Exhibit 10(l)
PURCHASE AND ASSUMPTION AGREEMENT
THIS AGREEMENT, entered into this 16th day of August,
1995, is by and between FIRST BANK, a state banking corporation
organized and existing under the laws of the state of North
Carolina, with its principal office in ▇▇▇▇, North Carolina
("Purchaser") and FIRST SCOTLAND BANK, a state banking corporation
organized and existing under the laws of the state of North
Carolina, with its principal office in Laurinburg, North Carolina
("Seller").
BACKGROUND STATEMENT
Seller is a North Carolina banking institution with three
offices located in Laurinburg, Maxton and Rockingham. Seller
desires to sell and Purchaser desires to purchase certain assets
and assume certain liabilities of Seller, including but not limited
to the assets and liabilities related to Seller's offices in
Rockingham and Laurinburg, upon the terms and conditions set forth
herein.
STATEMENT OF AGREEMENT
In consideration of the premises and the mutual covenants
contained herein, the parties hereto, for themselves, their
successors and assigns, agree as follows:
ARTICLE 1. DEFINITIONS.
1.1 "Agreement in Principle" shall mean the Agreement in
Principle, dated as of April 26, 1995, between Purchaser, Seller
and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
1.2 "Assets" shall mean the following:
(a) all right, title and interest of Seller in and to the
Seller Real Property;
(b) all right, title and interest of Seller in and to the
furniture, fixtures and equipment owned or (to the extent of the
lessee's interest) leased by Seller and located at either of the
Offices, except for signs and logos of Seller, and certain other
furniture, fixtures and equipment, all as listed on EXHIBIT 1.2(b)
attached hereto and made a part hereof;
(c) all other tangible assets owned by Seller that relate to
the Offices, except any right, title and interest of Seller in a
certain automobile currently being utilized by Seller's chief
executive officer;
(d) all intangible assets owned by Seller that relate to the
Offices, including but not limited to cash, securities and
goodwill, unless otherwise listed on EXHIBIT 1.2(d); and
(e) certain contracts and agreements ancillary to Seller's
business as listed on EXHIBIT 1.2(e) attached hereto and made apart
hereof.
1.3 "Balance Sheet" shall mean Seller's balance sheet as of
the close of the month preceding the Closing Date.
1.4 "Building Lease Agreement" shall mean the lease
agreement, dated as of the Closing Date, between Purchaser and Tri-
City, Inc. under which Tri-City, Inc. will lease to Purchaser
certain real property and improvements thereon located at Tri-City
Shopping Center, Rockingham, North Carolina, substantially in the
form of EXHIBIT 1.4 attached hereto.
1.5 "Closing Date" shall mean the date when the purchase and
assumption described in this Agreement are consummated. Unless the
parties otherwise agree, the Closing Date shall occur on the
business day closest to the fifteenth day of the month following
the month during which the final necessary regulatory approval
required under SECTIONS 6.2, 6.3 and 6.4 is received and the last
of any legally required waiting or protest periods has expired.
1.6 "Closing Payment" shall have the meaning as defined in
SECTION 2.6.
1.7 "Deposit Liabilities" shall mean, as reflected on the
Balance Sheet, the: (i) deposits maintained by Seller at either of
the Offices that are subject to check; (ii) amounts due trust
companies, banks or bankers on instruments presented to Seller at
either of the Offices for payment that have not been paid; (iii)
savings accounts maintained with Seller at either of the Offices;
(iv) outstanding cashier's checks drawn by Seller at either of the
Offices; and (v) certificates of deposits originated by Seller at
either of the Offices.
1.8 "Escrow Agent" shall mean the Escrow Agent appointed in
the Escrow Agreement.
1.9 "Escrow Agreement" shall mean the escrow agreement, dated
as of the Closing Date, between Purchaser and Seller in the form
substantially similar to EXHIBIT 1.9.
1.10 "Laurinburg Office" shall mean that division of Seller
that conducts its business in Laurinburg, North Carolina, with its
sole office located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇.
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1.11 "Maxton Office" shall mean that division of Seller that
conducts its business in Maxton, North Carolina, with its sole
office located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
1.12 "Net Book Value" shall mean the difference, as reflected
on the Balance Sheet and as determined in accordance with generally
accepted accounting principles, of the aggregated net book value of
the Assets and the Outstanding Loans minus the net book value of
the Deposit Liabilities and the Other Liabilities.
1.13 "Offices" shall mean the Laurinburg Office and the
Rockingham Office.
1.14 "Other Liabilities" shall mean the liabilities and
contracts of Seller listed on EXHIBIT 1.14.
1.15 "Outstanding Loans" shall mean all of the outstanding
loans made by Seller that originated from or are maintained by
either of the Offices that are evidenced by notes, overdrafts or
other documents, other than a loan from Seller to Laurel Hill Paper
Company in the original principal amount of $875,000.
1.16 "Purchaser Office" shall mean the division of Purchaser
that conducts its business in Laurinburg, North Carolina, with its
sole office located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇.
1.17 "Purchaser Real Property" shall mean the real property on
which the Purchaser Office is located, as more fully described on
EXHIBIT 1.17 hereto, together with all improvements thereon;
1.18 "Rockingham Office" shall mean that division of Seller
that conducts its business in Rockingham, North Carolina, with its
sole office located at the Tri-City Shopping Center, Rockingham,
North Carolina.
1.19 "Seller Real Property" shall mean the real property on
which the Laurinburg Office is situated, as more fully described on
EXHIBIT 1.19 hereto, together with all improvements thereon.
1.20 "Settlement Amount" shall mean the Closing Payment less
the book value of the Purchaser Real Property as reflected on
Purchaser's balance sheet as of the last business day of the month
immediately preceding the Closing Date.
1.21 "▇▇▇▇▇ Agreement" shall mean the agreement between ▇▇▇▇▇▇
▇. ▇▇▇▇▇, ▇▇. ("▇▇▇▇▇") and Purchaser, whereby ▇▇▇▇▇ agrees that
(i) for a period of three (3) years from the Closing Date, he will
not, directly or indirectly, compete with Purchaser in the banking
business in Cabarrus County, Chatham County, Davidson County,
Guilford County, ▇▇▇▇▇▇▇▇▇▇ County, ▇▇▇▇▇ County, ▇▇▇▇▇▇▇▇ County,
Richmond County, ▇▇▇▇▇▇▇ County, Scotland County, and Stanly
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County, North Carolina, (ii) he will vote the shares of Seller's
stock owned by him in favor of the transaction contemplated by this
Agreement in the event of such a shareholder vote, and (iii) he, or
an entity controlled by him, will enter into the Building Lease
Agreement as lessor.
ARTICLE 2. TERMS OF SALE.
2.1 SALE OF ASSETS. Seller shall sell and deliver to
Purchaser and Purchaser shall purchase from Seller the Assets.
2.2 SALE OF OUTSTANDING LOANS. Seller shall sell and deliver
to Purchaser, and Purchaser shall purchase from Seller, Seller's
rights in the Outstanding Loans (and the security therefore),
including all records and documents of Seller pertaining thereto.
Seller shall make available to Purchaser for inspection all
information Purchaser requests concerning any of the Outstanding
Loans.
2.3 ASSUMPTION OF LIABILITIES. Purchaser shall assume, and
Seller shall assign, the Deposit Liabilities and Other Liabilities.
Purchaser's assumption of the Deposit Liabilities shall be in
accordance with the terms of Seller's agreements with its customers
existing as of the Closing Date. On the Closing Date, the parties
shall enter into all documents necessary for Seller to assign to
Purchaser, and for Purchaser to assume from Seller, liability for
the payment and performance of Deposit Liabilities.
2.4 COMMUNITY MORTGAGE CORPORATION. Nothing in this
Agreement should be construed to require Purchaser to acquire any
of the assets or liabilities relating to Seller's interest in the
Community Mortgage Corporation.
2.5 CLOSING BALANCE SHEET. No later than five (5) business
days before the Closing Date, Seller will cause, at its expense,
its independent accountants to deliver to Purchaser (i) the Balance
Sheet, (ii) a comfort letter in form and substance satisfactory to
Purchaser regarding the Balance Sheet (including but not limited to
comfort regarding both the adequacy and allocation of the loan loss
allowance to such loans), (iii) schedules of the Deposit
Liabilities and the Outstanding Loans (including allocation of the
loan loss allowance to such loans), and (iv) such other financial
statements of Seller as Purchaser may request.
2.6 PURCHASE PRICE. The total purchase price of the Assets
shall be (i) Net Book Value plus a deposit premium of $540,000 (the
"Closing Payment") plus (ii) the post-closing payment made pursuant
to SECTION 2.9. The purchase price shall be settled as provided in
SECTION 2.7 and SECTION 2.8.
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2.7 PAYMENT BY PURCHASER. If the Settlement Amount is
greater than zero, the purchase price will be settled as follows:
(a) On the Closing Date, Purchaser will transfer to Seller
all right, title and interest of Purchaser in the Purchaser Real
Property;
(b) If the Settlement Amount is more than or equal to
$1,000,000, on the Closing Date Purchaser will transfer cash or
securities (i) to the Escrow Agent, to be held pursuant to the
Escrow Agreement, in the greater amount of (1) the Settlement
Amount minus $400,000 or (2) $1,000,000; and (ii) to Seller in the
amount of the difference between the Settlement Amount and the
amount Purchaser placed in escrow pursuant to SECTION 2.7(b)(i);
and
(c) If the Settlement Amount is less than $1,000,000,
Purchaser will transfer cash or securities in the amount of the
Settlement Amount to the Escrow Agent, to be held pursuant to the
Escrow Agreement, and Seller will transfer cash or securities to
the Escrow Agent, to be held pursuant to the Escrow Agreement, in
the amount of the difference between $1,000,000 and the Settlement
Amount; and
(d) Purchaser shall pay to Seller the post-closing payment as
provided in SECTION 2.9.
2.8 PAYMENT BY SELLER. If the Settlement Amount is zero or
less, the purchase price will be settled as follows:
(a) On the Closing Date, Purchaser will transfer to Seller
all right, title and interest of Purchaser in the Purchaser Real
Property;
(b) On the Closing Date, Seller will transfer cash or
securities in the amount of $1,000,000 to the Escrow Agent, to be
held pursuant to the Escrow Agreement;
(c) On the Closing Date, Seller will transfer cash or
securities to Purchaser in the amount of the Settlement Amount (for
this purpose the Settlement Amount shall be treated as a positive
number); and
(d) Purchaser shall pay to Seller the post-closing payment as
provided in SECTION 2.9.
2.9 POST-CLOSING PAYMENT. Purchaser will pay Seller cash in
an amount equal to twenty percent (20%) of Purchaser's net after-
tax profits from normal banking operations (excluding any
nonrecurring gains) derived from the Purchaser Office and the
Offices, as reflected by the books and records of Purchaser (using
Purchaser's normal and customary accounting practices), during the
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24-month period beginning on the first month-end following the
Closing Date. Such payment made pursuant to this SECTION 2.9 shall
be made within twenty (20) days after the end of such 24-month
period.
2.10 LEASE OF ANNEX. Seller will lease to Purchaser for a
period of six (6) months, at a rate of $500 per month, either (i)
the annex teller window portion of the Purchaser Real Property or
(ii) the drive-up window inside the main building on the Purchaser
Real Property (the "Leased Property"). Such lease will be on
similar terms to those applicable to the current lessee of the
annex teller window. Seller covenants to keep the Leased Property
in good repair.
2.11 LEASE OF BUILDING. Purchaser and Tri-City, Inc. will
enter into the Building Lease Agreement under which Purchaser will
lease, on a month-to-month basis, the real property on which the
Rockingham Office is situated and the improvements thereon. The
terms of the Building Lease Agreement will be substantially the
same as those between Seller and Tri-City, Inc., except that the
term shall be month-to-month and the lease agreement shall be
subject to a six (6) month notice requirement (i) by Tri-City,
Inc., for an increase in rent, or (ii) by Tri-City, Inc. or
Purchaser for termination or other material change in the lease.
2.12 COVENANT NOT TO COMPETE. Upon completion of the
transaction contemplated under this Agreement, for a period of
three (3) years from the Closing Date, Seller agrees that it will
not, directly or indirectly, compete with Purchaser in the banking
business in Cabarrus County, Chatham County, Davidson County,
Guilford County, ▇▇▇▇▇▇▇▇▇▇ County, ▇▇▇▇▇ County, ▇▇▇▇▇▇▇▇ County,
Richmond County, ▇▇▇▇▇▇▇ County, Scotland County, and Stanly
County, North Carolina. In addition, Seller agrees that within
five (5) days of the Closing Date, it will change its name to a
name that is not similar to or likely to be confused with its
current name or with the name of Purchaser or any of its
affiliates.
2.13 RESTRICTIONS ON USE OF THE PURCHASER REAL PROPERTY. Upon
completion of the transaction contemplated under this Agreement,
Seller agrees that it will not use the Purchaser Real Property
thereon for a banking operation, and for a period of one (1) year
from the Closing Date, will not, directly or indirectly, sell,
lease or otherwise transfer the Purchaser Real Property to (i) any
financial institution in Scotland County, North Carolina, (ii) any
financial institution in a county contiguous thereto, or (iii) any
other financial institution formed after the date of the Agreement
in Principle.
2.14 EMPLOYEE FUTURE EMPLOYMENT. Seller agrees not to solicit
employment of employees employed by Purchaser at the Offices for a
period of six (6) months after the Closing Date, except that Seller
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may continue to employ ▇▇▇▇▇ ▇▇▇▇▇, chief executive officer of
Seller.
2.15 ADDITIONAL OBLIGATIONS OF PURCHASER.
(a) In addition to other obligations under this Agreement,
Purchaser agrees to assume and discharge the duties and obligations
of Seller, from and after the Closing Date, with respect to (i) the
deposit accounts assumed by Purchaser in accordance with the terms
and conditions of the contracts of deposit and the laws, rules and
regulations applicable thereto, and (ii) the safe deposit box
business at the Offices, and to maintain all necessary facilities
for the use of such boxes by the renters thereof during the period
for which such persons have paid rent therefor in advance to
Seller, subject to the provisions of the rental agreements between
it and the respective renters of such boxes. On the Closing Date,
Seller shall assign, transfer and deliver to Purchaser such records
as exist (in whatever form or medium maintained by Seller)
pertaining to the safe deposit operations at the Offices, including
all relevant safe deposit contracts. From and after the Closing
Date, Purchaser shall assume all risks associated with granting
access to and protecting the contents of safe deposit boxes located
at the Offices.
(b) Purchaser agrees that it will preserve and safely keep,
for as long as may be required by applicable law, all of the files,
books of account and records referred to in SECTION 2.16 for the
joint benefit of itself and Seller, and that it will permit Seller
or its representatives, at any reasonable time and at Seller's
expense, to inspect, make extracts from or copies of, any such
files, books of account, or records as Seller shall deem reasonably
necessary.
2.16 ADDITIONAL OBLIGATIONS OF SELLER. On the Closing Date,
Seller shall:
(a) deliver to Purchaser such of the assets purchased as
shall be capable of physical delivery, including, without
limitation, all assets comprising the safe deposit box business at
the Offices;
(b) execute, acknowledge and deliver to Purchaser all such
endorsements, assignments, bills of sale, warranty deeds, and other
instruments of conveyance, assignment and transfer as shall
reasonably be necessary or advisable to consummate the sale and
transfer of the purchased assets to Purchaser as hereinabove
provided;
(c) assign, transfer and deliver to Purchaser such of the
following records pertaining to the deposit liabilities to be
assumed by Purchaser as exist and are available in whatever form or
medium is maintained by Seller:
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(i)signature cards, orders, night deposit agreements,
borrower resolutions and other contracts between Seller and
Offices'depositors, and records of similar character;
(ii)deposit slips and cancelled checks or withdrawal
orders representing charges to depositors; and
(iii)records of accounts;
(d) assign, transfer and deliver to Purchaser all collateral
security of any nature whatsoever held by Seller as collateral for
the Outstanding Loans; and
(e) assign, transfer and deliver to Purchaser such loan files
and records (in whatever form or medium is maintained by Seller) as
may pertain to the Outstanding Loans.
2.17 CERTAIN TRANSITIONAL MATTERS. Following the Closing
Date:
(a) Purchaser agrees to pay in accordance with law and
customary banking practices all properly drawn and presented
checks, drafts and withdrawal orders presented to Purchaser by
mail, over the counter or through the check clearing system of the
banking industry, by depositors of the accounts assumed, whether
drawn on the checks, withdrawal or draft forms provided by Seller
or by Purchaser, and in all other respects to discharge, in the
usual course of the banking business, the duties and obligations of
Seller with respect to the balances due and owing to the depositors
whose accounts are assumed by Purchaser.
(b) If any of such depositors, instead of accepting the
obligation of Purchaser to pay the deposit liabilities assumed,
shall demand payment from Seller for all or any part of any such
assumed deposit liabilities, Seller shall not be liable or
responsible for making such payments; provided if Seller pays the
same, Purchaser agrees to reimburse Seller for any such payments or
charges. Seller and Purchaser shall make appropriate arrangements,
including but not limited to the transfer by Seller to Purchaser of
banking industry routing numbers, to provide for settlement by
Purchaser of checks, returns and other items which are presented
after the Closing Date and which are drawn on or chargeable to
accounts which have been assumed by Purchaser. In addition,
subsequent to regulatory approval, Seller will notify its affected
customers by letter of the pending assignment of Seller's deposit
accounts to Purchaser, which notice shall be at Seller's cost and
expense.
(c) Purchaser agrees to pay promptly to Seller an amount
equivalent to the amount of any checks, drafts or withdrawal orders
credited to an assumed account as of the Closing Date which are
returned to Seller after the Closing Date. Seller may charge this
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settlement account established by Purchaser hereunder in the amount
of any such item(s).
(d) If the balance due on any loan purchased pursuant to
SECTION 2.2 has been reduced by Seller as a result of a payment by
check received prior to the Closing Date, which item is returned
after the Closing Date, the asset value represented by the loan
transferred shall be correspondingly increased and an amount in
cash equal to such increase shall be paid by Purchaser to Seller
promptly upon demand.
2.18 INDEMNIFICATION BY SELLER. Seller shall indemnify, hold
harmless and defend Purchaser from and against all losses and
liabilities, including reasonable attorneys'fees and expenses,
arising out of:
(a) any actions, suits or proceedings commenced prior to the
Closing Date (other than proceedings to prevent or limit the
consummation of this transaction) relating to Seller or the
Offices;
(b) any actions, suits or proceedings commenced on or after
the Closing Date but which relate to operations of Seller or the
Offices prior to the Closing Date;
(c) any breaches of warranty made or deemed made by Seller in
this Agreement or any other agreement, document, instrument or
certificate delivered pursuant hereto;
(d) any representation, statement, certificate or other
information made or deemed made by Seller in this Agreement or any
other agreement, document, instrument or certificate delivered or
made pursuant hereto that shall prove to have been incorrect in any
material respect when made or deemed made; or
(e) any violation of any applicable statute or regulation for
the protection of the environment, and/or breach of the
representations in SECTION 3.11, which occurs upon the Seller Real
Property prior to the Closing Date regardless of when such
violation is discovered, or by reason of the imposition of any
governmental lien for the recovery of environmental clean up cost
expended by reason of such violation. To the extent that Purchaser
is strictly liable under any such statute, Seller's obligations to
Purchaser under this indemnity shall likewise be without regard to
fault on the part of Seller with respect to the violation of law
which results in liability to Purchaser.
Seller acknowledges that its obligations under this SECTION 2.18
shall survive the Closing Date.
2.19 INDEMNIFICATION BY PURCHASER. Purchaser shall indemnify,
hold harmless and defend Seller from and against all losses and
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liabilities, including reasonable attorneys'fees and expenses,
arising out of:
(a) any actions, suits or proceedings commenced on or prior
to the Closing Date (other than proceedings to prevent or limit the
consummation of this transaction) relating to Purchaser;
(b) any actions, suits or proceedings commenced after the
Closing Date but which relate to operations of the Offices by
Purchaser after the Closing Date;
(c) any breaches of warranty made or deemed made by Purchaser
in this Agreement or any other agreement, document, instrument or
certificate delivered pursuant hereto;
(d) any representation, statement, certificate or other
information made or deemed made by Purchaser in this Agreement or
any other agreement, document, instrument or certificate delivered
pursuant hereto that shall prove to have been incorrect in any
material respect when made or deemed made; or
(e) any violation of any applicable statute or regulation for
the protection of the environment, and/or breach of the
representations in SECTION 4.5, which occurs upon the Purchaser
Real Property prior to the Closing Date regardless of when such
violation is discovered, or by reason of the imposition of any
governmental lien for the recovery of environmental clean up cost
expended by reason of such violation. To the extent that Seller is
strictly liable under any such statute, Purchaser's obligations to
Seller under this indemnity shall likewise be without regard to
fault on the part of Purchaser with respect to the violation of law
which results in liability to Seller.
Purchaser acknowledges that its obligations under this SECTION 2.19
shall survive the Closing Date.
2.20 PRO RATA ADJUSTMENT OF EXPENSES. All rents, utility
payments and similar expenses relating to the physical plant of the
Offices and the Purchaser Office and the FDIC premium and other
expenses relating to the deposit or other liabilities assumed or
assets acquired by Purchaser shall be prorated between the parties
as of the Closing Date.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller hereby represents and warrants to Purchaser as follows,
which representations and warranties shall survive the Closing Date
for a period of three (3) years:
3.1 CORPORATE ORGANIZATION. Seller is a banking institution
duly organized, validly existing and in good standing under the
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laws of the State of North Carolina. Seller has the corporate
power and authority to own its properties, to carry on its business
as presently conducted, and to effect this transaction.
3.2 NO VIOLATION. Neither the execution and delivery of this
Agreement, nor the consummation of this transaction, will violate
or conflict with (a) the Charter or By-laws of Seller, (b) any
provisions of any agreement or any other restriction of any kind to
which Seller is a party or by which Seller is bound, or (c) any
statute, law, decree, regulation or order of any governmental
authority, once the governmental consents referred to in this
Agreement are obtained, or will result in a default under, or cause
the acceleration of the maturity of, any obligation or loan to
which Seller is a party.
3.3 CORPORATE AUTHORITY. The execution and delivery of this
Agreement, and the consummation of this transaction, have been duly
authorized by the Board of Directors of Seller. No further
corporate authorization on the part of Seller is necessary to
consummate the transactions contemplated hereunder, except that
Seller must obtain the approval of its shareholders through a
shareholder vote or other authorized means.
3.4 INFORMATION. The financial and other information
provided or to be provided to Purchaser in connection with this
transaction, including all financial statements, the Balance Sheet,
all loan files, and the like, in whatever form contained, is
accurate and correct in all material respects as of the dates
reflected therein.
3.5 TITLE TO PROPERTIES. Seller has good title to all real
and personal property to be conveyed to Purchaser hereunder and
such property shall be conveyed to Purchaser free and clear of all
liens and encumbrances.
3.6 CONDITION AND ADEQUACY OF ASSETS. The Assets are in good
and marketable condition, and such assets consist of all of the
assets necessary for the operation of the Offices.
3.7 ADEQUACY OF LOAN LOSS ALLOWANCE. The loan loss allowance
as listed on Seller's financial statements and the Balance Sheet is
sufficient and adequate pursuant to, and in accordance with,
prudent banking practices.
3.8 TAXES. Seller is not delinquent in the payment of any
taxes or fees that have been levied or assessed by any governmental
or regulatory authority against it or its assets. Seller has
timely filed all tax returns that are required by law to be filed,
and has paid all taxes shown on said returns and all other
assessments or fees levied upon it or upon its properties to the
extent that such taxes, assessments or fees have become due, and if
not due, such taxes have been adequately provided for and
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sufficient reserves therefor established on Seller's financial
statements and on the Balance Sheet.
3.9 COMPLIANCE WITH LAWS. Except as disclosed on EXHIBIT
3.9, Seller is in full compliance with all applicable laws,
statutes and governmental regulations that relate to Seller or its
operations.
3.10 LITIGATION. There is no litigation pending or threatened
against Seller or otherwise arising out of Seller's operations, and
there is no litigation or other proceeding pending or threatened
that would affect the ability of Seller or Purchaser to consummate
this Agreement or any part thereof.
3.11 NO DEFAULT. No default or event of default (as defined
under any agreement to which Seller is a party) has occurred and is
continuing.
3.12 ENVIRONMENTAL MATTERS. To the best of Seller's
knowledge, as of the date of this Agreement: (1) the Seller Real
Property does not contain any hazardous wastes, hazardous
substances, hazardous materials, toxic substances, hazardous air
pollutants or toxic pollutants, as those terms are used in the
Resource Conservation and Recovery Act (42 U.S.C.A. 6901 et seq.),
the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (42 U.S.C.A. 9601 et seq.), the Hazardous
Materials Transportation Act (49 U.S.C.A. 1801 et seq.), the Toxic
Substances Control Act (15 U.S.C.A. 2601 et seq.), the Clean Air
Act (42 U.S.C.A. 7401 et seq.), and the Clean Water Act (33
U.S.C.A. 1251 et seq.), or in any amendments thereto, or any
regulations promulgated pursuant thereto, or in any applicable
state or local law, regulation or ordinance; (2) the Seller Real
Property is not subject to federal, state or local regulations or
liability because of the presence of stored, leaked, spilled or
disposed petroleum products, waste materials or debris, "PCB's" or
PCB items (as defined in 40 C.F.R. 761.3), underground storage
tanks, "asbestos" (as defined in 40 C.F.R. 763.63) or the past or
present accumulation, treatment, storage, disposal, spillage or
leakage of any dangerous, hazardous or toxic substance as defined
in or regulated by any federal, state or local laws, regulations or
orders; (3) no portion of the Seller Real Property is filled land;
and (4) no condition exists which is or may be characterized by any
federal, state or local government or agency as an actual or
potential threat or danger to public health or the environment.
Seller further represents and warrants to Purchaser that the Seller
Real Property shall be maintained through the Closing Date in the
condition represented and warranted above.
3.13 EMPLOYMENT CONTRACTS. Seller has no employment
contracts other than those listed on EXHIBIT 3.13. Purchaser will
have no liability with respect to any employment contract to which
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Seller is a party or otherwise with respect to any of Seller's
employees.
3.14 FINDERS OR BROKERS. Seller has not in any manner
whatsoever paid or agreed to pay any fee or commission to any
agent, broker, finder or other person for or on account of services
rendered as a broker or finder in connection with this Agreement or
the transactions covered and contemplated hereby. All negotiations
relating to this Agreement have been conducted by Seller directly
and without the intervention of any person in such manner as to
give rise to any valid claim against any party hereto for any
brokerage commission or finder's fee or other like payment.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows,
which representations and warranties shall survive the Closing Date
for a period of three (3) years:
4.1 CORPORATE ORGANIZATION. Purchaser is a banking
institution duly organized, validly existing and in good standing
under the laws of the State of North Carolina. Purchaser has the
corporate power and authority to own its properties, to assume the
liabilities being transferred, and to effect this transaction.
4.2 NO VIOLATION. Neither the execution and delivery of this
Agreement, nor the consummation of this transaction, will violate
or conflict with (a) the Charter or By-laws of Purchaser, (b) any
provision of any agreement or any other restriction of any kind to
which Purchaser is a party or by which Purchaser is bound, or (c)
any statute, law, decrees, regulation or order of any governmental
authority once the governmental consents referred to in this
Agreement are obtained, or will result in a default under, or cause
the acceleration of the maturity of, any obligation or loan to
which Purchaser is a party.
4.3 CORPORATE AUTHORITY. The execution and delivery of this
Agreement, and the consummation of this transaction, have been duly
authorized by the Board of Directors of Purchaser. No further
corporate authorization on the part of Purchaser is necessary to
consummate the transactions contemplated hereunder.
4.4 TITLE TO PROPERTIES. Purchaser has good title to all
real and personal property to be conveyed to Seller hereunder and
such property shall be conveyed to Seller free and clear of all
liens and encumbrances.
4.5 ENVIRONMENTAL MATTERS. To the best of Purchaser's
knowledge, as of the date of this Agreement: (1) the Purchaser Real
Property does not contain any hazardous wastes, hazardous
substances, hazardous materials, toxic substances, hazardous air
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pollutants or toxic pollutants, as those terms are used in the
Resource Conservation and Recovery Act (42 U.S.C.A. 6901 et seq.),
the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (42 U.S.C.A. 9601 et seq.), the Hazardous
Materials Transportation Act (49 U.S.C.A. 1801 et seq.), the Toxic
Substances Control Act (15 U.S.C.A. 2601 et seq.), the Clean Air
Act (42 U.S.C.A. 7401 et seq.), and the Clean Water Act (33
U.S.C.A. 1251 et seq.), or in any amendments thereto, or any
regulations promulgated pursuant thereto, or in any applicable
state or local law, regulation or ordinance; (2) the Purchaser Real
Property is not subject to federal, state or local regulations or
liability because of the presence of stored, leaked, spilled or
disposed petroleum products, waste materials or debris, "PCB's" or
PCB items (as defined in 40 C.F.R. 761.3), underground storage
tanks, "asbestos" (as defined in 40 C.F.R. 763.63) or the past or
present accumulation, treatment, storage, disposal, spillage or
leakage of any dangerous, hazardous or toxic substance as defined
in or regulated by any federal, state or local laws, regulations or
orders; (3) no portion of the Purchaser Real Property is filled
land; and (4) no condition exists which is or may be characterized
by any federal, state or local government or agency as an actual or
potential threat or danger to public health or the environment.
Purchaser further represents and warrants to Seller that the
Purchaser Real Property shall be maintained through the Closing
Date in the condition represented and warranted above.
4.6 FINDERS OR BROKERS. Purchaser has not in any manner
whatsoever paid or agreed to pay any fee or commission to any
agent, broker, finder or other person for or on account of services
rendered as a broker or finder in connection with this Agreement or
the transactions covered and contemplated hereby. All negotiations
relating to this Agreement have been conducted by Purchaser
directly and without the intervention of any person in such manner
as to give rise to any valid claim against Seller for any brokerage
commission or finder's fee or like payment.
ARTICLE 5. CONDUCT OF BUSINESS PENDING THE CLOSING DATE
From and after the date hereof until the Closing Date:
5.1 ACTIVITY IN THE ORDINARY COURSE. Seller shall carry on
the business of Seller and the Offices substantially in the same
manner as heretofore so as to maintain the goodwill of its
customers and employees, with no material adverse change in the
operations, performance, financial condition or management of
Seller. Without limiting in any way the foregoing, Seller
covenants that it will not change its rates for deposits and loans
in a way that is materially different from the current relationship
of such rates to market rates.
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5.2 NOTICE TO PURCHASER. Seller shall not, without providing
written notice to Purchaser prior to consummation, (a) make any new
loan or loan commitment of greater than or equal to $100,000; (b)
make any capital expenditure of $10,000, or (c) take any other
action not in the ordinary course of business.
5.3 APPROVAL BY PURCHASER. Seller shall not, without written
approval of Purchaser, sell (a) any real estate, loans, securities,
deposits, or a material amount of equipment or fixtures, or (b) any
other assets outside the ordinary course of its business; provided,
however, Seller may sell the assets related to the Maxton Office to
Lumbee Guaranty Bank pursuant to the terms of a Letter of Intent
dated February 28, 1995 between Seller and Lumbee Guaranty Bank as
amended on July 13, 1995.
ARTICLE 6. OBLIGATIONS OF PARTIES
PRIOR TO AND AFTER CLOSING DATE
6.1 FULL ACCESS. Seller shall afford to the officers and
authorized representatives of Purchaser access to the properties,
books, and records pertaining to Seller in order that Purchaser may
have full opportunity to make investigations, at reasonable times
without substantially interfering with Seller's normal business and
operations, of the affairs of Seller relating to the Offices, and
the officers of Seller shall furnish Purchaser with such additional
financial and operating data and other information as to its
business and properties at the Offices as Purchaser may, from time
to time, request, including, without limitation, information
required for inclusion in all governmental applications necessary
to effect this transaction.
6.2 REQUIREMENTS OF REGULATORY AUTHORITIES. Seller shall, as
soon as is practicable, notify the proper regulatory authorities of
its intent to terminate operation of the Offices and to consummate
this transaction and thereafter shall (i) comply with the normal
and usual requirement imposed by such authorities applicable to
effectuate this transaction, and (ii) use its good faith efforts to
obtain any required permission of such regulatory authorities to
cease operating the Offices.
6.3 APPLICATION FOR APPROVAL TO EFFECT PURCHASE OF ASSETS AND
ASSUMPTION OF LIABILITIES. Purchaser shall, within twenty-five
(25) days following the execution of this Agreement, prepare and
file an application, as required by law, to the appropriate federal
and/or state regulatory authorities for approval to purchase and
assume the aforesaid assets and liabilities, to establish a branch
at the locations of the Offices, and to effect in all other
respects the transaction(s) contemplated herein. Purchaser agrees
to process the application(s) in a diligent manner and to provide
Seller with a copy of the application(s) as filed (except for any
confidential portions thereof) and all material notices, orders,
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opinions, correspondence and other documents with respect thereto,
and to use its best efforts to obtain all necessary regulatory
approvals. Purchaser agrees to promptly notify Seller upon receipt
by Purchaser of notification that any application provided for
hereunder has been denied.
6.4 FURTHER APPROVALS. The parties hereto agree to execute
and deliver such instruments and to take such other actions as the
other party may reasonably require in order to carry out the intent
of the Agreement. Seller agrees to give such bills of sale, deeds,
acknowledgements and other instruments of conveyance and transfer
as shall be necessary and appropriate to convey to Purchaser all of
Seller's right, title and interest in and to the Assets,
Outstanding Loans and to any collateral to be transferred and the
liens in connection therewith. Purchaser shall be responsible for
the costs of all title examinations, titling fees, surveys,
attorneys'fees and expenses (excluding those of Seller's counsel),
recording costs, transfer fees and other expenses in connection the
transfer of with the Assets and Outstanding Loans. Seller shall be
responsible for the costs of all title examinations, titling fees,
surveys, attorneys'fees and expenses (excluding those of
Purchaser's counsel), recording costs, transfer fees, and other
expenses in connection with the transfer of the Purchaser Real
Property.
6.5 SHAREHOLDER APPROVAL. As soon as possible after the
execution of this Agreement, but in any event within thirty (30)
days after the execution of this Agreement, Seller will procure the
approval of its shareholders, by means of a shareholder vote or
other authorized means, of this Agreement, all other agreements to
be executed by Seller pursuant hereto, and the transaction
contemplated by this Agreement.
6.6 INSURANCE. Effective as of the Closing Date, Seller will
discontinue its insurance coverage maintained in connection with
the Offices and the activities conducted thereon.
6.7 RECEIPTS AFTER CLOSING. Purchaser agrees that any money
collected on account of a loan not transferred to Purchaser will be
paid promptly to Seller.
6.8 OTHER OFFERS. From the date hereof until the Closing
Date, neither Seller nor any of its shareholders, directors,
officers or agents shall discuss or otherwise entertain any other
offers to acquire the stock, assets or liabilities of the Offices,
nor will any such offers be solicited or encouraged, unless
Purchaser shall have first terminated this Agreement pursuant to
the terms hereof.
6.9 MONTHLY SCHEDULES. As soon as practicable after the end
of each month from the date hereof until the Closing Date, Seller
will provide Purchaser schedules of (i) the Deposit Liabilities,
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(ii) the Outstanding Loans with allocation of the loan loss
allowance, (iii) the letters of credit liabilities of Seller, and
(iv) the unfunded loan commitments of Seller.
ARTICLE 7. CONDITIONS TO PURCHASER'S OBLIGATIONS
The obligation of Purchaser to complete the transactions
provided for in this Agreement are conditioned upon fulfillment, at
or before the Closing Date, of each of the following conditions:
7.1 PURCHASER SATISFACTION. Purchaser's obligation to
consummate the transaction is conditioned upon Purchaser's
satisfaction, in its sole discretion, with the results of its
review of Seller, including a review of financial statements,
audits, loan documentation, condition of real estate and personal
property, environmental audit, compliance with laws and
regulations, valuations of assets, including OREO, adequacy of loan
loss allowance, and other aspects of Seller's business.
7.2 SELLER DEPOSITS AND LOANS. Purchaser's obligations to
consummate the transaction are further subject to the fulfillment
of the following conditions regarding the Offices as of the Closing
Date:
(a)core deposits (non-interest bearing DDA, NOW, money
market, and savings accounts) shall be at least $9,780,000;
(b)total performing Outstanding Loans (Outstanding
Loans on an accrual basis and not more than 90 days past due)
shall be at least $9,150,000; and
(c)total deposits, excluding certificates of deposit in
excess of $100,000, shall be at least $13,605,000.
7.3 SCHEDULES OF DEPOSITS LIABILITIES AND OUTSTANDING LOANS;
NO MATERIAL CHANGE. Purchaser shall have received schedules of the
Deposit Liabilities and the Outstanding Loans as of the Closing
Date and Purchaser, in its sole discretion, shall be satisfied that
there is no material change in the amounts of the Deposit
Liabilities and the Outstanding Loans from the Balance Sheet.
7.4 RELATED DOCUMENTS. Purchaser shall have received a duly
executed copy of the following in form and substance satisfactory
to Purchaser: (a) the ▇▇▇▇▇ Agreement, (b) the Building Lease
Agreement, (c) the Escrow Agreement, and (d) all other bills of
sale, deeds, and other instruments and documents necessary for the
consummation of the transactions described herein.
7.5 REPRESENTATION AND WARRANTIES TRUE. The representations
and warranties made by Seller in this Agreement shall be true in
all material respects at and as of the Closing Date as though such
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representations and warranties were made at and as of such time,
except for any changes permitted by the terms hereof or consented
to in writing by Purchaser.
7.6 OBLIGATIONS PERFORMED. Seller shall have performed and
complied in all material respects with all obligations and
agreements required by this Agreement to be performed or complied
with by it prior to or at the Closing Date.
7.7 SHAREHOLDER APPROVAL. The shareholders of Seller shall
have approved this Agreement and all other agreements entered into
pursuant hereto by means of a shareholder vote or some other
authorized means.
7.8 NO ADVERSE LITIGATION. On the Closing Date, no action,
suit, investigation or proceeding shall be pending or threatened
against Seller which might reasonably be expected to (a) materially
and adversely affect the business, properties and assets of Seller
or the Offices, or (b) materially and adversely affect this
transaction.
7.9 CERTIFICATE OF COMPLIANCE; NO MATERIAL ADVERSE CHANGE.
Seller shall have delivered to Purchaser a certificate of its
Chairman and President, dated the Closing Date, certifying (a) to
the fulfillment of all of the foregoing conditions, and (b) that
there has been no material adverse change in the financial
condition of Seller from the date of the Balance Sheet or other
financial statements delivered pursuant to SECTION 2.5 to the
Closing Date.
7.10 REGULATORY APPROVAL. Purchaser shall have received from
the appropriate regulatory authorities approval (a) of the
transaction(s) contemplated herein, and (b) to operate the Offices.
7.11 BOARD OF DIRECTORS APPROVAL. The board of directors of
Purchaser shall have approved this Agreement and all other
agreements entered into pursuant hereto by means of a resolution or
some other authorized means.
ARTICLE 8. CONDITIONS TO SELLER'S OBLIGATIONS
The obligation of Seller to complete the transactions provided
for in this Agreement are conditioned upon fulfillment, at or
before the Closing Date, of each of the following conditions:
8.1 REPRESENTATIONS AND WARRANTIES TRUE. The representations
and warranties made by Purchaser in this Agreement shall be true in
all material respects at and as of the Closing Date as though such
representations and warranties were made at and as of such time,
except for any changes permitted by the terms hereof or consented
to by Seller.
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8.2 NO ADVERSE LITIGATION. On the Closing Date, no action,
suit or proceeding shall be pending or threatened against Purchaser
or Seller which might materially and adversely affect the
transactions contemplated thereunder.
8.3 ESCROW AGREEMENT. Seller shall have received a duly
executed copy of the Escrow Agreement.
8.4 CERTIFICATE OF COMPLIANCE. Purchaser shall have
delivered to Seller a certificate of its President, dated the
Closing Date, certifying to the fulfillment of all of the foregoing
conditions.
8.5 REGULATORY APPROVAL.
(a) The appropriate party shall have received all necessary
regulatory approvals to cease operating the Offices, if such
approval is necessary, and all notice and waiting periods required
by law to pass after the granting of such approval shall have
passed and no proceeding to enjoin, restrain, prohibit or
invalidate such sale.
(b) Purchaser shall have received from the appropriate
regulatory authorities approval (i) of the transaction(s)
contemplated herein, and (ii) to operate the Offices.
ARTICLE 9. TERMINATION
9.1 METHODS OF TERMINATION. This Agreement may be terminated
in any of the following ways:
(a) at any time on or prior to the Closing Date by the mutual
consent in writing of Purchaser and Seller;
(b) on the Closing Date, by Purchaser in writing if the
conditions set forth in Article 7 of this Agreement shall not have
been met or waived in writing by Purchaser;
(c) on the Closing Date, by Seller in writing if the
conditions set forth in Article 8 of this Agreement shall not have
been met by Purchaser or waived in writing by Seller;
(d) at any time on or prior to the Closing Date, by Purchaser
or Seller in writing if the other shall have been in breach of any
representation and warranty in any material respect (as if such
representation and warranty had been made on and as of the date
hereof and on the date of the notice of breach referred to below),
or in breach of any covenant, undertaking or obligation contained
herein, and such breach has not been cured by the earlier of thirty
(30) days after the giving of notice to the breaching party of such
breach or the Closing Date; and
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(e) by Purchaser or Seller in writing at any time after any
of the regulatory authorities has denied approval of the sale of
the Offices or any application of Purchaser for approval of the
transaction(s) contemplated herein.
9.2 PROCEDURE UPON TERMINATION. In the event of termination
pursuant to SECTION 9.1 hereof, written notice thereof shall
forthwith be given to the other party, and this Agreement shall
terminate upon receipt of such notice immediately unless an
extension is consented to by the party having the right to
terminate. If this Agreement is terminated as provided herein:
(a) each party will return all documents, work papers and
other materials of the other party relating to this transaction,
whether obtained before or after the execution hereof, to the party
furnishing the same; and
(b) all information received by either party hereto with
respect to the business of the other party (other than information
which is a matter of public knowledge or which has heretofore been
or is hereafter published in any publication for public
distribution or filed as public information with any governmental
authority) shall not at any time be used for any business purpose
by such party or disclosed by such party to third persons.
9.3 LIABILITIES FOR BREACHES AND DEFAULTS. Nothing in this
Article 9 shall be construed to in any way release or absolve a
party terminating the Agreement from liability for any breach or
default of any provision of this Agreement or any agreement entered
into pursuant hereto.
ARTICLE 10. MISCELLANEOUS PROVISIONS
10.1 AMENDMENT AND MODIFICATION. The parties hereto, by
mutual consent of their duly authorized officers may amend, modify
and supplement this Agreement only in such manner as may be agreed
upon by them in writing.
10.2 WAIVER OR EXTENSION. Either party, by written
instrument signed by its Chairman or President, may extend the time
for the performance of any of the obligations or other acts of the
other party and may waive (a) any inaccuracies in the
representations or warranties in any document delivered by the
other party pursuant hereto or (b) compliance with any of the
undertakings, obligations, covenants or other acts required of the
other party contained herein.
10.3 ASSIGNMENT. This Agreement and all of the provisions
hereof shall be binding upon, and shall inure to the benefit of,
the parties hereto and their respective successors and permitted
assigns, but neither this Agreement nor any of the rights,
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interests or obligations hereunder shall be assigned, prior to the
Closing Date, by either of the parties hereto without the prior
written consent of the other.
10.4 SEVERABILITY. If any court determines that any
provision of this Agreement, or any part thereof, is invalid or
unenforceable, the remainder of this Agreement shall not thereby be
affected and shall be given full effect, without regard to the
invalid portion or portions.
10.5 PAYMENT OF EXPENSES. Except as otherwise specifically
provided in this Agreement, each party hereto shall bear and pay
all costs and expenses incurred by it or on its behalf in
connection with the transactions contemplated hereunder. Except as
otherwise provided herein, any expenses, fees and costs necessary
for any approvals of the appropriate federal and/or state
regulatory authorities or for any notice to depositors of the
assumption of deposit liabilities provided for in this Agreement
shall be paid by Purchaser.
10.6 ADDRESSES FOR NOTICE, ETC. All notices, requests,
demands, consents and other communications provided for hereunder
and under the related documents shall be in writing (including
telecopy communication) and mailed (by registered or certified
mail) or telecopied or delivered to the applicable party at the
address indicated below:
If to Seller: First Scotland Bank
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇. ▇. ▇▇▇▇▇, ▇▇.
telephone - (▇▇▇) ▇▇▇-▇▇▇▇
facsimile - (▇▇▇) ▇▇▇-▇▇▇▇
If to Purchaser: First Bank
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
telephone - (▇▇▇) ▇▇▇-▇▇▇▇
facsimile - (▇▇▇) ▇▇▇-▇▇▇▇
or, as to each party, at such other address as shall be designated
by such party in a written notice to the other party complying as
to delivery with the terms of this Section.
10.7 COUNTERPARTS. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one
and the same instrument.
10.8 HEADINGS. The headings of the Sections and Articles of
this Agreement are inserted for convenience only and shall not
constitute a part thereof.
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10.9 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of North
Carolina.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their duly authorized officers and
their corporate seals to be affixed as of the date first written
above.
FIRST SCOTLAND BANK
By: \s\ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Title: President
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By: \s\ ▇.▇. ▇▇▇▇▇, ▇▇.
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Title: Chairman
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FIRST BANK
By: \s\ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: President and C.E.O.
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