EXHIBIT 99.2
PURCHASE AND ASSUMPTION AGREEMENT
BY AND AMONG
FARMERS & MECHANICS BANK,
THE FIDELITY BANK,
AND
CITIZENS NATIONAL BANK OF BERKELEY SPRINGS
PURCHASE AND ASSUMPTION AGREEMENT
TABLE OF CONTENTS
ARTICLE I - THE ASSETS............................................................................................2
SECTION 1.1. BANKING CENTER................................................................................2
ARTICLE II - TRANSFER OF ASSETS AND LIABILITIES...................................................................2
SECTION 2.1. TRANSFERRED ASSETS............................................................................2
SECTION 2.2. PURCHASE PRICE................................................................................4
SECTION 2.3. DEPOSIT LIABILITIES...........................................................................5
SECTION 2.4. LOANS TRANSFERRED.............................................................................8
SECTION 2.5. SAFE DEPOSIT BUSINESS.........................................................................9
SECTION 2.6. EMPLOYEE MATTERS.............................................................................10
SECTION 2.7. RECORDS AND DATA PROCESSING, ETC.............................................................11
SECTION 2.8. SECURITY.....................................................................................12
SECTION 2.9. TAXES AND FEES; PRORATION OF CERTAIN EXPENSES................................................12
SECTION 2.10. TITLE TO REAL PROPERTY.......................................................................12
SECTION 2.11. ENVIRONMENTAL MATTERS........................................................................14
ARTICLE III - CLOSING AND EFFECTIVE TIME.........................................................................15
SECTION 3.1. EFFECTIVE TIME...............................................................................15
SECTION 3.2. CLOSING......................................................................................15
SECTION 3.3. POST CLOSING ADJUSTMENTS.....................................................................18
ARTICLE IV - INDEMNIFICATION.....................................................................................18
SECTION 4.1. SELLER'S INDEMNIFICATION OF PURCHASER........................................................18
SECTION 4.2. PURCHASER'S INDEMNIFICATION OF SELLER........................................................19
SECTION 4.3. CLAIMS FOR INDEMNITY.........................................................................19
SECTION 4.4. LIMITATIONS ON INDEMNIFICATION AND SURVIVAL..................................................20
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF SELLER.............................................................20
SECTION 5.1. CORPORATE ORGANIZATION.......................................................................21
SECTION 5.2. NO VIOLATION.................................................................................21
SECTION 5.3. CORPORATE AUTHORITY..........................................................................21
SECTION 5.4. ENFORCEABLE AGREEMENT........................................................................21
SECTION 5.5. NO BROKERS...................................................................................22
SECTION 5.6. PERSONAL PROPERTY............................................................................22
SECTION 5.7. BANKING CENTER...............................................................................22
SECTION 5.8. CONDITION OF PROPERTY........................................................................23
SECTION 5.9. EMPLOYEES....................................................................................23
SECTION 5.10. ASSUMED CONTRACTS............................................................................23
SECTION 5.11. LOANS........................................................................................24
SECTION 5.12. ENVIRONMENTAL MATTERS........................................................................24
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SECTION 5.13. DEPOSIT LIABILITIES..........................................................................26
SECTION 5.14. BOOKS, RECORDS, DOCUMENTATION, ETC...........................................................26
SECTION 5.15. LITIGATION...................................................................................26
SECTION 5.16. TAX MATTERS..................................................................................26
SECTION 5.17. LIMITATION AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES....................................27
ARTICLE VI - REPRESENTATIONS AND WARRANTIES OF PURCHASER.........................................................27
SECTION 6.1. CORPORATE ORGANIZATION.......................................................................27
SECTION 6.2. NO VIOLATION.................................................................................27
SECTION 6.3. CORPORATE AUTHORITY..........................................................................28
SECTION 6.4. ENFORCEABLE AGREEMENT........................................................................28
SECTION 6.5. NO BROKERS...................................................................................28
SECTION 6.6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES...................................................28
ARTICLE VII - OBLIGATIONS OF PARTIES PRIOR TO AND AFTER EFFECTIVE TIME...........................................28
SECTION 7.1. FULL ACCESS..................................................................................28
SECTION 7.2. DELIVERY OF MAGNETIC MEDIA RECORDS...........................................................29
SECTION 7.3. APPLICATION FOR APPROVAL.....................................................................29
SECTION 7.4. CONDUCT OF BUSINESS; MAINTENANCE OF PROPERTIES...............................................29
SECTION 7.5. NO SOLICITATION BY SELLER....................................................................30
SECTION 7.6. EFFORTS TO CONSUMMATE; FURTHER ACTIONS.......................................................31
SECTION 7.7. FEES AND EXPENSES............................................................................31
SECTION 7.8. OPERATIONS...................................................................................31
SECTION 7.9. DESTRUCTION AND CONDEMNATION.................................................................32
SECTION 7.10. INSURANCE....................................................................................33
SECTION 7.11. PUBLIC ANNOUNCEMENTS.........................................................................33
SECTION 7.12. TAX REPORTING................................................................................33
SECTION 7.13. TRANSITIONAL MATTERS.........................................................................33
ARTICLE VIII - CONDITIONS TO PURCHASER'S OBLIGATIONS.............................................................34
SECTION 8.1. REPRESENTATIONS AND WARRANTIES TRUE..........................................................34
SECTION 8.2. OBLIGATIONS PERFORMED........................................................................34
SECTION 8.3. NO ADVERSE LITIGATION........................................................................34
SECTION 8.4. REGULATORY APPROVAL..........................................................................34
SECTION 8.5. SELLER'S NEGOTIATION OF LEASE EXTENSION
FOR THE BANKING CENTER.......................................................................34
ARTICLE IX - CONDITIONS TO SELLER'S OBLIGATIONS..................................................................35
SECTION 9.1. REPRESENTATIONS AND WARRANTIES TRUE..........................................................35
SECTION 9.2. OBLIGATIONS PERFORMED........................................................................35
SECTION 9.3. NO ADVERSE LITIGATION........................................................................35
SECTION 9.4. REGULATORY APPROVAL..........................................................................35
SECTION 9.5. LESSORS' CONSENTS............................................................................35
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ARTICLE X - TERMINATION..........................................................................................36
SECTION 10.1. METHODS OF TERMINATION.......................................................................36
SECTION 10.2. PROCEDURE UPON TERMINATION...................................................................37
SECTION 10.3. PAYMENT OF EXPENSES..........................................................................37
ARTICLE XI - MISCELLANEOUS PROVISIONS............................................................................37
SECTION 11.1. AMENDMENT AND MODIFICATION...................................................................37
SECTION 11.2. WAIVER OR EXTENSION..........................................................................37
SECTION 11.3. ASSIGNMENT...................................................................................38
SECTION 11.4. CONFIDENTIALITY..............................................................................38
SECTION 11.5. ADDRESSES FOR NOTICES, ETC...................................................................38
SECTION 11.6. COUNTERPARTS.................................................................................39
SECTION 11.7. HEADINGS.....................................................................................39
SECTION 11.8. GOVERNING LAW................................................................................39
SECTION 11.9. SOLE AGREEMENT...............................................................................39
SECTION 11.10. PARTIES IN INTEREST..........................................................................40
SECTION 11.11 CALCULATION OF DATES AND DEADLINES...........................................................40
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PURCHASE AND ASSUMPTION AGREEMENT
THIS
PURCHASE AND ASSUMPTION AGREEMENT (this "Agreement") is entered
into as of ____________________, 2004, by and among FARMERS & MECHANICS BANK, a
Maryland-chartered commercial bank and wholly-owned subsidiary of Mercantile
Bankshares Corporation ("Mercantile") having its principal offices in Frederick,
Maryland ("F&M Bank"), THE FIDELITY BANK, a
Maryland-chartered commercial bank
and wholly-owned subsidiary of Mercantile having its principal offices in
Hagerstown,
Maryland ("Fidelity Bank" and, together with F&M Bank, "Seller"),
and CITIZENS NATIONAL BANK OF BERKELEY SPRINGS, a national banking association
having its principal offices in Berkeley Springs, West Virginia ("Purchaser").
RECITALS
A. F&M Bank previously occupied and operated a branch banking office
located at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Banking Center")
pursuant to a Lease dated April 29, 1987 by and between Fairview Orchards
Landbesitz, Inc., a
Maryland corporation (the "Landlord"), and F&M Bank (the
"Real Property Lease").
B. Fidelity Bank currently occupies and operates the Banking Center
pursuant to an Assignment and Assumption of Lease dated October 23, 2003 by and
between F&M Bank and Fidelity Bank (the "F&M-Fidelity Assignment").
C. In connection with the F&M-Fidelity Assignment, F&M Bank sold and
assigned to Fidelity Bank all of the deposits assigned and attributable to the
Banking Center and some, but not all, of the assets and other liabilities
assigned and attributable to the Banking Center.
D. Seller wishes to divest itself of certain of its assets, deposits,
and other liabilities assigned or attributable to the Banking Center.
E. Purchaser wishes to purchase such assets and assume such liabilities
from the Seller upon the terms and conditions set forth in this Agreement.
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AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual agreements
hereinafter set forth, Seller and Purchaser agree as follows:
ARTICLE I - THE ASSETS
Section 1.1. Banking Center.
Purchaser shall purchase from Seller the "Transferred Assets" (as defined in
Section 2.1 below), and assume certain liabilities assigned or attributable to
the Banking Center. For purposes of this Agreement, unless the context requires
otherwise, an obligation imposed under this Agreement with respect to
Transferred Assets or liabilities assigned or attributable to the Banking Center
shall impose an obligation on F&M Bank or Fidelity Bank only to the extent such
party owns such Transferred Assets or is obligated under such liability, as the
case may be.
ARTICLE II - TRANSFER OF ASSETS AND LIABILITIES
Section 2.1. Transferred Assets.
(a) As of the "Effective Time" (as defined in Section 3.1 below) and upon
the terms and conditions set forth herein, Seller will sell, assign,
transfer, convey, and deliver to Purchaser, and Purchaser will purchase
from Seller, all of Seller's right, title, and interest in and to the
following assets located at or attributed to the Banking Center, except
as otherwise excluded from sale pursuant to the provisions of paragraph
2.1(b) below (collectively, the "Transferred Assets"):
(1) all of Seller's transferable leasehold right, title, and
interest in and to the Banking Center under the Real Property
Lease and all of Seller's transferable right, title, and
interest in and to the improvements comprising the Banking
Center, together with all assignable rights and appurtenances
pertaining thereto (all of which shall be included in the
definition of the term "Banking Center");
(2) the furniture, fixtures, leasehold improvements, equipment,
and other tangible personal property located on or affixed to
or located at the Banking Center, including any of such items
on order at the Closing or subject to the terms of any
Equipment Leases (collectively, the "Personal Property");
(3) all assignable leases for equipment related to the Banking
Center (collectively, the "Equipment Leases"), and those
assignable, stand-alone software licenses and leases
acceptable to Purchaser that are related to the Banking Center
(the "Software Licenses");
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(4) all safe deposit contracts and leases for the safe deposit
boxes (exclusive of contents) located at the Banking Center as
of the Effective Time (the "Safe Deposit Contracts");
(5) all "Loans" (as defined in Section 2.4 below);
(6) all coins and currency located at the Banking Center as of the
Effective Time (the "Coins and Currency"); and
(7) all assignable operating contracts of the Banking Center
listed on Exhibit 2.1(a) (the "Operating Contracts").
(b) The following items shall be excluded from the Transferred Assets
(collectively, the "Excluded Assets"):
(1) Seller's rights in and to its names and any of its predecessor
banks' names and any of Seller's or Seller's predecessors'
corporate logos, trademarks, trade names, signs, paper stock
forms, and other supplies containing any such logos,
trademarks, or the trade names, and the logos, trademarks,
trade names, signs, paper stock forms, and other supplies
containing any such logos, trademarks, or trade names of any
affiliate of Seller, including, without limitation, "Farmers &
Mechanics Bank", "The Fidelity Bank", and "Mercantile-Safe
Deposit & Trust Company";
(2) any regulatory licenses or any other nonassignable licenses
and permits;
(3) the line of Seller's business that pertains to the origination
of indirect automobile loans and leases ("Dealer Sales");
(4) proprietary Seller software;
(5) Seller's computer hardware, including but not limited to
personal computers and file servers;
(6) any ATM owned and/or operated by Seller which is not Triple
DEZ compliant;
(7) Subject to Section 2.3 hereof, all contracts or agreements
that create, modify, or govern Seller's fiduciary and
non-fiduciary trust, custody, estate administration, and
guardian administration accounts and any rights of Seller to
the physical assets of such accounts or to hold the physical
assets of such accounts in accordance with the relevant trust
agreement; and
(8) the electricity generator located at the Banking Center.
Seller shall coordinate with Purchaser to remove the Excluded Assets from the
Banking Center on or prior to the Effective Time. Seller shall remove the
Excluded Assets at its own cost and
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using its reasonable efforts to attempt to minimize any damage as a result of
such removal. Apart from making any repairs necessitated by Seller's negligence
in removing the Excluded Assets, Seller shall be under no obligation to restore
the premises to its original condition, which shall be the responsibility of
Purchaser.
Section 2.2. Purchase Price.
(a) As consideration for the purchase of the Banking Center, Purchaser
shall pay Seller a purchase price equal to the sum of the following:
(1) the "Net Book Value" (as defined in paragraph 2.2(d) hereof)
of the Personal Property at the Banking Center and of the
Banking Center on the Closing Date;
(2) a premium for all "Deposit Liabilities" (as defined in
paragraph 2.3(a) hereof) and franchise value assigned to the
Banking Center equal to 4% of such Deposit Liabilities;
(3) the "Net Book Value" (as defined in paragraph 2.2(d) hereof)
of the Loans as set forth in Section 2.4 hereof as of the
Effective Time;
(4) A premium for Loans with maturity dates, either
originally-scheduled or deferred, of more than three (3) years
equal to 2.75% of the Net Book Value of such Loans; provided
that open-end credit facilities with no stated maturity dates
shall be considered to have maturity dates of more than three
(3) years; and
(5) the face amount of the Coins and Currency.
(b) In addition, Purchaser shall assume, as of the Effective Time, the
Deposit Liabilities and all duties, obligations, and liabilities
related to any of the following accruing or arising on or after the
Effective Time: (i) the Real Property Lease, (ii) the Equipment Leases,
(iii) the Software Licenses, (iv) the Safe Deposit Contracts, and (v)
all Operating Contracts. Specifically excluded from the above are:
(1) liabilities or obligations with respect to any litigation,
suits, claims, demands, or governmental proceedings arising
from any fact, circumstance, or event occurring prior to the
Effective Time and related to the Banking Center; and
(2) any and all obligations arising under any service agreements
entered into between Seller and its subsidiaries or other
affiliates.
(c) Seller shall prepare a balance sheet (the "Pre-Closing Balance Sheet")
in accordance with generally accepted accounting principles
consistently applied as of a date not earlier than 30 calendar days
prior to the Effective Time anticipated by the parties (the
"Pre-Closing Balance Sheet Date") reflecting the assets to be sold and
assigned hereunder and the liabilities to be transferred and assumed
hereunder. Seller agrees to pay to Purchaser at the Closing (as defined
in Section 3.1 hereof), in immediately available funds, the excess
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amount, if any, of the amount of Deposit Liabilities assumed by
Purchaser pursuant to paragraph (b) above, as reflected by the
Pre-Closing Balance Sheet, over the aggregate purchase price computed
in accordance with paragraph (a) above, as reflected by the Pre-Closing
Balance Sheet. Purchaser agrees to pay Seller at the Closing, in
immediately available funds, the excess, if any, of the aggregate
purchase price computed in accordance with paragraph (a) above, as
reflected by the Pre-Closing Balance Sheet, over the amount of Deposit
Liabilities assumed by Purchaser pursuant to paragraph (b) above, as
reflected by the Pre-Closing Balance Sheet. The purchase price, as well
as each of the items described in paragraphs (a)(1) through (5) above
and all amounts paid at the Closing shall be subject to subsequent
adjustment based on the Post-Closing Balance Sheet (as defined in
Section 3.3 hereof).
(d) The "Net Book Values" of the Personal Property and of the Banking
Center are the values that the relevant assets are carried on Seller's
general ledger. The "Net Book Value" of the Loans is the aggregate
principal amount of the Loans, plus accrued and unpaid interest, late
charges, bad check fees, and other accrued charges thereon, but such
value shall not include any loan loss reserves or general reserve.
(e) Seller and Purchaser agree to allocate the purchase price in accordance
with Section 1060 of the Internal Revenue Code (the "Code"). Within 120
days after the Closing Date, Purchaser shall provide to Seller
Purchaser's proposed allocation of the purchase price as finally
determined and paid by Purchaser hereunder. Within 30 days after the
receipt of such allocation, Seller shall propose to Purchaser any
changes to such allocation or otherwise shall be deemed to have agreed
with such allocation. Seller and Purchaser shall reduce such allocation
to writing, including jointly and properly executing a completed
Internal Revenue Service Form 8594, and any other forms or statements
required by the Code, Treasury Regulations, or the Internal Revenue
Service, together with any and all attachments required to be filed
therewith. Seller and Purchaser shall file timely any such forms and
statements with the Internal Revenue Service. To the extent consistent
with applicable law, Seller and Purchaser shall not file any tax return
or other documents or otherwise take any position with respect to taxes
which is inconsistent with such allocation of the final purchase price;
provided, however, that neither Seller nor Purchaser shall be obligated
to litigate any challenge to such allocation of the final purchase
price by a governmental authority. Seller and Purchaser shall promptly
inform one another of any challenge by any governmental authority to
any allocation made pursuant to this paragraph and agree to consult
with and keep one another informed with respect to the state of, and
any discussion, proposal, or submission with respect to, such
challenge.
Section 2.3. Deposit Liabilities.
(a) "Deposit Liabilities" shall mean all of Fidelity Bank's duties,
obligations, and liabilities, as recorded on its books and records as
of the Effective Time, for payment to the depositors of, and its
written contractual duties and obligations relating to, the deposit
accounts assigned to the Banking Center as of the Effective Time
(including accrued but unpaid or uncredited interest thereon);
provided, however, that, for purposes of
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calculating the premium pursuant to Section 2.2(a)(2) of this Agreement
only, the term "Deposit Liabilities" shall not include any duties,
obligations, and liabilities, as recorded on Fidelity Bank's books and
records as of the Effective Time, for payment to the depositors of, and
Fidelity Bank's written contractual duties and obligations relating to,
deposit accounts designated on Fidelity Bank's books and records as
Christmas Club Accounts assigned to the Banking Center as of the
Effective Time, for which no premium shall be paid.
(b) Except for those liabilities and obligations specifically assumed by
Purchaser under 2.2(b) above, Purchaser is not assuming any other
liabilities or obligations. Liabilities not assumed include, but are
not limited to, the following:
(1) Seller's cashier checks, letters of credit, money orders,
traveler's checks, interest checks and expense checks issued
prior to the Effective Time, consignments of U.S. Government
"E" and "EE" bonds, and any cash items paid by Seller and not
cleared prior to the Effective Time;
(2) individual retirement accounts that, by their terms, are not
subject to assignment, it being understood that all other
types of ▇▇▇ Deposit Liabilities are intended to be
transferred.
(c) Seller does not represent or warrant that any deposit customers whose
accounts are assumed by Purchaser will become or continue to be
customers of Purchaser after the Effective Time.
(d) After the Effective Time, 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 forms, 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; provided that Purchaser shall not be
obligated to honor or pay any item if there are insufficient funds in
the customer's account when presented.
(e) If, after the Effective Time, any depositor, instead of accepting the
obligation of Purchaser to pay the Deposit Liabilities assumed, shall
demand payment from Seller for all or any part of any such assumed
Deposit Liabilities, Seller shall not be liable or responsible for
making any such payment; provided, that if Seller shall pay the same,
Purchaser agrees to reimburse Seller for any such payments, and Seller
shall not be deemed to have made any representations or warranties to
Purchaser with respect to any such checks, drafts, or withdrawal orders
and any such representations or warranties implied by law are hereby
expressly disclaimed. Seller and Purchaser shall make arrangements to
provide for the daily settlement with immediately available funds by
Purchaser of checks, drafts, withdrawal orders, returns, and other
items presented to and
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paid by Seller within 60 calendar days after the Effective Time and
drawn on or chargeable to accounts that have been assumed by Purchaser;
provided, however, that Seller shall be held harmless and indemnified
by Purchaser for acting in accordance with such arrangements.
(f) Purchaser agrees, at its cost and expense, (i) to notify such
depositors, on or before the Effective Time, in a form and on a date
mutually acceptable to Seller and Purchaser, of Purchaser's assumption
of Deposit Liabilities, (ii) to furnish such depositors with checks on
the forms of Purchaser and with instructions to use Purchaser's checks
and to destroy any unused check, draft, and withdrawal order forms of
Seller (if Purchaser so elects, Purchaser may offer to buy from such
depositors their unused Seller's check, draft, and withdrawal order
forms), (iii) to reissue all ATM and debit cards associated with the
depositors of assumed Deposit Liabilities, and (iv) to replace all line
of credit checks with checks on the forms of Purchaser with
instructions to use Purchaser's checks and to destroy the unused
checks. At its expense, Seller will prepare and deliver to Purchaser
two sets of its normal customer mailing labels relating to the Deposit
Liabilities. In addition, subsequent to regulatory approval, Seller
will notify its affected customers by letter of the pending assignment
of Seller's Deposit Liabilities to Purchaser, which notice shall be at
Seller's cost and expense and shall be in a form mutually agreeable to
Seller and Purchaser. Seller and Purchaser will coordinate with each
other as to the time and manner of notification to customers consistent
with regulatory requirements.
(g) Purchaser agrees to pay promptly to Seller an amount equivalent to the
amount of any checks, drafts, or withdrawal orders credited to any
assumed Deposit Liabilities as of the Effective Time that are returned
to Seller after the Effective Time.
(h) As of the Effective Time, Purchaser will assume and discharge Seller's
duties and obligations in accordance with the terms and conditions and
laws, rules, and regulations that apply to the certificates of deposit,
accounts, and other Deposit Liabilities assumed under this Agreement.
(i) As of the Effective Time, Purchaser will maintain and safeguard in
accordance with applicable law and sound banking practices all account
documents, deposit contracts, signature cards, deposit slips, canceled
items, and other records related to the Deposit Liabilities assumed
under this Agreement, subject to Seller's right of access to such
records as provided in this Agreement.
(j) Seller will render a final statement to each depositor of an account
assumed under this Agreement as to transactions occurring through the
Effective Time and will comply with all laws, rules, and regulations
regarding tax reporting of transactions of such accounts through the
Effective Time. Seller will be entitled to impose normal fees and
service charges on a per-item basis, but Seller will not impose
periodic fees or blanket charges in connection with such final
statements. Purchaser will comply with all laws, rules, and regulations
regarding tax reporting of transactions of such accounts after the
Effective Time.
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(k) Prior to the Closing Date, Purchaser, at its expense, will notify all
Automated Clearing House ("ACH") originators of the transfers and
assumptions made pursuant to the Agreement; provided, however, that
Seller shall have provided Purchaser with all information necessary to
make such notifications and provided, further, that Seller may, at its
option, notify all such originators (on behalf of Purchaser) also at
the expense of Purchaser. For a period of 60 calendar days beginning on
the Effective Time, Seller will honor all ACH items related to accounts
assumed under this Agreement that are mistakenly routed or presented to
Seller. Seller will make no charge to Purchaser for honoring such
items, and will electronically transmit such ACH data to Purchaser. If
Purchaser cannot receive an electronic transmission, Seller will make
available to Purchaser at Seller's operations center receiving items
from the Automated Clearing House tapes containing such ACH data. Items
mistakenly routed or presented after the 60-day period will be returned
to the presenting party. Seller and Purchaser shall make arrangements
to provide for the daily settlement with immediately available funds by
Purchaser of any ACH items honored by Seller, and Seller shall be held
harmless and indemnified by Purchaser for acting in accordance with
this arrangement to accept ACH items.
(l) As of the Effective Time, Seller shall transfer and assign all files,
documents, and records related to the Deposit Liabilities to Purchaser,
including such information held in electronic form, and Purchaser will
be responsible for maintaining and safeguarding all such materials in
accordance with applicable law and sound banking practices.
(m) Seller and Purchaser agree to cooperate in good faith to develop a
mutually satisfactory method with respect to terminating, transferring,
converting, and/or otherwise resolving issues related to insurance
products associated with Deposit Liabilities, including accidental
death and dismemberment insurance coverage in connection with Deposit
Liabilities. The parties' obligations in this paragraph (m) are subject
to any restrictions contained in existing insurance contracts as well
as applicable laws and regulations.
Section 2.4. Loans Transferred.
(a) Seller will transfer to Purchaser as of the Effective Time, subject to
the terms and conditions of this Agreement, all of Seller's right,
title, and interest in (including accrued but unpaid interest and late
charges and collateral relating thereto) those loans assigned or
attributable to the Banking Center that are listed on Exhibit 2.4(a)
(collectively, the "Loans"). Such Loans (as well as any lien or
security interest related thereto) shall be transferred by means of one
or more blanket (collective) assignments and not individually (except
as may be otherwise required by law).
(b) Seller and Purchaser agree to cooperate in good faith to develop a
mutually satisfactory method with respect to terminating, transferring,
converting, and/or otherwise resolving issues related to insurance
products associated with Loans, including (1) single premium credit
life and accident and health insurance in connection with closed-end
Loans, (2) monthly outstanding balance credit life and accident and
health insurance in connection with closed-end Loans, and (3)
outstanding balance credit life and accident and health
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insurance in connection with open-end Loans. The parties' obligations
in this paragraph (b) are subject to any restrictions contained in
existing insurance contracts as well as applicable laws and
regulations.
(c) In connection with the transfer of any Loans requiring notice to the
borrower and the servicer, Purchaser and Seller will comply with all
notice and reporting requirements of the loan documents or of any law
or regulation.
(d) All Loans will be transferred without recourse and without any
warranties or representations as to their collectibility or the
creditworthiness of any of the obligors of such Loans.
(e) Purchaser will, at its expense, issue new coupon books or other forms
of payment identification for payment of Loans for which Seller
provides coupon books, with instructions to use Purchaser's coupons or
forms and to destroy coupons furnished by Seller.
(f) For a period of 60 calendar days after the Effective Time, Seller will
forward to Purchaser loan payments received by Seller. Purchaser shall
reimburse Seller for checks returned on payments forwarded to
Purchaser.
(g) As of the Effective Time, Seller shall transfer and assign all files,
documents, and records related to the Loans to Purchaser, including
such information held in electronic form, and Purchaser will be
responsible for maintaining and safeguarding all such materials in
accordance with applicable law and sound banking practices.
(h) If the balance due on any Loan purchased pursuant to this Section 2.4
has been reduced by Seller as a result of a payment by check received
prior to the Effective Time, which item is returned after the Effective
Time, 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.
(i) Seller shall grant to Purchaser as of the Effective Time a limited
power of attorney, in substantially the form attached hereto as Exhibit
2.4(i) (the "Power of Attorney").
Section 2.5. Safe Deposit Business.
(a) As of the Effective Time, Purchaser will assume and discharge Seller's
obligations with respect to the safe deposit box business at the
Banking Center in accordance with the terms and conditions of contracts
or rental agreements related to such business, and Purchaser will
maintain all facilities necessary for the use of such safe deposit
boxes by persons entitled to use them.
(b) As of the Effective Time, Seller shall transfer and assign the records
related to such safe deposit box business to Purchaser, and Purchaser
shall maintain and safeguard all such
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records and be responsible for granting access to and protecting the
contents of safe deposit boxes at the Banking Center.
(c) Safe deposit box rental payments collected by Seller before the
Effective Time shall be prorated to the Closing Date.
Section 2.6. Employee Matters.
(a) Purchaser agrees that it will offer employment to each of those
individuals who is employed by Seller at the Banking Center as of the
Effective Time (each, an "Employee", and collectively, "Employees");
provided, however, that this Section 2.6(a) shall not be construed to
limit the ability of the applicable employer to terminate the
employment of any Employee at any time.
(b) As soon as practicable following the Effective Time, the Employees
shall be entitled to participate in Purchaser's employee benefit plans
in which similarly situated employees of Purchaser participate, to the
same extent as comparable employees of Purchaser (it being understood
that inclusion of Employees in Purchaser's employee benefit plans may
occur at different times with respect to different plans).
(c) Purchaser shall give Employees full credit for the Employees' service
with Seller to the same extent recognized by Seller immediately prior
to the Effective Time, for purposes of eligibility, vesting and benefit
accrual (except to the extent giving such credit would result in the
duplication of benefits and except for benefit accruals under any
defined benefit pension plan) under any employee benefit plan or
arrangement maintained by the Purchaser in which Employees participate.
(d) Purchaser shall (i) waive all limitations as to preexisting conditions
exclusions and waiting periods with respect to participation and
coverage requirements applicable to Employees under any welfare benefit
plans in which such Employees may be eligible to participate after the
Effective Time, other than limitations or waiting periods that are
already in effect with respect to such Employees and that have not been
satisfied as of the Effective Time under any welfare plan maintained
for Seller's employees immediately prior to the Effective Time, and
(ii) provide each Employee with credit for any co-payments and
deductibles paid prior to the Effective Time in satisfying any
applicable deductible or out-of-pocket requirements under any welfare
plans that such Employees are eligible to participate in after the
Effective Time.
(e) Following the Effective Time, Purchaser shall honor in accordance with
their terms all employment, severance and other compensation agreements
and arrangements existing prior to the execution of this Agreement that
are between Seller and any Employee and that have been disclosed in
writing to Purchaser and have previously been made available to
Purchaser.
(f) After the execution of this Agreement, Seller will continue its normal
employment practices in staffing the Banking Center; provided, however,
that Seller makes no
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representations or warranties about whether any of the Employees who
become employees of Purchaser will remain employed at the Banking
Center after the Effective Time. Seller will: (i) use its best efforts
to maintain the Employees as employees of Seller at the Banking Center
until the Effective Time; (ii) refrain from dissuading any Employee
from accepting an offer of employment with Purchaser; and (iii) refrain
from recruiting employees for alternate positions with Seller. Seller
shall affirmatively advise Banking Center Employees that their current
positions will terminate as of the Effective Time. Any Employee whose
employment shall be terminated for any reason prior to the Effective
Time shall be dealt with by Seller in its sole and absolute discretion.
Seller agrees that, for a period of 24 months after the Closing Date,
it will not solicit for employment any Employee who remains employed by
Purchaser; provided, however, that newspaper, television, radio, and
similar media advertisements directed to the general public shall not
be prohibited under this Section 2.6(f).
(g) After the execution of this Agreement and subject to any legal
restrictions, Seller shall permit Purchaser, at reasonable times and
upon reasonable notice, to examine and inspect Seller's records
relating to Employees.
Section 2.7. Records and Data Processing, etc.
(a) As of the Effective Time, Purchaser shall become responsible for
maintaining the files, documents, and records referred to in this
Agreement. Purchaser will preserve and hold them in safekeeping as
required by applicable law and sound banking practice for the joint
benefit of Seller and Purchaser. After the Effective Time, Purchaser
will permit Seller and its representatives, for reasonable cause, at
reasonable times and upon reasonable notice, to examine, inspect, copy,
and reproduce any such files, documents, or records as Seller deems
reasonably necessary and to have similar access to such records and
Seller's former employees for purposes of preparation of records and
reports (including regulatory and tax reports and returns) and as
Seller requires in connection with third party litigation.
(b) As of the Effective Time, Seller will permit Purchaser and its
representatives, for reasonable cause, at reasonable times and upon
reasonable notice, to examine, inspect, copy, and reproduce files,
documents, or records retained by Seller regarding the assets and
liabilities transferred under this Agreement as Purchaser deems
reasonably necessary.
(c) For a period of 180 days after the Effective Time, the party providing
copies of records shall do so without charge; thereafter, it may charge
its customary rate for such copies.
(d) It is understood that certain of Seller's records, including
certificates of deposit, may be available only in electronic form or in
the form of photocopies, film copies, or other non-original and
non-paper media.
(e) After the execution of this Agreement, Seller will work with Purchaser
to prepare mutually satisfactory schedules of Transferred Assets to be
sold hereunder.
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Section 2.8. Security.
As of the Effective Time, Purchaser shall be solely responsible for the security
of and insurance on all persons and property located in or about the Banking
Center.
Section 2.9. Taxes and Fees; Proration of Certain Expenses.
(a) Purchaser shall not be responsible for, or have any liability with
respect to, taxes on any income to Seller arising out of this
transaction. Purchaser shall not be responsible for any income tax
liability of Seller arising from the business or operations of,
including any assets or liabilities assigned or attributable to, the
Banking Center before the Effective Time, and Seller shall not be
responsible for any tax liabilities of Purchaser arising from such
business or operations after the Effective Time. All excise, sales,
use, and transfer taxes that are payable or that arise as a result of
the consummation of the transactions contemplated by this Agreement
shall be paid one-half by Purchaser and one-half by Seller, and
Purchaser, on the one-hand, and Seller, on the other hand, shall
indemnify and hold the other harmless from and against any such taxes
in excess of the portion to be paid by such other party. Utility
payments, telephone charges, real property taxes, personal property
taxes, rent, salaries, deposit insurance premiums or assessments,
maintenance items, annual assessments, other ordinary operating
expenses of the Banking Center, and other expenses related to the
liabilities assumed or assets purchased hereunder shall be prorated
between the parties as of the Effective Time. To the extent any such
item has been prepaid by Seller for a period extending beyond the
Effective Time, there shall be a proportionate monetary adjustment in
favor of Seller. Purchaser shall be responsible for the payment of any
non-delinquent special assessments. Real estate taxes shall be
prorated, based upon the maximum allowable discount and other
applicable exemptions.
(b) Seller and Purchaser shall each be responsible for their own costs with
respect to the preparation and filing of any tax returns, as well as
the preparation, review, and analysis of the allocation statements and
any forms or statements prepared in connection with the allocation of
the final purchase price.
Section 2.10. Title to Real Property.
(a) Seller agrees to deliver to Purchaser as soon as reasonably possible
upon Purchaser's request copies of all title information in possession
of Seller, including, but not limited to, title insurance policies,
attorneys' opinions on title, surveys, covenants, deeds, and easements
relating to the Real Property Lease. Such delivery shall constitute no
warranty by Seller as to the accuracy or completeness thereof or that
Purchaser is entitled to rely thereon.
(b) Purchaser shall have the right to obtain, at Purchaser's sole cost and
expense:
(1) a title insurance commitment from a title insurance company
selected by Purchaser and an owner's policy of title insurance
insuring Purchaser's leasehold
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title to the Banking Center and related easements and rights
appurtenant thereto for the Net Book Value of the land and
buildings; and
(2) a survey as is required by the title insurer to remove the
survey exception in the title insurance policy, to be
conducted by a surveyor selected by Purchaser.
(c) Purchaser agrees to notify Seller, in writing, within 45 calendar days
after the date of this Agreement, of any mortgages, pledges, material
liens, encumbrances, reservations, tenancies, encroachments, overlaps
or other title exceptions, survey objections, or zoning or similar land
use violations (excluding legal but nonconforming uses), or material
engineering or structural problems related to the Banking Center to
which Purchaser reasonably objects (the "Title Defects"). If Purchaser
does not notify Seller of Title Defects within such time period, then
Purchaser shall be deemed to have waived its rights under this Section
2.10 and Article IV as to such Title Defects. Purchaser agrees that
Title Defects shall not include real property taxes not yet due and
payable or easements, restrictions, tenancies, survey matters, or other
title matters, and rights of way which do not materially interfere with
the use of the Banking Center as such facility is currently used
("Permitted Encumbrances"; the term "Permitted Encumbrances" shall also
include any title defects, deficiencies, exceptions, or encumbrances to
which Purchaser fails to object within said 45-day period, or to which
Purchaser objects within said 45-day period but which Seller does not
correct and which Purchaser expressly accepts in writing). Seller shall
make a good faith effort to correct any such Title Defect to
Purchaser's reasonable satisfaction prior to the Closing Date;
provided, however, that Seller shall not be obligated to bring any
lawsuit or make any payments of money (except to pay liens that Seller
does not dispute in good faith) to cure a Title Defect. If Seller is
unable to cure any such Title Defects to Purchaser's reasonable
satisfaction prior to Closing, then, as Purchaser's sole and exclusive
remedy, Purchaser shall have the option either to terminate this
Agreement (upon written notice to Seller) or to receive title in the
then existing condition and without the benefit of the indemnification
provisions of Article IV hereof.
(d) Purchaser shall have the right to request that the title insurance
company update title matters up to 10 business days prior to the
Closing Date for any changes that may have arisen between the date of
the original title search and the Closing Date. If such update
indicates that any Title Defects have been placed of record or have
come into existence since the date of Purchaser's original title
search, and Purchaser reasonably objects thereto in writing, then
Seller shall make a good faith effort to cure any such Title Defect to
Purchaser's reasonable satisfaction; provided that Seller shall not be
obligated to bring any lawsuit or make any payments of money (except to
pay liens that Seller does not dispute in good faith) to cure a Title
Defect. If Seller is unable to cure any such Title Defect, then, as
Purchaser's sole and exclusive remedy, Purchaser shall have the option
either to terminate this Agreement (upon written notice to Seller) or
to receive title in the then existing condition and without the benefit
of the indemnification provisions of Article IV hereof.
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Section 2.11. Environmental Matters.
(a) Seller agrees to deliver to Purchaser as soon as reasonably possible,
upon Purchaser's request, copies of all environmental studies, reports,
and audits in Seller's possession related to the Banking Center. Seller
does not make any representation or warranty regarding any aspect of
any report delivered to Purchaser, including without limitation, the
accuracy or completeness of the report, its preparation, or any
information upon which it is based. Any reliance on the report or any
information contained in the report shall be at Purchaser's risk.
Seller agrees to use reasonable efforts to assist Purchaser in
obtaining reliance letters from the environmental consultants or other
parties that issued such studies, reports, or audits that would permit
Purchaser to rely thereon, but Seller shall not be obligated to incur
any cost or liability in connection therewith.
(b) Seller authorizes Purchaser and/or its agents or contractors to contact
governmental agencies regarding the environmental status of the Banking
Center. In addition, Purchaser shall have the right, but not the
obligation, at its sole cost and expense, to cause such investigations
and tests to be made as they deem necessary to determine whether there
has been any soil, surface water, groundwater, or building space
contamination on or under the Banking Center; provided, however, that,
without the prior written consent of Seller, which consent will not
unreasonably be withheld, and execution of a satisfactory property
access agreement, Purchaser shall not conduct subsurface testing or any
ground water monitoring, install any test well, or undertake any other
investigation which requires a permit or license from, or the reporting
of the investigation or the results thereof to, a local or state
environmental regulatory authority or the United States Environmental
Protection Agency. Seller shall provide reasonable assistance to
Purchaser and/or its agents or contractors in their evaluation and
testing of the Banking Center and Seller shall provide Purchaser and/or
its agents or contractors access to pertinent records and documents.
Any tests performed by Purchaser shall be conducted in a manner so as
not to permanently or materially damage the Banking Center. If any
damage is caused, then Purchaser shall immediately repair and restore
the Banking Center to its former condition. Purchaser shall be
responsible to Seller for, and shall indemnify, defend, and hold
harmless Seller from and against any and all losses, claims, damages,
liabilities, and causes of action for personal injury or property
damage or loss to persons or property (including reasonable attorneys'
fees) arising from such entry, use, or occupancy of the Banking Center,
unless caused by the negligence of Seller. This indemnity shall survive
the Closing or termination of this Agreement. Purchaser shall furnish
Seller with a copy of each report setting forth the results of any test
performed by Purchaser within ten days after receipt. Purchaser shall
not submit a copy of any such report to any governmental agency unless
specifically required by applicable law; and, if so required, Purchaser
shall simultaneously provide to Seller a copy of any information
submitted to such agency.
Purchaser shall report the results of any such investigations
or tests to Seller no later than 30 days after the date of this
Agreement. If Purchaser's investigations or tests reveal any
environmental conditions that would cause a reasonably prudent
purchaser to require a Phase II report to determine the existence of a
"Material Adverse
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Environmental Condition" (as defined below), then Seller and Purchaser
agree to use good faith efforts to select a mutually acceptable
environmental consultant as soon as possible to determine whether such
a condition is a Material Adverse Environmental Condition and agree to
share equally the cost of retaining the consultant for such purpose.
"Material Adverse Environmental Condition" means an environmental
condition that is reasonably likely to cost more than $25,000 to
remediate to a commercial use standard, as determined by such
environmental consultant. If Purchaser objects to any Material Adverse
Environmental Condition that impacts the Banking Center, then Seller
shall have the right, but not the obligation, to cure any such Material
Adverse Environmental Condition. If Seller is unable or unwilling to
cure such problem prior to the Effective Time, then, as Purchaser's
sole and exclusive remedy, Purchaser shall have the option either to
terminate this Agreement (upon written notice to Seller) or to accept
the Banking Center in the then existing condition and without the
benefit of the indemnification provisions of Article IV hereof.
ARTICLE III - CLOSING AND EFFECTIVE TIME
Section 3.1. Effective Time.
(a) The purchase of assets and assumption of liabilities provided for in
this Agreement shall occur at a closing (the "Closing") to be held on a
Friday at the offices of F&M Bank in Frederick,
Maryland, at 10:00
a.m., local time, or at such other time, place, and manner as the
parties shall mutually agree, on a date to be mutually agreed upon
between the parties, which date shall be after the receipt of all
necessary approvals by regulatory agencies and after all statutory
waiting periods have expired and no later than April 9, 2004. The
effective time (the "Effective Time") shall be 5:00 p.m., local time,
on the day on which the Closing occurs (the "Closing Date").
(b) Seller and Purchaser may agree to conduct the Closing by exchanging
executed and original documents by overnight courier service for
delivery on the Closing Date. In this case, all Closing documents shall
be held in escrow by the parties' counsel pending their receipt of
confirmation that all Closing documents have been received and are
satisfactory, respectively, and that the parties' wire transfer(s) of
funds required under this Agreement have been received and credited to
their designated account(s). Upon the parties' receipt of such
confirmation(s), respectively, such Closing documents shall be released
from escrow by such counsel and the Closing shall be deemed to have
been consummated.
Section 3.2. Closing.
(a) All actions taken and documents delivered at the Closing shall be
deemed to have been taken and executed simultaneously, and no action
shall be deemed taken nor any document delivered until all have been
taken and delivered.
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(b) At the Closing, subject to all the terms and conditions of this
Agreement, Seller shall execute and deliver to Purchaser or, in the
case of items (5), (6), (7), (9), and (10), make reasonably available
to Purchaser:
(1) a ▇▇▇▇ of Sale, in substantially the form attached hereto as
Exhibit 3.2(b)(1) (the "▇▇▇▇ of Sale"), transferring to
Purchaser all of Seller's interest in the Personal Property
and in the Loans;
(2) an Assignment and Assumption Agreement in substantially the
form attached hereto as Exhibit 3.2(b)(2) (the "Assignment and
Assumption Agreement"), assigning Seller's interest in the
Equipment Leases, the Software Licenses, the Safe Deposit
Contracts, the Operating Contracts, and the Deposit
Liabilities;
(3) an Assignment and Assumption of Lease, in substantially the
form attached hereto as Exhibit 3.2(b)(3) (the "Assignment and
Assumption of Lease"), assigning Seller's interest in the Real
Property Lease;
(4) consents from third persons that are required to effect the
assignments set forth in the Assignment and Assumption
Agreement and the Assignment and Assumption of Lease;
(5) Seller's keys to the safe deposit boxes and Seller's records
related to the safe deposit box business at the Banking
Center;
(6) Seller's files and records related to the Loans;
(7) Seller's records related to the Deposit Liabilities assumed by
Purchaser;
(8) immediately available funds in the net amount shown as owing
to Purchaser by Seller on the Closing Statement, if any;
(9) the Coins and Currency;
(10) such of the other assets to be purchased as shall be capable
of physical delivery;
(11) a certificate of a proper officer of Seller, dated as of the
Closing Date, certifying to the fulfillment of all conditions
that are the obligation of Seller and that all of the
representations and warranties of Seller set forth in this
Agreement remain true and correct in all material respects as
of Effective Time;
(12) copies of resolutions of the Board of Directors of Seller, or
the Executive Committees of Seller, approving the sales
contemplated herein;
(13) a Closing Statement using amounts shown on the Pre-Closing
Balance Sheet, substantially in the form attached hereto as
Exhibit 3.2(b)(13) (the "Closing Statement");
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(14) the Power of Attorney;
(15) such title insurance affidavits as may be required by the
title insurance company; and
(16) such certificates and other documents as the parties and their
respective counsel may reasonably require to evidence receipt
of all necessary regulatory authorizations and approvals for
the consummation of the transactions provided for in this
Agreement.
It is understood that the items listed in items (5), (6), (7), (9), and
(10) shall be transferred at the Banking Center immediately after the
Banking Center has closed for business on the Closing Date.
(c) At the Closing, subject to all the terms and conditions of this
Agreement, Purchaser shall execute and deliver to Seller:
(1) the Assignment and Assumption Agreement;
(2) the Assignment and Assumption of Lease;
(3) a certificate and receipt acknowledging the delivery and
receipt of possession of the Assets and records referred to in
this Agreement;
(4) immediately available funds in the net amount shown as owing
to Seller by Purchaser on the Closing Statement, if any;
(5) a certificate of a proper officer of Purchaser, dated as of
the Closing Date, certifying to the fulfillment of all
conditions that are the obligation of Purchaser and that all
of the representations and warranties of Purchaser set forth
in this Agreement remain true and correct in all material
respects as of the Effective Time;
(6) copies of resolutions of the Board of Directors, or the
Executive Committee, of Purchaser approving the purchases
contemplated herein; and
(7) such certificates and other documents as Seller and its
counsel may reasonably require to evidence the receipt by
Purchaser of all necessary regulatory authorizations and
approvals for the consummation of the transactions provided
for in this Agreement.
(d) All instruments, agreements, and certificates described in this Section
3.2 shall be in form and substance reasonably satisfactory to the
parties' respective legal counsel.
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Section 3.3. Post Closing Adjustments.
(a) Not later than 30 days after the Effective Time (the "Post-Closing
Balance Sheet Delivery Date"), Seller shall deliver to Purchaser a
balance sheet dated as of the Effective Time and prepared in accordance
with generally accepted accounting principles consistently applied
reflecting the assets sold and assigned and the liabilities transferred
and assumed hereunder (the "Post-Closing Balance Sheet"), including,
but not limited to, the specific items described in paragraph 2.2(a)(1)
through (5) above, as adjusted, together with a copy of Seller's
calculation of the adjusted purchase price and amounts payable
thereunder. Additionally, Seller shall deliver to Purchaser a final
list of Loans purchased, individually identified by account number.
Seller shall afford Purchaser and its accountants and attorneys the
opportunity to review all work papers and documentation used by Seller
in preparing the Post-Closing Balance Sheet. Within 15 days following
the Post-Closing Balance Sheet Delivery Date (the "Adjustment Payment
Date"), Seller and Purchaser shall effect the transfer of any funds as
may be necessary to reflect changes in such assets and liabilities
between the Pre-Closing Balance Sheet and the Post-Closing Balance
Sheet and resulting changes in the purchase price, together with
interest thereon computed from the Effective Time to the Adjustment
Payment Date at the applicable Federal Funds Rate (as defined below).
(b) In the event that a dispute arises as to the appropriate amounts to be
paid to either party on the Adjustment Payment Date, each party shall
pay to the other on such Adjustment Payment Date all amounts other than
those as to which a dispute exists. Any disputed amounts retained by a
party that are later found to be due to the other party shall be paid
to such other party promptly upon resolution with interest thereon from
the Effective Time to the date paid at the applicable Federal Funds
Rate.
(c) The "Federal Funds Rate" shall be the mean of the high and low rates
quoted for Federal Funds in the Money Rates column of The Wall Street
Journal adjusted as such mean may increase or decrease during the
period between the Effective Time and the date paid.
ARTICLE IV - INDEMNIFICATION
Section 4.1. Seller's Indemnification of Purchaser.
(a) Subject to any limitations in Sections 2.10, 2.11 4.1, or 4.4 of this
Agreement, or otherwise contained in this Agreement, Seller shall
indemnify, hold harmless, and defend Purchaser from and against (i) any
breach by Seller of any representation or warranty contained herein,
(ii) claims, losses, liabilities, demands, and obligations, including
reasonable attorneys' fees and expenses, whether or not involving a
third-party claim, and including costs of cleanup, containment, or
other remediation, relating to any Title Defect or Material Adverse
Environmental Condition existing prior to the Effective Time under the
provisions of paragraph 2.10(c) or (d) or paragraph 2.11(b), and (iii)
all claims, losses, liabilities, demands, and obligations, including
reasonable attorneys' fees and expenses, arising out of any actions,
suits, or proceedings commenced prior to the
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Effective Time (other than proceedings to prevent or limit the
consummation of this transaction) relating to Seller's operations at,
or assets and liabilities assigned or attributable to, the Banking
Center. Except as otherwise provided in this Agreement, Seller shall
further indemnify, hold harmless, and defend Purchaser from and against
all claims, losses, liabilities, demands, and obligations, including
reasonable attorneys' fees and expenses, real estate taxes, intangibles
and franchise taxes, sales and use taxes, social security and
unemployment taxes, all accounts payable, and operating expenses
(including salaries, rents, and utility charges) incurred by Seller
prior to the Effective Time and that are claimed or demanded on or
after the Effective Time, or that arise out of any actions, suits, or
proceedings commenced on or after the Effective Time and that relate to
Seller's operations or transactions at the Banking Center prior to the
Effective Time.
(b) The Purchaser's sole remedy for a breach of the representations and
warranties contained in Section 5.11 shall be to require the Seller to
(i) purchase any Loans that Purchaser in good ▇▇▇▇▇ ▇▇▇▇▇ to breach
such representation and warranty at the principal amount thereof, plus
accrued and unpaid interest, late charges, and any other charges
thereon, in each case as of the time of the applicable purchase, or
(ii) indemnify Purchaser in accordance with the other provisions of
this Article IV, with Seller having the right to choose between such
measures. The remedies set forth in this paragraph 4.1(b) can be
exercised only for a period ending 12 months after the Closing Date.
Section 4.2. Purchaser's Indemnification of Seller.
Purchaser shall indemnify, hold harmless, and defend Seller from and against any
breach by Purchaser of any representation or warranty contained herein and all
claims, losses, liabilities, demands, and obligations, including reasonable
attorneys' fees and expenses, real estate taxes, intangibles and franchise
taxes, sales and use taxes, social security and unemployment taxes, all accounts
payable, and operating expenses (including salaries, rents, and utility
charges), that Seller may receive, suffer, or incur in connection with
operations and transactions occurring after the Effective Time and that involve
the Banking Center, the Transferred Assets, or the liabilities assumed by
Purchaser pursuant to this Agreement.
Section 4.3. Claims for Indemnity.
(a) Except as provided otherwise in Section 4.1(b) hereof, a claim for
indemnity under Sections 4.1 or 4.2 of this Agreement may be made by
the claiming party at any time prior to 12 months after the Effective
Time, by the giving of written notice thereof to the other party. Such
written notice shall set forth in reasonable detail the basis upon
which such claim for indemnity is made. In the event that any such
claim is made within the prescribed period, the indemnity relating to
such claim shall survive until such claim is resolved. Claims not made
within such period shall cease and no indemnity shall be made therefor.
(b) In the event that any individual, association, corporation, limited
liability company, partnership, limited liability partnership, trust,
firm, or other entity (a "Person") not a
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party to this Agreement shall make any demand or claim or file or
threaten to file any lawsuit, which demand, claim, or lawsuit may
result in any liability, damage, or loss to one party hereto of the
kind for which such party is entitled to indemnification pursuant to
Section 4.1 or 4.2 hereof, then, after written notice is provided by
the indemnified party to the indemnifying party of such demand, claim,
or lawsuit, the indemnifying party shall have the option, at its cost
and expense, to retain counsel for the indemnified party to defend any
such demand, claim, or lawsuit. In the event that the indemnifying
party shall fail to respond within five calendar days after receipt of
such notice of any such demand, claim, or lawsuit, then the indemnified
party shall retain counsel and conduct the defense of such demand,
claim, or lawsuit as it may in their discretion deem proper, at the
cost and expense of the indemnifying party. In effecting the settlement
of any such demand, claim, or lawsuit, an indemnified party shall act
in good faith, shall consult with the indemnifying party, and shall
enter into only such settlement as the indemnifying party shall approve
(the indemnifying party's approval will be implied if it does not
respond within ten calendar days of its receipt of the notice of such
settlement offer).
Section 4.4. Limitations on Indemnification and Survival.
(a) Notwithstanding anything to the contrary contained in this Article IV,
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. IN ADDITION, THE PARTIES SHALL HAVE NO OBLIGATIONS UNDER THIS
ARTICLE IV FOR ANY CONSEQUENTIAL LIABILITY, DAMAGE, OR LOSS THE
INDEMNIFIED PARTY MAY SUFFER AS THE RESULT OF ANY DEMAND, CLAIM, OR
LAWSUIT.
(b) Neither the Seller, on the one hand, nor the Purchaser, on the other
hand, shall be obligated to indemnify the other for more than
$2,000,000 in the aggregate for all claims asserted by such party;
provided, however, that the limitations contained in this Section
4.4(b) shall not apply to any claim of common law fraud or claims for
indemnification for Excluded Assets.
(c) The provisions of Article IV shall survive the Effective Time for the
periods specified in Sections 4.1(b) and 4.3(a), but in no event more
than 12 months after the Effective Time.
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF SELLER
Except as otherwise specifically herein provided, and except as specifically
disclosed to Purchaser in writing prior to the date hereof, or as otherwise
disclosed as described in the particular Sections of this Article V, F&M Bank
and Fidelity Bank, on behalf of itself and its subsidiaries, hereby represents
and warrants to Purchaser as follows:
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Section 5.1. Corporate Organization.
(a) F&M Bank is a commercial bank duly organized, validly existing, and in
good standing under the laws of the State of
Maryland. Seller has the
corporate power and authority to carry on its business as currently
conducted and to effect the transactions contemplated herein.
(b) Fidelity Bank is a commercial bank duly organized, validly existing,
and in good standing under the laws of the State of
Maryland. Seller
has the corporate power and authority to carry on its business as
currently conducted and to effect the transactions contemplated herein.
Section 5.2. No Violation.
The Banking Center has been operated in all material respects in accordance with
applicable laws, rules, and regulations. Neither the execution and delivery of
this Agreement, nor the consummation of the transactions contemplated herein,
will violate or conflict with: (i) the charter or bylaws of F&M Bank or Fidelity
Bank; (ii) any material provision of any material agreement or any other
material restriction of any kind to which F&M Bank or Fidelity Bank is a party
or by which F&M Bank or Fidelity is bound; (iii) any material statute, law,
decree, regulation, or order of any governmental authority; or (iv) any material
provision that will result in a default under, or cause the acceleration of the
maturity of, any material obligations or loans to which F&M Bank or Fidelity
Bank is a party.
Section 5.3. Corporate Authority.
Prior to the Closing Date, the consummation of the transactions contemplated
herein will have been duly authorized by the Board of Directors or the Executive
Committee of each of F&M Bank and Fidelity Bank. No further corporate
authorization is necessary for Seller to consummate the transactions
contemplated hereunder.
Section 5.4. Enforceable Agreement.
This Agreement has been duly executed and delivered by F&M Bank and Fidelity
Bank and is the legal, valid, and binding agreement of such parties, enforceable
against them in accordance with its terms.
Section 5.5. No Brokers.
All negotiations relative to this Agreement and the transactions contemplated
hereby have been carried on by Seller and Purchaser, and there has been no
participation or intervention by any other Person employed or engaged by or on
behalf of Seller in such a manner as to give rise to any valid claim against
Seller or Purchaser for a brokerage commission, finder's fee, or like
commission.
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Section 5.6. Personal Property.
Seller owns, and will convey to Purchaser at the Closing, all of Seller's right,
title, and interest to all of the Personal Property free and clear of any
mortgages, liens, security interests, or pledges. Such items are in generally
good working order other than items that are not material or items that do not,
in the aggregate, exceed $25,000 in value.
Section 5.7. Banking Center.
Seller makes the following additional representations regarding the Banking
Center:
(a) Except as specifically set forth herein, Seller has no knowledge of any
condemnation proceedings pending against the Banking Center.
(b) Except as specifically set forth herein, Seller has not entered into
any agreement regarding the Banking Center, and to Seller's knowledge
the Banking Center is not subject to any claim, demand, suit, lien,
proceeding, or litigation of any kind, pending or outstanding, that
would materially affect or limit Purchaser's use and enjoyment of the
Banking Center or that would materially limit or restrict Seller's
right or ability to enter into this Agreement and consummate the sale
and purchase contemplated hereby.
(c) To Seller's knowledge, (i) no fact or condition exists that would
result in the permanent termination or material impairment of access to
the Banking Center from adjoining public streets or highways or in the
permanent discontinuance of necessary utilities services to the Banking
Center, and (ii) all sanitation, plumbing, refuse disposal, and similar
facilities servicing the Banking Center are in material compliance with
applicable governmental regulations.
(d) No complaints have been received by Seller that Seller is in violation
of applicable building, zoning, platting, subdivision, use, safety,
building, or similar laws, ordinances, regulations, and restrictions
with respect to the Banking Center. To Seller's knowledge, there are no
special or general assessments pending against or affecting the Banking
Center and, to Seller's knowledge, no public improvements have been
recently made that would cause special or general assessments to be
assessed against the Banking Center. Except for any encroachment that
does not materially affect the use or value of the premises: (i) to
Seller's knowledge, there is no encroachment upon the Banking Center
from any buildings or improvements, if any, located on the adjacent
property; and (ii) to Seller's knowledge, there is no encroachment by
the Banking Center upon any adjacent property or upon any easements
with respect to the adjacent property. There are no leases or other
agreements by which any Person possesses or has a right to possess all
or any portion of the Banking Center other than those described in this
Agreement or exhibits to this Agreement. To Seller's knowledge, and
except as disclosed by title insurance binder or by survey, there is no
violation of any applicable building restriction or restrictive
covenant. To Seller's knowledge, the Banking Center is adequately
serviced by all utilities necessary for effective operation as
presently used for a financial institution office.
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Until the Closing Date, Purchaser's sole remedy for a breach of the
representations and warranties in this Section 5.7 shall be as provided in
Sections 2.10(c) and (d).
Section 5.8. Condition of Property.
Except as may be otherwise specifically set forth in this Agreement, the
Personal Property and the Banking Center to be purchased by Purchaser hereunder
are sold "AS IS, WHERE IS," with no warranties or representations whatsoever,
except as may be expressly represented or warranted in this Agreement.
Section 5.9. Employees.
No Employee located in the Banking Center is a party to any collective
bargaining, employment, severance, termination, or change of control agreement
or represented by a labor organization of any type other than Seller's
established terms of employment and severance policies. Seller is unaware of any
efforts during the past three years to unionize or organize the employees of the
Banking Center. Seller will provide to Purchaser a true and correct list of all
employees of the Banking Center as of the date hereof, and a list of any and all
bonus or incentive or other compensation arrangements or commitments, other than
benefits plans applicable to all Seller employees, for each such employee or for
the employees as a group. Purchaser agrees to keep such information in strictest
confidence and to confine knowledge of such information to those of its officers
and personnel who have a need to know such information in connection with the
performance of their duties. None of the employees of the Banking Center is a
party to any employment contract, formal or informal, oral or written, or
represented under any collective bargaining agreement relating to employment
with Seller.
Section 5.10. Assumed Contracts.
Seller has delivered to Purchaser a true and complete copy of each Real Property
Lease, Equipment Lease, Software License, Safe Deposit Contract, and Operating
Contract that is to be assumed by Purchaser. Each Real Property Lease, Equipment
Lease, Software License, Safe Deposit Contract, and Operating Contract is valid
and subsisting and in full force and effect. Seller has performed in all
material respects all obligations required to be performed by Seller thereunder
and no condition exists that constitutes or, with notice, or lapse of time,
would constitute a material default thereunder. To Seller's knowledge, all other
parties to each Real Property Lease, Equipment Lease and Software License have
performed in all material respects all obligations required to be performed by
such parties thereunder and no condition exists that constitutes or, with
notice, or lapse of time, would constitute a material default thereunder by such
other parties.
Section 5.11. Loans.
(a) Each Loan was made in the ordinary course of business, has been
properly executed by the parties thereto, represents the valid and
binding obligation of the obligor, enforceable by the holder thereof in
accordance with its terms, is free from any material defenses, contains
customary enforcement provisions such that the rights and remedies of
the holder thereof are adequate for enforcement of the Loans, and,
unless approved by Seller and documented in its files, no material
provision of a Loan has been waived.
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(b) Each Loan (such term to include, for purposes of this paragraph, the
principal documents relating in any way to such Loans, including notes,
mortgages, security instruments, and guarantees) complies and has been
administered in all material respects with all requirements of
applicable federal, state, and local laws and regulations.
(c) Each Loan that is secured by collateral is secured by a perfected
mortgage or security interest in the collateral in favor of Seller as
mortgagee or secured party and having the priority as documented in
Seller's files. No collateral has been released from the lien granted
to Seller, unless approved by Seller and documented in its files.
(d) No selection procedures believed to be adverse to Purchaser has been
used by Seller in selecting the Loans.
(e) Except as may be otherwise specifically set forth in this Agreement,
all Loans (such term to include, for purposes of this paragraph, the
principal documents relating in any way to such Loans, including notes,
mortgages, security instruments, and guarantees) transferred to
Purchaser hereunder are transferred "AS IS, WHERE IS," with no
warranties or representations whatsoever, except as may be expressly
represented or warranted in this Section 5.11. Purchaser's sole remedy
for a breach of the representations and warranties in this Section 5.11
shall be as provided in paragraph 4.1(b).
(f) As of the Effective Time, (i) no Loan will constitute a retail
installment sales contract, (ii) no Loan will be 90 days or more
delinquent, (iii) no Loan will have been 90 days or more delinquent
four or more times during the 18 months preceding Closing, and (iv) no
Loan will have been made to a borrower that is a debtor in a pending
case commenced under the United States Bankruptcy Code or to any
borrower that is the subject of a pending voluntary or involuntary
receivership or assignment for the benefit of creditors proceeding.
Section 5.12. Environmental Matters.
Except as previously disclosed to Purchaser in writing, to the actual knowledge
of the Executive Officers of Seller or its senior property management officer
and without any investigation by such officers:
(a) The Banking Center is, in all material respects, in compliance with all
applicable federal, state, local, or municipal statutes, ordinance,
laws, and regulations and all orders, rulings, or other decisions of
any court, administrative agency, or any other governmental authority
relating to the protection of the environment.
(b) The Banking Center is not constructed of, nor does it contain as a
component part, any material (either in its present form or as it may
reasonably be expected to change through aging or normal use) that
reasonably can be expected to release any substance, whether gaseous,
liquid, or solid or that is known to be (either by single exposure or
by repeated or prolonged exposure) injurious or hazardous to the health
of persons occupying the premises or is a "Hazardous Substance"
(defined below). Without limiting the generality
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of this Section, the Banking Center is, and during all applicable
limitation periods has been, to Seller's knowledge, free of asbestos
except to the extent properly sealed or encapsulated in compliance with
all applicable "Environmental Laws" (defined below) and all work-place
safety, disability and health laws, regulations, and guidelines so as
to completely prevent the escape of asbestos particles or fibers.
(c) During Seller's operation of the Banking Center, no part of the Banking
Center has been used for the manufacture, handling, storage, or
disposal of Hazardous Substances, except for conventional cleaning and
maintenance materials in quantities customary for commercial operations
of the nature conducted by Seller at the Banking Center.
(d) Except as disclosed in writing to Purchaser, the Banking Center does
not contain, nor has it ever contained, an "underground storage tank"
as that term is defined in the Federal Hazardous and Solid Waste
Amendments of 1984 to the Resource Conservation and Recovery Act.
(e) There is no action, suit, investigation, inquiry, or other proceeding,
ruling, order, or citation involving Seller, pending, threatened, or
previously asserted as a result of any actual or alleged failure to
comply with any requirement of any Environmental Laws with respect to
the Banking Center, and there is no factual basis for any of the
foregoing. Seller has not received a notice that they are a potentially
responsible party under any state or federal Environmental Law.
(f) Neither F&M Bank nor Fidelity Bank is an "owner or operator" of a
"facility" or "vessel," as those terms are defined in Section 9601 of
the Comprehensive Environmental Response Compensation and Liability Act
of 1980, 42 U.S.C.A. Section 9601 ("CERCLA"), thereby owning,
possessing, transporting, generating, or disposing of any Hazardous
Substances in relation to the Banking Center.
For purposes of this Section 5.12, "Hazardous Substances" has the meaning
defined in Section 9601 of CERCLA, and includes any substance that is now or
hereafter regulated by or subject to any Environmental Laws and any other
pollutant, contaminant, or waste, including, without limitation, asbestos,
radon, polychlorinated biphenyls, and petroleum products; and "Environmental
Laws" mean all laws (civil or common), ordinances, rules, regulations, and
orders that: (i) regulate solid waste management, including the containment,
storage, handling, transportation, disposal, or management of Hazardous
Substances; (ii) regulate or prescribe requirements for air, water, or soil
quality; (iii) are intended to protect public health or the environment; or (iv)
establish liability for the investigation, removal, or cleanup of, or damage
caused by, any Hazardous Substances. Until the Closing Date, Purchaser's sole
remedy for a breach of the representations and warranties in this Section 5.12
shall be as provided in Section 2.11(b).
Section 5.13. Deposit Liabilities.
No selection procedures believed to be adverse to Purchaser has been utilized by
Seller in selecting the Deposit Liabilities. The Deposit Liabilities are insured
by the Federal Deposit
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Insurance Corporation ("FDIC") to the fullest extent permitted by federal law
and no action is pending or has been threatened by the FDIC against Seller with
respect to the termination of such insurance. To Fidelity Bank's knowledge, the
Deposit Liabilities (i) are in all respects genuine and enforceable obligations
of Fidelity Bank and have been acquired and maintained in full compliance with
all applicable Laws, including but not limited to the Truth in Savings Act and
regulations promulgated thereunder; (ii) were acquired in the ordinary course of
Fidelity Bank's business; and (iii) are not subject to any claims with respect
to such Deposit Liabilities that are superior to the rights of persons shown on
the records delivered to Purchaser indicating the owners of the Deposit
Liabilities, other than claims against such Deposit Liabilities owners, such as
state and federal tax liens, garnishments, and other judgment claims, which have
matured or may mature into claims against the respective Deposit Liabilities.
Section 5.14. Books, Records, Documentation, etc.
The books and records of the Banking Center are correct, accurate, and complete,
in all material respects, have been maintained in a consistent and a customary
manner, and are in material compliance with all applicable federal and state
laws and regulations and customary banking practices. The deposit- and
lending-related forms, notices, statements, and related documentation, as well
as Seller's policies, procedures, and practices with respect thereto, used at
the Banking Center comply in all material respects with applicable federal and
state laws and regulations and customary banking practices.
Section 5.15. Litigation.
There are no actions, causes of action, claims, suits, or proceedings, pending
or, to Seller's knowledge, threatened, against Seller relating to the Banking
Center or materially affecting the Banking Center, whether at law, in equity or
before or by a governmental department, commission, board, bureau, agency, or
instrumentality. For purposes of this section, claims will be considered to
materially affect the Banking Center if the aggregate amount of such claims
exceeds $10,000.
Section 5.16. Tax Matters.
Seller has complied with the requirements of the Internal Revenue Service
regarding taxpayer identification number certification, interest information
reporting, and backup withholding of interest payable in connection with Deposit
Liabilities. Seller has filed all federal, state, county, local, and foreign tax
returns, including information returns, required to be filed by Seller in
connection with Seller's operation of the Banking Center, and has paid all taxes
owed by Seller, including those with respect to withholding, social security,
unemployment, workers compensation, franchise, ad valorem, premium, excise, and
sales taxes, and no taxes shown on such returns or assessments received by them
are delinquent. Seller has paid all taxes that it is required to withhold from
amounts owing to employees, creditors, holders of Deposit Liabilities, or other
third parties. For all completed years, Seller has duly and timely sent to each
holder of Deposit Liabilities a Form 1099 (or a substitute form permitted by
law) relating to interest, earnings, or dividends paid on such accounts for
those periods.
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Section 5.17. Limitation and Survival of Representations and Warranties.
Except as may be expressly represented or warranted in this Agreement, Seller
makes no representation or warranty whatsoever with regard to any asset being
transferred to Purchaser or any liability or obligation being assumed by
Purchaser or as to any other matter or thing. The foregoing representations and
warranties shall survive the Effective Time for a period of 12 months, except
Section 5.13, which shall survive the Effective Time for a period of six months,
and except as otherwise specifically herein provided.
ARTICLE VI - REPRESENTATIONS AND WARRANTIES OF PURCHASER
Except as otherwise specifically herein provided, Purchaser hereby represents
and warrants to Seller as follows:
Section 6.1. Corporate Organization.
Purchaser is a national banking association, duly organized and validly
existing, and in good standing under the laws of the United States of America.
Purchaser has the corporate power and authority to carry on the business being
acquired, to assume the liabilities being transferred, and to effect the
transactions contemplated herein.
Section 6.2. No Violation.
Neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated herein will violate or conflict with (i) Purchaser's
charter or bylaws, (ii) any material provision of any material agreement or any
other material restriction of any kind to which Purchaser is a party or by which
Purchaser is bound, (iii) any material statute, law, decree, regulation, or
order of any governmental authority, or (iv) any material provision that will
result in a default under, or cause the acceleration of the maturity of, any
material obligation or loan to which Purchaser is a party.
Section 6.3. Corporate Authority.
Prior to the Closing Date, the consummation of the transactions contemplated
herein will have been duly authorized by the Board of Directors or Executive
Committee of Purchaser. No further corporate authorization on the part of
Purchaser is necessary to consummate the transactions contemplated hereunder.
Section 6.4. Enforceable Agreement.
This Agreement has been duly executed and delivered by Purchaser and is the
legal, valid, and binding agreement of Purchaser, enforceable in accordance with
its terms.
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Section 6.5. No Brokers.
All negotiations relative to this Agreement and the transactions contemplated
hereby have been carried on by Purchaser and Seller and there has been no
participation or intervention by any other Person employed or engaged by or on
behalf of Purchaser in such a manner as to give rise to any valid claim against
Seller or Purchaser for a brokerage commission, finder's fee, or like
commission.
Section 6.6. Survival of Representations and Warranties.
The foregoing representations and warranties shall survive the Effective Time
for a period of 12 months.
ARTICLE VII - OBLIGATIONS OF PARTIES PRIOR TO
AND AFTER EFFECTIVE TIME
Section 7.1. Full Access.
Seller shall afford to the officers and authorized representatives of Purchaser,
upon prior notice and subject to Seller's normal security requirements, access
to the properties, books, and records pertaining to the Banking Center,
specifically including but not limited to all books and records relating to the
Deposit Liabilities, the Loans, the Banking Center, and the Personal Property,
and copies of the Real Property Lease, Equipment Leases, and Software Leases so
that Purchaser may have full opportunity to make reasonable investigations and
to engage in operational planning, at reasonable times, without interfering with
the normal business and operations of the Banking Center or the affairs of
Seller relating to the Banking Center. Seller will cooperate with Purchaser to
the extent reasonably requested and legally permissible to provide Purchaser
with information about Employees and a means to meet with Employees. The
officers of Seller shall furnish Purchaser with two standard sets of such
additional financial and operating data and other information as to its business
and properties at the Banking Center, or where otherwise located, as Purchaser
may, from time to time, reasonably request and as shall be available, including,
without limitation, information required for inclusion in all governmental
applications necessary to effect this transaction. Any additional copies of such
information shall be produced and provided at Purchaser's expense. Nothing in
this Section 7.1 shall require Seller to breach any obligation of
confidentiality or to reveal any proprietary information, trade secrets, or
marketing or strategic plans. Records, including credit information relating to
the Loans, will be made available for review by Purchaser no later than 30
calendar days after the execution of this Agreement. It is understood that
certain of Seller's records may be available only in the form of photocopies,
film copies, or other non-original and non-paper media.
Section 7.2. Delivery of Magnetic Media Records.
Seller shall prepare or cause to be prepared at its expense and make available
to Purchaser at Seller's data processing center or other reasonably convenient
location magnetic media records in Seller's field format as soon as possible and
in any event not later than 30 calendar days after the execution of this
Agreement and further shall make available to Purchaser such records updated
monthly and as of the Closing Date, which records shall contain the information
related
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to the items described in items 3.2(b)(5), (6), and (7) above. Such updated
records shall be made available at such time after the Closing Date as agreed to
by the parties. At its option, Seller may provide such reports in paper format
instead of magnetic media format.
Section 7.3. Application for Approval.
Within 30 calendar days following the execution of this Agreement, Purchaser
shall prepare and file applications required by law with the appropriate
regulatory authorities for approval to purchase and assume the aforesaid assets
and liabilities, to establish a branch at the location of the Banking Center,
and to effect in all other respects the transactions contemplated herein.
Purchaser agrees to process such applications in a diligent manner and on a
priority basis and to provide Seller promptly with a copy of such applications
as filed (except for any confidential portions thereof) and all material
notices, orders, opinions, correspondence, and other documents with respect
thereto, and to use its best efforts to obtain all necessary regulatory
approvals. On the date hereof, Purchaser knows of no reason why such
applications should not receive all such approvals. Purchaser shall promptly
notify Seller upon receipt by Purchaser of notification that any application
provided for hereunder has been accepted or denied. Seller shall provide such
assistance and information to Purchaser as shall be reasonably necessary for
Purchaser to comply with the requirements of the applicable regulatory
authorities.
Section 7.4. Conduct of Business; Maintenance of Properties.
From the date hereof until the Effective Time, Seller shall:
(1) carry on, or cause to be carried on, the business of the
Banking Center substantially in the same manner as on the date
hereof, use all reasonable efforts to preserve intact its
current business organization and preserve its business
relationships with depositors, customers, and others having
business relationships with it and whose accounts will be
retained at the Banking Center; provided, however, that Seller
need not, in its sole discretion, advertise or promote new or
substantially new customer services in the principal market
area of the Banking Center;
(2) cooperate with and assist Purchaser in assuring the orderly
transition of the business of the Banking Center to Purchaser
from Seller; and
(3) maintain the Banking Center and the Personal Property in their
current conditions, ordinary wear and tear excepted.
Section 7.5. No Solicitation by Seller.
(a) After the execution of this Agreement, Seller will take reasonable
steps to avoid causing Banking Center customers to transfer all or part
of their Deposit or Loan business from the Banking Center. For a period
of 24 months after the Closing Date, Seller will not establish any new
branch facility or install any automated teller machines at any
location within a radius of 18 miles from the Banking Center; provided,
however, that this
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restriction will not apply to any branch existing as of the date of
this Agreement nor prohibit Seller from acquiring a branch facility or
automated teller machine as part of an acquisition of another bank or
bank holding company that has at least 85% of its total deposits
attributed to branch offices located outside Washington County,
Maryland. As of the date of this Agreement, Seller does not have any
plans to make any such acquisitions, but Seller may make such
acquisitions in the future. In addition, for a period of 24 months
after the Closing Date, Seller will not specifically target or solicit
customers assigned to the Banking Center; provided, however, that this
restriction shall not restrict general mass mailings, telemarketing
calls, statement stuffers, and other similar communications directed to
all the current customers of Seller or Seller's affiliates, or to the
public or newspaper, radio, or television advertisements of a general
nature or otherwise prevent Seller from taking such actions as may be
required to comply with any applicable federal or state laws, rules, or
regulations. The foregoing restriction shall not restrict the ability
of Seller or any of its affiliates from: (i) engaging in the lines of
business excluded from the Transferred Assets, namely, the Dealer Sales
line of business, and (ii) soliciting customers whose accounts are
normally established or maintained in offices other than the Banking
Center. In addition, it is understood and agreed that the restrictions
contained in this paragraph 7.5(a) shall not be binding upon or apply
to any Person who merges, consolidates, or otherwise becomes affiliated
with Seller, or any of such Person's affiliates or successors, as a
result of a business combination transaction where such business
combination transaction was not undertaken for the primary purpose of
re-entering the retail and corporate branch banking business within the
area restricted by this paragraph 7.5(a). The obligations of the
parties hereunder shall specifically survive the Closing for a period
of 24 months.
(b) To facilitate Seller's compliance with the restrictions in this Section
7.5, Purchaser will give prompt notice to Seller of any mailing or
other form of marketing that it determines is not consistent with such
restrictions; provided, however, that the failure of Purchaser to so
notify Seller shall not negate the provisions of this Section 7.5.
Section 7.6. Efforts to Consummate; Further Actions.
The parties hereto agree to use all reasonable efforts to satisfy or cause to be
satisfied as soon as practicable their respective obligations hereunder and the
conditions precedent to Closing. The parties hereto shall execute and deliver
such instruments and take such other actions as the other party may reasonably
require in order to carry out the intent of this Agreement. Included in such
actions shall be the execution and delivery of additional powers of attorney and
such other documents and instruments as shall be prepared and reasonably
requested by Purchaser to transfer the Loans and all collateral related thereto.
Such assistance will be provided to the Purchaser without costs for Seller's
personnel for a period of at least 12 months after the Closing Date.
Section 7.7. Fees and Expenses.
Subject to the provisions of Section 10.3 and except as provided in Section 2.9,
Section 2.11(b), and this Section 7.7, Purchaser shall be responsible for the
costs of all title examinations,
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surveys, environmental investigation costs, its own attorneys' and accountants'
fees and expenses, software license and transfer fees, recording costs, transfer
fees, sales and use and other transfer taxes, regulatory applications, and other
expenses arising in connection therewith as well as all costs and expenses
associated with the transfer or perfection of any security interest or lien
securing Loans transferred hereunder. Purchaser shall pay the costs of any
applicable title insurance premiums and documentary stamps and similar real
estate transfer charges. Seller shall be responsible for its own attorneys' and
accountants' fees and expenses related to this transaction. Seller shall make no
charge to the Purchaser for Seller's personnel assigned to transition matters
hereunder.
Section 7.8. Operations.
Notwithstanding the foregoing, between the date of this Agreement and the
Effective Time, and except as may be otherwise required by regulatory authority,
Fidelity Bank shall underwrite and administer the Loans at the Banking Center in
accordance with its past standards and practices and in accordance with
applicable laws and regulations and shall not without the prior consent of
Purchaser, which consent shall not be unreasonably withheld:
(1) cause the Banking Center to engage or participate in any
material transaction or incur or sustain any obligation which
is material to its business, condition, or operation;
(2) cause the Banking Center to transfer to Seller's other
operations any material amount of Transferred Assets, except
for (i) supplies, if any, that have unique function in
Seller's business and ordinarily would not be useful to
Purchaser, (ii) cash and other normal intrabank transfers that
may be transferred in the ordinary course of business in
accordance with normal banking practices, and (iii) signs, or
those parts thereof, bearing Seller's name and/or logo;
(3) except in the ordinary course of business at the unsolicited
request of depositors (i) cause the Banking Center to transfer
to Seller's other operations any Deposit Liabilities, or (ii)
cause any of Seller's other operations to transfer to the
Banking Center any Deposit Liabilities;
(4) invest in any fixed assets on behalf of the Banking Center and
for replacements of furniture, furnishing, and equipment
except for normal maintenance and refurbishing purchased or
made in the ordinary course of business;
(5) materially breach or terminate the Real Property Lease or any
Operating Contract, or enter into or amend any continuing
contract (other than Deposit Liabilities and Loans) relating
to the Banking Center that cannot be terminated without cause
and without payment of any amounts as a penalty, bonus,
premium, or other compensation for termination, or that is not
made in the ordinary course of business;
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(6) undertake any actions that are inconsistent with a program to
use all reasonable efforts to maintain good relations with
customers and with employees employed at the Banking Center,
unless such actions are required or permitted by this
Agreement;
(7) hire any individual into the Banking Center (other than to
replace a departing employee and/or to bring the number of
employees at the Banking Center to normal staffing levels),
transfer or reassign any employee of the Banking Center,
increase the compensation of any employee of the Banking
Center, or promote any of the employees, except where any such
action is pursuant to and consistent with customary Seller's
procedures and policies;
(8) make any material change to its customary policies for setting
rates on deposits offered at the Banking Center;
(9) amend or modify any of its promotional, deposit account, or
Loan practices at the Banking Center other than amendments or
modifications in the ordinary course of business in accordance
with amendments or modifications undertaken at Seller's
branches other than the Banking Center;
(10) enter into any employment severance, termination, or change in
control contracts or understandings with any employee of the
Banking Center;
(11) reduce the service charges on any deposit product or fee-based
product (e.g. safe deposit boxes, money orders, cashier's
checks), unless such reduction is implemented generally in
Seller's other branches;
(12) lease or sublease any space in the Banking Center,
(13) until the Effective Time fail to maintain and update its
general ledgers on a basis consistent with its past accounting
practices; or
(14) undertake any actions that would result in a Title Defect or
fail to take any action to remove or cure a Title Defect
caused by the Seller after the date hereof.
Section 7.9. Destruction and Condemnation.
If any of the Banking Center is damaged or destroyed or condemned between the
date hereof and the Closing Date, unless Seller has repaired or replaced the
damage or destroyed property, Purchaser may elect, in its sole discretion, to
either (i) not acquire the damaged Banking Center and the related assets and
liabilities or, (ii) acquire the damaged Banking Center, in which event Seller
will deliver to Purchaser any insurance proceeds, condemnation proceeds, or
other payment with respect to the Banking Center.
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Section 7.10. Insurance.
As of the Effective Time, Fidelity Bank will discontinue its insurance coverage
maintained in connection with the Banking Center and the activities conducted
thereon. Purchaser shall be responsible for all insurance protection for the
Banking Center and the activities conducted thereon immediately following the
Effective Time. Fidelity Bank shall bear the risk of loss until the Effective
Time.
Section 7.11. Public Announcements.
Seller and Purchaser agree that, from the date hereof, neither shall make any
public announcement or public comment, regarding this Agreement or the
transactions contemplated herein without first consulting with the other party
hereto and reaching an agreement upon the substance and timing of such
announcement or comment. Further, Seller and Purchaser acknowledge the
sensitivity of this transaction to the Employees and no announcements or
communications with the public or the Employees shall be made without the prior
approval of Seller until the Effective Time.
Section 7.12. Tax Reporting.
Seller shall comply with all tax reporting obligations in connection with
transferred assets and liabilities on or before the Effective Time, and
Purchaser shall comply with all tax reporting obligations with respect to the
Transferred Assets and liabilities after the Effective Time.
Section 7.13. Transitional Matters.
Seller shall use its best efforts to cooperate with Purchaser to assure an
orderly transition of ownership of the Transferred Assets and Loans and
responsibility for the liabilities, including the Deposit Liabilities, assumed
by Purchaser hereunder.
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ARTICLE VIII - CONDITIONS TO PURCHASER'S OBLIGATIONS
The obligation of Purchaser to complete the transactions contemplated in this
Agreement is conditioned upon fulfillment, on or before the Closing Date, of
each of the following conditions:
Section 8.1. Representations and Warranties True.
The representations and warranties made by Seller in this Agreement shall be
true in all material respects on and as of the Effective Time as though such
representations and warranties were made at and as of such time, except for any
changes permitted by the terms hereof or consented to by Purchaser.
Section 8.2. Obligations Performed.
Seller shall have (i) delivered or made available to Purchaser those items
required by Section 3.2(b) hereof, and (ii) 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 Effective Time.
Section 8.3. No Adverse Litigation.
As of the Effective Time, no action, suit, or proceeding shall be pending or
threatened against Seller that is reasonably likely to (i) materially and
adversely affect the business, properties, and assets of the Banking Center, or
(ii) materially and adversely affect the transactions contemplated herein.
Section 8.4. Regulatory Approval.
(a) Purchaser shall have received all necessary regulatory approvals of the
transactions provided in this Agreement; all notice and waiting periods
required by law to pass shall have passed; no proceeding to enjoin,
restrain, prohibit, or invalidate such transactions shall have been
instituted or threatened; and any conditions of any regulatory approval
shall have been met.
(b) Such approvals shall not have imposed any condition that is materially
disadvantageous or burdensome to Purchaser.
Section 8.5. Seller's Negotiation of Lease Extension for the Banking
Center.
Seller shall have negotiated an amendment to the Real Property Lease in the form
substantially attached hereto as Exhibit 8.5 (the "Lease Amendment"), which
shall be signed and binding upon the Landlord. Other than as provided in the
Lease Amendment, Buyer shall be bound by all other terms of the Real Property
Lease.
-34-
ARTICLE IX - CONDITIONS TO SELLER'S OBLIGATIONS
The obligation of Seller to complete the transactions contemplated in this
Agreement is conditioned upon fulfillment, on or before the Closing Date, of
each of the following conditions:
Section 9.1. Representations and Warranties True.
The representations and warranties made by Purchaser in this Agreement shall be
true in all material respects at and as of the Effective Time as though such
representations and warranties were made at and as of such time, except for any
changes permitted by the terms hereof or consented to by Seller.
Section 9.2. Obligations Performed.
Purchaser shall have (i) delivered to Seller those items required by Section
3.2(c) hereof, and (ii) 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 on the Effective Time.
Section 9.3. No Adverse Litigation.
As of the Effective Time, no action, suit, or proceeding shall be pending or
threatened against Purchaser or Seller that might materially and adversely
affect the transactions contemplated hereunder.
Section 9.4. Regulatory Approval.
(a) Purchaser shall have received from the appropriate regulatory
authorities approval of the transactions contemplated herein; the
waiting periods required by law to pass shall have passed; no
proceeding to enjoin, restrain, prohibit, or invalidate such
transactions shall have been instituted or threatened; and any
conditions of any regulatory approval shall have been met.
(b) Purchaser's regulatory approvals shall not have imposed any condition
that is materially disadvantageous or burdensome to Seller.
Section 9.5. Lessors' Consents.
Seller shall have obtained such consents or approvals from the lessor or
sublessor as are deemed necessary or desirable by Seller to the assignment or
sublease of the Real Property Lease.
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ARTICLE X - TERMINATION
Section 10.1. Methods of Termination.
This Agreement may be terminated in any of the following ways:
(1) by either Purchaser or Seller in writing five calendar days
in advance of such termination, if the Closing has not
occurred by May 31, 2004; provided that a party shall not be
permitted to terminate this Agreement on such date if the
failure of the Closing to occur prior to such date arises
out of or results from the actions, inactions, or omissions
of the terminating party;
(2) at any time on or prior to the Effective Time by the mutual
consent in writing of Seller and Purchaser;
(3) by Seller in writing if the conditions set forth in Article
IX of this Agreement shall not have been met by Purchaser or
waived in writing by Seller prior to the Closing Date;
(4) by Purchaser in writing if the conditions set forth in
Article VIII of this Agreement shall not have been met by
Seller or waived in writing by Purchaser prior to the
Closing Date;
(5) by Purchaser in writing if it exercises its option to
terminate this Agreement pursuant to paragraphs 2.10(c),
2.10(d) or 2.11(b) hereof.
(6) any time prior to the Effective Time, 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 30 calendar days after
the giving of notice to the breaching party of such breach
or the Effective Time; provided, however, that there shall
be no cure period in connection with any breach of Section
7.3 hereof, so long as such breach by Purchaser was not
caused by any action or inaction of Seller, and Seller may
terminate this Agreement immediately if regulatory
applications are not filed within 30 calendar days after the
date of this Agreement as provided in that section; or
(7) by Seller or Purchaser in writing at any time after any
applicable regulatory authority has denied approval of any
application of Purchaser for approval of the transactions
contemplated herein.
-36-
Section 10.2. Procedure Upon Termination.
In the event of termination pursuant to Section 10.1 hereof, and except as
otherwise stated therein, written notice thereof shall be given to the other
party, and this Agreement shall terminate immediately upon receipt of such
notice unless an extension is consented to by the party having the right to
terminate. If this Agreement is terminated as provided herein:
(1) each party will return all documents, work papers, and other
materials of the other party, including photocopies or other
duplications thereof, relating to this transaction, whether
obtained before or after the execution hereof, to the party
furnishing the same;
(2) all information received by either party hereto with respect
to the business of the other party (other than information
that is a matter of public knowledge or that has heretofore
been published in any publication for public distribution or
filed as public information with any governmental authority)
shall not at any time be used for any business purpose by
such party or disclosed by such party to third persons; and
(3) each party will pay its own expenses.
Section 10.3. Payment of Expenses.
Notwithstanding section 10.2(3), should the transactions contemplated herein not
be consummated because of a party's breach of this Agreement, in addition to
such damages as may be recoverable in law or equity, the other party shall be
entitled to recover from the breaching party upon demand, itemization, and
documentation, its reasonable outside legal, accounting, consulting, and other
out-of-pocket expenses.
ARTICLE XI - MISCELLANEOUS PROVISIONS
Section 11.1. Amendment and Modification.
The parties hereto, by mutual consent, my amend, modify, and supplement this
Agreement in such manner as may be agreed upon by them in writing.
Section 11.2. Waiver or Extension.
Except with respect to required approvals of the applicable governmental
authorities, either party, by written instrument signed by a duly authorized
officer, may extend the time for the performance of any of the obligations or
other acts of the other party and may waive (i) any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto or (ii) compliance with any of the undertakings, obligations,
covenants, or other acts contained herein.
-37-
Section 11.3. Assignment.
This Agreement and all of the provisions hereof shall be binding upon, and shall
inure to the benefit of, the parties hereto and their permitted assigns, but
neither this Agreement nor any of the rights, interests, or obligations
hereunder shall be assigned by any of the parties hereto without the prior
written consent of the other.
Section 11.4. Confidentiality.
Purchaser and Seller agree that any confidentiality agreements between Purchaser
and Seller shall survive the execution hereof and the consummation of the
transactions contemplated herein.
Section 11.5. Addresses for Notices, Etc.
All notices, consents, waivers, and other communications under this Agreement
must be in writing and will be deemed to have been duly given when (i) delivered
by hand (with written confirmation of receipt), (ii) deposited in the United
States Mail by registered or certified mail, return receipt requested, (iii)
sent by telecopier (with electronic confirmation of receipt), provided that a
copy is mailed by registered or certified mail, return receipt requested, or
(iv) when received by the addressee, if sent by a nationally recognized
overnight delivery service (receipt requested), in each case to the appropriate
addresses or telecopier numbers set forth below (or to such other addresses and
telecopier numbers as a party may designate by notice to the other parties):
If to Seller, to: Farmers & Mechanics Bank
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Senior Vice President/General Counsel
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
The Fidelity Bank
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: J. ▇▇▇▇▇ ▇▇▇▇▇
President/CEO
Facsimile Number: ______________
with a copy to: ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇, Feinblatt, Rothman, Hoffberger &
▇▇▇▇▇▇▇▇▇, LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
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If to Purchaser, to: Citizens National Bank of Berkeley Springs
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President/CEO
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇, Esq.
▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
and to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
▇▇▇▇▇▇▇ ▇▇▇▇▇ PLLC
1600 Laidley Tower (Zip 25301)
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Section 11.6. Counterparts.
This Agreement may be executed simultaneously in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
Section 11.7. Headings.
The headings of the Articles and Sections of this Agreement are inserted for
convenience only and shall not constitute a part thereof.
Section 11.8. Governing Law.
This Agreement is made in the State of
Maryland, and shall be construed and
enforced in accordance with the laws of the State of Maryland, excluding any
conflicts of law principle that would apply the law of another jurisdiction.
Section 11.9. Sole Agreement.
Except for the confidentiality agreements described in Section 11.4 hereof, this
Agreement and the exhibits and attachments hereto represent the sole agreement
between the parties hereto respecting the transactions contemplated hereby and
all prior or contemporaneous written or oral proposals, agreements in principle,
representations, warranties and understandings between the parties with respect
to such matters are superseded hereby and merged herein.
-39-
Section 11.10. Parties In Interest.
Nothing in this Agreement, express or implied, including, without limiting the
generality of the foregoing in any way, the provisions of paragraphs 2.6(a)
through 2.6(e) hereof, is intended or shall be construed to confer upon or give
to any Person (other than the parties hereto, their successors and permitted
assigns) any rights or remedies under or by reason of this Agreement, or any
term, provision, condition, undertaking, warranty, representation, indemnity,
covenant, or agreement contained herein.
Section 11.11 Calculation of Dates and Deadlines.
Unless otherwise specified, any period of time to be determined under this
Agreement shall be deemed to commence at 12:01 a.m. on the first full day after
the specified starting date, event, or occurrence. Any deadline, due date,
expiration date, or period-end to be calculated under this Agreement shall be
deemed to end at 5 p.m. on the last day of the specified period. The time of day
shall be determined with reference to the then current local time in Frederick,
Maryland.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers as of the date first written
above.
FARMERS & MECHANICS BANK
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
THE FIDELITY BANK
By: /s/ J. ▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
Name: J. ▇▇▇▇▇ ▇▇▇▇▇
Title: President/CEO
CITIZENS NATIONAL BANK OF BERKELEY
SPRINGS
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President/CEO
-40-
PURCHASE AND ASSUMPTION AGREEMENT
BY AND AMONG
FARMERS & MECHANICS BANK,
THE FIDELITY BANK
AND
CITIZENS NATIONAL BANK OF BERKELEY SPRINGS
LIST OF EXHIBITS
Exhibit No. Description
2.1(a) List of Operating Contracts
2.1(b)(1) List of Excluded Assets
2.4(a) List of Loans
2.4(j) Form of Power of Attorney
3.2(b)(1) Form of ▇▇▇▇ of Sale
3.2(b)(2) Form of Assignment and Assumption Agreement
3.2(b)(3) Form of Assignment and Assumption of Lease
3.2(b)(13) Form of Closing Statement
8.5 Form of Lease Amendment
-41-
EXHIBIT 2.4(a)
LOANS
F&M BANK:
THE FIDELITY BANK:
-1-
EXHIBIT 2.4(i)
POWER OF ATTORNEY
THIS POWER OF ATTORNEY is dated this ____ day of ___________, 2004, by
FARMERS & MECHANICS BANK, a Maryland-chartered commercial bank, and THE FIDELITY
BANK, a Maryland chartered commercial bank (collectively, "Seller"), to be
effective as of 5:00 p.m., local time, on __________________, 2004.
WITNESSETH:
WHEREAS, Seller and CITIZENS NATIONAL BANK OF BERKELEY SPRINGS, a
national banking association ("Purchaser"), have entered into a
Purchase and
Assumption Agreement dated as of _________________, 2004 (the "Agreement"),
which provides for the sale by Seller to Purchaser of certain personal property;
and
WHEREAS, in a ▇▇▇▇ of Sale to Purchaser, dated __________________, 2004
(the "▇▇▇▇ of Sale"), Seller has agreed, from time to time, at the request of
Purchaser to execute, acknowledge and deliver to Purchaser any and all
instruments, documents, endorsements, assignments, information, materials and
other papers that may be reasonably required to (i) transfer to Purchaser
certain Transferred Assets (as defined in the Agreement) being acquired by
Purchaser pursuant to the Agreement, including loans and the collateral therefor
to the extent of Seller's interest in such collateral and files and records
relating to such loans, (ii) enable Purchaser to ▇▇▇▇, collect, service and
administer the loans transferred thereby and (iii) give full force and effect to
the intent and purpose of the ▇▇▇▇ of Sale.
NOW, THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged, Seller hereby irrevocably appoints and authorizes the
President or any Vice President, or the Secretary or any Assistant Secretary, of
Purchaser as its attorney-in-fact, solely for the purpose of endorsing and
recording, pursuant to the ▇▇▇▇ of Sale, notes and/or security instruments, or
any other such documentation relating to the loans transferred thereby in
Seller's name, to receive and collect any and all monies due under such loans,
and to enforce performance of all loans and instruments covered thereby;
provided, however, that such power of attorney is not intended to and does not
convey to Purchaser any right to endorse or record any documents of title
relating to collateral other than collateral transferred pursuant to the ▇▇▇▇ of
Sale as described in the preceding paragraph.
-2-
IN WITNESS WHEREOF, Seller has caused this Power of Attorney to be duly executed
by its duly authorized officer as of the day and year first above written.
WITNESSES: FARMERS & MECHANICS BANK
By:
------------------------------- ------------------------------------
Name:
Title:
THE FIDELITY BANK
By:
------------------------------- ------------------------------------
Name:
Title:
STATE OF MARYLAND )
)
COUNTY OF FREDERICK )
Before me, the undersigned Notary Public, in and for the State and
County aforesaid, duly commissioned, qualified and acting personally appeared
_____________________, with whom I am personally acquainted (or proved to me on
the basis of satisfactory evidence), and who, upon oath, acknowledged himself or
herself to be ______________ of Farmers & Mechanics Bank, a Maryland commercial
bank, and he or she, as such officer, being authorized so to do, executed the
foregoing instrument for the purposes therein contained by signing the name of
the association by himself or herself as such officer.
WITNESS my hand and official seal of office at ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ County,
Maryland, this the ______ day of ______________, 2004.
------------------------------------
Notary Public
My commission expires:
-3-
STATE OF MARYLAND )
)
COUNTY OF ▇▇▇▇▇▇▇▇▇ )
Before me, the undersigned Notary Public, in and for the State and
County aforesaid, duly commissioned, qualified and acting personally appeared
_____________________, with whom I am personally acquainted (or proved to me on
the basis of satisfactory evidence), and who, upon oath, acknowledged himself or
herself to be ______________ of The Fidelity Bank, a Maryland commercial bank,
and he or she, as such officer, being authorized so to do, executed the
foregoing instrument for the purposes therein contained by signing the name of
the association by himself or herself as such officer.
WITNESS my hand and official seal of office at ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ County,
Maryland, this the ______ day of ______________, 2004.
------------------------------------
Notary Public
My commission expires:
-4-
EXHIBIT 3.2(b)(1)
▇▇▇▇ OF SALE
THIS ▇▇▇▇ OF SALE is dated this ____ day of ____________, 2004, by
FARMERS & MECHANICS BANK, a Maryland-chartered commercial bank, and THE FIDELITY
BANK, a Maryland chartered commercial bank (collectively, "Seller").
WITNESSETH:
WHEREAS, Seller and CITIZENS NATIONAL BANK OF BERKELEY SPRINGS, a
national banking association ("Purchaser"), have entered into a
Purchase and
Assumption Agreement dated as of _______________, 2004 (the "Agreement"), which
provides for the sale by Seller to Purchaser of certain personal property and
loans related to the banking office located at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Banking Center"), all as set forth in the Agreement.
Capitalized terms used, but not defined, herein shall have the meanings defined
in the Agreement.
NOW, THEREFORE, Seller, for good and valuable consideration, receipt of
which is hereby acknowledged, hereby grants, bargains, sells, assigns, sets
over, conveys and transfers to Purchaser all of its right, title and interest in
and to the following:
(a) the Transferred Assets; and
(b) all of Seller's available files and records related to the
Transferred Assets, the Deposit Liabilities, and other
liabilities that are being transferred.
Seller, for itself and its successors and assigns, does hereby covenant
and agree to and with Purchaser and its successors and assigns that Seller (i)
own the Transferred Assets free and clear of any mortgages, liens, security
interests, or pledges, and (ii) shall, from time to time, at the request of
Purchaser, execute, acknowledge, and deliver to Purchaser any and all further
instruments, documents, endorsements, assignments, information, materials, and
other papers that may be reasonably required to transfer the Transferred Assets
to Purchaser, to enable Purchaser to ▇▇▇▇, collect, service, and administer the
Loans and to give full force and effect to the full intent and purposes of this
▇▇▇▇ of Sale.
-1-
IN WITNESS WHEREOF, Seller has caused this ▇▇▇▇ of Sale to be duly
executed by its duly authorized officers as of the day and year first above
written.
FARMERS & MECHANICS BANK
By:
----------------------
Name:
Title:
THE FIDELITY BANK
By:
----------------------
Name:
Title:
-2-
EXHIBIT 3.2(b)(2)
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT is entered into this ___ day
of ______________, 2004, by and between FARMERS & MECHANICS BANK, a
Maryland-chartered commercial bank, and THE FIDELITY BANK, a Maryland-chartered
commercial bank (collectively, "Seller"), and CITIZENS NATIONAL BANK OF BERKELEY
SPRINGS, a national banking association ("Purchaser").
WITNESSETH:
WHEREAS, Seller and Purchaser have entered into a
Purchase and
Assumption Agreement, dated as of ________________, 2004 (the "Agreement"),
which provides for the assignment by Seller of all of its right and interest in
and to certain leases, contracts, deposit accounts, and other liabilities
related to the banking office located at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇ (the "Banking Center"), and the assumption by Purchaser of all of Seller's
liabilities and obligations thereunder, all as set forth in the Agreement;
NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, receipt of which is hereby acknowledged by Seller
and Purchaser, and subject to the terms and conditions of the Agreement, Seller
hereby assigns, transfers, and sets over to Purchaser all of Seller's right and
interest to, and Purchaser does hereby assume, and agree to perform all of
Seller's duties, obligations, and liabilities as recorded on Seller's books and
records as of the Effective Time, for payment to the depositors of, and Seller's
written contractual duties and obligations relating to, the deposit accounts
assigned to the Banking Center as of the Effective Time (including accrued but
unpaid or uncredited interest thereon), except for those deposit accounts and
liabilities described in Section 2.3(b) of the Agreement (the "Deposit
Liabilities"), and all of Seller's duties, obligations, and liabilities accruing
or arising on or after the Effective Time in connection with the following
assets (the "Assets"):
(a) All assignable leases for equipment located at the Banking
Center as listed on Exhibit A;
(b) the assignable, stand-alone software licenses and leases
affecting the Banking Center as listed on Exhibit A;
(c) all safe deposit contracts and leases for the safe deposit
boxes (exclusive of contents) located at the Banking Center as
listed on Exhibit A; and
(d) all assignable operating contracts of the Banking Center
listed on Exhibit A.
-1-
This Assignment and Assumption Agreement shall be binding upon, and
shall inure to the benefit of, Seller, Purchaser, and each of their successors
and assigns and shall be subject to the terms and conditions of the Agreement.
In the event of a conflict between any of the terms and provisions hereof and
the Agreement, the Agreement shall be deemed to control.
This Assignment and Assumption Agreement, and the rights and
obligations of the parties hereunder, shall be construed and enforced in
accordance with the laws of the State of Maryland, excluding any conflicts of
law principle that would apply the law of another jurisdiction.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Assumption Agreement to be executed by their duly authorized officers, all as of
the day and year first above written.
FARMERS & MECHANICS BANK
BY:
-----------------------------------
NAME:
TITLE:
THE FIDELITY BANK
BY:
-----------------------------------
NAME:
TITLE:
CITIZENS NATIONAL BANK OF BERKELEY
SPRINGS
BY:
-----------------------------------
NAME:
TITLE:
-2-
EXHIBIT A TO
ASSIGNMENT AND ASSUMPTION AGREEMENT
List of assignable equipment leases:
List of assignable software licenses and leases:
List of safe deposit contracts and leases for safe deposit boxes
(see separate electronic file)
List of assignable operating contracts:
-3-
EXHIBIT 3.2(b)(3)
ASSIGNMENT AND ASSUMPTION OF LEASE
Site: ▇▇▇▇▇▇▇ Branch
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
This Assignment and Assumption of Lease (this "Assignment") is entered
into effective as of _____ p.m. local time in ______________, Maryland on
____________, 2004 ("Effective Time") by and between The Fidelity Bank, a
Maryland-chartered commercial bank ("Fidelity Bank"), and Citizens National Bank
of Berkeley Springs, a national banking association ("Assignee"). (Any terms
capitalized but not defined herein shall have the meaning ascribed to them in
the Lease described below.)
WHEREAS, Fairview Orchards Landbesitz, Inc., a Maryland corporation
("Lessor"), as lessor, and Farmers & Mechanics Bank, a Maryland-chartered
commercial bank ("F&M Bank"), as lessee, entered into a certain Lease dated
April 29, 1987 (the "Original Lease"), covering certain premises described
therein, which are located at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the
"Leased Premises").
WHEREAS, the Original Lease was assigned to and assumed by Fidelity
Bank, as lessee, pursuant to an Assignment and Assumption of Lease dated October
23, 2003 from F&M Bank to Fidelity Bank;
WHEREAS, F&M Bank, Fidelity Bank, Assignee and Lessor entered into an
Amendment to Lease and Release dated ______________, 2004 to, among other
things, amend certain terms of the Original Lease (the Original Lease, as
amended, the "Lease").
WHEREAS, F&M Bank, Fidelity Bank, and Assignee entered into a certain
Purchase and Assumption Agreement dated as of ________________, 2004 (the "P&A
Agreement"), whereby Fidelity Bank agreed to assign to Assignee, and Assignee
agreed to assume, all of Fidelity Bank's right, title and interest as the lessee
under the Lease; and
WHEREAS, the Lease does not contain a restriction or limitation on the
lessee's right to assign its interest in the Lease, and the Lease provides that
the terms of the Lease are binding on the lessee's successors and assigns.
NOW, THEREFORE, in consideration of One Dollar ($1.00) and other good
and valuable consideration paid by Assignee to Fidelity Bank and in
consideration of the mutual covenants contained herein, Fidelity Bank and
Assignee hereby agrees as follows:
1. Assignment. Fidelity Bank hereby assigns, transfers, sets over and
delivers to Assignee, without representation or warranty of any kind, except as
may be provided otherwise
-1-
in the P&A Agreement, all of Fidelity Bank's right, title and interest as lessee
in, to and under the Lease, subject to the terms, covenants, conditions, and
provisions set forth in the Lease.
2. Assumption of Lease Terms, Covenants and Obligations. Assignee
hereby accepts the assignment by Fidelity Bank of its right, title and interest
under the Lease and assumes and agrees to perform from and after the Effective
Time as its direct obligation to the lessor under the Lease, all the covenants,
obligations and other provisions to be performed by the lessee under the Lease
accruing or arising from and after the Effective Time, including but not limited
to the obligation to pay in accordance with the terms of the Lease, rent and all
other monetary obligations. On or before the Effective Time, Assignee shall
reimburse Fidelity Bank for any security deposits paid by Fidelity Bank under
the Lease. Assignee hereby acknowledges that the Leased Premises shall be
delivered by Fidelity Bank and accepted by Assignee "AS IS, WHERE IS" without
warranties or representations of any kind, except as may be specifically
provided otherwise in the P&A Agreement.
3. Applicable Law. This Assignment shall be governed by and construed
in accordance with the internal laws of the State of Maryland applicable to
contracts made and to be performed entirely within such state, without regard to
the principles of conflict of laws thereof.
4. Successors and Assigns. All the covenants, terms, and conditions set
forth herein shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns.
5. Headings. The headings of the paragraphs or section of this
Assignment are inserted for convenience only and shall not constitute a part
hereof.
IN WITNESS WHEREOF, the undersigned have each caused this instrument to
be duly executed and delivered by their respective duly authorized officers as
of the date first above written.
THE FIDELITY BANK
BY:
-----------------------------------
NAME:
TITLE:
-2-
CITIZENS NATIONAL BANK OF BERKELEY
SPRINGS
BY:
-----------------------------------
NAME:
TITLE:
-3-
EXHIBIT 3.1(b)(13)
CLOSING STATEMENT
(Pre-Closing Balance Sheet __________________________)
Cash due Purchasers for:
Deposit liabilities (including accrued interest) _________________
Pro rata real property taxes _________________
Other prorated items _________________
Total Cash due Purchaser _________________
Cash due Seller for:
Net Book Value of Banking Center
and Personal Property _________________
Premium for Deposit Liabilities _________________
Net Book Value of Loans (including accrued interest) _________________
Premium for Net Book Value of Loans _________________
Coins and Currency _________________
Other prorated items _________________
Total Cash due Seller _________________
Net cash due (Purchaser) (Seller) _________________
[DOCUMENT CONTINUED ON NEXT PAGE]
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[DOCUMENT CONTINUED]
Purchaser hereby approves the Closing Statement, acknowledges receipt
of the net cash due Purchaser and assume liability for payment of all taxes and
other items as provided for in the
Purchase and Assumption Agreement between
Seller and Purchaser dated as of _______________, 2004 (the "Agreement") to be
paid by Purchaser. Seller hereby approves the Closing Statement, acknowledges
receipt of the total cash due Seller, and assumes liability for payment of all
taxes and other items provided for in the Agreement to be paid by Seller. Seller
and Purchaser agree to make subsequent adjustments to the extent necessary in
accordance with Section 3.3 of the Agreement.
FARMERS & MECHANICS BANK
BY:
-----------------------------------
NAME:
TITLE:
THE FIDELITY BANK
BY:
-----------------------------------
NAME:
TITLE:
CITIZENS NATIONAL BANK OF BERKELEY
SPRINGS
BY:
-----------------------------------
NAME:
TITLE:
-2-
EXHIBIT 8.5
AMENDMENT TO LEASE AND RELEASE
This Amendment to Lease and Release (this "Amendment and Release") is
entered into this ____ day of _________, 2004 by and among Fairview Orchards
Landbesitz, Inc., a Maryland corporation ("Lessor"), The Fidelity Bank, a
Maryland commercial bank ("Fidelity Bank"), Farmers & Mechanics Bank, a Maryland
commercial bank ("F&M Bank"), and Citizens National Bank of Berkeley Springs, a
national banking association ("Citizens National Bank").
WHEREAS, Lessor, as lessor, and F&M Bank, as lessee, entered into a
certain Lease dated April 29, 1987 (the "Lease"), covering certain premises
described therein, which are located at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇ (the "Leased Premises").
WHEREAS, F&M Bank assigned to Fidelity Bank all of its right, title and
interest, as lessee, in the Leased Premises pursuant to an Assignment and
Assumption of Lease dated October 23, 2003.
WHEREAS, Fidelity Bank, F&M Bank, and Citizens National Bank are
negotiating a definitive agreement to effect the purchase and assumption by
Citizens National Bank of certain assets and liabilities associated with the
banking center located on the Leased Premises (the "Branch Purchase").
WHEREAS, the Branch Purchase will contemplate the assignment of all of
Fidelity Bank's right, title and interest, as lessee, in the Lease to Citizens
National Bank and the assumption by Citizens National Bank of Fidelity Bank's
liabilities under the Lease.
WHEREAS, the parties to this Amendment and Release desire to amend the
Lease and to provide for certain additional terms in the event that the Branch
Purchase is consummated.
NOW, THEREFORE, in consideration of One Dollar ($1.00) and other good
and valuable consideration paid by Fidelity Bank and/or F&M Bank to the Lessor
and in consideration of the mutual covenants contained herein, Lessor, Fidelity
Bank, F&M Bank and Citizens National Bank hereby agree as follows:
1. Amendment of Lease.
(a) The Lease is hereby amended to add the following terms,
which shall supersede any other provision of the Lease to the extent
inconsistent herewith:
(1) Upon the expiration of the current term of the
Lease (the "Current Term"), the Lease shall automatically renew for a 10-year
term (the "Automatic Renewal Term") and the lessee shall thereafter have the
right to renew the Lease for two
-3-
additional 5-year terms (each an "Optional Renewal Term"), for a total optional
renewal right of up to 10 years;
(2) The annual rent to be paid under the Lease by the
lessee during the Automatic Renewal Term shall be as follows, payable in monthly
installments: (i) $21,000 for year one; and (ii) for each year thereafter, 102%
of the previous year's rent;
(3) The annual rent to be paid under the Lease by the
lessee during the first Optional Renewal Term shall be as follows, payable in
monthly installments: (i) for year one, 102% of the previous year's rent, plus
the average annual increase in the Consumer Price Index as published by the
United Stated Department of Labor (the "CPI") during the preceding five years;
and (ii) for each year thereafter, 102% of the previous year's rent; and
(4) The annual rent to be paid under the Lease by the
lessee during the second Optional Renewal Term shall be as follows, payable in
monthly installments: (i) for year one, 102% of the previous year's rent, plus
the average annual increase in the CPI during the preceding five years; and (ii)
for each year thereafter, 102% of the previous year's rent.
(b) This Amendment and Release shall have no effect on the
rent payable to Lessor under the Lease for the remainder of the Current Term.
(c) Fidelity Bank and Citizens National Bank agree to notify
Lessor of Fidelity Bank's assignment of its interest in the Lease to Citizens
National Bank and to provide an executed original of any Assignment and
Assumption of Lease with respect to the Lease promptly after such Assignment and
Assumption of Lease is executed.
2. Release. Lessor hereby agrees to release F&M Bank and Fidelity Bank
for any breach or default by the lessee under the Lease that occurs subsequent
to the time the Lease is assigned to and assumed by Citizens National Bank.
3. Extension Fee. A $5,000 fee shall be due and payable to Lessor,
which fee shall be the joint and several obligation of Fidelity Bank and F&M
Bank, upon execution of this Amendment and Release.
4. Ratification of Lease Terms. The parties hereto each ratify and
confirm the Lease, as hereby amended, and agree that the Lease, as hereby
amended, is and shall remain in full force and effect.
5. Successors and Assigns. All the covenants, terms, and conditions set
forth herein shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns.
-4-
6. Applicable Law. This Amendment and Release shall be governed by and
construed in accordance with the internal laws of the State of Maryland
applicable to contracts made and to be performed entirely within such state,
without regard to the principles of conflict of laws thereof.
IN WITNESS WHEREOF, the undersigned, being duly authorized to do so,
have each caused this instrument to be duly executed and delivered by their
respective duly authorized officers as of the date first above written.
FARMERS & MECHANICS BANK
BY:
-----------------------------------
NAME:
TITLE:
THE FIDELITY BANK
BY:
-----------------------------------
NAME:
TITLE:
CITIZENS NATIONAL BANK OF BERKELEY
SPRINGS
BY:
-----------------------------------
NAME:
TITLE:
FAIRVIEW ORCHARDS LANDBESITZ, INC.
BY:
-----------------------------------
NAME:
TITLE:
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