiality
(a) First State Bank agrees that all "Confidential Information" (as
defined below) shall be kept confidential by First State Bank as
required by this Section 7.4(g) until the Closing and if this Agreement
is terminated, for a period of three (3) years following its
termination; provided, however, that (i) any of such Confidential
Information may be disclosed to such directors, officers, employees,
potential investors and authorized representatives of First State Bank
or its Affiliates (collectively, for purposes of this Section 7.4(g),
"First State Bank Representatives") as need to know such information for
the purpose of evaluating the transactions contemplated hereby (it being
understood that such First State Bank Representatives shall be informed
by First State Bank of the confidential nature of such information and
shall be required to treat such information confidentially), (ii) any
disclosure of Confidential Information may be made to the extent to
which Colonial consents, (iii) Confidential Information may be disclosed
by First State Bank or any First State Bank Representatives to the
extent that, in the opinion of counsel to First State Bank, First State
Bank or such First State Bank Representative is legally compelled to do
so, provided that, prior to making such disclosure, First State Bank or
such First State Bank Representative, as the case may be, consults with
Colonial regarding such disclosure and provided further that no such
disclosure shall be made if Colonial seeks to obtain a protective order
or other appropriate remedy to prevent disclosure (in which event no
such disclosure shall be made until such action is disposed of
adversely) and provided further that First State Bank or such First
State Bank Representative, as the case may be, disclose only that
portion of the Confidential Information as is legally required, and (iv)
any of such Confidential Information may be disclosed to any
governmental authority or other Person in connection with any notices,
applications, or requests submitted thereto. First State Bank agrees
that none of the Confidential Information will be used for any purpose
other than in connection with the transactions contemplated hereby. The
term "Confidential Information," as used herein, means all information
obtained by or on behalf of First State Bank from Colonial or its
representatives pursuant to this Agreement, other than information which
(i) was or becomes generally available to the public as a result of the
filing of an application or application(s) for approval of a
governmental authority for the transactions contemplated by this
Agreement or by means other than as a result of disclosure by First
State Bank or any First State Bank Representative or, after the Closing
Date, by Colonial or its Affiliates, (ii) was or becomes available to
First State Bank on a nonconfidential basis prior to the disclosure to
First State Bank by Colonial or its representatives, or (iii) was or
becomes available to First State Bank from a source other than Colonial
and its representatives, provided that the source is not known by First
State Bank to be bound by a confidentiality agreement with Colonial.
(b) If this Agreement is terminated, First State Bank shall promptly
return all Confidential Information to Colonial without retaining any
copies thereof, provided that such portion of the Confidential
Information as consists of notes, compilations, analyses, reports, or
other documents prepared by First State Bank or First State Bank's
Representatives shall be destroyed.
(c) Notwithstanding anything to the contrary in the foregoing provisions
of this Section 7.5 or elsewhere in this Agreement, any party hereto
(and any employee, representative or other agent of such party) may
disclose to any and all persons, without limitation of any kind, the tax
treatment and tax structure of the transactions contemplated by this
Agreement and all materials of any kind (including opinions or other tax
analyses) that are provided to any party relating to such tax treatment
and tax structure; provided, however,, that any such information and
materials shall be kept confidential to the extent necessary to comply
with any applicable securities laws. For purposes of the preceding
sentence, the tax treatment and tax structure of the transactions
contemplated by this Agreement shall not be deemed to include the
identity of the parties, or the location of the Corporate Trust Assets.
The foregoing authorization of disclosure is retroactively effective
immediately upon commencement of the first discussions among the parties
(or their agents) regarding the transactions contemplated hereby, and
the parties state and affirm that this tax disclosure authorization has
been given on a date which is no later than 30 days from the first day
that any part (or any employee, representative, or other agent of such
party) first made or provided a statement as to the potential federal
income tax consequences that may result from the transactions
contemplated hereby.
7.6 Publicity. Until consummation of the Closing, Colonial and First State
Bank shall coordinate with each other in advance as to the content of any
communication intended for dissemination to the public and to their respective
employees and to the form and content of any application made to any regulatory
authority, or similar agency, which relates to the transactions contemplated
hereby. Except for such notices as required by law, neither party shall
disseminate any such communication without the prior approval of the other,
which approval shall not be unreasonably withheld or delayed.
7.7 Tax Reporting. The Purchase Price shall be allocated among the
Corporate Trust Assets as reasonably determined by the parties and as set forth
on Schedule 7.7 hereto. Colonial and First State Bank agree that any reporting
of the Purchase Price or the allocation thereof on IRS Form 8594 under Internal
Revenue Code Section 1060 and on any other federal or state tax filing shall be
consistent with the Final Settlement Statement (as defined herein).
7.8 Rental of Personal Trust Space. Colonial, its successor, or any party
who purchases Colonial's personal trust business shall have the right to
continue to occupy the present space used for Colonial's personal trust
business, being approximately 2,500 square feet located at the Real Estate for a
period not to exceed one (1) year after the Closing Date pursuant to a lease
agreement on terms and rental rates acceptable to First State Bank and Colonial
or its successor or any party who purchases Colonial's personal trust business
and failing such agreement at the following rates: the first two months at a
monthly rental of $3,125, the next two months at a monthly rental rate of
$3,750, the fifth and six months at a monthly rental rate of $4,375.00, the
seventh and eighth months at a monthly rental rate of $5,000, the ninth and
tenth months at a monthly rental rate of $5,625, and the eleventh and twelfth
months at a monthly rental rate of $6,250.
ARTICLE 8
CONDITIONS TO OBLIGATIONS OF Colonial
The obligations of Colonial hereunder are subject to the satisfaction on or
before the Closing Date of the following conditions:
8.1 Corporate Approval. The execution, delivery and performance of this
Agreement shall have been duly authorized by all necessary corporate action of
First State Bank.
8.2 Absence of Litigation. No action or proceeding shall have been
instituted or threatened on or before the Closing Date pertaining to the
transactions contemplated hereby which, in the reasonable opinion of Colonial,
would materially and adversely affect the transactions contemplated herein.
8.3 Shareholder Approvals. At least the minimum amount required by Arizona
law of outstanding shares of Colonial common stock entitled to vote shall have
approved this Agreement and the transactions described herein in accordance with
applicable Arizona law.
8.4 Conditions Performed. All the terms, covenants and conditions of this
Agreement to be complied with and performed by First State Bank on or before the
Closing Date shall have been duly complied with and performed in all material
respects, or Colonial shall have waived such compliance or performance, and all
documents to be delivered or actions to be taken by First State Bank pursuant to
Section 10.3 shall have been delivered or performed in all material respects.
8.5 Representations. All of the representations and warranties made by
First State Bank herein shall be true and correct in all material respects as of
the Closing Date with the same force and effect as though such representations
and warranties had been made as of the Closing Date.
8.6 Documentation. The form and substance of all instruments of transfer
and other documents required to be delivered pursuant to this Agreement by First
State Bank shall be reasonably acceptable in all respects to Colonial.
8.7 Governmental Actions and Approvals. Neither the Texas Department of
Banking, the Arizona State Banking Department, the FDIC, the Department of
Justice nor any other agency of the United States or the States of Texas or
Arizona shall have issued any order or taken or threatened to take any action
which would or could have the effect of preventing the consummation of the
transactions contemplated by this Agreement or asserting any liability as a
result of such transactions. To the extent required by applicable law or
regulation, the Texas Department of Banking, the FDIC, the Arizona State Banking
Department and/or any such other state or federal agencies whose approval of the
transactions contemplated by this Agreement is so required, shall have approved
or authorized all of the transactions contemplated by this Agreement and all
applicable waiting periods following such approvals shall have expired. Any such
approval required to be obtained by Colonial or First State Bank shall have been
granted without the imposition of conditions that are deemed by the affected
party to be materially burdensome. No court, governmental agency, or other
authority shall have instituted any action or proceeding or issued any order,
decree or judgment to set aside, restrain, enjoin, or prohibit the transactions
contemplated by this Agreement or to assert any material liability in connection
herewith, and in the reasonable opinion of Colonial and First State Bank no such
action, proceeding, order, decree, or judgment shall be imminent.
8.8 Fairness Opinion. Colonial shall have received, on or before January
31, 2004, the opinion of The Bank Advisory Group that the purchase of assets and
assumptions of liabilities described in this Agreement is fair to Colonial and
its shareholders from a financial point of view.
ARTICLE 9
CONDITIONS TO OBLIGATIONS OF First State Bank
The obligations of First State Bank hereunder are subject to the
satisfaction on or before the Closing Date of the following conditions:
9.1 Corporate Approval. The execution delivery and performance of this
Agreement shall have been duly authorized and approved by all necessary
corporate action of Colonial.
9.2 Absence of Litigation. No action or proceeding shall have been
instituted or threatened on or before the Closing pertaining to the transactions
contemplated hereby which, in the reasonable opinion of First State Bank, would
materially and adversely affect the transactions contemplated herein.
9.3 Shareholder Approvals. The holders of the Colonial Stock entitled to
vote shall have approved this Agreement and the transaction described herein in
accordance with applicable Arizona law.
9.4 Minimum Value of Corporate Trust Assets. As of September 30, 2003, the
book value of the Corporate Trust Assets (excluding the value of the Real
Estate) was $941,152.85, computed in accordance with GAAP. At the Closing, the
book value of the Corporate Trust Assets (excluding the value of the Real
Estate) shall be not less than $600,000, computed in accordance with GAAP.
9.5 Access to Information. Colonial shall have permitted First State Bank
and its authorized representatives and agents to have reasonable access, after
the date of execution hereof, to those properties, assets, records and employees
of Colonial in the manner set forth herein.
9.6 Consents of Third Parties. Colonial shall have obtained all consents of
third parties, in form and substance reasonably satisfactory to First State
Bank, necessary to transfer to First State Bank the Corporate Trust Assets and
the Corporate Trust Liabilities and shall provide a copy of all such consents to
First State Bank.
9.7 Conditions Performed. All the terms, covenants and conditions of this
Agreement to be complied with and performed by Colonial on or before the Closing
shall have been duly complied with in all material respects, or First State Bank
shall have waived such compliance or performance, and all documents to be
delivered or actions to be taken by Colonial pursuant to Sections 10.2 and 10.4
shall have been delivered or performed in all material respects.
9.8 Representations. All the representations and warranties made by
Colonial herein shall be true and correct in all material respects as of the
Closing Date with the same force and effect as though such representations and
warranties had been made as of the Closing Date, except that representations and
warranties made regarding the updated Schedules shall be true and correct in all
material respects as of the Closing Date.
9.9 Documentation. The form and substance of all instruments of assumption
and other documents delivered pursuant to this Agreement by Colonial shall be
reasonably satisfactory in all respects to First State Bank. Colonial shall have
delivered to First State Bank updated Schedules as required pursuant to this
Agreement.
9.10 Governmental Actions and Approvals. Neither the Texas Department of
Banking, the Arizona State Banking Department, the FDIC, the Department of
Justice nor any other agency of the United States or the States of Texas or
Arizona shall have issued any order or taken or threatened to take any action
which would or could have the effect of preventing the consummation of the
transactions contemplated by this Agreement or asserting any liability as a
result of such transactions. To the extent required by applicable law or
regulation, the Texas Department of Banking, the FDIC, the Arizona State Banking
Department and/or any such other state or federal agencies whose approval of the
transactions contemplated by this Agreement is so required, shall have approved
or authorized all of the transactions contemplated by this Agreement, which
approvals shall confirm the ability to deposit trust funds generated from
operations in Arizona with First State Bank in Texas and the insurability of
such deposits by the FDIC, and all applicable waiting periods following such
approvals shall have expired. Any such approval required to be obtained by
Colonial or First State Bank shall have been granted without the imposition of
conditions that are deemed by the affected party to be materially burdensome. No
court, governmental agency, or other authority shall have instituted any action
or proceeding or issued any order, decree or judgment to set aside, restrain,
enjoin, or prohibit the transactions contemplated by this Agreement or to assert
any material liability in connection herewith, and in the reasonable opinion of
Colonial and First State Bank no such action, proceeding, order, decree, or
judgment shall be imminent.
ARTICLE 10
THE CLOSING
10.1 Time and Place of Closing. The consummation of the transactions
provided for herein will take place in a mutually acceptable manner and on a
mutually acceptable day and place ("Closing" or "Closing Date") within thirty
(30) days after the date of receipt of all necessary regulatory approvals and
expiration of any mandatory waiting periods; provided, however, in no event will
the Closing occur later than June 30, 2004, unless extended in writing by the
parties.
10.2 Payment Due at Closing. At the Closing, First State Bank shall deliver
to Colonial the Purchase Price by one or more checks or by one or more deposits
into Colonial's account ("Closing Payment"). Colonial shall prepare and deliver
to First State Bank two (2) Business Days before the Closing and at the Closing
a statement (the "Settlement Statement") supported by appropriate exhibits,
substantially in the form of Exhibit "A" hereto, showing the computation of the
Purchase Price.
10.3 Closing Documents to be Delivered or Actions to be Taken by First
State Bank
At the Closing, First State Bank shall:
(a) Deliver to Colonial a certificate of an authorized officer of First
State Bank, acceptable to Colonial, dated as of the Closing Date, that
the conditions to Colonial's obligations set forth in Sections 8.1, 8.4
and 8.5 have been met and certify as to the absence of any litigation as
contemplated by Section 8.2;
(b) Execute and deliver to Colonial an Assumption Agreement in the form
attached hereto as Exhibit "C", as assignee, with respect to the
Corporate Trust Liabilities; and
(c) Deliver or cause to be delivered to Colonial all other documents and
instruments necessary to transfer to First State Bank all of Colonial's
right, title and interest in and to the Corporate Trust Assets and the
responsibility for the Corporate Trust Liabilities.
10.4 Closing Documents to be Delivered or Actions to be Taken by Colonial.
At the Closing, Colonial shall:
(a) Deliver to First State Bank updated schedules as provided for
herein;
(b) Deliver to First State Bank the Settlement Statement and exhibits
thereto;
(c) Deliver to First State Bank the General Warranty Deed covering any
and all Real Estate to be purchased by First State Bank;
(d) Cause to be delivered to First State Bank a title policy issued by
the Title Company, together with any endorsements reasonably requested
by First State Bank, or an unconditional commitment to issue such title
policy with an effective date as of the Closing Date promptly following
the Closing, with coverage insuring with respect to the Real Estate
Colonial's good, marketable and indefeasible title to the Real Estate
with coverage under such title policy of the Real Estate in the amount
of the value of such Real Estate as it is reflected on the Settlement
Statement ("Title Policy"), subject only to the matters described in
Section 2.2 hereof (the "Permitted Exceptions"); provided, however, that
the boundary and survey exceptions shall be deleted to the maximum
extent permitted under applicable title insurance regulations;
(e) Execute and deliver to First State Bank a Xxxx of Sale and
Assignment in the form attached hereto as Exhibit "D" with respect to
the Corporate Trust Assets;
(f) Execute and deliver to First State Bank the General Assignment in
the form attached hereto as Exhibit "C";
(g) Deliver to First State Bank a certificate of an authorized officer
of Colonial acceptable to Colonial, or of another officer acceptable to
First State Bank, dated as of the Closing Date, that the conditions to
First State Bank's obligations set forth in Sections 9.1, 9.4, 9.7, and
9.8 have been met and certify as to the absence of any litigation as
contemplated under Section 9.2 and evidencing-the due substitution of
First State Bank for Colonial as corporate fiduciary under all of the
Corporate Trust Assets under applicable law and that no party has
objected to such substitution;
(h) Deliver or cause to be delivered to First State Bank all other
documents and instruments necessary to transfer to First State Bank all
of Colonial's right, title and interest in and to the Corporate Trust
Assets and the responsibility for the Corporate Trust Liabilities; and
(i) Deliver or cause to be delivered to First State Bank the Records;
(j) Deliver to First State Bank an executed limited power of attorney
granting to First State Bank the power and authority to execute any
documents or take any actions necessary to carry on the Corporate Trust
Business after the Closing Date.
(k) Deliver or cause to be delivered the Employment Agreements, executed
by each of Xxxx Xxxxxxx and Xxxxx Xxxxxxx, in the form of Exhibit "F"
and Exhibit "G", respectively, attached hereto;
(l) Deliver or cause to be delivered the Noncompetition Agreements
executed by Xxxx Xxxxxxx and Xxxxx Xxxxxxx, in the form of Exhibit "H"
and Exhibit "I", respectively, attached hereto.
10.5 Post Closing Adjustments.
(a) As soon as reasonably practicable after the Closing Date, but no
later than thirty (30) calendar days thereafter, Colonial shall provide
First State Bank with final Schedules of Contracts, Receivables,
Equipment and Personal Property, Accrued Expenses, Prepaid Expenses, and
Accrued Fees (collectively, the "Final Schedules") that shall accurately
reflect the balance of Contracts, Corporate Trust Receivables, Equipment
and Personal Property, Accrued Expenses, Prepaid Expenses, and Accrued
Fees, making up the Corporate Trust Assets and Corporate Trust
Liabilities, as shown on its financial records as of the close of
business on the Closing Date. An authorized officer acceptable to First
State Bank, shall deliver with the Final Schedules a certificate stating
that the Final Schedules and all other final computations are true and
accurate as of the close of business on the Closing Date.
(b) First State Bank shall have the right to review any and all
documents (and to interview any and all of Colonial's personnel)
reasonably necessary or desirable to confirm the accuracy of Final
Schedules.
(c) As soon as reasonably practical after the Closing Date, but no later
than ten (10) calendar days thereafter, Colonial shall prepare and
deliver to First State Bank a final settlement statement (the "Final
Settlement Statement"), substantially in the form of Exhibit "E" which
shall show, based on the Final Schedules delivered pursuant to Section
10.5(a), the calculation of the final Purchase Price.
(d) The parties shall make post-closing adjustments on the date that is
ten (10) calendar days following the Closing Date (the "Settlement
Date") or the first Business Day thereafter. If the amount shown on the
Final Settlement Statement as the "Final Purchase Price" (herein so
called) is different from the Closing Payment, then a payment shall be
made in the following manner: if the Closing Payment shall have been
greater than the Final Purchase Price, Colonial shall refund to First
State Bank the difference between such amounts; if the Closing Payment
shall have been less than the Final Purchase Price, First State Bank
shall pay to Colonial the difference between such amounts. Such refund
or payment shall be made promptly by wire transfer in immediately
available collected funds, together with interest thereon for the number
of days from and including the Closing Date to such Settlement Date, but
excluding such Settlement Date, at the rate per annum equal to the
average during such period of the average of the daily high and low
rates for federal funds on each Business Day during such period, as such
rates are published in the Southwest Edition of The Wall Street Journal,
computed on the basis of a 365-day year. Payments sent after 3:00 p.m.,
Happy, Texas time on the Settlement Date shall be deemed to have been
paid on the next Business Day, and the remittance shall bear interest,
as calculated pursuant to this section, for such extra day or days.
ARTICLE 11
TRANSFER OF OPERATIONS
11.1 Post Closing Mail. In the event Colonial receives after the Closing
Date a payment or other mail with respect to the Corporate Trust Assets or
Liabilities transferred to First State Bank, it shall, at its expense, mail such
to First State Bank within one (1) Business Day of receipt thereof at the
address First State Bank may from time to time designate. Legal process received
in regard to such Corporate Trust Assets shall not be forwarded, although copies
of the same shall be forwarded if not prohibited by law.
11.2 Taxpayer Information. Colonial shall deliver (or cause to be
delivered) to First State Bank on the Closing Date all information in Colonial's
possession or reasonably available to Colonial required by applicable law to be
provided to the IRS and/or account holders with respect to the Corporate Trust
Assets and Corporate Trust Liabilities transferred. Colonial hereby certifies
that such information, when delivered, shall accurately reflect in all material
respects the information provided by Colonial's customers.
11.3 Receivable Payments. Colonial shall forward to First State Bank,
within two (2) Business Days of receipt thereof, receivable payments received by
Colonial with respect to the Corporate Trust Receivables assigned to First State
Bank pursuant to this Agreement. First State Bank shall forward to Colonial,
within two (2) Business Days of receipt thereof, receivable payments received by
First State Bank with respect to any Receivables not assigned to First State
Bank pursuant to this Agreement. With respect to any corporate trust receivables
listed on Schedule 1.1(b), First State Bank would, if requested by Colonial,
consider entering into a servicing agent agreement with respect to such
corporate trust receivables on such terms and subject to such conditions as may
be negotiated by First State Bank and the parties thereto.
ARTICLE 12
TERMINATION
12.1 Events of Termination. This Agreement shall be terminable and, if so
terminated, be of no further force or effect between the parties hereto, except
as to any liability for breach of any duty, representation, warranty or
obligation arising prior to the date of termination, upon the occurrence of any
of the following events:
(a) By mutual written consent of Colonial and First State Bank;
(b) By Colonial, if any of the conditions set forth in ARTICLE 8 has not
been met by June 30, 2004;
(c) By First State Bank, if any of the conditions set forth in ARTICLE 9
has not been met by June 30, 2004;
(d) By either party if (i) a representation or warranty of the other
party is or becomes false or inaccurate or (ii) if the other party fails
to comply with a covenant in a timely manner, provided that such breach
is material to the value or condition of the Corporate Trust Business,
the Corporate Trust Assets or the Corporate Trust Liabilities or such
breach has a material impact on the other party's ability to consummate
the transactions contemplated hereby, and, in the case of clause (ii),
such failure (provided it can be cured) has not been cured within thirty
(30) days of actual knowledge thereof by the breaching party; provided,
however, that termination pursuant to this Section 12.1(d) shall not
relieve the breaching party of liability for such breach or otherwise;
(e) By either party, if any governmental agency having jurisdiction over
the transaction contemplated by this Agreement notifies First State Bank
or Colonial in writing that by its final determination it will refuse to
grant an approval or consent to any material element of the transaction
necessary to the consummation thereof or if such approval or consent
contains terms or conditions that either First State Bank or Colonial
reasonably determines is unduly burdensome to it;
(f) By Colonial, if the Board of Directors of Colonial, based upon the
advice of legal counsel, determines in good faith that such termination
is required for the Board of Directors to comply with its fiduciary
duties to stockholders imposed by law by reason of an Alternative
Proposal (as defined in Section 6.11(b)) being made; provided that
Colonial shall notify First State Bank promptly of its intention to
terminate this Agreement and enter into a definitive agreement with
respect to any Alternative Proposal. In the event that Colonial
terminates this Agreement pursuant to this Section 12.1(f), then
simultaneous with delivery of such notice of termination of this
Agreement to First State Bank, Colonial shall pay First State Bank, in
immediately available funds, $250,000 as agreed upon liquidated damages
as the sole and exclusive remedy of First State Bank under this
Agreement.
(g) By either party pursuant to Section 7.1; or
(h) By First State Bank pursuant to Section 6.9.
12.2 Manner of Termination. Notwithstanding anything to the contrary herein
contained, neither party hereto shall have the right to terminate this Agreement
on account of its own breach or any immaterial breach by the other party hereto.
If a party hereto desires to terminate this Agreement pursuant to any right
under this ARTICLE 12, such termination shall be ineffective unless communicated
in writing to the other party.
12.3 Effect of Termination. In the event of the termination of this
Agreement pursuant to this ARTICLE 12, this Agreement shall become null and void
and of no effect, except that the agreements contained in this ARTICLE 12, in
ARTICLE 13, and in Sections 7.4(g), 7.6, 14.3 and 14.9, shall survive the
termination hereof.
ARTICLE 13
INDEMNIFICATION
13.1 Indemnification by Both Parties. Except as otherwise set forth in this
ARTICLE 13, for the period of two (2) years following the Closing Date, Colonial
and First State Bank mutually agree to indemnify and hold each other harmless
from, and to reimburse each other promptly for, any and all losses, liabilities,
damages, costs, expenses and other costs (including court costs, costs of
investigation and reasonable attorneys' fees) ("Losses") that one party may
suffer as the result of the inaccuracy of the other party's representations or
warranties or the breach of any covenant, representation, warranty or obligation
under this Agreement by the other party to this Agreement.
13.2 Indemnification by First State Bank. First State Bank and the Company,
jointly and severally, agree, effective as of the Closing, to pay, and to
indemnify, save, defend and hold harmless Colonial and its officers, directors,
shareholders and representatives and their respective heirs, successors and
assigns (collectively, "Insiders"), from and against, and shall reimburse
Colonial and its Insiders with respect to, any and all Losses, imposed on,
incurred by or asserted against Colonial or its Insiders (or any of them) in any
way relating to or arising from or out of:
(a) a material breach of or in any statement, representation or warranty
of First State Bank contained in this Agreement, or any schedule,
certificate or other document delivered pursuant hereto or as part of
the transactions contemplated hereby the result of which, either
separately or in the aggregate, causes Colonial or its Insiders damage
in an amount equal to or in excess of $25,000;
(b) any legal, quasi legal or administrative proceedings of any nature
or kind based on actions or omissions of First State Bank or its
Insiders occurring after the Closing Date;
(c) any liability arising out of the operation or administration by
First State Bank or its Insiders of the Corporate Trust Assets or the
Corporate Trust Business after the Closing Date;
(d) any liability arising out of a breach of a Contract by First State
Bank or its Insiders occurring after the Closing Date; and
(e) a breach of any covenant of First State Bank or the failure of First
State Bank to perform any agreement, covenant or obligation of First
State Bank contained in this Agreement or document executed pursuant to
this Agreement.
13.3 Indemnification by Colonial. Colonial agrees, effective as of the
Closing, to pay, and to indemnify, save, defend and hold harmless First State
Bank and its officers, directors, shareholders and representatives and their
respective heirs, successors and assigns (collectively, "Insiders"), from and
against, and shall reimburse First State Bank and its Insiders with respect to,
any and all Losses, imposed on, incurred by or asserted against First State Bank
or its Insiders (or any of them) in any way relating to or arising from or out
of:
(a) a material breach of or in any statement, representation or warranty
of Colonial contained in this Agreement, or any schedule, certificate or
other document delivered pursuant hereto or as part of the transactions
contemplated hereby the result of which, either separately or in the
aggregate, causes First State Bank or its Insiders damage in an amount
equal to or in excess of $25,000;
(b) any legal, quasi legal or administrative proceedings of any nature
or kind based on actions or omissions by Colonial or its Insiders
occurring, or circumstances existing, on or prior to the Closing Date;
(c) any liability related to the Corporate Trust Business other than (i)
the Corporate Trust Liabilities specifically listed on the Final
Settlement Statement or (ii) liabilities arising out of the conduct of
the Corporate Trust Business by First State Bank or its Insiders after
the Closing Date; or (iii) any liability arising out of a breach of a
Contract by First State Bank or its Insiders after the Closing Date;
(d) any liability arising out of the operation or administration by
Colonial or its Insiders of the Corporate Trust Assets or the Corporate
Trust Business on or prior to the Closing Date; (e) any liability
arising out of a breach of a Contract by Colonial or its Insiders on or
prior to the Closing Date;
(f) a breach of any covenant of Colonial or the failure of Colonial to
perform any agreement, covenant or obligation of Colonial contained in
this Agreement or in any other agreement or document executed pursuant
to this Agreement; and
(g) any liability arising out of an "Environmental Condition." For
purposes of this Agreement, "Environmental Condition" means any
condition with respect to soil, surface waters, groundwaters, land,
stream sediments, surface or subsurface strata, ambient air and any
environmental medium comprising or surrounding the real property and
tangible personal property owned or leased by Colonial as of the date of
this Agreement, and arising from acts, events, occurrences or omissions
prior to the Closing whether or not yet discovered, which gives rise to
any monetary damage, loss, cost or expense or claim, demand or order for
or imposing financial liability against First State Bank or any third
party.
13.4 Procedure for Indemnification
(a) Promptly, or in any event within ten (10) calendar days (in the case
of service of legal process) or within thirty (30) calendar days (in the
case of any other claim), following receipt by any party to be
indemnified under the provisions of this ARTICLE 13 (the-"Indemnitee")
of notice of any action, suit, proceeding, claim, demand or assessment
(each, an "Action") against the Indemnitee that might give rise to a
claim pursuant to Sections 13.1, 13.2 or 13.3, the Indemnitee shall give
written notice thereof to the party obligated to provide such
indemnification under the provisions of this ARTICLE 13 (the
"Indemnitor") indicating the nature of such claim, the basis therefore
and the estimated amount thereof. Failure to give any notice provided
hereunder shall in no way be deemed a forfeiture of any Indemnitee's
rights to be indemnified hereunder; provided, however, if the Indemnitor
shall have been prejudiced in any material respect by such failure so to
notify the Indemnitor, the Indemnitor shall have the right to set-off
against any amounts payable or that become payable by the Indemnitor
under this Agreement the amount by which the Indemnitor has been damaged
as a result of such failure to notify the Indemnitor. A claim for
indemnity may, at the option of the Indemnitee, be asserted as soon as
any claim has been asserted by a third party in writing, regardless of
whether actual harm has been suffered or out-of-pocket expenses
incurred.
(b) At any time after the Indemnitee gives notice to the Indemnitor of a
claim being made against the Indemnitee for which a claim for indemnity
is being asserted, to the extent that such claim is not being defended
by any third party under the terms of any applicable insurance policy or
policies, the Indemnitee shall permit the Indemnitor, at the option and
expense of the Indemnitor, to assume the complete defense of such Action
with full authority to conduct such defense and to settle or otherwise
dispose of the same (except as hereinafter provided), and the Indemnitee
will reasonably cooperate in such defense. In order to assume such
defense, Indemnitor must notify Indemnitee in writing of its election to
do so within ten (10) calendar days following receipt of notice of the
claim from Indemnitee; in the event that Indemnitor does not so notify
Indemnitee within such ten (10) calendar day period, Indemnitor shall be
deemed to have elected not to assume such defense. After notice to the
Indemnitee of the Indemnitor's election to assume the defense of such
Action as provided above, the Indemnitor shall be liable to the
Indemnitee for such legal or other expenses subsequently incurred at the
request of the Indemnitor by the Indemnitee in connection with the
defense thereof.
(c) The Indemnitor will not, in defense of any such Action, except with
the consent of the Indemnitee, which consent will not be unreasonably
withheld, consent to the entry of any judgment or enter into any
settlement that does not include, as an unconditional term thereof, the
release by claimant or plaintiff of Indemnitee from all claims and/or
liability in respect thereof.
(d) As to those Actions with respect to which the Indemnitor does not
elect to assume control of the defense, (i) the Indemnitee will afford
the Indemnitor an opportunity to participate in such defense, at the
Indemnitor's own cost and expense; (ii)-the Indemnitee will not settle
or otherwise dispose of any of the same without the consent of the
Indemnitor, which consent will not be unreasonably withheld; and (iii)
the Indemnitor agrees to reasonably cooperate in such defense.
(e) The Indemnitor shall make payments to the Indemnitee, pursuant to
the provisions hereof, with respect to Actions of third parties as
follows: with respect to out-of-pocket expenses of the Indemnitee, on
demand as incurred, and, with respect to amounts and fees owed to third
parties, to the extent not paid directly to such third parties by the
Indemnitor, on demand at the time of payment by the Indemnitee to such
third party.
(f) The liability of the Indemnitor hereunder shall be subject to the
following limitations:
(i) subject to the provisions of Section 13.4(e) of this Agreement
with respect to out-of-pocket expenses of Indemnitee, the Indemnitor
shall pay claims hereunder when a claim against the Indemnitee or its
Insiders has been established by a final judgment in litigation with
a third party in which the Indemnitor has assumed the defense, or by
a settlement with a third party consented to in writing by the
Indemnitee; payment of other claims as to which the Indemnitee may
contest its liability, or claims not involving third parties, shall
be made when the dispute is settled either by litigation or consent;
and
(ii) payments for amounts due the Indemnitee or its Insiders
hereunder shall be paid by either cash or cashier's check.
ARTICLE 14
MISCELLANEOUS
14.1 Survival. Except as otherwise provided in this Section 14.1, and
except to the extent an earlier or later expiration date is otherwise expressly
provided for in this Agreement, the representations and warranties of each party
set forth herein shall survive the Closing for a period of two (2) years, and
shall survive any investigation by the other party. The parties hereto will have
no liability after such two (2) year period for any breach of any covenants,
agreements, representations and warranties set forth herein. Notwithstanding the
foregoing provisions of this Section 14.1, any claim in respect of which
indemnity may be sought under ARTICLE 13 shall survive the time it would
otherwise terminate under this Section 14.1 if notice of the claim, inaccuracy
or breach giving rise to such right to indemnify shall have been given to the
party against whom such indemnity may be sought prior to such time.
14.2 Notices. Any notice or other communication required or permitted
hereunder shall be sufficiently given if made in writing and sent by registered,
certified or first class United States mail, postage prepaid, by overnight
courier guaranteeing next day delivery, or by hand delivery addressed as
follows:
IF TO COLONIAL: ......Colonial Trust Company
......5336 X. 00xx Xxxxxx
......Xxxxxxx, XX 00000
......Attention: Xxxx X. Xxxxxxx
......Facsimile: 000-000-0000
WITH A COPY TO: ......Xxxxxx X. Xxxxxx, Xx.
......Burdett, Morgan, Xxxxxxxxxx & Xxxxxx, L.L.P.
......3423 S. Soncy Road, Suite 300
......Amarillo, Texas 79119
......Facsimile: 000-000-0000
IF TO FIRST STATE BANK: ......First State Bank
......100 E. Main Street
......P.O. Xxx 00
......Xxxxx, XX 00000
......Attention: J. Xxx Xxxxxxx
......Facsimile: 000-000-0000
WITH A COPY TO: ......Xxxxxxx X. Xxxxx, Esq.
......Jenkens & Xxxxxxxxx, A Professional Corporation
......1445 Xxxx Xxxxxx, #0000
......Xxxxxx, XX 00000
......Facsimile: 000-000-0000
or such other address as shall be furnished in writing by either party, and such
notice or communication shall be deemed to have been given as of three (3) days
after the date so mailed if sent, by United States mail, one (1) Business Day
after the date sent if sent by overnight courier, or on the date so delivered if
delivered in person.
14.3 Taxes; Expenses. Each party hereto shall pay its own expenses,
including attorneys' fees and filing or other fees payable in connection with
all application, notification and report forms and notices to be filed pursuant
to Section 7.1.
14.4 Entire Agreement, Modifications, Waivers, Headings. This Agreement,
including any exhibits and schedules hereto, constitutes the entire
understanding between the parties hereto pertaining to the subject matter hereof
and supersedes all prior agreements and understandings of the parties, whether
oral or written, in connection therewith. No modification of this Agreement
shall be binding unless executed in writing by the parties hereto. No waiver of
any provision of this Agreement shall be deemed or shall constitute a waiver of
any other provision hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver. Section and subsection headings are not
considered part of this Agreement, are solely for convenience of reference, and
are not intended to be full or accurate descriptions of the contents of any
section or subsection.
14.5 Successors and Assigns. Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective transferees, successors
and assigns, but rights under this Agreement may not be assigned and duties
hereunder may not be delegated by either party without the written consent of
the other, and any such assignment or delegation shall be void and of no force
or effect.
14.6 Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one instrument.
14.7 Governing Law; Jurisdiction; Venue. THE GOVERNING LAW APPLICABLE TO
THIS AGREEMENT SHALL BE THE LAW OF THE STATE OF TEXAS APPLICABLE TO CONTRACTS
MADE AND TO BE PERFORMED WITHIN THE STATE OF TEXAS BY RESIDENTS OF THE STATE OF
TEXAS. In respect of any proceeding or action arising out of or relating to this
Agreement or the transactions contemplated hereby, each of the parties hereto
consents to the jurisdiction and venue of any federal or state court located
within Xxxxxxx County, Texas, or in the alternative Maricopa County, Arizona
consents that all such service of process may be made by first class registered
or certified mail, postage prepaid, return receipt requested, directed to it at
the address specified in Section 14.2, and agrees that service so made shall be
deemed to be completed upon actual receipt thereof.
14.8 Time is of the Essence. Time is of the essence of this Agreement.
14.9 Attorneys' Fees. If any action at law or in equity, including an
action for declaratory relief, is brought to enforce or interpret the provisions
of this Agreement, the prevailing party shall be entitled to recover reasonable
attorneys' fees from the other party, which fees shall be in addition to any
other relief which may be awarded.
14.10 Severability. If any provision of this Agreement or the application
of any such provision to any Person or circumstance shall be held invalid,
illegal or unenforceable in any respect by a court of competent jurisdiction,
such provision shall be severed from this Agreement, and this Agreement shall
continue in full force and effect without said provision; provided, that no such
severance shall be effective if it materially changes the economic benefit of
this Agreement to either party.
ARTICLE 15
DEFINITIONS
15.1 Certain Terms Defined. In addition to such terms as are defined
elsewhere in this Agreement, each of the following terms has the meaning given
it below:
"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person.
"Best Efforts" means a party's reasonable best efforts in accordance with
reasonable commercial practice and without incurring unreasonable expense.
"Business Day" means a day other than a Saturday, a Sunday or a day
observed as a holiday by Colonial or First State Bank.
"Environmental Laws" mean all federal, state and local laws, regulations,
statutes, ordinances, codes, rules, decisions, orders or decrees relating or
pertaining to the public health and safety or the environment, or otherwise
governing the generation, use, handling, collection, treatment, storage,
transportation, recovery, recycling, removal, discharge or disposal of Hazardous
Materials, including, without limitation, (i) the Solid Waste Disposal Act, 42
U.S.C. 6901 et seq., as amended ("SWDA," also known as "RCRA" for a subsequent
amending act), (ii) the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. section 9601 et seq., as amended ("CERCLA"), (iii) the
Clean Water Act, 33 U.S.C. section 1251 et seq., as amended ("CWA"), (iv) the
Clean Air Act, 42 U.S.C. section 7401 et seq., as amended ("CAA"), (v) the Toxic
Substances Control Act, 15 U.S.C. section 2601 et seq., as amended ("TSCA"),
(vi) the Emergency Planning and Community Right to Know Act, 15 U.S.C. section
2601 et seq., as amended ("EPCRKA"), and (vii) the Occupational Safety and
Health Act, 29 U.S.C. section 651 et seq., as amended.
"Hazardous Material" means, without limitation, (i) any "hazardous wastes"
as defined under RCRA, (ii) any "hazardous substances as defined under CERCLA,
(iii) any toxic pollutants as defined under CWA, (iv) any hazardous air
pollutants as defined under CAA, (v) any hazardous chemicals as defined under
TSCA, (vi) any hazardous substances or extremely hazardous substances as defined
under EPCRKA, (vii) asbestos, (viii) polychlorinated biphenyls, (ix) underground
storage tanks, whether empty, filled or partially filled with any substance, (x)
any substance the presence of which on the property in question is prohibited
under any Environmental Law, and (xi) any other substance which under any
Environmental Law requires special handling or notification of or reporting to
any federal, state or local governmental entity in its generation, use,
handling, collection, treatment, storage, re-cycling, treatment, transportation,
recovery, removal, discharge or disposal.
"Person" means any individual, corporation, partnership, joint venture,
limited liability company, association, joint-stock company, trust, enterprise,
unincorporated organization, or governmental entity.
"To the best of Colonial's knowledge" (or similar references to Colonial's
best knowledge) means the knowledge of or receipt of notice (oral or written) by
any current officer of Colonial holding the office of Senior Vice President or
higher, as such knowledge has been obtained in the normal conduct of the
business of Colonial or in connection with the preparation of the schedules to
this Agreement and the furnishing of information to First State Bank as
contemplated by this Agreement, after having made a reasonable investigation of
the accuracy of the representations and warranties made by Colonial in this
Agreement or in any document, certificate, or other writing furnished by
Colonial to First State Bank pursuant hereto or in connection herewith.
[Signature Page Follows]
[Signature Page to Purchase and Assumption Agreement]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first written above.
COLONIAL: COLONIAL TRUST COMPANY,
an Arizona trust company
_________________________________________
Xxxx X. Xxxxxxx, President
FIRST STATE BANK: FIRST STATE BANK,
a Texas state banking association
_________________________________________
J. Xxx Xxxxxxx, President
COMPANY: HAPPY BANCSHARES, INC.,
a Texas corporation
_________________________________________
J. Xxx Xxxxxxx, President
EXHIBIT A
COLONIAL TRUST COMPANY (Colonial)
FIRST STATE BANK (First State Bank)
SETTLEMENT STATEMENT
EXHIBIT A
COLONIAL TRUST COMPANY (Colonial)
FIRST STATE BANK (First State Bank)
SETTLEMENT STATEMENT
This Settlement Statement as of ___________, 2004 is provided pursuant to
the terms of that certain Purchase and Assumption Agreement dated as of
_________, 2003, by and between First State Bank and Colonial (the "Agreement").
Unless otherwise defined, all capitalized terms used in this Settlement
Statement shall have the meanings attributed to them in the Agreement.
Calculation of Purchase Price
Purchase Price equals:
Goodwill Premium $550,000.00
------------------
Real Estate $819,000.00
------------------
------------------
PLUS:
Book Value of Corporate Trust Assets, including:
Accrued Fees
Accrued XXX Maintenance Fees $_________
Accrued Bond Printing Fees $_________
Accrued Trust Set-up Fees $_________
Corporate Trust Receivables
Accrued Interest Receivable $_________
Sinking Fund / Late Fee Receivables $_________
Sinking Fund / Accounts Receivable $_________
Sinking Fund / Interest Receivable $_________
Account Rec. XXX Institutional Maint. Fee $_________
Other Receivables $_________
Prepaid Expenses $_________
Equipment & Personal Property
Computer Hardware $_________
Computer Software $_________
Furniture & Fixtures $_________
------------------
Total Book Value of Corporate Trust Assets $_________
------------------
------------------
LESS:
Book Value of Corporate Trust Liabilities, including:
Accrued Expenses ($_________)
Accrued taxes and ad valorem taxes related to Real Estate ($_________)
Other taxes of any kind and nature ($_________)
------------------
------------------
Total Book Value of Corporate Trust Liabilities ($_________)
EQUALS:
PURCHASE PRICE $__________
==================
EXHIBIT B
ASSUMPTION AGREEMENT
EXHIBIT B
ASSUMPTION AGREEMENT
FOR VALUE RECEIVED, FIRST STATE BANK ("Assignee"), has executed and
delivered this Assumption Agreement ("Assumption Agreement") to COLONIAL TRUST
COMPANY ("Assignor"), pursuant to the terms of that certain Purchase and
Assumption Agreement entered into by Assignee and Assignor and dated as of
___________, 2003 ("Agreement"). Unless otherwise defined herein, all
capitalized terms used in this Assumption Agreement shall have the meanings
attributed to them in the Agreement.
Assignee hereby assumes:
(a) The Accrued Expenses as reflected on the Final Settlement Statement.
(b) All liabilities and obligations with respect to the Contracts after
the Closing Date as reflected on Schedule 4.7 attached to the Final
Settlement Statement; provided, however, that First State Bank
specifically does not assume any liabilities or obligations under the
Contracts, including, without limitation, liabilities or obligations
resulting from any actions or omissions by Colonial, that occurred or
existed on or prior to the Closing Date.
(c) All accrued taxes and ad valorem taxes attributable to the Real
Estate, provided, such taxes shall be prorated as of the Closing Date
based on a 365 day year and reflected on the Final Settlement Statement.
(d) All personal property and other taxes assessed in connection with
the Corporate Trust Assets, provided, such taxes shall be prorated as of
the Closing Date based on a 365 day year and reflected on the Final
Settlement Statement.
Notwithstanding anything contained herein which may be or appear to be to
the contrary, Assignee does not hereby assume and shall have no liability for
any debts, liabilities or obligations of Assignor of whatsoever kind or nature
other than as specifically set forth herein.
This Assumption Agreement shall not create in any third parties (including,
but not limited to, deposit account holders or borrowers): (a)-any rights or
remedies against Assignee which such parties did not have against Assignor prior
to the execution and delivery of this Assumption Agreement with respect to the
debts, liabilities or obligations specifically assumed herein; or (b)-any claims
against Assignee with respect to any liability of Assignor under the Corporate
Trust Assets arising on or prior to the close of business on the date hereof; or
(c)-any claims against Assignee with respect to the Assignor's Corporate Trust
Receivables other than for the administration thereof after the date hereof.
IN WITNESS WHEREOF, Assignor and Assignee have caused this Assumption
Agreement to be signed by their duly authorized officers as of the _____ day of
_____________, 2004.
COLONIAL TRUST COMPANY,
an Arizona trust company
_________________________________________
Xxxx X. Xxxxxxx, President
FIRST STATE BANK,
a Texas state banking association
_________________________________________
J. Xxx Xxxxxxx, President
EXHIBIT C
GENERAL ASSIGNMENT
EXHIBIT C
GENERAL ASSIGNMENT
For good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, COLONIAL TRUST COMPANY ("Colonial") does hereby grant,
sell, transfer, convey and deliver to FIRST STATE BANK ("First State Bank") in
accordance with that Purchase and Assumption Agreement dated as of
_____________, 2003 by and between Colonial and First State Bank (the
"Agreement"), all of Colonial's right, title and interest in, under and to any
and all guaranties, warranties and other similar rights, whether express or
implied, issued or made in connection with or related to the acquisition,
development, construction, operation, maintenance and/or repair of any Equipment
and Personal Property (as defined in the Agreement) located thereon or used in
connection therewith, including, among other things, any warranty covering any
machinery.
Unless otherwise defined herein, all capitalized terms used in this General
Assignment shall have the meanings attributed to them in the Agreement. This
General Assignment has been duly executed as of ___________________, 2004.
COLONIAL TRUST COMPANY
an Arizona Trust Company
_________________________________________
Xxxx X. Xxxxxxx, President
EXHIBIT D
XXXX OF SALE AND ASSIGNMENT
EXHIBIT D
XXXX OF SALE AND ASSIGNMENT
For good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, COLONIAL TRUST COMPANY ("Colonial") does hereby assign,
grant, sell, transfer and deliver to FIRST STATE BANK ("First State Bank"), in
accordance with the certain Purchase and Assumption Agreement dated as of
_____________, 2003 by and between Colonial and First State Bank (the
"Agreement"), all of Colonial's right, title and interest in and to all of the
Equipment and Personal Property, Corporate Trust Receivables, Records, all other
Corporate Trust Assets, and the Contracts. Unless otherwise defined herein, all
capitalized terms used in this Xxxx of Sale and Assignment shall have the
meanings attributed to them in the Agreement. Colonial acknowledges that First
State Bank does not assume and shall have no liability for any debts,
liabilities or obligations of Colonial of any kind whatsoever except as
specifically set forth in the Agreement or in any other writing executed by
First State Bank.
Colonial does hereby covenant with First State Bank and its successors and
assigns that it is lawfully seized of the foregoing properties and assets, and
Contracts that it holds the foregoing free and clear of all liens, claims,
encumbrances, security interests, pledges, leases, equities, conditional sales
contracts, charges, restrictions and chattel mortgages of any kind whatsoever
(except for those liens, encumbrances and contract rights set forth on Schedule
1.2(e) and Schedule 4.16), that it has good title to, and good and lawful
authority to convey, the foregoing properties and assets, and that it will
protect and defend First State Bank's right, title and interest in and to such
properties and assets.
This Xxxx of Sale and Assignment has been duly executed by Colonial as of
the day of , 2004.
COLONIAL TRUST COMPANY,
an Arizona Trust Company
_________________________________________
Xxxx X. Xxxxxxx, President
EXHIBIT E
COLONIAL TRUST COMPANY (Colonial)
FIRST STATE BANK (First State Bank)
FINAL SETTLEMENT STATEMENT
EXHIBIT E
COLONIAL TRUST COMPANY (Colonial)
FIRST STATE BANK (First State Bank)
FINAL SETTLEMENT STATEMENT
This Final Settlement Statement is provided pursuant to the terms of that
certain Purchase and Assumption Agreement dated as of ________________, 2003 by
and between First State Bank and Colonial (the "Agreement"). Unless otherwise
defined, all capitalized terms used in this Final Settlement Statement shall
have the meanings attributed to them in the Agreement.
Calculation of Final Purchase Price
Goodwill Premium $550,000.00
------------------
Real Estate $819,000.00
------------------
------------------
PLUS:
Book Value of Corporate Trust Assets, including:
Accrued Fees
Accrued XXX Maintenance Fees $_________
Accrued Bond Printing Fees $_________
Accrued Trust Set-up Fees $_________
Corporate Trust Receivables
Accrued Interest Receivable $_________
Sinking Fund / Late Fee Receivables $_________
Sinking Fund / Accounts Receivable $_________
Sinking Fund / Interest Receivable $_________
Account Rec. XXX Institutional Maint. Fee $_________
Other Receivables $_________
Prepaid Expenses $_________
Equipment & Personal Property
Computer Hardware $_________
Computer Software $_________
Furniture & Fixtures $_________
------------------
Total Book Value of Corporate Trust Assets $_________
------------------
------------------
LESS:
Book Value of Corporate Trust Liabilities, including:
Accrued Expenses ($_________)
Accrued taxes and ad valorem taxes related to Real Estate ($_________)
Other taxes of any kind and nature ($_________)
------------------
------------------
Total Book Value of Corporate Trust Liabilities ($_________)
EQUALS:
PURCHASE PRICE $__________
==================
POST CLOSING ADJUSTMENTS
Closing Payment (paid on Closing Date) $_________
Amount Final Purchase Price amount exceeds Closing Payment,
to be paid to Colonial by First State Bank $_________
Interest $_________
Total $_________
Closing Payment (paid on Closing Date) $_________
Amount Final Purchase Price amount exceeds Closing Payment,
to be paid to Colonial by First State Bank $_________
Interest $_________
Total $__________
EXHIBIT F
FIRST STATE BANK (First State Bank)
XXXX XXXXXXX
EMPLOYMENT AGREEMENT
EXHIBIT G
FIRST STATE BANK (First State Bank)
XXXXX XXXXXXX
EMPLOYMENT AGREEMENT
EXHIBIT H
FIRST STATE BANK (First State Bank)
XXXX XXXXXXX
NONCOMPETITION AGREEMENT
EXHIBIT I
FIRST STATE BANK (First State Bank)
XXXXX XXXXXXX
NONCOMPETITION AGREEMENT
