STOCK
ACQUISITION AGREEMENT
BY AND AMONG
SAN XXXX NATIONAL BANK,
ASTRA FINANCIAL INC.
And
XXXXXX X. XXXXXXX
Dated November 17, 1995
I N D E X
SECTION 1. ACQUISITION; CLOSING............................................... 1
(a) Acquisition............................................................ . 1
(b) Closing Date......................................................... ... 1
(c) Actions at Closing................................................... ... 2
SECTION 2. PURCHASE PRICE..................................................... 2
(a) Purchase Price........................................................ .. 2
(b) Payment of Cash Purchase Price........................................ .. 2
(c) Contingent Purchase Price............................................ ... 2
(d) Nonperforming Accounts Holdback..................................... .... 3
SECTION 3.
REPRESENTATIONS AND WARRANTIES OF ESSENTIAL FACTS CONCERNING THE COMPANY.......4
(a) Organization and Existence of the Company................................. 4
(b) Organizational Documents, Minutes and Stock Register...................... 4
(c) Capitalization............................................................ 5
(d) Financial Statements and Tax Returns...................................... 5
(e) Accounts Receivables and Reserves......................................... 5
(f) Undisclosed Liabilities................................................... 6
(g) No Accounts Held Back..................................................... 6
(h) No Adverse Changes; Conduct of Business in Normal Course.................. 6
(i) Properties and Assets..................................................... 7
(j) Litigation and Compliance with Laws....................................... 7
(k) Significant Contracts..................................................... 8
(l) Additional Schedules...................................................... 8
(m) No Defaults............................................................... 9
(n) Taxes..................................................................... 9
(o) Employee Benefit Plans................................................... 10
(p) Environmental Liability.................................................. 10
(q) Authorization of Transactions............................................ 10
(r) Disclosure............................................................... 11
SECTION 4.
REPRESENTATIONS AND WARRANTIES OF ESSENTIAL FACTS CONCERNING THE BANK....... 11
(a) Corporate Existence...................................................... 11
(b) Authorization of Transactions............................................ 11
(c) Disclosure............................................................... 12
SECTION 5. AGREEMENTS PENDING THE CLOSING.................................... 12
(a) Conduct of Business...................................................... 12
(b) Confidentiality and Access to Information................................ 13
(c) Regulatory Approvals, Tax Clearance, Cancellation of Lease............... 13
(d) Business Relations and Publicity......................................... 14
(e) Financial Statements..................................................... 14
(f) Best Efforts............................................................. 14
(g) No Conduct Inconsistent with this Agreement.............................. 14
(h) Tax Verification Forms................................................... 15
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE BANK................... 15
(a) Representations and Warranties of Essential Facts; Performance of
Agreements............ .......... 15
(b) Closing Certificate...................................................... 15
(c) Regulatory Approvals..................................................... 16
(d) Trial Balance............................................................ 16
(e) No Litigation............................................................ 16
(f) Opinion of Counsel....................................................... 16
(g) No Adverse Changes....................................................... 18
(h) Consents and Permissions................................................. 18
(i) Estoppel Certificate..................................................... 18
(j) Officers and Directors................................................... 18
(k) Other Documents.......................................................... 18
SECTION 7.
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY AND SHAREHOLDER........... 19
(a) Representations and Warranties of Essential Facts; Performance of
Agreements............................................................... 19
(b) Closing Certificate.......................................................19
(c) Regulatory Approvals......................................................19
(d) No Litigation.............................................................19
(e) Opinion of Counsel........................................................20
(f) Other Documents...........................................................20
(g) Funds Delivered...........................................................20
SECTION 8. SURVIVAL OF REPRESENTATIONS AND INDEMNITY......................... 21
(a) Survival of Representations...............................................21
(b) Indemnification by the Shareholder........................................21
(c) Indemnification by the Bank...............................................22
(d) Time Period Limitations...................................................22
SECTION 9. OBLIGATIONS AFTER CLOSING......................................... 23
(a) Non-Competition...........................................................23
(b) Employment Agreement......................................................23
(c) Confidentiality...........................................................23
(d) Additional Documents......................................................23
SECTION 10. GENERAL.......................................................... 23
(a) Confidential Information................................................. 23
(b) Nonassignment............................................................ 24
(c) Termination.............................................................. 24
(d) Expenses................................................................. 24
(e) Notices.................................................................. 24
(f) Brokerage and Finders' Fees; Indemnification............................. 25
(g) Breach and Non-Performance of Conditions................................. 25
(h) Counterparts............................................................. 26
(i) Entire Agreement......................................................... 26
(j) Severability............................................................. 26
(k) Amendments............................................................... 26
(l) Extension; Waiver........................................................ 26
(m) Arbitration.............................................................. 27
(n) Governing Law............................................................ 27
STOCK ACQUISITION AGREEMENT
THIS STOCK ACQUISITION AGREEMENT (this "Agreement") is entered into
this 17 day of November, 1995, by and among SAN XXXX NATIONAL BANK, a national
bank (the "Bank"), ASTRA FINANCIAL INC., a California corporation (the
"Company") and XXXXXX X. XXXXXXX, the sole shareholder of the Company (the
"Shareholder").
WHEREAS, this Agreement provides for the acquisition by the Bank of all
of the outstanding common shares of the Company from Shareholder for cash;
WHEREAS, the Shareholder owns of record and beneficially all of the
issued and outstanding shares of capital stock of the Company and desires that
the Acquisition occur; and
WHEREAS, the boards of directors of the Bank and the Company deem the
transactions contemplated by this Agreement desirable and in the best interests
of their respective shareholders.
NOW THEREFORE, the parties hereby covenant and agree as follows:
SECTION 1. ACQUISITION; CLOSING.
(a) Acquisition. The Bank agrees to buy and the Shareholder agrees to
sell all of the outstanding shares of the Company, in accordance with the terms
and provisions of this Agreement.
(b) Closing Date. The consummation of the transactions contemplated by
this Agreement shall take place at a closing (the "Closing") no more than twenty
(20) days after receipt of all approvals, expiration of all waiting periods
after prior notice of the transactions contemplated hereby that may be required
under Federal law and any other applicable law, and receipt of tax clearance for
the Company from the California Franchise Tax Board (the "Closing Date"). In the
event that any motion for rehearing or any appeal from the decision of such
regulatory authority, or any litigation of the type contemplated by Section
6(e), is filed, the Bank may postpone the Closing by written notice until such
approval is obtained or such motion, appeal or litigation is resolved.
(c) Actions at Closing. At the Closing the parties shall exchange the
various documents contemplated hereby and the Bank shall pay the portion of the
Cash Purchase Price (as such term is hereinafter defined) specified in Section
2(b) to the Shareholder as holder of all the common shares of the Company
outstanding immediately prior to the Closing Date. The Closing shall take place
at 10:00 a.m., local time, on the Closing Date at the offices of San Xxxx
National Bank, at 0 Xxxxx Xxxxxx Xxxxxx, Xxx Xxxx, Xxxxxxxxxx, or at such other
time, date or place, or any of them, as the parties may agree.
SECTION 2. PURCHASE PRICE.
(a) Purchase Price. The aggregate purchase price for all of the shares
of stock of the Company shall be Five Hundred Sixty Thousand Dollars
($560,000.00) (the "Cash Purchase Price"), plus the Contingent Purchase Price,
if any, described in paragraph (c) below.
(b) Payment of Cash Purchase Price. Payment of the Cash Purchase Price
to the Shareholder shall be in the form of readily available funds which shall
be delivered as follows: $50,000 at the Closing, and $510,000 on January 4,
1996, which payments shall be subject to the holdback, if any, described in
paragraph (d) below.
(c) Contingent Purchase Price. In addition to the Cash Purchase Price
specified above, the Bank shall pay to Shareholder a one-time deferred
Contingent Purchase Price within 60 days following the one year anniversary of
the Closing.
(1) The amount of the Contingent Purchase Price will be based
upon the Average Monthly Increase in the Astra Portfolio, as defined in
subparagraph (c)(3) and (c)(4) below, starting either (a) with the calendar
month in which the Closing occurs, if the Closing occurs on or before the 15th
of the month, or (b) with the calendar month following the Closing, in all other
cases, and in either event continuing for eleven more calendar months, assuming
the Employment Agreement between the Bank and Shareholder referred to in Section
9(b) does not terminate early. In the event the Employment Agreement is
terminated prior to the end of the twelve month period referred to in the prior
sentence, the amount of the Contingent Purchase Price will be based on the
Average Monthly Increase, starting with the month of the Closing and ending with
the month in which the Employment Agreement is terminated.
(2) The Contingent Purchase Price will be based on the
following formula: for each $1,000 by which the Average Monthly Increase exceeds
$20,000, Shareholder will receive a Contingent Purchase Price of $3,500, up to a
total Contingent Purchase Price of $280,000; provided however, that if the
Employment Agreement referred in Section 9(b) is terminated prior to the end of
the twelve month period referred to in paragraph 2(c)(1), the Shareholder shall
receive a Contingent Purchase Price equal to the amount determined by the above
formula, times the number of months over which the average was determined and
divided by twelve (12). Schedule 2(c)(2) to this Agreement sets forth examples
of calculation of the Contingent Purchase Price for various amounts of Average
Monthly Increases.
(3) The "Astra Portfolio" for purposes of this paragraph (c)
shall consist of all the Accounts Receivable in the Company's portfolio at the
Closing, plus (a) any new Accounts Receivable generated by Shareholder, and (b)
any new Accounts Receivable from customers located in New Mexico, during the
times specified in paragraph 2(c)(1) above.
(4) The "Average Monthly Increase" for purposes of this
paragraph (c) shall consist of the average monthly increases calculated as set
forth below. For the first month, the monthly increase (hereinafter, the "First
Monthly Increase") is equal to (1) the Accounts Receivable of the Company at the
Closing, less $1,800,000 and those Accounts Receivable that have been written
off prior to the Closing or subject to the holdback under section 2(d) below;
plus (2) any change in the Astra Portfolio since the Closing; less (c) any
Accounts Receivable that had been in (1) or (2) but have been paid off or
written off since the Closing. For all subsequent months, the monthly increase
shall consist of (3) the average daily balance of the Astra Portfolio, as taken
from the daily Client Summary Reports for the month; less (4) either (x) for the
second month, the First Monthly Increase plus $1,800,000, or (y) for every other
month, the average daily balance of the Astra Portfolio for the prior month;
plus (5) any accounts receivable subject to the holdback under section 2(d) that
are paid during the month. All Accounts Receivable generated by Shareholder
shall be subject to existing SJNB Financial Services underwriting criteria.
(d) Nonperforming Accounts Holdback. The Bank shall hold back from the
amount of the cash purchase price required to be delivered to the Shareholder
the total amount, if any, of Astra's outstanding Accounts Receivable (1) that
are over ninety (90) days past due; (2) for which the account debtors have
indicated either an inability or unwillingness to pay the invoice and the
customer has insufficient reserves to cover the potential charge-back; (3) that
are determined to be invalid for any reason; (4) that are determined to have
defective lien priority status; or (5) that have any contingencies in the
invoice payment amount or as to which Astra or Xxxxxxx have received information
indicating that the account debtor asserts a counterclaim or offset reduces the
amount owed. The amount of the holdback shall be determined by the parties based
on reviews of the Accounts Receivables as of two (2) business days prior to the
Closing. All Accounts Receivables subject to the holdback will be identified
prior to the Closing, and no Accounts Receivables can be added to the holdback
after the Closing. In the event that the holdback exceeds Seventy-Five Thousand
Dollars ($75,000), either Xxxxxxx or the Bank may terminate this Agreement
pursuant to Section 10(c) of the Agreement. When the Bank receives payment of
any account receivable that is subject to this holdback, such funds shall be
paid to the Shareholder, together with interest on such funds from the Closing
until such payment at the rate of interest charged by the Company on such
account prior to the Closing.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF ESSENTIAL FACTS CONCERNING
THE COMPANY. This Agreement is entered into by the Bank upon the understanding,
and the Company and the Shareholder represent and warrant, that the following
statements of Essential Facts are true and correct on the date of this
Agreement:
(a) Organization and Existence of the Company. The Company is a
California corporation duly chartered, organized, validly existing and in good
standing under the laws of the State of California, and is duly authorized and
has full power to own its properties and carry on its business as now being
conducted. The Company does not have any subsidiaries. The Company has never
used any fictitious business names.
(b) Organizational Documents, Minutes and Stock Register. The Company
has furnished the Bank copies of its Articles of Incorporation as filed with the
California Secretary of State and its bylaws, in each case as amended to the
date hereof, and such other documents relating to the Company's authority to
conduct its business as the Bank has requested. All such documents are complete
and correct. The minute books and stock register of the Company are complete and
correct in all material respects and accurately reflect all meetings and
consents of the organizers, incorporators, shareholders, Board of Directors and
committees of the Board of Directors of the Company and all transactions of
record in its capital stock occurring since the Shareholder's acquisition of
control of the Company and, to the best of the Shareholder's knowledge, since
the Company's initial organization, except as set forth in Schedule 3(b).
(c) Capitalization. The authorized capital stock of the Company
consists of one thousand (1000) shares of Common Stock, no par value, of which
one hundred sixty-seven (167) shares are issued and outstanding, have been duly
and validly authorized and issued and are fully paid and nonassessable, and all
such shares are owned by the Shareholder free and clear of any liens, claims,
encumbrances or rights of others. Except for the rights of the Bank under this
Agreement and as set forth in Schedule 3(c), there are no options, agreements,
contracts or other rights in existence for any person (natural or otherwise) to
purchase or acquire from the Company or the Shareholder any shares of capital
stock or other securities or rights of the Company, whether now or hereafter
authorized or issued.
(d) Financial Statements and Tax Returns. (1) The Company has furnished
the Bank true and complete copies of the Balance Sheets of the Company as of
December 31, 1992, 1993 and 1994 and Income Statements for the years ended
December 31, 1992, 1993 and 1994, together with the report on the Financial
Statements for 1993 by Xxx X. Xxxx, C.P.A., independent accountants for the
Company. The Company has also furnished the Bank true and complete copies of its
Balance Sheets and Income Statements for each month ended subsequent to December
31, 1994 through September 30, 1995. The Company's Balance Sheet as of September
30, 1995 is herein referred to as the "Last Balance Sheet." Each of the
foregoing financial statements has been prepared in accordance with generally
accepted accounting principles applied on a basis consistent with that of
preceding periods, and together with the notes thereto, present fairly the
financial condition and results of operations of the Company at the dates and
for the periods shown.
(2)..The Company has furnished the Bank true and complete
copies of its Federal and state tax returns for the years 1992, 1993 and 1994.
(e) Accounts Receivables and Reserves. To the best knowledge of the
Company and the Shareholder, all accounts receivables, factoring commitments, or
other financial accommodations or arrangements or evidences of indebtedness
reflected in the Last Balance Sheet, together with any and all security held as
collateral therefor, are valid, genuine and subsisting and are enforceable in
accordance with their terms, except as limited by antideficiency, bankruptcy or
insolvency laws. The allowances for losses reflected in the Last Balance Sheet
is adequate, to the best knowledge of the Company and the Shareholder as of the
date of this Agreement and as of the Closing, in all material respects to
provide for probable losses on outstanding accounts receivables, net of
recoveries, other than the accounts receivable that are subject to the holdback
pursuant to paragraph 2(d) of this Agreement. There are no accounts receivable
past due more than 60 days or similar credits other than as disclosed in
Schedule 3(e).
(f) Undisclosed Liabilities. The Company does not have any material
liabilities, whether accrued, absolute, contingent or otherwise, existing or
arising out of any existing or prior transactions or state of facts except as
and to the extent (1) disclosed, reflected or reserved against in the Last
Balance Sheet, (2) arising under contracts, commitments, transactions or
circumstances identified in the schedules provided for herein, (3) identified in
Schedule 3(f), and (4) incurred in the ordinary course of banking business after
the date of the Last Balance Sheet.
(g) No Accounts Held Back. The Accounts Receivable of the Company
include all sources of business that have been negotiated, committed to or
agreed upon prior to the date of this Agreement and there have been no accounts
or customer relationships held back for funding after the Closing. There are not
a significant amount of accounts or customer relationships that are being held
back and not committed, finally agreed to or funded by the Company pending the
Closing. Schedule 3(g) shows all customers and potential customers and accounts
with whom the Company is currently negotiating to purchase accounts receivable,
but from whom accounts receivable have not been acquired.
(h) No Adverse Changes; Conduct of Business in Normal Course. Other
than as specifically disclosed in Schedule 3(h), the financial statements and
schedules delivered pursuant to this Agreement, there has not occurred any
material adverse change since the date of the Last Balance Sheet, or any
condition (other than general economic or competitive conditions), event,
circumstance, fact or other occurrence, whether occurring before or since the
date of the Last Balance Sheet, that may reasonably be expected to have or
result in such a material adverse change in the business, income, assets,
liabilities, prospects, operations, properties or financial condition of the
Company. The business of the Company has, since the date of the Last Balance
Sheet, been conducted only in the ordinary and usual course consistent with past
practice.
(i) Properties and Assets. The assets of the Company reflected in the
Last Balance Sheet, identified in this agreement or listed in the schedules
provided for herein include (1) all of the material assets owned by the Company,
except for those subsequently disposed of by the Company for fair value in the
ordinary course of business and (2) all of the material assets used by the
Company in its business. Except as disclosed in Schedule 3(i)(1), all such
assets are owned by the Company free and clear of any liens, claims,
encumbrances or rights of others except for normal and customary rights of
customers of the Company arising in the ordinary course of banking transactions
and except as otherwise disclosed in the schedules provided for in this
agreement. The Company leases all real property used by it in the conduct of its
business under a lease, a true and correct copy of which has been furnished to
the Bank (the "Real Estate Lease"). All certificates, licenses, and permits
required for the lawful use and occupancy of such real property by the Company
have been obtained and are in full force and effect. All material tangible
personal property owned by the Company or used by the Company in its business is
listed in Schedule 3(i)(2). All of such property is insured against loss for
customary risks and in customary amount.
(j) Litigation and Compliance with Laws. Except as disclosed in
Schedule 3(j)(1), to the best knowledge of the Company and the Shareholder, the
Company is in compliance in all material respects with all applicable federal,
state, county and municipal laws and regulations (1) that regulate or are
concerned in any way with the business of accounts receivable financing or
factoring, or (2) that otherwise relate to or affect the business or assets of
the Company or the assets owned, used or occupied by it. Except as disclosed in
the Schedule 3(j)(2), there are no claims, actions, suits, or proceedings
pending, or, to the best knowledge of the Company or the Shareholder, threatened
or contemplated against, or adversely affecting the Company or its directors or
officers (in their capacities as such), at law or in equity, or before any
federal, state, municipal or other governmental authority, or before any
arbitrator or arbitration panel, whether by contract or otherwise, and there is
no decree, judgment or order of any kind in existence against or restraining the
Company, or any of its officers, employees or directors, from taking any actions
of any kind in connection with the business of the Company. Except as disclosed
in Schedule 3(j)(3), the Company has not received from any regulatory authority
any cease and desist order, other order, memorandum of understanding, agreement,
criticism, recommendation or suggestion of a material nature, and has no reason
to believe that any such order, memorandum, agreement, criticism, recommendation
or suggestion is contemplated, concerning the Company's business practices that
have not been resolved to the reasonable satisfaction of such authority.
Significant Contracts. The following schedules completely and
accurately sets forth every contract, commitment or arrangement (whether written
or oral) of a material nature under which the Company is obligated on the date
hereof:
(1). Schedule 3(k)(1): all employment contracts, consulting
arrangements, and contracts for professional and other services;
(2)..Schedule 3(k)(2): all leases of real estate or personal
property;
(3)..Schedule 3(k)(3): all conditional sales contracts and
security agreements for the acquisitionof personal property;
(4)..Schedule 3(k)(4): all pension, retirement, compensation,
profit sharing, insurance or similar plans or arrangements for the benefit of
employees (hereinafter referred to as "Employee Benefit Plans");
(5)..Schedule 3(k)(5): all union and other labor contracts;and
(6)..Schedule 3(k)(6): each other material contract to which
the Company is a party or under which it is obligated, other than contracts
described or listed in other schedules.
(l) Additional Schedules. The following additional schedules are
accurate and complete: (1) Schedule 3(l)(1): an Accounts Receivable Schedule,
describing all accounts receivable, factoring commitments, or other financial
accommodations or arrangements or evidences of indebtedness, whether written or
oral, including modifications or amendments thereof, and including any such
accounts receivables that the Company has written off prior to the date hereof,
extended by the Company to or for the benefit of others (the "Accounts
Receivables"); (2) Schedule 3(l)(2): a Real Estate Schedule, describing all real
estate owned (including other real estate owned ("OREO")) or leased by the
Company as of the date of this Agreement, or which is the subject of pending
foreclosure proceedings by the Company, indicating in each case whether such
real estate is improved and the nature of any material encumbrances or defects
of title; (3) Schedule 3(l)(3): a Securities Schedule of all investment
securities owned by the Company, if any, as of the month end preceding the date
of this Agreement; (4) Schedule 3(l)(4): an Insurance Schedule, describing all
policies of insurance as of the date of this Agreement (other than policies
covering collateral for accounts receivables and other loans by the Company) in
which the Company is named as an insured party, which otherwise relate to or
cover any assets or properties of the Company or which is carried by the
Company; and (5) Schedule 3(l)(5): a Subordinated Note Schedule, providing a
listing of the names and address of all holders of the Company's Subordinated
Notes and the forms of notes and agreements with all such holders. Such
schedules are complete and correct in all material respects.
(m) No Defaults. Other than as set forth in Schedule 3(m), the Company
has fulfilled and taken all action reasonably necessary to date to enable it to
fulfill when due, its obligations under all contracts, commitments and
arrangements to which it is a party, and there have not occurred, to the best
knowledge of the Company and the Shareholder, any material defaults or other
events that, with the lapse of time or election of any other party, will become
material defaults by the Company under any such contracts, commitments or
arrangements.
(n) Taxes. All federal, state, and local income, franchise, excise,
real and personal property, employment and other material tax reports, returns,
declarations and information statements (collectively, the "Returns") required
to be filed on or prior to the date hereof have been filed. The Company has paid
or has accrued or otherwise adequately reserved in the Last Balance Sheet in
accordance with generally accepted accounting principles for the payment of all
taxes and other charges (including interest, additions and penalties), required
to be paid in respect of the periods covered by such Returns. No issues have
been raised (or are currently pending) by the Internal Revenue service or any
other taxing authority in connection with any of the Returns which could
reasonably be expected to have a material adverse effect on the financial
condition of the Company, nor, to the best knowledge of the Company or the
Shareholder, are there any such issues which have not been so raised but if so
raised by the Internal Revenue Service or any other taxing authority in
connection with any of such Returns could reasonably be expected to have such
material adverse effect. All returns covering periods through the fiscal year
ended December 31, 1994 have been filed, and no consent to any extension of the
period of limitations applicable to the assessment or collection of any tax is
in effect.
(o) Employee Benefit Plans. Except as set forth on Schedule 3(o), the
Company has no employee benefit plans that are subject to the Employee
Retirement Income Security Act of 1974, as amended, and it is not obligated
under nor is it a sponsor of, party or contributor to any profit-sharing,
deferred compensation, bonus, stock option, stock ownership, stock purchase,
pension, retainer, employment, consulting, retirement, welfare, or incentive
plan or agreement, or any plan or agreement providing for "fringe benefits" to
its employees, including, but not limited to, vacation, sick leave, salary
continuation, service awards, severance pay, welfare, medical, hospitalization,
disability, life insurance, other insurance plans, or related benefits.
(p) Environmental Liability. Except as set forth in Schedule 3(p),
there are no actions, suits, proceedings or orders involving the Company or any
of its assets, that are pending, or, to the best knowledge of the Company or the
Shareholder, threatened as the result of any asserted failure of the Company to
comply with any requirement of federal, state, or local law or regulation
relating to hazardous, toxic or polluting substances, or the protection of
health or the environment. None of the property owned (including OREO), managed
or leased by the Company is contaminated with any wastes or hazardous
substances, including but not limited to, petroleum or crude oil or fraction
thereof, friable asbestos or asbestos-containing material, polychlorinated
biphenyls or urea formaldehyde foam insulation. The Company is not an "owner or
operator" of a "vessel" or, to the best knowledge of the Company and the
Shareholder, a "facility" which owns, possesses, transports, generates, or
disposes of a "hazardous substance," as those terms are defined in Section 9601
of the Comprehensive Environmental Response Compensation and Liability Act of
1980 42 U.S.C.A. ss. 9601 et. seq.
(q) Authorization of Transactions. The execution, delivery and
performance of this Agreement and the transactions contemplated hereby have been
duly authorized by the Board of Directors and the Shareholder of the Company.
The Company has full corporate power to execute, deliver and perform this
Agreement and to consummate the transactions herein contemplated, and such
execution, delivery and performance do not violate any provisions of the
Company's articles, bylaws, or any agreements to or by which the Company or the
Shareholder are a party or are otherwise bound. Except for the regulatory
approvals referred to in Section 5(c) hereof, no consent of any regulatory
authority or other person is required to be obtained by the Company or the
Shareholder to permit consummation of the transactions contemplated herein.
(r) Disclosure. When taken in the aggregate, the representations,
warranties, information and other documents made or delivered to the Bank by the
Company and the Shareholder, in connection with this Agreement or prior thereto,
do not and will not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements contained herein not
misleading. The Company and the Shareholder shall advise the Bank in writing
within five (5) business days of any matter arising or discovered after the date
of this Agreement which, if existing or known on the date hereof, would be
required to be disclosed or delivered to the Bank in order to make the
representations, warranties, information and other documents true in all
material respects.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF ESSENTIAL FACTS CONCERNING
THE BANK. This Agreement is entered into by the Company and the Shareholder upon
the understanding, and the Bank represents and warrants, that the following
statements of Essential Facts are true and correct on the date of this
Agreement.
(a) Corporate Existence. The Bank is duly chartered, organized, validly
existing and in good standing under the laws of the United States of America and
is duly authorized and has full power to own its properties and carry on its
business as now being conducted.
(b) Authorization of Transactions. The execution, delivery and
performance of this Agreement and the transactions contemplated hereby have been
duly authorized by the Board of Directors of the Bank. The Bank has full
corporate power to execute, deliver and perform this Agreement and to consummate
or cause to be consummated the transactions herein or therein contemplated, and
such execution, delivery and performance do not violate any provisions of the
articles or bylaws of the Bank, or any agreements to which it is a party or by
which it is otherwise bound. Except for the regulatory approvals referred to in
Section 5(c) hereof, no consent of any regulatory authority or other person is
required to be obtained by the Bank in order to permit consummation of the
transactions contemplated hereby.
(c) Disclosure. When taken in the aggregate, the representations,
warranties, statements, information and other documents made or delivered to the
Company and the Shareholder by the Bank do not and will not contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements contained herein not misleading. The Bank shall advise the
Company and the Shareholder in writing within five (5) business days of any
matter arising or discovered after the date of this Agreement which, if existing
or known on the date hereof, would be required to be disclosed or delivered to
the Company or the Shareholder in order to make the representations, warranties,
statements, information and other documents true in all material respects.
SECTION 5. AGREEMENTS PENDING THE CLOSING. Pending the Closing, the
parties hereby agree as follows:
(a) Conduct of Business. The business of the Company shall be conducted
in the usual and ordinary course consistent with past practice. Without limiting
the foregoing, without the consent of the Bank (1) no change shall be made in
the Company's Articles of Incorporation or bylaws or in the number of its issued
and outstanding shares; (2) the compensation paid by the Company to officers or
key employees of the Company shall not be increased, provided, however, that a
bonus may be paid to the Shareholder so long as the Company's shareholder's
equity is not reduced to less than $300,000; (3) the Company shall not
charge-off any of its Accounts Receivables or otherwise decrease its loss
reserve to an amount less than $50,000; (4) no dividends or other distributions
on its shares of its capital stock shall be declared or paid by the Company that
decrease its shareholder's equity to less than $300,000; (5) the Company shall
maintain its present insurance coverage of customary risks and in customary
amounts in respect of its properties and business; (6) no significant changes
shall be made in the general nature of the business conducted by the Company,
including but not limited to the investment or use of its assets, the
liabilities it incurs, or the facilities it operates; (7) no employment,
consulting or other similar agreements shall be entered into by the Company; (8)
the Company shall timely file all required tax returns with all applicable
taxing authorities and shall not make any application for or consent to any
extension of time for filing any tax return or any extension of the period of
limitations applicable thereto; (9) the Company shall not enter into any
transactions, other than in the ordinary course of business, with its directors,
officers, employees or any of their affiliates; (10) the Company shall not incur
any liabilities or obligations, make any commitment, disbursement, contract or
agreement, or engage in any transaction, except in the ordinary course of
business; (11) the Company shall not do or fail to do, anything which will cause
it to breach materially or to default in any contract, agreement, commitment or
obligation to which it is a party or by which it may be bound; (12) the Company
shall not make any acquisition of a business or engage in any new activity
requiring approval under any federal or state banking law or which would
otherwise constitute a change in the nature of the Company's business; and (13)
the Company's expenses incurred with respect to this Agreement, including
attorneys' fees, shall not exceed $25,000.
(b) Confidentiality and Access to Information. The Company shall give
the Bank and its representatives full access from time to time to further
information with respect to the Company for the purpose of conducting a business
and financial review of the Company and for such other purposes as may be
related to this Agreement, and the Bank shall maintain the confidentiality of
any such information. Pending the Closing, representatives of the Bank shall be
given full access to the Company's business activities and afforded the
opportunity to observe its business records, books and activities and consult
with the Company's directors and officers regarding the same on an ongoing
basis. The access referred to in this Section 5(b) shall not be exercised in a
manner unreasonably interfering with the operation of the Company's business.
(c) Regulatory Approvals, Tax Clearance, Cancellation of Lease. At the
Bank's expense, the Bank shall take all appropriate actions necessary (1) to
obtain approval of the transactions contemplated hereby from all regulatory
authorities required under any applicable Federal law and any applicable
California law, and (2) to obtain a tax clearance certificate with respect to
the Company from the California Franchise Tax Board in order for the Bank is
liquidate the Company shortly after the Closing. The Company and the Shareholder
shall cooperate fully in the process of obtaining all such approvals and the tax
clearance, including taking all corporate action necessary to approve a
dissolution of the Company and filing the Election to Dissolve with the
California Secretary of State. The Company shall, when requested by the Bank,
submit any required notice to cancel the Real Property Lease effective as of the
date requested by the Bank.
(d) Business Relations and Publicity. The Company shall use its best
efforts to preserve its reputation and its relationships with suppliers,
customers and employees. No press release or other communication related to this
Agreement (other than communications with appropriate regulatory authorities)
shall be issued or made except as mutually agreed upon, provided that the Bank
may, after consultation with the Company, make such disclosures concerning the
transactions provided for herein as the Bank believes are required to be made by
it pursuant to the Securities Exchange Act of 1934.
(e) Financial Statements. Within fifteen (15) days of the end of each
calendar month, the Company shall furnish the Bank true and correct copies of
its balance sheet, statement of income, expense budget statement of income and
proforma income statement. The foregoing financial statements shall be prepared
in accordance with generally accepted accounting principles applied on a basis
consistent with that of preceding periods, and together with the notes thereto,
will present fairly the financial positions of the Company at the dates shown
and the results of its operations and changes in its financial positions for the
period then ended. All statements furnished pursuant to this paragraph shall
fairly set forth the financial condition and results of operation as of the date
of each statement.
(f) Best Efforts. Each of the parties to this Agreement shall use its
best efforts in good faith to satisfy the various conditions to Closing and to
consummate the transactions contemplated hereby as quickly as possible. No party
shall intentionally take or fail to take or intentionally permit or fail to
permit to be taken any action that would be in breach of the terms or provisions
of this Agreement or that would cause any of the representations contained
herein to be or become untrue.
(g) No Conduct Inconsistent with this Agreement. The Company shall not,
nor shall it permit any of the Company's affiliates to, during the term of this
Agreement, (1) offer, sell, or negotiate with or entertain any proposals from
any other person for any such offer or sale of, any securities issued by the
Company, or (2) negotiate with or entertain any proposals from any other person
for any other transaction wherein the business or substantially all of the
properties of the Company would be acquired, directly or indirectly, by any
party other than the Bank.
(h) Tax Verification Forms. The Company shall provide to the Bank such
documents and sign such forms as are required for the Bank to obtain verifying
copies of the Company's tax returns from the IRS within 3 business days of such
a request by the Bank.
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE BANK. Unless the
conditions are waived by the Bank, all obligations of the Bank under this
Agreement are subject to the fulfillment, prior to or at the Closing, of each of
the following conditions:
(a) Representations and Warranties of Essential Facts; Performance of
Agreements. The Representations and Warranties of Essential Facts contained in
Section 3 of this Agreement and any representations or warranties of the
Shareholder contained herein or in any documents, certificates, schedules or
exhibits delivered by or on its behalf to the Bank pursuant to this Agreement
shall have been true and correct in all material respects as of their date and
shall be true and correct in all material respects at the Closing as though made
at the Closing Date (except for changes therein contemplated or permitted by
this Agreement), in each case to the reasonable satisfaction of the Bank, and
the Shareholder shall have performed all agreements herein required to be
performed by it on or prior to the Closing, including delivery of the executed
Non-competition Agreement and Employment Agreement referred to in Section 9(a)
and (b) of this Agreement.
(b) Closing Certificate. The Bank shall have received a certificate
signed by the Chairman of the Board of the Company and the Shareholder, dated as
of the Closing Date, certifying in such detail as the Bank may reasonably
request as to the fulfillment of the conditions to the obligations of the Bank
as set forth in this Agreement, including without limitation that the
representations and warranties of the Company and the Shareholder are true and
correct in all material respects, that the Company and the Shareholder have
performed all their obligations under this Agreement, all regulatory approvals
have been obtained, including tax clearance, there is no litigation of the type
referred in Section 6(e), there have been no adverse changes of the type
referred to in Section 6(g) and all other requirements of this Agreement.
(c) Regulatory Approvals. The parties hereto shall have duly obtained
all regulatory approvals of the transactions contemplated by this Agreement as
the Bank may reasonably believe are necessary or appropriate, upon such terms
and conditions, if any, as are satisfactory to the Bank in their reasonable
judgment and the Franchise Tax Board shall have provided a Tax Clearance
Certificate with respect to the Company.
(d) Trial Balance. The Bank shall have received a trial balance of
the Company's assets and liabilities as of the day prior to Closing.
(e) No Litigation. No suit or other action shall have been instituted
or threatened seeking to enjoin consummation of the transactions provided for
herein or to obtain other relief in connection with this Agreement or the
transactions contemplated hereby that the Bank believes, in good faith and with
the advice of counsel, makes it undesirable or inadvisable to consummate the
transactions provided for herein by reason of the probability that the
proceeding will result in the issuance of an order enjoining such transactions,
will result in a determination that the Company has failed to comply with
applicable legal requirements of a material nature in connection with the
consummation of the transactions provided for herein or actions preparatory
thereto or will have a material adverse effect on the future conduct of the
business of the Company.
(f) Opinion of Counsel. The Bank shall have received the opinion of
Binder and Xxxxxx, counsel for the Company, dated as of the Closing Date, and in
form satisfactory to the Bank and their counsel to the effect that:
(1)......The Company is a California corporation duly
incorporated, organized, validly existing and in good standing under the laws of
the State of California, and is duly authorized and has full power to own its
properties and carry on its business as now being conducted.
(2)......The authorized capital stock of the Company consists
of one thousand (1000) shares of Common Stock, no par value, of which one
hundred sixty-seven (167) shares are issued and outstanding, have been duly and
validly authorized and issued and are fully paid and nonassessable, and are
owned by the Shareholder free and clear of any liens, claims, encumbrances or
rights of others. Except for the rights of the Bank under this Agreement, there
are no options, agreements, contracts or other rights in existence for any
person (natural or otherwise) to purchase or acquire from the Company or the
Shareholder any shares of capital stock of the Company, whether now or hereafter
authorized or issued.
(3)......The execution, delivery, and performance of this
Agreement and the transactions contemplated herein have been duly authorized by
the Board of Directors of the Company and the Shareholder, these being the only
corporate authorizations required under the Company's articles or bylaws, or any
governing statutes. This Agreement has been duly executed and delivered by the
Company and the Shareholder and constitutes the legal, valid and binding
obligation of the Company and the Shareholder.
(4)......The execution, delivery and performance of this
Agreement and the transactions contemplated herein and therein do not violate
any provisions of the articles or bylaws of the Company or, to the best
knowledge of such counsel, any contract or agreement by which either the Company
or the Shareholder, or both, are bound.
(5)......Except as set forth in Schedules 3(j)(1) and 3(j)(2)
and as disclosed in officers' certificates received by counsel from the Company
and in reliance upon such officers' certificates, counsel knows of no claims,
actions, suits, or proceedings pending, threatened, or contemplated against, or
affecting the Company at law or in equity or before any federal, state or
municipal or other governmental authority, or of any decrees, judgments, or
orders of any kind that are in existence enjoining or restraining the Company or
any of the Company's officers, employees, directors or shareholder from taking
action of any kind in connection with the business of the Company.
(6) Counsel has no knowledge of any actions, suits or
proceedings pending or threatened against the Company or the Shareholder, to
enjoin consummation of the transactions provided for herein or to obtain other
relief in connection with this Agreement or the transactions contemplated
herein.
In rendering their opinion, such counsel may rely as to matters of fact upon
certificates of officers of the Company, the Shareholder, or governmental
officials as counsel deems appropriate, and where matters are limited to the
knowledge of such counsel.
(g) No Adverse Changes. Since the date of this Agreement, none of the
following adverse changes shall have occurred: (1) the total shareholder's
equity of the Company, as calculated pursuant to generally accepted accounting
principles consistently applied, has decreased below $300,000; and (2) the
Company's gross purchased accounts receivables have decreased below $1,800,000;
(3) the Company's Allowance for Loan Losses has decreased below $50,000; or (4)
any material adverse change or any condition, event, circumstance, fact or other
occurrence that may, to the best knowledge of the Company and the Shareholder,
reasonably be expected to result in a material adverse change, in the
operations, business, prospects, properties, assets, liabilities or financial
condition of the Company.
(h) Consents and Permissions. The Company shall have obtained all such
written consents, permissions and approvals as are required under contracts,
commitments and business arrangements with third parties.
(i) Estoppel Certificate. The Company shall deliver to the Bank on or
prior to the Closing Date an estoppel certificate signed by the landlord of the
Real Property Lease, which certificate shall be in form and substance
satisfactory to the Bank and their counsel; provided, however, that in the event
the Company is unable to obtain such estoppel certificate, it shall deliver to
the Bank such other assurances as may be reasonably satisfactory to the Bank and
their counsel.
(j) Officers and Directors. If and to the extent requested by the Bank:
(1) each officer of the Company shall have tendered his resignation from office
effective not later than the Closing Date and the Board of Directors shall have
elected such successor officers of the Company as are designated by the Bank;
(2) each director of the Company shall have tendered his resignation from the
Board effective not later than the Closing Date; and (3) each officer and
director and all employees shall have released in writing, in form and content
satisfactory to the Bank, all claims each may have against the Company excepting
only claims for normal compensation and employee benefits accrued through the
Closing Date.
(k) Other Documents. The Bank shall have received all such other
documents, certificates or instruments as it may have reasonably requested
evidencing compliance by the Company and the Shareholder with the terms
of this Agreement.
SECTION 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY AND
SHAREHOLDER. Unless the conditions are waived by the Company and the
Shareholder, all of their respective obligations under this Agreement are
subject to the fulfillment, prior to or at the Closing, of each of the following
conditions:
(a) Representations and Warranties of Essential Facts; Performance of
Agreements. The Representations and Warranties of Essential Facts contained in
Section 4 of this Agreement and any representations or warranties of the Bank
contained herein or in any documents, certificates, schedules or exhibits
delivered by it or on its behalf to the Company pursuant to this Agreement shall
have been true and correct in all material respects as of their date and shall
be true and correct in all material respects at the Closing as though made at
the Closing Date, in each case to the reasonable satisfaction of the Company,
and the Bank shall have performed all agreements herein required to be performed
by them on or prior to the closing, including delivery of the executed
Non-competition Agreement and Employment Agreement referred to in Section 9(a)
and (b) of this Agreement.
(b) Closing Certificate. The Company shall have received a certificate
signed by the Chairman or the President of the Bank, dated as of the Closing
Date, certifying in such detail as the Company may request as to the fulfillment
of the conditions to the obligations of the Company and the Shareholder set
forth in this Agreement.
(c) Regulatory Approvals. The parties hereto shall have duly obtained
all regulatory approvals of the transactions contemplated by this Agreement as
the Bank may reasonably believe are necessary or appropriate, upon such terms
and conditions, if any, as are satisfactory to the Bank in their reasonable
judgment.
(d) No Litigation. No suit or other action shall have been instituted
or threatened seeking to enjoin consummation of the transactions provided for
herein or to obtain other relief in connection with this Agreement or the
transactions contemplated hereby that the Company believes, in good faith and
with the advice of counsel, makes it undesirable or inadvisable to consummate
the transactions provided for herein by reason of the probability that the
proceeding will result in the issuance of an order enjoining such transactions
or will result in a determination that the Bank or the Company has failed to
comply with applicable legal requirements of a material nature in connection
with the consummation of the transactions provided for herein or action
preparatory thereto or will have a material adverse effect on the future conduct
of the business of the Bank or the Company.
(e) Opinion of Counsel. The Company shall have received the opinion of
Xxxxxx & Xxx, counsel for the Bank, dated as of the Closing Date, and in form
satisfactory to the Company and its counsel to the effect that:
(1)......The Bank is a national banking association duly
organized, validly existing and in good standing under the laws of the United
States of America, and is duly authorized and has full power to own its
properties and carry on its business as now being conducted.
(2)......The execution, delivery, and performance of this
Agreement and the transactions contemplated herein have been duly authorized by
the Board of Directors of the Bank and its sole shareholder, these being the
only corporate authorizations required under the Company's articles or bylaws,
or any governing statutes. This Agreement has been duly executed and delivered
by the Bank and constitutes the legal, valid and binding obligation of the Bank.
In rendering their opinion, such counsel may rely as to matters of fact upon
certificates of officers of the Bank, or governmental officials as counsel deems
appropriate, and where matters are limited to the knowledge of such counsel.
(f) Other Documents. The Company shall have received all of
such other documents, certificates or instruments as it may have reasonably
requested evidencing compliance by the Bank with the terms of this Agreement.
(g) Funds Delivered. All funds required to be delivered at th
e Closing to the Shareholder shall be delivered.
SECTION 8. SURVIVAL OF REPRESENTATIONS AND INDEMNITY.
(a) Survival of Representations. All representations, warranties and
agreements made by the parties hereto shall survive the Closing for the
applicable period set forth in Section 8(d) hereof; and any investigation made
by a party to be indemnified on account of any breach of such representations,
warranties or agreements shall not be a defense to a claim for indemnification.
This section does not require that any representation or warranty be made on a
continuing basis after the Closing.
(b) Indemnification by the Shareholder. The Shareholder shall indemnify
the Bank, its parent corporation and all of their officers, directors and agents
against and hold them harmless from any and all (1) losses, liabilities, claims,
demands, damages, deficiencies, causes of action or suits (the "Claims") arising
out of or resulting from (A) the breach or incorrectness of any of the
representations, warranties or covenants of the Company or the Shareholder
contained in this Agreement, which breach or incorrectness, either individually
or together total $15,000 or more, or (B) the assertion against the Bank of any
liability or obligation of the Company or the Shareholder arising, existing or
based upon any acts or omissions occurring prior to the date of Closing
(including, without limitation liabilities for any federal or state taxes,
penalties and interest thereon), other than a liability or obligation disclosed
in this Agreement or the schedules referred to herein, and (2) if the
Shareholder refuses to or delays in defending the Bank, reasonable expenses or
costs incurred by the Bank, including reasonable attorneys' fees, in connection
with investigating, attempting to correct, or defending against any Claims,
liens or charges against the Bank for which the Bank is entitled to indemnity
pursuant to the foregoing provisions. The Bank shall give prompt notice in
writing to the Shareholder of the facts and circumstances giving rise to any
Claims by the Bank for indemnification under this Section. Subject to the
limitations of any contract of insurance and to such conditions as the Bank
shall determine to be reasonably necessary for the protection of the interests
of the Bank, the Bank shall tender to the Shareholder the opportunity to
investigate, correct, manage and control any defense against any such Claims.
The assumption of management and control shall not, of itself, constitute any
admission by the Shareholder of liability to the Bank. The Bank shall cooperate
reasonably with the Shareholder in the conduct of such defense.
(c) Indemnification by the Bank. The Bank shall indemnify the
Shareholder against and hold him harmless from any and all (1) losses,
liabilities, claims, demands, damages, deficiencies, causes of actions or suits
(the "Claims") arising out of or resulting from (A) the breach or incorrectness
of any of the representations, warranties or covenants of the Bank contained in
this Agreement, which breach or incorrectness, either individually or together
total $15,000 or more, or (B) the assertion against the Shareholder of any
liability or obligation of the Bank arising, existing or based upon any acts or
omissions occurring prior to the date of Closing (including, without limitation
liabilities for any federal or state taxes, penalties and interest thereon),
other than a liability or obligation disclosed in this Agreement or the
schedules referred to herein, and (2) if the Bank refuses to or delays in
defending the Shareholder, reasonable expenses or costs incurred by the
Shareholder, including reasonable attorneys' fees, in connection with
investigating, attempting to correct, or defending against any Claims, liens or
charges against the Shareholder for which the Shareholder are entitled to
indemnity pursuant to the foregoing provisions. The Shareholder shall give
prompt notice in writing to the Bank of the facts and circumstances giving rise
to any Claims by the Shareholder for indemnification under this Section. Subject
to the limitations of any contract of insurance and to such conditions as the
Shareholder shall determine to be reasonably necessary for the protection of the
interest of the Shareholder, the Shareholder shall tender to the Bank the
opportunity to investigate, correct, manage and control any defense against any
such Claims. The assumption of management and control shall not, of itself,
constitute any admission by the Bank of liability to the Shareholder. The
Shareholder shall cooperate reasonably with the Bank in the conduct of such
defense.
= (d) Time Period Limitations. No party shall be entitled to assert any right of
indemnification under this Agreement for any Claims suffered by such party or
arising from a breach by another party of any other representation, warranty or
covenant contained in this Agreement after the date which is three (3) years
after the Closing Date. Each party shall continue to have the right to be
indemnified for breaches of the representations, warranties and covenants set
forth in the Sections specified above for a period beyond that specified as long
as a notice of such Claims as to such breaches is provided to the indemnifying
party within the specified time period.
SECTION 9. OBLIGATIONS AFTER CLOSING
(a) Non-Competition. At the Closing, the Shareholder and the Bank shall
each execute and deliver to each other as an integral part of this transaction a
Non-Competition Agreement in substantially the form attached hereto as Exhibit
A.
(b) Employment Agreement. At the Closing, the Shareholder and the Bank
as an integral part of this transaction shall each execute and deliver to each
other an Employment Agreement by which the Bank agrees to employ the Shareholder
in substantially the form attached hereto as Exhibit B.
(c) Confidentiality. After the Closing, the Shareholder shall keep
strictly confidential all documents containing any information concerning the
properties, business and assets of the other parties that may have been obtained
in the course of investigating, negotiating and preparing to consummate the
transactions contemplated by the parties (other than such information as shall
be in the public domain or otherwise ascertainable from public or outside
sources).
(d) Additional Documents. Each party shall at any time and from time to
time after the Closing cooperate in providing each other with any additional
documents or information' and shall cause to be executed and delivered to the
other party such further instruments or documents as such other party may
reasonably require to give effect to the transactions contemplated hereunder.
SECTION 10. GENERAL.
(a) Confidential Information. The parties hereto each covenant that, in
the event the transactions contemplated in this Agreement are not consummated,
each party shall keep strictly confidential, shall not use in any manner and
return all documents containing any information concerning the properties,
business and assets of the other party that may have been obtained in the course
of investigating, negotiating and preparing to consummate the transactions
contemplated by the parties (other than such information as shall be in the
public domain or otherwise ascertainable from public or outside sources).
(b) Nonassignment. This Agreement shall not be assignable by any party
without the written consent of the others. Notwithstanding the foregoing, the
Bank may assign its rights hereunder to its holding company, SJNB Financial
Corp., a California corporation, or to a wholly-owned subsidiary of the Bank,
but no such assignment on the part of the Bank shall relieve the Bank, of any of
its obligations hereunder. Subject to the foregoing, this Agreement shall be
binding upon and inure to the benefit of the respective heirs, successors,
assigns and personal representatives of the parties hereto.
(c) Termination. This Agreement may be terminated (1) by written
agreement between the Bank, on the one hand, and the Company, on the other hand
at any time, (2) by written notice from the Bank to the Company upon the
occurrence of any adverse condition set forth in Section 6(g), (3) by the Bank
upon written notice by reason of the failure of fulfillment of any condition set
forth in Section 6 or by reason of the material breach of any obligation set
forth herein by either the Company or the Shareholder, (4) by the Shareholder or
the Company upon written notice by reason of the failure of any condition set
forth in Section 7 or the material breach of any obligation set forth herein by
the Bank, or (5) by either party if the amount of the holdback specified in
paragraph 2(d) exceeds $75,000. This Agreement shall terminate automatically
without further action by either party if the Closing does not occur on or prior
to December 31, 1995. Termination of this Agreement shall not serve to relieve a
party of responsibility or obligation, if any, for any breaches of this
Agreement occurring prior to such termination. In the event the terms of this
Section 10(c) shall be inconsistent with any other terms in this Agreement, the
terms set forth in this Section 10(c) shall govern.
(d) Expenses. The parties hereto shall each bear their respective
costs and expenses incurred in the consummation of this transaction.
(e) Notices. All notices, requests, demands and other communications
provided for in this Agreement shall be in writing addressed as follows:
(i)......If to the Bank, addressed to:
......... San Xxxx National Bank
......... Xxx Xxxxx Xxxxxx Xxxxxx
......... Xxx Xxxx, Xxxxxxxxxx 00000
......... Attention: Mr. Xxxx Xxxxxx
......... with a copy to:
......... Xxxx X. Xxxxx
......... Xxxxxx & Lea
......... 00 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
......... Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
(ii) If to the Company or the Shareholder, addressed to:
......... Xx. Xxxxxx X. Xxxxxxx
......... 000 Xxxxxx Xxxxxx
......... Xxx Xxxx, Xxxxxxxxxx 00000
......... with a copy to:
......... Xxxxx Xxxxxx, Esq.
......... Binder & Xxxxxx
......... 0000 Xxx Xxxxxxx, Xxxxx 000
......... Xxx Xxxx, Xxxxxxxxxx 00000-0000
(f) Brokerage and Finders' Fees; Indemnification. Each of the parties
represents to the other that it has not incurred any liability for brokerage
commissions, finders' fees or like compensation in respect of the transactions
contemplated hereunder. The Shareholder shall indemnify and hold harmless the
Bank in respect of any claim for brokerage or other commissions relative to this
Agreement and the transactions contemplated hereby, based in any way on
agreements, arrangements or understandings claimed to have been made by the
Company or the Shareholder with any third party.
(g) Breach and Non-Performance of Conditions. No party shall be deemed
to be in breach of any of its covenants contained in this Agreement unless the
party entitled to performance thereof shall have given written notice to the
breaching party setting forth the nature of the breach, and such breach shall
not be cured or corrected within 20 days thereafter. No party shall be deemed to
have failed to satisfy a condition contained in this Agreement unless the party
entitled to the fulfillment thereof shall have given written notice to the
parties responsible for such fulfillment, and such condition shall thereafter
not be fulfilled.
(h) Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if the signatures to each counterpart were
upon the same instrument.
(i) Entire Agreement. This Agreement and the Exhibits and Schedules
referred to herein set forth the entire Understanding of the parties' and
supersede all prior agreements, arrangements and communications, whether oral or
written, and this Agreement shall not be modified or amended other than by
written agreement of the parties hereto. Captions appearing in this Agreement
are for convenience only and shall not be deemed to explain, limit or amplify
the provisions hereof.
(j) Severability. In the event that any provision of this Agreement or
any portion thereof shall be finally determined to be unlawful or unenforceable,
such provision or portion thereof shall be deemed to be severed from this
Agreement, and every other provision, and any portion of a provision, that is
not invalidated by such determination shall remain in full force and effect.
(k) Amendments. This Agreement may be amended by the parties hereto at
any time prior to the Closing Date by an instrument in writing signed by the
parties.
(l) Extension; Waiver. At any time prior to the Closing Date, the
parties hereto may (1) extend the time for the performance of any of the
obligations or other acts of the other party hereto, (2) waive any inaccuracies
in the representations and warranties of the other party contained herein or in
any documents delivered pursuant hereto, or (3) waive compliance by the other
party with any of the agreements or conditions contained herein. Any agreement
on the part of a party hereto to any such extension or waiver shall be valid if
set forth in an instrument in writing signed by such party.
(m) Arbitration. Any controversy or claim arising out of or relating to
this Agreement, or any breach thereof shall be settled in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, and
judgment upon the award may be entered in any court having jurisdiction thereof.
Any arbitration, suits and actions with respect to this Agreement shall be
brought in the County of Santa Clara, California. The parties consent to the
jurisdiction and venue of the courts referred to herein. In the event of any
dispute, arbitration, action at law or in equity between the parties in relation
to this Agreement, the nonprevailing party, in addition to other sums which such
party may be called upon to pay, shall pay to the other party all costs and
expenses of such action or suit, including reasonable attorney's fees, incurred
with or without suit.
(n) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have executed this Stock
Acquisition Agreement on the day and year first above written.
SAN XXXX NATIONAL BANK, a.. ASTRA FINANCIAL INC.,
national banking association a California corporation
by S/Xxxxx X. Xxxxx........ by S/Xxxxxx X. Xxxxxxx
------------------------------- ------------------------
its President & CEO its President
------------------------------- ------------------------
XXXXXX X. XXXXXXX
S/Xxxxxx X. Xxxxxxx
------------------------
EXHIBIT A
NON-COMPETITION AGREEMENT
THIS NON-COMPETITION AGREEMENT (this "Agreement") is entered
into this January 5, 1996, between SAN XXXX NATIONAL BANK, a national banking
association (the "Bank") and XXXXXX X. XXXXXXX, an individual ("Xxxxxxx"), in
relation to the following facts, circumstances and understandings:
R E C I T A L S
X. Xxxxxxx is the sole shareholder of Astra Financial Inc., a
California corporation (the "Company"). The Bank, the Company and Xxxxxxx, sole
shareholder of the Company, have entered into that certain Stock Acquisition
Agreement dated November 17, 1995 (the "Stock Acquisition Agreement"), pursuant
to which the Bank is purchasing all of the outstanding stock of the Company from
Xxxxxxx as of the closing under the Stock Acquisition Agreement (the "Closing").
X. Xxxxxxx and the Bank are simultaneously entering into an employment
agreement (the "Employment Agreement") by which he will be employed by the Bank
for a period of one year following the date of this agreement.
C. The execution and delivery of this Agreement and the Employment
Agreement are both a condition precedent to the obligations of the Bank and of
the Company and Xxxxxxx under the Stock Acquisition Agreement.
D. The Bank seeks to protect the goodwill and other assets of the
Company being acquired under the Stock Acquisition Agreement and to maintain a
competitive advantage in its business by preventing Xxxxxxx from competing with
the Company in the area in which it does business (a) for a period of one year
from the Closing under the Employment Agreement and (b) for an additional four
years from the Closing under the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, the parties hereto, each intending to be
legally bound, agree as follows:
1. Non-Competition. (a) In consideration for the payment made pursuant
to Section 2 of this Agreement, Xxxxxxx agrees that, commencing on the earlier
of January 5, 1997 (one year from closing) or termination of the Employment
Agreement and ending on January 5, 2002 (five years from closing) (the
"Noncompetition Period"), he shall not, individually or collectively, directly
or indirectly, own an interest in, operate, join, control, or participate in or
be connected as an officer, employee, agent, independent contractor, partner,
shareholder, creditor or principal of any corporation, partnership,
proprietorship, firm or association or other entity which owns and/or operates a
factoring business or accounts receivable financing business or engages in any
type of business that is carried on at that time by the Bank (except mortgage
lending); provided however, that the record or beneficial ownership by Xxxxxxx
as a passive investor of not more than five percent (5%) of the outstanding
publicly traded securities of any class of any such business in which he does
not actively participate shall not be deemed to be in violation of this Section.
For purposes of this Agreement, the geographic area of the business is Santa
Xxxxx County and all contiguous counties (collectively, the "Geographic Area").
Xxxxxxx agrees and acknowledges that the duration, scope and Geographic Area of
the restrictive covenants described in this Agreement are fair, reasonable and
necessary in order to protect the goodwill and other legitimate business
interests of the Bank and that adequate consideration has been received by
Xxxxxxx in exchange for such covenants.
(b) Xxxxxxx further acknowledges agrees that he has had access to and
become acquainted with information concerning the operation of the Company,
including without limitation knowledge of personnel, sales, planning, and
customer information that is owned by the Company and regularly used in the
operation of its business and that, except such information that is in the
public domain, this information constitutes the Company's trade secrets. Xxxxxxx
further agrees not to compete with the Company as specified herein by directly
or indirectly disclosing such trade secrets to any other person or use the trade
secrets in any way other than as an employee of the Company and agrees not to
solicit any employees of the Company to become employed or associated with
another business or entity which competes with the Company during the term of
this Agreement.
(c) The parties intend that the covenant contained in subsection (a) of
this Section 1 shall be construed as a series of separate Covenant, one for each
county and city specified. Except for geographic coverage, each such separate
covenant shall be deemed identical in terms of the covenant contained in
subsection (a). If, in any judicial proceeding, a court shall refuse to enforce
any of the separate covenants deemed to be included in this Section 1, then the
unenforceable covenant shall be deemed eliminated from these provision for the
purpose of those proceedings to the extent necessary to permit the remaining
separate covenant to be enforced.
2. Consideration. This agreement is an integral part of the Stock
Acquisition Agreement whereby Xxxxxxx has sold all of his shares of stock in the
Company to the Bank which will hereafter operate the business of the Company. In
consideration for the non-competition agreement of Xxxxxxx in this Agreement,
the Bank shall deliver $100,000.00 to Xxxxxxx on January 5, 1996. The parties
agree that such $100,000.00 relates to the Noncompetition Period and that
$25,000.00 of such sum relates to the time from the beginning of the
Noncompetition Period to January 5, 1998 (two years from the closing) and
$25,000 to each subsequent year of such restriction.
3. Remedies for Breach. (a) In the event that Xxxxxxx materially
breaches any of the material provisions of Section 1 of this Agreement, the Bank
shall notify Xxxxxxx of its intention to hold Xxxxxxx in breach of this
Agreement and the basis of such breach in accordance with the notice provisions
of Section 4 of this Agreement. If such breach is capable of being cured,
Xxxxxxx shall have 3 days from the date of such notice to cure the breach. If he
fails to cure such breach within such 3 days, or if the breach cannot be cured,
the parties hereto agree that the Bank will be irreparably damaged, and that the
Bank has no adequate remedy at law for damages and that its injury will be
continuing.
(b) Because of the continuing injury to the Bank that will be
created by a breach of the provisions of Section 1 as well as the nature of such
injury, the parties agree that the Bank shall be entitled to injunctive relief
prohibiting Xxxxxxx from engaging in the conduct constituting the breach and
that a court of competent jurisdiction may issue an appropriate injunction.
4. Notices. All notices hereunder, to be effective, shall be in writing
and shall be delivered in accordance with the Stock Acquisition Agreement.
5. Modification. This Agreement constitutes the entire Agreement
between the parties hereto with regard to the subject matter hereof, superseding
all prior understandings and agreements, whether written or oral. This Agreement
may not be amended or revised except by a writing signed by the parties.
6. Resolution of Disputes. Any controversy or claim arising out of or
relating to this Agreement, or any breach thereof shall be settled in accordance
with the Commercial Arbitration Rules of the American Arbitration Association,
and judgment upon the award may be entered in any court having jurisdiction
thereof. Any arbitration, suits and actions with respect to this Agreement shall
be brought in the County of Santa Clara, California. The parties consent to the
jurisdiction and venue of the courts referred to herein. In the event of any
dispute, arbitration, action at law or in equity between the parties in relation
to this Agreement, the nonprevailing party, in addition to other sums which such
party may be called upon to pay, shall pay to the other party all costs and
expenses of such action or suit, including reasonable attorney's fees, incurred
with or without suit.
7. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns.
The Bank may assign this Agreement to the Company or any entity conducting the
business of the Company without the prior consent of Xxxxxxx. Xxxxxxx may not
assign this Agreement without the prior written consent of the Bank.
8. Captions. Captions herein have been inserted only for convenience
of reference and do not define, limit or describe the scope or substance of any
provision of this Agreement.
9. Severability. In the event that any provision of this Agreement or
any portion thereof shall be finally determined to be unlawful or unenforceable,
such provision or portion thereof shall be deemed to be severed from this
Agreement, and every other provision, and any portion of a provision, that is
not invalidated by such determination shall remain in full force and effect.
10. Governing Law. This Agreement shall be construed under and
governed by the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
SAN XXXX NATIONAL BANK, a XXXXXX X. XXXXXXX
national banking association
by S/Xxxxx X. Xxxxx S/Xxxxxx X. Xxxxxxx
---------------------------- ---------------------------
its President & CEO
---------------------------
by S/Xxxxxx X. Xxxxxxxxx
----------------------------
its EVP/CFO
----------------------------
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into
this 5th day of January, 1996, between SAN XXXX NATIONAL BANK, a national
banking association (the "Bank") and XXXXXX X. XXXXXXX, an individual
("Xxxxxxx"), in relation to the following facts, circumstances and
understandings:
R E C I T A L S
X. Xxxxxxx is the sole shareholder of Astra Financial, a California
corporation (the "Company"). The Bank, the Company and Xxxxxxx have entered into
that certain Stock Acquisition Agreement dated November 17, 1995 (the "Stock
Acquisition Agreement"), pursuant to which the Bank is purchasing all of the
outstanding stock of the Company from Xxxxxxx as of the closing under the Stock
Acquisition Agreement (the "Closing").
B. The execution and delivery of both this Agreement and the Non-
Competition Agreement are conditions precedent to the obligations of the Bank
and of the Company and Xxxxxxx under the Stock Acquisition Agreement.
C. The Bank seeks to employ Xxxxxxx as a Vice President/Business
Development Officer, to assist in operating, marketing and promoting the
Company's business after the Closing and to maintain a competitive advantage in
the business of the Company and to prevent Xxxxxxx from competing with the
Company in the area in which it does business (a) for a period of one year from
the Closing under this Agreement and (b) for an additional four years from the
Closing under the terms and conditions set forth in a Non-Competition Agreement.
NOW, THEREFORE, the parties hereto, each intending to be
legally bound, agree as follows:
1. Employment. The Bank hereby employs Xxxxxxx and Xxxxxxx hereby
accepts employment upon the terms and conditions set forth in this Agreement.
2. Duties. Xxxxxxx shall perform the duties of Vice President/Business
Development Officer for the term of this Agreement. Xxxxxxx shall devote
substantially his full time energies and skills to the performance of his duties
under this Agreement and shall not engage in any other business pursuits.
Xxxxxxx shall do and perform all services necessary or advisable to fulfill the
duties of his position and such performance shall be at all times subject to the
direction of the President of the Bank.
3. Trade Secrets. The parties acknowledge and agree that during the
term of this Agreement and during the period when he was a shareholder of the
Company, Xxxxxxx has had and shall have access to information about of the
Company, including without limitation knowledge of personnel, sales, planning,
customer lists and other customer information that is owned by the Company and
regularly used in the operation of its business and that, except such
information that is in the public domain, this information constitutes the
Company's trade secrets. Xxxxxxx further agrees not to disclose such trade
secrets to any other person or use the trade secrets in any way other than as an
employee of the Company and agrees not to solicit any employees of the Company
to become employed or associated with another business or entity which competes
with the Company during the term of this Agreement.
4. Term. The term of employment under Section 1 shall commence on
the date of this Agreement and shall continue for a term of one year, unless it
is terminated earlier as specified herein.
5. Non-Competition. (a) This Agreement is an integral part of the Stock
Acquisition Agreement whereby Xxxxxxx has sold all of his shares of stock in the
Company to the Bank which will hereafter operate the business of the Company.
Xxxxxxx agrees that during his employment by the Bank (the "Noncompetition
Period"), pursuant to this Agreement, he shall not, individually or
collectively, directly or indirectly, own an interest in, operate, join,
control, or participate in or be connected as an officer, employee, agent,
independent contractor, partner, shareholder, creditor or principal of any
corporation, partnership, proprietorship, firm or association or other entity
which owns and/or operates a factoring business or accounts receivable financing
business or engages in any type of business that is carried on at that time by
the Bank (except mortgage lending); provided however, that the record or
beneficial ownership by Xxxxxxx as a passive investor of not more than five
percent (5%) of the outstanding publicly traded securities of any class of any
such business in which he is not active shall not be deemed to be in violation
of this Section. For purposes of this Agreement, the geographic area of the
business is Santa Xxxxx County and all contiguous counties (collectively, the
"Geographic Area"). Xxxxxxx agrees and acknowledges that the duration, scope and
Geographic Area of the restrictive covenants described in this Agreement are
fair, reasonable and necessary in order to protect the goodwill and other
legitimate business interests of the Bank and that adequate consideration has
been received by Xxxxxxx in exchange for such covenants.
(b) The parties intend that the covenant contained in subsection (a) of
this Section 5 shall be construed as a series of separate Covenant, one for each
county included. Except for geographic coverage, each such separate covenant
shall be deemed identical in terms of the covenant contained in subsection (a).
If, in any judicial proceeding, a court shall refuse to enforce any of the
separate covenants deemed to be included in this Section 5, then the
unenforceable covenant shall be deemed eliminated from these provision for the
purpose of those proceedings to the extent necessary to permit the remaining
separate covenant to be enforced.
(c) In the event that Xxxxxxx materially breaches any of the material
provisions of this Section 5, the Bank shall notify Xxxxxxx of its intention to
hold Xxxxxxx in breach of this Agreement and the basis of such breach in
accordance with the notice provisions of Section 13 of this Agreement. If such
breach is capable of being cured, Xxxxxxx shall have 3 days from the date of
such notice to cure the breach. If he fails to cure such breach within such 3
days, or if the breach cannot be cured, the parties hereto agree that the Bank
will be irreparably damages, and that the Bank has no adequate remedy at law for
damages and that its injury will be continuing.
(d) Because of the continuing injury to the Bank that will be created
by a breach of the provisions of Section 5 as well as the nature of such injury,
the parties agree that the Bank shall be entitled to injunctive relief
prohibiting Xxxxxxx from engaging in the conduct constituting the breach and
that a court of competent jurisdiction may issue an appropriate injunction.
6. Confidentiality. Xxxxxxx shall not divulge, publish or otherwise
reveal either directly or indirectly through another during the term of this
Agreement any knowledge of a confidential nature received by him during the
course of his employment, and such information shall be kept confidential and
shall not in any manner be revealed except as may be necessary in connection
with his duties hereunder.
7. Compensation. (a) As compensation for his services hereunder, the
Bank shall pay to Xxxxxxx a base annual salary of $60,000.00, payable in equal
semi-monthly installments on the 15th and last day of each month, prorated for
any partial periods. The Bank shall have the right to withhold from Xxxxxxx'x
compensation any and all sums required by law, including Federal and state tax
law.
(b) As additional incentive for Xxxxxxx to increase the accounts
receivable portfolio and generate new accounts receivable financing business,
the Bank shall pay to Xxxxxxx a one-time "Portfolio Growth Bonus" within 60 days
following the one year anniversary of the Closing under the Stock Acquisition
Agreement (the "Closing").
(1) The amount of the Portfolio Growth Bonus will be based
upon the Average Monthly Increase in the Astra Portfolio, as defined in
subparagraphs (b)(3) and (b)(4) below, starting either (a) with the calendar
month in which the Closing occurs, if the Closing occurs on or before the 15th
of the month, or (b) with the calendar month following the Closing, in all other
cases, and in either event continuing for eleven more calendar months, assuming
this Agreement does not terminate early. In the event this Agreement is
terminated prior to the end of the twelve month period referred to in the prior
sentence, the amount of the Portfolio Growth Bonus will be based on the Average
Monthly Increase, starting with the month of the Closing and ending with the
month in which this Agreement is terminated.
(2) The Portfolio Growth Bonus will be based on the following
formula: for each $1,000 by which the Average Monthly Increase exceeds $20,000,
Xxxxxxx will receive a Portfolio Growth Bonus of $1,500, up to a total Portfolio
Growth Bonus of $120,000; provided however, that if this Agreement is terminated
prior to the end of the eleventh month after the Closing, Xxxxxxx shall receive
a Portfolio Growth Bonus equal to the amount determined by the above formula,
times the number of months over which the average was determined and divided by
twelve (12).
(3) The "Astra Portfolio" for purposes of this paragraph 7(b)
shall consist of all the Accounts Receivable in the Company's portfolio at the
Closing, plus (a) any new Accounts Receivable generated by Xxxxxxx, and (b) any
new Accounts Receivable from customers located in New Mexico, during the times
specified in paragraph (b)(1) above.
(4) The "Average Monthly Increase" for purposes of this
paragraph shall consist of the average monthly increases calculated as set forth
below. For the first month, the monthly increase (hereinafter, the "First
Monthly Increase") is equal to (1) the Accounts Receivable of the Company at the
Closing, less $1,800,000 and those accounts receivable that have been written
off prior to the Closing or subject to the holdback under Section 2(d) of the
Stock Acquisition Agreement; plus (2) change in the Astra Portfolio since the
Closing; less (c) any accounts receivable that had been in (1) or (2) but have
been paid off or written off since the Closing. For all subsequent months, the
monthly increase shall consist of (3) the average daily balance of the Astra
Portfolio, as taken from the daily Client Summary Reports for the month; less
(4) either (x) for the second month, the First Monthly Increase plus $1,800,000,
or (y) for every other month, the average daily balance of the Astra Portfolio
for the prior month; plus (5) any Accounts Receivable subject to the holdback
under Section 2(d) of the Stock Acquisition Agreement that are paid off during
the month. All accounts receivable generated by Xxxxxxx shall be subject to
existing SJNB Financial Services underwriting criteria.
(c) In recognition and compensation of past and future services
provided and to be provided by Xxxxxxx to the Company and the Bank, the Bank
shall pay to Xxxxxxx on January 4, 1996, the amount of $140,000.
8. Benefits. The Bank shall pay to Xxxxxxx $400 a month as a car
allowance during the term of this Agreement. Xxxxxxx shall be entitled to four
(4) weeks of vacation during the term of this Agreement, which may be utilized
after April 5, 1996 (91 days after hire). Xxxxxxx shall be entitled to 5.33
hours of sick leave per month, which may accrue if not used, but he shall not be
entitled to any reimbursement for unused sick leave. Medical, dental and vision
insurance shall be provided to Xxxxxxx on a pre-tax basis, beginning at the
commencement of this Agreement. Sick-leave pay and long term disability shall be
provided to Xxxxxxx starting on April 5, 1996 (91 days after hire).
9. Termination. (a) (1) The Bank reserves the right to terminate this
Agreement if Xxxxxxx (1) wilfully breaches or habitually neglects the duties
which he is required to perform under the terms of this Agreement, or (2)
commits acts of dishonesty, fraud, misrepresentation, or other acts of moral
turpitude, that would prevent the effective performance of his duties.
(2) The Bank may at its option terminate this Agreement for
the reasons stated in this section by giving written notice of termination to
Xxxxxxx without prejudice to any other remedy to which the Bank may be entitled
either at law, in equity, or under this agreement. The notice of termination
required by this section shall specify the ground for the termination and shall
be supported by a statement of relevant facts.
(b) This Agreement, other than Section 7(c), shall be terminated upon
the death of Xxxxxxx.
(c) The Bank reserves the right to terminate this Agreement after
Xxxxxxx suffers any physical or mental disability that would prevent the
performance of his duties under this Agreement. Such a termination shall be
effected by giving 10 days' written notice of termination to Xxxxxxx.
(d) In the event that this Agreement is terminated prior to the
completion of the term of employment specified herein, Xxxxxxx shall be entitled
to the compensation described in Subsection 7(a) and Section 8 relating to the
period prior to the date of termination, computed pro rata up to and including
that date. Xxxxxxx shall be entitled to the compensation described in
Subsections 7(b) and (c) in any event, as described and limited in those
sections. Xxxxxxx shall be entitled to no further compensation as of the date of
termination.
10. Accounting. On all accountings required hereunder, the
determination of the amount due to Xxxxxxx shall be certified to be true and
correct by a senior officer of the Bank. Xxxxxxx or his agents shall have access
to and may at his cost, audit independently the books and records of the Bank to
determine the accuracy of the statements delivered to Xxxxxxx. If the amount
paid to Xxxxxxx by the Bank is found to be in error by more than 10% of the
amount due to Xxxxxxx, the Bank shall immediately pay the cost of such audit.
11. Surrender of Records and Property. Upon expiration or termination
of this Agreement, Xxxxxxx shall promptly return to the Bank all records,
including client lists or references, and client mailings, correspondence files,
other files, keys, and all other property belonging to or supplied by the Bank.
12. Personnel Policies and Practices. Xxxxxxx'x employment shall be
subject to all of the Bank's personnel policies and practices and any amendments
to such policies that the Bank may make and that are in effect at the Bank
during the term of this Agreement.
13. Notices. All notices hereunder, to be effective, shall be in
writing and shall be delivered in accordance with the Stock Acquisition
Agreement.
14. Modification. This Agreement constitutes the entire Agreement
between the parties hereto with regard to the subject matter hereof, superseding
all prior understandings and agreements, whether written or oral.This Agreement
may not be amended or revised except by a writing signed by the parties.
15. Resolution of Disputes. Any controversy or claim arising out of or
relating to this Agreement, or any breach thereof shall be settled in accordance
with the Commercial Arbitration Rules of the American Arbitration Association,
and judgment upon the award may be entered in any court having jurisdiction
thereof. Any arbitration, suits and actions with respect to this Agreement shall
be brought in the County of Santa Clara, California. The parties consent to the
jurisdiction and venue of the courts referred to herein. In the event of any
dispute, arbitration, action at law or in equity between the parties in relation
to this Agreement, the nonprevailing party, in addition to other sums which such
party may be called upon to pay, shall pay to the other party all costs and
expenses of such action or suit, including reasonable attorney's fees, incurred
with or without suit.
16. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns.
The Bank may assign this Agreement to any entity conducting the business of the
Bank without the prior consent of Xxxxxxx. Xxxxxxx may not assign this Agreement
without the prior written consent of the Bank. If Xxxxxxx dies prior to the
expiration of the term of this Agreement, any sums that may be due him from the
Bank under this Agreement as of the date of death shall be paid to Employee's
executors, administrators, heirs, personal representatives, successors and
assigns.
17. Captions. Captions herein have been inserted only for convenience
of reference and do not define, limit or describe the scope or substance of any
provision of this Agreement.
18. Partial Invalidity. If any provision in this Agreement is held by
a court of competent jurisdiction to be invalid, void, or unenforceable, the
remaining provisions shall nevertheless continue in full force without being
impaired or invalidated in any way.
19. Governing Law. This Agreement shall be construed under and
governed by the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
SAN XXXX NATIONAL BANK, a.. XXXXXX X. XXXXXXX
national banking association
by S/Xxxxx X. Xxxxx S/Xxxxxx X. Xxxxxxx
-------------------------- ----------------------------
its President & CEO......
-------------------------
by S/Xxxxxx X. Xxxxxxxxx
--------------------------
its EVP & CFO
December 14, 1995
Mr. Xxxxxx Xxxxxxx
Astra Financial Inc.
0000 Xxxxxxxx Xxx., Xxxxx 000
Xxx Xxxx, XX 00000
Re: Stock Acquisition Agreement dated November 17, 195
Dear Xx. Xxxxxxx:
This letter is intended to clarify several aspects of the above referenced Stock
acquisition Agreement (the "Agreement"). Terms used in this letter that are
defined in the Agreement shall have the same meaning as in the Agreement. Please
sign below if you agree with the following:
1. For purposes of the Agreement, an account shall be considered as owned by
Astra or the Bank regardless of whether the agreement by which the Account
Receivable was purchased from the client is with recourse or without
recourse.
2. In section 2(c)(3)(b) of the Agreement, the term "customers" shall be
deemed to mean "clients." Section 7(b)(3)(b) of the Employment Agreement to
be entered into at the Closing shall be changed in this manner prior to the
execution of the Employment Agreement.
3. For purposes of calculating both the Contingent Purchase Price provided in
Section 2(c) of the Agreement and the Portfolio Growth Bonus provided at
Section 7(b) of the Employment Agreement, all Accounts Receivables from
clients listed on the attached Exhibit A shall be considered to be
"generated by Shareholder."
4. The Company and Shareholder have applied or will apply by tomorrow to the
California Franchise Tax Board for tax clearance, but do not expect to have
tax clearance prior to the Closing. The Bank agrees to waive the receipt of
tax clearance as a condition to Closing.
Other than as specifically listed above, the Agreement shall remain in full
force and effect.
SAN XXXX NATIONAL BANK
by: S/Xxxxx X. Xxxxx
Xxxxx X. Xxxxx, President & CEO
ACCEPTED AND AGREED:
December 14, 1995
Astra Financial Inc.
S/Xxxxxx Xxxxxxx S/Xxxxxx Xxxxxxx
by Xxxxxx Xxxxxxx, President Xxxxxx Xxxxxxx
January 5, 1996
Mr. Xxxxxx Xxxxxxx
Astra Financial Inc.
0000 Xxxxxxxx Xxx., Xxxxx 000
Xxx Xxxx, XX 00000
Re: Stock Acquisition Agreement dated November 17, 1995
Dear Xx. Xxxxxxx:
This letter will confirm our discussions this morning concerning the closing of
the above referenced agreement. We agree that there is a hold-back of $10,000
under the terms of Section 2(d) of the Stock Acquisition Agreement. The terms of
the agreement shall govern the treatment of that hold-back.
In addition, we have agreed to a hold-back of $30,000 for income taxes relating
to 1995 net income. As we discussed, accruing an adequate provision for 1995
income taxes would have caused Astra's retained earnings to decline below the
amount required as a condition of closing. Should Astra's 1995 income taxes
require a greater provision than $30,000, you will pay us the difference. On the
other hand, if the 1995 taxes require less provision, we will pay you the amount
that is not needed.
Since the $30,000 hold-back relates to the ending retained earnings of Astra,
the Bank and you have agreed that the amount should be reflected in your
compensation under the Employment Agreement. We have paid you $110,000, instead
of $140,000, as adjusted with the taxes and other amount required to be withheld
under Section 7(c) of the Employment Agreement.
Other than as specifically listed above and as specified in the Extension
Agreement dated January 5, 1996, and our letters to you dated December 14, 1995
and January 5, 1996, the Agreement shall remain in full force and effect.
SAN XXXX NATIONAL BANK
S/Xxxxxx X. Xxxxxxxxx
Xxxxxx X. Xxxxxxxxx
ACCEPTED AND AGREED:
January 6, 1996
Astra Financial
S/Xxxxxx Xxxxxxx S/Xxxxxx Xxxxxxx
Xxxxxx Xxxxxxx, President Xxxxxx Xxxxxxx
Extension Agreement
SAN XXXX NATIONAL BANK, ASTRA FINANCIAL, INC. and XXXXXX X XXXXXXX
hereby agree to amend that certain STOCK ACQUISITION AGREEMENT between them
dated November 17, 1995 as follows:
1. The reference to "twenty (20) days" in the third line of Section 1(b)of
the Agreement is hereby amended to read "twenty-two (22) days."
2. The second sentance of Section 10(c) of the Agreement is hereby amended to
read as follows: "This Agreement shall terminate automatically without further
action by either party of the Closing does not occur on or prior to January 5,
1996.:
3. Other than as set forth in those certain letters from San Xxxx National Bank
to Xxxxxx X. Xxxxxxx dated December 14, 1995 and january 5, 1996 and holdback
letter agreement of 1/5/96, and as sest forth herein, the Agreement has not been
amended or supplemented and remians in full foce and effect.
Dated: January 5, 0000
XXX XXXX NATIONAL BANK ASTRA FINANCIAL, INC
a national banking association a California corporation
by S/Xxxxxx X. Xxxxxxxxx by S/Xxxxxx X. Xxxxxxx
--------------------------------- ------------------------
its EVP/CFO its President
-------------------------------- -----------------------
XXXXXX X. XXXXXXX
S/Xxxxxx X. Xxxxxxx
---------------------------
