PURCHASE AND ASSUMPTION AGREEMENT
BY AND BETWEEN
HOUSEHOLD BANK, f.s.b., AS SELLER
AND
SUN BANCORP, INC., AS BUYER
DATED AS OF JULY 17, 1998
TABLE OF CONTENTS
Section I Purchase of Assets Page
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1.01 Purchase and Sale of Assets 5
1.02 Calculation of Purchase Price 7
1.03 Allocation of Purchase Price 9
Section II Assumption of Liabilities
2.01 Assumption of Liabilities 10
Section III Representations and Warranties
3.01 Representations and Warranties of Seller 11
3.02 Representations and Warranties of Buyer 16
Section IV Pre-Closing Covenants
4.01 Investigations 17
4.02 Operations in the Ordinary Course 18
4.03 Deposit Pricing 19
4.04 Employees 19
4.05 Insurance 22
4.06 Regulatory Approvals 22
4.07 Assignments of Leases and Assumed Contracts 22
4.08 Best Efforts 23
4.09 Notice of Claims 23
4.10 Casualty to the Branches 23
4.11 Notices to Customers 23
4.12 Disclosures 23
4.13 Conversion 24
4.14 Non-solicitation 24
4.15 Materials 24
4.16 Buyer's Certificate of Deposit 24
4.17 Xxxxxxxxx Lease 25
Section V Post-Closing Items
5.01 Returned Items 25
5.02 Transfer of Safe Deposit Box Business 28
5.03 Assistance Clause 29
Section VI Closing
6.01 Closing Date 29
6.02 Updating Schedules 30
6.03 Actions at Closing 30
6.04 Method of Settlement 31
6.05 Adjustment of Expenses and Fees 32
Section VII Conditions to Obligations of Buyer
7.01 Covenants 32
7.02 Representations 32
7.03 Litigation 33
7.04 Consents 33
Section VIII Conditions to Obligations of Seller
8.01 Covenants 33
8.02 Representations 33
8.03 Litigation 34
Section IX Conditions to Obligations of Both Parties
9.01 Conditions to Obligations of Both Parties 34
Section X Termination
10.01 Termination 34
SECTION XI Indemnification
11.01 Indemnification by Seller 35
11.02 Indemnification by Buyer 36
Section XII Miscellaneous
12.01 Notices 37
12.02 Expenses 37
12.03 Entire Agreement, Modifications 37
12.04 Successors and Assigns 38
12.05 Counterparts 38
12.06 Governing Law 38
12.07 Arbitration of Disputes 38
12.08 Enforcement 38
12.09 Construction 39
12.10 Severability 39
12.11 Waiver 39
12.12 Remedies Cumulative 39
12.13 Parties in Interest 39
PURCHASE AND ASSUMPTION AGREEMENT
This PURCHASE AND ASSUMPTION AGREEMENT (the "Agreement") is
made and entered into as of the 17th day of July, 1998, by and between Household
Bank, f.s.b., a federally chartered savings bank with its principal office at
000 Xxxx Xxxx Xxxx, Xxxx Xxxx, XX 00000 ("Seller"), and Sun Bancorp, Inc., a New
Jersey corporation with its principal office at 000 Xxxxxx Xxxxxx, Xxxxxxxx, Xxx
Xxxxxx ("Buyer").
W I T N E S S E T H:
WHEREAS, subject to the approval of bank regulatory authorities as set
forth in Section 4.06 hereof, Seller desires to sell certain assets and transfer
certain liabilities, and Buyer desires to purchase certain assets and assume
certain liabilities (the "Transaction") associated with certain of Seller's
branch offices as set forth on the attached Schedule A hereto (the "Branches,").
NOW, THEREFORE, for and in consideration of the mutual promises and
agreements set forth herein, the parties hereto agree as follows:
DEFINITIONS
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"Account Loans" means all loans of Seller on the security of the
Accounts, including interest, fees and unposted activity.
"Accounts" means all deposit liabilities associated with the Branches
as shown on the books and records of Seller as of the close of business on the
Closing Date, including accrued but unpaid interest, fees and unposted activity
related to those liabilities, and including closed accounts, but excluding
accounts which Seller cannot lawfully transfer to Buyer or which are subject to
or involved in any form of litigation, including accrued but unpaid interest,
fees and unposted activity.
"Assumed Contracts" means Seller's rights under or created by all
equipment leases, maintenance contracts, and other contracts relating to the
Branches, which are assumed by Buyer.
"Branch Leases" means leases where Seller is lessee of real property
upon which a Branch is operated.
"Branches" means Seller's branch offices set forth on Schedule A.
"Business Day" means any day other than (a) Saturday or Sunday, or (b)
a day in which financial institutions in the state of Delaware are authorized or
required by law, executive order or governmental decree to be closed.
"Buyer's CD" has the meaning set forth in Section 4.16 of this
Agreement.
"Cash on Hand" means all teller working cash, xxxxx cash, ATM cash,
cash in transit and vault cash at the Branches as of the close of business on
the closing Date.
"Classified Loans" means loans for which full payment of principal or
interest is no longer anticipated and which are deemed substandard, doubtful or
a loss according to regulatory standards.
"Closing Date" means December 17, 1998.
"Code" means the Internal Revenue Code of 1986.
"Commercial Loans" means all of Seller's secured and unsecured
commercial loans carried on the books of Seller with respect to Seller's banking
business as of the close of business on the Closing Date, plus accrued interest,
fees and unposted activity.
"Commercial Repurchase Agreements" means the obligations and
liabilities of Seller arising from and after the Closing Date under any
commercial repurchase agreements entered into by the Seller.
"Consumer Loans" means all of Seller's secured and unsecured consumer
loans carried on the books of Seller with respect to the Branches, including
loans made on the security of the obligor's home equity in residential real
estate and other consumer loans, as of the close of business on the Closing
Date, plus accrued interest, fees and unposted activity.
"Contractual Delinquency Terms" means the method of determining
delinquency using the payment due dates under the Accountholder agreement. An
account is contractually delinquent if a payment equal to 90% or more of the
scheduled payment is not received by its due date.
"Conversion" means the conversion of the data for the Accounts from
Seller's data processing system to Buyer's data processing system as described
in Section 4.13 of this Agreement.
"Designated Employees" has the meaning set forth in Section 4.04 of
this Agreement.
"Employees" has the meaning set forth in Section 4.04 of this
Agreement.
"Laws" means all federal, state, city and county laws, rules,
regulations, orders, judgments, injunctions, decrees and awards (and
interpretations thereof) applicable to either the parties hereto or the
transactions contemplated hereby.
"Leases" means, collectively, the Branch Leases and the Tenant Leases.
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"Letters of Credit" means obligations and liabilities of Seller arising
from and after the Closing Date under any letters of credit issued by Seller in
connection with any Commercial Loans.
"Liabilities" means the liabilities described in Section 2.01.
"Loan Instruments" means the documentation evidencing the Loans.
"Loans" or "Loan Portfolio" means the Account Loans, Overdraft Loans,
Consumer Loans and Commercial Loans.
"Mistakes-in-Fact" has the meaning set forth in Section 1.02.
"Net Book Value" means net book value as determined from the books and
records of Seller, in accordance with regulatory accounting principles
consistently applied.
"Nonperforming Asset" means an asset originally acquired to earn income
that is currently not earning income.
"Nonperforming Loans" means loans that are ninety (90) days
contractually past due or on nonaccrual status.
"Obligors" means the obligors, makers, co-makers, guarantors, endorsers
of debtors on the Loans.
"Operational Staff" has the meaning set forth in Section 4.04 of this
Agreement.
"OTS" means the Office of Thrift Supervision.
"Overdraft Loans" means Sellers' unsecured overdraft loans, including
negotiable order of withdrawal line of credit account, relating to the Accounts,
as of the close of business on the Closing Date, plus accrued interest, fees and
unposted activity.
"Person" means any individual, corporation, partnership, trust,
organization, firm or other entity, or any governmental or regulatory agency of
other body.
"Personal Property" means all furniture, fixtures, equipment,
improvements and other items of tangible personal property located at the
Branches and owned by the Seller as of the close of business on the Closing
Date, including without limitation any existing signage fixtures, and all
personal property used in connection with the safe deposit box business being
transferred to Buyer under the Agreement.
"Preliminary Purchase Price" has the meaning set forth in Section
1.02(b).
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"Premium Adjustment Amount" has the meaning set forth in Section 1.02
(a) of this Agreement .
"Premium Adjustment Date" has the meaning set forth in Section 1.02(a)
of this Agreement.
"Purchase Price" has the meaning set forth in Section 1.02(a).
"Records" means all records and original documents relating to the
Assets and Liabilities being transferred to Buyer under the Agreement, excluding
Seller's transactional records.
"Regulatory Accounting Principles" means accounting principles set
forth by financial institution regulators for use by regulated financial
institutions.
"Related Accounts" has the meaning set forth in Section 2.01 (f).
"Residual Assets" has the meaning set forth in Section 1.01 (l) of this
Agreement.
"Returned Items" has the meaning set forth in Section 5.01 of this
Agreement.
"Safe Deposit Box Business" means all safe deposit box business located
at the Branches as of the close of business on the Closing Date.
"SAIF" means the Saving Association Insurance Fund of the FDIC.
"Tax" or "Taxes" has the meaning set forth in Section 11.01 of this
Agreement.
"Taxpayer Information" has the meaning set forth in Section 5.01(i) of
this Agreement.
"Tenant Leases" means leases where Seller is lessor or sublessor of
real property as any Branch.
"Training Program" has the meaning set forth in Section 4.04 of this
Agreement.
"Transaction" means the transaction contemplated by this Agreement.
"Withholding Obligations" has the meaning set forth in Section 5.01(e)
of this Agreement.
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ARTICLE I
PURCHASE OF ASSETS
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Section 1.01 Purchase and Sale of Assets. Subject to the terms and
conditions set forth herein, Seller agrees to sell, convey, assign and transfer
to Buyer, and Buyer agrees to purchase and accept, all right, title and interest
of Seller in and to the following assets (collectively, the "Assets") as of the
close of business on the Closing Date (as defined in Section 6.01) except as
otherwise specifically set forth herein:
(a) Records. All records and original documents relating to
the Assets and Liabilities (as defined in Section 2.01) being transferred to
Buyer hereunder, excluding Seller's transactional records (collectively, the
"Records"); provided that should Buyer require records or other information
retained by Seller, Seller shall promptly perform the required research on
behalf of Buyer and make copies of, and excerpts from, such records as
reasonably required by Buyer, and should Seller require records or other
information provided to Buyer, Buyer shall promptly perform the required
research on behalf of Seller and make copies of, and excerpts from, such records
as reasonably required by Seller. The cost of such research shall be borne by
the requesting party, based on the schedule of fees for such services provided
to customers of the party providing such records.
(b) Leases. Assignment of Seller's right, title and interest
in and to (i) any lease where Seller is the lessee (the "Branch Leases") of real
property upon which the Branches are operated, as set forth in Schedule A
hereto, and (ii) any lease or sublease where Seller is the lessor or sublessor
of real property at any Branch (the "Tenant Leases"). True and complete copies
of the Branch Leases and Tenant Leases (collectively, the "Leases") have been
delivered by Seller to Buyer.
(c) Personal Property. All furniture, fixtures, equipment,
improvements and other items of tangible personal property owned by the Seller
located at the Branches as of the close of business on the Closing Date,
including without limitation any existing signage fixtures, and all personal
property owned by the Seller used in connection with the safe deposit box
business being transferred to Buyer hereunder (collectively, the "Personal
Property"). A true and complete list, to the best of Seller's knowledge, of the
Personal Property as of June 30, 1998, is set forth on Schedule C hereto. The
parties acknowledge that Schedule C shall be updated as of the Closing Date in
accordance with Section 6.02 hereof. If, prior to the Closing Date, an item of
Personal Property is stolen, destroyed or otherwise lost, such item shall be
excluded from the sale contemplated hereby, and the term "Personal Property" as
used herein shall exclude such item. If, prior to the Closing Date, an item of
Personal Property is damaged by fire or other casualty, such item, if reasonably
repairable, shall be sold to Buyer (in accordance with the provisions hereof)
and the insurance proceeds relating to such item, if any, shall be assigned to
Buyer, it being understood that if such item is not reasonably repairable, it
shall be excluded from the sale contemplated hereby.
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(d) Account Loans. All loans of Seller for which written
documentation of such loan facility exists on the security of the Accounts (as
defined in Section 2.01(a)) as of the close of business on the Closing Date,
plus accrued interest, fees and unposted activity (the "Account Loans"). A true
and complete list, to the best of Seller's knowledge, of Account Loans as of
June 30, 1998, is set forth on Schedule D hereto. The parties acknowledge that
Schedule D shall be updated as of the Closing Date in accordance with Section
6.02 hereof.
(e) Overdraft Loans. All of Seller's unsecured overdraft
loans, including negotiable order of withdrawal line of credit accounts,
relating to the Accounts, for which written documentation of such loan facility
exists, excluding loans 30 days contractually Past Due as of the close of
business on the Closing Date, plus accrued interest, fees and unposted activity
(the "Overdraft Loans"). A true and complete list of Overdraft Loans as of June
30, 1998, is set forth on Schedule E hereto. The parties acknowledge that
Schedule E shall be updated as of the Closing Date in accordance with Section
6.02.
(f) Consumer Loans. All of Seller's secured and unsecured
consumer loans carried on the books of Seller excluding loans 30 days
contractually Past Due with respect to the Branches, including loans made on the
security of the obligor's home equity in residential real estate and other
consumer loans, as of the close of business on the Closing Date, plus accrued
interest, fees and unposted activity (the "Consumer Loans"). A true and complete
list, to the best of Seller's knowledge, of Consumer Loans as of June 30, 1998,
is set forth on Schedule F hereto. The parties acknowledge that Schedule F shall
be updated as of the Closing Date in accordance with Section 6.02 hereof.
(g) Commercial Loans. All of Seller's secured and unsecured
commercial loans carried on the books of Seller excluding Nonperforming or
Classified Loans with respect to Seller's banking business as of the close of
business on the Closing Date, plus accrued interest, fees and unposted activity
(the "Commercial Loans"). A true and complete list, to the best of Seller's
knowledge, of Commercial Loans as of June 30, 1998, is set forth on Schedule G
hereto. The parties acknowledge that Schedule G shall be updated as of the
Closing Date in accordance with Section 6.02 hereof.
(h) Assumed Contracts. Seller's rights under or created by
all equipment leases, maintenance contracts, and other contracts relating to the
Branches, which contracts as of June 30, 1998, are listed on Schedule H hereto
(collectively, the "Assumed Contracts"). The Buyer shall inform Seller in
writing within thirty (30) days of the date hereof which, if any, of the Assumed
Contracts the Buyer would like the Seller to assign to the Buyer as of the
Closing Date. Buyer hereby waives any rights or interest in or with respect to
any Assumed Contracts not included by Buyer within such notice, and Seller may
proceed to cancel or terminate any such Assumed Contracts. The parties
acknowledge that Schedule H shall be updated as of the Closing Date in
accordance with Section 6.02 hereof.
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(i) Cash on Hand. All teller working cash, xxxxx cash, ATM
cash, cash in transit and vault cash at the Branches as of the close of business
on the Closing Date (the "Cash on Hand") subject to joint audit as of the
Closing Date.
(j) Safe Deposit Box Business. All safe deposit box business
located at the Branches as of the close of business on the Closing Date (the
"Safe Deposit Box Business"). A true and complete list of safe deposit boxes as
of June 30, 1998 is set forth on Schedule I hereto. The parties acknowledge that
Schedule I shall be updated as of the Closing Date in accordance with Section
6.02 hereto. Seller will also provide an inventory of the contents of previously
drilled boxes. Prior to or on the Closing Date, Seller will deliver to Buyer
copies of all safe deposit box lease agreement forms in its possession, along
with Seller's records identifying the location, lessee, lease term, and lease
rate of the safe deposit boxes at the Branches.
(k) Consignment Business. All consignment activities
including travelers checks, food stamps and DART tickets, as of close of
business on the Closing Date.
(l) Residual Assets. All of the remaining intangible assets
including goodwill associated with the Assets and Liabilities to be transferred
to the Buyer hereunder, prepaid expenses and security deposits, insurance
commissions receivable, and miscellaneous receivables (the "Residual Assets").
Section 1.02 Calculation of Purchase Price.
(a) The purchase price to be paid in consideration of the sale of the
Assets to, and assumption of the Liabilities by, the Buyer shall equal the
difference between (A) the outstanding balances and accrued interest on the
Accounts as of the close of business on the Closing Date and (B) the sum of (i)
the Premium, as defined below, (ii) the net book value of the Personal Property
as of the close of business on the last day of the month immediately preceding
the Closing Date, (iii) the amount of Cash on Hand, (iv) the net book value of
the Account Loans (v) the net book value of the Overdraft Loans, (vi) the net
book value of the Consumer Loans, and (vii) the net book value of the Commercial
Loans (the "Purchase Price"). The Premium is an amount equal to (i) $24,000,000
less (ii) $1,000,000 of Seller's Loan Loss Reserves, the result of which shall
be adjusted ninety days after the Closing Date (the "Premium Adjustment Date")
by (iii) the Premium Adjustment Amount. The "Premium Adjustment Amount" shall be
the product of (i) a fraction the numerator of which is $23,000,000 and the
denominator of which is the balance of the Accounts on the Closing Date, times
(ii) the amount, if any, by which the aggregate Related Account balances on the
Closing Date exceed the aggregate Related Account balances on the Premium
Adjustment Date; provided, however, that the Premium Adjustment Amount shall not
be payable with respect to any Related Account which Buyer has repriced, or has
sent notice to the Account holder about any potential repricing, between the
Closing Date and the Premium Adjustment Date. In the event that the Purchase
Price calculation in this subsection results in a positive number, Seller shall
pay Buyer the Purchase Price. In the event the Purchase Price calculation in
this
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subsection results in a negative number, Buyer shall pay Seller the absolute
value of the Purchase Price. The payment formula referred to above is for the
sole purpose of determining the amount to be paid and transferred by the Seller
to the Purchaser hereunder and shall not constitute an allocation of the
purchase price for any particular asset being transferred or liability being
assumed.
(b) Because certain components of the Purchase Price will not be
finally determinable until after the Closing Date, the party making a payment,
as determined in subsection (a) above, shall pay the other party, by wire
transfer of immediately available funds by 2:00 p.m. eastern local time on the
Closing Date an amount equal to the outstanding balances and accrued interest on
the Accounts as of the close of business on the third business day preceding the
Closing Date reduced by the sum of (i) $23,000,000 (ii) the net book value of
the Personal Property as of the close of business on the last day of the month
immediately preceding the Closing Date, (iii) the amount of Cash on Hand, (iv)
the net book value of the Account Loans, (v) the net book value of the Overdraft
Loans, (vi) the net book value of the Consumer Loans, and (vii) the net book
value of the Commercial Loans (the "Preliminary Purchase Price"). In the event
that the Preliminary Purchase Price calculation in this subsection results in a
positive number, Seller shall pay Buyer the absolute value of such number. In
the event that the Preliminary Purchase Price calculation in this subsection
results in a negative number, Buyer shall pay Seller the absolute value of such
number. The Seller shall deliver to the Buyer on the business day immediately
preceding the Closing Date a preliminary settlement statement setting forth a
calculation of the Preliminary Transfer Amount (Exhibit F).
(c) The Seller shall deliver to the Buyer no later than fifteen (15)
business days after the Closing Date a final settlement statement (Exhibit G)
setting forth a calculation of the Purchase Price (excluding the Premium
Adjustment Amount) and the difference between the Purchase Price (excluding the
Premium Adjustment Amount) and the Preliminary Purchase Price. The difference
between the Purchase Price (excluding the Premium Adjustment Amount) and the
Preliminary Purchase Price shall be paid by wire transfer of funds by the Buyer
to the Seller or by the Buyer to the Seller, as applicable, no later than
fifteen (15) days after the Closing Date. Any such amount shall accrue interest
at the Federal Funds Rate in effect on the Closing Date from the Closing Date to
the date of payment. Further, any errors on Accounts or accrued interest
thereon, or other amounts ("Mistakes-in-Fact") which are determined as of the
date of the final settlement statement shall be reconciled as of such date and
appropriate adjustments of payments shall be made to the Seller or the Buyer, as
appropriate, at such time. Notwithstanding the foregoing, or anything else
herein to the contrary, any Mistakes-in-Fact which shall be determined by the
Seller or the Buyer thereafter related to the transaction consummated under this
Agreement shall nevertheless be reconciled by adjustment or payment to the
Seller or the Buyer, as appropriate, within fifteen (15) days of such
determination, provided that any such Mistakes-in-Fact must be determined by
June 30, 1999 in order for a claim to be made with respect thereto.
(d) The Buyer shall deliver to the Seller no later than fifteen (15)
business days after the Premium Adjustment Date a statement of the Premium
Adjustment Amount (Exhibit H)
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setting forth a calculation of the Premium Adjustment Amount. If required, the
Premium Adjustment Amount shall be paid by wire transfer of funds by the Seller
to the Buyer no later than fifteen (15) days after the Premium Adjustment Date.
(e) If Seller accepts an item before the Closing Date, which item is
returned as uncollectable, and no offset of funds is available to the Buyer,
then Seller shall be liable for such item in an amount equal to the portion not
covered by offset. Adjustment to the Purchase Price will be made as necessary to
reflect Seller's liability.
As used herein, the term "net book value" shall mean net book value as
determined from the books and records of Seller, in accordance with regulatory
accounting principles, consistently applied.
Section 1.03 Allocation of Purchase Price. The Purchase Price is to be
allocated among the Assets to be purchased hereunder based upon their fair
market values and in accordance with Section 1060 of the Internal Revenue Code
of 1986 (the "Code"), such fair market values to be agreed to by the parties as
set forth in this Section 1.03.
The Purchase Price shall be allocated among the Assets as follows:
(a) Records - $1.00.
(b) Leases - The net book value as of the close of business
on the last day of the month immediately preceding the Closing Date.
(c) Personal Property - The net book value as of the Closing
Date.
(d) Account Loans and Overdraft Loans - The net book value of
such loans as of the close of business on the Closing Date.
(e) Consumer Loans - The net book value of such loans as
of the close of business on the Closing Date.
(f) Commercial Loans - The net book value of such loans
as of the close of business on the Closing Date.
(g) Assumed Contracts - The net book value as of the Closing
Date.
(h) Cash on Hand - The amount of all teller working cash,
xxxxx cash, ATM cash and vault cash in the Branches as of the close of business
on the Closing Date.
(i) Safe Deposit Box Business - $1.00.
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(j) Residual Assets - The balance of the Purchase Price
remaining after allocation to the Assets in subsections (a) through (i) above.
The parties each agree to file all applicable Tax (as defined in
Section 11.01 hereof) returns and other required Tax-related schedules and
documents in accordance with the fair market values and allocations set out
above and will not adopt or otherwise assert Tax positions inconsistent
therewith.
ARTICLE II
ASSUMPTION OF LIABILITIES
-------------------------
Section 2.01 Assumption of Liabilities. Subject to the terms and
conditions set forth herein, Buyer agrees to assume and discharge, by
documentation reasonably satisfactory as to form and substance to Seller, as of
the close of business on the Closing Date, the following liabilities
(collectively, the "Liabilities"):
(a) Deposit Liabilities. All deposit liabilities associated
with the Branches, as shown on the books and records of Seller as of the close
of business on the Closing Date, including accrued but unpaid interest and
unposted activity, but excluding accounts which Seller cannot lawfully transfer
to Buyer or which are subject to or involved in any form of litigation,
including accrued but unpaid interest and unposted activity (collectively, the
"Accounts"). A true and complete description of the Accounts, reflecting the
types and aggregate amounts of such Accounts, as of June 30, 1998, is set forth
on Schedule J hereto. The parties acknowledge that on the Closing Date, Seller
shall deliver to Buyer a revised Schedule J, updated as of a date two (2) days
prior to the Closing Date. The parties further acknowledge that Schedule J shall
be updated as of the Closing Date in accordance with Section 6.02 hereof. Prior
to or on the Closing Date, Seller will deliver to Buyer Seller's records
identifying the accountholders with respect to the Accounts. As used in this
Section 2.01(a), the term "deposit liabilities" shall include all of the deposit
products offered by Seller out of the Branches, including, without limitation,
passbook accounts, statement accounts, checking accounts, money market accounts,
escrow accounts and certificates of deposit. The parties acknowledge that
Accounts shall not include: (i) deposits of any affiliate of Seller, (ii)
deposits instituted solely in order to facilitate payment of funds under a
contractual relationship between Seller or any of its affiliates and a third
party, or (iii) deposits instituted solely in order to secure credit cards
issued by an affiliate of Seller.
(b) Leases. The obligations and liabilities of Seller arising
from and after the Closing Date under any Lease which is assigned to Buyer.
(c) Assumed Contracts. The obligations and liabilities of
Seller arising from and after the Closing Date under any Assumed Contract which
is assigned to Buyer.
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(d) Letters of Credit. The obligations and liabilities of
Seller arising from and after the Closing Date under any letters of credit (the
"Letters of Credit") issued by Seller in connection with any Commercial Loans.
(e) Commercial Deposits or Repurchase Agreements. The
obligations and liabilities of Seller arising from and after the Closing Date
under any commercial deposit or repurchase agreements (the "Commercial Deposit
or Repurchase Agreements") entered into by Seller.
(f) Related Accounts. All liabilities associated with
certificates of deposit, demand accounts, and Thrift Club money market accounts
held in the name of (i) employees, retired employees or directors of Beneficial
National Bank, (ii) employees, retired employees or directors of entities that
were, as of June 29,1998, affiliates of Beneficial National Bank, or (iii) the
spouse, children or parents of any of the persons set forth in (i) or (ii) (the
accounts described in (i), (ii) and (iii) collectively referred to as the
"Related Accounts"). A true and complete list, to the best of Seller's
knowledge, of the Related Accounts as of June 30, 1998, is set forth on Schedule
L hereto.
(g) General Liabilities. Miscellaneous liabilities related to
the night deposit and Safe Deposit Business.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
------------------------------
Section 3.01 Representations and Warranties of Seller. Seller
represents and warrants to Buyer, as of the date hereof and as of the Closing
Date, as follows:
(a) Good Standing and Corporate Power. Seller is a federal
savings bank duly organized, validly existing and in good standing under the
laws of the United States, the deposits of which are insured by the Savings
Association Insurance Fund (the "SAIF") of the FDIC (except as otherwise
disclosed to Buyer), and has the requisite corporate power and authority to
carry on its business as the same is being conducted at the Branches and to
execute and deliver this Agreement, and to carry out all the transactions
contemplated hereby. Seller is not a "foreign person" as defined in Section 1445
of the Internal Revenue Code of 1986, as amended, and any related regulations.
(b) Authorization. The execution, delivery and performance by
Seller of this Agreement, and the consummation by Seller of the transactions
contemplated hereby, have been duly and validly authorized and approved by the
Board of Directors of Seller. All requisite corporate actions have been taken so
that this Agreement is a legal, valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms.
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(c) Non-Contravention. Subject to the receipt of all
necessary regulatory approvals and all required consents, the execution and
delivery of this Agreement and the other instruments and documents contemplated
hereby do not and will not conflict with, violate, breach or cause a default
under the charter or bylaws of Seller or under any agreement or instrument to
which Seller is a party or by which it is bound, or any applicable Laws (as
defined in Section 12.08); provided that, prior to the Closing Date, Seller
shall have obtained the consents and approvals referred to in Section 3.02(d)
hereof .
(d) Consents to Transaction. The consummation of the
transactions contemplated by this Agreement does not require Seller to obtain
the consent or approval of any Person (as defined in Section 12.08), other than
the Office of Thrift Supervision ("OTS") which must approve the transaction and
the Seller's CRA Strategic Plan.
(e) Compliance with Laws, Licenses and Permits. In operating
the Branches, Seller has not materially violated any applicable Laws. Seller has
obtained any and all licenses, permits and approvals from any regulatory or
governmental agency required in order to conduct its business at the Branches.
Seller makes no representation concerning compliance of any equipment or systems
with year 2000 requirements.
(f) Litigation. There are no governmental or administrative
proceedings or other proceedings, litigation, judgments or claims pending or to
the best of Seller's knowledge, threatened against Seller arising out of
Seller's operation of the Branches, materially affecting any of the Assets or
Liabilities, or materially affecting the ability of Buyer or Seller to carry out
this Agreement, or any of the transactions contemplated hereby, or which will
materially affect Buyer or its operation of the Branches after the Closing Date,
except as disclosed on Schedule K hereto.
(g) Books and Records. The books and records of the Seller
respecting the operations of the Branches and the Assets and Liabilities
accurately reflect, in accordance with regulatory accounting principles
consistently applied, the net book value of each of the Assets and Liabilities
being transferred to Buyer hereunder, including without limitation the Personal
Property, the amount of the Cash on Hand, the outstanding principal balance of
each of the Account Loans, Overdraft Loans, Consumer Loans, and Commercial
Loans, the total balance of each Account, and the net book value of each of the
other Assets and Liabilities being transferred to Buyer hereunder.
(h) Schedules. Schedule C hereto contains an accurate and
complete description of each item of the Personal Property, including, without
limitation, all furniture, fixtures, equipment and other items of tangible
personal property located at the Branches, together with all personal property
used in connection with the Safe Deposit Box Business being transferred
hereunder. Schedule D hereto contains an accurate and complete description of
the Account Loans. Schedule E hereto contains an accurate and complete
description of the Overdraft Loans. Schedule F hereto contains an accurate and
complete description of the Consumer Loans. Schedule G hereto contains an
accurate and complete description of the
12
Commercial Loans. Schedule H hereto contains an accurate and complete
description of the Assumed Contracts. Schedule I hereto contains an accurate and
complete description of safe deposit boxes. Schedule J hereto contains an
accurate and complete description of each Account. Schedule L contains an
accurate and complete description of the Related Accounts. Each of the Schedules
X, X, X, X, X, X, X, X, X and L hereto will be updated within thirty (30) days
after the Closing Date in accordance with Section 6.02 hereof and will be true
and correct in all material respects as of the Closing Date.
(i) Leases. The Branch Leases associated with the Leased
Branches give Seller the right to occupy the building and land comprising the
Leased Branches. Seller has delivered to Buyer a true and correct copy of all
Branch Leases and all attachments, amendments and addenda thereto. To the best
of Seller's knowledge, the Branch Leases constitute legal, valid, binding and
assignable leasehold interests of Seller in all of the buildings, improvements
and land comprising each of the Leased Branches, free and clear of any material
encumbrances. Seller is in material compliance with its obligations and is not
in default under any of the Branch Leases, nor has it encumbered or placed any
liens on such leases.
(j) Personal Property. To the best of Seller's knowledge, the
Personal Property is in good working condition, and the Records reflect the true
and accurate net book value of the Personal Property in accordance with
regulatory accounting principles consistently applied, provided, however, that
Seller makes no representation concerning compliance of any equipment or systems
with year 2000 requirements.
(k) Assumed Contracts. To the best of Seller's knowledge, the
Assumed Contracts constitute the legal, valid and binding obligations of the
parties thereto, enforceable in accordance with their terms. Seller is not in
default under any of the Assumed Contracts, and no other party to any of the
Assumed Contracts is in default thereunder. Seller has delivered to Buyer true
and correct copies of each of the Assumed Contracts that are written, and all
attachments, amendments and addenda thereto. Seller has provided to Buyer a
description of each of the Assumed Contracts that are not written.
(l) Loans. The following are true statements with respect to
the Account Loans, Overdraft Loans, Consumer Loans, and Commercial Loans
(collectively, the "Loans" or the "Loan Portfolio"):
(i) Each of the Loans is a legal, valid and binding
obligation of the obligor, maker, co-maker, guarantor, endorser or
debtor (such Persons referred to herein as "Obligors") thereunder,
evidenced by legal, valid and binding instruments (the "Loan
Instruments") executed by the respective Obligors, each of whom at the
time of such execution had capacity to contract, and any signature on
any Loan Instrument is the true signature of the Obligor on the Loan
involved. Every extension of credit by Seller pursuant to the Loan
Instruments and all of Seller's actions in connection with the Loans
have been administered by Seller in compliance in all material
respects with all
applicable Laws, and each of the Loans is enforceable in accordance
with the terms of the Loan Instruments (except as enforceability may
be limited by bankruptcy laws and other laws of similar nature
relating to creditors' rights), and to the best of Seller's knowledge
each of the Loans is not subject to any defense, counterclaim or
set-off of any kind.
(ii) Seller is not in default under any of the Loans and each
of the Loans may be assigned to Buyer without the approval or consent
of any Obligor.
(iii) To the best of Seller's knowledge, each Account Loan is
properly and fully secured by an Account of Seller being assumed by
Buyer hereunder, such Account is indicated on the Loan Instrument
relating to such Loan, and the security interest with respect to each
Account Loan is a legal, valid and binding lien on such Account,
enforceable by Buyer in accordance with its terms (except as
enforceability may be limited by bankruptcy laws and other laws of
similar nature relating to creditors' rights).
(iv) To the best of Seller's knowledge, the security interest
with respect to each Consumer Loan, Overdraft Loan, and Commercial
Loan (if Seller's Records reference a security interest in collateral
with respect to any such Loan) is a legal, valid and binding lien on
such collateral, enforceable by Seller in accordance with its terms
(except as enforceability may be limited by bankruptcy laws and other
laws of similar nature relating to creditors' rights).
(v) Within five (5) days after the Closing Date, Seller will
deliver to Buyer Seller's records with respect to the Account Loans
and the Overdraft Loans, including all original contracts or copies
thereof, and all other documentation in Seller's possession relating
to such Loans and the collateral securing the Account Loans.
(vi) Within five (5) days after the Closing Date, Seller will
deliver to Buyer Seller's records with respect to the Consumer Loans
and the Commercial Loans, including all original contracts or copies
thereof, and all other documentation relating to such Loans and the
collateral, if any, securing such Loans.
(m) Accounts. To the best of Seller's knowledge, all of the
Accounts were originated and have been administered in compliance, in all
material respects, with the documents governing the relevant type of Account and
all applicable Laws. Seller has properly accrued interest on the Accounts and
the records respecting the Accounts accurately reflect such accruals of
interest. Seller has delivered to Buyer a true and complete copy of each of the
documents governing the Accounts and a true and correct copy of the current
account forms for each of the types of Accounts offered by Seller out of the
Branches.
(n) Employees. None of the Designated Employees, as defined
in Section 4.04(b), is a member of any labor union or is otherwise subject to
collective bargaining. Seller
14
is not a party to any contract, written or oral, express or implied, with any of
such Designated Employees other than those listed on Schedule N, nor has Seller
created any conditions with respect to which any contract may be implied. Seller
has not entered into any agreement or otherwise made any commitment or
representation to any of such Designated Employees with respect to their
employment by Buyer. To the best of Seller's knowledge, except as disclosed on
Schedule O, there are no claims (statutory or otherwise), demands, proceedings
or other actions pending or threatened against Seller by any of such employees.
As of the Closing Date, Seller will have provided or will provide all required
notification under the Consolidated Omnibus Budget Reconciliation Act of 1985
("COBRA") to all former employees of Seller, including Designated Employees who
have terminated employment with Seller, and to all other persons who became
"qualified beneficiaries" under COBRA with respect to any group health plans
maintained by Seller for its employees, and Seller will have provided or will
provide any required COBRA coverage to all such former employees and other
qualified beneficiaries of Seller who elected COBRA coverage within the time
period specified by COBRA and the regulations promulgated thereunder.
(o) No Broker. Except as otherwise disclosed on Schedule P,
no agent, broker, investment banker or other Person acting on behalf or under
authority of Seller is or will be entitled to any broker's or finder's fee or
any other commission or similar fee directly or indirectly in connection with
any of the transactions contemplated by this Agreement.
(p) Regulatory Capital and Condition. Seller is in compliance
with all applicable capital standards as of the date hereof, and has no reason
to believe that it will be unable to obtain all required regulatory approvals
for the transactions contemplated herein solely as a result of its current level
of regulatory capital. As of the date hereof, to the best of Seller's knowledge,
there is no pending or threatened legal or governmental proceedings against
Seller or any affiliate of Seller that would affect Seller's ability to obtain
the required regulatory approvals or satisfy any of the other conditions
required to be satisfied in order to consummate the transactions contemplated
hereby.
(q) Community Reinvestment Act. Seller is in compliance in
all material respects with the Community Reinvestment Act and its implementing
regulations and, to the best of Seller's knowledge, there are no threatened or
pending actions, proceedings, or allegations by any person or regulatory agency
which may cause bank regulatory authorities to deny any application required to
be filed pursuant to Section 4.07 hereof. In addition, Seller has not been
advised of any supervisory concerns regarding its compliance with the Community
Reinvestment Act.
(r) Currency Transaction Reports. Seller has filed all
Currency Transaction Reports with respect to all transactions required to be
reported under the Bank Secrecy Act and regulations adopted pursuant thereto.
(s) Information Reporting. With respect to the Accounts,
Seller has (i) performed "due diligence" within the meaning of Section 6676(b)
of the Code, as amended,
15
and applicable regulations for information returns required to be filed on or
before December 31, 1989, and (ii) complied with specified information reporting
requirements pursuant to Section 6723 of the Code and any applicable regulations
thereunder, or established "reasonable cause" pursuant to Section 6724 of the
Code for information returns required to be filed on or after December 31, 1989.
(t) General. No representation or warranty by Seller
contained in this Agreement (including without limitation the Schedules hereto)
contains any untrue statement of fact or omits any statement of fact necessary
to make the statements herein not materially misleading.
Section 3.02 Representations and Warranties of Buyer. Buyer represents
and warrants to Seller, as of the date hereof and as of the Closing Date, as
follows:
(a) Good Standing and Corporate Power. Buyer is a New Jersey
corporation duly organized, validly existing and in good standing under the laws
of New Jersey, the deposits of which are insured by the SAIF and BIF Insurance
Fund of the FDIC, and has the requisite corporate power and authority to
execute, deliver and perform this Agreement and all transactions contemplated
hereby.
(b) Authorization. The execution, delivery and performance by
Buyer of this Agreement, and the consummation by Buyer of the transactions
contemplated hereby, have been duly and validly authorized and approved by the
Board of Directors of Buyer. All requisite corporate actions have been taken so
that this Agreement is a legal, valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms.
(c) Non-Contravention. Subject to the receipt of all
necessary regulatory approval and all required consents, the execution and
delivery of this Agreement, and the other instruments and documents contemplated
hereby, do not and will not conflict with, violate, breach or cause a default
under the articles of incorporation or bylaws of Buyer or under any agreement or
instrument to which Buyer is a party or by which it is bound, or any applicable
Laws as defined at Section 12.08; provided that, prior to the Closing Date,
Buyer shall have obtained the consents and approvals referred to in Section
3.02(d) hereof.
(d) Consents to Transaction. The consummation of the
transactions contemplated by this Agreement do not require Buyer to obtain the
prior consent or approval of any Person, other than the Office of the
Comptroller of Currency (the "OCC"), the Federal Reserve Board (the "FRB"), the
Delaware Banking Department, and the Federal Deposit Insurance Corporation (the
"FDIC").
(e) Litigation. There are no governmental or administrative
proceedings or other proceedings, litigation, judgment or claims pending or to
the best of Buyer's knowledge, threatened against Buyer materially affecting the
ability of Buyer to carry out this Agreement,
16
or any of the transactions contemplated hereby, or which will materially affect
Buyer or its operation of the Branches after the Closing Date.
(f) Regulatory Capital and Condition. Buyer is in compliance
with all applicable capital standards as of the date hereof, and has no reason
to believe that it will be unable to obtain all required regulatory approvals
for the transactions contemplated herein solely as a result of its current level
of regulatory capital. As of the date hereof, to the best of Buyer's knowledge,
there is no pending or threatened legal or governmental proceedings against
Buyer or any affiliate of Buyer that would affect Buyer's ability to obtain the
required regulatory approvals or satisfy any of the other conditions required to
be satisfied in order to consummate the transactions contemplated hereby.
(g) Community Reinvestment Act. Buyer is in compliance in all
material respects with the Community Reinvestment Act and its implementing
regulations, and there are no threatened or pending actions, proceedings, or
allegations by any person or regulatory agency which may cause the bank
regulatory authorities to deny any application required to be filed pursuant to
Section 4.07 hereof. In addition, Buyer has not been advised of any supervisory
concerns regarding its compliance with the Community Reinvestment Act.
(h) Funds Available. Buyer has access to sufficient sources
of funds to pay the Purchase Price and consummate the transactions contemplated
by this Agreement.
(i) General. No representation or warranty by Buyer contained
in this Agreement contains any untrue statement of fact or omits any statement
of fact necessary to make the statements herein not misleading.
ARTICLE IV
PRE-CLOSING COVENANTS
---------------------
The covenants set forth in this Article IV are intended to
govern conduct during the period from the date hereof to the Closing Date and
shall be so construed, unless otherwise set forth herein.
Section 4.01 Investigations. Seller shall permit Buyer and its agents
to inspect the facilities at the Branches and the books and records of Seller
regarding the Assets and Liabilities being purchased and assumed hereunder at
reasonable times and upon reasonable notice; provided, however, that any such
inspection shall be conducted in such manner so as not to interfere with the
operation of the business of Seller. In addition, Seller shall furnish Buyer and
its agents with copies of such documents and records with respect to the
Branches and the Assets and Liabilities being purchased and assumed hereunder as
Buyer shall from time to time reasonably request, including without limitation
all documents and records reasonably necessary or advisable in order for Buyer
to allocate the Purchase Price pursuant to Section 1.03 hereof.
17
All information, materials and documents provided to Buyer by Seller,
or Seller's agents or representatives, during Buyer's investigations pertaining
to any of the Assets or Liabilities being transferred hereunder, or relating in
any way to Seller's use and operations of the Branches, shall be true and
correct, and shall not omit any additional information or statement of fact
necessary to make such information, materials and documents not materially
misleading.
Except to the extent disclosure may be required by applicable Laws,
Buyer shall maintain and cause its agents to maintain the confidentiality of all
information obtained from Seller which is not publicly available, and Buyer
shall use such information and cause its agents to use such information only for
purposes reasonably related to this Agreement and the transactions contemplated
hereby.
Section 4.02 Operations in the Ordinary Course. Seller shall conduct
the operations of the Branches only in the ordinary course of business
consistent with past practices. Seller shall maintain the books and records of
the Branches in a manner consistent with past practices and regulatory
accounting principles. Seller shall conduct the operations of the Branches in
compliance in all material respects with all applicable Laws. Seller shall
notify Buyer before purchasing, in any single transaction or series of related
transactions, Personal Property which costs in excess of Fifty Thousand Dollars
($50,000.00). Seller shall use its reasonable efforts to retain for Buyer's
benefit the relationship with Seller's depositors, customers, suppliers and
others having business relations with the Seller or the Branches. Seller shall
use its reasonable efforts to retain the services of Seller's present employees
who are located in the Branches or who are otherwise necessary to conduct the
operations of the Branches or to operate and preserve the Assets and Liabilities
to be transferred to Buyer hereunder; provided, however, that Seller shall not
enter into any agreement with, or otherwise make any commitment or
representation to, any of such employees with respect to their employment by
Buyer. Seller shall not increase the compensation or other benefits paid to any
of such employees, except in accordance with Seller's normal compensation
policies, and except for bonus and severance packages paid by Seller to such
employees in connection with the transactions contemplated hereby.
Except with the prior written consent of Buyer, and with the exception
of the Fourth Street Branch which has been relocated to temporary facilities,
Seller shall not relocate the Branches; Seller shall not transfer from the
Branches any Accounts to be assumed by Buyer hereunder, except for (i) Accounts
which depositors specifically request to be transferred, (ii) Accounts which
constitute deposits of any affiliate of Seller, or (iii) Accounts instituted
solely in order to facilitate payment of funds under a contractual relationship
between Seller or any of its affiliates and a third party. Seller shall not
sell, encumber or otherwise transfer or dispose of a material portion of the
Assets (or enter into any agreement to do so) other than in the ordinary course
of business consistent with past
18
practices. Seller shall not transfer, amend, waive or terminate any rights under
the Leases or any of the Assumed Contracts (or enter into any agreement to do
so) other than in the ordinary course of business consistent with past
practices. Seller shall perform its obligations under the Leases and each of the
Assumed Contracts. Seller shall continue, or cause the continuation of, data
processing in the ordinary course of business consistent with past practices
with respect to the operations of the Branches.
Section 4.03 Deposit Pricing. Seller shall continue to use the
procedures used by Seller prior to the date hereof to set the rates on deposit
products offered to customers at the Branches.
Section 4.04 Employees. The parties shall comply with following
procedures in dealing with employees of Seller, who are employed in Seller's
Beneficial Bank Delaware division, except those employees Seller designates in
Schedule Q hereof, (the "Employees") regarding employment after the Closing
Date:
(a) Within thirty (30) days of the date hereof, Seller shall
deliver to Buyer a true and complete list of all Employees by name, date of hire
and position as of the date of such list, together with their most recent
performance evaluations, current salaries and other compensation arrangements;
provided that Seller shall have obtained the written consent of each such
Employee prior to the release of the respective performance evaluation. Seller
shall thereafter, at its discretion, direct Buyer to interview any or all
Employees for the purposes set forth in this Section 4.04. Seller shall also,
during such time between the date hereof and the Closing Date, at its
discretion, permit Buyer to interview certain employees of Seller who are
necessary in order to conduct the operations of the Branches or the Assets and
Liabilities to be transferred to Buyer hereunder, including, without limitation,
Seller's employees in management, marketing, underwriting, servicing, or similar
areas (the "Operations Staff"), provided that any Employees or Operations Staff
who accept a position of employment offered by Buyer within fourteen (14) days
of the date of such offer shall be treated as "Designated Employees" (as
hereinafter defined) for the purposes of subsections 4.04(c) and 4.04(d), and
any of such employees who do not accept a position of employment offered by
Buyer within such time shall not be treated as either "Employees" or "Designated
Employees" (as hereinafter defined).
(b) Within fifteen (15) days of receipt of Seller's direction
to interview Employees pursuant to subsection (a) above, Buyer shall interview
all of such Employees who are interested in seeking employment with Buyer and
shall, within such time, deliver to Seller a confidential list setting forth
those Employees to which Buyer intends to offer employment on the Closing Date
(the "Designated Employees") and the position to be offered to each Designated
Employee. Contingent employment offers shall be made by Buyer to all such
Designated Employees at any time prior to the Closing Date. Buyer shall use its
best efforts to offer employment to all Branch Employees.
(c) On the Closing Date, Seller shall terminate, and Buyer
shall offer employment to, each of the Designated Employees who are actively
employed by Seller immediately prior to the Closing Date. Except as otherwise
provided herein, until July 1, 2000 (or for such shorter period as Buyer shall
employ a Designated Employee), Buyer shall
19
pay each Designated Employee a base salary generally equivalent to but not less
than, on an aggregate dollar value basis, 100% of the dollar value of the base
salary received by such Designated Employees from Seller immediately prior to
the Closing Date. Buyer shall cause all Designated Employees as of the Closing
Date to be eligible to participate, as of the next "entry date" under any such
plan that so limits the commencement of participation therein, (i) in any
holiday, sick leave, vacation pay, leave of absence or similar policy of Buyer
in which similarly situated employees of Buyer are generally eligible to
participate without duplication of benefits and (ii) in the "employee welfare
benefit plans" and "employees pension plans" (as defined in Section 3(1) and
Section 3(2) of ERISA, respectively) of Buyer in which similarly situated
employees of Buyer are generally eligible to participate, provided that all
Designated Employees and their dependents shall be covered immediately after the
Closing Date and shall not be excluded from coverage on account of any
pre-existing condition under any such plan that is a group health plan of Buyer
subject to Part 6 of Title I of ERISA and under basic company-provided life or
disability coverage if, and to the extent that, such persons were covered under
equivalent plans of Seller on the Closing Date. For purposes of any seniority or
length of service requirements, waiting periods, vesting periods or differential
benefits based on length of service in any such plan or policy of Buyer for
which a Designated Employee may be eligible after the Closing Date, Buyer shall
ensure that service by such Designated Employee with Seller shall be deemed to
have been service with Buyer for all purposes under any such plan or policy to
the extent such service is credited by Seller under its similar plans; provided
that Buyer shall not be required to treat a Designated Employee's service with
Seller as service with Buyer for purposes of determining benefit accrual under
any defined benefit plan maintained by Buyer, or under Buyer's 401(k) or other
defined contribution plan
(d) Seller shall pay, discharge and be responsible for (i)
all salary, wages and claims arising out of or relating to the employment of the
Designated Employees before the Closing Date and (ii) any employee benefits
(including, but not limited to, accrued vacation, annual or long-term incentive
program, 401(k) plan, pension plan, retirement plan, non-qualified deferred
compensation plan and group health coverage continuation pursuant to Code
Section 4980B(f)) arising under Seller's employee benefit plans and employee
programs prior to the Closing Date, including benefits with respect to claims
incurred prior to the Closing Date but reported after the Closing Date. Seller
shall retain the right to modify, amend, curtail or discontinue any of its pay,
benefits and employee programs to the same extent it could have done so prior to
date hereof. From and after the Closing Date, Buyer shall pay, discharge and be
responsible for all salary, wages, claims and benefits arising out of or
relating to the employment of the Designated Employees by Buyer on and after the
Closing Date; Seller shall promptly inform Buyer of any Designated Employee who
resigns prior to the Closing Date. With respect to any Designated Employee who
is terminated by Buyer on or before July 1, 2000, or who is deemed to be
terminated by the Buyer because of a reduction in salary or wages or a change in
the terms and conditions of employment including geographic location, Seller
shall provide to such Designated Employee the amount of any compensation and
other benefits provided for in the severance plan in effect as of the Closing
Date for the Designated Employees that exceeds the compensation and other
benefits provided for in Buyer's severance
20
plan in effect at the time of such termination. A description of Seller`s
severance plan is attached as Schedule R and a copy of Buyer's severance plan as
Schedule S.
(e) Beginning on the date all regulatory approvals have been
obtained and ending on the Closing Date, Seller shall permit Buyer to conduct a
training program in order to train certain Designated Employees with respect to
Buyer's procedures and data processing systems (the "Training Program"). The
schedule for the Training Program shall be subject to Seller's consent, which
shall not be unreasonably withheld. Buyer shall conduct the Training Program
solely at Buyer's or Seller's facilities, unless otherwise agreed by Seller and
Buyer. Seller shall reasonably assist Buyer in communicating with the Designated
Employees in connection with Buyer's request to conduct the Training Program as
specified herein. Seller shall not be required to impose any such training as a
condition of employment of the Designated Employees, and Buyer shall not impose
any such training prior to the Closing Date as a condition of employment of any
such Designated Employee. Buyer shall ensure that the Training Program is
conducted in a reasonable, professional, and diligent manner. Buyer shall ensure
that the Training Program does not at any time interfere with Seller's operation
of business. If the Training Program is conducted at the Seller's facilities,
Buyer may bring equipment necessary to conduct such training on Seller's site;
provided that Buyer shall not interfere with the operation of the business of
Seller. Buyer shall use its best efforts to ensure the safety of the Designated
Employees during the Training Program. Buyer shall ensure that the Training
Program, and its supervision of the Designated Employees during such training,
fully comply with the terms of any applicable laws, regulations, codes, or any
other restrictions of municipal, state, or federal law.
(f) Buyer shall reimburse Seller in the amount equal to each
Designated Employee's current hourly wages, for the time spent by such
Designated Employee involved in the Training Program, which shall be deemed to
mean any and all time away from such Designated Employee's normal work duties at
Seller, but not including travel time. Buyer shall also reimburse Seller for
travel expenses connected with Designated Employees traveling to Buyer's
facilities for training, at the rate of 30 cents per mile, plus parking
expenses, tolls, and similar travel expenses. In addition to reimbursing Seller
for the items set forth above, Buyer shall pay all other costs directly
associated with training the Designated Employees, whether such costs are
incurred by Buyer or by Seller. Buyer shall reimburse Seller for any costs
incurred within fifteen (15) days of receiving Seller's request therefor. Buyer
shall indemnify and hold harmless Seller for any loss, liability, claim, cost,
or expense related to or arising out of: (i) Buyer training the Designated
Employees, (ii) any act, omission, or negligence of any Designated Employee
during such training, (iii) any injury to person or property during such
training, or (iv) any failure of Buyer to comply with the requirements of
subsection 4.04(e).
(g) If the transactions contemplated by this Agreement are
not consummated for any reason, (i) the Training Program, if any, as permitted
by Seller hereunder, shall terminate immediately, (ii) Buyer shall immediately
reimburse Seller for all costs incurred with respect to the Training Program,
and (iii) Buyer shall not solicit for hire any Employee, or any of the
Operations Staff, for a period of three (3) years from the date hereof.
21
(h) Nothing in this Section 4.04 is intended, nor shall it be
construed, to confer any express or implied third party beneficiary rights in
any person including present or former employees of Seller, the Employees or
Operations Staff, and any beneficiaries or dependents thereof, other than Buyer
or Seller.
Section 4.05 Insurance. From the date hereof until the Closing Date,
Seller shall maintain in full force and effect all of its insurance policies
relating to the Branches and the Personal Property. Seller represents and
warrants to Buyer that (i) such insurance is and will be customary in type and
amount for assets of the nature just described, (ii) such insurance is and will
be sufficient to replace the Branch or any of the Personal Property which are
damaged, destroyed or lost prior to the Closing Date, and (iii) such insurance
is and will be "occurrence" insurance, meaning that Seller or such lessors, as
the case may be, will have the enforceable right to submit and pursue claims and
receive proceeds under such insurance after the Closing Date with respect to
events occurring prior to the Closing Date.
Section 4.06 Regulatory Approvals. Within fifteen (15) days from July
20, 1998, Buyer and Seller shall each prepare, submit and file, and to the
extent the other party is responsible for a filing, cooperate with the other
party in the preparation, submission and filing of, all applications for
approvals, consents and authorizations, as may be required by applicable Laws
for the lawful consummation by such party with respect to the transactions
contemplated by this Agreement, including without limitation, approval of the
OTS,the OCC, the FRB, the Delaware Banking Department and the FDIC. Each party
shall use its best efforts to obtain such approvals and to satisfy any
conditions to such approvals imposed by such governmental authorities
expeditiously, and shall keep the other party closely informed as to the
developments and progress of such applications. The party responsible for a
filing as set forth above shall deliver to the other party evidence of the
filing of all applications, filings, registrations and notifications relating
thereto (except for any confidential portions thereof), and any supplement,
amendment or item of additional information in connection therewith (except for
any confidential portions thereof). The party responsible for a filing shall
also deliver to the other party a copy of each material notice, order, opinion
and other item of correspondence received by such filing party from any
governmental authority in respect of any such application (except for any
confidential portions thereof).
Section 4.07 Assignments of Leases and Assumed Contracts. Seller shall
use its reasonable efforts to obtain on or before the Closing Date any required
consents to assign the Leases and Assumed Contracts to Buyer at the same terms,
including charges or fees, as are currently stated in or associated with the
Leases and Assumed Contracts. Seller shall transfer to Buyer no later than the
Closing Date, any and all funds held by Seller as security deposits under
Assumed Contracts. Buyer and Seller shall be jointly obligated to pay any
consideration necessary to obtain any required consents and to make any
assignments to Buyer.
Section 4.08 Best Efforts. Buyer shall use its best efforts to
accomplish or satisfy expeditiously, and in any event before the Closing Date,
the conditions set forth in Sections
22
8.01, 8.02 and 9.01. Seller shall use its best efforts to accomplish or satisfy
expeditiously, and in any event before the Closing Date the conditions set forth
in Sections 7.01, 7.02, 7.04 and 9.01.
Section 4.09 Notice of Claims. Seller shall promptly notify Buyer upon
obtaining knowledge of the institution or the threatened institution of any
action, claim or proceeding of any nature regarding or which might in any way
adversely affect the business, condition or prospects of the Branches, any of
the Assets and Liabilities to be purchased and assumed hereunder, or any of the
transactions contemplated hereby.
Section 4.10 Casualty to the Branches. If on or before the Closing
Date, any part of a Branch is destroyed or damaged by fire or any other cause,
Seller shall promptly notify Buyer, such Branch shall thereby be excluded from
the transactions contemplated by this Agreement, and the provisions of the
applicable Branch Lease shall govern the repair or restoration of the premises
and the liabilities and obligations of Seller, Buyer, and the landlord, as the
case may be.
Section 4.11 Notices to Customers. Following the receipt of all
required regulatory approvals of the transactions contemplated hereunder, but no
earlier than thirty-five (35) days before the anticipated Closing Date, the
parties shall jointly mail to each owner of an Account at the Branches a notice,
prepared and mailed at Buyer's expense, of Seller's contemplated transfer of the
Accounts and the Branches to Buyer. Notwithstanding the foregoing, Buyer and
Seller agree to jointly prepare and mail marketing notices announcing the
transaction contemplated by this Agreement, such notices to be prepared and
mailed, at Buyer's expense, at mutually agreed upon times after the date of this
Agreement. The form and content of any such notice shall be agreed upon, to the
extent reasonably practicable, by both parties within five (5) business days
after receipt of the other party's proposed notice. In addition, Seller shall
notify the Obligors under the Account Loans, Overdraft Loans, Consumer Loans,
and Commercial Loans by a letter, in a form mutually acceptable to Buyer and
Seller, of the pending transfer of such loans to Buyer. Except as otherwise
expressly provided herein, all notices sent by Buyer shall be at the sole
expense of Buyer, and all notices sent by Seller shall be at the sole expense of
Seller. Fourteen (14) days prior to the date any such notice is to be sent,
Seller shall provide to Buyer a report of the names and addresses of the owners
of the Accounts and the lessees of the safe deposit boxes in connection with the
mailing of such materials, which report shall be current as of the date thereof.
In addition, within thirty (30) days of the date hereof, Seller shall provide to
Buyer a detailed explanation of Seller's file layouts used in connection with
the servicing of the Accounts.
Section 4.12 Disclosures. From the date hereof until and through the
Closing Date, neither party shall issue or publicly disclose, or permit any of
its affiliates to issue or publicly disclose, any press release or other
information concerning any of the transactions contemplated hereby, without
first providing a copy of such press release or other information to, and
obtaining the written approval of, the other party; provided that, this Section
4.13 shall not restrict either party or its affiliates in submitting or filing
any documents or information to
23
or with any federal or state regulatory agency or similar body (including
without limitation the Securities and Exchange Commission, National Association
of Securities Dealers, Inc. and the New York Stock Exchange), or otherwise
restrict either party in complying with any Laws applicable to such party or its
affiliates. Without limiting the generality of the foregoing, either party may
provide written notice of the closing of any branch offices arising from this
transaction, both to the public and to those customers affected by any such
closing, as required by any federal or state regulatory agency or similar body,
and subject to the reasonable approval of the other party.
Section 4.13 Conversion. From the date hereof through the Closing Date,
Seller shall cooperate and work with Buyer to complete the tasks required to
facilitate the conversion of the data for the Accounts from Seller's data
processing system to Buyer's data processing system (the "Conversion"). Such
tasks include, but are not limited to, providing Buyer with updated cartridges,
reports, and other items as are necessary to complete the conversion process and
related testing procedures. Within thirty (30) calendar days from the date
hereof, Seller shall provide Buyer with initial computer cartridge reports and
related documentation of the Accounts in a format acceptable to Buyer. Seller
agrees to reasonably cooperate in resolving any conversion-related issues
arising from the conversion of the Accounts for a period of thirty (30) calendar
days following the date that the conversion is completed. Conversion will occur
on the calendar day following the Closing Date.
Section 4.14 Non-solicitation. Subject to the Buyer's satisfaction of
the conditions set forth in Section 9.01 and provided that Seller has not
reasonably determined that the conditions set forth in Section 9.01 will not be
satisfied, Seller shall refrain from soliciting, proposing to enter into or
entering into any discussion or negotiations with other potential buyers of the
Branches or buyers of substantially all of the assets or deposit liabilities of
the Branches from the date of this Agreement through the Closing Date. Seller
shall promptly inform Buyer of the receipt after the date hereof of any
proposals, and the terms thereof, from third parties relating to any such
potential acquisition.
Section 4.15 Materials. Subject to the Buyer's satisfaction of the
conditions set forth in Section 9.01 and provided that Seller has not reasonably
determined that the conditions set forth in Section 9.01 will not be satisfied,
Seller shall at its expense furnish Buyer with two sets of mailing labels
addressed to each Account holder and borrower and similar information in
electronic data format, using information as of 45 days prior to the anticipated
Closing Date.
Section 4.16 Buyer's Certificate of Deposit . On or before July 20,
1998, Buyer shall deliver to the Seller by wire transfer of immediately
available funds by 2:00 p.m. eastern local time an amount equal to $1,200,000 to
the following account:
Bank: Beneficial National Bank, Wilmington, Delaware
ABA Number: 0000-00-000
Attention: Xxxxxxx Xxxxxx
(000) 000-0000
24
The foregoing amount shall be used to purchase a certificate of deposit having a
face value of $1,200,000 maturing on the Closing Date and shall be known as the
"Buyer's CD". The Buyer's CD shall accrue interest at the Federal Funds Rate in
effect on July 20, 1998 to the Closing Date. In the event that (i) this
Agreement is terminated by Seller under Section 10.01 (b), Section 10.01 (d),
Section 10.01 (f), or by either party under Section 10.01 (e), or (ii) Buyer has
not satisfied its obligations under Article VIII on the Closing Date and Seller
has not waived such satisfaction in writing, or (iii) on or prior to the Closing
Date Seller reasonably determines that the conditions set forth in Article IX
will not be satisfied (unless the reason that the conditions set forth in
Article IX may not be satisfied is an action or inaction by the OTS), then Buyer
shall assign to Seller all right, title and interest in and to the Buyer's CD.
Section 4.17 Xxxxxxxxx Lease. On or before the Closing Date, Seller
agrees to enter into a sublease with Buyer for the existing square footage used
by the bank currently occupying the space or 1100 square feet, whichever is
less, on the first floor of One Xxxxxxxxx Place, Wilmington, Delaware. Said
sublease shall be for a term equivalent to Seller's lease at such facility, at a
cost of $11 per square foot.
ARTICLE V
POST-CLOSING COVENANTS
----------------------
Section 5.01 Returned Items.
(a) From and after the Closing Date, each party shall
cooperate with the other party to the extent required to accomplish the
transactions contemplated by this Agreement. Without limiting the generality of
the foregoing, any items that were credited for deposit to any Account prior to
the Closing Date and are returned unpaid ("Returned Items") after the Closing
Date will be handled in the following manner:
(i) If, within seven (7) calendar days after the Closing
Date, Buyer's bank account is charged for the Returned Item, Buyer
will use its best efforts to obtain reimbursement from the Account to
which, or from the party to whom, the Returned Item was previously
credited. If there are sufficient funds in the Account to which such
Returned Item was credited or any other accounts on deposit at the
Branches standing in the name of the party liable for such item, Buyer
will debit any or all of such accounts an amount equal in the
aggregate to the Returned Item. If those accounts do not contain funds
sufficient to reimburse Buyer fully, Seller will, upon notice from
Buyer, immediately repay to Buyer the amount of the Returned Item and
Buyer will assign the Returned Item to Seller for collection;
(ii) If, within seven (7) calendar days after the Closing
Date, Seller's bank account is charged for the Returned Item and if
there are sufficient funds in the Account to which such Returned Item
was previously credited or any other accounts on deposit
25
at the Branches standing in the name of the party liable for such
item, Buyer will debit any or all of such accounts an amount equal to
the aggregate such Returned Item and shall repay that amount to
Seller.
(iii) If either Seller or Buyer receive any Returned Item
after eight (8) calendar days after the date funds were credited, and
there are insufficient funds in the Account originally credited,
Seller shall reasonably assist Buyer, upon receiving notice from the
Buyer, in making any applicable claims with respect to the lateness of
the Returned Item or failure to receive any required notice of
non-payment.
(b) Holds. Holds that have been placed by Seller on
particular Accounts or on individual checks, drafts, or other instruments before
the Closing Date will be continued by Buyer under the same terms after the
Closing Date. Seller will deliver to Buyer on the Closing Date a schedule of
such holds. Buyer agrees to comply with the terms and conditions of any
garnishment, citation, levy, court order, or similar legal process received by
Seller prior to the Closing Date and requiring the payment of funds after the
Closing Date with respect to any Account.
(c) ACH Items. Seller and Buyer will use their best efforts
to transfer existing ACH arrangements to Buyer as soon as possible after the
Closing Date. At least thirty (30) calendar days prior to the Closing Date,
Seller will deliver to Buyer (i) a modem transmission of existing ACH Items and
Recurring Debit Arrangements, (ii) copies of existing ACH origination forms for
social security payments and Recurring Debit arrangements being assumed by Buyer
hereunder, and (iii) all other records and information necessary for Buyer to
administer such arrangements. Buyer shall continue such ACH arrangements and
such Recurring Debit arrangements as are originated and administered by third
parties and for which Buyer need act only as processor. Buyer shall have no
obligation to continue Recurring Debit arrangement that were originated or
administered by Seller, and Seller shall terminate such arrangements on or prior
to the Closing Date.
After the Closing Date, Seller will use its best efforts to
(i) by no later than 6:00 p.m. on each business day, transmit or deliver to
Buyer, at such address as Buyer may from time to time designate, a summary of
ACH Items or Recurring Debit activity affecting the Accounts during the prior
business day; and (ii) remit by wire transfer to Buyer all ACH Item funds then
known by Seller, that are intended for Accounts being transferred to Buyer;
provided, however, that Seller's obligation to deliver such summaries and to
forward such ACH Items shall continue only until one hundred twenty (120)
calendar days after the Closing Date. Thereafter, Seller will return all ACH
Items to the originating depository financial institution ("ODFI").
(d) Checking Accounts. Five (5) business days prior to the
anticipated Closing Date, Buyer, at its sole expense, will mail holders of
Accounts which may be accessed by checks, new checks, MICR encoded with Buyer's
routing and transit number and Buyer's customer identification number. On a
daily basis, Seller will outsort all checks received by
26
Seller drawn on Accounts and prepare them for delivery to Buyer's service
center. Buyer shall determine the method by which such checks will be delivered
to Buyer from Seller's service center. Buyer accepts full responsibility to
either pay the items or return them in accordance with the customer agreement,
the Uniform Commercial Code, and all applicable federal laws and regulations.
Seller's obligation to outsort and deliver such checks shall continue for one
hundred twenty (120) calendar days after the Closing Date. After the one hundred
twenty (120) calendar day period, Seller will stop accepting such items and will
return such items marked "Refer to Maker."
Seller will give Buyer a daily accounting of debits to its
clearing account. Buyer and Seller will daily agree on the amount of checks
transferred by Seller to Buyer. Buyer will then remit such amount, by wire
transfer on the same day, to the Seller.
(e) Withholding. Seller shall deliver to Buyer (i) on or
before the Closing Date a list of all "B" (TINs do not match) and "C" (under
reporting/IRS imposed withholding) notices from the IRS imposing withholding
restrictions and (ii) for a period of one hundred twenty (120) calendar days
after the Closing Date, all notices received by Seller from the IRS releasing
withholding restrictions on the Accounts transferred to Buyer pursuant to this
Agreement. Any amounts required by any governmental agency to be withheld from
any of the Accounts (the "Withholding Obligations") will be handled in the
following manner:
(i) Any Withholding Obligations required to be remitted to the
appropriate governmental agency up to and including the Closing Date
will be withheld and remitted by Seller and any other sums withheld by
Seller, pursuant to Withholding Obligations up to and including the
Closing Date, shall also be remitted by Seller to the appropriate
governmental agency on or prior to the time they are due.
(ii) Any Withholding Obligations required to be remitted to the
appropriate governmental agency after the Closing Date with respect to
Withholding Obligations after the Closing Date and not withheld by
Seller as set forth in subsection (i) above will be remitted by Buyer.
Within two (2) business days of receipt of such notice, Seller shall
notify Buyer and Buyer shall comply with the notification requirements.
(iii) Any penalties described on "B" notices from the IRS or any
similar penalties that relate to Accounts opened by Seller relating to
periods prior to the Closing Date will be paid by Seller promptly upon
receipt of the notice, providing such penalty assessment resulted from
Seller's acts, policies or omissions.
(f) Retirement Accounts. Seller will provide Buyer with trust
documents in its possession for any retirement accounts assumed by Buyer under
this Agreement. Seller shall be responsible for all federal and state income tax
reporting of Retirement Accounts for the period of time up to and including the
Closing Date. Buyer shall be responsible for all federal and state income tax
reporting for the period of time from and after the Closing Date.
27
(g) Interest Reporting. To the extent otherwise applicable,
Seller shall report the amount of any interest paid, credited, or withheld with
respect to the Accounts or the Loans, and the amount of any early withdrawal
penalties charged to the Accounts, for the period from January 1, 1998 through
the Closing Date. To the extent otherwise applicable, Buyer shall report the
amount of any interest paid, credited, or withheld with respect to the Accounts
or the Loans, and the amount of any early withdrawal penalties charged to the
Accounts, for the period from the Closing Date through December 31, 1998. Said
reports shall be made to the holders of these Accounts and to the applicable
federal and state regulatory agencies.
(h) Card Processing. All (i) ATM access cards, debit cards,
or combined ATM and debit cards issued by Seller to customers of the Branches
who will not have accounts accessible by such cards with Seller after the
Closing Date, and (ii) check guarantee cards issued by Seller to customers of
the Branches who will not have checking accounts with Seller after the Closing
Date, if applicable, will be valid for a period of thirty (30) days after the
Closing Date. In connection with the notices to depositors described in Section
4.11 of this Agreement, Buyer will notify customers in writing at least thirty
(30) calendar days prior to the anticipated cancellation of the ATM access cards
and check guarantee cards.
Seller agrees to provide the necessary data tapes reasonably
required, prior to the Closing Date, to accommodate Buyer's processing of ATM
cards, which Buyer may issue, but not activate, prior to the Closing Date.
Furthermore, both Buyer and Seller agree to settle within two (2) business days
after the ATM transaction date: (i) any and all rejected ATM transactions
processed after the Closing Date, and (ii) any and all ATM transactions
processed while the ATM network could not communicate with Seller's main host.
The Buyer agrees to remit the total sum of such transactions to the Seller on
the same date the transactions are settled.
(i) Taxpayer Information. Seller shall deliver to Buyer
within fourteen (14) business days after the Closing Date (i) TINs (or record of
appropriate exemption) for all holders of Accounts; and (ii) all other
information in Seller's possession or reasonably available to Seller required by
applicable law to be provided to the IRS with respect to the Assets and Accounts
and the holders thereof, except for such information which Seller will report on
pursuant to Section 5.01(g) of this Agreement (collectively, the "Taxpayer
Information"). Seller hereby certifies that such information, when delivered,
shall accurately reflect the information provided by Seller's customers.
Section 5.02 Transfer of Safe Deposit Box Business. After the receipt
of all regulatory approvals required to consummate the transactions contemplated
by this Agreement, Seller shall notify the owners of the safe deposit boxes, by
a letter in a form mutually acceptable to Buyer and Seller, that, in connection
with such transactions, Seller shall assign to Buyer the safe deposit agreements
between Seller and all such parties on the Closing Date. Buyer shall be solely
responsible for implementing any relocation, drilling, termination, or closing
of any of the safe deposit boxes in the Branches, whether necessitated by the
28
transactions contemplated by this Agreement or in connection with the closing or
consolidation of any of the Branches. Seller shall provide Buyer with two sets
of keys to any safe deposit boxes that are not leased on the Closing Date.
Section 5.03 Assistance Clause. In connection with any audit or other
examination by any taxing authority, or any judicial or administrative
proceeding relating to the Assets transferred to Buyer or Liabilities assumed by
Buyer as contemplated by this Agreement, Seller and Buyer agree to provide each
other such assistance as may be reasonably requested. In the event that Seller
must obtain information regarding the Assets transferred to Buyer or the
Liabilities assumed by Buyer, and such information is in the possession or
control of Buyer, Buyer shall perform the required research on behalf of Seller
and make copies of, and excerpts from, such books and records as reasonably
required by Seller. In the event that Buyer must obtain information regarding
the Assets transferred to Buyer or the Liabilities assumed by Buyer and such
information is in the possession or control of Seller, Seller shall perform the
required research on behalf of Buyer and make copies of, and excerpts from, such
books and records as reasonably required by Buyer. Buyer shall retain all
records received from Seller with respect to the Accounts and Loans as required
by applicable Laws and Buyer's record retention practices. With respect to Tax
records, the Buyer shall retain all Tax or Tax-related records associated with
the Accounts and Loans for periods ending on or before the Closing Date until
the expiration of the full period of the applicable statute of limitations,
including any extensions thereof. If the applicable statute of limitations has
not expired by the end of the tenth year following the Closing Date, the Buyer
shall have the option of transferring the records to the Seller for storage.
Each party agrees to notify the other party of any extension of an applicable
statute of limitations and each party shall make a good faith effort to obtain
the consent of the other party before destroying any of such records after the
expiration of the statute of limitations period. The cost of obtaining such
information shall be borne by the requesting party, based on the schedule of
fees for such services provided to customers of Seller.
ARTICLE VI
CLOSING
-------
Section 6.01 Closing Date. The transfer of the Assets and assumption of
the Liabilities required by Articles I and II, including the delivery of the
instruments, updated schedules and documents referred to herein, and all other
transactions to be consummated at the same time pursuant hereto, shall take
place on December 17, 1998 at the close of business (the "Closing Date") or on
the first Thursday after the day on which all of the conditions set forth in
Articles VII, VIII and IX are satisfied or waived in writing, but in no event
shall the Closing Date be later than December 31, 1998, unless otherwise agreed
to in writing by the parties. Nothing contained in this Section 6.01 shall
relieve either party from liability for any breach of its representations or
warranties set forth herein.
29
Section 6.02 Updating Schedules. On the Closing Date, Seller shall
deliver to Buyer an updated version of Schedule K as contemplated herein with
the latest information available to Seller as of three (3) business days prior
to the Closing Date. Within thirty (30) calendar days after the Closing Date,
Seller shall deliver to Buyer final versions of all Schedules contemplated
herein covering all transactions through the close of business on the Closing
Date
Section 6.03 Actions At Closing. On the Closing Date, the following
shall occur:
(a) Seller shall pay to Buyer by wire transfer in immediately
available funds the difference between the Assumption Price and the Purchase
Price.
(b) Except as otherwise expressly provided herein, Seller
shall deliver to Buyer the Records, the Personal Property and Cash On Hand.
(c) Without limiting the generality of Section 6.03(b),
Seller shall deliver to Buyer all of the Records relating to the Account Loans,
Overdraft Loans, Consumer Loans, and Commercial Loans, and such assignment
documents as Buyer may reasonably deem necessary or advisable to assign to Buyer
all of Seller's interest in the collateral securing the Account Loans, Consumer
Loans, or Commercial Loans, as applicable.
(d) Without limiting the generality of Section 6.03(b),
Seller shall deliver to Buyer all of the Records relating to the Branches and
Assumed Contracts, including, without limitation, the Records necessary for
Buyer to exercise its rights and discharge its obligations with respect to the
Leases and Assumed Contracts.
(e) Without limiting the generality of Section 6.03(b),
Seller shall deliver to Buyer all of the Records relating to the Accounts,
including without limitation the Records necessary for Buyer to discharge its
obligations with respect to the Accounts.
(f) Without limiting the generality of Section 6.03(b)
hereof, Seller shall deliver to Buyer all of the Records relating to the Safe
Deposit Box Business.
(g) Seller shall deliver to Buyer a xxxx of sale with respect
to the Personal Property substantially in the form of Exhibit B hereto. Buyer
agrees to bear all sales and transfer taxes, if any, arising from the sale of
the Personal Property to Buyer.
(h) Seller shall deliver to Buyer such assignment documents,
including but not limited to landlord consents, substantially in the form of
Exhibit C hereto, as Seller may reasonably deem necessary or advisable to assign
to Buyer all of Seller's interest in and rights under the Leases and Assumed
Contracts.
30
(i) Seller shall deliver to Buyer, in form and substance
reasonably satisfactory to Buyer, such other assignments or instruments of
transfer as Buyer may reasonably deem necessary or advisable to accomplish the
transfer of the Assets.
(j) Buyer shall execute and deliver to Seller, substantially
in the form of Exhibit D hereto, an Instrument of Assumption by which Buyer
agrees to assume and discharge the Liabilities set forth in Section 2.01.
(k) Seller shall deliver to Buyer a duly executed Certificate
of Non-Foreign Status in accordance with the requirements of Section 1445 of the
Code substantially in the form of Exhibit E hereto.
(l) Seller shall provide to Buyer conversion cartridges and
reports no later than 12:00 Noon on the day immediately following the Closing
Date.
Section 6.04 Method of Settlement. Notwithstanding the transactions
herein described as occurring on the Closing Date, the settlement for the
transactions contemplated herein shall occur in two phases as follows:
(a) On the Closing Date, the parties will conduct a
preliminary settlement using settlement sheet data accumulated through the close
of business at the Branches as of three (3) business days prior to the Closing
Date. Based upon such preliminary settlement sheet data, substantially in the
form of Exhibit H hereto, the amount due under Section 6.03(a) shall be
calculated and transferred by Seller to Buyer on the Closing Date, or, at the
option of Seller, on the Monday immediately following the Closing Date along
with accrued interest calculated at the Federal Funds Rate in effect for each
day as published in The Wall Street Journal, from the Closing Date to the Monday
immediately following the Closing Date. The interest calculation over any
weekend or holiday shall be the rate in effect the prior Business Day.
(b) Within ten (10) business days following the Closing Date,
the parties will conduct adjusting settlements using updated settlement sheet
data as of the close of business on the Closing Date, substantially in the form
of Exhibit I hereto. An appropriate adjusting settlement payment from Seller to
Buyer or from Buyer to Seller, as the case may be, will be made, together with
accrued interest calculated at the Federal Funds Rate in effect for each day, as
published in The Wall Street Journal, for the number of days elapsed from, but
not including, the Closing Date and the date of such adjusting settlement
payment. The interest calculation over any weekend or holiday shall be the rate
in effect the prior Business Day. Payments sent after 2:00 p.m. (CST) on any day
shall be deemed, for purposes of this Agreement, to have been made on the next
business day. The adjusted settlement sheet shall be executed by both parties.
Section 6.05 Adjustment of Expenses and Fees. (a) The following items
shall be prorated and adjusted between Seller and Buyer as of 11:59 p.m. on the
day before the Closing
31
Date, so that Seller shall be responsible for or entitled to such items
allocable to periods or amounts prior to such time and Buyer shall be
responsible for or entitled to such items allocable to periods or amounts after
such time:
(i) Any accrued income from the Branches, for or pertaining to
Assumed Contracts, Tenant Leases, safe deposit box rental fee income,
or similar matters;
(ii) Any personal property taxes, special assessments, or
other applicable taxes, based on the most recent ascertainable tax
xxxx.
(ii) The amount of any FDIC insurance premiums paid by the
Seller as of the beginning of the calendar quarter for such quarter to
be pro rated based upon the deposits transferred times the assessment
rate and the number of days remaining in such calendar quarter.; and
(iv) All operating expenses, fees, or other charges for or
pertaining to the Branches for rent, utilities, Assumed Contracts, or
similar matters, based upon the most recent period for which costs are
available.
To the extent that Seller has paid prior to the Closing Date any such expenses
that are expenses allocable to any period following the Closing Date, such
expenses shall appear as an asset on the settlement sheet.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF BUYER
----------------------------------
The obligations of Buyer hereunder are subject to the
satisfaction, or the waiver in writing by Buyer, on or before the Closing Date
of each of the following conditions:
Section 7.01 Covenants. All the terms, covenants and conditions of this
Agreement to be complied with and performed by Seller on or before the Closing
Date shall have been duly complied with and performed in all material respects,
and Seller shall have delivered to Buyer a certificate to such effect dated as
of the Closing Date substantially in the form of Exhibit J hereto.
Section 7.02 Representations. All of the representations and warranties
made by Seller herein shall be true in all material respects as of the Closing
Date with the same force and effect as though such representations and
warranties had been made as of the Closing Date, and Seller shall have delivered
to Buyer a certificate to such effect dated as of the Closing Date substantially
in the form of Exhibit J hereto.
32
Section 7.03 Litigation. No order in any legal, administrative or other
proceeding shall have been entered and remain in force at the Closing Date
materially restraining or prohibiting the transaction contemplated by this
Agreement.
Section 7.04 Consents. Seller shall have received, from the lessors
under the Branch Leases, any required consent to assign such Leases to Buyer,
and Seller shall have delivered to Buyer documents evidencing such consents.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF SELLER
-----------------------------------
The obligations of Seller hereunder are subject to the
satisfaction, or the waiver in writing by Seller, on or before the Closing Date
of each of the following conditions:
Section 8.01 Covenants. All the terms, covenants and conditions of this
Agreement to be complied with and performed by Buyer on or before the Closing
Date shall have been duly complied with and performed in all material respects,
and Buyer shall have delivered to Seller a certificate to such effect dated as
of the Closing Date substantially in the form of Exhibit K hereto.
Section 8.02 Representations. All the representations and warranties
made by Buyer herein shall be true in all material respects as of the Closing
Date with the same force and effect as though such representations and
warranties had been made as of the Closing Date, and Buyer shall have delivered
to Seller a certificate to such effect dated as of the Closing Date
substantially in the form of Exhibit K hereto.
33
Section 8.03 Litigation. No order in any legal, administrative or other
proceeding shall have been entered and remain in force at the Closing Date
materially restraining or prohibiting the transaction contemplated by this
Agreement.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF BOTH PARTIES
-----------------------------------------
Section 9.01 Conditions to Obligations of Both Parties. The obligations
of both parties to this Agreement are subject to the satisfaction, on or before
the Closing Date, of the condition that all actions shall have been taken in
order for the transactions contemplated by this Agreement to comply with all
applicable Laws, and to the extent required by applicable Laws, the OTS, the
OCC, the FRB, the Delaware Banking Department, the FDIC and any other regulatory
or governmental body having jurisdiction, shall have approved, consented to and
authorized all of the transactions contemplated by this Agreement (including
without limitation the transfer of Assets and Liabilities to Buyer hereunder)
and all applicable waiting periods shall have expired; provided, however, that
any such approval, consent or authorization required to be obtained shall have
been granted without the imposition of any condition which either party
reasonably and in good xxxxx xxxxx to be materially burdensome to it or its
parent company.
ARTICLE X
TERMINATION
-----------
Section 10.01 Termination. Upon the occurrence of any of the following
events, this Agreement, except for Articles XI and XII, and any other provisions
herein which by their terms survive, shall terminate and be of no further force
or effect between the parties hereto, and neither party shall bear any liability
as a result of or in connection with such termination, except for any liability
provided in Article XI and in Section 4.16:
(a) Seller and Buyer agree in writing to terminate this
Agreement; or
(b) on the Closing Date, Seller elects in writing to
terminate this Agreement because the conditions set forth in Article VIII have
not been satisfied or waived in writing by Seller; or
(c) on the Closing Date, Buyer elects in writing to terminate
this Agreement because the conditions set forth in Article VII have not been
satisfied or waived in writing by Buyer; or
(d) on or prior to the Closing Date, Buyer or Seller elects
in writing to terminate this Agreement if the other party has breached in any
material respect any of its representations, warranties or covenants contained
herein, and such breach (if capable of being
34
cured) has not been cured within thirty (30) calendar days (one calendar day in
the case of a breach of Section 4.15) after the giving of written notice of such
breach to such other party; or
(e) on or prior to the Closing Date, Seller or Buyer
reasonably determines that the conditions set forth in Article IX will not be
satisfied for reasons beyond the control of either party; or
(f) the Closing Date does not occur prior to December 31,
1998, or such later date as the parties may agree upon.
ARTICLE XI
INDEMNIFICATION
---------------
Section 11.01 Indemnification by Seller. Seller shall indemnify and
hold harmless Buyer, and its successors and assigns, against and from any loss,
liability, obligation, claim, demand, damage or expense, including without
limitation attorneys' fees and disbursements, which is directly or indirectly
suffered or incurred at any time by Buyer or any of its successors or assigns,
and which arises directly or indirectly out of or by virtue of, or relates
directly or indirectly to, any of the following:
(a) any false, misleading or inaccurate representation or
warranty made by Seller in this Agreement, or any breach of any such
representation or warranty;
(b) any breach, violation or nonfulfillment by Seller of, or
any failure by Seller to perform, any covenant, agreement, obligation or other
provision contained in this Agreement;
(c) any claim, liability, obligation or penalty related to
the Accounts transferred pursuant to this Agreement arising out of or relating
to Seller's preparation or submission (or failure to prepare or submit) of Forms
1098, Forms 1099, Forms 5498 or other information, returns or reports required
by applicable Laws, except to the extent that such claim, liability or
obligation is caused by Buyer's negligence;
(d) any claim or liability arising out of Seller's failure to
properly record accrued interest on the Accounts; or
35
(e) any action, lawsuit or other proceeding arising from or
relating to any of the foregoing.
For purposes of this Agreement, "Tax" or "Taxes" shall include federal,
state and local income taxes, sales, use, franchise, employment, excise,
property (real and personal) and any other similar type of charge, expense or
levy, including any interest thereon. Notwithstanding anything to the contrary
contained in this Agreement, no claim shall be made against Seller for
indemnification under this Section 11.01 with respect to any loss which Buyer
may suffer, incur or sustain unless the aggregate of all such losses shall
exceed $500,000, and Seller shall only be required to pay or be liable for any
such losses to the extent that their aggregate amount exceeds $500,000, and then
only with respect to losses incurred in excess of such amount, provided,
however, that Seller shall not be liable for losses to the extent that the
aggregate amount of losses exceeds the Premium.
Section 11.02 Indemnification by Buyer. Buyer shall indemnify and hold
harmless Seller, and its successors and assigns, against and from any loss,
liability, obligation, claim, demand, damage or expense, including without
limitation attorneys' fees and disbursements, which is directly or indirectly
suffered or incurred at any time by Seller or any of its successors or assigns,
and which arises directly or indirectly out of or by virtue of, or relates
directly or indirectly to, any of the following:
(a) any false, misleading or inaccurate representation or
warranty made by Buyer in this Agreement, or any breach of any such
representation or warranty;
(b) any breach, violation or nonfulfillment by Buyer of, or
any failure by Buyer to perform, any covenant, agreement, obligation or other
provision contained in this Agreement;
(c) any claim, liability, obligation or penalty related to
the Accounts transferred pursuant to this Agreement arising out of or relating
to Buyer's preparation or submission (or failure to prepare or submit) of Forms
1098, Forms 1099, Forms 5498 or other information, returns or reports required
by applicable Laws, except to the extent that such claim, liability or
obligation is caused by Seller's negligence;
(d) any claim or liability arising out of Buyer's failure to
properly record accrued interest on the Accounts; or
(e) any action, lawsuit or other proceeding arising from or
relating to any of the foregoing.
Notwithstanding anything to the contrary contained in this Agreement,
other than the provisions of Section 6.05(b), no claim shall be made against
Buyer for indemnification under this Section 11.02 with respect to any loss
which Seller may suffer, incur or sustain unless the aggregate of all such
losses shall exceed $500,000, and Buyer shall only be required to pay or
36
be liable for any such losses to the extent that their aggregate amount exceeds
$500,000, and then only with respect to losses incurred in excess of such
amount, provided that the Buyer's obligation set forth in section 6.05(b) hereof
to pay any FDIC insurance premiums or other assessments shall not be subject to
the $500,000 exclusion set forth herein
ARTICLE XII
MISCELLANEOUS
-------------
Section 12.01 Notices. Any notice or other communication required or
permitted hereunder shall be sufficiently given if it is in writing and served
on the parties at the following addresses or such other address(es) as shall be
furnished in writing by either party:
If to Seller: With a copy to:
Household Bank, f.s.b. Household Bank, f.s.b.
0000 Xxxxxxx Xxxx 0000 Xxxxxxx Xxxx
Xxxxxxxx Xxxxxxx, XX 00000 Xxxxxxxx Xxxxxxx, XX 00000
Attention: Chief Financial Officer Attention: General Counsel
FAX: 847/000-0000 FAX: 847/000-0000
If to Buyer: With a copy to:
Sun National Bank Xxxxxxx Xxxxx, Esq.
000 Xxxxxx Xxxxxx Xxx Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000 0000 X Xxxxxx, XX
Attention: Xxxxxx Xxxxxxxxx Suite 700 East
FAX: 000-000-0000 Xxxxxxxxxx, X.X. 00000
FAX: 202/000-0000
Notices shall be either (i) personally delivered or sent by Federal Express or
other nationally recognized overnight courier to the addresses set forth above,
in which case they shall be deemed delivered on the date of delivery to said
address; (ii) sent by registered or certified mail, return receipt requested, in
which case they shall be deemed delivered three business days after deposit in
the U.S. mail; or (iii) transmitted by facsimile and delivered as required by
either (i) or (ii) above, in which case they shall be deemed delivered on the
date of facsimile transmittal.
Section 12.02 Expenses. Except as provided otherwise in this Agreement,
each party shall pay its own expenses in negotiating and closing the
transactions contemplated by this Agreement.
Section 12.03 Entire Agreement, Modifications. This Agreement shall
include all of the Schedules attached hereto and all updates made thereto
pursuant to Section 6.02, and all of
37
such Schedules are incorporated herein by this reference. This Agreement
constitutes the entire agreement between the parties hereto pertaining to the
subject matter hereof, and supersedes all prior and contemporaneous agreements
and understandings of the parties in connection therewith. No modification of
this Agreement shall be binding unless executed in writing by both of the
parties hereto.
Section 12.04 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of each of the parties hereto and their respective
successors and assigns; provided, however, that neither party shall assign any
rights or delegate any obligations under this Agreement, or otherwise transfer
any interest herein, without the prior written consent of the other party
hereto, and any attempt to make any such assignment, delegation or transfer
without such consent shall be void and of no effect. Notwithstanding the
preceding sentence, (i) either party shall be permitted to assign all of its
rights and delegate all of its obligations under this Agreement to any Person
which acquires all or substantially all of the assets of such party or its
parent, or any Person which merges with such party or its parent, or (ii) Buyer
may assign this Agreement upon ten (10) days prior written notice on or before
the Closing Date to Sun National Bank of Delaware, subject to the receipt by
such entity of authority to operate as a bank.
Section 12.05 Counterparts. This Agreement may be executed in one or
more counterparts, all of which, including those received via facsimile
transmission, taken together shall constitute one instrument.
Section 12.06 Governing Law. This Agreement shall be construed and
enforced in accordance with the laws of the State of Illinois, except to the
extent matters may be governed as a matter of law by federal law.
Section 12.07 Arbitration of Disputes. It is agreed that all disputes,
claims and controversies between the parties to this Agreement, whether
individual or joint in nature, arising from or in connection with this Agreement
or otherwise, including, without limitation, contract, tort and other claims,
which are not otherwise resolved between the parties shall be arbitrated
pursuant to the Rules of the American Arbitration Association. Either party may
file a request for arbitration in the State of Delaware and such filing shall
bind the other party to such arbitration of such matter. Any disputes, claims or
controversies concerning the lawfulness or reasonableness of any act, or
exercise of any right, concerning this Agreement, including any claim to
rescind, reform, or otherwise modify any provision of this Agreement, shall also
be arbitrated, provided, however, that no arbitrator shall have the right or
power to enjoin or restrain any act of any party. Judgment upon any award
rendered by the arbitrator(s) may be entered in any court having jurisdiction.
The statute of limitations, estoppel, waiver, laches, and similar doctrines
which would otherwise be applicable in an action brought by a party shall be
applicable.
Section 12.08 Enforcement. In any action to enforce this Agreement, the
prevailing party shall be entitled to reasonable attorneys' fees and expenses.
38
Section 12.09 Construction. The parties hereto acknowledge that each
party hereto and its counsel have reviewed and revised this Agreement, and agree
that the normal rule of construction to the effect that any ambiguities are to
be resolved against the drafting party shall not be employed in the
interpretation of the Agreement. Except as expressly provided herein, no
provision in this Agreement shall be construed to constitute any party hereto
(or any of the directors, officers or employees thereof) the partner, agent or
legal representative of any other party hereto. The underlined headings
contained herein are for convenience of reference only, shall not be deemed to
be a part of this Agreement and shall not be referred to in connection with the
interpretation hereof. Whenever required by the context hereof, the singular
number shall include the plural, and vice versa; the masculine gender shall
include the feminine and neuter genders; and the neuter gender shall include the
masculine and feminine genders. As used herein, the term "Laws" shall mean all
federal, state, city and county laws, rules, regulations, orders, judgments,
injunctions, decrees and awards (and interpretations thereof) applicable to
either the parties hereto or the transactions contemplated hereby. As used
herein, the term "Person" shall include without limitation any individual,
corporation, partnership, trust, organization, firm or other entity, or any
governmental or regulatory agency or other body. As used herein, the term "close
of business" shall mean the close of business in Chicago, Illinois.
Section 12.10 Severability. If any provision of this Agreement, or the
application of such provision to any Person or set of circumstances, shall be
determined to be invalid, unlawful or unenforceable to any extent at any time
after the Closing Date, the remainder of this Agreement, and the application of
such provision to persons or circumstances other than those as to which it is
determined to be invalid, unlawful or unenforceable, shall not be affected and
shall continue to be enforceable to the fullest extent permitted by law.
Section 12.11 Waiver. No failure or delay on the part of any party
hereto in exercising any power, right or privilege hereunder shall operate as a
waiver thereof; and no single or partial exercise of any such power, right or
privilege shall preclude any other or further exercise thereof or of any other
power, right or privilege. No waiver shall be binding unless in a writing
executed by the party making the waiver.
Section 12.12 Remedies Cumulative. Any and all remedies conferred by
this Agreement are cumulative with all rights and remedies under the UCC and any
other principles of law and equity. Such rights and remedies shall not impair
the rights and remedies of either party incident to obligation that is
collateral or ancillary to this Agreement.
Section 12.13 Parties in Interest. None of the provisions of this
Agreement is intended to provide any rights or remedies to any Person (including
without limitation any depositors, employees or creditors of any of the parties
hereto) other than the parties hereto and their respective permitted successors
and assigns, if any.
