BRANCH PURCHASE AND ASSUMPTION AGREEMENT
dated as of
August 13, 2003
between
RBC CENTURA BANK
as Seller
and
FIRST BANK
as Purchaser
TABLE OF CONTENTS
Page
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ARTICLE 1 CERTAIN DEFINITIONS..........................................................1
1.1 Certain Definitions..........................................................1
1.2 Accounting Terms.............................................................6
1.3 Use and Application of Terms.................................................6
ARTICLE 2 THE TRANSACTIONS.............................................................7
2.1 Transfer and Consideration...................................................7
2.2 Adjustment of Expenses and Fees..............................................7
2.3 Allocation of Consideration..................................................8
2.4 Trade and Service Marks......................................................8
2.5 Sale and Transfer of Servicing and Escrows...................................8
2.6 Assumption of XXX Account Deposits...........................................8
2.7 Purchaser's Right to Reject Loans............................................9
2.8 Loan Accounts Secured by Deposit Accounts...................................10
ARTICLE 3 CLOSING PROCEDURES..........................................................10
3.1 Closing Date and Place; Notifications.......................................10
3.2 Procedure at the Closing; Adjustments.......................................11
ARTICLE 4 TRANSITIONAL MATTERS........................................................12
4.1 Certain Procedures..........................................................12
4.2 Customers...................................................................12
4.3 Assumption of Obligations...................................................13
4.4 Maintenance of Records......................................................13
4.5 Interest Reporting and Withholding..........................................13
4.6 Negotiable Instruments......................................................14
4.7 Leasing of Furniture, Fixtures and Equipment................................14
4.8 ATM/Debit Cards.............................................................14
4.9 Delivery of the Loan Documents..............................................14
4.10 Collateral Assignments and Filing...........................................15
4.11 Training....................................................................15
4.12 Collateral for Public Funds Deposits........................................15
4.13 Telephone Numbers...........................................................15
4.14 Change of Name..............................................................15
4.15 Credit Insurance............................................................15
4.16 Kenansville Real Property...................................................15
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF SELLER....................................16
5.1 Corporate Organization and Authority........................................16
5.2 No Conflict; Licenses and Permits; Compliance with Laws and Regulations.....16
5.3 Approvals and Consents......................................................17
5.4 Title to Assets.............................................................17
5.5 Utilities Complete..........................................................17
5.6 Condemnation Proceedings....................................................17
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5.7 Contracts...................................................................17
5.8 Fiduciary Obligations.......................................................17
5.9 Employees...................................................................17
5.10 Litigation and Liabilities..................................................17
5.11 Regulatory Matters..........................................................17
5.12 Brokers' Fees...............................................................18
5.13 Compliance With Laws........................................................18
5.14 Absence of Certain Changes, Etc.............................................18
5.15 Books and Records...........................................................18
5.16 Loans.......................................................................18
5.17 Deposits....................................................................19
5.18 Leased Real Property........................................................19
5.19 No Other Representations or Warranties......................................19
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF PURCHASER.................................19
6.1 Corporate Organization and Authority........................................19
6.2 No Conflict; Licenses and Permits; Compliance with Laws and Regulations.....20
6.3 Approvals and Consents......................................................20
6.4 Brokers' Fees...............................................................20
6.5 Regulatory Matters..........................................................20
6.6 Financing Available.........................................................21
6.7 Litigation and Undisclosed Liabilities......................................21
6.8 No Other Representations or Warranties......................................21
ARTICLE 7 COVENANTS OF THE PARTIES....................................................21
7.1 Activity in the Ordinary Course.............................................21
7.2 Access and Confidentiality..................................................22
7.3 Regulatory Approvals........................................................23
7.4 Assumed Contracts...........................................................23
7.5 Delivery of Records at Closing..............................................24
7.6 Further Assurances..........................................................24
7.7 Insurance...................................................................24
7.8 Notices of Default..........................................................24
7.9 New Account Numbers and Checks..............................................24
7.10 Settlement Operations after Closing.........................................25
7.11 Covenant of Seller Not to Solicit...........................................27
7.12 Real Property Matters.......................................................27
7.13 Defects in Assets...........................................................29
ARTICLE 8 TAX AND EMPLOYEE MATTERS....................................................29
8.1 Tax Representations.........................................................29
8.2 Allocation Between Pre and Post Closing Periods.............................30
8.3 Transfer Taxes..............................................................30
8.4 Assistance and Cooperation..................................................30
8.5 Notices, Etc................................................................31
8.6 Employees and Employee Benefits.............................................31
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ARTICLE 9 CONDITIONS TO CLOSING.......................................................33
9.1 Conditions to Obligations of Purchaser......................................33
9.2 Conditions to Obligations of Seller.........................................35
9.3 Other Documents.............................................................36
ARTICLE 10 TERMINATION.................................................................36
10.1 Termination.................................................................36
10.2 Effect of Termination.......................................................37
ARTICLE 11 INDEMNIFICATION.............................................................37
11.1 Indemnification.............................................................37
11.2 AS-IS Sale; Waiver of Warranties............................................39
ARTICLE 12 MISCELLANEOUS...............................................................39
12.1 Survival....................................................................39
12.2 Assignment..................................................................39
12.3 Binding Effect..............................................................39
12.4 Public Notice...............................................................39
12.5 Notices.....................................................................40
12.6 Incorporation...............................................................40
12.7 Governing Law...............................................................40
12.8 Entire Agreement............................................................40
12.9 Counterparts................................................................41
12.10 Headings 41
12.11 Waiver and Amendment........................................................41
12.12 Expenses 41
12.13 Severability................................................................41
Exhibits
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Exhibit A - Form of Xxxx of Sale and Instrument of Assignment and Assumption
Exhibit 9.1(d)(vi) - A - Assignment and Assumption of Lease
Exhibit 9.1(d)(vi) - B - Landlord's Consent to Assignment
Exhibit 9.1(d)(vi) - C - Landlord's Estoppel Certificate
Schedules
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C .........List of Branches
1.1 .........Closing Statement
1.2 .........Excluded Employees
1.4 .........Excluded Loans
5.4 .........Title to Assets
5.10 .........Litigation and Liabilities
5.16(e) .........Ownership of Loans
7.1 .........Commitments for Material Improvements
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BRANCH PURCHASE AND ASSUMPTION AGREEMENT, dated as of August ___, 2003,
between FIRST BANK, a bank organized under the laws of the State of North
Carolina ("Purchaser"), and RBC CENTURA BANK, a North Carolina state-chartered
bank ("Seller").
RECITALS
A. Seller. Seller is a bank chartered under the laws of the State of North
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Carolina and is a member primarily of the Bank Insurance Fund ("BIF") of the
Federal Deposit Insurance Corporation (the "FDIC") with its main office located
in Rocky Mount, North Carolina.
B. Purchaser. Purchaser is a bank organized under the laws of the State of
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North Carolina with its principal office located in Troy, North Carolina.
C. The Transaction. Purchaser desires to assume and purchase from Seller,
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and Seller desires to assign and sell to Purchaser, certain of Seller's
liabilities and assets currently held and allocated by Seller to its branch
offices at the locations listed on Schedule C (individually, a "Branch" and
collectively, the "Branches").
NOW, THEREFORE, in consideration of their mutual promises and obligations
and intending to be legally bound hereby, the parties agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
1.1 Certain Definitions. As used in this Agreement, the terms below shall
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have the meanings set forth.
"Accrued Expenses" means the accrued and unpaid expenses appearing as a
Liability on the Preliminary Closing Statement or the Final Closing Statement.
"Accrued Interest" with respect to (i) Deposits at any date means interest
which is accrued on such Deposits to such date and not yet posted to such
deposit accounts or paid to the depositor and (ii) Loans at any date means
interest which is accrued on such Loans to such date and not yet paid.
"Adjustment Date" means a date, which shall be a Business Day as soon as
practicable after the Closing Date but in no event later than fifty (50)
calendar days after the Closing Date, as agreed to by the parties in accordance
with Section 3.2.
"Affiliate" of a person means any person directly or indirectly controlling
or controlled by or under direct or indirect common control with such person.
"Agreement" means this Branch Purchase and Assumption Agreement, including
all schedules, exhibits and addenda as modified, amended or extended from time
to time.
"Allocation" has the meaning specified in Section 2.3.
"Applicable Employees" has the meaning specified in Section 8.6(a).
"Assets" means the (i) Furniture, Fixtures and Equipment, (ii)
Improvements, (iii) Cash on Hand, (iv) Prepaid Expenses, (v) Owned Real
Property, (vi) Records, (vii) Loans, the servicing rights
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thereto and the collateral for the Loans, (viii) Seller's benefits and rights
under Safe Deposit Agreements, and (ix) Seller's benefits and rights under
Assumed Contracts and Assumed Lease and (x) any prepaid fee or expense pursuant
to Section 2.2; provided, however, Assets do not include any ATMs, deferred Tax
assets, refunds for Taxes relating to the period prior to the Closing Date and
prepaid Taxes. The allocation provisions of Section 8.2 shall apply for the
purposes of determining to what extent any Taxes, deferred Tax assets and Tax
refunds relate to the period prior to the Closing Date. Notwithstanding anything
herein to the contrary, Assets do not include any credit card receivables or
credit card accounts.
"Assumed Contracts" means all service or similar contracts, including
personal property leases, in effect as of the Closing Date, that relate to the
Branches and the Assets at the Branches and that Purchaser will assume as of the
Closing pursuant to Section 7.4.
"Assumed Deposits" means all Deposits existing on the Closing Date,
together with all Accrued Interest thereon as of the Closing Date, but excluding
any Deposits excluded pursuant to Section 2.8 or excluded by mutual agreement of
Seller and Purchaser.
"Assumed Lease" means that certain lease dated February 14, 1977 between
Waccamaw Bank and Trust Company and H.R. and Xxxxx X. Xxxxx, with respect to the
Xxxxxxx Xxxxxx, as assigned by an Assignment of Lessee's Interest in Lease dated
August 6, 1997 between Xxxxx X. Xxxxx and Xxxxxx Xxxxx Xxxxxxx, Triangle Bank
(as Assignee) and United Carolina Bank (the "Xxxxxxx Lease").
"ATM" means any automated teller machine owned or leased by Seller and
located at the Branches.
"Bank Merger Act" means Section 18(c) of the Federal Deposit Insurance Act,
as amended.
"BIF" has the meaning specified in Recital A.
"Branch" or "Branches" means the branches of Seller located at the
addresses specified in Schedule C.
"Business Day" means a day on which Seller and Purchaser are open for
business in the State of North Carolina which is not a Saturday, Sunday or legal
holiday recognized generally by commercial banks in the State of North Carolina.
"Cash on Hand" means, as of any date, all xxxxx cash, vault cash, teller
cash and prepaid postage maintained at the Branches, including at ATMs.
"Close of Business" means 2:00 p.m. on the Closing Date.
"Closing" and "Closing Date" refer to one or more closings of the sale,
purchase and assumption provided for herein to be held at such times and dates
as provided for in Article 3 hereof.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commissioner" means the Commissioner of Banks of the State of North
Carolina.
"Delivery Records" means all Records (or copies of original Records if
original Records cannot be located by Seller), but excluding transaction tickets
and records for closed accounts.
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"Deposits" means, as of any date, all deposit liabilities of Seller booked,
maintained or primarily serviced at the Branches, which constitute "deposits"
for purposes of the Federal Deposit Insurance Act, 12 U.S.C. ss. 1813, including
all uncollected items included in depositors' balances (including Overdrafts, as
set forth in Section 7.10(h)), merchant accounts, any Accrued Interest and any
IRAs assigned to Purchaser under Section 2.6, together with Seller's rights and
responsibilities under any customer agreement evidencing or relating thereto,
but excluding (i) deposits securing loans or other extensions of credit by
Seller where such loans or other extensions of credit are not being transferred
under this Agreement, (ii) deposits held in accounts for which Seller acts as
fiduciary (other than IRAs assigned to Purchaser under Section 2.6); (iii)
deposits subject to legal process as shown on Records, (iv) deposits which have
been reported as abandoned property under the abandoned property laws of any
jurisdiction, (v) deposits held in any XXX where the account holder has notified
Seller or Purchaser of his, her or its objection to Purchaser acting as
custodian or trustee of such XXX, (vi) deposits held in the name of Seller or
any of its affiliated entities, (vii) deposits represented by official checks,
travelers checks, money orders, or certified checks of Seller, and (viii)
accounts designated as "closed" on the Records of Seller. Deposits also shall
include any dealer reserve associated with Loans (other than Excluded Loans),
whether or not the dealer reserve is maintained or primarily serviced at the
Branches.
"Dispute Resolver" means an independent accounting firm mutually acceptable
to the Seller and the Purchaser. All determinations under this Agreement made by
a Dispute Resolver shall be binding upon Purchaser and Seller.
"Employees" means any employee employed by Seller on the Closing Date at
the Branches, other than those employees identified in Schedule 1.2.
"Encumbrances" means all mortgages, claims, charges, liens, encumbrances,
easements, limitations, restrictions, commitments, security interests, pledges
or other similar charges or liabilities, whether accrued, absolute, contingent
or otherwise, except for statutory liens securing payments not yet due.
"Environmental Law" has the meaning set forth in Section 7.12(e).
"ERISA" has the meaning assigned in Section 5.9.
"FDIC" means the Federal Deposit Insurance Corporation.
"Federal Funds Rate" on any day means the per annum rate of interest
(rounded upward to the nearest 1/100 of 1%) which is the weighted average of the
rates on overnight federal funds transactions arranged on such day or, if such
day is not a banking day, the previous banking day, by federal funds brokers
computed and released by the Federal Reserve Bank of Richmond (or any successor)
in substantially the same manner as such Federal Reserve Bank currently computes
and releases the weighted average it refers to as the "Federal Funds Effective
Rate" at the date of this Agreement.
"Final Closing Statement" means the statement, as of the Adjustment Date,
delivered by Seller to Purchaser in accordance with Schedule 1.1 and Section
3.2(c), setting forth the Assets and Liabilities transferred at the Closing.
"Final Settlement Payment" has the meaning specified in Section 3.2(c).
"Furniture, Fixtures and Equipment" means all furniture, fixtures, and
equipment (excluding ATMs), trade fixtures, telephone systems, security
equipment, safe deposit boxes (exclusive of
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contents), vaults and supplies (excluding any items consumed or disposed of, but
including new items acquired or obtained, in the ordinary course of business of
the Branches through the Closing Date) that are located at the Branches, but
excluding signage or other advertising or blank paper stock, forms, or supplies
bearing Seller's corporate logos, trade names, or trademarks, and computers and
computer software.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"Hazardous Material" has the meaning set forth in Section 7.12(f).
"Improvements" means all improvements to the Owned Real Property in respect
of the Branches which shall have been purchased, installed or constructed and
used in connection with the operation or maintenance of such Branches.
"XXX" means an "individual retirement account" or similar Deposit account
established in accordance with the provisions of Section 408 of the Code for
which Seller acts as custodian or trustee but as to which Seller may not
exercise investment discretion.
"IRS" means the Internal Revenue Service.
"Information" shall have the meaning specified in Section 7.2(b).
"Leased Real Property" means the Real Property leased by Seller under the
Kenansville Lease and the Xxxxxxx Lease.
"Liabilities" means the (i) Assumed Deposits and all terms and agreements
relating to the Assumed Deposits, (ii) Seller's obligations with respect to the
Loans, the servicing of the Loans and the collateral for the Loans, (iii)
Seller's obligations under Assumed Contracts and Assumed Lease, (iv) Seller's
obligations under the Safe Deposit Agreements, (v) Seller's obligations to
provide customer services from and after the Closing Date in connection with the
Assets and the Assumed Deposits, (vi) all other liabilities of Seller with
respect to the operations of the Branches, including accounts payable and
Accrued Expenses, recorded as liabilities on the books of the Branches as of the
Closing Date; (vii) any fee or expense adjustment required in accordance with
Section 2.2, and (viii) liabilities that arise from the operation of the
Branches after the Closing Date; provided, however, that Liabilities shall not
include any Liability for Taxes for any period prior to the Closing Date. The
allocation provisions of Section 8.2 shall apply for purposes of determining to
what extent a liability for Taxes is with respect to a period prior to the
Closing Date.
"Loan Documents" means all Records with respect to a Loan, including,
without limitation, applications, notes, security agreements, deeds of trust,
mortgages, loan agreements, including building and loan agreements, guarantees,
sureties and insurance policies (including title insurance policies), flood
hazard certifications, and all modifications, waivers and consents relating to
any of the foregoing.
"Loans" means all loans (including loan commitments, but excluding the
interest of any participants in such Loans) which are recorded on the books of
the Branches at the Close of Business, including Overdraft Loans, but excluding
those loans listed on Schedule 1.4 as "Excluded Loans." Loans shall also exclude
(i) loans in non-accrual status on Seller's books, loans in which the collateral
securing the same has been repossessed or as to which collection efforts have
been instituted or claim and delivery or foreclosure proceedings have been
filed, or loans as to which insurance on the loan collateral
4
has been force-placed; (ii) mortgage loans not designated to the Branches; (iii)
loans ninety (90) days or more past due as to principal or interest; (iv) loans
which have been classified adversely by any governmental authority or regulatory
agency or placed by Seller on any internal "watch list" or similar list of loans
causing concern; (v) loans in connection with which the obligor has filed a
petition for relief under the United States Bankruptcy Code, or otherwise has
indicated an inability or refusal to pay the Loan as it becomes due, prior to
the Closing; (vi) letters of credit, or loans in which Seller participates with
another lender, except as specifically offered by Seller and accepted by
Purchaser; (vii) loans to borrowers known by Seller to be deceased, as reflected
in Records relating to such loans; (viii) loans rejected by Purchaser pursuant
to Section 2.7; (ix) loans excluded pursuant to Section 2.8; (x) blocked lines
of credit or commitments; (xi) expired lines of credit or commitments; (xii)
revolving credit tied to inactive Deposits; (xiii) revolving credit to borrowers
located outside North Carolina and South Carolina and (xiv) loans linked to
brokerage accounts.
"Loan Value" means, with respect to a Loan and as of a date, the unpaid
principal balance of any such Loan plus Accrued Interest thereon, net of the
interest in such Loan of any participant, as of such date, and excluding
accumulated but unpaid late charges as of such date.
"Losses" means losses, liabilities, damages (including forgiveness or
cancellation of obligations), expenses, costs, legal fees and disbursements,
collectively.
"Material Adverse Effect" means a material adverse effect on the condition,
financial or otherwise, or results of operations of the Branches, or on the
ability of Seller or the Purchaser to consummate timely the transactions
contemplated hereby. Notwithstanding the foregoing, a Material Adverse Effect
shall not be deemed to exist as a result of general economic conditions or
conditions generally affecting the industry in which the Branches operate, or
changes thereto (it being agreed that such items shall never be considered
material). "Overdraft" means the amount by which any Deposit account at any of
the Branches is overdrawn as of the Closing Date on account of checks, drafts or
other items that have been presented against such account for payment against
insufficient funds and that, under applicable rules of the Federal Reserve Bank
or other check collection rules or procedures, cannot be returned and charged
back as a matter of right to the presenting or collecting bank.
"Overdraft Loans" means unsecured overdraft loans, including negotiable
order of withdrawal line of credit accounts, relating to the Assumed Deposits,
as of the Close of Business, plus accrued interest, which do not exceed the
applicable credit limit by more than 10% of that limit and that are linked to an
open Deposit account.
"Owned Real Property" means the Real Property which is owned by Seller.
"Preliminary Closing Statement" means the statement prepared by Seller, in
consultation with Purchaser, substantially in the format of Schedule 1.1, which
shall be based on the Assets and Liabilities as of the end of the third Business
Day prior to the Closing Date and delivered by Seller no later than the opening
of business on the Closing Date.
"Prepaid Expenses" means the prepaid expenses appearing as an asset in
respect of the Branches on a Preliminary Closing Statement or a Final Closing
Statement, as the case may be, that (i) have been recorded in accordance with
GAAP, (ii) are not intercompany or interoffice accounts and (iii) provide future
benefit to the business conducted at the Branches.
"Purchase Price" has the meaning specified in Section 2.1(b).
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"Real Property" means the owned and leased real properties identified on
Schedule C and the buildings thereon, including any Improvements thereon, and if
the context so requires, Real Property can mean one or more, but less than all
of the real properties identified on Schedule C.
"Records" means all records and original documents in Seller's possession
(including records maintained electronically) which pertain to and are utilized
by Seller to administer, reflect, monitor, evidence or record information
respecting the business or conduct of the Branches (including transaction
tickets through the Closing Date and all records for closed accounts located in
the Branches) and all such records and original documents respecting (i) the
Assumed Contracts and the Assumed Lease, (ii) the Assets, (iii) the Assumed
Deposits and (iv) the Loans, the servicing rights to the Loans and the
collateral for the Loans (including the Loan Documents).
"Regulatory Approvals" means all approvals, permits, authorizations,
waivers or consents of governmental or regulatory agencies or authorities
necessary or appropriate to permit consummation of the transactions contemplated
herein and includes, without limitation, the following: (i) approval of
cognizant regulatory agencies under the Bank Merger Act; (ii) approvals of the
Commissioner under applicable law; and (iii) expiration of the waiting period
provided for in the Bank Merger Act without commencement of any action
challenging Purchaser's acquisition of the Branches hereunder by the United
States Department of Justice or any other person.
"Safe Deposit Agreements" means any agreements, including rental
agreements, related to the safe deposit boxes, if any, located in the Branches.
"Settlement Payment" means a payment made pursuant to Section 2.1(c).
"Tax Returns" means all returns or other reports required to be filed with
respect to any Taxes, including information returns.
"Tax" or "Taxes" refers to all federal, state, local, or foreign income,
gross receipts, windfall profits, severance, property, production, sales, use,
excise, transfer, license, franchise, employment, withholding or similar taxes
or amounts required to be withheld and paid over to any government in respect of
any tax or governmental fee or charge, including any interest, penalties, or
additions to tax on the foregoing.
"Transaction Account" means any account at the Branches in respect of which
deposits are withdrawable in practice upon demand or upon which third party
drafts may be drawn by the depositor, including checking accounts, negotiable
order of withdrawal accounts and money market deposit accounts.
"Transferred Employee" has the meaning specified in Section 8.6(a).
"Welfare Plans" has the meaning specified in Section 8.6(d).
1.2 Accounting Terms. To the extent that any accounting terms used in this
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agreement are not defined in Section 1.1 or elsewhere herein, they shall be
defined under GAAP.
1.3 Use and Application of Terms. In using and applying the various terms,
----------------------------
provisions and conditions in this Agreement, the following shall apply: (1) the
terms "hereby", "hereof", "herein", "hereunder", and any similar words, refer to
this Agreement; (2) words in the masculine gender mean and include correlative
words of the feminine and neuter genders and words importing the singular
numbered meaning include the plural number, and vice versa; (3) words importing
persons include firms,
6
companies, associations, general partnerships, limited partnerships, limited
liability partnerships, limited liability limited partnerships, limited
liability companies, trusts, business trusts, corporations and other legal
organizations, including public and quasi-public bodies, as well as individuals;
(4) the use of the terms "including" or "included in", or the use of examples
generally, are not intended to be limiting, but shall mean, without limitation,
the examples provided and others that are not listed, whether similar or
dissimilar; (5) the phrase "costs and expenses", or variations thereof, shall
include, without limitation, reasonable attorneys' fees and fees of legal
assistants, and reasonable fees of accountants, engineers, surveyors, appraisers
and other professionals or experts - and all references to attorneys' fees or
fees of legal assistants, or fees of accountants, engineers, surveyors,
appraisers or other professionals or experts shall mean reasonable fees; (6) any
reference contained in this Agreement to specific statutes or laws shall include
any successor statutes or laws, as the case may be; and (7) this Agreement shall
not be applied, interpreted and construed more strictly against a person because
that person or that person's attorney drafted this Agreement.
ARTICLE 2
THE TRANSACTIONS
2.1 Transfer and Consideration.
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(a) Subject to the terms and conditions set forth in this Agreement, at the
Closing, Purchaser shall (i) purchase the Assets and (ii) assume the Liabilities
and the Accrued Expenses, and Seller shall sell, assign, transfer, convey and
deliver to Purchaser, free and clear of all Encumbrances (except as described in
Section 5.4), all of Seller's right, title and interest in and to the Assets and
the Liabilities.
(b) The purchase price for the Assets shall be an amount (the "Purchase
Price") computed as follows:
(i) An amount equal to 14.1% of the average daily balance (including
Accrued Interest) of Assumed Deposits for the period commencing thirty (30)
days prior to and inclusive of the day prior to the Closing Date and ending
on the day prior to the Closing Date; provided, however, that in
calculating the average pursuant to this Section 2.1(b)(i), there shall be
excluded from the Assumed Deposits (i) an amount of $600,000, (ii) brokered
Deposits, (iii) the amount by which time Deposits greater than $100,000
exceeds $9,288,000 and (iv) the amount by which public Deposits (including
Secured Public Sweep Accounts) exceeds $4,712,000; plus
(ii) The aggregate amount of Cash on Hand as of the Closing Date; plus
(iii) The aggregate net book value of the Assets, other than Cash on
Hand and Loans, as reflected on the books of Seller as of the Closing Date;
plus
(iv) The aggregate Loan Value of the Loans as of the Closing Date.
(c) On the Closing Date, Seller shall transfer to Purchaser cash in an
amount (the "Settlement Payment") equal to the excess of (i) the sum of (A) the
Assumed Deposits plus (B) the Accrued Expenses, over (ii) the Purchase Price, as
calculated based on the Preliminary Closing Statement.
2.2 Adjustment of Expenses and Fees. All operating expenses and fees
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accrued or pre-paid prior to the Closing Date, including, without limitation,
rents, utility payments, and FDIC assessments, but not including those related
to Taxes (except as provided in Section 8.2 below), relating
7
to the Branches, transferred at Closing, shall be pro-rated between the parties.
To the extent that Seller has paid expenses that are expenses allocable to
Purchaser pursuant to this Section 2.2, such expenses shall appear as an Asset
on the Preliminary Closing Statement and the Final Closing Statement. To the
extent that expenses have been accrued and not paid by Seller prior to the
Closing Date, they shall appear as a Liability on the Preliminary Closing
Statement and the Final Closing Statement.
2.3 Allocation of Consideration. Purchaser and Seller agree that the
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consideration payable hereunder at the Closing shall be allocated among the
Assets, tangible and intangible, on the basis of an allocation (the
"Allocation") to be reasonably determined by Purchaser and Seller in accordance
with applicable Treasury regulations and the Code. Purchaser and Seller agree
(i) to timely file a mutually acceptable appropriate IRS form in accordance with
the Allocation and (ii) that the Allocation shall be binding on Purchaser and
Seller for all tax reporting purposes, except that either party may change any
such report in the event of a dispute with any taxing authority or take any
other step to settle or resolve such a dispute; provided, however, that a party
shall not make any such change without first obtaining the consent of the other
party, which consent will not be unreasonably withheld or delayed.
2.4 Trade and Service Marks. Notwithstanding anything to the contrary in
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this Agreement, Purchaser shall not acquire hereunder any right to the use of
any trade name, trade xxxx or service xxxx, if any, of Seller or any of its
Affiliates.
2.5 Sale and Transfer of Servicing and Escrows.
------------------------------------------
(a) The Loans shall be sold on a servicing released basis. As of the
Closing Date, all rights, obligations, liabilities and responsibilities with
respect to the servicing of the Loans on and after the Closing Date will be
assumed by Purchaser. Seller shall be discharged and indemnified by Purchaser
from all liability with respect to servicing of the Loans on and after the
Closing Date, and Purchaser shall be indemnified by Seller from all liability
with respect to servicing the Loans prior to the Closing Date.
(b) As of the Closing Date, Purchaser will assume, and agrees to undertake
and discharge, any and all obligations of the holder and servicer of any Loans
that are mortgage Loans, if any, as such obligations may relate to the escrow,
maintenance of escrow and payments from escrow of moneys paid by or on account
of the applicable mortgagor. On or before the fifth (5th) Business Day after the
Closing Date, Seller shall remit by wire transfer of immediately available funds
to Purchaser any and all funds held in escrow that were collected and received
pursuant to a mortgage Loan for the payment of taxes, assessments, hazard
insurance premiums, primary mortgage insurance policy premiums, if applicable,
or comparable items prior to the Closing Date plus any Accrued Interest. Seller
makes no warranties or representations of any kind or nature as to the
sufficiency of such sum to discharge any obligations with respect to mortgage
Loans.
2.6 Assumption of XXX Account Deposits.
----------------------------------
(a) With respect to Assumed Deposits in IRAs, Seller will use reasonable
efforts and will cooperate with Purchaser in taking any action reasonably
necessary or appropriate to accomplish the appointment of Purchaser (or an
Affiliate of Purchaser designated by Purchaser) as successor custodian or
trustee or the delegation to Purchaser (or an Affiliate of Purchaser) of
Seller's authority and responsibility as custodian of all such XXX deposits
except self-directed XXX deposits, including, but not limited to, sending to the
depositors thereof appropriate notices, cooperating with Purchaser (or such
Affiliate) in soliciting consents from such depositors, executing assignments
reasonably satisfactory to Purchaser, and filing any appropriate applications
with applicable regulatory authorities. If any such delegation is made to
Purchaser (or such Affiliate), Purchaser (or such Affiliate) will perform all of
the duties so delegated and comply with the terms of Seller's agreement with the
depositor of the XXX deposits affected thereby.
8
(b) If, notwithstanding the foregoing, as of the Closing Date, Purchaser
shall be unable to retain deposit liabilities in respect of an XXX or the
account holder has notified Seller or Purchaser of the account holder's
objection to Purchaser acting as custodian or trustee of such XXX, such deposit
liabilities shall be excluded from Assumed Deposits for purposes of this
Agreement.
2.7 Purchaser's Right to Reject Loans.
---------------------------------
(a) During the period beginning on the date that Seller provides Purchaser
a complete listing of all Loans carried on the books of Seller as of the date of
this Agreement and ending on the tenth (10th) Business Day after such date, in
the case of Loans carried on the books of Seller as of the date of this
Agreement (the "Review Period"), and, with respect to new Loans associated with
the Branches and made after the date of this Agreement, during a subsequent five
(5) Business Day period beginning on a mutually-agreed date at least thirty (30)
calendar days prior to the Closing Date (the "Supplemental Review Period"),
Seller shall afford to the officers and authorized representatives of Purchaser,
subject to Seller's normal security requirements, access to all necessary Loan
Documents relating to such Loans in order that Purchaser may have full
opportunity to make reasonable investigations of the Loans, the Loan Documents
and the Loan collateral. With respect to the Supplemental Review Period, on a
date not less than thirty-five (35) calendar days prior to the Closing, Seller
shall provide a listing of new Loans as of the date forty-five (45) days prior
to Closing and any such supplemental review shall be completed at least twenty
(20) calendar days before the Closing. Notwithstanding the foregoing, Seller
shall not be required to provide access to or disclose information where such
access or disclosure would violate or prejudice the legal rights of any customer
or employee or attorney-client privilege or would be contrary to law, rule,
regulation or any legal or regulatory order or process or any fiduciary duty or
binding agreement entered into prior to the date of this Agreement. Following
the Closing and during a ten (10) Business Day period beginning on the date on
which Seller has delivered to Purchaser all Loan Documents pertaining to Loans
transferred to Purchaser at the Closing as provided in Section 4.9 below,
together with a listing of those Loans transferred to Purchaser at the Closing
which were made by Seller subsequent to the beginning of the Supplemental Review
Period and prior to Closing, Purchaser shall have the right to review the Loan
Documents relating to Loans made within that period and to any other Loans with
respect to which Seller withheld any Loan Documents or information from
Purchaser prior to the Closing pursuant to the preceding sentence (the
"Post-Closing Review Period").
(b) No later than five (5) Business Days (or, in the case of (i) or (iii)
below, no later than sixty (60) calendar days) following the expiration of the
Review Period, the Supplemental Review Period, or the Post-Closing Review
Period, as applicable, Purchaser shall notify Seller in writing of the existence
of any of the following defects relating to the Loans (any such Loan being
called an "Identified Loan"):
(i) Loan Documents, which are material to the enforceability of a
Loan, have been lost or are missing;
(ii) a Loan was not originated or has not been administered in
compliance in all material respects with applicable laws or the Loan
Instruments pertaining to such Loan are not legal, valid and binding or do
not contain the true signature of an obligor;
(iii) Seller's rights in any collateral are not perfected or
enforceable, or the priority of such rights are not as reflected on
Seller's Records; provided, however, that the absence of any such right of
Seller in the collateral securing such a Loan must have a material impact
on the foreclosure of the Loan in the event of a default;
9
(iv) a Loan is an Excluded Loan;
(v) a Loan is materially inconsistent with the credit policies of
Purchaser; provided that this clause shall apply only to Loans booked by
Seller after Purchaser's due diligence review and any Loans that were
booked at time of due diligence but were not made available to Purchaser to
review.
(c) Following receipt of any such notice with respect to defects identified
during the Review Period or the Supplemental Review Period, and at any time
prior to the date of notification to the customers of the assignment of the
Loans pursuant to applicable law, Seller may in its sole discretion attempt to
cure any such defect described in Section 2.7(b)(i) through (iii) to Purchaser's
reasonable satisfaction. If Seller is unable or unwilling to cure such defect to
Purchaser's reasonable satisfaction, Purchaser shall have the right to reject
such Identified Loan in which case such Identified Loan will be excluded from
this Agreement. Promptly following its receipt of any such notice with respect
to defects identified during the Post-Closing Review Period, Seller will
repurchase each Identified Loan from Purchaser at Loan Value on Purchaser's
books on the date of repurchase; provided, however that, in the case of an
Identified Loan as to which Seller withheld any Loan Documents or information
from Purchaser during the Review Period or the Supplemental Review Period
pursuant to Section 2.7(a) above, Seller shall not be obligated to repurchase
that Identified Loan unless the defect described in Purchaser's notice to Seller
is one that was revealed by the Loan Documents or other information first
delivered to Purchaser after the Closing.
2.8 Loan Accounts Secured by Deposit Accounts. In the event that a loan
------------------------------------------
account at one of the Branches is secured by a Deposit or security account that
is assigned by Seller to another of Seller's branches, or where a Deposit
account at one of the Branches secures a loan account assigned by Seller to
another of Seller's branches, such loan account, Deposit account and/or security
account shall not be an Assumed Deposit or a Loan.
ARTICLE 3
CLOSING PROCEDURES
3.1 Closing Date and Place; Notifications. The closing of the transactions
-------------------------------------
provided for herein (the "Closing") will be held at the offices of Seller at
0000 Xxxxxxx Xxxxxxx, Xxxxx Xxxxx, Xxxxx Xxxxxxxx 00000, or at another place
agreed to by the parties, on or before October 31, 2003 (the "Closing Date"),
unless all Regulatory Approvals are not yet received despite the efforts of
Purchaser and Seller or unless a later date and time are agreed to by the
parties. Notwithstanding anything contained in this Agreement to the contrary,
Seller agrees that, if Purchaser receives all necessary Regulatory Approvals
related to its purchase of Assets and assumption of Liabilities related to some
of the Branches prior to its receipt of necessary Regulatory Approvals related
to all of the Branches, and if it reasonably appears that necessary Regulatory
Approvals related to the other Branches will not be obtained by a time that
would permit a Closing related to all Branches to occur on or before October 31,
2003, then, at Purchaser's option, which shall be exercised by written notice to
Seller, separate Closings of the transactions related to each of the Branches
shall be held. In the event of separate Closings, the Closing of the
transactions related to the Branches for which Regulatory Approvals are first
received shall occur as soon as reasonably practical following Purchaser's
receipt of those necessary Regulatory Approvals, its giving of the above written
notice, and the satisfaction of all other conditions to Closing described herein
that are related to those Branches, and the Closing of the transactions related
to the remaining Branches shall occur at a later date as provided herein. In
that event, this Agreement shall be deemed to be separate agreements with
respect to each separate Closing, and the provisions of this Agreement that
apply in the case of transactions related to all Branches shall apply separately
to each Branch and to each Closing, and the provisions that apply only to the
transactions related to one of the Branches shall apply only to that Branch and
the Closing of the transactions related to that Branch. Following the Closing of
the transactions related to some but not all of the Branches, this Agreement
shall remain in full force and effect separately with respect to the remaining
Branches, and neither Purchaser's inability to obtain any necessary Regulatory
Approval with respect to the transactions related to the remaining Branches, the
inability of either party to satisfy any other conditions to the Closing of the
transactions related to the remaining Branches, nor either party's breach of or
termination of this Agreement with respect to the transactions related to the
remaining Branches, shall have any effect on the transactions or obligations of
the parties hereunder related to the Branches for which Regulatory Approvals
have been obtained.
3.2 Procedure at the Closing; Adjustments.
-------------------------------------
(a) No later than one (1) Business Day prior to the Closing Date, Seller
shall deliver to Purchaser the Preliminary Closing Statement prepared in the
format set forth on Schedule 1.1 and based on figures as of the end of the third
(3rd) Business Day immediately preceding the Closing Date. At the Closing, the
parties shall deliver the documents referred to in Sections 9.1(d), 9.2(d) and
9.3. On the Closing Date, Seller shall deliver to Purchaser the required
Settlement Payment.
(b) The sales, purchases, transfers, assumptions, leases and other acts
made or taken at the Closing will be made or taken to be effective as of the
Close of Business although the Settlement Payment may be paid at any time on the
Closing Date. Seller shall be responsible for the Branches and the operation
thereof until the Close of Business. The Close of Business shall be the relevant
cutoff time for purposes of the proration described in Section 2.2, and any
amounts to be paid in accordance with Section 2.2 shall be paid
contemporaneously with the Final Settlement Payment on the Adjustment Date.
(c) Within thirty (30) calendar days after the Closing, Seller shall
deliver to Purchaser the Final Closing Statement. The Purchase Price and
Settlement Payment shall be recalculated in accordance with Section 2.1 based on
such Final Closing Statement. The "Final Settlement Payment" shall be (i) paid
on the Adjustment Date by Seller to Purchaser in the amount by which (A) the
Assumed Deposits and the Accrued Expenses exceed (B) the Purchase Price and the
Settlement Payment or (ii) paid on the Adjustment Date by Purchaser to Seller in
the amount by which (A) the Purchase Price and the Settlement Payment exceed (B)
the Assumed Deposits and Accrued Expenses, each as on the Final Closing
Statement. In either case, interest at the Federal Funds Rate from the Closing
Date to, but excluding, the Adjustment Date shall be included in the Final
Settlement Payment. The Final Closing Statement shall become final and binding
on Purchaser and Seller on the earlier of (i) the date it is approved by
Purchaser by written notice to Seller or (ii) at 5:00 p.m. on the tenth (10th)
Business Day after it is delivered by Seller to Purchaser unless, within such
ten (10) Business Day period, Purchaser gives written notice to Seller of its
actual or potential disagreement with respect to any item included in such Final
Closing Statement. Seller and Purchaser shall use their reasonable best efforts
to resolve the disagreement or concern during the ten (10) day period following
receipt by Seller of such notice. If the disagreement or concern is not resolved
during such ten (10) day period, the dispute shall be referred to a Dispute
Resolver, and such Final Closing Statement shall be modified, if required, by
the Dispute Resolver and thereupon such Final Closing Statement shall become
final and binding. Purchaser and Seller shall share equally the cost of any
Dispute Resolver.
(d) The Adjustment Date shall occur within four (4) Business Days after the
Final Closing Statement becomes final and binding pursuant to subsection (c) of
this Section. The Final Settlement Payment shall be made in cash as provided in
Section 3.2(e). The Final Settlement Payment shall, for all purposes, be
considered an adjustment to the Purchase Price.
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(e) All cash payments to be made hereunder by one party to the other shall
be made by wire transfer of immediately available funds on or before 4:00 p.m.
local time on the date of payment to an account specified by the receiving party
at least two (2) calendar days prior to the date of payment.
(f) If any instrument of transfer contemplated herein shall be recorded in
any public record before the Closing and thereafter the Closing is not
completed, then at the request of such transferring party the other party will
deliver (or execute and deliver) such instruments and take such other action as
such transferring party shall reasonably request to revoke or record such
purported transfer.
ARTICLE 4
TRANSITIONAL MATTERS
4.1 Certain Procedures. Seller and Purchaser shall cooperate with each
------------------
other and shall use their reasonable efforts to cause the timely transfer of
information concerning the Deposits and the Loans which is maintained on
Seller's data processing systems in accordance with a working agreement to be
developed and mutually agreed upon by Purchaser and Seller within forty-five
(45) calendar days of the date of this Agreement (the "Working Agreement").
Within five (5) Business Days after the date of this Agreement, Seller and
Purchaser shall each designate appropriate and qualified personnel to be
responsible for this cooperation of the parties in developing and implementing
the Working Agreement, and to act as an initial contact for responding to
questions and requests for information. The parties acknowledge that the goal of
the Working Agreement, and its implementation, is to enable Purchaser to obtain
and confirm data prior to the Closing Date so that such back office conversion
is completed and Purchaser is processing all data relating to the operations of
the Branches on the Business Day after the Closing Date. Within twenty (20)
calendar days of the date of this Agreement, appropriate personnel of Seller and
Purchaser shall meet to discuss products and data mapping.
Following execution of this Agreement, Purchaser will pick up from Seller
at Seller's Operations Center in Rocky Mount, North Carolina, three sets of
electronic data files, corresponding layouts, and applicable balancing reports,
with respect to the Deposits and loans proposed to be Loans. The first set will
be created after a night's processing as soon as possible following the date of
this Agreement. The second set will be created after a night's processing
approximately seven weeks prior to the Closing Date. The third set will be the
live conversion set and will be created after processing on the night of the
Closing Date and will be delivered to Purchaser no later than noon on the day
following the Closing Date, or at another time set forth in a plan of
conversion. This third set will be accompanied by a backup set.
In connection with its processing on the night of the Closing, Seller will
produce interim statements on any Deposit or Loan account normally receiving a
statement.
4.2 Customers.
---------
(a) Prior to Closing, (i) Seller and Purchaser jointly will notify the
customers of the Branches of the transactions contemplated hereby and (ii) each
of Seller and Purchaser shall provide, or join in providing where appropriate,
with the cooperation of the other party, all notices to such customers and other
persons that Seller or Purchaser, as the case may be, is required to give by any
regulatory authority having jurisdiction or under applicable law, including but
not limited to any notice required by the Real Estate Settlement Procedures Act
of 1974, as amended, or the terms of any other agreement between Seller and any
customer in connection with the transactions contemplated hereby. All costs and
expenses of any notice or communication sent or published under this Agreement
by Purchaser or Seller
12
shall be the responsibility of the party sending such notice or communication
and all costs and expenses of any joint notice or joint communication shall be
shared equally by Seller and Purchaser.
(b) Anything herein to the contrary notwithstanding, neither Purchaser nor
Seller shall object to the use by depositors of the Assumed Deposits of checks
and similar instruments issued to or ordered by such depositors on or prior to
the Closing Date, which instruments may bear Seller's name, or any logo,
trademark, service xxxx, trade name or other proprietary xxxx of Seller. As
provided in Section 7.9, Seller and Purchaser will agree on a mutually
acceptable method to notify customers who use, and to transfer funds and
authorization relating to, direct deposit and direct debit arrangements related
to the Assumed Deposits.
4.3 Assumption of Obligations. Upon the Closing Date, Purchaser shall
-------------------------
assume and thereafter fully and timely discharge the duties and obligations of
Seller relating to all periods from and after the Closing Date with respect to
the Assumed Deposits, Assumed Contracts, Assumed Lease and other Liabilities as
may arise under applicable laws, regulations, agreements and rules of automated
clearing houses and other payment systems which relate thereto, and in
accordance with the terms of account agreements or other agreements with
depositors applicable to such accounts as such terms and agreements are in
effect on the Closing Date, except such terms as, under applicable law and
agreement, may be changed after the Closing Date.
4.4 Maintenance of Records. Through the Closing Date, Seller will maintain
----------------------
the Records in accordance with safe and sound banking practices and in a manner
consistent with past practice, which, with respect to financial accounting
matters, is understood by Seller to be generally in accordance with GAAP.
Purchaser may upon reasonable notice, at its own expense and during normal
business hours, make such copies of and excerpts from the Records as it may deem
desirable. All Records, whether held by Purchaser or Seller, shall be maintained
for such periods following the Closing as are required by law, unless the
parties shall, applicable law permitting, agree in writing to a different
period. From and after the Closing Date, (a) each of the parties shall permit
the other reasonable access to any applicable Records in its possession relating
to matters arising on or before the Closing Date and (b) the Purchaser shall
permit the Seller reasonable access to any applicable Records in its possession
relating to matters arising after the Closing Date, in either case, reasonably
necessary in connection with any request for information, claim, action,
litigation or other proceeding involving the party requesting access to such
Records or in connection with any legal obligation owed by such party to any
present or former depositor or other customer.
4.5 Interest Reporting and Withholding.
----------------------------------
(a) Unless otherwise agreed by the parties, Seller will report to
applicable taxing authorities and holders of Assumed Deposits, with respect to
the period from January 1 of the year in which the Closing occurs through the
Closing Date, all interest credited to, withheld from and any early withdrawal
penalties imposed upon the Assumed Deposits. Purchaser will report to the
applicable taxing authorities and holders of Assumed Deposits, with respect to
all periods from the day after the Closing Date, all such interest credited to,
withheld from and early withdrawal penalties imposed upon such Assumed Deposits.
Any amounts required by any governmental agencies to be withheld from any of the
Assumed Deposits through the Closing Date will be withheld by Seller in
accordance with applicable law or appropriate notice from any governmental
agency and will be remitted by Seller to the appropriate agency on or prior to
the applicable due date. Any such withholding required to be made subsequent to
the Closing Date shall be withheld by Purchaser in accordance with applicable
law or appropriate notice from any governmental agency and will be remitted by
Purchaser to the appropriate agency on or prior to the applicable due date.
13
(b) Unless otherwise agreed by the parties, Seller shall be responsible for
delivering to payees all IRS notices with respect to information reporting and
tax identification numbers required to be delivered for the period through the
Closing Date which occur with respect to the Assumed Deposits. Purchaser shall
be responsible for delivering to payees all such IRS notices required to be
delivered for the period from the day after the Closing Date.
(c) Unless otherwise agreed by the parties, Seller will make all required
reports to applicable Tax authorities and to obligors on Loans purchased on the
Closing Date, with respect to the period from January 1 of the year in which the
Closing occurs through the Closing Date, concerning all interest and points
received by the Seller. Purchaser will make all required reports to applicable
Tax authorities and to obligors on Loans purchased on the Closing Date, with
respect to all periods from the day after the Closing Date, concerning all such
interest and points received.
4.6 Negotiable Instruments. Seller will destroy or remove any supply of
----------------------
Seller's money orders, official checks, gift checks or any other negotiable
instruments, including travelers' checks, located at the Branches on the Closing
Date.
4.7 Leasing of Furniture, Fixtures and Equipment. Seller shall use
--------------------------------------------
reasonable efforts to renew or extend on a month-to-month basis, any lease
relating to Furniture, Fixtures or Equipment, that is currently in effect but
that would otherwise expire on or prior to the Closing Date and will promptly
notify Purchaser if it is unable to do so.
4.8 ATM/Debit Cards.
---------------
(a) Seller will provide Purchaser with a list of ATM access/debit cards
issued by Seller to depositors of any Assumed Deposits, and a data processing
record in a format reasonably agreed to by the parties containing all addresses
therefor, no later than forty-five (45) calendar days after the date of this
Agreement. At or promptly after the Closing, Seller will provide Purchaser with
a revised data processing record. Seller shall render ATM access/debit cards
issued by Seller inactive as of the Closing. Purchaser shall reissue ATM
access/debit cards to depositors of any Assumed Deposits prior to the Closing
Date, which cards shall be effective as of the Closing Date.
(b) Seller will not be required to disclose to Purchaser customers' PINs or
algorithms or logic used to generate PINs.
4.9 Delivery of the Loan Documents.
------------------------------
(a) In connection with the sale hereunder, as soon as reasonably
practicable after the Closing Date, Seller shall deliver to Purchaser or its
designee the Loan Documents actually in the possession of Seller, including
electronic Records. Notwithstanding anything herein to the contrary, without the
express consent of Purchaser to electronic deliveries, Seller shall deliver all
Loan Documents to Purchaser in paper format. Seller makes no representation or
warranty to Purchaser regarding the condition of the Loan Documents or any
single document included therein, or Seller's interest in any collateral
securing any Loan, except as specifically set forth herein. Seller shall have no
responsibility or liability for the Loan Documents from and after the time such
files are delivered by Seller to an independent third party designated by
Purchaser for shipment to Purchaser, the cost of which shall be the sole
responsibility of Purchaser.
(b) Promptly upon the execution of this Agreement, Purchaser shall provide
Seller the exact name to which the Loans are to be endorsed, or whether any
Loans should be endorsed in blank. Seller will use reasonable efforts to
complete such endorsements and deliver the Loan Documents within
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ninety (90) calendar days after Closing; provided, however, with respect to
specific Loan Documents, Seller may require additional time to effectively
transfer title thereto and Purchaser shall not hold Seller liable for any
reasonable delays in the delivery of such Loan Documents; and further provided,
however, that Purchaser shall be given immediate access to any Loan Documents
reasonably requested to address a Loan delinquency, payoff, customer inquiry, or
similar contingency. Purchaser further acknowledges and agrees that Seller may
execute or endorse any Loan Document by way of facsimile signature.
4.10 Collateral Assignments and Filing. As reasonably requested by
---------------------------------
Purchaser, Seller shall take all such reasonable actions to assist Purchaser in
obtaining the valid perfection of a first priority lien or security interest in
the collateral, if any, securing each Loan sold on the Closing Date in favor of
Purchaser or its designated assignee as secured party. Any such action shall be
at the sole expense of Purchaser, and Purchaser shall reimburse Seller for all
reasonable actual costs of third-party services incurred in connection
therewith, provided any such costs that exceed $1,000 in the aggregate are
approved in advance by Purchaser, which approval shall not be unreasonably
withheld.
4.11 Training. Seller shall permit Purchaser to train employees of the
--------
Branches before Closing with regard to Purchaser's operations, policies and
procedures at Purchaser's sole cost and expense, and Purchaser shall reimburse
Seller for any incremental employee wages related to periods of time during
which the employees are trained, including overtime pay resulting from such
training. This training may, as mutually agreed upon by Seller and Purchaser,
take place at the Branches and may take place during business hours; provided,
however, that any training that occurs shall be conducted in a manner not
disruptive to operations of the Branches.
4.12 Collateral for Public Funds Deposits. At least thirty (30) Business
------------------------------------
Days prior to the Closing, Seller shall provide Purchaser with a listing of any
pledge of collateral by Seller with respect to any deposit proposed to be an
Assumed Deposit that constitutes public funds or otherwise requires collateral.
Purchaser shall use its best efforts to make arrangements acceptable to such
customer prior to the Closing Date to replace Seller's collateral with
collateral belonging to Purchaser. If such deposit cannot be collateralized in a
manner acceptable to the Deposit customer, it shall not become an Assumed
Deposit.
4.13 Telephone Numbers. Except for toll-free numbers and call center
-----------------
numbers, Seller shall take all steps reasonably necessary to enable Purchaser,
after the Closing, to continue to use the telephone numbers used at the Branches
on the date of this Agreement.
4.14 Removal of Assets. Seller shall remove from the Branches all items
-----------------
that are not being transferred to Purchaser under this Agreement, including but
not limited to signage (which shall include all structures supporting such
signage) that bears Seller's logos, trade names, or trademarks, on or prior to
the Closing, at Seller's own expense; provided, however, that Seller shall
reimburse Purchaser for any property damage to any of the Branches caused by the
removal of such signage. Seller shall have the option to remove and retain, or
provide to Purchaser, signage apparatus at the Branches that does not bear
Seller's logos, trade names, or trademarks. Seller shall give notice to
Purchaser, at least twenty (20) calendar days before Closing, of its decision so
as to allow Purchaser to make plans for signage.
4.15 Credit Insurance. Seller will remit all proceeds it receives on
----------------
account of credit insurance on the Loans to Purchaser, and Seller will use its
best efforts to assign policies of credit insurance associated with the Loans to
Purchaser. Purchaser will remit any insurance premiums paid to it in connection
with the Loans to the appropriate credit insurance company.
4.16 Kenansville Real Property. Notwithstanding anything herein to the
-------------------------
contrary, prior to Closing, Seller will cooperate with Purchaser in an effort to
enable Purchaser, at its option, to
15
either (i) purchase directly from Branch Banking and Trust Co. on the Closing
Date (or through Seller after Seller purchases from Branch Banking and Trust Co)
the Real Property (the "Kenansville Real Property") currently subject to that
certain lease dated as of August 15, 1997 between United Carolina Bank (now
Branch Banking and Trust Co.) and Centura Bank (now Seller) with respect to the
Kenansville Branch (the "Kenansville Lease") or (ii) lease the Kenansville Real
Property from Branch Banking and Trust Co., under a new lease on terms
reasonably satisfactory to Purchaser (or under the existing lease as modified to
Purchaser's satisfaction - with Seller released from the modified existing
lease). If Purchaser is unable to reach agreement with Branch Banking and Trust
Co. with regard to the purchase or lease of the Kenansville Real Property as
aforesaid, then, at Purchaser's option and in its sole discretion, the
Kenansville Branch shall not be a part of the transactions contemplated by this
Agreement and all references in this Agreement to Branches shall not include the
Kenansville Branch and Purchaser shall promptly return to Seller all Information
regarding the Kenansville Branch.. If Purchaser cannot either purchase or lease
the Kenansville Real Property from Branch Banking and Trust Company but
nonetheless elects for the Kenansville Branch to be a part of the transaction
contemplated by this Agreement, then the Kenansville Real Property will become
one of the "Assumed Lease" and all of the provisions of this Agreement
applicable to "Assumed Lease" shall be applicable to the Kenansville Real
Property. Purchaser's option in the preceding sentence to include the
Kenansville Branch in the transaction under the circumstances described in such
sentence shall be exercised no later than ten (10) Business Days before the
Closing Date by written notice to Seller, and Purchaser, by such notice, will be
acknowledging and agreeing that Seller, at Closing, shall assign to Purchaser
only a "month-to-month lease" which can be terminated by Branch Banking and
Trust Company at any time for any reason.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants as follows:
5.1 Corporate Organization and Authority. Seller is bank duly organized,
------------------------------------
validly existing and in good standing under the laws of the State of North
Carolina and has the requisite power and authority to conduct the business now
being conducted at the Branches, to accept and maintain the Assumed Deposits and
to own the Assets. Seller is a member of BIF and its Deposits maintained at the
Branches are insured by BIF, subject to applicable FDIC coverage limitations.
Seller has the requisite corporate power and authority and has taken all
corporate action necessary in order to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. This Agreement is a valid and
binding agreement of Seller enforceable against Seller in accordance with its
terms subject, as to enforcement, to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles.
5.2 No Conflict; Licenses and Permits; Compliance with Laws and
-----------------------------------------------------------
Regulations. The execution, delivery and performance of this Agreement by Seller
------------
does not, and will not, (i) violate any provision of its charter or by-laws or
(ii) subject to the receipt of the Regulatory Approvals, violate or constitute a
breach of, or default under, any law, rule, regulation, judgment, decree, ruling
or order of any court, government or governmental agency to which Seller is
subject or under any agreement or instrument of Seller, or to which Seller is
subject or is a party or by which Seller is otherwise bound, or to which any of
the Assets, Assumed Deposits, or Assumed Contracts (except for any required
consents under Assumed Contracts in respect of the transactions herein
contemplated) or the Branches are subject, which violation, breach,
contravention or default referred to in this clause would have a Material
Adverse Effect, individually or in the aggregate. Seller has all material
licenses, franchises, permits, certificates of public convenience, orders and
other authorizations of all foreign, federal, state and local governments and
governmental authorities necessary for the lawful conduct of its business at the
Branches as now
16
conducted and all such licenses, franchises, permits, certificates of public
convenience, orders and other authorizations are valid and in good standing and
are not subject to any suspension, modification or revocation or proceedings
related thereto.
5.3 Approvals and Consents. Except as required to obtain the Regulatory
----------------------
Approvals, no notices, reports or other filings are required to be made, as of
the date hereof, by Seller with, nor are any consents, registrations, approvals,
permits or authorizations required to be obtained, as of the date hereof, by
Seller from, any governmental or regulatory authorities in connection with the
execution and delivery of this Agreement by Seller and the consummation by
Seller of the transactions contemplated hereby.
5.4 Title to Assets. Except as set forth in Schedule 5.4, Seller has good
---------------
and marketable fee title to the Assets, free and clear of all Encumbrances;
provided, however, that this representation does not cover the Real Property.
5.5 Utilities Complete. To Seller's knowledge, all utility services,
------------------
including sewer, water, gas and electric power and telephone service, as
applicable, are available to the Branches.
5.6 Condemnation Proceedings. Seller has not received any notice of any
------------------------
condemnation or eminent domain proceedings or negotiations for the purchase of
the Real Property in lieu of condemnation, and to Seller's knowledge, no
condemnation or eminent domain proceedings or negotiations have been commenced
or threatened in connection with the Branches.
5.7 Contracts. Each Assumed Contract constitutes a valid and binding
---------
obligation of the Seller and there does not exist, with respect to Seller's
obligations thereunder, any material default, or event or condition which
constitutes, or after notice or passage of time or both would constitute, a
material default on the part of Seller under any Assumed Contract. Each lease
relating to Furniture, Fixtures and Equipment used in the Branches is current
and all rents, expenses and charges payable by Seller have been paid or accrued
in accordance with the terms thereof.
5.8 Fiduciary Obligations. Other than in respect of IRAs, Seller has no
---------------------
trust or fiduciary relationship or obligations in respect of any of the Assumed
Deposits or in respect of any other Assets or Liabilities.
5.9 Employees. Seller has complied, and is currently in compliance, in all
---------
material respects with applicable law (including, without limitation, the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")), rules
and regulations relating to the employment of labor, including without
limitation those relating to wages, hours, unfair labor practices, employment
discrimination and payment of social security and similar taxes with respect to
Employees.
5.10 Litigation and Liabilities. Schedule 5.10 sets forth each action,
--------------------------
suit, proceeding or investigation pending, or to Seller's knowledge, threatened
against Seller at law, in equity or otherwise, in, before or by any court or
governmental agency or authority, related to the Assets, the Assumed Deposits or
the Branches and involving an amount in excess of $10,000. There is no action,
suit, proceeding or investigation pending or, to Seller's knowledge, threatened
against Seller at law, in equity or otherwise, in, before, or by any court or
governmental agency or authority related to the Assets, the Assumed Deposits or
the Branches and which, individually or in the aggregate, could have a Material
Adverse Effect.
5.11 Regulatory Matters. There are no pending, or, to the knowledge of
------------------
Seller, threatened, disputes or controversies between Seller and any federal,
state or local governmental authority
17
(i) with respect to the Branches or (ii) that, individually or in the aggregate,
reasonably could be expected to have a Material Adverse Effect. Except for the
possibility that one or more Branch purchases may not be approved due to
competitive issues relating to deposit concentration in the relevant market or
markets, Seller is unaware of any reason why the Regulatory Approvals and, to
the extent necessary to consummate the transaction described herein, any other
approvals, authorization or filings, registrations and notices cannot be
obtained.
5.12 Brokers' Fees. Except for Trident Securities, Seller has not employed
-------------
any broker or finder or incurred any liability for any brokerage fees,
commissions or finders' fees in connection with the transactions contemplated by
this Agreement. Seller shall be responsible for the payment of any fees or
commissions payable to Trident Securities.
5.13 Compliance With Laws. Seller's business at each of the Branches has
--------------------
been conducted in compliance with all federal, state and local laws, regulations
and ordinances applicable thereto, including without limitation, informational
reporting, truth in lending, truth in savings and consumer credit laws and
regulations, currency transaction reporting and Environmental Laws, except for
any failure to comply that would not, individually or in the aggregate, result
in a Material Adverse Effect.
5.14 Absence of Certain Changes, Etc. Except in connection with the
--------------------------
transaction contemplated hereby, since December 31, 2002, Seller's business at
the Branches has been conducted only in, and there has not been any material
transaction other than according to, the ordinary and usual course of such
business and (a) there has not been any material adverse change in the condition
(financial or otherwise), properties, business or results of operations of the
Branches, or any development or combination of developments (other than those
related to general economic conditions or conditions generally affecting the
areas in which the Branches operate) which, individually or in the aggregate, is
reasonably likely to result in any such change; provided that, Seller makes no
representation or warranty that there will be no material adverse change in the
level of Deposits prior to the Closing Date or that there will be any certain
level of Deposits on the Closing Date, or (b) except as the parties may
otherwise agree in writing, there has not been any material change by Seller in
accounting principles, practices or methods that would affect the items
reflected in the Preliminary Closing Statement or the Final Closing Statement,
except as may be required by changes in GAAP.
5.15 Books and Records. Since December 31, 2002, the books, accounts and
-----------------
records of the Branches have been maintained in accordance with safe and sound
banking practices and in a manner consistent with past practice, which, as they
relate to financial accounting, is in accordance with GAAP.
5.16 Loans. The initial list of Loan delivered to Purchaser pursuant to
-----
Section 2.7 of this Agreement is, or will be as of the date of delivery (if
delivered after the date hereof), accurate and complete. Such list will be
updated from time to time as required by Section 2.7. With respect to each Loan:
(a) Such Loan was solicited and originated in material compliance with all
applicable requirements of federal, state, and local laws and regulations in
effect at the time of such solicitation and origination; and there was no fraud
on the part of the Seller with respect to the origination of any Loan;
(b) To Seller's knowledge, each note evidencing a Loan and any related
security instrument (including, without limitation, any guaranty or similar
instrument) constitutes a valid and legally binding obligation of the obligor
thereunder enforceable in accordance with its terms, subject to
18
bankruptcy, insolvency, fraudulent transfers, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles;
(c) The collateral for each secured Loan is (i) the collateral described in
the related Loan Documents and (ii) subject to a valid, enforceable and
perfected lien with the priority reflected in the Loan Documents;
(d) Such Loan was made substantially in accordance with Seller's standard
underwriting and documentation guidelines, which are generally consistent with
prudent and customary industry standards, as in effect at the time of its
origination and has been administered substantially in accordance with the Loan
Documents and Seller's standard loan servicing procedures, which are generally
consistent with prudent and customary industry standards, as in effect from time
to time;
(e) Except as set forth in Schedule 5.16(e), immediately prior to the
Closing the Seller will be the sole owner of each Loan, free and clear of any
Encumbrance.
5.17 Deposits. Prior to the Closing, Seller shall use commercially
--------
reasonable efforts to identify deposits excluded from the Assumed Deposits
pursuant to this Agreement.
5.18 Leased Real Property. Seller is the sole tenant, and the sole owner of
--------------------
the tenant's interest, under the Assumed Lease, and it has not previously
assigned either the Assumed Lease or any interest therein, or sublet the Leased
Real Property, in whole or in part. The Assumed Lease is valid and enforceable
in accordance with its terms (subject to general principles of equity, the
enforcement of indemnity provisions, and applicable bankruptcy, insolvency, or
other laws affecting creditor's rights) and is in full force and effect, and the
Assumed Lease has not been amended or modified. Seller is not in default under
any of the terms, covenants, or conditions of the Assumed Lease, and there
exists no circumstance or condition which, either now or with the passage of
time, would constitute a default by Seller under the terms of the Assumed Lease
or that would entitle either of the lessors of the Leased Real Property to
terminate its respective Assumed Lease.
5.19 No Other Representations or Warranties. Except for the representations
--------------------------------------
and warranties expressly contained in this Agreement, none of the Seller, any
Affiliate of Seller or any other person has made or makes any other express or
implied representation or warranty, either written or oral, on behalf of the
Seller. ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants as follows:
6.1 Corporate Organization and Authority. Purchaser is a bank duly
------------------------------------
organized, validly existing and in good standing under the laws of North
Carolina. Purchaser has the requisite corporate power and authority and has
taken all corporate action necessary in order to execute and deliver this
Agreement, to consummate the transactions contemplated hereby, to accept and
maintain the Assumed Deposits, to own the Assets and to operate the Branches.
This Agreement is a valid and binding agreement of Purchaser enforceable against
Purchaser in accordance with its terms subject, as to enforcement, to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles. Purchaser is a member of BIF and its deposits
are insured by the FDIC, subject to applicable FDIC coverage limitations.
19
6.2 No Conflict; Licenses and Permits; Compliance with Laws and
-----------------------------------------------------------
Regulations. The execution, delivery and performance of this Agreement by
-----------
Purchaser does not, and will not, violate any provision of its charter or
by-laws or, subject to the receipt of the Regulatory Approvals, violate or
constitute a breach or contravention of or default under any law, rule,
regulation, order, judgment, decree or filing of any government, governmental
authority or court to which Purchaser is subject or under any agreement or
instrument of Purchaser, or by which Purchaser is otherwise bound, which
violation, breach, contravention or default, individually or in the aggregate,
(i) could be expected to result in a Material Adverse Effect or (ii) could
impair the validity or consummation of this Agreement or the transactions
contemplated hereby. On the Closing Date Purchaser shall have all material
licenses, franchises, permits, certificates of public convenience, orders and
other authorizations of all foreign, federal, state and local governments and
governmental authorities necessary for the lawful conduct of its business at the
Branches and all such licenses, franchises, permits, certificates of public
convenience, orders and other authorizations will be valid and in good standing
and not subject to any suspension, modification or revocation or proceedings
related thereto.
6.3 Approvals and Consents. Except as required to obtain the Regulatory
----------------------
Approvals, no notices, reports or other filing are required to be made by
Purchaser with, nor are any consents, registrations, approvals, permits or
authorizations required to be obtained by Purchaser from, any governmental or
regulatory authorities in connection with the execution and delivery of this
Agreement by Purchaser and the consummation of the transactions contemplated
hereby by Purchaser.
6.4 Brokers' Fees. Except for Xxxxxxxx Xxxxxxxx Xxxxxx Group, Inc.,
-------------
Purchaser has not employed any broker or finder or incurred any liability for
any brokerage fees, commissions or finders' fees in connection with the
transactions contemplated by this Agreement. Purchaser shall be responsible for
the payment of any fees or commissions payable to Xxxxxxxx Xxxxxxxx Xxxxxx
Group, Inc.
6.5 Regulatory Matters.
------------------
(a) There are no pending, or, to the knowledge of Purchaser, threatened,
disputes or controversies between Purchaser or any of its Affiliates and any
federal, state or local governmental authority that, individually or in the
aggregate, reasonably could be expected to have a Material Adverse Effect.
Except that the possibility the purchase of some of the Branches may not be
approved due to competitive issues relating to deposit concentration in the
relevant market, Purchaser is unaware of any reason why the Regulatory Approvals
and, to the extent necessary to consummate the transaction described herein, any
other approvals, authorization or filings, registrations and notices cannot be
obtained.
(b) Purchaser has at least a "satisfactory" rating under the Community
Reinvestment Act of 1977, and is (and on a pro forma basis giving effect to the
transaction contemplated by this Agreement will be) at least "adequately
capitalized," as defined for purposes of the Federal Deposit Insurance Act.
(c) Purchaser is not a party to any written order, decree, agreement or
memorandum of understanding with, or commitment letter or similar submission to,
any federal or state governmental agency or authority charged with the
supervision or regulation of depository institutions or engaged in the insurance
of deposits nor has Purchaser been advised by any such regulatory authority that
such authority is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree, agreement,
memorandum or understanding, commitment letter or submission, in each case which
order, decree, agreement, memorandum of understanding, commitment letter or
submission (i) could reasonably be expected to result in a Material Adverse
Effect or (ii) could impair the validity or consummation of this Agreement or
the transactions contemplated hereby.
20
6.6 Financing Available. Not later than the Closing Date, Purchaser will
-------------------
have available sufficient cash or other liquid assets or financing pursuant to
binding agreements or commitments which may be used to fund the transactions
contemplated by this Agreement; and Purchaser's ability to consummate the
transactions contemplated by this Agreement is not contingent on raising any
equity capital, obtaining specific financing, consent of any lender or any other
matter.
6.7 Litigation and Undisclosed Liabilities. There are no actions, suits or
--------------------------------------
proceedings pending or, to Purchaser's knowledge, threatened against Purchaser,
or obligations or liabilities (whether or not accrued, contingent or otherwise)
or facts or circumstances that could reasonably be expected to result in any
claims against or obligations or liabilities of Purchaser that, individually or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect.
6.8 No Other Representations or Warranties. Except for the representations
--------------------------------------
and warranties expressly contained in this Agreement, none of the Purchaser, any
Affiliate of Purchaser or any other person has made or makes any other express
or implied representation or warranty, either written or oral, on behalf of the
Purchaser
ARTICLE 7
COVENANTS OF THE PARTIES
7.1 Activity in the Ordinary Course.
-------------------------------
(a) From the date hereof, to and including the Closing Date, Seller shall
conduct the business of the Branches in the ordinary and usual course consistent
with past practices and standards, and Seller shall not, without the prior
written consent of Purchaser:
(i) Permit any of the Branches to engage or participate in any
material transaction or incur or sustain any material obligation except in
the ordinary course of business;
(ii) Offer interest rates or terms on any category of deposits or
loans at the Branches which are not determined in a manner consistent with
past practice and procedure;
(iii) Except as expressly contemplated herein, transfer to or from the
Branches to or from any of Seller's other operations or branches any Assets
or Deposits, except upon the unsolicited request of a depositor or customer
in the ordinary course of business or if such deposit is pledged as
security for a loan or similar obligation that is not an Asset;
(iv) Except in the ordinary course of business, sell, transfer,
assign, encumber or otherwise dispose of or enter into any contract,
agreement or understanding to sell, transfer, assign, encumber or dispose
of any Asset;
(v) Make or agree to make any material improvements to any of the
Branches or the Real Property except with respect to commitments for such
made on or before the date of this Agreement and disclosed on Schedule 7.1
or normal maintenance purchased or made in the ordinary course of business;
(vi) Terminate the operations of any of the Branches or file any
application to relocate or close any of the Branches; or
21
(vii) Enter into any commitment, agreement, understanding or other
arrangements to transfer, assign, encumber or otherwise dispose of the
Branches, except in a manner consistent with Seller's obligations under
this Agreement; or
(viii) Except for those employees of the Branches listed on Schedule
1.2, transfer any employee employed at one of the Branches to any other
branch of Seller, nor will Seller permit any employee of one of the
Branches to post for positions outside such Branch, nor will Seller grant
any increase in the salary or wages of any of the employees of the Branches
other than normal increases at times and amounts consistent with Seller's
past practices.
(b) Between the date of this Agreement and the Closing Date, neither Seller
nor Purchaser shall, and each shall cause its respective officers, directors,
agents and employees not to, take any action that is intended to induce, or is
reasonably likely to induce, the transfer of banking business from the Branches;
provided, however, that nothing in this paragraph shall (i) limit the right of
either party to advertise or market its products in the ordinary course of
business or (ii) prohibit Purchaser from notifying customers of the Branches of
its inability to provide certain services offered by Seller; provided that any
such communications shall be agreed upon in advance by Seller and Purchaser,
with both parties acting in a commercially reasonable manner.
(c) From the date hereof until twelve (12) months after (i) the Closing
Date or (ii) the date of termination of this Agreement, whichever is applicable
(the "Non-Solicitation Period"), Seller agrees that it will not solicit or hire
any individual who is an employee of Purchaser at any of the Branches or at any
branch of Purchaser within a twenty-five (25) mile radius of the Branches.
Likewise, except as explicitly contemplated hereby with respect to the
Transferred Employees, Purchaser agrees that during the Non-Solicitation Period,
Purchaser will not solicit for employment or hire any individual who is an
employee of Seller at any branch of Seller within a twenty-five (25) mile radius
of any of the Branches. The parties agree, however, that general recruiting
advertisements not targeted specifically at the other's employees shall not be
considered a solicitation under this Section 7.1(c).
7.2 Access and Confidentiality.
--------------------------
(a) Between the date of this Agreement and the Closing Date, Seller shall
afford to Purchaser and its officers, employees, agents and representatives full
access to the properties, books, records, contracts, documents, files (including
Loan files) and other information of or relating to the Branches, the Assets,
the Assumed Contracts and the Assumed Deposits upon reasonable advance notice
during normal business hours; provided, however, that any inspection shall be
conducted in a manner that does not unreasonably interfere with Seller's normal
business operations or its relations with its customers. Seller shall cause its
personnel to be reasonably available during normal business hours, to an extent
not disruptive of ongoing operations, to provide information and assistance in
connection with Purchaser's investigation of matters relating to the Branches,
the Assets, the Assumed Contracts, the Assumed Lease and the Assumed Deposits
and to familiarize Purchaser with basic policies and operational procedures of
Seller relating to the Branches. Seller shall furnish Purchaser with such
additional financial and operating data and other information about its business
operations at the Branches as may be reasonably necessary for the orderly
transfer of the business operations of the Branches.
(b) Subject to Section 12.4 hereof, each party to this Agreement shall
hold, and shall cause its respective directors, officers, employees, agents,
consultants and advisors to hold, in strict confidence (unless disclosure to a
bank regulatory authority is necessary in connection with any Regulatory
Approval or unless compelled to disclose by judicial or administrative process
or, in the written opinion of its counsel, by other requirements of law or the
applicable requirements of any regulatory agency or relevant stock exchange) all
discussions and information related to the Branches (or,
22
if required under a contract with a third party, concerning such third party)
and, with respect to Purchaser, all non-public records, books, contracts,
instruments, computer data, system requirements and other data and information
(collectively, "Information") furnished to it by Seller or Seller's
representatives pursuant to this Agreement (except to the extent that such
Information can be shown to have been (i) previously known by such party on a
non-confidential basis, (ii) in the public domain through no fault of such party
or (iii) later lawfully acquired from other sources by the party to which it was
furnished and such other source is not subject to a confidentiality restriction
with regard to such Information), and neither party shall release or disclose
such Information to any other person, except, upon the same conditions of
confidentiality, its auditors, attorneys, financial advisors, bankers, other
consultants and advisors and, to the extent permitted above, bank regulatory
authorities.
(c) This Section shall not prohibit disclosure of Information required by
applicable law to be disclosed, but such additional disclosure shall be limited
to that actually required by law, and the party making disclosure shall give the
other party as much notice as is practicable of such obligation (except where
prohibited by applicable law) so that the other party may seek a protective
order or other similar or appropriate relief, and also shall undertake in good
faith to have the Information disclosed treated confidentially by the party to
whom the disclosure is made.
(d) Notwithstanding any other express or implied agreement, arrangement or
understanding to the contrary, Purchaser and Seller may disclose to any tax
advisor (i) the tax treatment and tax structure of this Agreement; (ii) any fact
that may be relevant to understanding the tax treatment and the tax structure of
this Agreement; and (iii) any materials that are provided to Purchaser and/or
Seller relating to the tax treatment and tax structure of this Agreement.
Purchaser and Seller may, however, keep confidential any information relating to
the tax treatment and tax structure of this Agreement to the extent required to
be kept confidential to comply with applicable federal and state securities
laws.
7.3 Regulatory Approvals. As soon as practicable after the date of this
--------------------
Agreement and no later than ten (10) Business Days after the date of this
Agreement, Purchaser shall prepare and file any applications to federal or state
regulatory authorities for approvals necessary, including all Regulatory
Approvals, to consummate the transactions contemplated by this Agreement. Seller
shall cooperate fully and promptly with Purchaser in connection with Purchaser's
applications, and will prepare and file any such applications required by
regulatory authorities to be filed by Seller. Purchaser shall use its reasonable
best efforts to obtain each such approval as promptly as practicable, and
Purchaser and Seller will cooperate in connection therewith and provide the
other with copies of any applications relating thereto prior to filing, other
than material filed in connection therewith under a claim of confidentiality.
7.4 Assumed Contracts.
-----------------
(a) Seller agrees to provide to Purchaser no later than thirty (30)
calendar days after the date hereof a conformed copy of all potential Assumed
Contracts, to be in effect as of the Closing Date. Within ten (10) calendar days
thereafter, Purchaser shall notify Seller of all such contracts that are to be
Assumed Contracts. Purchaser shall have no obligation or liability to any person
under any contract that is not an Assumed Contract.
(b) Seller shall use reasonable efforts (such efforts not to include making
payments to third parties), and Purchaser shall cooperate to, obtain from any
parties to any Assumed Contracts any required consents to the assignment of the
Assumed Contracts to Purchaser, under the existing terms and conditions
contained in the Assumed Contracts on the Closing Date; provided, however, that
Seller shall not be obligated to obtain any consent that imposes a condition,
commitment or requirement that would, after consultation with Purchaser and in
Purchaser's reasonable judgment, adversely affect the operations
23
of the Branches. Any such Assumed Contract for which consent has not been
obtained as of the Closing Date shall not be an Assumed Contract and the Seller
shall have no obligation to continue attempting to obtain such consent. For any
contract for which a required consent is not obtained and satisfactory
alternatives are not available, Purchaser shall have the right to terminate this
Agreement if the Purchaser reasonably believes such contract is material to the
operations of the Branches.
7.5 Delivery of Records at Closing. At or prior to the Closing, Purchaser
------------------------------
shall pick up from Seller at Seller's Operations Center in Rocky Mount, North
Carolina all Delivery Records as well as all the data which is reasonably
necessary for the conversion of the Assumed Deposits to Purchaser's data
processing system; provided, however, that Seller and Purchaser each shall pay
for their own expenses incurred in the back office conversion.
7.6 Further Assurances. Purchaser and Seller agree to use all reasonable
------------------
efforts to satisfy or cause to be satisfied as soon as practicable their
respective obligations hereunder and the conditions precedent to the Closing.
Each of Seller and Purchaser will execute, acknowledge and deliver such
instruments and take such other actions as the other party may reasonably
require in order to carry out the intent of this Agreement. Seller will duly
execute and deliver such assignments, bills of sale, deeds, acknowledgment and
other instruments of conveyance and transfer as shall at any time be necessary
or appropriate to vest in Purchaser the full legal and equitable title to the
Assets being sold hereunder, free and clear of all Encumbrances, except as set
forth on Schedule 5.4. For a reasonable period of time after the Closing Date,
each party will promptly deliver to the other all mail and other communications
which are properly addressable or deliverable to the other as a consequence of
the transactions pursuant to this Agreement; and without limitation of the
foregoing, on and after the Closing Date, Seller shall promptly forward any
mail, communications or other material relating to the Assumed Deposits or the
Assets, to such employees of Purchaser at such addresses as may from time to
time be specified by Purchaser in writing.
7.7 Insurance. Seller shall maintain the Assets in customary repair, order,
---------
and condition, reasonable wear and tear and damage by fire or other unavoidable
casualty excepted. Until the effectiveness of the Closing, Seller shall maintain
insurance on the Assets consistent with its historical practices and all risk of
loss shall be on the Seller. Seller shall remain in substantial compliance with
any obligations it has under the Assumed Contracts or otherwise relating to
maintenance of and insurance upon the Assets. As of the Closing, Seller shall
discontinue its insurance coverage maintained in connection with the Assets and
risk of loss thereafter shall be on the Purchaser.
7.8 Notices of Default. Seller and Purchaser shall each promptly give
------------------
written notice to the other upon becoming aware of the impending or threatened
occurrence of any event which could reasonably be expected to cause or
constitute a breach of any of their respective representations, warranties,
covenants or agreements contained in this Agreement.
7.9 New Account Numbers and Checks. Purchaser agrees, at its cost and
------------------------------
expense, (1) to assign new account numbers to depositors of Assumed Deposits,
(2) to notify such depositors, on or before the Closing Date, in a form and on a
date reasonably and mutually acceptable to Seller and Purchaser, of Purchaser's
assumption of the Deposit, and (3) to furnish such depositors with checks on the
forms of Purchaser and with instructions to utilize Purchaser's checks and to
destroy unused check, draft and withdrawal order forms of Seller. Purchaser
shall not provide checks to depositors more than ten (10) calendar days prior to
the Closing Date. If Purchaser so elects, Purchaser may offer to buy from such
depositors their unused Seller check, draft and withdrawal order forms. In
addition, Seller will notify its affected customers by letter of the pending
assignment of Assumed Deposits to Purchaser, which notice shall be at Seller's
cost and expense and shall be in a form and mailed at a time reasonably and
mutually agreeable to Seller and Purchaser.
24
7.10 Settlement Operations after Closing. Seller and Purchaser hereby agree
-----------------------------------
that, except as provided below, for a period of sixty (60) calendar days after
the Closing Date or, only with the prior written consent of Seller, for such
longer period as Purchaser may reasonably determine to be necessary:
(a) Seller will transfer, convey, and assign to Purchaser all deposits
received by Seller after the Closing for credit to any of the Assumed Deposits,
and all payments received by Seller after the Closing for application to or on
account of any of the Assets.
(b) Seller will notify Purchaser of the return to it of any items deposited
in, or cashed at, the Branches prior to the Closing Date and shall expeditiously
forward any such items to Purchaser. If Purchaser cannot recover on such
returned items after making a good faith effort to do so, Seller shall reimburse
Purchaser for such return items upon assignment of such items by Purchaser to
Seller. Purchaser's good faith effort shall include collection efforts
consistent with Purchaser's existing collection policies in effect from time to
time but shall not include institution of any legal action with respect to such
recovery.
(c) To the extent permitted by law and the applicable Deposit contracts,
Purchaser will honor all properly payable checks, drafts, withdrawal orders and
similar items drawn on Seller's forms against Assumed Deposits which are
presented to Purchaser by mail, over its counters, or through clearing houses.
(d) Provided that such items have been timely delivered to Purchaser by
Seller, Purchaser shall pay the items referred to in Section 7.10(c). Seller
shall make such checks, drafts and similar items available for pickup by
Purchaser at EDS's Charlotte Item Processing Center no later than 10:00 a.m. on
the Business Day following the day they were processed by Seller (and shall use
commercially reasonable efforts to make such items available by 9:30 a.m.).
Purchaser shall promptly reimburse Seller on a daily basis for the amount of all
such checks and drafts paid by Seller. Seller shall be under no obligation with
respect to any such checks or drafts after their delivery, including late
returns, if the items are made available to Purchaser in the agreed upon manner.
Purchaser shall not return any such checks or drafts to Seller, but shall handle
any returns directly with the depositary bank or other parties in the clearing
process.
(e) As of the Closing Date, Purchaser, at its expense, will notify all
Automated Clearing House ("ACH") originators of the transfers and assumptions
made pursuant to the Agreement; provided, however, that Seller may, at its
option, notify all such originators itself (on behalf of Purchaser). For a
period of ninety (90) calendar days beginning on the Closing Date, Seller will
honor all ACH items related to accounts assumed under this Agreement which are
mistakenly routed or presented to Seller. Seller will make no charge to
Purchaser for honoring such items, and will electronically transmit such ACH
data to Purchaser on a daily basis. If Purchaser cannot receive an electronic
transmission, Seller will make available daily to Purchaser at Seller's
operations Center receiving items from the Automated Clearing House tapes
containing such ACH data. Any ACH items presented to Purchaser by Seller which
are not posted by the Purchaser shall be the responsibility of the Purchaser to
return through its normal ACH return process. Items mistakenly routed or
presented after the ninety (90) calendar day period should be returned to the
presenting party. Seller and Purchaser shall make arrangements to provide for
the daily settlement with immediately available funds by Purchaser of any ACH
items honored by Seller, and Seller shall be held harmless and indemnified by
Purchaser for acting in accordance with this arrangement to accept ACH items.
Seller agrees to settle any and all ATM transactions effected on or before the
Closing Date, but processed after the Closing Date, as soon as practicable.
Purchaser and Seller agree to remit the total net balance of such transactions
to Seller or Purchaser, as the case may be, on the same date the transactions
are settled. In instances where a depositor of a Deposit made an
25
assertion of error regarding an account constituting an Assumed Deposit pursuant
to the Electronic Funds Transfer Act and Federal Reserve Board Regulation E, and
Seller, prior to the Closing, recredited the disputed amount to the relevant
account during the conduct of the error investigation, Purchaser agrees to
comply with a written request from Seller to debit such account in a stated
amount and remit such amount to Seller, to the extent of the balance of funds
available in the accounts.
(f) Seller shall provide Purchaser with a listing of each stop payment
order (but not the orders themselves) in effect as to a Deposit or Loan on the
Closing Date. Purchaser shall honor all stop payment orders relating to the
Deposits or the Loans initiated prior to the Closing and reflected in the
magnetic tape made available by Seller to Purchaser on the Closing Date. In the
event that Purchaser shall make any payment in violation of a stop payment order
initiated prior to the Closing but not reflected in stop payment documents and
the magnetic tape made available by Seller to Purchaser prior to such payment,
then Seller shall indemnify, hold harmless and defend Purchaser from and against
all claims, losses and liabilities, including reasonable attorneys' fees and
expenses, arising out of any such payment. In the event that Purchaser shall
make any payment in violation of a stop payment order initiated prior to the
Closing that is reflected in stop payment documents and the magnetic tape made
available by Seller to Purchaser prior to such payment, then Purchaser shall
indemnify, hold harmless and defend Seller from and against all claims, losses
and liabilities, including reasonable attorneys' fees and expenses, arising out
of any such payment.
(g) After the Closing Date, Purchaser hereby agrees to accept, assume and
process any and all "charge-back items" received subsequent to the Closing Date
but arising prior thereto against MasterCard and/or Visa merchant and debit card
Deposit accounts, as covered under Visa charge-back regulations. "Charge-back
items" shall include, but not be limited to, disputed items, purchases over
limit, fraudulent use of card, late presentations of sales slips, unpresented
credit on sales returns and other adjustments as specified under the rules and
regulations of MasterCard and/or Visa. If Purchaser cannot recover on any such
charge-back items after making a good faith effort to do so, Seller shall
reimburse Purchaser for such items upon assignment of such items by Purchaser to
Seller. Purchaser's good faith effort to recover on any such items shall not
require that Purchaser take any legal action against the owner of the merchant
Deposit account or any other person.
(h) All overdrawn Deposit accounts will be assigned to Purchaser at
Closing, and the Overdrafts represented thereby will be included in the Assets
purchased by Purchaser at Closing. Purchaser will use good faith efforts
consistent with its normal collection practices to collect the Overdrafts;
Purchaser's good faith efforts to collect Overdrafts shall not require, however,
that it institute any legal action against any person. Seller will reimburse
Purchaser for any Overdrafts deemed uncollectible by Purchaser following such
good faith collection efforts and an assignment of the rights to pursue such
Overdrafts to Seller. Seller agrees that, following the date of this Agreement,
Seller will not alter or change any business practice at the Branches related to
overdrawn Deposit accounts.
(i) Purchaser and Seller agree that all amounts required to be remitted by
either such party to the other party hereto pursuant to this Section shall be
settled on a daily basis. Any amounts to be paid by Seller to Purchaser shall be
netted daily against any amounts to be paid by Purchaser to Seller, such that
only one amount, representing the net amount due, shall be transferred on a
daily basis by the party with the higher amount of remittances for such day in
immediately available funds. Seller shall provide Purchaser with a daily net
settlement figure for all such transactions from the immediately preceding
Business Day by 12:00 noon Eastern Time on each Business Day and the party
obligated to remit any funds thereunder shall do so in immediately available
funds by wire transfer by 2:00 p.m. Eastern Time on such day or by any other
method of payment agreed upon by the parties; any such settlement shall be
provisional pending receipt or review by the parties of the physical items
relating to
26
such settlement, with the daily settlement after such receipt and review to
reflect any adjustments resulting from a parties receipt and examination of the
physical items.
7.11 Covenant of Seller Not to Solicit. Seller hereby agrees that for a
---------------------------------
period of one year from the Closing Date, Seller shall not specifically target
and solicit customers of the Branches whose Deposits or Loans are being assumed
or purchased by Purchaser; provided, however, that nothing in this Section 7.11
shall (i) restrict general mass mailings, telemarketing calls, statement
stuffers, advertisements or other similar communications whether in print, on
radio, television, the Internet, or by other means that are directed to the
general public or to a group of customers who may include customers of the
Branches, provided that such group is defined by criteria other than primarily
as customers of the Branches, (ii) otherwise prevent Seller from taking such
actions as may be required to comply with applicable federal or state laws,
rules or regulations or from servicing or communicating with the then-current
customers of Seller, including customers of Seller with whom Seller maintains
account relationships either centrally or at branches other than the Branches.
7.12 Real Property Matters.
---------------------
(a) Seller agrees to deliver to Purchaser, as soon as reasonably possible
after the execution of this Agreement but no later than ten (10) Business Days
from the date of this Agreement, copies of all (i) title information in
possession of Seller, including, but not limited to, title insurance policies,
attorneys' opinions on title, surveys, covenants, deeds, notes and mortgages and
easements relating to the Real Property, and (ii) reports, surveys, notices,
correspondence or other information known to Seller and either in Seller's
possession or reasonably retrievable by Seller, that relate to the environmental
condition of the Real Property or violations of laws or regulations relating to
the environment. Such delivery shall constitute no warranty by Seller as to the
accuracy or completeness thereof or that Purchaser is entitled to rely thereon.
(b) At its option and expense, Purchaser may cause to be conducted, within
forty-five (45) calendar days after the date of this Agreement (the "Study
Period"), (i) a title examination, physical survey, zoning compliance review,
and structural inspection of the Owned Real Property and Improvements thereon
and, with the consent of the applicable lessors, the Leased Real Property (the
"Property Examination") and (ii) site inspections, regulatory analyses and Phase
I environmental assessments of the Owned Real Property, and, with the consent of
the applicable lessors, the Leased Real Property, together with such other
studies and analyses as Purchaser shall deem necessary or desirable (the
"Environmental Survey"); provided, however, that without the prior written
consent of Seller and, with respect to the Leased Real Property, the lessors
thereof, Purchaser shall not conduct any soil, surface water or ground water
sampling ("Intrusive Testing").
(c) If in the course of the Property Examination or Environmental Survey
Purchaser discovers a "Material Defect" (as defined in Subsection (d) below)
with respect to the Real Property, Purchaser will give prompt written notice
thereof to Seller (but in any event prior to 5:00 p.m. on the last day of the
Study Period) describing the facts or conditions constituting the Material
Defect and the measures which Purchaser reasonably believes are necessary to
correct such Material Defect. If Purchaser provides Seller with written notice
of a Material Defect within the Study Period, then Seller and Purchaser shall
promptly discuss and seek to reach agreement as to an acceptable cure or other
resolution of the asserted Material Defect. Seller shall respond to Purchaser's
notice before 5:00 p.m. on the tenth (10th) Business Day after its receipt,
advising Purchaser whether Seller elects to cure the Material Defect. Absent
such a response, Seller shall be deemed to have declined to cure such Material
Defect. If Seller elects to cure, then Seller shall proceed with such cure and
shall complete such cure within forty-five (45) calendar days thereafter or
within such additional period as shall be agreed upon by
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Seller and Purchaser provided that completion of the cure shall be a condition
to Purchaser's obligation to close.
If Seller elects not to cure or is not able to cure any Material Defect
with respect to Owned Real Property and the Purchaser and Seller are otherwise
unable to agree on how the Material Defect will be addressed in order to effect
Closing on the Owned Real Property, or if Seller does not consent to any
Intrusive Testing reasonably proposed by Purchaser with respect to the Owned
Real Property, then Purchaser shall have the option exercisable upon written
notice to Seller delivered at least ten (10) Business Days prior to Closing to
(i) waive the Material Defect; or (ii) purchase the Assets (other than such
Owned Real Property) and assume the Deposits associated with the affected Branch
but, lease such Owned Real Property "as is" without any representation or
warranty or liability for existing environmental damage, maintenance, taxes or
insurance for a period of up to twelve (12) months, on a month-by-month basis,
at a reasonable cost and with reasonable terms to be agreed upon by Seller and
Purchaser, in order to allow for relocation of the business of such Branch to
another facility.
Subject to Section 4.16, if Seller elects not to cure or is not able to
cure any Material Defect with respect to Leased Real Property and the Purchaser
and Seller are otherwise unable to agree on how the Material Defect will be
addressed, then Purchaser shall have the option to not assume the lease for such
Leased Real Property and if it elects to not assume such lease, then the Branch
in question will be excluded from the transactions contemplated by this
Agreement, references in this Agreement to Branches shall not include the Branch
in question and Purchaser shall promptly return to Seller all Information
regarding the Branch in question.
(d) For purposes of this Agreement a "Material Defect" with regard to the
Property Examination shall include:
(i) the existence of any lien (other than the lien of real property
taxes not yet due and payable), encumbrance, easement, covenant, or other
restriction, title imperfection or title irregularity, or the existence of
any facts or condition that constitutes a breach of Seller's
representations and warranties contained in Section 5.4 and 5.6 above, in
any such case that Purchaser reasonably believes will materially affect its
use of the Real Property for the purpose of the operation of a branch bank
or materially affects the value or marketability of the Real Property;
(ii) the encroachment by an improvement on the Real Property onto
other property or onto any easement, a violation of any setback
requirement, the encroachment of an improvement on any other property onto
the Real Property, or the existence of a zoning restriction that does not
permit use of the Real Property as a branch banking facility without
grandfathering or variance and without site plan review or the construction
of any additional improvements; or
(iii) the existence of any structural defect or state of disrepair in
the improvements on the Real Property (including any equipment, fixtures or
other components related thereto) that Purchaser reasonably believes would
cost at least $20,000 with respect to any one Branch or $60,000 in the
aggregate for all of the Branches to repair or correct.
For purposes of this Section 7.12, a "Material Defect" with regard to the
Environmental Survey shall include the existence of facts or circumstances
relating to a Branch demonstrating that any action, including the discharge,
disposal, release, or emission by any person of any "Hazardous Material" (as
defined below) detected in, on, or under the Real Property in a concentration
that violates any applicable Environmental Law (as defined below), has been
taken or not taken, or a condition or event likely has occurred or exists, with
respect to the Real Property which constitutes or would constitute a
28
violation of any Environmental Law, as to which Purchaser reasonably believes,
based on the advice of legal counsel or other consultants, that Purchaser could
become responsible or liable for assessment, removal, remediation, monetary
damages, or civil, criminal or administrative penalties or other corrective
action and in connection with which the amount of expense or liability which it
could incur or for which it could become responsible or liable following
consummation of the transactions contemplated by this Agreement at any time or
over a period of time could equal or exceed $20,000 with respect to any one
Branch or $60,000 in the aggregate for all of the Branches.
(e) For purposes of this Agreement, "Environmental Laws" shall include all
federal, state, and local statutes, regulations, ordinances, orders, decrees,
and similar provisions having the force or effect of law relating to or imposing
liability, responsibility, or standards of conduct applicable to environmental,
health, or safety conditions and/or releases of Hazardous Materials affecting
the Real Property, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act; the Superfund Amendment
and Reauthorization Act; the Federal Insecticide, Fungicide and Rodenticide Act;
the Hazardous Materials Transportation Act; the Resource Conservation and
Recovery Act; the Clean Water Act; the Clean Air Act; the Toxic Substances
Control Act; the Oil Pollution Act; the Coastal Zone Management Act; any
"Superfund" or "Superlien" law; the North Carolina Oil Pollution and Hazardous
Substances Control Act; the North Carolina Solid Waste Management Act; and the
North Carolina Water and Air Resources Act; including any amendments thereto
from time to time; all contractual agreements and all common law concerning
public health and safety, worker health and safety, and pollution or protection
of the environment, including, without limitation, all standards of conduct and
bases of obligations relating to the presence, use, production, generation,
handling, transportation, treatment, storage, disposal, distribution, labeling,
reporting, testing, processing, discharge, release, threatened release, control
or clean-up of any Hazardous Substances.
(f) For purposes of this Agreement, "Hazardous Material" means any
materials, substances, wastes, chemical substances, or mixtures presently
listed, defined, designated, or classified as hazardous, toxic, or dangerous, or
otherwise regulated, under any Environmental Law, whether by type or quantity,
including, but not limited to, any pesticides, pollutants, contaminants, toxic
chemicals, oil or other petroleum products or byproducts, asbestos or materials
containing (or presumed to contain) asbestos, polychlorinated biphenyls, urea
formaldehyde foam insulation, lead or lead containing paint, radon, or
radioactive material.
7.13 Defects in Assets. Purchaser will be given the opportunity to conduct
-----------------
such other investigations and inspections of the other Assets to be transferred,
including but not limited to the Furniture, Fixtures and Equipment, Prepaid
Expenses, Assumed Contracts, and Records, as Purchaser may reasonably deem
appropriate; provided, however, that Purchaser must conduct any such review
within forty-five (45) calendar days from the date of this Agreement or, in the
case of items that become Assets after such review, within a reasonable time
following identification of such Assets and before the Closing. If Purchaser
reasonably determines in good faith that any such Asset is unsuitable for
Purchaser's use or of materially less value than its net book value, Purchaser
shall have no obligation to accept, assume, or pay for such Assets and such
Assets shall be excluded from the Assets, and the Preliminary Closing Statement
or the Final Closing Statement shall be adjusted accordingly.
ARTICLE 8
TAX AND EMPLOYEE MATTERS
8.1 Tax Representations. Seller represents and warrants to Purchaser as
-------------------
follows:
29
(a) With respect to the Assumed Deposits, Seller is in material compliance
with the law and IRS regulations relative to (i) obtaining from depositors of
the Assumed Deposits executed IRS Forms W-8 and W-9 and (ii) reporting of
interest.
(b) There are no liens for Taxes allocated to or imposed on Seller on any
of the Assets and to the knowledge of Sellers there is no basis for the
assertion of any such liens.
(c) Seller has paid when due all Taxes in respect of the Assets.
(d) No tax is required to be withheld by Purchaser from the Purchase Price
or Settlement Payment as a result of the transfers contemplated by this
Agreement pursuant to the Code or any other provision of federal, state or local
Tax law.
8.2 Allocation Between Pre and Post Closing Periods. Whenever it is
-----------------------------------------------
necessary under this Agreement to allocate Taxes (including a liability for
Taxes or prepaid Tax) between periods prior to and after the Closing Date (or
determine the amount of prepaid Taxes) such Taxes shall be apportioned by
assuming that the Branches had a taxable year or period which ended at the close
of the Closing Date, except that any property Taxes or exemptions, allowances or
deductions that are calculated on an annual basis shall be apportioned based on
time. Appropriate payments shall be made between the Purchaser and the Seller
whenever necessary to effectuate the proper allocation of any Tax liability or
prepaid Tax under this Agreement.
8.3 Transfer Taxes. Notwithstanding anything herein to the contrary, all
--------------
excise, sales, use, transfer, documentary, stamp or similar Taxes that are
payable or that arise as a result of the consummation of the transactions
contemplated by this Agreement will be borne by Seller and any recording or
filing fees with respect thereto will be borne by the Purchaser.
8.4 Assistance and Cooperation. After the Closing Date, each of Seller and
--------------------------
Purchaser shall:
(a) Assist the other party in preparing any Tax Returns which such other
party is responsible for preparing and filing in accordance with this Article 8;
(b) Cooperate fully in preparing for any audits of, or disputes with taxing
authorities regarding, any Tax Returns with respect to the Assets or income
therefrom, the Liabilities or payments in respect thereof, or the operation of
the Branches;
(c) Make available to the other and to any taxing authority as reasonably
requested all relevant information, records, and documents relating to Taxes
with respect to the Assets or income therefrom, the Liabilities or payments in
respect thereof, or the operation of the Branches;
(d) Provide timely notice to the other in writing of any pending or
proposed tax audits (with copies of all relevant correspondence received from
any taxing authority in connection with any Tax audit or information request) or
assessments with respect to the Assets or the income therefrom, the Liabilities
or payments in respect thereof, or the operation of the Branches for taxable
periods for which the other may have a liability under this Article 8;
(e) Furnish the other with copies of all relevant correspondence received
from any taxing authority in connection with any tax audit or information
request with respect to any taxable period referred to in subsection (d) above;
and
30
(f) The party requesting assistance or cooperation shall bear the other
party's out-of-pocket expenses in complying with such request to the extent that
those expenses are attributable to fees and other costs of unaffiliated
third-party service providers; provided, that such other party shall obtain a
quotation from any such third-party service providers prior to engagement and
obtain approval thereof from the party requesting assistance.
8.5 Notices, Etc. Without limiting the provisions of Section 8.4, the
-------------------
notification and contest provisions of Section 11.1 shall apply to claims for
indemnification under Sections 8.1 through 8.3; provided, however, that notice
of claim for indemnification pursuant to Sections 8.1 through 8.3 shall be given
prior to the expiration of the applicable statute of limitations (as extended)
for the assertion of the claims for taxes by the relevant tax authority. The
representations of Section 8.1 shall similarly survive until the expiration of
the relevant limitations period for the assertion of claims by the relevant tax
authority.
8.6 Employees and Employee Benefits.
-------------------------------
(a) Purchaser shall offer employment, within a reasonable commuting
distance from the Branch to which each Applicable Employee is assigned, in
positions requiring comparable skills and abilities (with no reduction in base
salary or weekly or hourly rate of pay) to all Applicable Employees (as defined
below). Such offer shall be effective on the Closing Date in the case of an
Applicable Employee actively employed at the Closing, or upon the return of any
such Applicable Employee to active employment in the case of any other
Applicable Employee. For purposes of this Agreement, "Applicable Employees"
means (i) all active Employees on the Closing Date, including Employees on
temporary leave for purposes of jury or annual two-week national
service/military duty, Employees on vacation and Employees on a regularly
scheduled day off from work, and (ii) Employees who on the Closing Date are on
maternity or paternity leave, educational leave, military leave with veteran's
reemployment rights under federal law, leave under the Family Medical Leave Act
of 1993, approved personal leave, short-term disability leave or medical leave,
provided, however, that no such Employee shall be guaranteed reinstatement to
active employment if he is incapable of working in accordance with the policies,
practices and procedures of the Purchaser or if his return to employment is
contrary to the terms of his leave; and further provided, however that Purchaser
shall not be required to offer employment to any Applicable Employee whose
employment would not be permitted under applicable law and regulation. Each
Applicable Employee who accepts Purchaser's offer of employment shall be a
"Transferred Employee" for purposes of this Agreement effective upon the later
of the Closing Date or the return of such Applicable Employee to active
employment. A Transferred Employee's employment with Purchaser shall be on an
"at-will" basis, and nothing in this Agreement shall be deemed to constitute an
employment agreement with any such person or to obligate Purchaser to employ any
such person for any specific period of time or in any specific position or to
restrict Purchaser's right to terminate the employment of any such person at any
time and for any reason satisfactory to it.
(b) With respect to each Applicable Employee who declines Purchaser's offer
of employment, Seller shall be responsible for all severance costs associated
with terminating the employment of such employee in accordance with the Seller's
severance policies and practices. Purchaser will provide to any Transferred
Employee who it terminates without cause at any time within one year following
the Closing Date, severance pay in an amount equal to the product of (i) an
amount equal to the salary at termination of such Terminated Employee for ten
(10) working days and (ii) the Terminated Employee's cumulative years of service
with Seller and Purchaser. Purchaser's determination of the presence or absence
of cause under this Section 8.6(b) shall be conclusive absent bad faith, and its
calculations of severance pay shall be conclusive absent manifest error.
31
(c) Subject to Section 8.4(f)), on and after the Closing Date and for
purposes of eligibility, vesting, vacation entitlement and severance benefits
under any "employee benefit plan," as defined in Section 3(3) of ERISA, and any
other employee benefit arrangement or payroll practice, including, without
limitation, any bonus plan, equity or equity-based compensation, or deferred
compensation arrangement, stock purchase, severance pay, sick leave, vacation
pay, paid time off salary continuation for disability, hospitalization, medical
insurance, life insurance, scholarship program, any "employee pension plan", as
defined in Section 3(2) of ERISA, each Transferred Employee shall receive full
credit from Purchaser for all prior service properly credited under a comparable
plan or arrangement of Seller. Purchaser shall not be required to credit any
Transferred Employee with prior service for purposes of benefit accrual or
contributions under any pension plan, profit sharing plan, savings plan, or
other deferred compensation plan. The schedule referred to in Section 8.6(g)
below shall list such service of each Transferred Employee and may be
conclusively relied upon by Purchaser in crediting service in accordance with
this Section.
(d) Each Transferred Employee shall cease to be covered by the employee
welfare benefit plans, including plans, programs, policies and arrangements
which provide medical and dental coverage, life and accident insurance,
disability coverage, and vacation and severance pay (collectively, "Welfare
Plans") of Seller and all other benefit and compensation plans of Seller on the
date the Transferred Employee becomes a Transferred Employee, or on such later
date specified under the terms of an applicable Welfare Plan or other plan of
Seller. Seller shall retain responsibility for all claims under Welfare Plans
incurred by Applicable Employees prior to the date they become Transferred
Employees. Purchaser shall assume responsibility for all claims under Welfare
Plans incurred by Transferred Employees on or after the Closing Date; provided
that Seller shall retain any obligation for payment of long or short-term
disability arising from disabilities of Applicable Employees that occurred prior
to the Closing Date. Purchaser shall be responsible for payment of long and
short-term disability claims that arise from disabilities of Applicable
Employees that occur on or after the date they become Transferred Employees. For
purposes of this paragraph, a claim shall be deemed to have been incurred when
the medical or other service giving rise to the claim is performed, except that
disability claims shall be deemed to have been incurred on the date the
applicable Employee becomes disabled.
(e) Purchaser agrees to (i) provide coverage for Transferred Employees and
their beneficiaries under any medical, dental and health plans available to
similarly situated employees of Purchaser as of the later of the Closing Date or
the date an Applicable Employee becomes a Transferred Employee, (ii) waive any
waiting periods and preexisting condition limitations or exclusions (except to
the extent the waiting period or exclusion would have been applicable under
Seller's health insurance plan) under such plans, (iii) cause such plans to
honor any expenses incurred by the Transferred Employees and their beneficiaries
under similar plans of the Seller during the portion of the calendar year in
which the Closing Date occurs for purposes of satisfying applicable deductible,
co-insurance and maximum out-of-pocket expenses, and (iv) permit Transferred
Employees to participate in Purchaser's retirement or 401(k) plans immediately
following the Closing Date.
(f) Seller shall not pay out to Transferred Employees vacation pay benefits
earned but not yet used as of the Closing Date. Purchaser shall provide
Transferred Employees with credit under Purchaser's vacation pay plan for the
earned but not yet used vacation pay benefits accrued since January 1, 2003 and
attributable to each Transferred Employee as set forth on the written report
referred to in Section 8.6(g) provided prior to the Closing by Seller to
Purchaser. Liability for such amounts shall be borne by Purchaser; Seller shall
have no liability for such vacation pay benefits. Notwithstanding the foregoing
provisions of this Section, Seller shall pay out to the Transferred Employees,
and Purchaser shall not have liability for, any vacation pay benefits earned
prior to January 1, 2003.
32
(g) At least twenty (20) calendar days prior to Closing, Seller shall
deliver to Purchaser a report listing each employee employed at the Branches as
of the date the report is prepared to include name, position, exempt or
nonexempt status, date of hire and total years of service, present salary, date
of last salary increase, employment status (permanent or temporary, full-time or
part-time, active or leave recipient and type of leave) and other information
required by Sections 8.6(c) and 8.6(f) above. Seller represents and warrants to
Purchaser that the report and all information delivered in connection with this
Section 8.6(g) will be complete and accurate in all material respects.
ARTICLE 9
CONDITIONS TO CLOSING
9.1 Conditions to Obligations of Purchaser. Unless waived in writing by
--------------------------------------
Purchaser, the obligation of Purchaser to consummate the transactions
contemplated by this Agreement to be consummated at the Closing is conditioned
upon fulfillment, at or before the Closing, of each of the following conditions:
(a) All consents, approvals and authorizations required to be obtained
prior to the Closing from governmental and regulatory authorities in connection
with the performance and consummation of the transactions contemplated hereby,
including the Regulatory Approvals, shall have been made or obtained, and shall
remain in full force and effect, all waiting periods applicable to the
consummation of the transactions contemplated hereby shall have expired or been
terminated and all required regulatory filings shall have been made.
(b) No court or governmental or regulatory authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and which would result
in a Material Adverse Effect, and no proceeding seeking the enactment of such a
judgment, decree, injunction or other order shall have been announced or
commenced.
(c) Each of the representations and warranties of Seller contained in this
Agreement shall be true in all material respects when made and as of the Closing
Date, with the same effect as though such representations and warranties had
been made on and as of the Closing Date (except that representations and
warranties that are made as of a specific date need be true in all material
respects only on and as of such date); each of the covenants and agreements of
Seller to be performed on or prior to the Closing Date shall have been duly
performed in all material respects.
(d) Purchaser shall have received each of the following documents:
(i) Resolutions of Seller's Board of Directors, certified by its
Secretary or Assistant Secretary, authorizing the signing and delivery of
this Agreement and all related documents and the consummation of the
transactions contemplated hereby and thereby;
(ii) A certificate from the Secretary or Assistant Secretary of Seller
as to the incumbency and signatures of officers;
(iii) A certificate signed by a duly authorized officer of Seller
stating that the conditions set forth in Sections 9.1(a), (b) and(c) have
been satisfied;
(iv) A Xxxx of Sale and Instrument of Assignment and Assumption,
signed by the Seller, substantially in the form of Exhibit A hereto;
33
(v) A special warranty deed with appropriate documentary stamps
affixed conveying the Owned Real Property to the Purchaser subject to all
matters of record in the public registries of the counties in which each of
the Owned Real Property is located, together with such other instruments
and documents as may be reasonably required by Purchaser's title insurance
company in order to meet its requirements to issue a commercial title
insurance policy with respect to the Owned Real Property, and the Seller
shall have filed or recorded (or provided to Purchaser for filing and
recording) any and all documents necessary to duly vest an equitable title
in the Owned Real Property in Purchaser;
(vi) An Assignment and Assumption of Lease in the form attached hereto
as Exhibit 9.1(d)(vi) - A transferring the leasehold interest in the Leased
Real Property to Purchaser, together with such instruments and documents as
may be reasonably required for the issuance of appropriate leasehold title
insurance with respect to the Assumed Lease, and Seller shall have filed or
recorded (or provided to Purchaser for filing and recording) any and all
documents necessary to vest such leasehold interest in Purchaser, including
Landlord's Consent to the Assignment in the form attached hereto as Exhibit
9.1(d)(vi) - B and Landlord's Estoppel Certificate in the form attached
hereto as Exhibit 9.1(d)(vi) - C.
(vii) Such other bills of sale, assignments of management,
maintenance, service or servicing contracts, security deposits under
leases, guaranties, warranties, utilities security deposits, and such other
instruments and documents as Purchaser may reasonably require as necessary
for transferring, assigning and conveying to Purchaser good, marketable and
insurable title to the Assets free and clear of any Encumbrances, and
permitting assumption of Liabilities by Purchaser;
(viii) The Delivery Records;
(ix) An original, fully executed counterpart of each written Assumed
Contract in effect on the Closing Date and, subject to Section 7.4, such
consents as shall be required pursuant to the terms of any Assumed
Contracts in connection with the assignments of such Assumed Contracts to
Purchaser;
(x) A complete set of keys of the Branches, including but not limited
to keys for all vaults, appropriately tagged for identification and any
vault manuals or specifications with respect to vaults and automated teller
machines, if any;
(xi) The Preliminary Closing Statement and the required Settlement
Payment, if any;
(xii) Seller's resignation as trustee or custodian, as applicable,
with respect to each XXX included in the Assumed Deposits, and designation
of the Purchaser as successor trustee or custodian with respect thereto,
subject to Section 2.6;
(xiii) All documentation required to exempt Seller from the
withholding requirement of Section 1445 of the Code, consisting of an
affidavit from Seller to Purchaser that Seller is not a foreign person and
providing Seller's U.S. taxpayer identification number; and
(xiv) An assignment in recordable form reflecting the transfer and
assignment to Purchaser of deeds of trust, mortgages, assignments of rents
and profits and other real property related Loan Documents of record in the
real property records in applicable public registries (e.g. real property
records in the offices of Registers of Deeds in North Carolina).
34
(e) The following events or conditions shall be absent or shall not have
occurred:
(i) Subject to Sections 5.14 and 7.1(b) above, there shall not have
occurred any material adverse change in the business of the Branches, and
no circumstances shall exist which, with the passage of time or otherwise,
likely will result in any such material adverse change;
(ii) There shall not have been any significant damage to or
destruction of the improvements located on the Real Property which (1) is
not covered by property insurance (or a payment from Seller) in an amount
necessary to fully repair such damage or destruction or replace the
property destroyed with property of like kind and quality and the proceeds
of which have been either used for such repair or replacement or assigned
to Purchaser or (2) would materially interfere with its use as a bank
branch; and
(iii) In the event that Seller has agreed to cure a Material Defect as
provided in Section 7.12 above, such Material Defect shall have been
corrected in the manner agreed upon by Purchaser and Seller.
(f) The form and substance of all legal matters described in this Agreement
or related to the transactions contemplated by this Agreement shall be
reasonably acceptable to Purchaser's legal counsel.
9.2 Conditions to Obligations of Seller. Unless waived in writing by
-----------------------------------
Seller, the obligation of Seller to consummate the transactions contemplated by
this Agreement to be consummated at the Closing, is conditioned upon
fulfillment, at or before the Closing, of each of the following conditions:
(a) All consents, approvals, permits and authorizations required to be
obtained prior to the Closing from governmental and regulatory authorities in
connection with the performance and consummation of the transactions
contemplated hereby, including the Regulatory Approvals, shall have been made or
obtained and shall remain in full force and effect; and all waiting periods
applicable to the consummation of the transactions contemplated hereby shall
have expired or been terminated and all required regulatory filings shall have
been made.
(b) No court or governmental or regulatory authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and would result in a
Material Adverse Effect, and no proceeding seeking the enactment of such a
judgment, decree, injunction or other order that would have a Material Adverse
Effect shall have been announced or commenced.
(c) Each of the representations and warranties of Purchaser contained in
this Agreement shall be true in all material respects when made and as of the
Closing Date, with the same effect as though such representations and warranties
had been made on and as of the Closing Date (except that representations and
warranties that are made as of a specific date need be true in all material
respects only on and as of such date); each of the covenants and agreements of
Purchaser to be performed on or prior to the Closing Date shall have been duly
performed in all material respects.
(d) Seller shall have received each of the following documents, which shall
be delivered in a manner agreed to between Purchaser and Seller and shall be in
form and substance reasonably satisfactory to Seller:
35
(i) Resolutions of Purchaser's Board of Directors or an authorized
committee thereof, certified by its Secretary or Assistant Secretary,
authorizing the signing and delivery of this Agreement and all related
documents and the consummation of the transactions contemplated hereby and
thereby;
(ii) A certificate of the Secretary or Assistant Secretary of
Purchaser as to the incumbency and signatures of officers;
(iii) A certificate signed by a duly authorized officer of Purchaser
stating that the conditions set forth in Sections 9.2(a), (b) and (c) have
been fulfilled;
(iv) A Xxxx of Sale and Instrument of Assignment and Assumption,
signed by the Purchaser, substantially in the form of Exhibit A hereto;
(v) Purchaser's acceptance of its appointment as successor trustee or
custodian, as applicable, of the XXX accounts included in the Assumed
Deposits and assumption of the fiduciary obligations of the trustee or
custodian with respect thereto, subject to Section 2.6; and
(vi) the Assignment and Assumption of Lease for the Assumed Lease,
signed by Purchaser.
(e) Manner of Closing. The form and substance of all legal matters
-----------------
described in this Agreement or related to the transactions contemplated by this
Agreement shall be reasonably acceptable to Seller's legal counsel.
9.3 Other Documents. The parties agree to execute and deliver such other
---------------
documents as the parties determine are reasonably necessary to consummate the
transactions contemplated by this Agreement.
ARTICLE 10
TERMINATION
10.1 Termination. This Agreement may be terminated at any time prior to the
-----------
Closing Date:
(a) By the mutual written consent of Purchaser and Seller;
(b) By Seller or Purchaser, in the event of a material breach by the other
of any representation, warranty or agreement contained herein which is not cured
or cannot be cured within thirty (30) calendar days after written notice of such
termination has been delivered to the breaching party; provided, however, that
termination pursuant to this Section 10.1(b) shall not relieve the breaching
party of liability for such breach or otherwise;
(c) Notwithstanding any other provision of this Agreement, by Seller or
Purchaser, in the event that the Closing has not occurred by February 28, 2004
unless the failure to so consummate by such time is due to a breach of this
Agreement by the party seeking to terminate; or
(d) By Seller or Purchaser at any time after the denial or revocation of
any Regulatory Approval, unless such denial or revocation was caused by the
failure of the party seeking to
36
terminate to act in a timely manner with respect to such Regulatory Approval or
such party's negligence or willful misconduct or by the breach of this
Agreement.
For any of the reasons described above, Purchaser shall have the right, in
its sole discretion, to terminate this Agreement as to any one or more of the
Branches, but to proceed with the purchase of one or more of the other Branches.
10.2 Effect of Termination. In the event of termination of this Agreement
---------------------
and abandonment of the transactions contemplated hereby pursuant to Section
10.1, no party hereto (or any of its directors, officers, employees, agents or
Affiliates) shall have any liability or further obligation to any other party,
except as provided in Section 7.2(b) and except that nothing herein will relieve
any party from liability for any breach of this Agreement.
ARTICLE 11
INDEMNIFICATION
11.1 Indemnification.
---------------
(a) Subject to Section 11.1(c) below, Seller shall indemnify and hold
harmless Purchaser and any person directly or indirectly controlling Purchaser
from and against any and all Losses which Purchaser may suffer, incur or sustain
arising out of or attributable to (i) any breach of any representation or
warranty made by Seller pursuant to this Agreement, (ii) any breach of any
agreement to be performed by Seller pursuant to this Agreement, (iii) any third
party claim, penalty asserted, legal action or administrative proceeding based
upon any action taken or omitted to be taken by Seller prior to the Closing or
resulting from any transaction or event occurring prior to the Closing, relating
in any such case to the Branches, the Assets, the Assumed Deposits or the
Assumed Contracts, or (iv) any liabilities, obligations or duties of Seller that
are not Liabilities but are related to the Branches, the Assets, the Assumed
Deposits or the Assumed Contracts or the Assumed Lease.
(b) Subject to Section 11.1(d) below, Purchaser shall indemnify and hold
harmless Seller and any person directly or indirectly controlling Seller from
and against any and all Losses which Seller may suffer, incur or sustain arising
out of or attributable to (i) any breach of any representation or warranty made
by Purchaser pursuant to this Agreement, (ii) any breach of any agreement to be
performed by Purchaser pursuant to this Agreement, (iii) any third party claim,
penalty asserted, legal action or administrative proceeding based upon any
action taken or omitted to be taken by Purchaser or resulting from any
transaction or event occurring after the Closing, relating in any such case to
the operation of the Branches, the Assets, the Assumed Deposits or the Assumed
Contracts or (iv) any of the Liabilities assumed by Purchaser at the Closing.
(c) Seller shall not have any liability whatsoever under Section 11.1(a)(i)
and (ii) for any Loss until the aggregate of all Losses for which Seller would
be liable under Section 11.1(a)(i) and (ii) (excluding for this purpose each and
every individual Loss that is less than $100) exceeds on a cumulative basis an
amount equal to $50,000, and then only to the extent of any such excess. The
maximum liability of Seller under Section 11.1(a)(i) and (ii) shall be 50% of
the Purchase Price.
(d) Purchaser shall not have any liability whatsoever under Section
11.1(b)(i) and (ii) for any Loss until the aggregate of all Losses for which
Purchaser would be liable under Section 11.1(b)(i) and (ii) (excluding for this
purpose each and every individual Loss that is less than $100) exceeds on a
cumulative basis an amount equal to $50,000, and then only to the extent of any
such
37
excess. The maximum liability of Purchaser under Section 11.1(b)(i) and (ii)
shall be 50% of the Purchase Price.
(e) To exercise its indemnification rights under this Section 11.1 as the
result of an assertion against it of any claim or potential liability for which
indemnification is provided, the indemnified party shall promptly notify the
indemnifying party of the assertion of such claim, discovery of any such
potential liability or the commencement of any action or proceeding in respect
of which indemnity may be sought hereunder; provided that notice of an original
claim for indemnification under Section 11.1(a)(i) and (ii) or Section
11.1(b)(i) and (ii) must be given prior to the expiration of twelve (12) months
from the Closing Date, after which time the right to such indemnification will
expire; provided further that notice of an original claim for indemnification
under Section 11.1(a)(iii) and (iv) or Section 11.1(b)(iii) and (iv) must be
given prior to the expiration of three years from the Closing Date, after which
time the right to such indemnification will expire; provided further, that, with
respect to claims arising from a breach of representation or warranty made in
Article 8, the provisions of Section 8.5 regarding the time by which notice must
be given shall govern. Notwithstanding the foregoing, notice of any claim for
indemnification arising out of a third-party lawsuit or other similar legal
action shall be made within ten (10) Business Days after the indemnified party
receives the summons and complaint or similar documents in connection therewith,
provided, however, that a party's failure to timely give such notice shall not
affect its right to indemnification in connection therewith except to the extent
the indemnifying party is prejudiced as a result of such failure to timely give
such notice. The indemnified party shall advise the indemnifying party of all
facts relating to such assertion within the knowledge of the indemnified party,
and shall afford the indemnifying party the opportunity, at the indemnifying
party's sole cost and expense, to defend against such claims for liability. In
any such action or proceeding, the indemnified party shall have the right to
retain its own counsel, but the fees and expenses of such counsel shall be at
its own expense unless the indemnifying party and the indemnified party mutually
agree to the retention of such counsel.
(f) The indemnified party shall have the right to settle or compromise any
claim or liability subject to indemnification under this Section 11.1, and to be
indemnified from and against all Losses resulting therefrom, unless the
indemnifying party, within sixty (60) calendar days after receiving written
notice of the claim or liability in accordance with Section 11.1(e) above,
notifies the indemnified party that it intends to defend against such claim or
liability and undertakes such defense, or, if required in a shorter time than
sixty (60) calendar days, the indemnifying party makes the requisite response to
such claim or liability asserted.
(g) An indemnified party shall, subject to its reasonable business needs,
use reasonable efforts to minimize the amount of any Losses for which
indemnification is sought from the indemnifying party hereunder.
(h) Notwithstanding any other provision of this Agreement: The indemnified
party shall have the right to participate in such defense at its own expense. If
the indemnified party reasonably determines in its judgment that the counsel
selected by the indemnifying party is not capable of properly defending the
third party claim or would have a conflict of interest in doing so, then the
indemnified party may employ separate counsel to represent or defend it in any
such third party claim and the indemnifying party shall pay the reasonable fees
and disbursements of such separate counsel. The indemnifying party shall consult
with the indemnified party at reasonable intervals, upon the indemnified party's
reasonable request for such consultation, with respect to such third party
claims. The indemnifying party shall have no right in connection with any such
defense or the resolution of any such third party claim to impose any cost,
restriction, limitation or condition of any kind that compromises the
indemnified party hereunder.
38
(i) Except for claims based on fraud, the indemnification provisions of
this Article 11 shall be the sole and exclusive monetary remedies of Seller and
Purchaser with respect to any matters for which indemnification is provided in
this Article 11 and shall preclude any indemnified party from seeking any other
monetary remedy from the other party hereto in respect of any such matters.
11.2 AS-IS Sale; Waiver of Warranties. EXCEPT AS SET FORTH IN THIS
--------------------------------
AGREEMENT, Purchaser expressly acknowledges that the Assets and Liabilities are
being sold and accepted on an "AS IS, WHERE IS" basis, and are being accepted
without any representation or warranty. As part of Purchaser's agreement to
purchase and accept the Assets and Liabilities AS IS, WHERE IS, and not as a
limitation on such agreement, TO THE FULLEST EXTENT PERMITTED BY LAW AND EXCEPT
AS SET FORTH IN THIS AGREEMENT, PURCHASER HEREBY UNCONDITIONALLY AND IRREVOCABLY
WAIVES AND RELEASES ANY AND ALL ACTUAL OR POTENTIAL RIGHTS PURCHASER MIGHT HAVE
AGAINST SELLER REGARDING ANY FORM OF WARRANTY, EXPRESS OR IMPLIED, OF ANY KIND
OR TYPE, RELATING TO THE ASSETS AND LIABILITIES. SUCH WAIVER AND RELEASE IS, TO
THE FULLEST EXTENT PERMITTED BY LAW AND EXCEPT AS SET FORTH IN THIS AGREEMENT,
ABSOLUTE, COMPLETE, TOTAL AND UNLIMITED IN EVERY WAY. SUCH WAIVER AND RELEASE
INCLUDES TO THE FULLEST EXTENT PERMITTED BY LAW AND EXCEPT AS SET FORTH IN THIS
AGREEMENT, BUT IS NOT LIMITED TO, A WAIVER AND RELEASE OF EXPRESS WARRANTIES
(EXCEPT THOSE SET FORTH IN THIS AGREEMENT), IMPLIED WARRANTIES, WARRANTIES OF
FITNESS FOR A PARTICULAR USE, WARRANTIES OF MERCHANTABILITY, WARRANTIES OF
HABITABILITY, STRICT LIABILITY RIGHTS AND CLAIMS OF EVERY KIND AND TYPE,
INCLUDING BUT NOT LIMITED TO CLAIMS REGARDING DEFECTS WHICH WERE NOT OR ARE NOT
DISCOVERABLE, ALL OTHER EXTANT OR LATER CREATED OR CONCEIVED OF STRICT LIABILITY
OR STRICT LIABILITY TYPE CLAIMS AND RIGHTS.
ARTICLE 12
MISCELLANEOUS
12.1 Survival. The parties' respective representations and warranties
--------
contained in this Agreement shall survive until expiration of the times
prescribed for claims for indemnification under Article 11, and thereafter
neither party may claim any damage for breach thereof. The covenants contained
in this Agreement shall survive until the end of the time period stated in such
covenant, and for purposes of the following sections, shall survive
indefinitely: Sections 2.3, 2.4, 3.2, 4.3 and 7.2(b).
12.2 Assignment. Neither this Agreement nor any of the rights, interests or
----------
obligations of either party hereunder may be assigned by either of the parties
hereto without the prior written consent of the other party.
12.3 Binding Effect. This Agreement and all of the provisions hereof shall
--------------
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Except as expressly provided in
Section 11.1, the parties hereto intend that nothing in this Agreement, express
or implied, is intended to or shall confer upon any other person, including,
without limitation, any employee or former employee of Seller, any legal or
equitable right, benefit or remedy of any nature whatsoever, including without
limitation, any rights of employment or benefits for any specified period, under
or by reason of this Agreement.
12.4 Public Notice. From and after the date hereof until the Closing Date,
-------------
neither Purchaser nor Seller shall directly or indirectly, make, or cause to be
made, any press release for general
39
circulation, public announcement or disclosure or issue any notice or
communication generally to employees with respect to any of the transactions
contemplated hereby without the prior consent of the other party, which consent
shall not be unreasonably withheld or delayed. Consent shall be deemed granted
by the party from which it is sought unless such party objects within two (2)
Business Days after receipt of the proposed press release or other announcement
from the party requesting consent. Seller and Purchaser shall cooperate
reasonably to produce public announcements to be released simultaneously within
five (5) calendar days after the date of this Agreement. Nothing herein shall
limit the right of Seller's or Purchaser's parent, after the initial press
release regarding the transaction, to refer to this transaction in any document
required to be filed with the Securities and Exchange Commission or in its
annual report to shareholders. Nothing in this Agreement shall limit the right
of either party to make any disclosure required by law, subject to the
provisions of Section 7.2(c) or (d).
12.5 Notices. All notices, requests, demands, consents and other
-------
communications given or required to be given under this Agreement and under the
related documents shall be in writing and delivered to the applicable party at
the address indicated below:
If to Seller: RBC Centura Bank
------------ 0000 Xxxxxxx Xxx.
Xxxxx Xxxxx, XX 00000
Attention: Xxxx Xxxxxxx, Assistant General Counsel
Facsimile No. 000-000-0000
If to Purchaser: First Bank
000 Xxxxx Xxxx Xxxxxx
Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, Chief Executive Officer
Facsimile No. 000-000-0000
With copies to: Xxxxxxxx, Xxxxxxxx & Xxxxxx, P.A.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
Xxxxx X. Xxxxxxx, Esq.
Facsimile No. 000-000-0000
or, as to each party at such other address as shall be designated by such party
in a written notice to the other party complying as to delivery with the terms
of this Section. Any notices shall be in writing, including telegraphic or
facsimile communication, and may be sent by registered or certified mail, return
receipt requested, postage prepaid, or by fax, or by overnight delivery service.
Notice shall be effective upon actual receipt thereof.
12.6 Incorporation. All Exhibits and Schedules attached hereto and to which
-------------
reference is made herein are incorporated by reference as if fully set forth
herein and shall be part of the defined term "Agreement".
12.7 Governing Law. This Agreement and the legal relations between the
-------------
parties shall be governed by and interpreted in accordance with the laws of the
State of North Carolina applicable to contracts made and to be performed
entirely within the State of North Carolina.
12.8 Entire Agreement. This Agreement contains the entire understanding of
----------------
and all agreements between the parties hereto with respect to the subject matter
hereof and supersedes any prior or contemporaneous agreement or understanding,
oral or written, pertaining to any such matters which
40
agreements or understandings shall be of no force or effect for any purpose.
Following the execution of this Agreement, representatives of Purchaser and
Seller may prepare an operating agreement, conversion plan, or similar document
relating to the methods of consummating the transactions contemplated by this
Agreement, but no such document shall amend this Agreement or waive any of its
provisions unless it (a) explicitly describes a "waiver" or "amendment" and
refers to the particular provision of this Agreement being waived or amended,
and (b) is executed in the manner provided in Section 12.11. Unless there is an
effective amendment or waiver under the standards of this Section 12.8, the
provisions of this Agreement shall prevail if there is any inconsistency between
this Agreement and any operating agreement, conversion plan, or similar document
relating to the methods of consummating the transactions contemplated by this
Agreement.
12.9 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.10 Headings. The headings used in this Agreement are inserted for
--------
purposes of convenience of reference only and shall not limit or define the
meaning of any provisions of this Agreement.
12.11 Waiver and Amendment. The waiver of any breach of any provision under
--------------------
this Agreement by any party shall not be deemed to be a waiver of any preceding
or subsequent breach under this Agreement. No such waiver shall be effective
unless in writing. This Agreement may not be amended or supplemented in any
manner except by mutual agreement of the parties and as set forth in a writing
signed by the parties hereto or their respective successors in interest.
12.12 Expenses. Except as specifically provided otherwise in this
--------
Agreement, each party shall bear and pay all costs and expenses, including
without limitations brokerage and legal fees, which it incurs, or which may be
incurred on its behalf in connection with the preparation of this Agreement and
consummation of the transactions described herein, and the expenses, fees, and
costs necessary for any approvals of the appropriate regulatory authorities.
12.13 Severability. If any provision of this Agreement or the application
------------
of any such provision to any person or circumstance shall be held invalid,
illegal or unenforceable in any respect by a court of competent jurisdiction,
such invalidity, illegality or unenforceability shall not affect any other
provision hereof.
[THE NEXT PAGE IS A SIGNATURE PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
RBC CENTURA BANK
By: /s/ Xxxxx X. Early
----------------------------------------------
Name: Xxxxx X. Early
Title: Vice President - Strategic Initiative
FIRST BANK
By: /s/ Xxxxx X. Xxxxxx
----------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: President
42
