Exhibit 10.9
ASSET SALE AGREEMENT
Asset Sale Agreement (together with all Schedules and Exhibits hereto, the
"Agreement"), dated as of September 10, 1999, by and among National Bank of the
Redwoods, a National Association organized under the laws of the United States
("Seller"), and Valley Financial Acquisition, Inc., a Delaware corporation
("Buyer").
RECITALS
A. Seller is engaged in the commercial and mortgage banking business, including
for the purpose of this Agreement the origination of mortgage loans, the
servicing of such mortgage loans and the sale of such mortgage loans and
servicing rights (the "Business").
B. All of the assets being sold hereunder are owned by the Seller.
C. Seller desires to sell to Buyer, and Buyer desires to purchase from Seller,
certain assets of the Seller.
In consideration of the premises and the respective representations, warranties
and agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follow:
ARTICLE I.
DEFINITIONS
1.1 Certain Defined Terms. As used in this Agreement, the following terms
shall have the following meanings (such definitions to be equally
applicable to both the singular and plural forms of the terms defined):
"Affiliate" means any person or entity which (i) owns a voting interest in
Seller or Buyer; (ii) in which Seller or Buyer owns a voting interest; or (iii)
which is under common control with Seller or Buyer, whether direct or indirect.
"Affiliated Businesses" has the meaning specified in Section 2.1(e).
"Agreement" means this Asset Sale Agreement, including all schedules and
exhibits hereto, as it may be further amended from time to time as herein
provided.
"Assumed Liabilities" has the meaning specified in Section 2.3(a).
"Books and Records" has the meaning specified in Section 2.1(g).
"Business" has the meaning specified in the recitals of this Agreement.
"Closing" and "Closing Date" means the closing and date thereof,
respectively, of the transactions contemplated by this Agreement as specified in
Section 3.1.
"Disclosure Schedules" means all schedules and exhibits prepared for or
delivered in connection with this Agreement and elsewhere described herein.
"Excluded Liabilities" has the meaning specified in Section 2.3(a).
"Governmental Entity" means any instrumentality, commission, division,
subdivision, department, agency or procuring office or other entity of any
federal, state, local or foreign government.
"Intellectual Property" means all copyrights, service marks, trademarks,
patents, trade names, software and software licenses, copyright registration and
applications, service xxxx registrations and applications, trade xxxx
registrations and applications, patent registrations and applications,
unpatented inventions, databases and documentation, trade secrets and other
confidential information, technology and know-how, licenses and processes, if
any, used in or necessary or required by the Buyer as it presently conducts its
business as specified in Schedule 2.
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"Lien" has the meaning specified in Section 2.1.
"Permitted Lien" has the meaning specified in Section 2.1.
"Purchased Assets" has the meaning specified in Section 2.1.
"Servicing" means all mortgage servicing associated with CUSO, that
consists of all departments accounted for in the 6000 series of the Seller's
General Ledger as of June 30, 1999, as set forth on Schedule 3.
"Taxes" means all income, franchise or other taxes imposed or assessed by
any Governmental Entity.
"Transaction Documents" has the meaning specified in Section 2.3(a).
"Valley" means Valley Financial, a division of Seller.
ARTICLE II.
PURCHASE AND SALE OF ASSETS
2.1 Sale of Assets. Subject to the terms and conditions herein set forth and
in consideration of the payment of the purchase price at the Closing,
Seller shall sell, assign, transfer and deliver the Buyer and Buyer shall
purchase from Seller the following assets (the "Purchased Assets"):
(a) All furniture, fixtures, equipment and other fixed assets as set
forth on Schedule 1;
(b) The name "Valley Financial" and all other Intellectual Property as
set forth on Schedule 2;
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(c) All Servicing as set forth on Schedule 3; and
(d) All contracts and agreements relating to the Business as set forth on
Schedule 4.
(e) Seller's capital stock or other equity interests in the entities that
own the businesses affiliated with Valley as set forth on Schedule 6 (the
"Affiliated Businesses").
(f) All deposits made by borrowers and held by Seller in escrow, as set
forth on Schedule 7.
(g) All books and records relating exclusively to the Business or the
Affiliated Businesses (the "Books and Records").
The Purchased Assets shall be sold, transferred and conveyed to Buyer free and
clear of all liens, claims, pledges, security interests, equities, options,
charges, restrictions or other encumbrances of any kind whatsoever ("Liens"),
except for any Liens with respect to contingent liabilities that may exist with
respect to Servicing that can be satisfied solely by the payment of money in a
maximum aggregate amount of up to Eighty-Five Thousand Dollars ($85,000) which
are further described on Schedule 5 (the "Permitted Lien").
2.2 Excluded Assets. The Seller shall retain all assets of Seller other than
the Purchased Assets.
2.3 Assumption of Liabilities.
(a) Notwithstanding anything to the contrary contained in this Agreement
or any agreement, document, certificate or instrument being
delivered pursuant to this Agreement (collectively, the "Transaction
Documents") and regardless of whether such liability is disclosed in
this Agreement, in any of the Transaction Documents or on any
Schedule or Exhibit hereto or thereto, Buyer will not assume, agree
to pay, perform or discharge or
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in any way be responsible for any debts, liabilities or obligations
of Seller or any Affiliate of Seller of any kind or nature
whatsoever, whether known or unknown, absolute or contingent,
liquidated or unliquidated and whether due or to become due (all
such debts, liabilities and obligations not being assumed by Buyer,
including without limitation those liabilities described in Section
2.3(b) and those set forth on Schedule 8, are referred to as
"Excluded Liabilities"), except for and to the extent such debts,
liabilities and obligations are listed on Schedule 9, such debts,
liabilities and obligations, to the extent listed on Schedule 9,
shall be assumed by Buyer and are referred to herein as the "Assumed
Liabilities." Notwithstanding anything to the contrary contained in
this Agreement or any Transaction Document, the Assumed Liabilities
shall not include, and Seller shall remain solely liable for, any
liability or obligation arising out of or in connection with any
breach of any contract or agreement listed on Schedule 4 occurring
at or prior to the Closing.
(b) Without Limiting the generality of Section 2.3(a) above, Buyer is
expressly not assuming, and Seller shall remain solely liable for,
all claims, suits or actions which arise, directly or indirectly,
out of facts, circumstances or conditions existing as of, or events
occurring at or prior to, the Closing.
2.4 Purchase Price and Payment of Assets. Subject to the terms and conditions
herein set forth and in consideration of the sale, assignment, transfer
and delivery to Buyer of the Purchased Assets, Buyer shall (a) pay to
Seller at the Closing an amount equal to Four Hundred Seventy-Eight
Thousand Four Hundred Seventy-Nine Dollars and 51/100 ($478,479.53) plus
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Forty-One Thousand Eight Hundred Thirty-Nine Dollars and 24/100
($41,839.24) for the Affiliated Businesses and (b) assume the Assumed
Liabilities.
ARTICLE III.
CLOSING
3.1 Closing. The consummation of the purchase and sale of the Purchased Assets
(the "Closing") shall take place at the offices of National Bank of the
Redwoods located at 000 Xxxxx Xxxx Xxxxxx, Xxxxx Xxxx, Xxxxxxxxxx at 10:00
a.m., local time, on [Buyer will use reasonable efforts to close by
September 10, 1999 but Closing will occur no later than September 17,
1999]. The date and time of the closing are referred to herein as the
"Closing Date."
3.2 Seller Obligations At Closing. At the Closing, Seller shall deliver or
cause to be delivered to Buyer:
(a) A schedule of all furniture, fixtures, equipment and other fixed
assets of Seller used or held for use in the operation of the
Business, which shall be consistent with the assets included in the
six thousand (6,000) series of the Seller's general ledger.
(Schedule 1);
(b) A schedule of all Intellectual Property of Seller used or held for
use in the operation of the Business (Schedule 2);
(c) A schedule of all loans being serviced as of the Closing Date on the
CUSO Servicing System (Schedule 3);
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(d) A schedule of all contracts and agreements to which Seller is a
party or by which it is bound which relate primarily to the Business
(Schedule 4);
(e) A schedule of the Affiliated Businesses, Seller's ownership interest
in such Affiliated Businesses, the percentage of the equity
interests in such Affiliated Businesses owned by the Seller and the
assets owned by such Affiliated Businesses (Schedule 6), Seller
represents and warrants to the Purchaser that the ownership
interests set forth on Schedule 6 represent all of Seller's
ownership interests in such Affiliated Businesses and such
Affiliated Businesses have no liabilities, claims or obligations
arising prior to the Closing or relating to facts, circumstances or
conditions existing as of, or events occurring at or prior to,
Closing, other than contract and other commitments set forth on
Schedule 4;
(f) A schedule of all deposits of borrowers held by the Seller in escrow
(Schedule 7). Upon the mutual agreement of Buyer and Seller, Buyer
may deduct the amount of such deposits from the purchase price due
to Seller at the Closing pursuant to Section 2.4;
(g) All Books and Records;
(h) A xxxx of sale for the Purchased Assets and any and all assignments
requested by Buyer of contracts and agreements set forth on Schedule
4, in substantially the forms attached hereto as Exhibit A;
(i) A written acknowledgement to Buyer that Seller has terminated the
individuals currently employed by Seller which are to be hired by
Buyer or Buyer's nominee as set forth on
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Schedule 10 in substantially the form attached hereto as Exhibit B.
The Seller will transfer to Buyer funds representing any vacation
accrual associated with the individuals being hired by Buyer or
Buyer's nominee. Upon the mutual agreement of Buyer and Seller,
Buyer may deduct the amount of such funds from the purchase price
due to Seller at Closing pursuant to Section 2.4; and
(j) Certificates of duly authorized officers of Seller, dated as of the
Closing Date, certifying as to their authority to sign this
Agreement and the Transaction Documents on behalf of Seller, in
substantially the form attached hereto as Exhibit C.
3.3 Buyer Obligations At Closing: At the Closing, Buyer shall deliver or cause
to be delivered to Seller:
(a) The purchase price, by wire transfer of immediately available funds
to the Seller's account at Federal Reserve Bank San Francisco,
Routing Number 1211-41000, Attn: Xxxxxxx X. Xxxxxxxx;
(b) An executed Indemnification Agreement by Xxxxx Xxxxxx, Xxxx
Xxxxxxxxxx, Xxxx Xxxxx and Xxxxxx Xxxxxxx indemnifying the Seller
from any further obligations under real property leases known as the
(1) Shopping Center Lease dated November 24, 1997 and ending
November 23, 2000, (2) Office and Building Lease in the name of
Allied Bank F.S.B. and Xxxxx Xxxxxx dated July 25, 1996 including
three addendums ending January 1,2002, and (3) Hacienda Professional
Building lease dated February 14, 1997 in the name of Allied Bank
and Xxxxx Xxxxxx Mortgage Partners ending February 14, 2000, in
substantially the form attached hereto as Exhibit D;
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(c) Resignations of all officers of Valley, in substantially the form
attached hereto as Exhibit E;
(d) A written acknowledgment that Buyer will be providing positions for
the individuals currently employed by the Seller and set forth on
Schedule 10, in substantially the form attached hereto as Exhibit F;
(e) Evidence of the assumption by Buyer of (i) all contracts and
agreements set forth on Schedule 4 and (ii) all liabilities set
forth on Schedule 9; and
(f) Certificates of duly authorized officers of Buyer, dated the Closing
Date, certifying as to their authority to sign this Agreement and
the Transaction Documents on behalf of the Buyer, in substantially
the form attached hereto as Exhibit G.
(g) Buyer agrees to cause its affiliate, Pacific Guarantee Mortgage
Corporation, to provide services to the Seller pursuant to the terms
of that certain Residential Mortgage Loan Services and Purchase
Agreement between Pacific Guarantee Mortgage Corporation and the
Seller, dated August 27, 1999, attached hereto as Exhibit I.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
4.1 Organization. Seller is a National Association duly organized, validly
existing and in good standing under the laws of the United States of
America and has full corporate power to own and sell the Purchased Assets.
4.2 Authorization.
(a) Seller has full corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by
all necessary corporate action on the part of Seller. This Agreement
has been duly executed and delivered by Seller. This Agreement
constitutes a legal, valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms, except as
the enforceability thereof may be limited by bankruptcy, insolvency,
receivership, conservatorship, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights
generally and general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity).
(b) Except for items otherwise set forth herein, no consent, waiver,
approval, order or authorization of, notice to, or registration,
declaration, designation, qualification or filing with, any
Governmental Entity or third Person, domestic or foreign, is or has
been or will be required on the part of Seller in connection with
the execution and delivery
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of this Agreement by Seller or the consummation by Seller of the
transactions contemplated hereby.
4.3 Financial Exhibits. Schedule 11 contains a statement of assets purchased
at book value of the Business as of the Closing Date, which balance sheet
was prepared consistently with Seller's past accounting practices with
respect to the Business and is true and correct in all material respects.
4.4 Absence of Undisclosed Liabilities. Except as set forth on Schedule 12,
Seller does not have any liabilities which are in the aggregate, material
to the Purchased Assets. Seller agrees to accept responsibility for all
liabilities (other than Assumed Liabilities) incurred, arising or relating
to periods on or prior to the Closing Date. Any ordinary course
liabilities incurred prior to the Closing Date, but not received by the
Seller or the Buyer until after the Closing will be paid by Seller for the
period ending on the Closing Date and by Buyer for the period beginning
the day after the Closing Date.
4.5 Title To Assets. As of the date of this Agreement, Seller has, and as of
the Closing Date Seller will have, good and marketable title to, or, in
the case of leases and licenses, valid and subsisting leasehold interests
and licenses in, all of the Purchased Assets, free and clear of all Liens
other than the Permitted Lien. The Purchased Assets include substantially
all of the assets required to conduct the Business as presently conducted
and are in good operating condition and repair.
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4.6 Litigation. Except as listed on Schedule 13, there is no action pending
or, to the knowledge of Seller, threatened against Seller which relates to
the Business, the Purchased Assets, the Assumed Liabilities or the
transactions contemplated hereby.
4.7 Employee Benefit Plans. The Seller will not continue to provide any
employee benefits for those individuals set forth on Schedule 10. As
provided in Section 3.2(i) hereof, Seller will transfer the economic value
of accrued vacation to Buyer or its nominee for those individuals set
forth on Schedule 10 who have such accruals. Seller will comply with all
applicable laws and provide employee services required by law or
consistent with existing agreements to provide such services after
termination. All salary payments will cease on the Closing Date. Payments
made on behalf of individuals employed by the Seller prior to Closing
Date, but effective beyond the Closing Date will remain in effect without
proration of expense.
4.8 Contracts and Commitments. Any contract or commitments not set forth on
Schedule 4 that is in the name of the Seller, but created for the benefit
of Valley will be transferred, assigned or conveyed to the Buyer only upon
the Buyer's request. If the contract represents a liability, the Buyer
agrees to assume the outstanding liability from the Closing Date to the
extent not related to a breach occurring on or prior to the Closing Date.
The Seller is not in default under any commitment, contract or agreement
constituting Purchased Assets, and to the knowledge of Seller, no other
party thereto is in default thereunder.
4.9 Permits and Other Operating Rights. The Seller makes no representation
that Seller is transferring to Buyer any permits or operating rights other
than those permits which are
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transferable by Seller and are required for Buyer to operate the Business
after the Closing, all of which are being transferred by Seller to Buyer
hereunder.
4.10 Mortgage Servicing Portfolio
(a) Schedule 3 sets forth, as of the Closing Date, a listing of (i) all
CUSO investors with which Seller has a mortgage servicing agreement,
listing for each such investor its name, address and the unpaid
principal amount of mortgage loans subject to such agreement, and
(ii) all such loans subject to loan servicing agreements, organized
by the name of the investor, including (1) the outstanding principal
amount and the loan number, (2) a statement of arrears, organized by
mortgagor and loan number. (3) a statement of prepayments in trust
accounts not applied to principal balances of such loans and (4)
escrows in trust accounts by loan number. Each such loan is
evidenced by a note or other evidence of indebtedness, complied at
the time it was made with all applicable regulations and the
requirements of any investor which acquired the loan, and is duly
secured by a mortgage or deed of trust with customary terms, each
such mortgage or deed of trust constituting a security interest that
has been duly perfected and maintained and is in full force and
effect.
(b) Schedule 14 contains a true and complete list, as of the Closing
Date, of (i) all outstanding loan commitments and standby loan
commitments made by Seller, (ii) the commitments of investors, if
any, to purchase the resulting mortgage loans and (iii) the
discount/purchase price of each such commitment.
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(c) Seller has the exclusive right to service all mortgage loans
included in its mortgaging loan servicing portfolio. To the best
knowledge of Seller, Seller is not in default under any of its
mortgage loan servicing agreements, which default could have a
material adverse effect on the Business or Buyer.
4.11 Compliance With Laws; Agreements With Regulators. Seller is not in
violation of any material law, rule, regulation or order of any
Governmental Entity to which Seller is or was bound and which relates to
the Business or the transactions contemplated hereby. As of the Closing
Date, Seller is not (a) a party to any formal agreement or memorandum of
understanding with, (b) a party to any commitment letter or similar
undertaking to, (c) subject to any order of any Governmental Entity, or
(d) the recipient of any extraordinary supervisory letter from, any
Governmental Entity or official thereof restricting the conduct of the
Business.
4.12 No Brokers. Neither Seller not any of its directors, officers or employees
has employed any broker, finder or investment banker or incurred any
liability for any brokerage fees, commissions, finders' fees or similar
fees in connection with the transactions contemplated by this Agreement.
4.13 Disclaimer. Seller makes no representations or warranties to Buyer in
connection with this Agreement and the transactions contemplated hereby,
except as provided in this Agreement. Except as otherwise expressly set
forth in this Agreement, Seller disclaims any representations or
warranties of any kind or nature, express or implied, as to the condition,
value or quality of the Purchased Assets.
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ARTICLE V.
REPRESENTATIVES AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
5.1 Organization. Buyer is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has full
corporate power and authority to carry on its business as and where it is
now being conducted.
5.2 Authorization. Buyer has full corporate power and authority to enter into
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Buyer. This Agreement has been
duly executed and delivered by Buyer. This Agreement constitutes a legal,
valid and binding obligation of Buyer, enforceable against Buyer in
accordance with its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, receivership, conservatorship,
reorganization, moratorium or other similar laws affecting the enforcement
of creditors' rights generally and general principles of equity
(regardless of whether enforceability is considered in a proceeding at law
or in equity).
52 Availability of Funds. Buyer has available and will have available on the
Closing Date sufficient funds to enable it to consummate the transactions
contemplated by this Agreement.
5.4 No Broken. Neither Buyer nor any of its directors, officers or employees
has employed any broker, finder or investment banker or incurred any
liability for any brokerage fees
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commissions, finders' fees or similar fees in connection with the
transactions contemplated by this Agreement.
ARTICLE VI.
CERTAIN COVENANTS
6.1 Joint Marketing Agreement. Seller and Buyer are desirous to entering into
a Joint Marketing Agreement to facilitate the processing of single family
mortgages for Seller's customers and prospects. Further it is the desire
of Seller and Buyer to provide construction loans for the clients of the
Buyer or nominee. It is agreed that the parties will enter into an
agreement with respect to the foregoing by September 30, 1999.
6.2 Authorizations. Each of Buyer and Seller, on the Closing Date or, if
permissible, as promptly as practicable after the Closing Date, shall (a)
deliver, or cause to be delivered, all notices and make, or cause to be
made, all such declarations, designations, registrations, filings and
submissions under all laws, rules and regulations applicable to it as may
be required for it to consummate the sale of the Purchased Assets and the
other transactions contemplated hereby in accordance with the terms of
this Agreement; (b) use commercially reasonable efforts to obtain, or
cause to be obtained, all authorizations, approvals, orders, consents and
waivers from all Governmental Entities and other persons necessary to
consummate the foregoing; and (c) use commercially reasonable efforts to
take, or cause to be taken, all other actions necessary, proper or
advisable in order for it to fulfill its respective obligations hereunder
and to carry out the intentions of the parties expressed herein.
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6.3 Acknowledgement by Buyer. THE REPRESENTATIONS AND WARRANTIES SET FORTH IN
THIS AGREEMENT CONSTITUTE THE SOLE AND EXCLUSIVE REPRESENTATIONS AND
WARRANTIES OF SELLER TO BUYER IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED HEREBY. THERE ARE NO REPRESENTATIONS, WARRANTIES, COVENANTS,
UNDERSTANDINGS OR AGREEMENTS, ORAL OR WRITTEN, IN RELATION THERETO BETWEEN
THE PARTIES OTHER THAN THOSE INCORPORATED HEREIN AND TO BE DELIVERED
HEREUNDER. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET
FORTH IN THIS AGREEMENT, BUYER DISCLAIMS RELIANCE ON ANY REPRESENTATIONS
OR WARRANTIES, EITHER EXPRESS OR IMPLIED, BY SELLER OR ITS EMPLOYEES,
REPRESENTATIVES OR AGENTS.
6.4 Public Announcements. After the date hereof, neither Buyer, Seller nor the
representatives of either of them shall make any public announcement with
respect to this Agreement or the transactions contemplated hereby without
the prior written consent of the other party hereto. The foregoing
notwithstanding, any such public announcement may be made if required by
applicable law or a securities exchange rule, provided that the party
required to make such public announcement shall confer with the other
party concerning the timing and content of such public announcement before
the same is made.
6.5 Assignment of Contracts.
(a) On or prior to the Closing Date, Seller, at its expense, shall
obtain or cause to be obtained all consents and other approvals of
all lessors, lenders, Governmental Entities
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and other third persons which are required to be obtained by Seller
as a result of the transactions contemplated by this Agreement and
as set forth on Schedule 15, which consents and approvals shall
continue each applicable lease, loan or other arrangement related to
the Business on substantially identical terms as exist on the date
hereof.
(b) To the extent that the assignment hereunder by the Seller to Buyer
of any contract or agreement is not permitted or is not permitted
without the consent of any other party to the contract or agreement,
this Agreement shall not be deemed to constitute an assignment of
any such contract or agreement if such consent is not given or if
such assignment otherwise would constitute a breach of, or cause a
loss of contractual benefits under, any such contract or agreement,
and Buyer shall not assume any obligations or liabilities
thereunder. Without in any way limiting Seller's obligations to
obtain all consents and waivers necessary for the sale, transfer,
assignment and delivery of the contracts and agreements and the
Purchased Assets to Buyer hereunder, if any such consent is not
obtained or if such assignment is not permitted irrespective of
consent and the Closing hereunder is consummated, Seller shall
continue to use their best efforts to obtain such consents and shall
cooperate with Buyer in any arrangement designed to provide Buyer
with the rights and benefits (subject to the obligations) under any
such contracts or agreements. If Seller is able to provide Buyer
with the benefits of any such contract, Buyer will assume or
reimburse to Seller the obligations thereunder.
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6.6 Non-Solicitation/Non-Hire
(a) Non-Solicitation of Employees or Agents. Seller hereby agrees that
from the date of this Agreement until the earlier of (i) three (3)
years from the Closing Date, or (ii) the expiration of the longest
period of time allowed by law, Seller shall not hire or engage in
soliciting, diverting, hiring or inducing, or attempting to solicit,
divert, hire or induce, directly or indirectly (whether on its own
behalf or that of any other person, business or entity), any
employee or agent of Buyer or its Affiliates, who was employed by or
under contract with Seller, Buyer or any Affiliate of Buyer within
one (1) year of the date of such solicitation, to terminate his or
her relationship with Buyer or any such Affiliate of Buyer
(b) Non-Solicitation of Customers and Referral Sources. Seller hereby
agrees that from the date of this Agreement until the earlier of (i)
three (3) years from the Closing Date or (ii) the longest period of
time allowed by law, Seller shall not, either directly or
indirectly, engage in calling upon, soliciting, diverting or
inducing, or attempting to call upon, solicit, divert or induce, and
shall not, directly or indirectly, use any non-public information
relating to a customer of Seller, Buyer or its Affiliates, for
calling upon, diverting, soliciting or inducing, or attempting to
call upon, divert, solicit or induce, any customer or referral
source relating to mortgage business of Seller, Buyer or any
Affiliate of Buyer including any individual or entity which has done
business with Seller, Buyer or its Affiliates, (i) to do business
with a competitor of Buyer or of any Affiliate of Buyer or (ii) not
to do business with Buyer or any of its Affiliates. Notwithstanding
the foregoing, the Seller may engage (i) in the business of funding
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wholesale construction mortgage loans and (ii) in the retail
mortgage banking and brokering business but only with respect to
individuals who are customers of the Seller prior to the Seller's
solicitation or the initiation of such individual's mortgage banking
or brokerage business.
6.7 Lynden Loan. Seller will assign to Buyer the loan known as the "Lynden et
al" loan within sixty (60) days after the Closing Date pursuant to an
Assignment Agreement in substantially the form set forth attached hereto
as Exhibit H.
6.8 CUSO Servicing Indemnification. Buyer agrees to indemnify Seller for up to
a maximum of Eighty-Five Thousand Dollars ($85,000), in the aggregate, for
claims made by the original sellers of the Servicing.
6.9 Transitional Services. Buyer agrees to provide services at reasonable cost
to the Seller for any services now being performed by Valley for Seller in
their current arrangement which for whatever reason cannot be assigned to
the Buyer until such time the current contact or current agreement is not
in effect, terminates or expires.
ARTICLE VII.
INDEMNIFICATION
7.1 Survival of Representations and Warranties. The representations and
warranties of Seller in Article IV hereof and of Buyer in Article V hereof
shall survive for a period of thirty-six (36) months from the Closing. If
written notice of a claim has been given prior to the
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expiration of the applicable representations and warranties by a party in
whose favor such representations and warranties have been made to the
party that made such representations and warranties, then the relevant
representations and warranties shall survive as to such claim, until the
claim has been finally resolved.
7.2 Indemnification by Seller. Except as otherwise limited by Section 7.1 or
this Section 7.2, Buyer and its officers, directors, employees,
subsidiaries, successors and assigns shall be indemnified and held
harmless by Seller for any and all losses, damages, liabilities, claims,
costs and expenses, interest, awards, judgments and penalties (including
reasonable legal costs and expenses) suffered or incurred by them arising
out of, relating to or resulting directly or indirectly from (a) the
inaccuracy of any representation or warranty of Seller set forth in this
Agreement, (b) any other breach or violation of this Agreement by Seller,
(c) any liability arising from or relating to any Excluded Asset or
Excluded Liability, (d) any and all liabilities, claims, or obligations of
the Affiliated Businesses arising prior to the Closing or relating to
facts, circumstances, or conditions existing as of, or events occurring at
or prior to Closing, and (e) any and all debts, liabilities and
obligations, other than Assumed Liabilities, arising from the operation of
the Business prior to the Closing or relating to facts, circumstances or
conditions existing as of, or events occurring at or prior to the Closing.
Any such payment shall constitute an adjustment of the Purchase Price.
7.3 Indemnification by Buyer. Except as otherwise limited by Section 7.1 or
this Section 73, Seller and its officers, directors, employees,
subsidiaries, successors and assigns shall be indemnified and held
harmless by Buyer for any and all losses, damages, liabilities, claims,
costs and expenses, interest, awards, judgments and penalties (including
reasonable legal
21
costs and expenses) actually suffered or incurred by them arising out of
or resulting from (a) the inaccuracy of any representation or warranty of
Buyer set forth in this Agreement, (b) any other breach or violation of
this Agreement by Buyer, (c) any Assumed Liability, and (d) any
liabilities (other than Excluded Liabilities) arising solely from the
ownership or use of the Purchased Assets, or the operation of the
Business, after the Closing.
ARTICLE VIII.
TAX MATTERS
8.1 Taxes. Buyer shall be liable for all Taxes which relate to the Business to
the extent related to periods or portions thereof occurring after the
Closing. Seller shall be liable for all Taxes which relate to the Business
to the extent related to periods or portions thereof occurring on or prior
to the Closing.
8.2 Notification and Defense. Buyer shall promptly notify Seller in writing
upon receipt by Buyer or any affiliate of Buyer of notice of any pending
or threatened action relating to any Tax of Seller for periods ending
prior to or including the Closing Date. Seller shall have the sole right
to represent the taxpayer's interest in any such action with respect to
periods or portions thereof ending on or prior to the Closing, and to
employ counsel of its choice at its expense. Buyer agrees that it will
cooperate fully with Seller and its counsel at Seller's cost and expense
in the defense against or compromise of any claim in any such action.
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ARTICLE IX.
GENERAL PROVISIONS
9.1 Expenses, Taxes, Etc. Each party will pay all fees and expenses incurred
by it in connection with this Agreement and the transactions contemplated
hereby.
9.2 Notices. All notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed to have been duly given or
made as of the date delivered or mailed if delivered personally or mailed
by registered or certified mail (postage prepaid, return receipt
requested) or sent by facsimile transmission, (confirmation received) to
the parties at the following addresses and facsimile transmission numbers
(or at such other address or number for a party as shall be specified by
like notice), except that notices after the giving of which there is a
designated period within which to perform an act and notices of changes of
address or number shall be effective only upon receipt:
(a) if to Seller:
National Bank of the Redwoods
X.X. Xxx 000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Telecopy No.: (000) 000-0000
Telephone No.: (000) 000-0000
(b) if to Buyer:
Valley Financial Acquisition, Inc.
c/o Prism Mortgage Company
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: President
Telecopy No.: (000) 000-0000
Telephone No.: (000) 000-0000
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9.3 Disclosure Schedules. The Disclosure Schedules shall be divided into
sections corresponding to the sections and subsections of this Agreement.
Disclosure of any fact or item in any section of the Disclosure Schedules
shall, should the existence of the fact or item or its contents be
relevant to any other section of the Disclosure Schedules, be deemed to be
disclosed with respect to that other section or sub section of the
Disclosure Schedule whether or not any explicit cross-reference appears
therein if the wording of the relevant disclosure makes it clearly related
to such other Section hereof. Disclosure of any matter in the Disclosure
Schedules shall not be deemed to imply that such matter is or is not
material. Disclosure of any matter in the Disclosure Schedules shall not
constitute an admission or raise any inference that such matter
constitutes a violation of law or an admission of liability or facts
supporting liability.
9.4 Interpretation. When a reference is made in this Agreement to Sections,
subsections, Schedules or Exhibits, such reference shall be to a Section,
subsection, Schedule or Exhibit to this Agreement unless otherwise
indicated. The words "include," "includes" and "including" when used
herein shall be deemed in each case to be followed by the words "without
limitation." The word "herein" and similar references mean, except where a
specific Section, subsection or Article reference is expressly indicated,
the entire Agreement rather than any specific Section, subsection or
Article. The table of contents and the headings contained in this
Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. Any references to the
"best knowledge" or
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"knowledge" of a Person shall mean the actual knowledge of the Persons
listed on Schedule 16.
9.5 Severability. If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in
any manner adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so
as to effect the original intent of the parties as closely as possible in
an acceptable manner to the end that transactions contemplated hereby are
fulfilled to the greatest extent possible.
9.6 Assignment This Agreement may not be assigned by operation of law or
otherwise, except that Buyer may assign its rights and obligations
hereunder (a) to any affiliate of Buyer and (b) in connection with the
sale or transfer of substantially all of the assets of Buyer.
9.7 No Third-Party Beneficiaries, This Agreement is for the sole benefit of
the parties hereto and their permitted assigns and nothing herein
expressed or implied shall give or be construed to give to any Person,
other than the parties hereto and such assigns, any legal or equitable
rights hereunder.
9.8 Amendment. This Agreement may not be amended or modified except by an
instrument in writing signed by Seller and Buyer.
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9.9 Further Assurances. Each party agrees to cooperate fully with the other
parties and to execute such further instruments, documents and agreements
and to give such further written assurances as may be reasonably requested
by any other party to evidence and reflect the transactions described
herein and contemplated hereby and to carry into effect the intents and
purposes of this Agreement
9.10 Mutual Drafting. This Agreement is the joint product of Buyer and Seller
and each provision hereof has been subject to the mutual consultation,
negotiation and agreement of Buyer and Seller and shall not be construed
for or against any party hereto.
9.11 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California (without giving
effect to its choice of law principles).
9.12 Dispute Resolution. Any dispute, controversy or claim between the parties
relating to, arising out of or in connection with this Agreement (or any
subsequent agreements or amendments thereto), including as to its
existence, enforceability, validity, interpretation, performance, breach
or damages, including claims in tort, whether arising before or after the
termination of this Agreement, shall be settled only by binding
arbitration pursuant to the Commercial Arbitration Rules, as then amended
and in effect, of the American Arbitration Association (the "Rules"),
subject to the following:
(a) The arbitration shall take place in Santa Rosa, California.
(b) There shall be three arbitrators, who shall be selected under the
normal procedures prescribed in the Rules, except that one such
arbitrator shall be a certified public
26
accountant and one arbitrator (who shall chair the arbitration
panel) shall be a member of the American Board of Trial Advocates or
the American College of Trial Lawyers.
(c) Subject to legal privileges, each party shall be entitled to
discovery in accordance with the Federal Rules of Civil Procedure.
(d) At the arbitration hearing, each party may make written and oral
presentations to the arbitrator, present testimony and written
evidence and examine witnesses.
(e) The arbitrators' decision shall be in writing, shall be binding and
final and may be entered and enforced in any court of competent
jurisdiction.
(f) No party shall be eligible to receive, and the arbitrators shall not
have the authority to award, exemplary or punitive damages.
(g) Each party to the arbitration shall pay one-half of the fees and
expenses of the arbitrators and the American Arbitration
Association.
9.13 Counterparts. This Agreement may be executed in two or more counterparts,
and by the different parties hereto in separate counterparts, each of
which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
9.14 Entire Agreement. This Agreement, together with all Schedules and Exhibits
hereto, and the documents and instruments and other agreements among the
parties delivered pursuant hereto, constitute the entire agreement and
supersede all prior agreements and undertakings.
27
both written and oral, among Seller and Buyer with respect to the subject
matter hereof and are not intended to confer upon any other Person any
rights or remedies hereunder, except as otherwise expressly provided
herein.
* * * * *
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, Seller and Buyer have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
NATIONAL BANK OF THE REDWOODS,
a National Association
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
VALLEY FINANCIAL ACQUISITION INC.,
a Delaware Corporation
By: /s/ [ILLEGIBLE]
---------------------------------
Name:
--------------------------------
Title: President
