PURCHASE AND ASSUMPTION AGREEMENT
by and between
NATIONAL BANK OF COMMERCE
and
FIRST SOUTH BANK
Dated as of
October 29, 2003
TABLE OF CONTENTS
Page
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ARTICLE I
TRANSFER OF ASSETS AND LIABILITIES
Section 1.1 Transferred Assets..............................................................................1
Section 1.2 Purchase Price..................................................................................2
Section 1.3 Deposit Liabilities.............................................................................3
Section 1.4 Loans Transferred...............................................................................6
Section 1.5 Employee Matters................................................................................8
Section 1.6 Safe Deposit Business...........................................................................9
Section 1.7 Real Property...................................................................................9
Section 1.8 Records and Data Processing.....................................................................9
Section 1.9 Security and Insurance.........................................................................10
Section 1.10 Taxes and Fees; Proration of Certain Expenses..................................................10
ARTICLE II
CLOSING AND EFFECTIVE TIME
Section 2.1 Effective Time.................................................................................10
Section 2.2 Closing........................................................................................10
Section 2.3 Post-Closing Adjustments.......................................................................12
ARTICLE III
INDEMNIFICATION
Section 3.1 Seller's Indemnification of Purchaser..........................................................13
Section 3.2 Purchaser's Indemnification of Seller..........................................................13
Section 3.3 Claims for Indemnity...........................................................................13
Section 3.4 Limitations on Indemnification.................................................................14
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Section 4.1 Corporate Organization.........................................................................14
Section 4.2 No Violation...................................................................................14
Section 4.3 Corporate Authority............................................................................15
Section 4.4 Enforceable Agreement..........................................................................15
Section 4.5 No Brokers.....................................................................................15
Section 4.6 Real and Tangible Personal Property............................................................15
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Section 4.7 Condition of Property..........................................................................15
Section 4.8 Litigation.....................................................................................15
Section 4.9 Loans..........................................................................................15
Section 4.10 Limitation of Representations and Warranties...................................................16
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Section 5.1 Corporate Organization.........................................................................16
Section 5.2 No Violation...................................................................................16
Section 5.3 Corporate Authority............................................................................16
Section 5.4 Enforceable Agreement..........................................................................16
Section 5.5 Litigation.....................................................................................16
Section 5.6 No Brokers.....................................................................................17
ARTICLE VI
OBLIGATIONS OF PARTIES PRIOR TO AND AFTER EFFECTIVE TIME
Section 6.1 Full Access....................................................................................17
Section 6.2 Delivery of Magnetic Media Records.............................................................17
Section 6.3 Application for Approval to Effect Purchase of Assets and Assumption of Liabilities............17
Section 6.4 Conduct of Business; Maintenance of Properties.................................................18
Section 6.5 No Solicitation by Seller......................................................................19
Section 6.6 Further Actions................................................................................19
Section 6.7 Fees and Expenses..............................................................................19
Section 6.8 Breaches with Third Parties....................................................................19
Section 6.9 Insurance......................................................................................19
Section 6.10 Public Announcements...........................................................................20
Section 6.11 Tax Reporting..................................................................................20
ARTICLE VII
CONDITIONS TO PURCHASER'S OBLIGATIONS
Section 7.1 Representations and Warranties True............................................................20
Section 7.2 Obligations Performed..........................................................................20
Section 7.3 No Adverse Litigation..........................................................................20
Section 7.4 Regulatory Approval............................................................................20
ARTICLE VIII
CONDITIONS TO SELLER'S OBLIGATIONS
Section 8.1 Representations and Warranties True............................................................21
Section 8.2 Obligations Performed..........................................................................21
Section 8.3 No Adverse Litigation..........................................................................21
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Section 8.4 Regulatory Approval............................................................................21
ARTICLE IX
TERMINATION
Section 9.1 Methods of Termination.........................................................................21
Section 9.2 Procedure Upon Termination.....................................................................22
Section 9.3 Payment of Expenses............................................................................22
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.1 Amendment and Modification.....................................................................23
Section 10.2 Waiver or Extension............................................................................23
Section 10.3 Assignment.....................................................................................23
Section 10.4 Addresses for Notices, Etc.....................................................................23
Section 10.5 Counterparts...................................................................................24
Section 10.6 Headings.......................................................................................24
Section 10.7 Governing Law..................................................................................24
Section 10.8 Sole Agreement.................................................................................24
Section 10.9 Severability...................................................................................24
Section 10.10 Parties in Interest............................................................................24
Exhibits
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Exhibit A - List of Branches
Exhibit B - Form of Power of Attorney
Exhibit C - Form of ▇▇▇▇ of Sale
Exhibit D - Form of Assignment and Assumption Agreement
Exhibit E - Form of Closing Statement
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PURCHASE AND ASSUMPTION AGREEMENT
THIS PURCHASE AND ASSUMPTION AGREEMENT, dated as of October 29, 2003 (this
"Agreement") is by and between NATIONAL BANK OF COMMERCE, a national bank having
its principal offices in Memphis, Tennessee ("Seller"), and First South Bank, a
North Carolina-chartered bank having its principal offices in Washington, North
Carolina ("Purchaser").
W I T N E S S E T H:
--------------------
WHEREAS, Seller wishes to divest, upon the terms and conditions set forth
herein, of certain of its assets and substantially all of its deposits and other
liabilities of two of its branch offices located at ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (the
"Banking Centers" as listed in Exhibit A); and
WHEREAS, Purchaser wishes to purchase such assets and assume such
liabilities upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and mutual agreements
hereinafter set forth, Seller and Purchaser agree as follows:
ARTICLE I
TRANSFER OF ASSETS AND LIABILITIES
Section 1.1 Transferred Assets.
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(a) As of the Effective Time (as defined in SECTION 2.1 below) and upon the
terms and conditions set forth herein, Seller will sell, assign, transfer,
convey and deliver to Purchaser, and Purchaser will purchase from Seller, all of
the following assets associated with the Banking Centers and identified in this
Agreement and the Exhibits hereto, and not otherwise excluded from sale pursuant
to the provisions of SECTION 1.1(b) below (the "Assets"):
(1) Reserved.
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(2) the furniture, fixtures (including security equipment and
automated teller machines, subject to compatibility with Purchaser's data
processing system), leasehold improvements, equipment and other tangible
personal property located on or affixed to the Banking Centers as of the
date of this Agreement (collectively, the "Tangible Personal Property");
(3) such equipment leases for equipment located at the Banking Centers
as the parties hereto may agree subsequent to the date of this Agreement
(together with related maintenance agreements, the "Equipment Leases");
(4) all safe deposit contracts and leases for the safe deposit boxes
located at the Banking Centers as of the Effective Time (the "Safe Deposit
Contracts);
(5) all Loans as defined herein and transferred pursuant to SECTION
1.4;
(6) all demand deposit overdrafts;
(7) all coins and currency located at the Banking Centers as of the
Effective Time (the "Coins and Currency");
(8) originals or copies of all records of Seller pertaining to the
Loans, all deposit accounts, and any other customer relationships
transferred to Purchaser; and
(9) Seller's rights in and to the use of the current telephone numbers
of the Banking Centers.
(b) Excluded from the assets, properties and rights being transferred,
conveyed and assigned to Purchaser under this Agreement are debit and credit
card merchant services agreements related to customers of the Banking Centers,
Seller's rights in and to the name "National Bank of Commerce," Seller's rights
to and interest in software installed on computers and computer hardware located
at the Banking Centers, Seller's right to recover assets charged off by Seller
prior to the Effective Time, including, without limitation, charged off loans
and demand deposit overdrafts, demand deposit overdrafts outstanding more than
thirty (30) days and not covered by overdraft or bounce protection, and all of
Seller's corporate logos, trademarks and trade names, and signs, paper stock,
forms and other supplies containing such name and any such logos, trademarks or
trade names (collectively, the "Excluded Assets"). Seller shall remove the
Excluded Assets from the Banking Centers on or prior to the Effective Time or,
as soon thereafter as practicable. Seller shall remove the Excluded Assets at
its own cost and, apart from making any repairs necessitated by Seller's
negligence in removing the Excluded Assets, Seller shall be under no obligation
to restore the Banking Centers premises to their original condition, which shall
be the responsibility of Purchaser.
Section 1.2 Purchase Price.
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(a) As consideration for the purchase of the Banking Centers, Purchaser
shall pay Seller a purchase price equal to the sum of the following (the
"Purchase Price"):
(1) $75,000 for the Tangible Personal Property;
(2) A premium for the Deposit Liabilities (as defined in SECTION
1.3(a) hereof) and franchise value related to the Banking Centers equal to
1.5% of the Deposit Liabilities, except for (i) the Deposit Liabilities
represented by those certain accounts shown on Exhibit 1.2(a)(2) attached
hereto and incorporated herein by reference, (ii) Deposit Liabilities
consisting of sweep accounts, brokered deposits, commercial repurchase
agreements or public fund deposits, or (iii) certificates of deposit in
excess of $100,000 issued subsequent to September 30, 2003, or (iv) any
Deposit Liability to the extent such Deposit Liability is attributable to
an increase from the balance as of
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September 30, 2003 in a certificate of deposit with a balance exceeding
$100,000 at the Effective Time;
(3) the Net Book Value, including accrued interest, for the Loans (as
defined in SECTION 1.4 hereof); and
(4) the face amount of the Coins and Currency.
(b) In addition, Purchaser shall assume, as of the Effective Time, all of
the duties, obligations and liabilities of Seller relating to the Equipment
Leases and the Deposit Liabilities (including all accrued interest relating
thereto); provided, that any cash items paid by Seller and not cleared prior to
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the Effective Time shall be the responsibility of Seller, subject to the terms
of SECTION 1.3 below.
(c) Seller shall prepare a balance sheet (the "Pre-Closing Balance Sheet"),
in accordance with Seller's customary practices and procedures, as of a date not
earlier than thirty (30) calendar days prior to the Effective Time anticipated
by the parties (the "Pre-Closing Balance Sheet Date"), reflecting the assets to
be sold and assigned hereunder and the liabilities to be transferred and assumed
hereunder, all based on the book value of such assets and liabilities. The
amounts of assets and liabilities set forth on the Pre-Closing Balance Sheet
shall be used by Seller in the preparation of the Closing Statement (as
hereinafter defined). Seller agrees to pay to Purchaser at the Closing (as
defined in SECTION 2.1 hereof), in immediately available funds, the amount, if
any, owed to Purchaser as set forth on the Closing Statement. Purchaser agrees
to pay Seller at the Closing, in immediately available funds, the amount, if
any, owed to Seller as set forth on the Closing Statement. Amounts paid at
Closing shall be subject to subsequent adjustment based on the Post-Closing
Balance Sheet (as defined in SECTION 2.3 hereof).
(d) For purposes of this Agreement, "Net Book Value" means the value
determined from the Post-Closing Balance Sheet; provided, however, that, with
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respect to the Loans, "Net Book Value" means the outstanding balance at the
Closing, plus accrued interest, but not including the loan loss reserve
attributable to any Loan or any general reserve.
Section 1.3 Deposit Liabilities.
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(a) "Deposit Liabilities," shall mean all of Seller's duties, obligations
and liabilities relating to the deposit accounts located at the Banking Centers
as of the Effective Time (including accrued but unpaid or uncredited interest
thereon) but excluding deposit accounts which have been in overdraft status for
30 days or more.
(b) Except for those liabilities and obligations specifically assumed by
Purchaser under SECTION 1.2(b) above, Purchaser is not assuming any other
liabilities or obligations of Seller. Liabilities not assumed include, but are
not limited to, the following:
(1) Seller's cashier checks, letters of credit, money orders, interest
checks and expense checks issued prior to the Closing, consignments of U.S.
Government "E" and "EE" bonds and any and all traveler's checks;
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(2) liabilities or obligations with respect to any litigation, suits,
claims, demands or governmental proceedings arising, commenced or otherwise
applicable to Seller prior to the Closing and related to the Banking
Centers;
(3) Deposit accounts associated with qualified retirement plans where
Seller is the trustee of such plan or the sponsor of a prototype plan used
by such plan;
(4) Deposit accounts associated with Seller's national or regional
account relationships, if any; and
(5) Self-directed individual retirement accounts, if any, it being
understood that all other types of ▇▇▇ Deposit Liabilities are intended to
be transferred.
(c) Seller does not represent or warrant that any deposit customers whose
accounts are assumed by Purchaser will become or continue to be customers of
Purchaser after the Effective Time.
(d) Purchaser agrees to pay in accordance with law and customary banking
practices all properly payable checks, drafts and withdrawal orders presented to
Purchaser by mail, over the counter or through the check clearing system of the
banking industry, whether drawn on the checks, withdrawal or draft forms
provided by Seller or by Purchaser, and in all other respects to discharge, in
the usual course of the banking business, the duties and obligations of Seller
with respect to the Deposit Liabilities assumed by Purchaser, provided that, in
the case of any such payments made by Purchaser with respect to checks dated
prior to the Effective Time and in amounts of greater than $50,000, where such
payments are made by Purchase on or before ten business days following the
Effective Time, Seller shall refund to Purchaser that portion of the premium
referred to in Section 1.2(a)(2) herein attributable to such payments.
(e) If, after the Effective Time, any depositor, instead of accepting the
obligation of Purchaser to pay the Deposit Liabilities assumed, shall demand
payment from Seller for all or any part of any such assumed Deposit Liabilities,
Seller shall forward to Purchaser any paper checks, drafts or withdrawal orders
presented to it relating thereto, and Seller shall not be liable or responsible
for making any such payment; provided, that if Seller shall pay the same,
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Purchaser agrees to reimburse Seller for any such payments, and Seller shall not
be deemed to have made any representations or warranties to Purchaser with
respect to any such checks, drafts or withdrawal orders, and any such
representations or warranties implied by law are hereby expressly disclaimed.
Seller and Purchaser shall make arrangements to provide for the daily settlement
with immediately available funds by Purchaser of checks, drafts, withdrawal
orders, returns and other items presented to and paid by Seller within sixty
(60) calendar days after the Effective Time and drawn on or chargeable to
accounts that have been assumed by Purchaser; provided, however, that Seller
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shall be held harmless and indemnified by Purchaser for acting in accordance
with such arrangements. Purchaser shall be responsible for any costs incurred
for courier services of the daily settlements. Availability of daily settlement
will be by 2:00 p.m. (Eastern Standard Time).
(f) Purchaser agrees, at its cost and expense, (i) to assign new account
numbers to depositors of assumed accounts, (ii) to notify such depositors, on or
before the Effective Time, of
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Purchaser's assumption of Deposit Liabilities, and (iii) to furnish such
depositors with checks on the forms of Purchaser and with instructions to
utilize Purchaser's checks and to destroy unused check, draft and withdrawal
order forms of Seller. Seller will cooperate with Purchaser in providing the
necessary information for Purchaser's notice to customers pursuant to subsection
(ii) above; additionally, Seller will cooperate in a joint notice to customers,
if requested by Purchaser.
(g) Purchaser agrees to pay promptly to Seller an amount equivalent to the
amount of any checks, drafts or withdrawal orders credited to an assumed account
as of the Effective Time that are returned to Seller after the Effective Time,
provided that Purchaser shall be required to make such payment only up to the
balance of funds on deposit with Purchaser at the ▇▇▇▇ ▇▇▇▇▇▇ makes demand to
Purchaser.
(h) As of and following the Effective Time, Purchaser shall assume and
discharge Seller's duties and obligations with respect to the Deposit
Liabilities, in accordance with the terms and conditions of, and laws, rules and
regulations that apply to, the Deposit Liabilities. At the Effective Time,
Seller shall provide to Purchaser a written listing of each stop payment order,
tax lien, levy, garnishment, pledge, guardianship agreement, or other hold or
restriction then in effect with respect to any of the Deposit Liabilities (the
"Holds"), and Purchaser shall honor and comply with the terms of all valid Holds
described in the above list. If, following receipt of such list, Purchaser makes
any payment in violation of any such Hold, then it shall be solely liable for
such payment and shall indemnify, hold harmless, and defend Seller from and
against all claims, losses and liabilities, including reasonable attorneys' fees
and expenses, arising out of any such payment. In the event that Purchaser shall
make any payment in violation of a Hold initiated prior to the Effective Time
but not reflected in the above list, then Seller shall be solely liable for such
payment and shall indemnify, hold harmless and defend Purchaser from and against
all claims, losses, and liabilities, including reasonable attorneys' fees and
expenses, arising out of any such payment.
(i) As of the Effective Time, Seller will transfer and assign to Purchaser,
and Purchaser will maintain and safeguard in accordance with applicable law and
sound banking practices, all account documents, deposit contracts, signature
cards, deposit slips, canceled items and other records related to the Deposit
Liabilities assumed under this Agreement, subject to Seller's right of access to
such records as provided in this Agreement.
(j) Seller will render a final statement to each depositor of an account
assumed under this Agreement as to transactions occurring through the Effective
Time and will comply with all laws, rules and regulations regarding tax
reporting of transactions of such accounts through the Effective Time; provided,
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however, that Seller shall not be obligated to render a final statement on any
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account not ordinarily receiving periodic statements in the ordinary course of
Seller's business. Seller will be entitled to impose normal fees and service
charges on a per-item basis, but Seller will not impose periodic fees or blanket
charges in connection with such final statements.
(k) As of the Effective Time, Purchaser, at its expense, will notify all
Automated Clearing House ("ACH") originators of the transfers and assumptions
made pursuant to the Agreement; provided, however, that Seller may, at its
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option, notify all such originators itself (on
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behalf of Purchaser), also at the expense of Purchaser. For a period of sixty
(60) calendar days beginning on the Effective Time, Seller will, without any
obligation to investigate the accuracy of such request or the balance in the
underlying account, honor all ACH items related to accounts assumed under this
Agreement that are mistakenly routed or presented to Seller, and Purchaser will
reimburse Seller for all such ACH payments on a daily basis. Seller will make no
charge to Purchaser for honoring such items and will electronically transmit
such ACH data to Purchaser. If Purchaser cannot receive such electronic
transmissions, Seller will make available to Purchaser, at Seller's operations
center, receiving items from the ACH tapes containing such ACH data. Items
mistakenly routed or presented after the sixty (60) day period will be returned
to the presenting party. Seller and Purchaser shall make arrangements to provide
for the daily settlement with immediately available funds by Purchaser of any
ACH items honored by Seller, and Seller shall be held harmless and indemnified
by Purchaser for acting in accordance with this arrangement to accept ACH items.
If requested by Purchaser, Seller shall extend the period of honoring ACH items
for an additional thirty (30) day period; provided however, that Seller may
refuse to extend the original sixty (60) day period if Purchaser has not made a
good faith effort to fulfill its duties to notify all ACH originators of the
transfers and assumptions made pursuant to the Agreement.
Section 1.4 Loans Transferred.
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(a) Seller will sell, transfer and assign to Purchaser as of the Effective
Time, subject to the terms and conditions of this Agreement, all of Seller's
right, title and interest in (including collateral relating thereto) the loans
of the Banking Centers including demand deposit overdrafts, together with all
promissory notes, loan agreements, security agreements, deeds of trust,
assignment or pledge agreements and other documentation pertaining thereto and
all Seller's rights thereunder (collectively, the "Loans"); provided, however,
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the Loans shall not include any loans described in subsection (b) below. Such
Loans (as well as any security interest related thereto) shall be transferred by
means of a blanket assignment and not individually (except as may be otherwise
required by law). Purchaser shall inform Seller not less than thirty (30)
calendar days prior to the Effective Time of any case in which individual
assignments will be required by law.
(b) Notwithstanding the provisions of subsection (a) above, the Loans shall
not include:
(1) nonaccruals (which term shall include loans in which the
collateral securing same has been repossessed or in which collection
efforts have been instituted or, claim and delivery or foreclosure
proceedings have been filed);
(2) loans sixty (60) calendar days or more past due;
(3) loans upon which insurance has been force-placed;
(4) loans in connection with which the borrower has filed a petition
for relief under the United States Bankruptcy Code prior to the Effective
Time;
(5) Letters of Credit, unless specifically accepted by Purchaser, or
loans in which the Seller participates with another bank, unless
specifically accepted by Purchaser;
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(6) loans identified by Purchaser in writing 45 calendar days or more
prior to the Effective Time as not being purchased because of failure to
meet the credit standards of Purchaser; and
(7) Credit card loans.
Following the execution of this Agreement, Purchaser shall have an
opportunity to examine, to the extent it deems necessary, each of the loans of
the Banking Centers, together with all files, documentation or other information
related to such loans that are maintained or held by Seller. Such examination
shall take place at a site and time mutually agreed upon by Purchaser and
Seller, which time shall not be later than 45 days prior to the Closing.
Purchaser may conduct such examination on more than one occasion, at reasonable
intervals, prior to the Closing, and Seller will, upon Purchaser's request at
reasonable intervals, provide a listing of new loans made by Seller since each
previous occasion of examination by Purchaser.
(c) Seller and Purchaser agree that Purchaser will become the beneficiary
of credit life insurance written on direct consumer installment Loans, and
coverage will continue to be the obligation of the current insurer after the
Effective Time and for the duration of such insurance as provided under the
terms of the applicable policy or certificate. Seller and Purchaser agree to
cooperate in good faith to develop a mutually satisfactory method by which the
current insurer will make rebate payments to and satisfy claims of the holders
of such certificates of insurance after the Effective Time. The parties'
obligations in this Section are subject to any restrictions contained in
existing insurance contracts as well as applicable laws and regulations.
(d) In connection with the transfer of any Loans requiring notice to the
borrower, Purchaser and Seller agree to comply with all notice and reporting
requirements of the loan documents or of any law or regulation.
(e) All Loans transferred to Purchaser shall be valued at their Net Book
Value, such value to include their outstanding principal balance, plus any
accrued interest.
(f) Subject to Section 1.4(l) below, all Loans will be transferred without
recourse and without any warranties or representations as to their
collectibility or the creditworthiness of any of the obligors of such Loans.
(g) Purchaser will, at its expense, issue new coupon books for payment of
Loans for which Purchaser provides coupon books, with instructions to utilize
Purchaser's coupons and to destroy coupons furnished by Seller.
(h) For a period of ninety (90) calendar days after the Effective Time,
Seller will forward to Purchaser, on a weekly basis, all loan payments received
by Seller, in the form received by Seller.
(i) As of the Effective Time, Seller shall transfer and assign all files,
documents and records related to the Loans to Purchaser, and Purchaser will be
responsible for maintaining and safeguarding all such materials in accordance
with applicable law and sound banking practices.
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(j) If the balance due on any Loan purchased pursuant to this SECTION 1.4
has been reduced by Seller as a result of a payment by check received prior to
the Effective Time, which item is returned after the Effective Time, then Seller
shall assign that check to Purchaser, the asset value represented by the Loan
transferred shall be correspondingly increased, and an amount in cash equal to
such increase shall be paid by Purchaser to Seller promptly upon demand;
provided, however, that if, before Purchaser's receipt of notice of such
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returned check, the obligor of such Loan shall have paid Purchaser in full the
outstanding balance of such Loan showing on Purchaser's books and records and
Purchaser shall have canceled the Loan documents and returned the same to the
obligor, then Purchaser shall have no obligation to make any such payment to
Seller.
(k) Seller shall grant to Purchaser as of the Effective Time a limited
power of attorney, in substantially the form attached hereto as Exhibit B (the
"Power of Attorney").
Section 1.5 Employee Matters.
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(a) Subject to Section 10.10 herein, Purchaser shall offer employment to
all employees, other than temporary agency workers or employees, employed by
Seller at the Banking Centers as of the Effective Time (the "Employees"), in
their then current functional positions with remuneration not less than current
levels (subject to normal salary increases) and with the same benefits as those
available to Purchaser's comparable employees. Nothing herein contained shall be
construed as an employment contract enforceable by any employee. Employees shall
receive full credit for their prior service with Seller under Purchaser's
benefit plans and policies, including its vacation and sick leave policies. As
of the Effective Time, the Employees and their dependents, if any, previously
covered under Seller's health insurance plans shall be covered under Purchaser's
health insurance plan without being subject to any pre-existing condition
limitations or exclusions except those excluded under Seller's health insurance
plan. Employees at the New Bern location shall receive full credit for their
prior service with Seller for the purposes of determining their participation
eligibility and vesting rights under Purchaser's employee benefit plans.
(b) Seller makes no representations or warranties about whether any of the
Employees will remain employed at the Banking Centers after the Effective Time.
Seller will use commercially reasonable efforts to maintain the Employees as
employees of Seller at the Banking Centers until the Effective Time. Any
Employee whose employment will be terminated for any reason prior to the
Effective Time or who elects not to be an employee of Purchaser shall be dealt
with by Seller in its sole and absolute discretion. Seller agrees that, for a
period of twelve (12) months after the Effective Time, it will not solicit for
employment any Employee who becomes employed by Purchaser as of the Effective
Time. All salaries, benefits, unused (but accrued) vacation, if any, withholding
taxes, FICA taxes and any other liabilities of every nature which arise or
originate prior to the Closing will be discharged in full by Seller, and Seller
agrees to indemnify Purchaser from all liability therefore.
(c) For the New Bern location only, Purchaser agrees for a period of twelve
(12) months after the Effective Time it will not terminate any Employee without
cause without paying to such
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Employee a severance benefit. With respect to Employees other than the Branch
Manager, the severance benefit shall equal two weeks of base salary for every
year of service with Seller; provided that the minimum severance payment shall
not be less than four weeks base salary. With respect to the Branch Manager, the
severance benefit shall equal two weeks of base salary for every year of service
with Seller; provided however, that the minimum severance benefit shall not be
less than six months of base salary.
(d) Seller agrees to honor any severance and stay bonus it offered to
employees employed at the Greenville Banking Center.
Section 1.6 Safe Deposit Business
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(a) As of the Effective Time, Purchaser will assume and discharge Seller's
obligations with respect to the safe deposit box business at the Banking Centers
in accordance with the terms and conditions of contracts or rental agreements
related to such business, and Purchaser will maintain all facilities necessary
for the use of such safe deposit boxes by persons entitled to use them.
(b) As of the Effective Time, Seller shall transfer and assign the records
related to such safe deposit box business to Purchaser, and Purchaser shall
maintain and safeguard all such records and be responsible for granting access
to and protecting the contents of safe deposit boxes at the Banking Centers.
(c) Safe deposit box rental payments (not including late payment fees)
collected by Seller before the Effective Time shall be prorated as of the
Effective Time.
Section 1.7 Reserved.
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Section 1.8 Records and Data Processing.
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(a) As of the Effective Time, Purchaser shall become responsible for
maintaining the files, documents and records referred to in this Agreement.
Purchaser will preserve and keep such documents as required by applicable law
and sound banking practice for the joint benefit of Seller and Purchaser. After
the Effective Time, Purchaser will permit Seller and its representatives, at
reasonable times and upon reasonable notice and at Seller's expense, to examine,
inspect, copy and reproduce any such files, documents or records as Seller deems
reasonably necessary.
(b) After the Effective Time, Seller will permit Purchaser and its
representatives, for reasonable cause, at reasonable times and upon reasonable
notice and at Purchaser's expense, to examine, inspect, copy and reproduce
files, documents or records retained by Seller as Purchaser deems reasonably
necessary, regarding the assets and liabilities transferred under this
Agreement.
(c) It is understood that certain of Seller's documents and records may be
available only in the form of photocopies, film copies or other non-original and
non-paper media.
9
Section 1.9 Security and Insurance. As of the Effective Time, Purchaser
------------------------
shall be solely responsible for the security of and insurance on all persons and
property located in or about the Banking Centers. Purchaser reserves the right
to make its own security arrangements and not assume any existing agreements
between Seller and a security vendor or be responsible for any penalty with
respect thereto.
Section 1.10 Taxes and Fees; Proration of Certain Expenses. Purchaser shall
----------------------------------------------
be responsible for the payment of all fees and taxes related to the transactions
contemplated by this Agreement; provided, that Purchaser shall not be
--------
responsible for, or have any liability with respect to, taxes on any income to
Seller arising out of this transaction, and Seller agrees that it shall pay, or
represents that it has paid, in a timely manner any and all such income taxes.
Purchaser shall not be responsible for any income tax liability of Seller
arising from the business or operations of the Banking Centers before the
Effective Time, and Seller shall not be responsible for any tax liabilities of
Purchaser arising from the business or operations of the Banking Centers after
the Effective Time. Utility payments, telephone charges, personal property
taxes, rent, salaries, deposit insurance premiums, other ordinary operating
expenses of the Banking Centers and other expenses related to the liabilities
assumed or assets purchased hereunder shall be prorated between the parties as
of the Effective Time. To the extent any such item has been prepaid by Seller
for a period extending beyond the Effective Time, there shall be a proportionate
monetary adjustment in favor of Seller.
ARTICLE II
CLOSING AND EFFECTIVE TIME
Section 2.1 Effective Time. The purchase of assets and assumption of
----------------
liabilities provided for in this Agreement shall occur at a closing (the
"Closing") to be held at the offices of NBC Legal Department, One Commerce
Square, Memphis, Tennessee, at 10:00 a.m., local time, within thirty-one (31)
calendar days following the date of all approvals by regulatory agencies and
after all statutory waiting periods have expired, or at such other place, time
or date on which the parties shall mutually agree. The effective time (the
"Effective Time") shall be 5:00 p.m., local time, on the day on which the
Closing occurs.
Section 2.2 Closing.
--------
(a) All actions taken and documents delivered at the Closing shall be
deemed to have been taken and executed simultaneously, and no action shall be
deemed taken nor any document delivered until all have been taken and delivered.
(b) At the Closing, subject to all the terms and conditions of this
Agreement, Seller shall deliver to Purchaser or, in the case of items (b)(5) and
(6), make reasonably available to Purchaser:
(1) a ▇▇▇▇ of Sale, in substantially the form attached hereto as
Exhibit C (the "▇▇▇▇ of Sale"), transferring to Purchaser all of Seller's
interest in the Tangible Personal Property and in the Loans;
10
(2) an Assignment and Assumption Agreement, in substantially the form
attached hereto as Exhibit D (the "Assignment and Assumption Agreement"),
assigning Seller's interest in the Contracts, the Equipment Leases and the
Deposit Liabilities;
(3) consents from third persons, in form and substance reasonably
satisfactory to Purchaser, that are required to effect the assignments set
forth in the Assignment and Assumption Agreement, including, but not
limited to, the lessors under the Equipment Leases (to the extent required
by such leases);
(4) Seller's keys to the safe deposit boxes and Seller's records
related to the safe deposit box business at the Banking Centers;
(5) Seller's files and records related to the Loans;
(6) Seller's records related to the Deposit Liabilities;
(7) immediately available funds in the net amount shown as owing to
Purchaser by Seller on the Closing Statement, if any;
(8) the Coins and Currency;
(9) such of the other Assets to be purchased as shall be capable of
physical delivery, together with such documents or instruments of transfer
as Purchaser shall reasonably request to vest title in Purchaser;
(10) a certificate of a proper officer of Seller, dated as of the date
of Closing, certifying to the fulfillment of all conditions that are the
obligation of Seller and that all of the representations and warranties of
Seller set forth in this Agreement remain true and correct in all respects
as of the Effective Time;
(11) such certificates and other documents as Purchaser may reasonably
require to evidence (i) the receipt by Seller of all necessary corporate
and regulatory authorizations and approvals for the consummation of the
transactions provided for in this Agreement; (ii) the transfer and sale to
Purchaser of the Assets and (iii) the perfection of Purchaser's security
interest in the Loans;
(12) a Closing Statement, substantially in the form attached hereto as
Exhibit E (the "Closing Statement");
(13) the Power of Attorney;
(14) Forms for the transfer of ▇▇▇ accounts and the appointment of
successor trustees; and
(15) Assignment of credit life insurance policies pursuant to Section
1.4(c).
It is understood that the items listed in subsections (b)(4), (8) and (9)
shall be transferred after the Banking Centers has closed for business on the
date of Closing and that the records
11
listed in subsections (b)(5) and (6) will be transferred as soon as possible
after the Closing, but in no event more than five (5) business days after the
Closing. All documents listed above shall be in form and substance reasonably
satisfactory to Purchaser and its legal counsel.
(c) At the Closing, subject to all the terms and conditions of this
Agreement, Purchaser shall deliver to Seller:
(1) the Assignment and Assumption Agreement;
(2) a certificate and receipt acknowledging the delivery and receipt
of possession of the property and records referred to in this Agreement;
(3) immediately available funds in the net amount shown as owing to
Seller by Purchaser on the Closing Statement, if any;
(4) a certificate of a proper officer of Purchaser, dated as of the
date of Closing, certifying to the fulfillment of all conditions that are
the obligation of Purchaser and that all of the representations and
warranties of Purchaser set forth in this Agreement remain true and correct
in all respects as of the Effective Time;
(5) such certificates and other documents as Seller may reasonably
require to evidence the receipt of Purchaser of all necessary corporate and
regulatory authorizations and approvals for the consummation of the
transactions provided for in this Agreement; and
(6) the Closing Statement.
All documents listed above shall be in form and substance reasonably
satisfactory to Seller and its legal counsel
Section 2.3 Post-Closing Adjustments.
-------------------------
(a) Not later than thirty (30) days after the Effective Time (the
"Post-Closing Balance Sheet Delivery Date"), Seller shall deliver to Purchaser a
balance sheet dated as of the Effective Time and prepared in accordance with
Seller's customary practices and procedures; reflecting the assets sold and
assigned and the liabilities transferred and assumed hereunder (the
"Post-Closing Balance Sheet"). Additionally, Seller shall deliver to Purchaser a
list of the Loans, individually identified by account number, which list shall
be appended to the ▇▇▇▇ of Sale. Seller shall afford Purchaser and its
accountants and attorneys the opportunity to review all work papers and
documentation used by Seller in preparing the Post-Closing Balance Sheet. Within
fifteen (15) business days following the Post-Closing Balance Sheet Delivery
Date (the "Adjustment Payment Date"), Seller and Purchaser shall effect the
transfer of any funds as may be necessary to reflect changes in such assets and
liabilities between the Pre-Closing Balance Sheet, and the Post-Closing Balance
Sheet, together with interest thereon computed from the Effective Time to the
Adjustment Payment Date at the applicable Federal Funds Rate (as hereinafter
defined).
12
(b) In the event that a dispute arises as to the appropriate amounts to be
paid to either party on the Adjustment Payment Date, each party shall pay to the
other on such Adjustment Payment Date all amounts other than those as to which a
dispute exists. Any disputed amounts retained by a party that are later found to
be due to the other party shall be paid to such other party promptly upon
resolution with interest thereon from the Adjustment Payment Date to the date
paid at the applicable Federal Funds Rate.
(c) The "Federal Funds Rate" shall be the mean of the high and low rates
quoted for Federal Funds in the Money Rates Column of the Wall Street Journal
adjusted as such mean may increase or decrease during the period between the
Effective Time and the Adjustment Payment Date.
ARTICLE III
INDEMNIFICATION
Section 3.1 Seller's Indemnification of Purchaser. Seller shall indemnify,
--------------------------------------
hold harmless and defend Purchaser from and against any breach by Seller of any
representation or warranty contained herein and all claims, losses, liabilities,
demands and obligations, including reasonable attorneys' fees and expenses,
arising out of any actions, suits or proceedings commenced prior to the
Effective Time (other than proceedings to prevent or limit the consummation of
the transactions contemplated hereby) relating to operations at the Banking
Centers; and, except as otherwise provided in this Agreement, Seller shall
further indemnify, hold harmless and defend Purchaser from and against all
claims, losses, liabilities, demands and obligations, including reasonable
attorneys' fees and expenses, and all real estate taxes, intangibles and
franchise taxes, sales and use taxes, social security and unemployment taxes,
all accounts payable and operating expenses (including salaries, rents and
utility charges) incurred by Seller prior to the Effective Time and which are
claimed or demanded on or after the Effective Time, or that arise out of any
actions, suits or proceedings commenced on or after the Effective Time and that
relate to operations at the Banking Centers prior to the Effective Time.
Section 3.2 Purchaser's Indemnification of Seller. Purchaser shall
------------------------------------------
indemnify, hold harmless and defend Seller from and against any breach by
Purchaser of any representation or warranty contained herein and all claims,
losses, liabilities, demands and obligations, including reasonable attorneys'
fees and expenses, and all real estate taxes, intangibles and franchise taxes,
sales and use taxes, social security and unemployment taxes, all accounts
payable and operating expenses (including salaries, rents and utility charges),
that Seller may receive, suffer or incur in connection with operations and
transactions occurring after the Effective Time and that involve the Banking
Centers, the assets transferred or the liabilities assumed pursuant to this
Agreement.
Section 3.3 Claims for Indemnity.
---------------------
(a) A claim for indemnity under SECTIONS 3.1 or 3.2 of this Agreement may
be made by the claiming party at any time prior to twelve (12) months after the
Effective Time by the giving of written notice thereof to the other party,
provided that any claims for indemnity arising from fraud or intentional
misrepresentation may be made at any time prior to the expiration of the
applicable statute of limitations or repose. Such written notice shall set forth
in reasonable detail
13
the basis upon which such claim for indemnity is made. In the event that any
such claim is made within such prescribed twelve (12) month period, the
indemnity relating to such claim shall survive until such claim is resolved.
Claims not made within such twelve (12) month period shall cease, and no
indemnity shall be made therefor.
(b) In the event that any person or entity not a party to this Agreement
shall make any demand or claim or file or threaten to file any lawsuit, which
demand, claim or lawsuit may result in any liability, damage or loss to one
party hereto of the kind for which such party is entitled to indemnification
pursuant to SECTION 3.1 or 3.2 hereof, then, after written notice is provided by
the indemnified party to the indemnifying party of such demand, claim or
lawsuit, the indemnifying party shall have the option, at its cost and expense,
to retain counsel for the indemnified party to defend any such demand, claim or
lawsuit. In the event that the indemnifying party shall fail to respond within
five (5) calendar days after receipt of such notice of any such demand, claim or
lawsuit, then the indemnified party shall retain counsel and conduct the defense
of such demand, claim or lawsuit as it may in its discretion deem proper, at the
cost and expense of the indemnifying party. In effecting the settlement of any
such demand, claim or lawsuit, an indemnified party shall act in good faith,
shall consult with the indemnifying party and shall enter into only such
settlement as the indemnifying party shall approve (the indemnifying party's
approval will not be unreasonably withheld and will be implied if it does not
respond within ten (10) calendar days of its receipt of the notice of such
settlement offer).
Section 3.4 Limitations on Indemnification. Notwithstanding anything to the
-------------------------------
contrary contained in this ARTICLE III, no indemnification shall be required to
be made by either party until the aggregate amount of all such claims by a party
exceeds $25,000. Once such aggregate amount exceeds $25,000, such party shall
thereupon be entitled to indemnification for all amounts in excess of such
$25,000. IN ADDITION, THE PARTIES SHALL HAVE NO OBLIGATIONS UNDER THIS ARTICLE
III FOR ANY CONSEQUENTIAL LIABILITY, DAMAGE OR LOSS THE INDEMNIFIED PARTY MAY
SUFFER AS THE RESULT OF ANY DEMAND, CLAIM OR LAWSUIT.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser as follows, which
representations and warranties shall survive the Effective Time for a period of
twelve (12) months, unless claims for violations of Seller's representations and
warranties are based on fraud or intentional misrepresentation, in which case
such claims will be governed by the applicable statute of limitations or repose:
Section 4.1 Corporate Organization. Seller is a national bank duly
------------------------
organized, validly existing and in good standing under the laws of the United
States. Seller has the corporate power and authority to own its properties, to
carry on its business as currently conducted and to effect the transactions
contemplated herein.
Section 4.2 No Violation. The Banking Centers has been operated in all
--------------
material respects in accordance with applicable laws, rules and regulations.
Neither the execution and
14
delivery of this Agreement, nor the consummation of the transactions
contemplated herein, will violate or conflict with (a) Seller's Articles of
Incorporation or Bylaws; (b) any material provision of any material agreement or
any other material restriction of any kind to which Seller is a party or by
which Seller is bound; (c) any material statute, law, decree, regulation or
order of any governmental authority; or (d) any material provision that will
result in a default under, or which will cause the acceleration of the maturity
of, any material obligation or loan to which Seller is a party.
Section 4.3 Corporate Authority. The execution and delivery of this
---------------------
Agreement and the consummation of the transactions contemplated herein have been
duly authorized by Seller's Board of Directors. No further corporate
authorization is necessary for Seller to consummate the transactions
contemplated hereunder.
Section 4.4 Enforceable Agreement. This Agreement has been duly authorized,
----------------------
executed and delivered by Seller and is the legal, valid and binding agreement
of Seller, enforceable in accordance with its terms.
Section 4.5 Use of Brokers. Seller has used no brokers for this
-----------------
transaction.
Section 4.6 Tangible Personal Property. Seller makes the following
-----------------------------
representations regarding the Tangible Personal Property: Seller owns, and will
convey to Purchaser at the Closing, all of Seller's right, title and interest to
all of the Tangible Personal Property free and clear of any claims, mortgages,
liens, security interests, pledges or encumbrances of any kind, except as may
otherwise be set forth in this Agreement. The Deposit Liabilities are insured by
the FDIC to the fullest extent permitted under federal law.
Section 4.7 Condition of Property. The Tangible Personal Property to be
----------------------
purchased by Purchaser hereunder is sold AS IS, WHERE IS, with no warranties or
representations whatsoever, except as expressly represented or warranted in this
Agreement. Seller has valid title to all Tangible Personal Property and the
Loans and has the right to transfer them as provided in this Agreement.
Section 4.8 Litigation. There are no actions, suits or proceedings pending,
-----------
or to Seller's knowledge, threatened, against Seller related to the Assets or
the transactions contemplated by this Agreement, and Seller has no knowledge of
any state of facts or the occurrence of any event which could form the basis for
any claim which could affect the Banking Centers or the transactions
contemplated herein.
Section 4.9 Loans. Each Loan is in all respects what it purports to be,
------
and, if originated by Seller, was made in the ordinary course of business and
was not originated or administered on the basis of fraud or intentional
misrepresentation, and, if originated by Seller, was not known to be
uncollectible at the time it was made and, with respect to all Loans, is not now
known to be uncollectible, and accrues interest in accordance with the terms of
the Loan. To the best knowledge of Seller, the records of Seller regarding all
Loans outstanding are accurate in all material respects and the risk
classifications for the Loans outstanding are, in the best judgment of the
management of Seller, appropriate. To the best knowledge of Seller, except as
disclosed in Exhibit 4.9 attached hereto and incorporated herein by reference,
each Loan is the
15
legal, valid and binding obligation of the obligor and any guarantor, subject to
bankruptcy, insolvency, fraudulent conveyance and other laws of general
applicability relating to or affecting creditors' rights and to general
principles of equity, and no defense, offset or counterclaim has been asserted
with respect to any such Loan. None of the Loans is in violation of any laws,
regulations or rulings, and each of the Loans complies with applicable federal
and state consumer protection, contract and usury laws, except for violations or
failures to comply which, in the aggregate, would not result in an expense to
Purchaser in excess of $25,000, provided that Purchaser shall have the duty to
mitigate its damages in the event it discovers any violations or failures to
comply among the Loans.
Section 4.10 Limitation of Representations and Warranties. Except as
-------------------------------------------------
expressly represented or warranted in this Agreement by Seller, Seller makes no
representations or warranties whatsoever with regard to any asset being
transferred to Purchaser or any liability or obligation being assumed by
Purchaser or as to any other matter or thing.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
Section 5.1 Corporate Organization. Purchaser is a bank duly organized,
------------------------
validly existing and in good standing under the laws of the State of North
Carolina. Purchaser has the corporate power and authority to own the properties
being acquired, to assume the liabilities being transferred and to effect the
transactions contemplated herein.
Section 5.2 No Violation. Neither the execution and delivery of this
--------------
Agreement, nor the consummation of the transactions contemplated herein, will
violate or conflict with (a) the Articles of Incorporation or Bylaws of
Purchaser, any material provision of any material agreement or any other
material restriction of any kind to which Purchaser is a party or by which
Purchaser is bound; (b) any material statute, law, decree, regulation or order
of any governmental authority; or (c) any material provision that will result in
a default under, or cause the acceleration of the maturity of, any material
obligation or loan to which Purchaser is a party.
Section 5.3 Corporate Authority. The execution and delivery of this
---------------------
Agreement, and the consummation of the transactions contemplated herein, have
been duly authorized by the Board of Directors of Purchaser. No further
corporate authorization on the part of Purchaser is necessary to consummate the
transactions contemplated hereunder.
Section 5.4 Enforceable Agreement. This Agreement has been duly authorized,
----------------------
executed and delivered by Purchaser and is the legal, valid and binding
agreement of Purchaser enforceable in accordance with its terms.
Section 5.5 Litigation. There are no actions, suits or proceedings pending,
-----------
or to Purchaser's knowledge, threatened, against Purchaser related to the
transactions contemplated by this Agreement.
16
Section 5.6 Use of Brokers. Purchaser utilized Triangle Capital Partners,
---------------
LLC as broker for this transaction. All fees due to Triangle Capital Partners,
LLC shall be the sole responsibility of Purchaser pursuant to obligations
outside the parameters of this Agreement.
ARTICLE VI
OBLIGATIONS OF PARTIES PRIOR TO AND AFTER EFFECTIVE TIME
Section 6.1 Full Access. Seller shall afford to the officers and authorized
------------
representatives of Purchaser, upon prior notice and subject to Seller's normal
security requirements, access to the properties, books and records pertaining to
the Banking Centers in order that Purchaser may have full opportunity to make
reasonable investigations, at reasonable times, without interfering with the
normal business and operations of the Banking Centers or the affairs of Seller.
The officers of Seller shall furnish Purchaser with one standard set of such
additional financial and operating data and other information as to its business
and properties at the Banking Centers, or where otherwise located, as Purchaser
may, from time to time, reasonably request and as shall be available, including,
without limitation, information required for inclusion in all governmental
applications necessary to effect this transaction. Any additional copies of such
information shall be produced and provided at Purchaser's expense. Nothing in
this SECTION 6.1 shall require Seller to breach any obligation of
confidentiality or to reveal any proprietary information, trade secrets or
marketing or strategic plans. Records, including credit information, relating to
the Loans will be made available for review by Purchaser within fourteen (14)
days after the execution of this Agreement. It is understood that certain of
Seller's records may be available only in the form of photocopies, film copies
or other non-original and non-paper media. Seller shall permit Purchaser from
and after the date of public notice of the transactions provided under this
Agreement to perform training of Seller's personnel at the Banking Centers
regarding Purchaser's systems and methods of doing business, such training to be
performed at the Banking Centers or at other locations selected by Purchaser.
Seller shall permit Purchaser, from and after the date of public announcement of
the transactions provided under this Agreement, to install equipment at the
Banking Centers that will be used for branch operations after the Closing.
Purchaser shall not perform such training or install such equipment in a manner
that unreasonable disrupts Seller's operations prior to Closing.
Section 6.2 Delivery of Magnetic Media Records. Seller shall prepare at its
-----------------------------------
expense and make available to Purchaser at Seller's data processing center,
magnetic media records in Seller's field format not later than twenty (20)
calendar days after the execution of this Agreement and further shall make
available to Purchaser such records updated as of the Closing Date, which
records shall contain the information related to the items described in SECTIONS
2.2(b)(6) and (b)(7) above. Such updated records shall be made available at such
time after Closing as agreed to by the parties. At its option, Seller may
provide such reports in paper format instead of magnetic media format.
Section 6.3 Application for Approval to Effect Purchase of Assets and
-------------------------------------------------------------
Assumption of Liabilities. Within thirty (30) calendar days following the
----------------------------
execution of this Agreement, Purchaser shall prepare and file applications
required by law with the appropriate regulatory authorities for approval to
purchase and assume the aforesaid assets and liabilities, to establish a
17
branch office at the location of the Banking Centers and to effect in all other
respects the transactions contemplated herein. Purchaser agrees to process such
applications in a diligent manner and on a priority basis and to provide Seller
promptly with a copy of such applications as filed (except for any confidential
portions thereof) and all material notices, orders, opinions, correspondence and
other documents with respect thereto, and to use its best efforts to obtain all
necessary regulatory approvals. On the date hereof, Purchaser knows of no reason
why such applications should not receive all such approvals. Purchaser shall
promptly notify Seller upon receipt by Purchaser of notification that any
application provided for hereunder has been denied. Seller shall provide such
assistance and information to Purchaser as shall be reasonably necessary for
Purchaser to comply with the requirements of the applicable regulatory
authorities.
Section 6.4 Conduct of Business; Maintenance of Properties. From the date
------------------------------------------------
hereof until the Effective Time, Seller covenants that it will:
(a) carry on the business of the Banking Centers substantially in the same
manner as on the date hereof, use all reasonable efforts to preserve intact its
current business organization and preserve its business relationships with
depositors, customers and others having business relationships with it and whose
accounts will be retained at the Banking Centers and make new or renew existing
Loans at the Banking Centers only in the ordinary course consistent with past
practices; provided, however, that Seller need not, in its sole discretion,
-------- -------
advertise or promote new or substantially new customer services in the principal
market area of the Banking Centers; and provided further, that all Loans
-------- -------
originated by Seller at the Banking Centers at any time within 45 days prior to
the Closing must comply with Purchaser's underwriting standards;
(b) provide reasonable cooperation with and assist Purchaser in assuring
the orderly transition of the business of the Banking Centers to Purchaser from
the Seller;
(c) maintain the Tangible Personal Property in its current condition,
ordinary wear and tear excepted, and not remove, or cause to be removed, any of
the Tangible Personal Property from the Banking Centers; and
(d) not make any salary increases for employees of the Banking Centers
other than in accordance with past practices, which past practices shall
include, without limitation, annual review and salary adjustments and not hire
any new employees for the Banking Centers other than replacement employees;
(e) Not change interest rates paid in the Banking Centers except as on a
basis consistent with past practices on a regional or statewide basis;
(f) Not engage in any marketing campaign designed for the Banking Centers
specifically aimed at increasing certificates of deposit in individual amounts
exceeding $100,000 through the Closing Date; however, this shall not prohibit
Seller from engaging in any marketing campaign that it is undertaking on a
corporate basis throughout Seller's entire banking footprint in Seller's
ordinary course of business; and
(g) Not make any commitments for expenditures for capital improvements at
any of the Banking Centers without Purchaser's prior written consent.
18
Section 6.5 No Solicitation.
----------------
(a) For a period of twelve (12) months after the Effective Time, neither
Seller, nor any of its affiliates, will specifically target and solicit
customers of the Banking Centers; provided, however, these restrictions shall
-------- -------
not restrict general mass mailings, telemarketing calls, statement stuffers and
other similar communications directed to all the current customers of Seller or
Seller's affiliates, or to the public or newspaper, radio or television
advertisements of a general nature or otherwise prevent Seller from taking such
action as may be required to comply with any applicable federal or state laws,
rules or regulations. In addition, these restrictions shall not restrict (i) the
solicitations of commercial accounts normally established and maintained in
offices other than the Banking Centers, or (ii) the ability of Seller to
install, operate and serve customers' needs through automated teller machines at
any location.
(b) For the period from the execution of this Agreement until the Effective
Time, neither Purchaser, nor any of its affiliates, will specifically target and
solicit customers of the Banking Centers; provided, however, these restrictions
-------- -------
shall not restrict general mass mailings, telemarketing calls, statement
stuffers and other similar communications directed to all the current customers
of Purchase or Purchaser's affiliates, or to the public or newspaper, radio or
television advertisements of a general nature or otherwise prevent Purchaser
from taking such action as may be required to comply with any applicable federal
or state laws, rules or regulations. In addition, these restrictions shall not
restrict (i) the solicitations of commercial accounts normally established and
maintained in offices other than the Banking Centers, or (ii) the ability of
Purchaser to install, operate and serve customers' needs through automated
teller machines at any location.
Section 6.6 Further Actions. The parties hereto shall execute and deliver
-----------------
such instruments and take such other actions as the other party may reasonably
require in order to carry out the intent of this Agreement.
Section 6.7 Fees and Expenses. Purchaser shall be responsible for the costs
------------------
of all its attorneys' and accountants' fees and expenses, recording costs, and
other expenses related to this transaction. Seller shall be responsible for its
attorneys' and accountants' fees and expenses related to this transaction.
Section 6.8 Breaches with Third Parties. If the assignment of any material
----------------------------
claim, contract, license, lease, commitment, sales order or purchase order (or
any material claim or right or any benefit arising thereunder) without the
consent of a third party would constitute a breach thereof or materially affect
the rights of Purchaser or Seller thereunder, then such assignment is hereby
made subject to such consent or approval being obtained.
Section 6.9 Insurance. As of the Effective Time, Seller will discontinue
----------
its insurance coverage maintained in connection with the Banking Centers and the
activities conducted thereon. Purchaser shall be responsible for all insurance
protection for the Banking Centers premises and the activities conducted thereon
immediately following the Effective Time. Pending the Closing, risk of loss
shall be the responsibility of Seller. In the event of a total or major loss to
a Banking Center prior to Closing such that Seller, at its option, decided not
to replace and reopen the Banking Center, the Deposit Liabilities, Loans and
other assets and
19
liabilities to be transferred to Purchaser under this Agreement shall be
transferred to the other Banking Center covered by the Agreement.
Section 6.10 Public Announcements. Seller and Purchaser agree that, from
----------------------
the date hereof, neither shall make any public announcement or public comment
regarding this Agreement or the transactions contemplated herein without first
consulting with the other party hereto and reaching an agreement upon the
substance and timing of such announcement or comment. Further, Seller and
Purchaser acknowledge the sensitivity of this transaction to the Employees, and
no announcements or communications with the public or the Employees shall be
made without the prior approval of Seller.
Section 6.11 Tax Reporting. Seller shall comply with all tax reporting
---------------
obligations with respect to the transferred assets and liabilities on or before
the Effective Time, and Purchaser shall comply with all tax reporting
obligations with respect to the transferred assets and liabilities after the
Effective Time.
Section 6.12 Assignment of Loans and Deposit Liabilities. In any instance
---------------------------------------------
where a Loan and a Deposit Liability securing that Loan are not assigned to the
same Banking Center, no later than eight weeks prior to the Closing Seller shall
either (i) assign both the Loan and the Deposit Liability securing the Loan to a
single Banking Center or (ii) remove the Loan and/or Deposit Liability from the
Banking Center.
ARTICLE VII
CONDITIONS TO PURCHASER'S OBLIGATIONS
The obligation of Purchaser to complete the transactions contemplated in
this Agreement are conditioned upon fulfillment, on or before the Closing, of
each of the following conditions:
Section 7.1 Representations and Warranties True. The representations and
-------------------------------------
warranties made by Seller in this Agreement shall be true in all material
respects on and as of the Effective Time as though such representations and
warranties were made at and as of such time, except for any changes permitted by
the terms hereof or consented to by Purchaser.
Section 7.2 Obligations Performed. Seller shall (a) deliver or make
-----------------------
available to Purchaser those items required by SECTION 2.2 hereof, and (b)
perform and comply in all material respects with all obligations and agreements
required by this Agreement to be performed or complied with by it prior to or on
the Effective Time.
Section 7.3 No Adverse Litigation. As of the Effective Time, no action,
-----------------------
suit or proceeding shall be pending or threatened against Purchaser or Seller
that is reasonably likely to (a) materially and adversely affect the business,
properties and assets of the Banking Centers, or (b) materially and adversely
affect the transactions contemplated herein.
Section 7.4 Regulatory Approval. Purchaser shall have received all
---------------------
necessary regulatory approvals of the transactions provided in this Agreement,
all notice and waiting periods required by law to pass shall have passed, no
proceeding to enjoin, restrain, prohibit or
20
invalidate such transactions shall have been instituted or threatened, and any
conditions of any regulatory approval shall have been met, and such approvals
shall not have imposed any condition that is materially disadvantageous or
burdensome to Purchaser.
Section 7.5 Lease Agreements. Purchaser shall have received an assignment
------------------
of the Lease for each Banking Center on the same terms and conditions as Sellers
existing Leases and all third party approvals of such assignment shall have been
obtained.
ARTICLE VIII
CONDITIONS TO SELLER'S OBLIGATIONS
The obligation of Seller to complete the transactions contemplated in this
Agreement are conditioned upon fulfillment, on or before the Closing, of each of
the following conditions:
Section 8.1 Representations and Warranties True. The representations and
-------------------------------------
warranties made by Purchaser in this Agreement shall be true in all material
respects at and as of the Effective Time as though such representations and
warranties were made at and as of such time, except for any changes permitted by
the terms hereof or consented to by Seller.
Section 8.2 Obligations Performed. Purchaser shall (a) deliver to Seller
-----------------------
those items required by SECTION 2.2 hereof, and (b) perform and comply in all
material respects with all obligations and agreements required by this Agreement
to be performed or complied with by it prior to or on the Effective Time.
Section 8.3 No Adverse Litigation. As of the Effective Time, no action,
-----------------------
suit or proceeding shall be pending or threatened against Purchaser or Seller
that might materially and adversely affect the transactions contemplated
hereunder.
Section 8.4 Regulatory Approval. Purchaser shall have received from the
---------------------
appropriate regulatory authorities approval of the transactions contemplated
herein, all notice and waiting periods required by law to pass shall have
passed, no proceeding to enjoin, restrain, prohibit or invalidate such
transactions shall have been instituted or threatened, and any conditions of any
regulatory approval shall have been met, and such approvals shall not have
imposed any condition that is materially disadvantageous or burdensome to
Seller.
ARTICLE IX
TERMINATION
Section 9.1 Methods of Termination. This Agreement may be terminated in any
-----------------------
of the following ways:
(a) at any time on or prior to the Effective Time by the mutual consent in
writing of Purchaser and Seller;
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(b) by Purchaser, in writing, if the conditions set forth in ARTICLE VII of
this Agreement shall not have been met by Seller or waived in writing by
Purchaser within thirty-one (31) calendar days following the date of all
approvals by regulatory agencies and after all statutory waiting periods have
expired;
(c) by Seller, in writing, if the conditions set forth in ARTICLE VIII of
this Agreement shall not have been met by Purchaser or waived in writing by
Seller within thirty-one (31) calendar days following the date of all approvals
by regulatory agencies and after all statutory waiting periods have expired;
(d) any time prior to the Effective Time, by Purchaser or Seller, in
writing, if the other party shall have been in breach of any representation and
warranty in any material respect (as if such representation and warranty had
been made on and as of the date hereof and on the date of the notice of breach
referred to below), or in breach of any covenant, undertaking or obligation
contained herein, and such breach has not been cured by the earlier of thirty
(30) calendar days after the giving of notice to the breaching party of such
breach or the date specified in (b) and (c) above; provided, however, that there
-------- -------
shall be no cure period in connection with any breach of SECTION 6.3 hereof, so
long as such breach by Purchaser was not caused by any action or inaction of
Seller, and Seller may terminate this Agreement immediately if regulatory
applications are not filed within thirty (30) calendar days after the date of
this Agreement as provided in that Section; or
(e) by Seller or Purchaser in writing at any time after any applicable
regulatory authority has denied approval by a final non-appealable order of any
application of Purchaser for approval of the transactions contemplated herein.
Section 9.2 Procedure Upon Termination. In the event of termination
-----------------------------
pursuant to SECTION 9.1 hereof, and except as otherwise stated therein, written
notice thereof shall be given to the other party, and this Agreement shall
terminate immediately upon receipt of such notice unless an extension is
consented to by the party having the right to terminate.
If this Agreement is terminated as provided herein,
(a) each party will return all documents, work papers and other materials
of the other party, including photocopies or other duplications thereof,
relating to this transaction, whether obtained before or after the execution
hereof, to the party furnishing the same; and
(b) all information received by either party hereto with respect to the
business of the other party (other than information which is a matter of public
knowledge or which has heretofore been published in any publication for public
distribution or filed as public information with any governmental authority)
shall not at any time be used for any business purpose by such party or
disclosed by such party to third persons.
Section 9.3 Payment of Expenses. Should the transactions contemplated
---------------------
herein not be consummated because of a party's breach of this Agreement, in
addition to such damages as may be recoverable in law or equity, the other party
shall be entitled to recover from the breaching party upon demand, itemization
and documentation, its reasonable outside legal, accounting, consulting and
other out-of-pocket expenses.
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ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.1 Amendment and Modification. The parties hereto, by mutual
----------------------------
consent of their duly authorized officers, may amend, modify and supplement this
Agreement in such manner as may be agreed upon by them in writing.
Section 10.2 Waiver or Extension. Except with respect to required approvals
--------------------
of applicable governmental authorities, either party, by written instrument
signed by a duly authorized officer, may extend the time for the performance of
any of the obligations or other acts of the other party and may waive (a) any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto or (b) compliance with any of the
undertakings, obligations, covenants or other acts contained herein.
Section 10.3 Assignment. This Agreement and all of the provisions hereof
-----------
shall be binding upon, and shall inure to the benefit of, the parties hereto and
their permitted assigns, but neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by either of the parties
hereto without the prior written consent of the other.
Section 10.4 Addresses for Notices, Etc. All notices, requests, demands,
----------------------------
consents and other communications provided for hereunder and under the related
documents shall be effective upon receipt and shall be in writing and mailed (by
registered or certified mail, return receipt requested), telegraphed, telexed,
telecopied or personally delivered (with receipt thereof acknowledged) to the
applicable party at the address indicated below:
if to Seller: National Bank of Commerce
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
with a copy to: National Bank of Commerce
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
if to Purchaser: First South Bank
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Stradley, Ronon, ▇▇▇▇▇▇▇, & Young,
LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or, as to each party, at such other address as shall be designated by such party
in a written notice to the other party complying as to delivery with the terms
of this Section.
Section 10.5 Counterparts. This Agreement may be executed simultaneously in
-------------
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
Section 10.6 Headings. The headings of the Sections and Articles of this
---------
Agreement are inserted for convenience only and shall not constitute a part
thereof.
Section 10.7 Governing Law. This Agreement shall be governed by, and
---------------
construed in accordance with, the laws of the State of Tennessee.
Section 10.8 Sole Agreement. This Agreement and the Exhibits and Schedules
---------------
hereto represent the sole agreement between the parties hereto respecting the
transactions contemplated hereby and all prior or contemporaneous written or
oral proposals, agreements in principle, representations, warranties and
understandings between the parties with respect to such matters are superseded
hereby and merged herein.
Section 10.9 Severability. If any provision of this Agreement is invalid or
-------------
unenforceable, the balance of this Agreement shall remain in effect.
Section 10.10 Parties in Interest. Nothing in this Agreement, express or
--------------------
implied, expressly including, without limiting the generality of the foregoing
in any way, the provisions of SECTION 1.5 hereof, is intended or shall be
construed to confer upon or give to any person (other than the parties hereto,
their successors and permitted assigns) any rights or remedies under or by
reason of this Agreement, or any term, provision, condition, undertaking,
warranty, representation, indemnity, covenant or agreement contained herein.
[Signatures on following page]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers as of the date first written
above.
ATTEST: NATIONAL BANK OF COMMERCE
By:/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------ -------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Associate General Counsel and Title: President and CEO
Assistant Corporate Secretary
ATTEST:
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------ --------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Executive Vice President Title: Executive Vice
President, Chief
Financial Officer
and Secretary
25