EXHIBIT 2.9
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PURCHASE AND ASSUMPTION AGREEMENT
BETWEEN
STERLING BANK
AND
SOUTH TEXAS NATIONAL BANK OF LAREDO
DATED AS OF
OCTOBER 29, 2002
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Table of Contents
Page
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ARTICLE I DEFINITIONS............................................................... 1
ARTICLE II ASSUMPTION OF LIABILITIES AND OBLIGATIONS................................. 6
2.1 Liabilities Assumed by the Assuming Bank.................................. 6
2.2 Interest on Deposits...................................................... 7
2.3 Assumption of Contracts................................................... 8
2.4 Informational Tax Reporting............................................... 8
ARTICLE III PURCHASE OF ASSETS........................................................ 8
3.1 Assets Purchased by the Assuming Bank..................................... 8
3.2 Manner of Conveyance; Limited Warranty; Nonrecourse; Etc.................. 8
3.3 Assets Not Purchased by the Assuming Bank................................. 9
ARTICLE IV BANK PREMISES; SAFE DEPOSIT BOXES; LETTERS OF CREDIT...................... 10
4.1 Bank Premises............................................................. 10
4.2 Agreement with Respect to Safe Deposit Business........................... 11
4.3 Letters of Credit......................................................... 11
ARTICLE V DUTIES WITH RESPECT TO DEPOSITORS OF THE PURCHASED BRANCH................. 11
5.1 Payment of Checks, Drafts and Orders...................................... 11
5.2 Certain Agreements Related to Deposits.................................... 11
5.3 Correspondent Banking Relationship........................................ 12
5.4 Settlement and Return Items............................................... 12
ARTICLE VI RECORDS................................................................... 12
6.1 Transfer of Records....................................................... 12
6.2 Delivery of Assigned Records.............................................. 13
6.3 Preservation of Records................................................... 13
6.4 Access to Records; Copies................................................. 13
ARTICLE VII PURCHASE PRICE; CLOSING................................................... 14
7.1 Purchase Price............................................................ 14
Table of Contents
(continued)
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7.2 Form of Payment........................................................... 14
7.3 Interest.................................................................. 14
7.4 Subsequent Adjustments.................................................... 14
7.5 Closing................................................................... 15
ARTICLE VIII CONTINUING COOPERATION.................................................... 15
8.1 General Matters........................................................... 15
8.2 Additional Title Documents................................................ 15
8.3 Payment of Deposits....................................................... 15
ARTICLE IX CONDITIONS PRECEDENT...................................................... 16
9.1 Conditions to Obligations of Each Party................................... 16
9.2 Additional Conditions to the Obligations of the Assuming Bank............. 16
9.3 Additional Conditions to the Obligations of Seller........................ 17
ARTICLE X REPRESENTATIONS AND WARRANTIES............................................ 18
10.1 Representations and Warranties of Seller.................................. 18
10.2 Representations and Warranties of the Assuming Bank....................... 21
ARTICLE XI CERTAIN COVENANTS OF SELLER AND THE ASSUMING BANK......................... 23
11.1 Covenants of Seller....................................................... 23
11.2 Covenants of the Assuming Bank............................................ 29
11.3 Solicitation of Employees................................................. 29
11.4 Best Efforts; Taking of Necessary Action.................................. 30
11.5 Use of Names, Trademarks and Service Marks................................ 31
11.6 Allocation of Purchase Price.............................................. 31
ARTICLE XII EMPLOYEE PLANS............................................................ 32
12.1 Employees; Participation in Assuming Bank Plans........................... 32
12.2 Claims Incurred Prior to and After Closing................................ 32
12.3 Severance Pay............................................................. 32
ARTICLE XIII INDEMNIFICATION........................................................... 33
13.1 Indemnification........................................................... 33
13.2 Limitations on Indemnification............................................ 34
13.3 Exclusivity of Remedies................................................... 34
ii
Table of Contents
(continued)
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ARTICLE XIV MISCELLANEOUS............................................................. 35
14.1 Entire Agreement.......................................................... 35
14.2 Headings.................................................................. 35
14.3 Governing Law............................................................. 35
14.4 Successors................................................................ 35
14.5 Modification; Assignment.................................................. 36
14.6 Notice.................................................................... 36
14.7 Manner of Payment......................................................... 37
14.8 Costs, Fees and Expenses.................................................. 37
14.9 Waiver.................................................................... 37
14.10 Severability.............................................................. 37
14.11 Termination of Agreement.................................................. 38
14.12 Survival of Representations and Warranties................................ 39
14.13 Public Notice............................................................. 39
14.14 Counterparts.............................................................. 39
Exhibits:
Exhibit A - Form of Special Warranty Deed
Exhibit B - Form of General Assignment and ▇▇▇▇ of Sale
Exhibit C - Form of Instrument of Assumption
Schedules:
Schedule 2.1 Liabilities Assumed
Schedule 2.3 Contracts
Schedule 3.1 Acquired Assets
Schedule 10.1(b) Seller Consents
Schedule 10.1(g) Litigation
Schedule 10.1(h) Environmental Compliance
Schedule 10.1(i) Loans
Schedule 11.1(b) Public Funds Deposits
Schedule 12.1 Employees
Schedule 13.3 Environmental Laws
iii
PURCHASE AND ASSUMPTION AGREEMENT
THIS AGREEMENT, made and entered into as of the 29th day of October,
2002 is by and between STERLING BANK, organized under the laws of the State of
Texas and having its principal place of business in Houston, Texas ("Seller"),
and SOUTH TEXAS NATIONAL BANK OF LAREDO, a national banking association having
its principal place of business in Laredo, Texas (the "Assuming Bank").
WITNESSETH:
WHEREAS, Seller desires to sell certain of the assets and liabilities
of its branch located at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ (the "Purchased
Branch");
WHEREAS, Seller desires to sell and the Assuming Bank desires to
purchase the banking business of Seller at the Purchased Branch on the terms and
conditions set forth in this Agreement; and
NOW THEREFORE, in consideration of the mutual promises herein set forth
and other valuable consideration, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used herein, words imparting the singular include the plural and
vice versa.
"ACH" means automated clearing house.
"ACQUIRED ASSETS" means, without duplication, the operating assets of
the Purchased Branch as of the Closing Date (other than the Excluded Assets)
including (i) all Loans of the Purchased Branch other than Loans which are
Excluded Assets, (ii) Bank Premises, Furniture and Equipment, and Fixtures
including, but not limited to, all Furniture (including works of art, paintings,
etc.) and Equipment and Fixtures identified on Schedule 3.1 hereto, and (iii)
▇▇▇▇▇ cash tickets and cash float related to the Purchased Branch on the Closing
Date.
"AFFILIATES" of a person means any director, officer or employee of
such Person and any other Person (i) who is directly or indirectly controlling,
or controlled by, or under common control with, such Person, or (ii) who is an
affiliate of such Person as the term "affiliate" is defined in Section 2 of the
Bank Holding Company Act of 1956, as amended.
"AGREEMENT" means this Purchase and Assumption Agreement by and between
Seller and the Assuming Bank, as amended or otherwise modified from time to
time.
"ASSUMED COMMITMENTS" means all commitments and all amendments,
modifications, renewals, and extensions thereof, as reflected on the books and
records of the Purchased Branch, that were legally binding on the Seller as of
the Closing Date.
"ASSUMED CONTRACTS" shall have the meaning provided in Section 2.3 of
this Agreement.
"ASSUMING BANK" shall have the meaning provided in the recitals on page
one of this Agreement.
"ASSUMING BANK INDEMNIFIED PERSONS" shall have the meaning provided in
Section 13.1(a) of this Agreement.
"BANK PREMISES" means (i) the banking and teller facilities (staffed or
automated) together with appurtenant storage and service facilities, that are
owned or leased by Seller which relate to the Purchased Branch and (ii) the raw
land in Eagle Pass, Texas owned by Seller and which was acquired for expansion.
"BOOK VALUE" means, with respect to any Acquired Asset and any
Liability Assumed, the dollar amount thereof stated on the accounting records of
Seller. The Book Value of any item shall be determined as of the Closing Date
after adjustments made by Seller for differences in accounts, suspense items,
unposted debits and credits, and other similar adjustments or corrections.
Without limiting the generality of the foregoing, the Book Value of (i) a
Liability Assumed shall include all accrued and unpaid interest thereon as of
the Closing Date, (ii) a Loan shall reflect adjustments for earned or unearned
interest (as it relates to the "rule of 78s" or add-on-interest loans, as
applicable), if any, as of the Closing Date, and adjustments for the portion of
earned or unearned loan-related credit life and/or disability insurance premiums
and FAS 91 costs, if any, attributable to Seller as of the Closing Date, in each
case as determined for financial reporting purposes, (iii) an Assumed Commitment
shall be deemed to be zero, and (iv) the Bank Premises and Furniture and
Equipment shall not exceed 105% of their fair market value (such fair market
value to be mutually agreed by Seller and Assuming Bank). The Book Value of an
Acquired Asset shall not include any adjustment for any general or specific
reserves on the accounting records of Seller, except that Loans set forth on
Seller's monitored loan list as of the Closing Date shall be net of Seller's
allocated reserve with respect to such Loans as shall be mutually agreed to by
Seller and the Assuming Bank.
"BUSINESS DAY" means a day other than (i) a Saturday, Sunday, Federal
legal holiday, or legal holiday under the laws of the State of Texas, or (ii) a
day on which the principal office of Seller is closed.
"CLOSING" shall have the meaning provided in Section 7.5 of this
Agreement.
"CLOSING DATE" shall have the meaning provided in Section 7.5 of this
Agreement.
"CLOSING BALANCE SHEET" shall have the meaning provided in Section
7.1(a) of this Agreement.
"COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended.
"COMMITMENT" shall have the meaning provided in Section 4.1 of this
Agreement.
"DEPOSIT" means a deposit, as defined in 12 U.S.C. Section 1813(l),
including, without limitation, all uncollected items included in the depositors'
balances and credited on the books of the Purchased Branch; provided, however,
that for purposes of this Agreement, Deposit shall not include brokered deposits
nor public fund deposits except those described on Schedule 11.1(b) hereof and
renewals thereof.
"EDP CONVERSION" shall have the meaning provided in Section 11.1(g) of
this Agreement.
"EXCLUDED ASSETS" shall have the meaning provided in Section 3.3 of
this Agreement.
"EXCLUDED LIABILITIES" shall have the meaning provided in Section
2.1(b) of this Agreement.
"FIXTURES" means those improvements, additions, alterations and
installations constituting all or a part of Bank Premises and which were
acquired, added, built, installed, or purchased at the expense of Seller,
regardless of the holder of legal title thereto as of the Closing Date.
"FURNITURE AND EQUIPMENT" means the furniture and equipment, leased or
owned by Seller and used by the Purchased Branch and reflected on the accounting
records of Seller as of the Closing Date, including, without limitation, the
furniture and equipment (other than personal computers) listed on Schedule 3.1
and all other carpeting, furniture, office machinery (excluding personal
computers), shelving, office supplies, telephone, surveillance, and security
systems, and artwork.
"GOVERNMENTAL AUTHORITY" means any foreign governmental authority, the
United States of America, any State of the United States, any local authority
and any political subdivision of any of the foregoing, any multi-national
organization or body, any agency, department, commission, board, bureau, court
or other authority thereof, or any quasi-governmental or private body
exercising, or purporting to exercise, any executive, legislative, judicial,
administrative, police, regulatory or taxing authority or power of any nature.
"INQUIRIES" shall have the meaning provided in Section 6.3 of this
Agreement.
"INTERIM BALANCE SHEET" shall have the meaning provided in Section
7.1(b) of this Agreement.
"KNOWLEDGE" or "KNOWN" means an individual shall be deemed to have
"knowledge" of or to have "known" a particular fact or other matter if such
individual is actually aware of such fact or other matter. Seller shall be
deemed to have "knowledge" of or to have "known" a particular fact or other
matter if ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, or any individual who is serving as a senior
vice president, chief financial officer, or more senior officer of Seller has,
or at any time had, actual awareness of such fact or other matter.
"LIABILITIES ASSUMED" shall have the meaning provided in Section 2.1 of
this Agreement.
"LIENS" means any mortgage, lien, pledge, charge, assignment for
security purposes, security interest, or encumbrance of any kind with respect to
an Acquired Asset, including any conditional sale agreement or capital lease or
other title retention agreement relating to such Acquired Asset.
"LOANS" means all of the following owed to or held by the Purchased
Branch as of the Closing Date and reflected on the Closing Balance Sheet:
(i) loans, interests in loan participations,
funded portions of lines of credit or credit plans (whether
revolving or not, and whether commercial or consumer),
consumer loans, residential mortgage loans, overdrafts of
customers (including but not limited to overdrafts made
pursuant to overdraft protection plans, cash reserve accounts,
or similar extensions of credit in connection with demand
deposit accounts) ("overdrafts"), letters of credit (as
contemplated by Section 4.3) and United States and/or
state-guaranteed student loans;
(ii) all Liens, rights (including rights of
set-off), remedies, powers, privileges, demands, claims,
priorities, equities and benefits owned or held by, or
accruing or to accrue to or for the benefit of, the holder of
the obligations or instruments referred to in clause (i)
above, including, but not limited to, those arising under or
based upon the credit documents, casualty insurance policies
and binders, standby letters of credit, mortgagee title
insurance policies and binders, payment bonds and performance
bonds at any time and from time to time existing with respect
to any of the obligations or instruments referred to in clause
(i) above; and
(iii) all written amendments, modifications,
renewals, extensions, refinancings, and refundings of or for
any of the foregoing.
"MATERIAL ADVERSE EFFECT" shall mean any material adverse change in the
financial condition, assets, liabilities (absolute, accrued, contingent or
otherwise), reserves, business or results of operations.
"PERMITTED ENCUMBRANCES" shall mean with respect to any Acquired
Assets, (i) statutory liens for taxes and special assessments not yet
delinquent, (ii) covenants and restrictions, right-of-way, easements and other
matters of public records (other than liens voluntarily created by Seller),
(iii) any and all provisions of any ordinance, municipal regulation or public
law, and (iv) other matters to which like properties commonly are subject which
does not, individually or in the aggregate, materially interfere with the
current use of such Acquired Asset.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or other
entity, or government or any agency or political subdivision thereof.
"POST-CLOSING SETTLEMENT PAYMENT" shall have the meaning provided in
Section 7.1(b) of this Agreement.
"PROVIDING PARTY" shall have the meaning provided in Section 11.1(f) of
this Agreement.
"PURCHASE PRICE" shall have the meaning provided in Section 7.1 of this
Agreement.
"PURCHASED BRANCH" shall have the meaning provided in the recitals on
page one of this Agreement.
"QUALIFIED BENEFICIARIES" shall have the meaning provided in COBRA.
"RECEIVING PARTY" shall have the meaning provided in Section 11.1(f) of
this Agreement.
"RECORD" means any document, microfiche, microfilm and computer record
(including but not limited to magnetic tape, disc storage, card forms and
printed copy) or, where reasonable and appropriate, copies thereof, of the
Purchased Branch relating to any of the Acquired Assets or Liabilities Assumed.
"SAFE DEPOSIT BOXES" shall mean the safe deposit boxes of the Purchased
Branch, if any, including the removable safe deposit boxes and safe deposit
stacks in the Purchased Branch vault(s), all rights and benefits under rental
agreements with respect to such safe deposit boxes, and all keys and
combinations thereto.
"SELLER" shall have the meaning provided in the recitals on page one of
this Agreement.
"SELLER'S RELATED PARTIES" shall have the meaning provided in Section
13.3 of this Agreement.
"SETTLEMENT DATE" shall have the meaning provided in Section 7.1(b) of
this Agreement.
"SETTLEMENT PAYMENT" shall have the meaning provided in Section 7.1(b)
of this Agreement.
"SUBSIDIARY" shall have the meaning provided in 12 U.S.C. Section
1813(w)(4).
"WELFARE BENEFIT PLANS" shall have the meaning provided in Section 3(1)
of the Employee Retirement Income Security Act of 1974, as amended.
ARTICLE II
ASSUMPTION OF LIABILITIES AND OBLIGATIONS
2.1 LIABILITIES ASSUMED BY THE ASSUMING BANK.
(a) Effective as of the Closing Date, except as otherwise
provided in this Agreement, the Assuming Bank hereby expressly assumes
at Book Value and agrees to pay, perform, and discharge (i) all
liabilities of Seller in respect to Deposits of the Purchased Branch as
of the Closing Date, (ii) ad valorem and personal property taxes
applicable to any Acquired Asset, if any, and pro-rated as of the
Closing Date, (iii) liabilities with respect to Assumed Commitments,
(iv) liabilities with respect to the Assumed Contracts, and (v) other
liabilities, if any, with respect to the Purchased Branch, the Deposits
and the Safe Deposit Box businesses, and the Acquired Assets which are
directly attributable to and used in the business of the Purchased
Branch as reflected on the accounting records of Seller as of the
Closing Date (collectively, the "Liabilities Assumed"). Prepaid
expenses, other than expenses related to Federal Deposit Insurance
Corporation premiums ("FDIC Premium"), of the Purchased Branch shall be
prorated as of the Closing Date. The Assuming Bank shall pay to Seller,
the pro rata portion of the FDIC Premium payment which is attributable
to the Deposits being assumed as of the Closing Date by the Assuming
Bank hereunder. Attached hereto as Schedule 2.1 is a list of all
projected Liabilities Assumed as of the date of this Agreement (and
Seller shall separately provide as of the date hereof a confidential
detailed list of all Deposits).
(b) Except for those liabilities and obligations
specifically assumed by Assuming Bank under Subsection (a) above,
Assuming Bank is not assuming any other duties, responsibilities,
liabilities or obligations. Liabilities not assumed ("Excluded
Liabilities") include, but are not limited to, the following:
(i) Seller's cashier checks, letters of credit,
money orders, interest checks and expense checks issued prior
to Closing, consignments of U.S. Government "E" and "EE" bonds
and any and all traveler's checks;
(ii) 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;
(iii) All transactions related to or arising from
credit card relationships with Seller, including, without
limitation, merchant accounts;
(iv) Any trust account, or liability or
obligation of Seller used in, or made by or with respect to,
the operations of Seller in its trust business;
(v) All liabilities of Seller for individual
retirement account or ▇▇▇▇▇ account deposits in which the
custodial duties of Seller cannot be transferred to and
assumed by Assuming Bank;
(vi) All liabilities or claims, actual or
contingent, made or unmade, from any person with regard to any
aspect of the business, assets, liabilities or operation of
the Purchased Branch prior to the Closing Date;
(vii) (A) Any income, profits, franchise or
similar tax relating to the business, assets, liabilities or
operation of the Purchased Branch prior to the Closing Date;
(B) any liability or claims for personal injury, property
damage or consequential damages relating to the condition or
operation of the Purchased Branch (including the Bank Premises
and Furniture and Equipment), or otherwise, prior to the
Closing Date; (C) any liability or losses due to or arising
from forgery or from any fraud, defalcation or any other
improper act or omission on the part of Seller or any of its
officers, directors, employees, representatives or agents; (D)
any liability or obligation of Seller arising out of any
threatened or pending litigation relating to the Purchased
Branch prior to the Closing Date or relating to Seller's other
banking locations; or (E) any liability arising out of
Seller's acts or omissions under any statute, rule or
regulation, including, but not limited to, antitrust, banking,
bank secrecy, Patriot Act, civil rights, health, safety,
labor, discrimination and environmental laws, rules and
regulations; and
(viii) Except as specifically set out in Article
XII of this Agreement, with respect to any employee or former
employee of Seller, (A) any pension or other liabilities, (B)
any liabilities arising from the employment by Seller of
employees, or of the termination by Seller of employees (or
any liabilities arising from any decision by the Assuming Bank
not to hire Seller's employees), and (C) any liabilities
arising by virtue of any collective bargaining relationship or
agreement or pursuant to the National Labor Relations Act or
any other labor relations law.
2.2 INTEREST ON DEPOSITS. The Assuming Bank agrees that, from and
after the Closing Date, it will accrue and pay interest on Deposits assumed
under this Agreement at the
rate(s) at which Seller was legally obligated to accrue and pay interest on such
Deposits as of the Closing Date.
2.3 ASSUMPTION OF CONTRACTS. Attached hereto as Schedule 2.3 is a
list of all contracts, agreements, and other obligations that shall be assigned
to, and assumed by, the Assuming Bank (the "Assumed Contracts") which Assumed
Contracts relate specifically to the operation of the Purchased Branch, and
include, as applicable, service contracts, maintenance contracts, consulting
contracts, agency agreements and licensing agreements (but excluding contracts
that relate to Seller's bank operations generally and that are not being assumed
by the Assuming Bank); provided, however, that Schedule 2.3 need not list
Assumed Contracts relating to the Deposits or the Safe Deposit Box contracts
with customers at the Purchased Branch; and provided, further, that if Seller
notifies the Assuming Bank not later than thirty (30) days prior to the Closing
Date that one or more of such contracts or agreements may not be legally
assigned, Seller shall not be required to assign such contracts or agreements at
Closing and shall have no liability to the Assuming Bank as a result of its
inability to accomplish such assignments. Assuming Bank shall assume no
liabilities, obligations, duties or responsibilities relating to contracts,
agreements, and other obligations which are not listed on Schedule 2.3.
2.4 INFORMATIONAL TAX REPORTING. Effective as of the Closing Date,
the Assuming Bank agrees to perform all obligations of Seller with respect to
federal and state income tax informational reporting with respect to the
Purchased Branch including, but not limited to filing obligations with respect
to Forms 940, 941, 1099, 1098, W-2 and back up withholding related to (i) the
Acquired Assets and the Liabilities Assumed; and (ii) for periods after the
Closing Date, compensation paid to employees and contractors of the Purchased
Branch who have been hired by the Assuming Bank; provided, however, that Seller
shall report savings bond interest for the full tax year in which the Closing
occurs. Seller and the Assuming Bank agree to cooperate with each other in order
to fulfill these and all other reporting obligations set forth or contemplated
herein.
ARTICLE III
PURCHASE OF ASSETS
3.1 ASSETS PURCHASED BY THE ASSUMING BANK. Effective as of the
Closing Date and subject to Section 3.3, the Assuming Bank shall purchase from
Seller, and Seller shall sell, assign, transfer, convey, and deliver to the
Assuming Bank, all right, title, and interest of Seller in and to the Acquired
Assets. Attached as Schedule 3.1 is a list of all projected Acquired Assets as
of the date of this Agreement.
3.2 MANNER OF CONVEYANCE; LIMITED WARRANTY; NONRECOURSE; ETC. THE
CONVEYANCE OF ALL ACQUIRED ASSETS, INCLUDING REAL AND PERSONAL PROPERTY
INTERESTS, PURCHASED BY THE ASSUMING BANK UNDER THIS AGREEMENT SHALL BE MADE, AS
NECESSARY, BY DEED OR ▇▇▇▇ OF SALE, "AS IS", "WHERE IS", WITHOUT RECOURSE AND,
EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THIS AGREEMENT, WITHOUT ANY
WARRANTIES
WHATSOEVER WITH RESPECT TO SUCH ACQUIRED ASSETS, EXPRESS OR IMPLIED, WITH
RESPECT TO TITLE, ENFORCEABILITY, COLLECTIBILITY, DOCUMENTATION, CONDITION,
QUALITY, PERFORMANCE, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR
FREEDOM FROM LIENS OR ENCUMBRANCES (IN WHOLE OR IN PART), OR ANY OTHER MATTERS.
3.3 ASSETS NOT PURCHASED BY THE ASSUMING BANK. The Assuming Bank
does not purchase, or obtain an option to purchase under this Agreement, any of
the following (the "Excluded Assets"):
(a) any financial institution bonds, banker's blanket
bonds, or any other similar insurance policy of Seller, or any proceeds
payable with respect to any of the foregoing;
(b) any interest, right, action, claim, or judgment of
Seller or any of its Affiliates against (i) any officer, director,
employee, accountant, attorney, or any other Person employed or
retained by Seller or any of its Affiliates or any Subsidiary of Seller
on or prior to the Closing Date arising out of any act or omission of
such Person in such capacity, (ii) any underwriter of financial
institution bonds, banker's blanket bonds or any other insurance policy
of Seller, (iii) any shareholder or holding company of Seller, or (iv)
any other Person whose action or inaction may be related to any loss
(exclusive of any loss resulting from such Person's failure to pay on a
Loan on the books of the Purchased Branch) incurred by Seller;
provided, that for the purposes hereof, the acts, omissions, or other
events giving rise to any such claim shall have occurred on or before
the Closing Date, regardless of when any such claim is discovered and
regardless of whether any such claim is made with respect to a
financial institution bond, banker's blanket bond, or any other
insurance policy of Seller in force as of the Closing Date;
(c) legal or equitable interests in tax receivables of
Seller, if any, including any claims arising as a result of Seller, as
the case may be, having entered into any agreement or otherwise being
joined with another Person with respect to the filing of tax returns or
the payment of taxes;
(d) insurance policies and agreements and the rights and
benefits thereunder (including any prepaid assessments or prepaid
insurance premiums, premium refunds derived from cancellation, proceeds
payable with respect to any of the foregoing, and collateral pledged
under such agreements and any rights to such collateral) of Seller with
respect to insurance coverage for public liability, casualty, fire,
extended coverage, and similar coverage provided with respect to assets
of Seller;
(e) any rights in or to any trademarks, service marks,
copyrights, and trade, corporate, or fictitious names registered in the
name of or owned by Seller or any of its Affiliates;
(f) recoveries from legal actions or claims filed in any
legal proceedings, including without limitation, bankruptcy and
administrative proceedings, before the Closing Date;
(g) any Loans, or portions thereof, charged-off or
designated for charge-off prior to the Closing Date, and any recoveries
on Loans charged-off or designated for charge-off prior to the Closing
Date;
(h) credit card relationships;
(i) annuity, mutual fund or other brokerage accounts;
(j) software;
(k) goodwill and other intangibles;
(l) repossessed assets or other real estate owned;
(m) sign faces and sign surrounds; and
(n) any tangible or intangible asset of Seller used in,
or related to, the operations of Seller in its trust business.
ARTICLE IV
BANK PREMISES; SAFE DEPOSIT
BOXES; LETTERS OF CREDIT
4.1 BANK PREMISES.
(a) At Closing, Seller agrees to execute and deliver to
the Assuming Bank a special warranty deed for the Bank Premises which
are owned by Seller in substantially the form of Exhibit A attached
hereto.
(b) By the Closing Date, the Assuming Bank must receive,
at its expense, a Commitment for Title Insurance (the "Commitment") and
copies of all recorded instruments affecting title to the Bank Premises
and recited as exceptions in such Commitment from a title insurance
company reasonably acceptable to Seller for the issuance of an Owner
Policy of Title Insurance, insuring good and indefeasible title in the
Bank Premises as of the date of Closing, subject to: (i) the standard
printed exceptions contained in the usual form of title policy; (ii)
rights of parties in possession; (iii) standby fees, taxes and
assessments for the current year and subsequent years, and subsequent
assessments for prior years due to a change in land usage or ownership;
(iv) any discrepancies, conflicts or shortages in area or boundary
lines, or any encroachments or protrusions, or any overlapping of
improvements; (v) covenants, restrictions, conditions, reservations,
exceptions and easements shown of record; (vi) oil, gas, mineral and
royalty
conveyances, and leases of record, if any, in effect and shown of
record; (vii) other conditions and encumbrances validly subsisting and
affecting title to the Bank Premises as of the date of Closing; and
(viii) all other matters to which like properties similarly situated
are commonly subject, which do not, individually or in the aggregate,
materially interfere with the current use of the Bank Premises.
4.2 AGREEMENT WITH RESPECT TO SAFE DEPOSIT BUSINESS. The Assuming
Bank hereby assumes and agrees to discharge, from and after the Closing Date, in
the usual course of conducting a banking business, the duties and obligations of
Seller with respect to all Safe Deposit Boxes, if any, of the Purchased Branch
and to maintain all of the necessary facilities for the use of such boxes by the
renters thereof during the period for which such boxes have been rented and the
rent therefor paid to Seller, subject to the provisions of the rental agreements
between Seller, as the case may be, and the respective renters of such boxes.
4.3 LETTERS OF CREDIT. The Assuming Bank will use its reasonable
efforts to replace all letters of credit of the Purchased Branch where Seller or
CaminoReal Bank, or any predecessor thereto, is named as issuer, endorser or
guarantor with letters of credit of the Assuming Bank.
ARTICLE V
DUTIES WITH RESPECT TO
DEPOSITORS OF THE PURCHASED BRANCH
5.1 PAYMENT OF CHECKS, DRAFTS AND ORDERS. Effective as of the
Closing Date and subject to Section 8.3, the Assuming Bank agrees to pay all
properly drawn checks, drafts and withdrawal orders including, without
limitation, electronic debit transactions, presented for payment by depositors
of the Purchased Branch, whether drawn on the check or draft forms provided by
Seller or the Assuming Bank, to the extent that the Deposit balances to the
credit of the respective makers or drawers assumed by the Assuming Bank under
this Agreement are sufficient to permit the payment thereof, and in all other
respects to discharge, in the usual course of conducting a banking business, the
duties and obligations of Seller with respect to the Deposit balances due and
owing to the depositors of the Purchased Branch assumed by the Assuming Bank
under this Agreement.
5.2 CERTAIN AGREEMENTS RELATED TO DEPOSITS. Effective as of the
Closing Date and subject to Section 2.2, the Assuming Bank agrees to honor the
terms and conditions of any written escrow or mortgage servicing agreement or
other similar agreement relating to a Deposit assumed by the Assuming Bank
pursuant to this Agreement. After the Closing Date, the Assuming Bank, at its
sole expense, will issue to Deposit account customers checks with appropriate
routing and transit numbers for use by such customers after the Closing Date.
With respect to Deposit accounts, Seller will (i) pay interest payable, if any,
on non-certificate deposit accounts and credit such interest to such accounts as
of the Closing Date, and (ii) transfer to
Assuming Bank, certificate of deposit accounts with both principal and accrued,
but unpaid, interest.
5.3 CORRESPONDENT BANKING RELATIONSHIP. For a period not to exceed
ninety (90) days after Closing Date, Seller agrees to receive all items
(including, but not limited to ACH items) which contain Seller's transit routing
number that are drawn on and presented for payment against a Deposit account of
the Purchased Branch. Such items which Seller receives with respect to the
Deposit accounts of the Purchased Branch shall be promptly transmitted or
presented on their respective settlement dates to the Assuming Bank. Items
received after the 90th day after the Closing Date will be returned by Seller to
the originator. Likewise, the Assuming Bank agrees to promptly send to the
appropriate Federal Reserve Bank any return items. The Assuming Bank further
agrees to issue and furnish to Seller notifications of change with respect to
each ACH item received containing Seller's transit routing number drawn against
a Deposit account of the Purchased Branch and Assuming Bank agrees to submit a
notification of change to the appropriate Federal Reserve Bank. Seller and the
Assuming Bank both agree to comply with applicable clearinghouse association
rules, Regulation CC of the Board of Governors of the Federal Reserve System and
any other applicable law. During such ninety (90) day period ACH items will be
delivered by Seller to Assuming Bank in NACHA format each business morning.
Seller shall not be required to break-out or otherwise isolate ACH items
pertaining to the Purchased Branch received on the last processing day prior to
the Closing.
5.4 SETTLEMENT AND RETURN ITEMS. Subject to Section 5.3,
settlement, return items, servicing fees, loan payments received and other
transaction matters shall be processed in accordance with a service agreement
mutually agreeable to the parties to be executed by Seller and Assuming Bank
prior to the Closing Date.
ARTICLE VI
RECORDS
6.1 TRANSFER OF RECORDS. Effective as of the Closing Date, Seller
shall assign, transfer, convey and deliver to the Assuming Bank the following
Records (in original) pertaining to Deposits of the Purchased Branch: signature
cards, orders, contracts between the Seller and the depositors of the Purchased
Branch, and Records of similar character pertaining to the Deposit account
relationships of the Purchased Branch assumed by the Assuming Bank under this
Agreement, except as provided in Section 6.4. Effective as of the Closing Date,
Seller shall assign, transfer, convey and deliver to the Assuming Bank the
following Records (in original) pertaining to the Acquired Assets and
Liabilities Assumed:
(i) Loan and collateral records and credit
documents and other documents;
(ii) deeds, mortgages, abstracts, surveys, and
other instruments or records of title pertaining to real
estate or real estate mortgages, if any; and
(iii) Safe Deposit Box agreements, if any;
(iv) any other Records, whether held at the
Purchased Branch or Seller's other branches/business
locations, that relate to the Acquired Assets or Liabilities
Assumed, (including Records relating to the Assuming Bank's
obligations under Section 2.4, taxpayer information on all
depositors of the Purchased Branch, documents of title
relating to the Bank Premises, Furniture and Equipment, and
Fixtures, and ATM cardholders/users) to the extent such
Records are not commingled with Records of Seller relating to
its other branches/business locations;
and, upon request, all other Records which are required for the
Assuming Bank to perform its obligations and exercise its rights under this
Agreement.
6.2 DELIVERY OF ASSIGNED RECORDS. Seller shall deliver to the
Assuming Bank all Records described in Section 6.1 as soon as practicable on or
after the Closing Date, and shall not use any retained records for any purpose
except as contemplated by Section 6.4 or as may be required by applicable law.
6.3 PRESERVATION OF RECORDS. The Assuming Bank agrees that it will
preserve and maintain for the joint benefit of, Seller and the Assuming Bank,
all Records of which it has custody for such period as may be required by law or
regulation. The Assuming Bank shall have the primary responsibility to respond
to subpoenas, discovery requests, and other similar official inquiries
("Inquiries") with respect to the Records of which it has custody. Seller shall
have primary responsibility to respond to Inquiries with respect to the Records
of which it has custody. Seller and Assuming Bank agree to provide to each other
copies of all Inquiries delivered to Seller or the Assuming Bank promptly upon
determination that such Inquiry relates to the Purchased Branch.
6.4 ACCESS TO RECORDS; COPIES. Subject to applicable law, the
Assuming Bank and Seller agree to permit the other party access to all Records
of which the Assuming Bank or Seller has custody, and to use, inspect, make
extracts from or request copies of any such Records in the manner and to the
extent requested, and to duplicate, any Record in the form of microfilm or
microfiche pertaining to Deposit account relationships of the Purchased Branch
for the sole purpose of responding to Inquiries, requests of customers of the
Purchased Branch for their account history information, or in furtherance of the
rights and duties described herein. On or before the 30th day after the Closing
Date, copies of Records will be provided without charge to the party requesting
such copies. Beginning on the 31st day after the Closing Date, the party
requesting a copy of any Record shall bear the cost (based on standard accepted
industry charges to the extent applicable) for providing such duplicate Records.
A copy of each Record requested and documentation evidencing the relevant
Inquiry or customer request shall be provided as soon as practicable by the
party having custody thereof.
ARTICLE VII
PURCHASE PRICE; CLOSING
7.1 PURCHASE PRICE.
(a) Subject to subsection (c) below, the purchase price
("Purchase Price") of the Acquired Assets shall equal the sum of (a) an
amount (which may be negative) determined by Seller and the Assuming
Bank pursuant to Articles II and III equal to the aggregate Book Value
of the Acquired Assets, minus the aggregate Book Value of the
Liabilities Assumed which shall be reflected on a balance sheet dated
as of the Closing Date and based on Seller's accounting records as of
the close of business on the Closing Date ("Closing Balance Sheet"),
plus (b) a premium in an amount equal to 7.5% of Deposits as of the
close of business on the Closing Date.
(b) For the purpose of the Closing, the amount due Seller
or the Assuming Bank, respectively, pursuant to subsection (a) hereof
shall be estimated as of the month end prior to Closing Date ("Interim
Balance Sheet") and a settlement payment ("Settlement Payment") shall
be made at Closing based upon the Interim Balance Sheet. Within 10 days
prior to the Closing Date, or at such time as the parties mutually
agree, Seller and the Assuming Bank shall jointly determine the
Settlement Payment required at Closing. Within 30 days after the
Closing Date, or at such time as the parties may mutually agree, Seller
and the Assuming Bank shall jointly determine the actual settlement
payment required by subsection (a) above and the Closing Balance Sheet,
as applicable, and make appropriate adjustments ("Post-Closing
Settlement Payment").
(c) In the event any bookkeeping omissions or errors are
discovered in preparing any balance sheet for the Purchased Branch or
in completing the transfer and assumptions contemplated hereby, the
parties agree to correct such errors and omissions, it being understood
that no adjustments will be made that are inconsistent with the
judgments, methods, policies, or accounting principles utilized by
Seller in preparing and maintaining the accounting records of the
Purchased Branch. Adjustments made pursuant to this Section 7.1(c) are
not intended to bring the accounting records of the Purchased Branch
into accordance with generally accepted accounting principles.
7.2 FORM OF PAYMENT. The Settlement Payment shall be made in
immediately available funds on the Closing Date by the Assuming Bank if the
Settlement Payment is a positive number and by Seller if the Settlement Payment
is a negative number.
7.3 INTEREST. The Post-Closing Settlement Payment shall bear no
interest.
7.4 SUBSEQUENT ADJUSTMENTS. In the event that the Assuming Bank or
Seller discovers any errors or omissions as contemplated by Section 7.1(c) or
any error with respect to the payments made under Section 7.1(b) after the
Settlement Date, the Assuming Bank and Seller agree to promptly correct any such
error or omission, make any payments and effect any
transfers or assumptions as may be necessary to reflect any such correction;
provided, that interest shall not be paid with respect to any such payments.
7.5 CLOSING. Unless this Agreement shall have been terminated and
the transactions herein contemplated shall have been abandoned pursuant to the
provisions of Section 14.11, and subject to the conditions of Article IX hereof,
the closing (the "Closing") of the purchase and assumption of the Acquired
Assets and Liabilities Assumed as provided by Sections 2.1 and 3.1 shall take
place at 10:00 a.m., Houston, Texas time, at the offices of ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇
LLP, Houston, Texas, on a mutually agreeable date within ten (10) business days
or as promptly as practicable after receipt of all regulatory approvals, the
expiration of all waiting periods and the satisfaction of all conditions to
Closing under this Agreement, or at such other place, time and date as the
parties may agree. The date and time of the Closing are herein referred to as
the "Closing Date." For purposes of this Agreement, the Closing shall be deemed
to be effective immediately following the close of business on the date on which
the Closing shall occur.
ARTICLE VIII
CONTINUING COOPERATION
8.1 GENERAL MATTERS. The parties hereto agree that they will, in
good faith and with their best efforts, cooperate with each other to carry out
the transactions contemplated by this Agreement and to effect the purposes
hereof.
8.2 ADDITIONAL TITLE DOCUMENTS. Seller and the Assuming Bank each
agree, at any time, and from time to time, upon the request of any party hereto,
to execute and deliver such additional instruments and documents of conveyance
as shall be reasonably necessary to vest in the appropriate party its full legal
or equitable title in and to the property transferred pursuant to this Agreement
or to be transferred in accordance herewith. The Assuming Bank shall prepare
such instruments and documents of conveyance (in form and substance satisfactory
to Seller) as shall be necessary to vest title in the Assuming Bank to the
Acquired Assets. The Assuming Bank shall be responsible for recording such
instruments and documents of conveyance at its own expense.
8.3 PAYMENT OF DEPOSITS.
(a) In the event any depositor does not accept the
obligation of the Assuming Bank to pay any Deposit of the Purchased
Branch assumed by the Assuming Bank pursuant to this Agreement and
asserts a claim against Seller for all or any portion of any such
Deposit, the Assuming Bank agrees on demand to provide to Seller, as
the case may be, funds sufficient to pay such claim in an amount not in
excess of the Deposit reflected on the books of the Assuming Bank at
the time such claim is made. Upon payment of such amount by the
Assuming Bank to Seller, as the case may be, the Assuming Bank shall be
discharged from any further obligation under this Agreement to pay to
any such depositor the amount of such Deposit paid to Seller.
(b) For a period of one hundred and eighty (180) days
after the Closing Date, Seller shall promptly reimburse the Assuming
Bank for any (i) amount the Assuming Bank refunds to depositors of the
Purchased Branch in interest adjustments after the Closing Date arising
out of errors occurring prior to the Closing Date, and (ii) any prepaid
fees which the Assuming Bank is required to refund to depositors of the
Purchased Branch after the Closing Date as a result of the cancellation
of services formerly provided by Seller, in accordance with the
applicable schedules of service charges for which such depositors had
prepaid Seller prior to the Closing Date.
ARTICLE IX
CONDITIONS PRECEDENT
9.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective
obligations of each party under this Agreement are subject to the fulfillment at
or prior to the Closing Date of the condition precedent that no preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a Governmental Authority nor any statute, rule,
regulation or executive order promulgated or enacted by any Governmental
Authority shall be in effect enjoining or otherwise materially impairing the
consummation of the transactions contemplated by this Agreement.
9.2 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF THE ASSUMING BANK.
The obligations of the Assuming Bank are also subject to fulfillment (or waiver
by the Assuming Bank) at or prior to the Closing Date of each of the following
conditions precedent:
(a) Representations and Warranties True. The
representations and warranties of Seller contained in Section 10.1 of
this Agreement shall be true and correct as of the date hereof and as
of the Closing Date (other than any inaccuracies which individually or
in the aggregate would not materially and adversely affect the ability
of Seller to perform, satisfy or observe any obligation or condition
under this Agreement) as though made at and as of the Closing Date,
except to the extent that they expressly refer to an earlier time.
(b) Performance of Covenants. Seller shall have duly
performed and complied in all material respects with each covenant,
agreement and condition required by this Agreement to be performed or
complied with by it prior to or on the Closing Date.
(c) Regulatory Approvals. All regulatory approvals
necessary for the consummation by the Assuming Bank of the sale and
assumption contemplated by this Agreement shall have been obtained and
be in full force and effect, and all required waiting periods shall
have expired or been terminated.
(d) Officer's Certificate. The Assuming Bank shall have
received from a duly authorized senior officer of Seller a certificate
as to the matters described in Sections 9.2(a), 9.2(b) and 9.2(f).
(e) Deed; ▇▇▇▇ of Sale and Assignment. The Assuming Bank
shall have received from Seller a special warranty deed in
substantially the form of Exhibit A attached hereto, and a ▇▇▇▇ of sale
and assignment in substantially the form of Exhibit B attached hereto.
(f) No Material Adverse Effect. Nothing shall have
occurred which has a Material Adverse Effect with respect to the
Purchased Branch since the date hereof.
(g) Title Insurance. The Assuming Bank shall have
obtained a Commitment in accordance with Section 4.1(b), in a form and
with such exceptions that are consistent with Section 4.1(b) and
endorsements that are acceptable to the Assuming Bank.
9.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF SELLER. The
obligations of Seller are also subject to fulfillment (or waiver by Seller) at
or prior to the Closing Date of each of the following conditions precedent:
(a) Representations and Warranties True. The
representations and warranties of the Assuming Bank contained in
Section 10.2 of this Agreement shall be true and correct as of the date
hereof and as of the Closing Date (other than any inaccuracies which
would not materially and adversely affect the ability of the Assuming
Bank to perform, satisfy or observe any obligation or condition under
this Agreement) as though made at and as of the Closing Date, except to
the extent they expressly refer to an earlier time.
(b) Performance of Covenants. The Assuming Bank shall
have duly performed and complied in all material respects with each
covenant, agreement and condition required by this Agreement to be
performed or complied with by it prior to or on the Closing Date.
(c) Regulatory Approvals. All regulatory approvals
necessary for the consummation by the Assuming Bank of the sale and
assumption contemplated by this Agreement shall have been obtained and
be in full force and effect, and all required waiting periods shall
have expired or been terminated.
(d) Officer's Certificate. Seller shall have received
from a duly authorized senior officer of the Assuming Bank a
certificate as to the matters described in Sections 9.3(a), 9.3(b) and
9.3(c).
(e) Instrument of Assumption. Seller shall have received
from the Assuming Bank an instrument of assumption in substantially the
form of Exhibit C attached hereto.
ARTICLE X
REPRESENTATIONS AND WARRANTIES
10.1 REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents
and warrants to the Assuming Bank as follows:
(a) Corporate Existence and Authority. Seller (i) is duly
organized, validly existing and in good standing under the laws of the
State of Texas and has full power and authority to own and operate its
properties and to conduct its business as now conducted by it, and (ii)
subject to regulatory approval, has full power and authority to execute
and deliver this Agreement and to perform its obligations under this
Agreement in accordance with its terms. Seller has taken all necessary
corporate action to authorize the execution, delivery and performance
of this Agreement and the performance of the transactions contemplated
hereby.
(b) Third Party Consents. Except as set forth on Schedule
10.1(b), no Governmental Authority or other third party consents
(including but not limited to approvals, licenses, registrations, or
declarations) are required in connection with execution, delivery, or
performance by Seller of this Agreement.
(c) Execution and Enforceability. This Agreement has been
duly executed and delivered by Seller. Upon the due authorization,
execution and delivery of this Agreement by the Assuming Bank, this
Agreement will constitute the legal, valid and binding obligation of
Seller, enforceable, (subject to regulatory approval) in accordance
with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors rights generally and by general
equity principles.
(d) Title and Right to Convey. Seller has good title to,
and is the sole owner of, all of the Acquired Assets, free and clear of
any lien, pledge, claim, security interest, encumbrance, charge or
restriction of any kind; except for the Permitted Encumbrances.
(e) Compliance with Law.
(i) The Acquired Assets and Liabilities Assumed
are not in violation of any statute, regulation, order,
decision, judgment, or decree of, or any restriction imposed
by any Governmental Authority having jurisdiction over Seller
or any assets or liabilities of Seller, or any foreign
government or agency thereof having such jurisdiction, with
respect to the conduct of the business of Seller, the nature
of the Deposits of the Purchased Branch held by Seller or the
ownership of the assets of Seller, which, either individually
or in the aggregate with all other such violations, would
materially and adversely affect the Acquired Assets or the
Liabilities Assumed, or the ability of Seller to perform,
satisfy, or observe any obligation or condition under this
Agreement or which would otherwise have a Material Adverse
Effect on the Purchased Branch.
(ii) Neither the execution and delivery nor the
performance by Seller of this Agreement will result in any
violation by Seller of, or be in conflict with, any provision
of any applicable law or regulation, or any order, writ, or
decree of any Governmental Authority.
(iii) The Deposits are insured by the FDIC to the
fullest extent permitted by law, and all premiums and
assessments due and payable in connection therewith have been
paid by Seller.
(iv) All Records and accountings of Seller
(including, when prepared, the Interim Closing Balance Sheet
and Closing Balance Sheet) are maintained in all material
respects in accordance with applicable legal and accounting
requirements, reflect only actual transactions, and reflect in
all material respects assets, liabilities, accruals and items
of income and expense in accordance with generally accepted
accounting principles consistently applied. All Records and
accountings of the Purchased Branch are true, complete and
correct in all material respects.
(f) Compliance with Law and Other Obligations.
(i) Seller is not in violation or breach of or
in default under (A) any obligation, agreement, covenant, or
condition contained in its charter or organizational
documents, articles of association, or by-laws or (B) any
contract, lease, or other instrument to which Seller is a
party (or which is binding on Seller or any assets of Seller),
which violation, breach, or default, either individually or in
the aggregate with all such other violations, breaches and
defaults, would materially and adversely affect the Acquired
Assets or the Liabilities Assumed or Seller's ability to
perform, satisfy, or observe any obligation or condition under
this Agreement or which would otherwise have a Material
Adverse Effect on the Purchased Branch.
(ii) Neither the execution and delivery nor the
performance by Seller of this Agreement will result in a
violation, breach of, or default under or be in conflict with:
(A) its organizational documents or charter, articles of
association, or by-laws, or (B) any other agreement or
instrument to which Seller is a party, or which is binding on
Seller or the assets of Seller, or (C) any order, decree,
award, or judgment issued by any Governmental Authority which
is binding on Seller or any assets of Seller, and will not
result in the creation of any Lien on the assets of Seller.
(g) Litigation. Except as set forth on Schedule 10.1(g)
hereto, there is no legal action, suit, investigation or proceeding
(whether or not Seller is a party thereto), claim, controversy or
contingent liability pending or, to Seller's knowledge, threatened
against Seller, any assets of Seller or the Purchased Branch, which
questions the validity
of this Agreement, any Assumed Contract or any of the transactions
contemplated hereby or which would, if adversely determined, either
individually or in the aggregate with all such other actions, suits,
investigations or proceedings if adversely determined, materially and
adversely affect the Acquired Assets or the Liabilities Assumed or
Seller's ability to perform, satisfy, or observe any obligation or
condition under this Agreement or which would otherwise have a Material
Adverse Effect on the Purchased Branch. There is no injunction, order,
judgment, decree, or regulatory restriction imposed upon Seller or the
Purchased Branch that, either individually or in the aggregate (i) has
had since March 22, 2001, or could reasonably be expected to have, a
Material Adverse Effect on the Purchased Branch, or (ii) which has
affected, or could reasonably be expected to affect, in a materially
adverse manner, the Acquired Assets, the Liabilities Assumed or
Seller's ability to perform, satisfy or observe any obligation or
condition under this Agreement. To the knowledge of Seller, there are
no facts, circumstances or conditions affecting the Purchased Branch
which would indicate or suggest the possibility of any unrecognized
future loss caused (A) by defalcation, embezzlement or other employee
malfeasance, or by (B) payments made, cash transactions effected or
Deposits accepted in violation of any law, rule or regulation.
(h) Environmental Compliance. To Seller's knowledge and
except as set forth on Schedule 10.1(h), the Seller is in compliance in
all material respects with all material federal, state, and local laws,
regulations, and ordinances relating to the environment and to the
release, emission or discharge of materials, wastes, substances,
pollutants or contaminants into the air, ground, or water applicable to
the Bank Premises. There are no material actions, suits, or proceedings
pending or, to Seller's knowledge, threatened against Seller by or
before any Governmental Authority, concerning any noncompliance or
alleged noncompliance with any such laws, regulations, and ordinances.
(i) Loans.
(i) Except as set forth on Schedule 10.1(i), to
the knowledge of Seller, (A) each of the Loans was validly and
legally made and constitutes a valid and binding agreement of
the borrower enforceable in accordance with its terms subject
to bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting the rights and remedies of creditors
generally and subject to general principles of equity; (B) any
mortgage or security agreement relating to each Loan is
properly secured and recorded or perfected and represents a
valid mortgage or security interest on properties described
therein; and (C) no amount owed under any Loan is subject to
any meritorious defenses. Seller has not entered into any
agreement which, to Seller's knowledge, will result in a
future waiver or negation of any material rights or remedies
currently available against the borrower (or guarantor, if
any) on any such Loan. To Seller's knowledge, no claim,
counterclaim, set-off right or other similar right has been
asserted, and no grounds for any meritorious claim,
counterclaim, set-off right or other similar right exists,
with respect to any Loan which could impair the collectability
thereof.
(ii) Except as set forth on Schedule 10.1(i),
each mortgage securing a Loan has been, since March 22, 2001,
and is evidenced by documentation of the types customarily
employed by Seller, which are consistent in all material
respects with federal and state banking laws, rules and
regulations, and prudent banking practices and standards, and
complete copies thereof have been maintained by Seller in
accordance with such standards and practices. Seller has duly
performed in all material respects all of its obligations
under such documentation to the extent that such obligations
to perform have accrued.
(iii) Except as set forth on Schedule 10.1(i), to
Seller's knowledge, since March 22, 2001, all of the Loans
currently held by the Purchased Branch were solicited,
originated and currently exist in material compliance with all
applicable loan policies and procedures of Seller (as
previously described to the Assuming Bank) and comply in all
material respects with all applicable federal and state laws,
rules and regulations (including applicable usury statutes,
the Truth in Lending Act, the Equal Credit Opportunity Act,
the Real Estate Settlement Procedures Act, the Flood Disaster
Protection Act, and other applicable consumer protection
statutes and the regulations thereunder).
(iv) If, under generally accepted accounting
principles, any reserve should be established in respect of
any Loan (or in respect of all Loans in the aggregate as an
unallocated reserve), such reserve has been established with
respect to such Loan or Loans in the amount set out in
Schedule 10.1(i).
(v) Each reserve (if any) identified in Schedule
10.1(i) is adequate, in the reasonable and good faith judgment
of Seller, to absorb any loss which may occur in respect of
the Loan or Loans to which such reserve relates.
10.2 REPRESENTATIONS AND WARRANTIES OF THE ASSUMING BANK. The
Assuming Bank represents and warrants to Seller as follows:
(a) Corporate Existence and Authority. The Assuming Bank
(i) is duly organized, validly existing and in good standing under the
laws of the United States and has full power and authority to own and
operate its properties and to conduct its business as now conducted by
it, and (ii) subject to regulatory approval, has full power and
authority to execute and deliver this Agreement and to perform its
obligations under this Agreement in accordance with its terms. The
Assuming Bank has taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement and the
performance of the transactions contemplated hereby.
(b) Third Party Consents. Except for the consent of the
Office of the Comptroller of the Currency under 12 U.S.C. Section
1828(c), no Governmental Authority or other third party consents
(including but not limited to approvals, licenses,
registrations, or declarations) are required in connection with
execution, delivery, or performance by the Assuming Bank of this
Agreement.
(c) Execution and Enforceability. This Agreement has been
duly executed and delivered by the Assuming Bank. Upon the due
authorization, execution and delivery of this Agreement by Seller, this
Agreement will constitute the legal, valid and binding obligation of
the Assuming Bank, enforceable (subject to regulatory approval) in
accordance with its terms except as such enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors rights generally and by general
equity principles.
(d) Compliance with Law.
(i) The Assuming Bank is not in violation of any
statute, regulation, order, decision, judgment, or decree of,
or any restriction imposed by any Governmental Authority
having jurisdiction over the Assuming Bank or any of its
assets, or any foreign government or agency thereof having
such jurisdiction, with respect to the conduct of the business
of the Assuming Bank, or the ownership of the properties of
the Assuming Bank, which, either individually or in the
aggregate with all other such violations, would materially and
adversely affect the ability of the Assuming Bank to perform,
satisfy, or observe any obligation or condition under this
Agreement.
(ii) Neither the execution and delivery nor the
performance by the Assuming Bank of this Agreement will result
in any violation by the Assuming Bank of, or be in conflict
with, any provision of any applicable law or regulation, or
any order, writ, or decree of any Governmental Authority.
(e) Compliance with Obligations.
(i) The Assuming Bank is not in violation or
breach of or in default under (A) any obligation, agreement,
covenant, or condition contained in its charter or
organizational documents, articles of association, or by-laws
or (B) any contract, lease, or other instrument to which the
Assuming Bank is a party (or which is binding on the Assuming
Bank or any assets of the Assuming Bank), which violation,
breach, or default, either individually or in the aggregate
with all such other violations, breaches and defaults, would
materially and adversely affect the Assuming Bank's ability to
perform, satisfy, or observe any obligation or condition under
this Agreement.
(ii) Neither the execution and delivery nor the
performance by the Assuming Bank of this Agreement will result
in a violation, breach of, or default under or be in conflict
with: (A) its organizational documents or charter, articles of
association, or by-laws, or (B) any other agreement or
instrument to which the Assuming Bank is a party, or which is
binding on the Assuming Bank or the
assets of Assuming Bank, or (C) any order, decree, award, or
judgment issued by any Governmental Authority which is binding
on the Assuming Bank or any assets of Assuming Bank, and will
not result in the creation of any Lien on the assets of the
Assuming Bank.
(f) Litigation. There is no legal action, suit,
investigation or proceeding (whether or not the Assuming Bank is a
party thereto) pending or, to Assuming Bank's knowledge, threatened
against the Assuming Bank or of its any assets which questions the
validity of this Agreement or any of the transactions contemplated
hereby or which would, if adversely determined, either individually or
in the aggregate with all such other actions, suits, investigations or
proceedings if adversely determined, materially and adversely affect
the Assuming Bank's ability to perform, satisfy, or observe any
obligation or condition under this Agreement.
(g) Capital. To he best of the Assuming Bank's knowledge,
the Assuming Bank has such capital that regulatory approval of this
transaction should not be denied on the basis of inadequacy of capital.
ARTICLE XI
CERTAIN COVENANTS OF SELLER
AND THE ASSUMING BANK
11.1 COVENANTS OF SELLER.
(a) General Covenants. Except as otherwise provided
herein, Seller hereby covenants and agrees that it shall do or cause to
be done at all times all things necessary to maintain and preserve and
keep in full force and effect its corporate existence, and all rights
and franchises material to the business of Seller.
(b) Operation of the Purchased Branch. (i) During the
period commencing on the date of this Agreement through the Closing,
unless otherwise consented to by Assuming Bank, which consent shall not
be unreasonably withheld, Seller shall use its best efforts, except as
specifically otherwise contemplated by this Agreement:
(A) to preserve intact the Purchased
Branch's management, assets (including, but not
limited to, Furniture and Equipment and Fixtures)
licenses, permits, authorizations, and relationships;
(B) to comply with all material
contractual obligations applicable to the Purchased
Branch's operations, except those as to which Seller
may in good faith reasonably contest;
(C) to maintain all the Purchased
Branch's properties in the repair, order and
condition, of such properties, reasonable wear and
tear excepted, and maintain the insurance coverages
from reputable insurers
which, in respect to amounts, types and risks
insured, are adequate for the Purchased Branch; and
(D) to conduct its business of banking
at the Purchased Branch in the usual, regular and
ordinary course consistent with past practice, use
reasonable efforts to maintain and preserve intact
the Purchased Branch's business relationships
(including relationships with customers), and take no
action which would adversely affect or delay the
ability of any party hereto to obtain any regulatory
approval or to perform its covenants and agreements
under this Agreement. Without limiting the foregoing,
during the period commencing on the date of this
Agreement through the Closing, without the prior
approval of the Assuming Bank (whose consent shall
not be unreasonably withheld), Seller shall use its
best efforts to not cause nor permit the Purchased
Branch (except as specifically contemplated by this
Agreement), to:
(1) engage or participate in
any material transaction or incur or sustain
any material obligation except in the
ordinary course of business consistent with
all material requirements of law and with
past practice;
(2) transfer from the
Purchased Branch to Seller's other
operations or branches any assets, or
liabilities or records which are expected to
constitute Acquired Assets, Liabilities
Assumed or Records related to the Purchased
Branch as set forth herein, except upon the
unsolicited request of a depositor or
customer in the ordinary course of business;
or transfer to the Purchased Branch from
Seller's other operations or branches assets
or liabilities of a type which are expected
to constitute Acquired Assets or Liabilities
Assumed, except upon the unsolicited request
of a depositor or customer in the ordinary
course of business;
(3) make or purchase any new,
or increase any, Loan held by the Purchased
Branch (i) not in accordance with the
Purchased Branch's established lending
policies and procedures as previously
described to the Assuming Bank and as in
effect on the date hereof, or (ii) in an
amount exceeding $100,000;
(4) enter into any commitment,
agreement, understanding or other
arrangement to dispose of the Purchased
Branch other than pursuant to the terms of
this Agreement, or furnish to any other
Person (other than a Governmental Authority,
as required by law) any information with
respect to the Purchased Branch;
(5) undertake any
extraordinary marketing or advertising
efforts not in the ordinary course of
business;
(6) increase or agree to
increase the salary, remuneration or
compensation of any Purchased Branch
employee, in the aggregate in excess of 5%
of such employee's base pay;
(7) hire, or terminate in a
manner inconsistent with Seller's current
branch staffing policies (as previously
described to the Assuming Bank), any
Purchased Branch employee;
(8) invest in any fixed assets
or leasehold improvements related to the
Purchased Branch, except for replacements of
furnishings, Furniture and Equipment,
Fixtures and normal maintenance and
refurbishing in the ordinary course of
business of the Purchased Branch consistent
with past practice;
(9) enter into any new line of
business in the Purchased Branch not
previously engaged in at such Branch;
(10) offer rates on Deposits or
loans in a manner which is inconsistent with
prior practice or which are more than 25
basis points in variance from prevailing
market rates for the areas served by the
Purchased Branch;
(11) change the Purchased
Branch's accounting methods, policies or
procedures, except as required by changes in
generally accepted accounting procedures;
(12) undertake, enter into or
renew, amend or terminate, or give notice of
a proposed renewal, amendment or termination
of any commitment with respect to any lease,
contract or agreement involving the
Purchased Branch other than in the ordinary
course of business consistent with past
practice;
(13) waive any material right,
whether in equity or at law, that it has
with respect to any Loan;
(14) make less stringent than
as in effect on the date of this Agreement
(and as previously disclosed to the Assuming
Bank) the Purchased Branch's operational
policies, activities or practices (including
practices with respect to customer service
charges, credit underwriting policies or
standards and policies or
practices with respect to lending,
charge-off or classification of loans,
reserves and provisions for loan losses, the
placement of loans in non-accrual status,
the acceptance of deposits, the
implementation of know-your-customer and
related standards, and liability
management); or
(15) bid for public fund
deposits except for renewals of those public
fund deposits set forth on Schedule 11.1(b)
hereof.
(c) Untrue Representations. Seller shall promptly notify
the Assuming Bank in writing if Seller has knowledge of any fact or
condition that makes untrue, or shows to have been untrue, in any
material respect, any schedule or any other information furnished
pursuant to this Agreement by Seller to the Assuming Bank or any
representation or warranty made in or pursuant to this Agreement or
that results in Seller's failure to comply with any covenant, condition
or agreement contained in this Agreement.
(d) Litigation and Claims. Seller shall promptly notify
the Assuming Bank in writing if Seller has knowledge of any litigation,
or of any claim, controversy or contingent liability that might be
expected to become the subject of litigation affecting the Acquired
Assets or the Liabilities Assumed (other than garnishment proceedings),
and Seller shall promptly notify the Assuming Bank of any legal action,
suit or proceeding or judicial, administrative or governmental
investigation, pending or, to the knowledge of Seller, threatened
against Seller that questions or might question the validity of this
Agreement or the agreements contemplated hereby, or any actions taken
or to be taken by Seller pursuant hereto or thereto or seeks to enjoin
or otherwise restrain the transactions contemplated hereby or thereby.
(e) Adverse Changes. Seller shall promptly notify in
writing the Assuming Bank if, to Seller's knowledge, any change or
development shall have occurred or been threatened with regard to
Seller, the Acquired Assets or the Liabilities Assumed that has or may
reasonably be expected to have or lead to a Material Adverse Effect on
Seller, the Acquired Assets or the Liabilities Assumed. Notwithstanding
the disclosure to the Assuming Bank of any such change, Seller shall
not be relieved of any liability to the Assuming Bank pursuant to this
Agreement for, nor shall the providing of such information by Seller to
the Assuming Bank be deemed a waiver by the Assuming Bank of, the
breach of any representation or warranty of Seller contained in this
Agreement.
(f) Investigation. Between the date of this Agreement and
the Closing Date, Seller shall afford to the Assuming Bank and its
authorized agents and representatives reasonable access at mutually
convenient times to the Purchased Branch and to Records and other
information within Seller's possession relating to the Purchased Branch
and the Acquired Assets and Liabilities Assumed. Seller shall cause its
personnel to cooperate with the Assuming Bank and provide to the
Assuming Bank reasonable assistance in the
Assuming Bank's investigation of matters relating to the Purchased
Branch and to the Acquired Assets and Liabilities Assumed and the
Assuming Bank's preparation for an orderly transition (including, at
Assuming Bank's request, arranging employment interviews with Purchased
Branch employees). Notwithstanding the foregoing, the parties agree
that the Assuming Bank's investigations and preparations for the
transition shall be conducted in a manner which does not unreasonably
interfere with the Purchased Branch's normal operations, customers and
employee relations. All information provided by a party hereto (the
"Providing Party") to the other Party hereto (the "Receiving Party")
will be kept confidential by the Receiving Party and shall not, except
as required by law or with the prior written consent of Providing
Party, be disclosed by the Receiving Party in any manner whatsoever
except as contemplated herein, in whole or in part, and shall not be
used by the Receiving Party, other than in connection with the
transactions contemplated by this Agreement. In the event that the
transactions contemplated by this Agreement shall not be consummated,
all copies of the information, including that portion of the
information which consists of analyses, compilations, forecasts,
studies or other documents prepared by the Receiving Party which
reflect such information, will be, at the Receiving Party's sole
option, either returned to Providing Party or destroyed upon the
written request of Providing Party. A written certification of such
destruction shall be delivered by the Receiving Party promptly
following such destruction. The foregoing shall not apply to any
information which (i) is or becomes generally available to the public
other than as a result of a disclosure by the Receiving Party, or (ii)
becomes available to the Receiving Party on a nonconfidential basis
from a source which is not prohibited from disclosing such information
to the Receiving Party by a legal, contractual or fiduciary obligation
to Providing Party. In the event that the Receiving Party becomes
legally compelled to disclose any of the information furnished to it by
Providing Party, the Receiving Party will provide Providing Party with
prompt notice so that Providing Party may seek a protective order or
other appropriate remedy or waive compliance with the provisions of
this Agreement. In the event that such protective order or other remedy
is not obtained, or that Providing Party waives compliance with the
provisions of this Agreement, the Receiving Party shall furnish only
that portion of the information that is legally required and shall
exercise reasonable efforts to obtain reliable assurance that
confidential treatment will be afforded the information. The Receiving
Party shall not be liable for the disclosure of the information
hereunder to a tribunal compelling such disclosure unless such
disclosure to such tribunal was caused by or resulted from a previous
disclosure by the Receiving Party or any of its agents, affiliates or
advisors not permitted by this Agreement. In any filings that may be
required to obtain the regulatory approvals, the Assuming Bank will
request confidential treatment of this Agreement, including the
exhibits and schedules hereto, and the amount of the Purchase Price and
will consult with the other party hereto prior to the disclosure of
this Agreement, the exhibits or the schedules or the amount of the
Purchase Price in the event such request is denied.
Notwithstanding any other provision of this Agreement, the
Assuming Bank and its agents or representatives shall not perform any
investigation or study of Seller, or any
asset or property of Seller which may involve the intrusive or
destructive sampling or analysis or chemical testing of any portion of
such asset or property or any improvements thereon, including without
limitation, of any soil, water or groundwater on, under or about such
asset or property ("Phase II Investigation"), without first (a)
submitting to Seller a detailed description of (i) the work to be
performed as part of the Phase II Investigation, (ii) the persons to
undertake such Phase II Investigation, and (iii) the types and amounts
of insurance coverage maintained by such persons, and (b) obtaining the
prior written consent of Seller as to such matters. Seller may grant or
withhold such consent in its sole discretion and may grant such consent
subject to such terms, conditions or restrictions as Seller may in its
sole discretion require. In all events, Seller or its representatives
shall have the right, but not the obligation, to observe any and all
activities associated with performance of any agreed Phase II
Investigation, and may obtain half of any samples which the Assuming
Bank or its representatives may collect during the Phase II
Investigation. In the event the Assuming Bank or its representatives
conduct a Phase II Investigation, the Assuming Bank shall cause (x) any
investigation-derived waste generated or created in connection with
performance of the Phase II Investigation (including without
limitation, drill cuttings, purged or developed water, or sample
remnants) to be removed from any investigated property, (y) any ▇▇▇▇▇
installed during the Phase II Investigation to be plugged and
abandoned, and (z) the restoration of any investigated property to
substantially the same physical condition which existed before
commencement of the Phase II Investigation, all within seven (7) days
after completion of the field activities related to the Phase II
Investigation, and in compliance with applicable laws and regulations.
The Assuming Bank shall be responsible for executing on its own behalf,
and in compliance with applicable laws and regulations any and all
manifests, shipping documents, plugging and abandoning reports and
similar documents in connection with its obligations under this
paragraph. The Assuming Bank agrees to indemnify and hold Seller
harmless from and against any and all claims, liabilities, damages,
expenses, and causes of action arising out of the Assuming Bank's
inspections of the real or personal property of Seller, including
without limitation, any Phase II Investigation.
(g) EDP Conversion. Between the date hereof and the
Closing Date, Seller shall use its best efforts to cooperate in the
conversion of the Purchased Branch from Seller's existing electronic
data processing systems to the systems of the Assuming Bank ("EDP
Conversion") so that Assuming Bank is able to and shall convert the
Purchased Branch's existing electronic data processing systems to the
systems of the Assuming Bank on the Closing Date. Seller will provide
conversions files in Seller's standard format. Seller will provide to
Assuming Bank a maximum of three test tapes. Service for debit and ATM
cards on Deposit accounts shall be discontinued at the end of Seller's
business day on the Closing Date.
(h) Condemnation. If prior to Closing all or any portion
of the Bank Premises is taken or is made subject to eminent domain or
other governmental acquisition proceedings, then Seller shall promptly
notify Assuming Bank thereof, and on the
Closing Date pay to the Assuming Bank all payments received or to be
received in respect thereto; provided, however, that the Assuming Bank
shall have the right to terminate this Agreement in the event that the
Book Value of the portion of the Bank Premises so taken or made subject
to eminent domain is in excess of $50,000, unless Seller agrees to pay
the Assuming Bank the difference between the fair market value of such
portion as of the date immediately preceding such condemnation and the
condemnation award.
(i) Insurance Proceeds and Casualty Payments. In the
event of any damage, or destruction affecting the Acquired Assets
between the date hereof and the time of the Closing, Seller shall
deliver to the Assuming Bank notice of such damage or destruction and,
at the Assuming Bank's election, shall either fix or repair such damage
or destruction or pay to the Assuming Bank the insurance proceeds, to
the extent of the applicable amount set forth in Section 7.1(a) hereof
with respect to Bank Premises, Fixtures and the replacement cost with
respect to the Furniture and Equipment, as the case may be, received
(or with respect to insurance proceeds, which would be received
assuming Seller's insurance policy had no deductible) by Seller as a
result thereof; provided, however, that the Assuming Bank shall have
the right to terminate this agreement in the event of that the Book
Value of such Acquired Assets so damaged or destroyed is in excess of
$50,000, unless Seller agrees to pay the Assuming Bank the difference
between the fair market value of such Acquired Assets as of the date
immediately preceding such damage or destruction and the insurance
proceeds.
(j) Notices to Customers. The Assuming Bank may,
following receipt of all required regulatory approvals for the
transactions contemplated herein, but no earlier than 35 days prior to
the Closing Date, communicate with, and deliver information, brochures,
bulletins, press releases and other communications to, depositors and
borrowers of the Purchased Branch concerning the transactions
contemplated by this Agreement and concerning the business and
operations of the Purchased Branch, and Seller shall take all
reasonable steps to cooperate with the Assuming Bank in effecting such
communications.
11.2 COVENANTS OF THE ASSUMING BANK. Except as otherwise provided
herein, the Assuming Bank hereby covenants and agrees that it shall do or cause
to be done at all times all things necessary to maintain and preserve and keep
in full force and effect its corporate existence, and all rights and franchises
material to the business of the Assuming Bank, up through the Closing Date.
11.3 SOLICITATION OF EMPLOYEES. In the event this Agreement is
terminated in accordance with its terms, for a period of 18 months after the
date of such termination, neither party will, without the prior approval of the
other party, directly or indirectly (excluding contacts initiated by the
employee and any contact that results from advertisements in public journals or
mass media or contact by search firms engaged by the other party in the ordinary
course of business and directed only as to the position to be filled and not
directed as to a specific employee or group of employees) hire or solicit for
employment, or otherwise disrupt the
employment relationship of any person who is employed by the other party, and
whose employment relates to the Purchased Branch or with whom the other party
has had significant contact.
11.4 BEST EFFORTS; TAKING OF NECESSARY ACTION. Each of the parties
hereto agrees to use its best efforts promptly to take or cause to be taken all
action and promptly to do or cause to be done all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement. In case at any time after the
Closing Date any further action is necessary, proper or advisable to carry out
the purposes of this Agreement, as soon as reasonably practicable each party to
this Agreement shall cause its proper officers and/or directors to take all such
necessary action. Without limiting the foregoing, the Assuming Bank agrees to
promptly prepare and file all applications and other notices required in
connection with on or before the 15th business day after the date hereof, and to
use its best efforts to obtain promptly and comply with all conditions contained
in, the regulatory approvals described in Section 10.2(b) and any other consent,
approval or other action by, or notice to or registration or filing with, any
governmental or administrative agency or authority required or necessary to be
made, obtained or complied with, as the case may be, by the Assuming Bank in
connection with the performance of this Agreement by the Assuming Bank or the
consummation of the transactions contemplated hereby; provided, that any delay
by Seller in furnishing information for the application or reviewing the
application shall extend the period in which the Assuming Bank is required to
file the application under this Section 11.4 The Assuming Bank shall provide an
information request to Seller for Seller's information to be included in the
application on or before the tenth business day after the date hereof. To the
extent that any application filed in connection with obtaining any such approval
contains any significant information relating to Seller, prior to submitting
such application to any regulatory agency, the Assuming Bank will permit Seller
to review such information and will consider in good faith the suggestions of
Seller with respect thereto. Seller shall have the right to approve any such
information that relates to Seller, provided that such approval shall not be
unreasonably withheld. The Assuming Bank shall use its best efforts to insure
that any information provided by Seller, its Affiliates or representatives to be
submitted in connection with submissions to governmental or administrative
agencies or authorities receives confidential treatment if so requested by
Seller.
The Assuming Bank shall provide to Seller copies of all applications
and other notices required in connection with the regulatory approvals described
in Section 10.2(b) (excluding personal financial information relating to
directors or regulatory examinations of the Assuming Bank and its Affiliates)
and any other consent, approval or other action by, or notice to, or
registration or filing in connection with the transaction contemplated by this
Agreement within five days of such submissions. The Assuming Bank shall provide
copies of any comments, requests or actions by governmental or administrative
agencies or authorities to Seller within five days of the Assuming Bank's
receipt thereof. The Assuming Bank shall not be required to provide copies of
any such comments or requests which relate to personal information of directors
or regulatory examinations of the Assuming Bank and its Affiliates, unless such
comments or requests indicate that the applications related thereto may not be
approved. Information provided under this paragraph shall be subject to the
provisions of Section 11.1(f).
11.5 USE OF NAMES, TRADEMARKS AND SERVICE MARKS. Anything herein to
the contrary notwithstanding, no interest in or right to use any logo, name,
trademark or service ▇▇▇▇ presently or previously used by Seller is being
conveyed pursuant to this Agreement. The Assuming Bank agrees that on and after
the Closing Date neither it nor any of its Affiliates (including the Purchased
Branch) will use names containing the words "Sterling" or "CaminoReal" in
connection with any business or activity engaged in by the Assuming Bank and its
Affiliates; provided, however, that Assuming Bank may identify the Acquired
Assets and the Liabilities Assumed as being formerly owned by Seller in
connection with any customer or regulatory inquiry. Promptly after the Closing
Date, the Assuming Bank shall commence the removal of the trade names, names,
service marks, logos, insignia, slogans, emblems, symbols, designs, and other
identifying characteristics ("names") from all premises, equipment, interior
decor items, fixtures and furnishings. Such removal shall be at the sole expense
of the Assuming Bank and shall be completed not later than five days after the
Closing Date. Within three business days after the Closing Date, Seller shall,
and the Assuming Bank will permit Seller to, remove all exterior signs
containing Seller's name. On the Closing Date, Seller will remove all printed
materials and related business literature associated with the Purchased Branch.
11.6 ALLOCATION OF PURCHASE PRICE. The parties to this Agreement
agree to allocate the Purchase Price in accordance with the rules under Section
1060 of the Code, and the Treasury Regulations promulgated thereunder. Such
allocation shall be based on the fair market value of the Acquired Assets. The
Assuming Bank agrees to provide Seller with a schedule allocating the Purchase
Price among the Acquired Assets and with a properly completed Internal Revenue
Service Form 8594 within 60 days after the Closing Date but in no event later
than 90 days before the due date, including extensions, for the consolidated
federal income tax return that includes Seller for the taxable year including
the Closing Date. If Seller objects to any items reflected on such schedule,
Seller shall notify the Assuming Bank of such objection and its reasons for
objecting, in which case the Assuming Bank and Seller shall attempt to resolve
the disagreement. If the Assuming Bank and Seller cannot resolve the
disagreement, the allocation shall be determined by a nationally recognized
independent appraiser selected by Seller and reasonably acceptable to the
Assuming Bank. The fees and expenses of such appraiser shall be borne equally by
the Assuming Bank and Seller. Seller and the Assuming Bank agree to act in
accordance with the computations and allocations contained in the schedule as
finally agreed or determined by such independent appraiser (including any
modifications thereto reflecting any post-closing adjustments) in any relevant
Tax Returns or similar filings (including any forms or reports required to be
filed pursuant to Section 1060 of the Code or the Treasury Regulations
promulgated thereunder ("1060 Forms")) and to file such 1060 Forms in the manner
required by applicable law. Seller and the Assuming Bank will promptly notify
each other in accordance with Section 14.6 of any challenge by any tax authority
to such computations or allocations.
ARTICLE XII
EMPLOYEE PLANS
12.1 EMPLOYEES; PARTICIPATION IN ASSUMING BANK PLANS. Attached
hereto as Schedule 12.1 is a list which Seller represents sets out all Purchased
Branch employees, including inactive employees, as of the date hereof. Except as
set forth in this Agreement, the Assuming Bank shall have no obligation in
respect of any Purchased Branch employee employed by Seller unless such employee
is hired by the Assuming Bank. The Assuming Bank's decision to offer employment
is subject to the Assuming Bank's sole discretion and nothing contained herein
is to be construed as an employment contract, as an offer of employment, or as
an agreement to offer employment, with respect to any such employee. Unless
employment has been offered by the Assuming Bank and accepted by the employee by
the Closing Date, all Purchased Branch employees employed by Seller shall be
terminated by Seller as of the Closing Date. Effective as of the Closing Date,
employees of the Purchased Branch who are hired by the Assuming Bank shall cease
participation in all plans, programs, policies and arrangements maintained for
their benefit by Seller or any of its Affiliates. Commencing on the Closing
Date, the Assuming Bank shall provide to employees of the Purchased Branch who
are hired by the Assuming Bank such plans, programs, policies and arrangements
being maintained by the Assuming Bank and which contain terms that are, in the
aggregate, no less favorable than those provided to similarly situated employees
of the Assuming Bank or any of its Affiliates. Each employee of Seller who is
hired by the Assuming Bank shall be given credit for all purposes under such
plans, programs, policies and arrangements, including fringe benefits,
maintained by the Assuming Bank (except for benefit accrual under a defined
benefit plan) for all service prior to the Closing Date with Seller and its
Affiliates.
12.2 CLAIMS INCURRED PRIOR TO AND AFTER CLOSING. Seller will retain
responsibility for and continue to pay all medical, life insurance, disability
and other welfare plan expenses and benefits for each employee of the Purchased
Branch or their covered dependents which are covered and payable under Seller's
Welfare Benefit Plans with respect to claims incurred by such employees and
former employees or their covered dependents prior to the Closing Date. Expenses
and benefits with respect to claims incurred by employees of the Purchased
Branch who are hired by the Assuming Bank or their covered dependents on or
after the Closing Date shall be the responsibility of the Assuming Bank. For
purposes of this Section, a claim is deemed incurred when the services that are
the subject of the claim are performed: in the case of life insurance, when the
death occurs; in the case of long-term disability benefits, when the disability
occurs; and, in the case of a hospital stay, when such stay commences. Seller
will retain responsibility for all welfare plan expenses and benefits, if any,
including responsibility for compliance with COBRA, for all former employees of
the Purchased Branch who are not employed by Seller on the Closing Date or such
former employees' Qualified Beneficiaries and for all Qualified Beneficiaries
with respect to Seller's plans who are eligible for COBRA coverage prior to the
Closing Date.
12.3 SEVERANCE PAY. The Assuming Bank agrees to reimburse Seller
within 5 days after Seller invoices Assuming Bank that severance benefits have
been paid in accordance with
Seller's severance plan (as previously disclosed to the Assuming Bank as of the
date hereof), and all unused accrued vacation benefits paid in accordance with
Seller's vacation benefits plan (as previously disclosed to the Assuming Bank as
of the date hereof) to all employees of the Purchased Branch who are not hired
by the Assuming Bank. The Assuming Bank will, as soon as practicable and in any
event within 45 days of the date hereof, inform Seller of its intentions with
respect to each employee of the Purchased Branch.
ARTICLE XIII
INDEMNIFICATION
13.1 INDEMNIFICATION.
(a) From the Closing Date and for a period of two years
thereafter, Seller shall indemnify, hold harmless, and defend the
Assuming Bank, its Affiliates and their respective directors, officers,
agents and employees (collectively, "Assuming Bank Indemnified
Persons") from and against any and all costs, losses, liabilities
(including, without limitation, STRICT LIABILITIES), expenses
(including, without limitation, reasonable attorneys' fees and
expenses), judgments, fines and settlements actually and reasonably
incurred by any such indemnitee in connection with any and all actions,
suits, claims, investigations or other proceedings based upon:
(i) any liability of Seller or any of its
Affiliates not expressly assumed by the Assuming Bank pursuant
hereto;
(ii) any breach by Seller of any of its
representations, warranties, covenants or agreements herein or
in any instrument, certificate, or agreement delivered by
Seller to the Assuming Bank pursuant hereto; or
(iii) any check or other instrument drawn on or
deposited into a Purchased Branch Deposit account prior to the
Closing Date upon which a forgery (signature or endorsement)
or alteration claim is asserted against the Assuming Bank.
(b) From the Closing Date and for a period of two years
thereafter, the Assuming Bank shall indemnify, hold harmless and defend
Seller, its Affiliates and their respective directors, officers, agents
and employees from and against any and all costs, losses, liabilities
(including, without limitation, STRICT LIABILITIES), expenses
(including, without limitation, reasonable attorneys' fees and
expenses), judgments, fines and settlements actually and reasonably
incurred by any such indemnitee in connection with any and all actions,
suits, claims, investigations or other proceedings based upon:
(i) performance or nonperformance by the
Assuming Bank of any and all liabilities of Seller assumed by
the Assuming Bank pursuant to this Agreement; or
(ii) any breach by the Assuming Bank of any of
its representations, warranties, covenants or agreements
herein or in any instrument, certificate, or agreement
delivered by the Assuming Bank to Seller pursuant thereto.
(c) With respect to any claim made or threatened against
any indemnitee hereunder for which such indemnitee is or may be
entitled to indemnification hereunder, it shall be a condition to such
indemnification that such indemnitee shall:
(i) promptly upon discovering any facts or
circumstances that might reasonably be expected to give rise
to such a claim, give written notice of such facts or
circumstances to the indemnitor;
(ii) as soon as practicable after such a claim is
made or threatened, give written notice thereof to the
indemnitor, which notice shall specify in reasonable detail
the nature of the claim and the amount (or an estimate of the
amount) of the claim;
(iii) provide to the indemnitor such information
and cooperation with respect to such claim as the indemnitor
may reasonably require including, without limitation, (a)
making records and appropriate personnel available to the
indemnitor at such times as the indemnitor shall request
(provided that such personnel are under the employ of the
indemnitee as such time), (b) providing copies of invoices or
other evidence of expense incurred, and (c) providing the
indemnitor copies of any process, pleadings, correspondence or
other writings relating to the claim;
(iv) cooperate and take all such steps as the
indemnitor may reasonably request to preserve and protect any
defense to such claim; and
(v) upon reasonable prior notice, afford to the
indemnitor the right, which the indemnitor may exercise at its
(or their) sole discretion and at its (or their) own expense,
to participate in (and/or assume full responsibility for the
direction of) the investigation, defense and/or settlement of
such claims.
13.2 LIMITATIONS ON INDEMNIFICATION. Notwithstanding anything to
the contrary contained in this Article XIII, no indemnification shall be
required to be made by either party until the aggregate amount of all such
claims by a party exceeds $50,000. Once such aggregate amount exceeds $50,000,
such party shall thereupon be entitled to indemnification for all amounts in
excess of such $50,000 which result in direct damage to such party by way of any
cost, loss, liability, expense, judgment, fine, or settlement actually incurred
by such party in accordance with Section 13.1; provided, however, subject to the
foregoing, no party shall have any liability under this Article XIII for
consequential damages.
13.3 EXCLUSIVITY OF REMEDIES. The remedies of the Assuming Bank
Indemnified Persons under Section 13.1(a) shall be considered the Assuming Bank
Indemnified Persons' sole
and exclusive remedies. Without limiting the generality of the foregoing, except
with respect to such remedies specifically set forth herein, the Assuming Bank
hereby releases, waives and agrees not to ▇▇▇ Seller or any of its shareholders
officers, directors, affiliates, employees, agents, representatives, successors
or assigns ("Seller's Related Parties") for any and all claims, causes of
action, rights of contribution, cost recovery, losses, liabilities, suits,
costs, fees, judgments or expenses which may now exist or which may hereafter
arise, REGARDLESS OF WHETHER CAUSED IN WHOLE OR IN PART BY THE SOLE,
CONTRIBUTORY, PASSIVE OR PARTIAL NEGLIGENCE OR STRICT LIABILITY OF SELLER OR ANY
OF THE SELLER'S RELATED PARTIES, in connection with:
(i) any material, waste, substance, substance,
pollutant or contaminant, the use, collection, handling,
recycling, generation, treatment, storage, disposal, release
or transportation of which by the Seller or any of its
predecessors, or is or may become regulated or controlled by
any Governmental Authority, or the improper handling,
management or disposal of which may affect human health or
safety, property (or the use thereof) or the environment, or
(ii) the compliance by Seller or any of its
predecessors, or any of its current or former real or personal
property, with applicable laws, regulations, standards to,
pollutant or contaminant limitations, orders or directives
pertaining directly or indirectly to human health or safety or
the environment, including without limitation the laws listed
on Schedule 13.3 as amended from time to time, and any state
or local analogue of the same.
ARTICLE XIV
MISCELLANEOUS
14.1 ENTIRE AGREEMENT. This Agreement embodies the entire agreement
of the parties hereto in relation to the subject matter herein and supersedes
all prior understandings or agreements, oral or written, between the parties.
14.2 HEADINGS. The headings and subheadings of the Table of
Contents, Articles and Sections contained in this Agreement, except the terms
identified for definition in Article I and elsewhere in this Agreement, are
inserted for convenience only and shall not affect the meaning or interpretation
of this Agreement or any provision hereof.
14.3 GOVERNING LAW. This Agreement and the rights and obligations
hereunder shall be governed by and construed in accordance with the laws of the
State of Texas.
14.4 SUCCESSORS. All terms and conditions of this Agreement shall
be binding on the successors and assigns of Seller and the Assuming Bank. Except
as otherwise expressly provided in this Agreement, nothing expressed or referred
to in this Agreement is intended or shall be construed to give any Person other
than Seller and the Assuming Bank any legal or equitable right, remedy, or claim
under or with respect to this Agreement or any provisions contained herein, it
being the intention of the parties hereto that this Agreement, the obligations
and statements of responsibilities hereunder, and all other conditions and
provisions hereof are for the sole and exclusive benefit of Seller and the
Assuming Bank and for the benefit of no other Person.
14.5 MODIFICATION; ASSIGNMENT. No amendment or other modification,
rescission, release, or assignment of any part of this Agreement shall be
effective except pursuant to a written agreement subscribed by the duly
authorized representatives of the parties hereto.
14.6 NOTICE. Any notice, request, demand, consent, approval or
other communication to any party hereto shall be effective when received and
shall be given in writing, and delivered in person against receipt therefor, or
sent by certified mail, postage prepaid, courier service, telex, or facsimile
transmission to such party (with copies as indicated below) at its address set
forth below or at such other address as it shall hereafter furnish in writing to
the other parties. All such notices and other communications shall be deemed
given on the date received by the addressee.
STERLING BANK:
▇. ▇▇▇▇▇▇ Bridgwater
Sterling Bank
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Sterling Bancshares, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
3400 JPMorgan Chase Tower
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
ASSUMING BANK
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
South Texas National Bank of Laredo
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile (▇▇▇) ▇▇▇-▇▇▇▇
14.7 MANNER OF PAYMENT. All payments due under this Agreement shall
be in lawful money of the United States of America in immediately available
funds as each party hereto may specify to the other parties.
14.8 COSTS, FEES AND EXPENSES. Except as otherwise specifically
provided herein, each party hereto agrees to pay all costs, fees and expenses
which it has incurred in connection with or incidental to the matters contained
in this Agreement, including without limitation any fees and disbursements to
its accountants and counsel.
14.9 WAIVER. Seller and the Assuming Bank may waive their
respective rights, powers, or privileges under this Agreement; provided, that
such waiver shall be in writing; and further provided, that no failure or delay
on the part of Seller or the Assuming Bank to exercise any right, power, or
privilege under this Agreement shall operate as a waiver thereof, nor will any
single or partial exercise of any right, power, or privilege under this
Agreement preclude any other or further exercise thereof or the exercise of any
other right, power, or privilege by Seller or the Assuming Bank under this
Agreement, nor will any such waiver operate or be construed as a future waiver
of such right, power, or privilege under this Agreement.
14.10 SEVERABILITY. If any provision of this Agreement is declared
invalid or unenforceable, then, to the extent possible, all of the remaining
provisions of this Agreement shall remain in full force and effect and shall be
binding upon the parties hereto so long as there is no material adverse effect
on the economic or legal substance of the transactions contemplated by this
Agreement or any Material Adverse Effect on any party hereto. Upon such
determination that any term or other provision is invalid or unenforceable, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties with respect to the relative benefits,
rights and obligations thereof as closely as possible in a mutually acceptable
manner so that the transactions contemplated hereto may be fulfilled to the
greatest extent possible.
14.11 TERMINATION OF AGREEMENT.
(a) This Agreement may be terminated at any time prior to
the Closing:
(i) By mutual agreement of Seller and the
Assuming Bank;
(ii) By Seller or the Assuming Bank upon notice
given to the other in the event that the other shall, contrary
to the terms of this Agreement, fail or refuse to consummate
the Closing contemplated hereby or to take any other action
referred to herein necessary to consummate the Closing
contemplated hereby or if there shall have been a material
failure of condition, or a material breach of any
representation or warranty, covenant or agreement, after
affording such defaulting party a 30 day period after notice
in which to cure;
(iii) By Seller or the Assuming Bank upon notice
given to the other if the Closing shall not have taken place
on or before the 180th calendar day after the date hereof;
(iv) By Seller if the Assuming Bank's regulatory
agencies have failed to issue a formal approval of the
Assuming Bank's applications by the 165th calendar day after
the date hereof;
(v) By Seller if the Assuming Bank's
applications are disapproved by the Assuming Bank's regulatory
agencies;
(vi) By Seller or the Assuming Bank upon written
notice to the other party if any court or governmental
authority of competent jurisdiction shall have issued a final
permanent order, enjoining, prohibiting or otherwise
materially limiting or conditioning the Assuming Bank's
business or the transactions contemplated by this Agreement,
or shall have issued an order denying approval of the purchase
and assumption and the other transactions contemplated hereby,
and the time for appeal or petition for reconsideration of
such order shall have expired; or
(b) In the event of the termination of this Agreement as
provided in this Section, this Agreement shall forthwith become wholly
void and of no further force and effect other than Section 11.1(f) with
respect to information provided to the Assuming Bank, Section 11.2(b)
and, other than as set forth in Section 14.11(c), there shall be no
liability on the part of Seller, the Assuming Bank or their respective
officers or directors (except as set forth in this Section). The
obligations of the parties to this Agreement under this Section shall
survive any such termination.
(c) In the event Seller or the Assuming Bank terminates
this Agreement pursuant to Sections 14.11(a)(iii), (iv), (v) or (vi)
and such termination is a result of alleged anti-competitive effects of
the transactions contemplated by this Agreement, then
the Assuming Bank agrees to pay to Seller the sum of $ -0- in
immediately available funds on or before the third business day after
such termination.
14.12 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the parties in this Agreement shall survive
the Closing for a period of two years.
14.13 PUBLIC NOTICE. All written notices to third parties (including
customers of the Branches) and all public announcements and press releases
concerning the transactions contemplated by this Agreement made prior to the
Closing Date shall be jointly planned, coordinated and reviewed by Seller and
Assuming Bank.
14.14 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the duly authorized representative of a different party
hereto on separate counterparts, each of which when so executed shall be deemed
to be an original and all of which when taken together shall constitute one and
the same Agreement.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the date first above
written.
STERLING BANK
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
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Its: EVP & CFO
SOUTH TEXAS NATIONAL BANK OF
LAREDO
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Its: President