BRANCH PURCHASE AND DEPOSIT ASSUMPTION AGREEMENT Between FIRST NATIONAL COMMUNITY BANK as Buyer and HARLEYSVILLE NATIONAL BANK AND TRUST COMPANY as Seller July 26, 2006
Exhibit
2.1
Between
FIRST
NATIONAL COMMUNITY BANK
as
Buyer
and
HARLEYSVILLE
NATIONAL BANK AND TRUST COMPANY
as
Seller
July 26,
2006
TABLE
OF CONTENTS
Page
ARTICLE
I
SALE
OF
ASSETS AND ASSUMPTION OF LIABILITIES
1.1 Effective
Date...................................................................................................................................................................................................................................
1
1.2
Sale
of
Assets and Assumption of
Liabilities............................................................................................................................................................................
2
1.3 Purchase
of
Loans..........................................................................................................................................................................................................................
5
1.4 Cash
Payment,
Adjustment of Income and Expenses, and Settlement
Procedure................................................................................................................
6
1.5 Obligations
of Seller on the Effective
Date.................................................................................................................................................................................
8
1.6 Obligations
of Buyer on the Effective
Date................................................................................................................................................................................. 9
1.7 Indemnification................................................................................................................................................................................................................................
10
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES OF SELLER
2.1 Corporate
Organization and
Standing..........................................................................................................................................................................................
13
2.2 Corporate
Authority; Due Authorization; Execution and Delivery; Binding
Obligation.....................................................................................................
13
2.3 No
Violation......................................................................................................................................................................................................................................
13
2.4 Title
to
Assets..................................................................................................................................................................................................................................
14
2.5 The
Branch.......................................................................................................................................................................................................................................
15
2.6 Environmental
Matters.................................................................................................................................................................................................................... 16
2.7 Other
Representations and
Warranties........................................................................................................................................................................................
17
2.8 No
Broker........................................................................................................................................................................................................................................... 18
2.9 No
Other
Warranties........................................................................................................................................................................................................................
18
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF BUYER
3.1 Corporate
Organization and
Standing................................................................................................................................................................................................ 18
TABLE
OF CONTENTS (Continued)
3.2 Corporate
Authority; Due Authorization; Execution and Delivery; Binding
Obligation......................................................................................................
18
3.3 No
Violation.......................................................................................................................................................................................................................................
19
3.4
No
Broker...........................................................................................................................................................................................................................................
19
ARTICLE
IV
OBLIGATIONS
OF THE PARTIES PRIOR TO AND AFTER EFFECTIVE DATE
4.1 Cooperation
and Best
Efforts..........................................................................................................................................................................................................
19
4.2 Conduct
of
Business........................................................................................................................................................................................................................
20
4.3 Access
to
Records and
Properties.................................................................................................................................................................................................
20
4.4 Seller
Regulatory
Applications....................................................................................................................................................................................................... 21
4.5 Buyer
Regulatory
Applications......................................................................................................................................................................................................
21
4.6 Employee
Matters.............................................................................................................................................................................................................................
21
4.7 Public
Announcements and Customer
Notices............................................................................................................................................................................
23
4.8 Prohibition
Against Certain
Disclosures........................................................................................................................................................................................
24
4.9 Prohibition
Against Customer and Employee
Solicitations.........................................................................................................................................................
24
4.10 ▇▇▇
and ▇▇▇▇▇
Accounts...............................................................................................................................................................................................................
25
4.11 Buyer
Account
Forms and ATM/Debit
Cards..............................................................................................................................................................................
25
4.12 Cooperation
and Further Assurances; Correction of
Errors.......................................................................................................................................................
26
4.13 Certain
Transitional
Matters............................................................................................................................................................................................................
26
4.14 Buyer
Obligation to Maintain
Records..........................................................................................................................................................................................
27
4.15 Seller
Obligation to Maintain
Records...........................................................................................................................................................................................
28
4.16 Seller
Restrictive
Covenants............................................................................................................................................................................................................
28
iii
TABLE
OF CONTENTS (Continued)
4.17 Information
Returns.........................................................................................................................................................................................................................
29
4.18 Casualty..............................................................................................................................................................................................................................................
29
ARTICLE
V
CONDITIONS
PRECEDENT
5.1 Conditions
Precedent to Buyer’s
Obligations................................................................................................................................................................................
30
5.2 Conditions
Precedent to Seller’s
Obligations.................................................................................................................................................................................
31
ARTICLE
VI
TERMINATION,
AMENDMENT AND WAIVER
6.1 Termination..........................................................................................................................................................................................................................................
32
6.2 Procedure
Upon
Termination............................................................................................................................................................................................................
34
6.3 Effect
of
Termination..........................................................................................................................................................................................................................
34
6.4 Amendment..........................................................................................................................................................................................................................................
35
6.5 Waiver...................................................................................................................................................................................................................................................
35
ARTICLE
VII
MISCELLANEOUS
PROVISIONS
7.1 Parties
in
Interest and
Assignment...................................................................................................................................................................................................
35
7.2 Expenses................................................................................................................................................................................................................................................
35
7.3 Notices...................................................................................................................................................................................................................................................
35
7.4 Headings................................................................................................................................................................................................................................................
36
7.5 Defined
Terms.......................................................................................................................................................................................................................................
37
7.6 Governing
Law
and Related
Matters.................................................................................................................................................................................................
37
7.7 Specific
Performance............................................................................................................................................................................................................................
38
7.8 Entire
Agreement..................................................................................................................................................................................................................................
38
iv
TABLE
OF CONTENTS (Continued)
ATTACHMENTS
1 - Purchase
Prices and Deposit Premium
2 - Allocation
of Purchase Price
3 - Calculation
of Cash Payment
4 - Index
of
Defined Terms
EXHIBITS
A - Form
of
Special Warranty Deed
B - Loan
Purchase Agreement
C - ▇▇▇▇
of
Sale
D - Assignment
and Assumption Agreement
E - Residual
Processing Agreement
SCHEDULES
A - Furniture,
Fixtures and Equipment
B - Contracts
C - Deposit
Liabilities
D - Loans
E - Description
of Real Estate
F - Severance
Benefit
v
MADE
as
of and effective this 26th day of July, 2006 by and between FIRST NATIONAL
COMMUNITY BANK, a national bank organized under the laws of the United States
and having its principal office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (“Buyer”), and HARLEYSVILLE NATIONAL BANK AND TRUST COMPANY,
a national bank organized under the laws of the United States of America and
having its principal office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
(“Seller”).
Background:
Seller
wishes to sell and assign to Buyer certain fixed and other assets and certain
deposit and other liabilities of the branch office located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter referred to as the
“Branch”).
Buyer
wishes to purchase those assets and to assume those deposits and other
liabilities relating to the Branch, on the terms and subject to the conditions
hereinafter set forth, at the prices and with the deposit premium set forth
on
Attachment 1 hereto.
NOW,
THEREFORE, in consideration of the mutual agreements contained herein, and
for
other good and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, the parties, intending to be legally bound hereby, agree
as
follows:
ARTICLE
I
SALE
OF ASSETS AND ASSUMPTION OF LIABILITIES
1.1
Effective
Date.
The
closing (the “Closing”) shall be held on a date (hereinafter referred to as the
“Effective Date”) to be mutually selected by Buyer and Seller, which date shall
be the close of business on a Friday after: (i) all required regulatory
approvals have been received and all waiting periods required by law have
expired, and (ii) all steps necessary to effect an orderly conversion of
account data have been taken. The parties anticipate that the Closing will
be
held on December 1 or 8, 2006.
-1-
1.2
Sale
of Assets and Assumption of Liabilities.
(a)
Sale
of Assets.
Seller
agrees that, subject to the terms and conditions of this Agreement, it will
sell, assign, transfer, convey and deliver to Buyer and Buyer agrees that it
will purchase and accept, on the Effective Date, the following assets relating
to the Branch:
(i)
Real
Estate.
All of
Seller’s right, title and interest in and to the real estate upon which the
Branch is located, together with all of the improvements thereon, which real
estate is described in Schedule E attached hereto (the “Real
Estate”);
(ii)
Furniture,
Fixtures and Equipment.
All of
Seller’s right, title and interest in and to the furniture, fixtures and
equipment located at the Branch on the date hereof (which shall include the
items identified on Schedule A attached hereto), less items disposed of in
the
ordinary course, plus items acquired in the ordinary course, as shall be set
forth in Exhibit A to the ▇▇▇▇ of Sale to be delivered by Seller to Buyer on
the
Effective Date (collectively, the “Furniture, Fixtures and
Equipment”);
(iii)
Safe
Deposit Box Business.
All of
Seller’s right, title and interest in and to the safe deposit box business (if
any) conducted at the Branch (the “Safe Deposit Box Business”);
(iv)
Contracts.
Subject
to the receipt of any necessary third party consents, all of Seller’s right,
title and interest in and to the contracts (if any) identified on Schedule
B
attached hereto (collectively, the “Contracts”);
(v)
Deposit
Related Loans.
All of
Seller’s right, title and interest in and to the Deposit Related Loans (as
defined in Section 1.3(a) below);
(vi)
Other
Loans.
All of
Seller’s right, title and interest in and to the Other Loans (as defined in
Section 1.3(c) below); and
(vii)
Vault
Cash.
All of
Seller’s right, title and interest in and to the cash on hand at the Branch as
of the Effective Date (the “Vault Cash”).
-2-
The
foregoing assets are sometimes hereinafter referred to collectively as the
“Purchased Assets.”
(b)
Assumption
of Liabilities.
Seller
agrees to assign to Buyer on the Effective Date and Buyer agrees to assume
and
thereafter to fully and timely perform and discharge in accordance with their
terms the following liabilities relating to the Branch:
(i)
Deposits.
All
deposit liabilities (which shall include, but shall not be limited to,
“deposits” as such term is defined in Section 3(1)(1) of the Federal
Deposit Insurance Act, as amended) of Seller (including balances in money market
and other accounts linked to accounts containing deposit liabilities under
“sweep” or similar arrangements, together with Seller’s rights and obligations
under any related customer agreement, and Individual Retirement Accounts
(“IRA’s”) for which Seller is custodian, except any IRA’s for which Seller
receives contrary instructions or accounts which by their terms cannot be
assumed), together with accrued interest, attributed on the records of Seller
to
the Branch, as set forth in Schedule C attached hereto, with only such changes
therein as shall have occurred in the ordinary course of business of Seller
between the date of such Schedule and the Effective Date, as shall be set forth
on an updated Schedule C which Seller agrees to deliver to Buyer on the
Effective Date, but excluding: (1) deposits subject to legal process,
(2) deposits which have been reported as abandoned property under the
abandoned property law of any jurisdiction, (3) deposits owned by Seller,
(4) deposits constituting official checks, traveler checks, money orders or
certified checks of Seller, (5) accounts designated as closed on the books
and records of Seller, (6) deposits (if any) pledged as collateral for
loans not being purchased by Buyer, (7) all negative deposits and
overdrafts on the Effective Date, and (8) brokered deposits (The foregoing
deposit liabilities are sometimes hereinafter referred to collectively as the
“Deposit Liabilities” and the Deposit Liabilities to be assumed by Buyer
hereunder are sometimes hereinafter referred to collectively as the “Assumed
Deposits”);
(ii)
Safe
Deposit Box Business.
All of
the obligations and liabilities of Seller relating to the Safe Deposit Box
Business, to the extent that such liabilities and obligations arise or accrue
after the close of business on the Effective Date;
-3-
(iii)
Contracts.
Subject
to the receipt of any necessary third party consents, all of the obligations
and
liabilities of Seller under the Contracts, to the extent that such liabilities
and obligations arise or accrue after the close of business on the Effective
Date;
(iv)
Deposit
Related Loans.
All of
the obligations of Seller under the Deposit Related Loans (as defined in
Section 1.3(a) below), to the extent that such liabilities and obligations
arise or accrue after the close of business on the Effective Date;
and
(v)
Other
Loans.
All of
the obligations of Seller under the Other Loans (as defined in
Section 1.3(c) below), to the extent that such liabilities and obligations
arise or accrue after the close of business on the Effective Date.
The
foregoing liabilities are sometimes hereafter referred to collectively as the
“Assumed Liabilities.”
(c)
Scope.
Buyer
and Seller acknowledge and agree that Buyer will purchase only the Purchased
Assets and that Buyer will assume only the Assumed Liabilities as expressly
provided in this Agreement.
(d)
Purchase
Prices and Deposit Premium.
The
purchase prices of the Real Estate and the Furniture, Fixtures and Equipment
to
be paid by Buyer on the Effective Date and the deposit premium to be paid by
Buyer on the Effective Date in respect of the Assumed Deposits (the “Deposit
Premium”) are set forth on Attachment 1 hereto.
(e)
Allocation
of Purchase Price.
The
purchase price for the Purchased Assets (the “Purchase Price”) shall be an
amount equal to the sum of: (i) the purchase price of the Real Estate (the
“Real Estate Purchase Price”), (ii) the aggregate purchase price of the
Furniture, Fixtures and Equipment as set forth on Attachment 1 hereto (the
“FF&E Purchase Price”), (iii) the Deposit Related Loan Purchase Price
determined in accordance with Section 1.3(b) below; (iv) the aggregate purchase
price of the Other Loans determined in accordance with the provisions of
Section 2.2 of the Loan Purchase Agreement (the “Other Loan Purchase
Price”), (v) the aggregate amount of Vault Cash transferred to Buyer on the
Effective Date, and (vi) the
-4-
(f)
Licenses,
Permits and other Governmental Authorizations.
Buyer
shall promptly obtain, at its expense, all licenses, permits and other
governmental authorizations of any kind that may be required in order to effect
the transfer to it of the Purchased Assets and Assumed Liabilities.
1.3
Purchase
of Loans.
(a)
Deposit
Related Loans.
Buyer
shall purchase on the Effective Date all of the loans (if any) identified as
Deposit Related Loans on Schedule D (which loans consist of:
(i) negative deposits and overdrafts in deposit accounts (provided that no
such overdraft or negative deposit shall have been outstanding for more than
30 days as of the Effective Date), and (ii) loans fully secured as to
principal and interest by deposits to be assumed by Buyer hereunder), plus
loans
of the same type made at the Branches in the ordinary course of business, less
loans repaid, from the date of such Schedule to the Effective Date (as shall
be
set forth in an updated Schedule F-1 which Seller agrees to deliver to Buyer
on
the Effective Date). The foregoing loans are sometimes hereinafter referred
to
collectively as the “Deposit Related Loans.”
(b)
Deposit
Related Loan Purchase Price.
The
purchase price for the Deposit Related Loans shall be equal to the unpaid
principal balance thereof outstanding on the Effective Date, plus accrued unpaid
interest, plus late charges and fees owed, less prepaid interest, and less
any
unearned discounts (the “Deposit Related Loan Purchase Price”).
(c)
Other
Loans.
Subject
to the right to reject set forth in Section 1.3(d) below, Buyer shall purchase
on the Effective Date all of the loans (if any) identified as Other Loans on
Schedule D, plus loans of the same type made at the Branch in the ordinary
course of business, less loans repaid, from the date of such Schedule to the
Effective Date (as shall be set forth in an updated Schedule D which Seller
agrees to deliver to Buyer on the Effective Date) in accordance with the terms
of the Loan Purchase Agreement attached hereto as Exhibit B
(the
-5-
(d)
Right
to Reject Other Loans.
Notwithstanding Section 1.3(c) above, Buyer shall have the right at any
time on or before September 30, 2006 to decline to purchase any Other Loan
which Buyer determines, in its reasonable discretion and by reference to its
existing lending policies, to be deficient in terms of credit quality or loan
documentation. Buyer acknowledges and agrees that interest rate considerations
shall not constitute a basis for declining to purchase an Other Loan under
this
Section 1.3(d). Buyer may exercise the foregoing right at any time and from
time to time on or before September 30, 2006 by delivering written notice
to Seller, which notice shall identify the Other Loan or Other Loans which
Buyer
declines to purchase and shall specify in each case the reason or reasons why
it
has elected to reject such Other Loan. Seller shall have the right at any time
prior to the Closing to cure any Other Loan which Buyer has rejected by reason
of documentary deficiencies; if such deficiencies are cured to Buyer’s
reasonable satisfaction, Buyer shall purchase the Other Loan involved at the
Closing and if such deficiencies are not cured to Buyer’s reasonable
satisfaction, the Other Loan involved shall continue to be treated as having
been rejected and Buyer shall not be required to purchase such Other Loan at
the
Closing.
In
the
case of an Other Loan which is originated and closed after September 30,
2006 and before the Closing, Buyer shall have the rejection right (which may
be
exercised at any time prior to the Closing) and Seller shall have the right
to
cure, each as provided for in the immediately preceding paragraph.
1.4
Cash
Payment, Adjustment of Income and Expenses, and Settlement
Procedure.
(a)
Cash
Payment.
Seller
shall on the Effective Date pay to Buyer by wire transfer of immediately
available funds an amount (the “Cash Payment”) calculated in accordance with
Attachment 3 attached hereto.
(b)
Pro
Rata Adjustment of Income and Expenses; Transfer and Other Taxes.
Except
as otherwise provided herein or in the Loan Purchase Agreement, all income
and
operating expenses, accrued or prepaid, including, without limitation, safe
deposit box fees,
-6-
(c)
Settlement
Procedure.
Notwithstanding the fact that the transactions provided for in this Agreement
are herein described as occurring on the Effective Date, settlement hereunder
shall occur in two phases, as follows:
(i)
Preliminary
Settlement.
Seller
and Buyer will on the Effective Date conduct a preliminary settlement (the
“Preliminary Settlement”) using preliminary data as of such date or dates (which
dates shall not be more than ten (10) days prior to the Effective Date) as
Buyer
shall determine (including, without limitation, data from updated
Schedules C and D). The Cash Payment shall be calculated based upon such
preliminary data and the amount so calculated shall be paid by wire transfer
of
immediately available funds.
(ii)
Adjusting
Settlement.
After
the final data necessary to prepare a definitive settlement sheet are available
and within thirty (30) days after the Effective Date, Seller and Buyer shall
meet for purposes of conducting an adjusting settlement (the “Adjusting
Settlement”) using such final data. The difference between the amount of cash
paid by Seller to Buyer at the Preliminary Settlement and the amount of the
Cash
Payment as determined at the Adjusting Settlement, together with interest
accrued thereon from the Effective Date, at the federal funds rate in effect
on
the Effective Date, shall be paid by wire transfer of immediately available
funds by Seller to Buyer or by Buyer to Seller, as the case may be.
-7-
1.5
Obligations
of Seller on the Effective Date.
On the
Effective Date, Seller shall:
(a)
Physical
Possession.
Deliver
to Buyer such of the Purchased Assets as shall be capable of physical
delivery;
(b)
Documents
of Transfer.
Execute
and deliver to Buyer a ▇▇▇▇ of Sale in the form attached hereto as
Exhibit C, an Assignment and Assumption Agreement in the form attached
hereto as Exhibit D, a special warranty deed in the form attached hereto as
Exhibit A, and all such endorsements, assignments or other instruments of
conveyance, assignment and transfer as shall be reasonably necessary or
advisable to consummate the sale and transfer to Buyer of the Purchased Assets
and Assumed Liabilities in accordance with the terms of this
Agreement;
(c)
Safe
Deposit Boxes.
Deliver
to Buyer the keys, contracts, signature cards and other records relating to
the
Safe Deposit Box Business;
(d)
Updated
Schedules.
Deliver
to Buyer Schedules C and D, updated as of the close of business on the last
business day prior to the Effective Date;
(e)
Deposit
Related Loans.
Deliver
to Buyer all notes (or, to the extent possible, an affidavit of lost note if
Seller does not have possession of a note) relating to the Deposit Related
Loans
and all files and records relating to the Deposit Related Loans as exist and
are
available to Seller (it being understood and agreed that Seller shall have
no
obligation to deliver any document or instrument which is not in its possession
on the Effective Date) and all collateral security of any nature whatsoever
held
by Seller as collateral security for each Deposit Related Loan;
(f)
Other
Loans.
Execute
and deliver to Buyer the Loan Purchase Agreement, together with all such
documents as are contemplated under the Loan Purchase Agreement;
(g)
Limited
Power of Attorney or Confirmation of Officer Appointment.
Deliver
to Buyer, at Seller’s option: (i) a limited power of attorney granting to
the employees of Buyer named therein (such employees to be designated by Buyer
and approved by Seller) authority to endorse notes and execute assignments
and
other documents and instruments
-8-
(h)
Residual
Processing Agreement.
Execute
and deliver to Buyer the Residual Processing Agreement (as defined in
Section 4.13(e) below);
(i)
Deposit
Records.
Assign,
transfer and deliver to Buyer such of the following records pertaining to the
Assumed Deposits as exist and are available to Seller, it being understood
and
agreed that Seller shall have no obligation to deliver any document or
instrument which is not in its possession on the Effective Date:
(i) signature cards, (ii) orders and contracts between Seller and
Branch depositors and records of similar character, to the extent that such
orders, contracts and other records are available to Seller and can reasonably
be retrieved from Seller’s records and transferred to Buyer, (iii) the form
of rules and regulations applicable to the Branch, (iv) electronic data
files containing a customer’s name, address, social security number, account
type and balance, taxpayer identification number, and withholding information,
and (v) electronic data files containing ▇▇▇ information and
data;
(j)
Cash
Payment.
Pay to
Buyer the Cash Payment by wire transfer of immediately available
funds;
(k)
Consents.
Deliver
to Buyer all consents necessary to permit this Agreement to be consummated
without violation of any contract; and
(l)
Other
Documents.
Execute
and deliver to Buyer all such other documents and instruments as Buyer may
reasonably request.
1.6
Obligations
of Buyer on the Effective Date.
On the
Effective Date, Buyer shall:
(a)
Assignment
and Assumption Agreement.
Execute
and deliver to Seller a counterpart Assignment and Assumption
Agreement;
-9-
(b)
Residual
Processing Agreement.
Execute
and deliver to Seller the Residual Processing Agreement (as defined in
Section 4.12(d) below);
(c)
Loan
Purchase Agreement.
Execute
and deliver to Seller the Loan Purchase Agreement, together with all such
documents as are contemplated under the Loan Purchase Agreement;
and
(d)
Other
Documents.
Execute
and deliver to Seller all such other documents and instruments as Seller may
reasonably request.
1.7
Indemnification.
(a)
Seller’s
Indemnity Obligation.
Except
as otherwise provided herein, Seller shall indemnify, hold harmless and defend
Buyer from and against all claims, losses, suits or causes of action,
liabilities, expenses, costs, demands and obligations, including reasonable
legal fees (collectively, the “Losses”), arising out of or relating to:
(i) the conduct of business and operations at the Branch (including the
Purchased Assets, Assumed Liabilities and employees) prior to the close of
business on the Effective Date, including any act or omission of Seller prior
to
the close of business on the Effective Date relating to the Purchased Assets
or
the Assumed Liabilities; (ii) any liability of Seller which is not assumed
by
Buyer hereunder, (iii) any material breach of any representation or
warranty made by Seller in this Agreement or in any certificate or other
document delivered to Buyer hereunder, or (iv) any material breach of any
covenant made by Seller in this Agreement or in any certificate or other
document delivered to Buyer hereunder; provided, however, that this
Section 1.7(a) shall not be applicable to the Loan Purchase Agreement,
which sets forth the exclusive representations, warranties, covenants and
remedies applicable to the Other Loans and to the transactions contemplated
therein. Promptly after the receipt of notice of a Loss with respect to which
Buyer will seek a defense, indemnification, reimbursement or other remedy under
this Section, Buyer shall notify Seller in writing, setting forth in reasonable
detail the basis therefor and providing copies of all relevant documents
relating thereto. Seller shall then have thirty (30) days from the date it
received such notice to investigate the Loss and determine whether it will
elect
to assume the defense of the matter. If it does so elect, Buyer shall give
its
full cooperation and assistance to Seller in maintaining a defense. Seller
shall
not be liable for any amounts paid in settlement of a Loss if
-10-
(b)
Buyer’s
Indemnity Obligation.
Buyer
shall indemnify, hold harmless and defend Seller from and against all Losses
arising out of or relating to: (i) the operation of the Branch after the
close of business on the Effective Date, (ii) any act or omission of Buyer
occurring after the close of business on the Effective Date relating to the
Purchased Assets or the Assumed Liabilities, (iii) any liability assumed by
Buyer under this Agreement, (iv) any material breach of any representation
or warranty made by Buyer in this Agreement or in any certificate or other
document delivered to Seller hereunder, or (v) any material breach of any
covenant made by Buyer in this Agreement or in any certificate or other document
delivered to Seller hereunder; provided, however, that this Section 1.7(b)
shall not be applicable to the Loan Purchase Agreement, which sets forth the
exclusive representations, warranties, covenants and remedies applicable to
the
Loans and to the transactions contemplated therein. Promptly after the receipt
of notice of a Loss with respect to which Seller will seek a defense,
indemnification, reimbursement or other remedy under this Section, Seller shall
notify Buyer in writing, setting forth in reasonable detail the basis therefor
and providing copies of all relevant documents relating thereto. Buyer shall
then have thirty (30) days from the date it received such notice to investigate
the Loss to determine whether it will elect to assume the defense of the matter.
If it does so elect, Seller shall give its full cooperation and assistance
to
Buyer in maintaining a defense. Buyer shall not be liable for any amounts paid
in settlement of a Loss if such settlement is effected without Buyer’s written
consent, which consent shall not be unreasonably withheld. It is understood
that
the obligations of Buyer under this Section shall survive the Effective
Date to the extent provided in Section 1.7(c) below.
(c)
Limitations
on Liability.
(i)
Limitations
on Liability of Seller.
Seller
shall not be liable for indemnification claims pursuant to
Section 1.7(a)(iii) or (iv) above except to the extent that the aggregate
Losses suffered or incurred by Buyer exceed $50,000. In no event
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(ii)
Limitations
on Liability of Buyer.
Buyer
shall not be liable for indemnification claims pursuant to
Section 1.7(b)(iv) or (v) above except to the extent that the aggregate
Losses suffered or incurred by Seller exceed $50,000. In no event shall Buyer’s
liability to Seller for indemnification pursuant to Section 1.7(b) exceed,
in the aggregate, the amount of the Deposit Premium.
(d)
Survival
of Indemnity Obligations.
All
representations, warranties and covenants set forth in this Agreement shall
survive the Closing, shall continue in effect for a period of 18 months after
the Effective Date and all indemnity obligations hereunder shall thereafter
terminate, except as to any claim for which written notice shall have been
given
prior to the expiration of such 18 month period; provided, however, that:
(i) Seller’s obligation to indemnify Buyer under
Section 1.7(a)(i) and (ii) above and Buyer’s obligation to
indemnify Seller under Section 1.7(b)(i) through (iii) above
shall not terminate upon the expiration of such 18 month period and shall remain
in full force and effect indefinitely, and (ii) each other covenant or
other agreement set forth herein which by its terms is to be performed after
the
expiration of such 18 month period shall survive until fully
discharged.
(e)
Exclusive
Remedy.
Except
for the right of a party to seek specific performance and other forms of
equitable relief as contemplated under Section 7.7 below, a claim for
indemnification pursuant to this Section 1.7 shall be the exclusive remedy
available to either party with respect to any breach of any representation,
warranty, covenant or other agreement by the other party (whether such claim
arises under contract, tort or any other legal theory) and each party hereby
waives any and all other rights and remedies which it may have against the
other
party at law or in equity arising from or relating to any such
breach.
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ARTICLE
II
REPRESENTATIONS
AND WARRANTIES OF SELLER
Seller
represents and warrants to Buyer, as of the date of this Agreement and as of
the
Effective Date, as follows:
2.1
Corporate
Organization and Standing.
Seller
is a national bank, duly organized, validly existing and in good standing under
the laws of the United States of America, and has full power and lawful
authority to own, lease and hold its properties and to carry on its present
business.
2.2
Corporate
Authority; Due Authorization; Execution and Delivery; Binding
Obligation.
Seller
has the corporate power and authority to enter into this Agreement and, subject
to the receipt of all required regulatory approvals and the giving of all
required notices, to carry out its obligations hereunder. The execution and
delivery of this Agreement and the performance of the transactions contemplated
herein have been (or, prior to the Effective Date, will be) duly authorized
by
the Board of Directors of Seller, and no other corporate action on the part
of
Seller is necessary to authorize the execution and delivery of this Agreement
or
the performance of the transactions contemplated herein. This Agreement has
been
duly executed and delivered by Seller and (assuming due authorization, execution
and delivery by Buyer) constitutes a legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms, subject as
to
enforcement to bankruptcy, insolvency, reorganization, moratorium and similar
laws affecting the enforceability of the rights of creditors generally and
subject to the application of equitable principles.
2.3
No
Violation.
Subject
to the receipt of all required regulatory approvals and third party consents
and
the giving of all required notices, the execution, delivery and performance
of
this Agreement will not constitute a violation of or a breach or default under
the charter or the bylaws of Seller or any material statute, rule, regulation,
order, judgment, decree, contract, note, mortgage, indenture, license, lease
or
other instrument or agreement to which Seller is a party or by which Seller
or
any of the Purchased Assets or Assumed Liabilities are bound, which breach,
violation or default would have a material adverse effect upon: (i) the
Purchased Assets, the
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2.4
Title
to Assets.
(a)
Real
Estate.
Seller,
to the best of its knowledge, has good and marketable title to the Real Estate
free and clear of all liens or encumbrances of any kind whatsoever, other than:
(i) liens of current taxes not yet due, and (ii) such imperfections of
title, encumbrances and easements, if any, as are not substantial in character,
amount or extent and do not materially detract from the value or interfere
with
the present or proposed use thereof (which shall include existing visible
easements and rights of municipalities and public utilities).
Seller
has ordered a title commitment relating to the Real Estate from Fidelity
National Title Insurance Company (the “Title Commitment”) and, upon receipt of
the Title Commitment, shall promptly deliver a copy to Buyer. If any exception
from coverage appears in the Title Commitment (other than an exception described
in clause (i) or (ii) of the preceding paragraph) and if such exception is
unacceptable to Buyer, Buyer shall identify each such exception (an “Exception”)
in a written notice (an “Exception Notice”) to be delivered to Seller within
fifteen (15) days after receipt by Buyer of the Title Commitment. (In the event
that Buyer fails timely to notify Seller of Exceptions as required herein,
Buyer
shall be deemed to have waived any and all rights to object to the status of
the
title to the Real Estate.) Seller shall within fifteen (15) days following
its
receipt of an Exception Notice, deliver to Buyer a written notice (the “Seller
Response”) setting forth with respect to each such Exception, at Seller’s
option: (A) a legally binding undertaking on the part of Seller to cure
such Exception by taking all such actions as may be necessary to cause _____
Title Insurance Company to remove such Exception from the title policy to be
issued to Buyer, or (B) a statement that Seller has elected not to cure
such Exception. In the event that Seller elects not to cure any Exception,
Buyer
may by written notice delivered to Seller within fifteen (15) days following
Buyer’s receipt of the Seller Response elect to terminate this Agreement, in
which case Buyer shall have no further rights or recourse with respect to the
Branch or the related Purchased Assets or Assumed Liabilities. In the event
that
Buyer does not timely elect to terminate this Agreement as provided
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(b)
Other
Purchased Assets.
Seller
is the owner of and has (and will at the Closing convey to Buyer) good and
marketable title to the Purchased Assets (except that this representation and
warranty does not apply to: (i) the Real Estate, the representations and
warranties with respect to which are set forth exclusively in Section 2.4(a)
above, and (ii) the Loans, the representations and warranties with respect
to
which are set forth exclusively in the Loan Purchase Agreement), free and clear
of all liens and encumbrances of any kind whatsoever, other than such
imperfections of title, encumbrances and easements, if any, as are not
substantial in character, amount or extent and do not materially detract from
the value or interfere with the present or proposed use thereof.
2.5
The
Branch.
(a)
Legal
Compliance.
Seller
represents and warrants to Buyer that: (i) there is no condemnation or
similar proceeding pending or threatened which would preclude or materially
impair the ability to use the Branch as such Branch is presently used by Seller
in the conduct of its business, (ii) no notice of any proposed assessment
against the Branch has been received by Seller from any governmental authority,
and (iii) no notice has been received by Seller from any governmental
authority that the Branch is in violation of the Americans with Disabilities
Act
(the “ADA”), or any asbestos abatement or Occupational Safety and Health
Administration (“OSHA”) regulations, or any zoning law, building or fire code or
similar statute, ordinance or regulation.
(b)
Condition
of Branch.
The
structures and other improvements to the Real Estate are in good operating
condition and repair, ordinary wear and tear excepted.
(c)
No
Other Representations or Warranties.
Except
as expressly provided in Section 2.4(a) and in this Section 2.5, the Real Estate
is being sold “as is, where is” and without representations or warranties of any
kind.
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2.6
Environmental
Matters.
(a)
Phase I
Examination.
Buyer,
if it wishes to have a Phase I environmental examination of the Real Estate
and the improvements located thereon, shall within fifteen (15) days from
the date hereof engage a competent engineering firm (which firm shall be subject
to Seller’s approval, which will not be unreasonably withheld) for this purpose.
The cost of such Phase I environmental examination shall be borne by Buyer.
Upon
receipt of the Phase I report (the “Phase I Report”), Buyer shall promptly
(and, in any event, on or before September 30, 2006) deliver a copy to Seller.
If anything appears in the Phase I Report which Buyer determines in the exercise
of its reasonable judgment to involve potential remediation expense or other
liability in excess of $25,000, Buyer shall identify each such item (an
“Environmental Exception”) in a written notice (an “Exception Notice”) to be
delivered to Seller with Seller’s copy of the Phase I Report. (In the event
that Buyer fails timely to notify Seller of any Environmental Exceptions as
required herein, Buyer shall be deemed to have waived any and all rights to
object to the environmental condition of the Real Estate.) Seller shall within
fifteen (15) days following its receipt of an Exception Notice, deliver to
Buyer
a written notice (the “Seller Response”) setting forth with respect to each such
Environmental Exception, at Seller’s option: (a) a legally binding written
undertaking on the part of Seller to remediate each such Environmental Exception
by taking all such actions as may be necessary to effect such remediation in
compliance with all applicable laws and in a manner reasonably acceptable to
Buyer, which undertaking shall be reasonably satisfactory to Buyer in form
and
substance; or (b) a statement that Seller has elected not to remediate such
Environmental Exception. In the event that Seller elects not to remediate any
Environmental Exception, Buyer may by written notice delivered to Seller within
fifteen (15) days following Buyer’s receipt of the Seller Response elect to
terminate this Agreement, in which case Buyer shall have no further rights
or
recourse with respect to the Branch or the related Purchased Assets or Assumed
Liabilities. In the event that Buyer does not timely elect to terminate this
Agreement as provided in the preceding sentence, Buyer shall be deemed to have
waived any and all rights to object to the Environmental Exception or Exceptions
involved.
(b)
Representations.
As of
the date of this Agreement, to the knowledge of Seller: (i) the Real Estate
is not in violation of or liable under any environmental law (as
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2.7
Other
Representations and Warranties.
(a)
Assumed
Deposits.
The
Assumed Deposits have been originated and administered and are in compliance
in
all material respects with all applicable federal and state laws and regulations
and in compliance with the agreements and terms governing such deposits and
are
insured by the FDIC to the maximum extent permitted by law.
(b)
Interest
Rates.
The
interest rates paid by the Seller on the Assumed Deposits during the six month
period preceding the date of this Agreement were established in the ordinary
course, consistent with past practice, and were consistent with the rates then
offered by Seller at its other branches.
(c)
No
Litigation.
There
is no civil, criminal or administrative investigation, action, suit or
proceeding pending or, to the knowledge of Seller, threatened, against Seller
which, if determined adversely to Seller, would materially adversely affect
the
Purchased Assets or Assumed Liabilities taken as a whole or which would
materially adversely affect the validity of this Agreement.
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2.8
No
Broker.
Seller
has not retained any broker, finder or other intermediary who is or would be
entitled to be paid any fee, commission or other compensation for, on account
of, or in connection with the transactions contemplated by this Agreement,
except for Cedar Hill Advisors, LLC, whose fee is to be paid entirely by
Seller.
2.9
No
Other Warranties.
Except
as expressly provided in this Article II or in the Loan Purchase Agreement,
the Purchased Assets and the Assumed Liabilities shall be sold and assigned
to
Buyer “AS IS, WHERE IS,” without recourse and without any warranties whatsoever,
express or implied, including, without limitation, warranties with respect
to
title, condition, enforceability, collectibility, documentation or freedom
from
liens or encumbrances.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF BUYER
Buyer
represents and warrants to Seller, as of the date of this Agreement and as
of
the Effective Date, as follows:
3.1
Corporate
Organization and Standing.
Buyer
is a national bank, duly organized, validly existing and in good standing under
the laws of the United States, and has full power and lawful authority
(including all required regulatory approvals and authorizations) to own, lease
and hold its properties and to carry on its present business.
3.2
Corporate
Authority; Due Authorization; Execution and Delivery; Binding
Obligation.
Buyer
has the corporate power and authority to enter into this Agreement and, subject
to the receipt of all required regulatory approvals, to carry out its
obligations hereunder. The execution and delivery of this Agreement and the
performance of the transactions contemplated herein have been (or, prior to
the
Effective Date, will be) duly authorized by the Board of Directors of Buyer
and
no other corporate action on the part of Buyer is necessary to authorize the
execution and delivery of this Agreement or the performance of the transactions
contemplated herein. This Agreement has been duly executed and delivered by
Buyer and (assuming due authorization, execution and delivery by Seller)
constitutes a legal, valid and binding obligation of Buyer, enforceable against
Buyer in accordance with its terms, subject as to enforcement to bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting
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3.3
No
Violation.
Subject
to the receipt of all required regulatory approvals, the execution, delivery
and
performance of this Agreement will not constitute a violation of or breach
or
default under the Articles of Incorporation or the bylaws of Buyer or any
material statute, rule, regulation, order, judgment, decree, contract, note,
mortgage, indenture, license, lease or other instrument or agreement to which
Buyer is a party or by which Buyer or any of its assets are bound.
3.4
No
Broker.
Buyer
has not retained any broker, finder or other intermediary who is or would be
entitled to be paid any fee, commission or other compensation for, on account
of, or in connection with the transactions contemplated by this
Agreement.
ARTICLE
IV
OBLIGATIONS
OF THE PARTIES PRIOR TO AND AFTER EFFECTIVE DATE
4.1
Cooperation
and Best Efforts.
Buyer
and Seller shall each cooperate with the other, and each shall use its
commercially reasonable best efforts to do or cause to be done all things
necessary or appropriate on its part in order to effect the consummation of
this
Agreement and the Loan Purchase Agreement; provided, however, that Seller shall
not be obligated to pay any money or other consideration to or initiate any
suit
or proceeding against any third party in order to obtain any waiver or consent
which may be required in connection with the transfer or conveyance of any
Purchased Asset. Without limitation of the foregoing, the parties shall
cooperate with one another and each shall take all such commercially reasonable
actions as may be necessary and as are consistent with customary industry
practices in order to assure that the Closing and transition (including the
conversion of Seller’s data relating to the Assumed Deposits and the Loans) are
effected smoothly and efficiently so as to minimize potential disruption to
the
customers of the Branch, to Buyer and to Seller.
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4.2
Conduct
of Business.
Pending
the Effective Date, and except as otherwise consented to by Buyer:
(a)
Ordinary
Course.
Seller
shall carry on the business of the Branch diligently and substantially in the
same manner as carried on as of the date hereof and Seller will not, with regard
to the Branch, engage in any one or more activities or transactions which shall
be outside of the ordinary course of the business of the Branch as conducted
as
of the date hereof, except for activities or transactions contemplated by this
Agreement.
(b)
Preservation
of Business.
Seller
shall use its commercially reasonable efforts to preserve its business
operations as conducted at the Branch intact. Seller further agrees to use
its
commercially reasonable efforts to preserve for Buyer the goodwill of its
customers and others having relations with the business normally conducted
at
the Branch and to cooperate with and assist Buyer in assuring the orderly
transition of such business from Seller to Buyer.
(c)
Interest
Rates.
Without
limitation of the foregoing, Seller agrees that the interest rates offered
by it
on the Deposit Liabilities and the Loans shall be established in the ordinary
course consistent with past practice and shall be consistent with the rates
offered by Seller at its other Branches.
4.3
Access
to Records and Properties.
Seller
shall afford to the officers and authorized representatives of Buyer access
to
the Branch and to the books and records in Seller’s possession relating to the
Purchased Assets and Assumed Liabilities in order that Buyer may have an
opportunity to make such reasonable investigations thereof at such reasonable
times as it may from time to time reasonably request, and Seller shall furnish
Buyer with such additional financial and operating data and other information
relating to its business and properties at the Branch and to the Purchased
Assets and Assumed Liabilities as Buyer may from time to time reasonably
request, including information required for inclusion in the regulatory
applications required to be filed by Buyer pursuant to Section 4.5 below.
Buyer’s access to Seller’s properties shall be subject to Seller’s normal
security procedures. Nothing in this Section shall be deemed to require
Seller to breach any obligation of confidentiality.
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4.4
Seller
Regulatory Applications.
Seller
shall, on or before August 15, 2006, prepare and file all required notices
(if any) and all required applications for regulatory approval of the
transactions (if any) contemplated by this Agreement and shall use its
commercially reasonable best efforts to obtain all such approvals.
4.5
Buyer
Regulatory Applications.
Buyer
shall promptly prepare and file all required applications for regulatory
approval of the transactions contemplated by this Agreement and shall use its
commercially reasonable best efforts to obtain all such approvals (the “Buyer
Regulatory Approvals”).
4.6
Employee
Matters.
(a)
Retention
of Seller Employees.
Buyer
agrees on the Effective Date to extend an offer of employment to each person
then employed by Seller at the Branches (or on approved leave therefrom) at
a
base salary or wage which is not less than that in effect as of the day
immediately preceding Effective Date and Buyer further agrees not to reduce
such
base salary or wage for a period of twelve (12) months after the Effective
Date. Seller agrees in this regard that it will not increase the compensation
of
any such Branch Employee after the date hereof, except in the ordinary course
consistent with past practice and that it will consult with Buyer prior to
implementing any such increase. Seller also agrees that such increases, in
the
aggregate, shall not exceed seven percent (7%) of current compensation for
employees eligible for a raise through December 31, 2006. Buyer agrees that
if,
within twelve (12) months after the Effective Date, it terminates (other
than for cause, as determined by Buyer in its reasonable discretion) the
employment of any person who accepts Buyer’s offer of employment pursuant to
this Section 4.6(a) (a “Transferred Employee”), Buyer shall pay to such
Transferred Employee the severance benefit as described in Schedule F,
giving such Transferred Employee past service credit based upon such Transferred
Employee’s hire date with Seller (or upon such Transferred Employee’s hire date
by any predecessor of Seller acquired by Seller through merger, purchase of
assets or otherwise, where Seller has granted past service credit to such
Transferred Employee), subject to the condition that the Transferred Employee
execute and deliver to Seller and to Buyer a complete waiver and release of
claims in favor of Seller and Buyer in a form acceptable to Seller and to Buyer.
If within twelve (12) months after the Effective Date:
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(b)
Past
Service Credit.
With
respect to Buyer’s employee retirement and welfare benefit plans (as defined in
the Employee Retirement Income Security Act of 1974, as amended), Buyer agrees
to provide to each Transferred Employee past service credit for purposes of
eligibility to participate and vesting only (excluding past service credit
for
benefit accrual purposes), based upon such Transferred Employee’s hire date with
Seller (or upon such Transferred Employee’s hire date by any predecessor of
Seller acquired by Seller through merger, purchase of assets or otherwise,
where
Seller has granted past service credit to such Transferred Employee). With
respect to Buyer’s vacation and sick leave policies and Buyer’s employee
discount programs (such as loans, mortgages, deposit accounts, and ATM and
credit cards) and for purposes of the Family and Medical Leave Act, Buyer agrees
to provide to each Transferred Employee past service credit (determined as
set
forth above) for purposes of benefit and leave entitlement.
(c)
Communications
with Employees.
Buyer
and Seller shall mutually agree as to the scope and content of all
communications to the employees at the Branch who are to be offered employment
pursuant to Section 4.6(a) above. In no event shall Buyer contact any such
employee without the prior consent of Seller, which consent shall not be
unreasonably withheld.
(d)
Employee
Training.
At
mutually agreed upon times following the date hereof, Buyer shall be permitted
to meet with the employees at the Branch to discuss employment opportunities
with Buyer, provided that representatives of Seller shall be permitted
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(e)
Transferred
Employee Records.
Seller
shall have no duty or obligation to deliver to Buyer personnel or medical
records relating to any Transferred Employee, but shall provide to Buyer only
such information as may be reasonably necessary to permit Buyer to make
provision for providing the Transferred Employee and, as applicable, the
Transferred Employee’s dependents, with welfare and pension plan coverage as
described in Section 4.6(b) above.
(f)
Employee
Information Returns.
Seller
shall, at its expense, prepare and forward to all applicable taxing authorities
and to each employee who becomes a Transferred Employee all required federal
and
state income tax information returns (including, without limitation, Form W-2)
for the period from January 1, 2006 through the day prior to the Effective
Date. Buyer shall, at its expense, prepare and forward to all applicable taxing
authorities and to each employee who becomes a Transferred Employee all required
federal and state income tax information returns (including, without limitation,
Form W-2) for all periods beginning on and after the Effective
Date.
4.7
Public
Announcements and Customer Notices.
Buyer
and Seller will consult with one another before issuing any press release or
otherwise making any public statements or customer notifications with respect
to
this Agreement and the transactions contemplated hereby and agree that, unless
approved by the other party hereto in advance, neither Buyer nor Seller
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4.8
Prohibition
Against Certain Disclosures.
In the
event that Buyer should decide prior to the Effective Date to relocate,
consolidate or close the Branch or to change the terms and conditions of any
deposit account, Buyer covenants and agrees that it will not announce or
otherwise publicly disclose any such decision or the fact that the relocation,
consolidation or closing of the Branch or change in the terms and conditions
of
any deposit account is under consideration (whether such announcement or other
public disclosure is by press release, by notice to a regulator in a publicly
available filing, by published legal notice, by posting of a notice in the
Branch, by a mailing to customers of the Branch, or otherwise) at any time
before the Effective Date.
4.9
Prohibition
Against Customer and Employee Solicitations.
(a)
Non
Solicitation of Customers by Buyer.
Buyer
shall not during the period from the date of this Agreement until the Effective
Date solicit any customer of the Branch for the purpose of inducing any such
customer to: (i) open a deposit account with Buyer or to transfer all or
any part of any Deposit Liability to any then existing deposit account with
Buyer, (ii) apply for or obtain any loan with Buyer, or
(iii) establish any other relationship with Buyer; provided, however, that
Buyer shall not be prohibited from engaging in advertising and marketing
activities consistent with past practice which are directed to the public
generally and which are not specifically targeted at any customer or customers
of the Branch.
(b)
Non
Solicitation of Employees by Buyer.
Buyer
shall not during the period from the date of this Agreement until the Effective
Date solicit for employment, engage as
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4.10
▇▇▇
and ▇▇▇▇▇ Accounts.
Seller,
in its capacity as trustee of any Assumed Deposits which are ▇▇▇ or ▇▇▇▇▇
deposits, shall to the extent legally permissible resign as trustee of such
▇▇▇
and ▇▇▇▇▇ deposits and Seller shall appoint Buyer as successor trustee or
custodian effective as of the Effective Date and Buyer shall accept such
appointment.
4.11
Buyer
Account Forms and ATM/Debit Cards.
(a)
Buyer
Account Forms.
Buyer
shall, promptly following the receipt by it of all Buyer Regulatory Approvals,
but no later than five (5) days prior to the Effective Date, at its expense,
forward to each customer whose deposit account will be assumed by Buyer, by
first class mail, checks, deposit tickets, or other similar instruments on
Buyer’s forms which shall be appropriately encoded with Buyer’s routing number
and with accurate account numbers, and with instructions to the customer to
utilize such checks, deposit tickets, and other similar instruments on and
after
the Effective Date and thereafter to destroy any unused checks on Seller’s
forms.
(b)
Buyer
ATM/Debit Cards.
Buyer
shall, following the receipt by it of all Buyer Regulatory Approvals, but no
later than five (5) days prior to the Effective Date, forward to each customer
whose deposit account will be assumed by Buyer, by first class mail, Buyer
ATM/Debit cards to replace Seller’s ATM/Debit cards, together with a notice
advising such customer to destroy Seller’s ATM/Debit cards, such notice to be
reasonably acceptable to Seller in form and substance. Seller shall undertake
reasonable operational measures and such other actions as may reasonably be
requested by Buyer to provide existing personal identification numbers of such
customers in encrypted format to Buyer not later than five (5) Business Days
prior to the Effective Date.
(c)
Deactivation
of Seller’s ATM’s and ATM/Debit Cards.
On the
Effective Date, Seller shall deactivate the ATM/Debit cards issued by it to
each
customer whose deposit account is assumed by Buyer, shall electronically block
access of such cards to such accounts,
-25-
4.12
Cooperation
and Further Assurances; Correction of Errors.
The
parties hereby covenant and agree to cooperate with one another after the
Effective Date in order to effectuate the purposes of this Agreement. Without
limitation of the foregoing:
(a)
Correction
of Errors.
Errors
in calculation or data entry relating to the Assumed Deposits, the Loans, the
transition obligations of the parties under Section 4.13 or otherwise which
are discovered by a party may be corrected by notice given to the other party
promptly after discovery of the error. Provided that it agrees that such an
error occurred, the recipient of such notice shall take any action, including
the payment of money or the amendment of any records, reasonably necessary
to
effect such correction within ten (10) business days after receiving such notice
from the other party.
(b)
Further
Documents of Transfer.
Each
party covenants and agrees, upon the reasonable request of the other and without
further consideration, to execute and deliver such further instruments of
conveyance, assignment and transfer and to take all such other actions as the
other may from time to time reasonably request in order to effectuate the
purposes of this Agreement.
4.13
Certain
Transitional Matters.
Following
the Effective Date:
(a)
Payment
of Checks, Drafts and Withdrawal Orders.
Buyer
agrees to pay in accordance with law up to the collected amount on deposit
(and
any other funds available by reason of any agreement between the depositor
and
Seller which is assigned to Buyer) all properly drawn and presented checks,
drafts and withdrawal orders presented to Buyer by mail, over its counters,
through the check clearing system of the banking industry, or through the
Federal Reserve Bank Automated Clearing House (“ACH”), by depositors of the
accounts assumed, whether drawn on the checks, withdrawal or draft forms
provided by Seller, or by Buyer, and in all other respects to discharge, in
the
usual course of the banking business, the
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(b)
Deposit
Accounts.
If any
of such depositors, instead of accepting the obligation of Buyer to pay the
deposit liabilities assumed, shall demand payment from Seller for all or any
part of any such assumed deposit liabilities, Seller shall not be liable or
responsible for making such payment. Seller may, at its discretion, assume
custody of such check or other item presented for payment on an account which
has been transferred with the Branch, batch such items and forward them to
Buyer
on the next banking day after receipt by Seller at such location as Buyer may
direct in writing. Seller shall not, at any time, be liable or responsible
for
making payment on such items by reason of its obtaining custody of them for
transmittal to Buyer.
(c)
Uncollected
Items.
Buyer
agrees, no later than the third business day after demand by Seller, to pay
Seller an amount equivalent to the amount of any uncollected item included
in a
depositor’s balance on the Effective Date which is returned after the Effective
Date as not collected.
(d)
Returned
Deposit Related Loan Payments.
If the
balance due on any Deposit Related Loan has been reduced by Seller as a result
of a payment by check received prior to the Effective Date, which item is
returned after the Effective Date as uncollected, the asset value represented
by
the loan transferred shall be correspondingly increased and an amount in cash
equal to such increase shall be paid by Buyer to Seller upon
demand.
(e)
Residual
Processing Agreement.
Buyer
and Seller agree that residual processing after the Effective Date will be
in
accordance with the Residual Processing Agreement attached hereto as
Exhibit E (the “Residual Processing Agreement”).
4.14
Buyer
Obligation to Maintain Records.
Buyer
agrees that it will preserve and safely keep all of the records and files
delivered to it by Seller hereunder for the joint benefit of
-27-
4.15
Seller
Obligation to Maintain Records.
Seller
agrees that it will preserve and safely keep, for as long as may be required
by
applicable law, all of the books and records of account (if any) not transferred
to Buyer hereunder which relate to the Loans and the Assumed Deposits for the
joint benefit of itself and Buyer. Seller further agrees that it will permit
Buyer and its authorized representatives, upon prior written notice, at any
reasonable time or times and at Buyer’s expense, to inspect, make extracts or
copies of any such books and records of account as Buyer shall deem reasonably
necessary, subject to any customer privacy restrictions under applicable law
as
may now or hereafter exist.
4.16
Seller
Restrictive Covenants.
(a)
Non
Solicitation of Customers.
Seller
agrees that it will not, for a period of one (1) year following the Effective
Date, directly solicit customers whose loans are purchased or whose deposit
accounts are assigned to Buyer hereunder, except as may occur in connection
with
advertising or solicitations directed to the public generally. Nothing in this
Section shall prevent Seller from forwarding any notice required by any
government agency or by any law, rule or regulation.
(b)
Non
Solicitation of Employees.
Seller
agrees that it will not, directly or indirectly, for a period of one (1) year
following the Effective Date, solicit for employment, recruit, hire, cause
to be
hired, engage as an independent contractor or consultant or otherwise induce
to
terminate his employment relationship with Buyer any Transferred Employee;
provided, however, that the foregoing covenant shall not apply to any
Transferred Employee if: (i) such Transferred Employee is terminated by
Buyer for any reason, or (ii) such Transferred Employee is hired or engaged
by Seller as a result of a general solicitation for employment in newspaper
advertisements or otherwise which is not specifically targeted at the
Transferred Employees.
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(c)
Restriction
on New Branch.
Seller
agrees that it will not for a period of two (2) years following the Effective
Date establish or acquire a retail banking branch, mortgage office or loan
production office in ▇▇▇▇▇ County, Pennsylvania; provided, however, that the
foregoing limitation will not preclude Seller from acquiring (and
subsequently operating) a retail banking branch or mortgage office or loan
production office within ▇▇▇▇▇ County, Pennsylvania pursuant to the acquisition
by merger, purchase of assets or otherwise of: (i) another bank or other
financial institution, or (ii) any substantial part of the assets of
another bank or other financial institution. Notwithstanding the foregoing,
Seller agrees that it will not for a period of one (1) year following the
Effective Date acquire any bank, bank holding company or other financial
institution which has its headquarters in ▇▇▇▇▇ County, Pennsylvania and which
operates one or more retail banking branches, mortgage offices or loan
production offices in ▇▇▇▇▇ County, Pennsylvania.
4.17
Information
Returns.
Seller
shall, at its expense, prepare and forward to all applicable taxing authorities
and to all customers who are holders of Assumed Deposits or borrowers under
the
Loans all required federal and state income tax information returns (including,
without limitation, Forms 1096, 1098 and 1099) for the period from
January 1, 2006 through and including the Effective Date. Buyer shall, at
its expense, prepare and forward to all applicable taxing authorities and to
all
customers who are holders of Assumed Deposits or borrowers under the Loans
required federal and state income tax information returns (including, without
limitation, Forms 1096, 1098 and 1099) for all periods after the Effective
Date.
4.18
Casualty.
In the
event that any item of Furniture, Fixtures and Equipment is damaged or destroyed
prior to the Effective Date by fire or other casualty and if Seller has not
replaced such item with a comparable item, Buyer may, at its option, decline
to
purchase such damaged or destroyed item or accept the insurance proceeds paid
or
payable to Seller in respect of such damaged or destroyed item. In the event
that the Branch is damaged or destroyed by fire or other casualty prior to
the
Effective Date, Seller shall apply the insurance proceeds paid in respect of
such damage or destruction toward the repair of the Branch. In the further
event
that such repairs are not completed prior to the Effective Date, Buyer shall
be
entitled to receive all such insurance proceeds (except to the extent applied
by
Seller toward repair of the Branch) and Seller shall assign to Buyer and Buyer
shall assume all of Seller’s obligations under all contracts
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ARTICLE
V
CONDITIONS
PRECEDENT
5.1
Conditions
Precedent to Buyer’s Obligations.
The
obligation of Buyer to consummate this Agreement shall be subject to the
satisfaction of each of the following conditions as of the Effective Date,
except to the extent that any such condition may have been waived:
(a)
Accuracy
of Representations and Warranties.
All of
the representations and warranties of Seller as set forth in this Agreement
shall be true and correct in all material respects as of the Effective Date,
as
if made on such date (or on the date to which it relates in the case of any
representation or warranty which expressly relates to an earlier
date).
(b)
Covenants
Performed.
Seller
shall have performed or complied in all material respects with all covenants
required by this Agreement to be performed or complied with by it.
(c)
Regulatory
Approvals.
The
approval of each federal and state regulatory authority having jurisdiction
over
the transactions contemplated by this Agreement shall have been obtained and
all
applicable waiting and notice periods shall have expired.
(d)
Consents.
All
consents required to be obtained by Seller from third parties in order to permit
this Agreement to be consummated without violation of any contract shall have
been obtained on terms and conditions reasonably satisfactory to
Buyer.
(e)
No
Litigation.
No
action, suit or proceeding shall be pending or threatened before any court
or
governmental agency which seeks to modify, enjoin or prohibit the transactions
contemplated by this Agreement. No action, suit or proceeding shall be pending
or threatened against either party which might: (i) materially adversely
affect the Purchased Assets, the Assumed Liabilities or the business conducted
at the Branch, or (ii) otherwise materially adversely affect this
transaction.
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(f)
Deliveries
by Seller.
Seller
shall have made to Buyer the deliveries specified in Section 1.5 of this
Agreement.
(g)
Loan
Purchase Agreement.
The
transactions contemplated under the Loan Purchase Agreement shall have closed
and Seller shall have otherwise performed or complied in all material ways
with
all covenants required by the Loan Purchase Agreement to be performed or
complied with by it.
(h)
Real
Estate.
Seller
shall have conveyed to Buyer good and marketable fee simple title to the Real
Estate, insurable at ordinary rates by Fidelity National Title Insurance Company
(or by another nationally recognized title company), free and clear of all
liens
and encumbrances of any kind whatsoever, other than liens and encumbrances:
(i) of the kind described in Clauses (i) and (ii) of
Section 2.4(a) above, or (ii) relating to an Exception which Buyer
shall be deemed to have waived pursuant to the last sentence of the second
paragraph of Section 2.4 (a) above.
5.2
Conditions
Precedent to Seller’s Obligations.
The
obligation of Seller to consummate this Agreement shall be subject to the
satisfaction of each of the following conditions as of the Effective Date,
except to the extent that any such condition may have been waived:
(a)
Accuracy
of Representations and Warranties.
All of
the representations and warranties of Buyer as set forth in this Agreement
shall
be true and correct in all material respects as of the Effective Date, as if
made on such date (or on the date to which it relates in the case of any
representation or warranty which expressly relates to an earlier
date).
(b)
Covenants
Performed.
Buyer
shall have performed or complied in all material respects with all covenants
required by this Agreement to be performed or complied with by it.
(c)
Regulatory
Approvals.
All
required regulatory notices shall have been given, the approval of each federal
and state regulatory authority having jurisdiction over the transactions
contemplated by this Agreement shall have been obtained and all applicable
waiting and notice periods shall have expired.
-31-
(d)
Consents.
All
consents required to be obtained by Seller from third parties in order to permit
this Agreement to be consummated without violation of any contract shall have
been obtained on terms and conditions reasonably satisfactory to
Seller.
(e)
No
Litigation.
No
action, suit or proceeding shall be pending or threatened before any court
or
governmental agency which seeks to modify, enjoin or prohibit the transactions
contemplated by this Agreement. No action, suit or proceeding shall be pending
or threatened against either party which might: (i) materially adversely
affect the Purchased Assets, the Assumed Liabilities or the business conducted
at the Branch, or (ii) otherwise materially adversely affect this
transaction.
(f)
Deliveries
by Buyer.
Buyer
shall have made to Seller the deliveries specified in Section 1.6 of this
Agreement.
(g)
Loan
Purchase Agreement.
The
transactions contemplated under the Loan Purchase Agreement shall have closed
and Buyer shall have otherwise performed or complied in all material ways with
all covenants required by the Loan Purchase Agreement to be performed or
complied with by it.
ARTICLE
VI
TERMINATION,
AMENDMENT AND WAIVER
6.1
Termination.
This
Agreement may be terminated at any time before the Effective Date, as
follows:
(a)
Mutual
Consent.
This
Agreement may be terminated at any time by mutual consent of the parties upon
the execution by both parties of a written instrument to this
effect.
(b)
Unilateral
Action by Buyer.
This
Agreement may be terminated unilaterally by Buyer upon written notice given
to
Seller:
(i)
Breach.
In the
event that there has been a material breach by Seller of any representation,
warranty or covenant set forth in this Agreement and such breach, if
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(ii)
Regulatory
Disapproval.
In the
event that any application required for regulatory approval of the transactions
contemplated by this Agreement shall have been denied and the time period for
appeals and requests for reconsideration shall have run;
(iii)
Failure
of Condition.
In the
event that it is probable to a reasonable degree of certainty that, through
no
fault on the part of Buyer, a condition to Buyer’s obligations hereunder will
not be satisfied prior to January 31, 2007;
(iv)
Failure
to Close.
In the
event that the Effective Date shall not have occurred on or before the close
of
business on January 31, 2007, unless the failure of such occurrence is due
to the wrongful failure of Buyer to perform its obligations under this
Agreement;
(v)
Title
Issues.
In
accordance with the second paragraph of Section 2.4(a) above;
or
(vi)
Environmental
Issues.
In
accordance with Section 2.6 above.
(c)
Unilateral
Action by Seller.
This
Agreement may be terminated unilaterally by Seller upon written notice given
to
Buyer:
(i)
Breach.
In the
event that there has been a material breach by Buyer of any representation,
warranty or covenant set forth in this Agreement and such breach, if susceptible
to cure, shall not have been waived or cured within 15 days after such
notice is given;
(ii)
Regulatory
Disapproval.
In the
event that any application required for regulatory approval of the transactions
contemplated by this Agreement shall have been denied and the time period for
appeals and requests for reconsideration shall have run;
-33-
(iii)
Failure
of Condition.
In the
event that it is probable to a reasonable degree of certainty that, through
no
fault on the part of Seller, a condition to Seller’s obligations hereunder will
not be satisfied prior to January 31, 2007; or
(iv)
Failure
to Close.
In the
event that the Effective Date shall not have occurred on or before the close
of
business on January 31, 2007, unless the failure of such occurrence is due
to the wrongful failure of Seller to perform its obligations under this
Agreement.
6.2
Procedure
Upon Termination.
In the
event that this Agreement is terminated as provided above:
(a)
Return
of Documents.
Each
party shall return to the other all documents, work papers and other materials
of the other party relating to this Agreement, whether obtained before or after
the execution hereof.
(b)
Confidentiality.
Neither
party shall use for any business purpose or disclose to any third party any
non-public information obtained by it during the course of its investigation
of
the other party, except to the extent judicially ordered or otherwise required
by law to do so.
6.3
Effect
of Termination.
(a)
General.
The
termination of this Agreement shall not release or be construed to release
either party from liability to the other arising out of or relating to any
breach by such other party of any representation, warranty or covenant set
forth
in this Agreement.
(b)
Payment
of Expenses.
In the
event that this Agreement is duly terminated by Buyer pursuant to
Section 6.1(b)(i) above or by Seller pursuant to Section 6.1(c)(i)
above, then in addition to such other rights the terminating party may have,
the
other party shall be obligated upon demand to pay all of the expenses reasonably
incurred by the terminating party in connection with this Agreement, including
but not limited to reasonable legal and accounting fees.
-34-
6.4
Amendment.
This
Agreement may be amended at any time before the Effective Date by written
instrument duly authorized and executed by Buyer and by Seller.
6.5
Waiver.
Any
term or condition of this Agreement may be waived by the party entitled to
the
benefit thereof at any time before the Effective Date by written instrument
duly
authorized and executed by such party and delivered to the other
party.
ARTICLE
VII
MISCELLANEOUS
PROVISIONS
7.1
Parties
in Interest and Assignment.
This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and to their respective successors and permitted assigns; provided, however,
that the rights and obligations of Buyer under this Agreement may not be
assigned by it without the prior written consent of Seller; provided, further,
that this Agreement is not intended to confer upon any person not a party hereto
or an assignee hereof, any rights or remedies of any kind and no such person
(including, without limitation, any employee or customer of Seller) shall have
any right to initiate or maintain any suit or action for any breach or alleged
breach of this Agreement or to enforce any provision set forth
herein.
7.2
Expenses.
Each
party hereto shall bear and pay all costs and expenses incurred by it or on
its
behalf in connection with the transactions contemplated herein, except that:
(i) Buyer shall bear and pay all costs and expenses relating to the
transfer of the Deposit Related Loans and Other Loans, including, but not
limited to, the costs and expenses of preparing, executing, filing, and/or
recording all assignments of mortgage and other collateral security, financing
statements and other documents and instruments, and similar costs and expenses,
and (ii) in the event that this Agreement is terminated by reason of a
material breach, the breaching party shall pay certain expenses incurred by
the
terminating party as provided in Section 6.3(b) above. Without limitation
of the foregoing, any expenses, fees and costs relating to applications for
regulatory approval or to notices to customers of Seller provided for in this
Agreement shall be borne by the party seeking such approval or giving such
notice.
7.3
Notices.
All
notices, requests, demands, consents and other communications provided for
hereunder shall be in writing and shall be hand delivered, mailed (by registered
or
-35-
If
to
Seller:
▇▇▇▇▇▇▇
▇. High
Executive
Vice President and Chief Operating Officer
Harleysville
National Bank and Trust Company
▇▇▇
▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
with
a
copy to:
▇▇▇▇▇▇▇
▇. ▇▇▇▇, Esquire
▇▇▇▇▇▇▇
& ▇▇▇
▇▇
▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇.▇.
▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇-▇▇▇▇ [17603 for courier purposes]
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
and
If
to
Buyer:
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇
First
Senior Vice President
First
National Community Bank
▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
with
a
copy to:
▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇., Esq.
▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
or,
as to
each party, at such other address as shall be designated by such party in a
written notice to the other party complying as to delivery with the terms and
conditions of this Section. Such notices shall be deemed received upon actual
receipt by the recipient.
7.4
Headings.
The
Section headings and other headings set forth in this Agreement are
intended for purposes of convenience and reference only and shall not in any
way
affect the meaning or interpretation of this Agreement.
-36-
7.5
Defined
Terms.
An
index of defined terms is set forth in Attachment 4 to this
Agreement.
7.6
Governing
Law and Related Matters.
(a)
Governing
Law.
This
Agreement shall be construed in accordance with the laws of the Commonwealth
of
Pennsylvania (without reference to its choice of laws provisions), except to
the
extent that federal law is applicable.
(b)
Consent
to Jurisdiction.
Seller
and Buyer each hereby agrees that any legal action or proceeding against it
arising out of or relating to this Agreement or any other document or instrument
executed in connection herewith, or any course of conduct, course of dealing,
statement (whether oral or written), or action on the part of the other shall
be
brought exclusively in the court of common pleas of ▇▇▇▇▇▇▇▇▇▇ County,
Pennsylvania or the United States District Court for the Eastern District of
Pennsylvania and, by execution and delivery hereof, Seller and Buyer each
accepts and consents to, for itself and in respect of its property, generally
and unconditionally, the jurisdiction of the aforesaid courts with respect
to
any action or proceeding brought by either of them against the
other.
(c)
Waiver
of Trial by Jury.
Seller
and Buyer each hereby knowingly, voluntarily and intentionally waives any and
all rights it may have to a trial by jury in respect of any litigation arising
out of or relating to this Agreement or any other document or instrument
executed in connection herewith, or any course of conduct, course of dealing,
statement (whether oral or written), or action on the part of the other. This
provision is a material inducement for Seller to enter into this
Agreement.
(d)
Waiver
of Certain Damages.
Seller
and Buyer each hereby waives to the fullest extent permitted by law the right
to
assert against the other any claim for punitive, exemplary, incidental, special,
indirect or consequential damages of any kind arising out of or relating to
this
Agreement, the Loan Purchase Agreement or any other document or instrument
executed in connection herewith, or any course of conduct, course of dealing,
statement (whether oral or written), or action on the part of the
other.
-37-
7.7
Specific
Performance.
Each
party hereby acknowledges that monetary damages would not adequately compensate
the other party in the event of a breach of this Agreement, that the
non-breaching party would suffer irreparable harm in the event of any such
breach, and that the non-breaching party shall have, in addition to any other
rights or remedies which it may have under Section 1.7 above, the right to
seek specific performance, injunctive relief or other form of equitable relief
as a remedy for the enforcement hereof in the event of any such breach or
threatened breach. Buyer and Seller agree that the party seeking any such form
of equitable relief shall not be required to post a bond or other form of
security in connection with its request for such relief.
7.8
Entire
Agreement.
This
Agreement (including the Attachments, Schedules and Exhibits hereto), together
with the Loan Purchase Agreement, sets forth the entire understanding of the
parties hereto and supersedes any and all prior amendments, arrangements and
understandings, oral or written, relating to the subject matter
hereof.
IN
WITNESS WHEREOF, this Agreement is executed the day and year first above
written.
HARLEYSVILLE
NATIONAL BANK AND TRUST COMPANY
By:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President
(Corporate
Seal)
FIRST
NATIONAL COMMUNITY BANK
By:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
(Corporate
Seal)
First
Senior Vice President
-38-