Appendix J
SHARE PURCHASE AGREEMENT
INTRODUCTION
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This SHARE PURCHASE AGREEMENT is dated as of December 19, 1995, by and
between ▇▇▇▇▇ ▇▇▇▇▇▇ or assigns ("▇▇▇▇▇▇") being the owner of 11,300 of the
issued and outstanding shares of capital stock of First Security Federal Savings
Bank ("First Security"), and American Industrial Loan Association or its assigns
(the "Buyer") First Security is a federal savings bank, and the Buyer is a
Virginia corporation.
BACKGROUND
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▇▇▇▇▇▇ owns approximately eighty-seven percent (87%) of the issued and
outstanding shares of capital stock of First Security (the "Shares"). (▇▇▇▇▇▇
owns 11,300 of the 12,941 total issued and outstanding shares of First
Security.) The Buyer desires to purchase from ▇▇▇▇▇▇, and ▇▇▇▇▇▇ desires to sell
to the Buyer, his Shares in exchange for the Purchase Price in accordance with
the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the respective covenants,
representations and warranties herein contained, and intending to be legally
bound hereby, the parties hereto agree as follows:
ARTICLE I
TERMS AND CONDITIONS
1. Definitions.
For convenience and brevity, certain terms used in various parts of this
Agreement are listed in alphabetical order and defined or referred to below
(such terms to be equally applicable to both singular and plural forms of the
terms defined).
"Acquisition" means the acquisition of all of ▇▇▇▇▇▇'▇ Shares by the Buyer
including all related transactions provided for in or contemplated by this
Agreement or any Schedule hereto.
"Agreement" means this Share Purchase Agreement.
"Assets" means all of First Security's and each Subsidiary's assets,
properties, business, goodwill and rights of every kind and description, real
and personal, tangible and intangible, wherever situated and whether or not
reflected on the latest year-end balance sheet or any interim balance sheet.
"Business" means the existing and prospective business, operations,
facilities and other Assets, financial condition, results of operations,
finances, markets, products, competitive
position, customers and customer relations and personnel of First Security and
each Subsidiary.
"Buyer" means American Industrial Loan Association.
"Deposit" means the $50,000.00 deposit by Buyer to be paid to Escrow Agent
upon execution of this Agreement.
"Employee Benefit Plans" means "employee benefit plans" as defined in
section 3(3) of ERISA and any other plan, policy, program, practice or
arrangement providing compensation or other benefits to any current or former
officer or employee of First Security or any Subsidiary, or any affiliate or
under which First Security or any affiliate has any obligation or liability,
whether actual or contingent, including, without limitation, all incentive,
bonus, deferred compensation, vacation, holiday, medical, disability, share
purchase or other similar plans, policies, programs, practices or arrangements.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agent" means ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
"Escrow Agreement" means an escrow agreement among ▇▇▇▇▇▇, the Buyer and
the Escrow Agent substantially in the form of Schedule 2.2.
"First Security" means First Security Federal Savings Bank and its
subsidiary.
"GAAP" means generally accepted accounting principles consistently
applied.
"Shareholder" means ▇▇▇▇▇▇.
"Shares" means shares owned by ▇▇▇▇▇▇ of the Common Stock of First
Security which constitutes approximately eighty-seven percent (87%) (11,300 of
the 12,941 issued and outstanding shares) of all of the issued and outstanding
capital stock of First Security.
ARTICLE II
SALE AND PURCHASE OF THE SHARES
2.1. Sale and Purchase of the Shares. Subject to the post-Closing
adjustment set forth in Section 2.3 hereof and subject to the terms and
conditions hereinafter set forth and on the basis of and in reliance upon the
representations, warranties, obligations and agreements set forth herein, at the
Closing ▇▇▇▇▇▇ shall sell to the Buyer and the Buyer shall purchase from ▇▇▇▇▇▇
all of the
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Shares owned by ▇▇▇▇▇▇ in exchange for the payment to ▇▇▇▇▇▇ of an amount equal
to the Purchase Price as adjusted.
2.2. Purchase Price. The Purchase Price prior to adjustments is Three
Million Four Hundred Forty-Nine Thousand One Hundred Fifteen Dollars
($3,449,115.00), which includes:
A. Three Million One Hundred Eighty-Nine Thousand One Hundred
Fifteen Dollars ($3,189,115.00) in cash, cashier's check or verified wire
transfer at Closing (subject to the escrow and adjustment provisions of Sections
2.2.2 and 2.3, respectively), which total amount includes a Fifty Thousand
Dollars ($50,000.00) Deposit placed with Escrow Agent pursuant to the terms of
Escrow Agreement Number One attached hereto as Schedule 2.2.A.
B. Shares of American Industrial Loan Association ("AILA") valued at
Two Hundred Sixty Thousand Dollars ($260,000.00) based on the closing bid price
on the last trading day. Any fractional share shall be paid in cash.
2.2.1. Re-Purchase Option. ▇▇▇▇▇▇ grants AILA the option to repurchase the
AILA shares within three (3) years at the greater of (i) the fair market value
(closing bid price the last trading day prior to repurchase) or (ii) an amount
which will reflect an eight percent (8%) return per annum including dividends.
2.2.2. Closing Escrow. Twenty percent (20%) of the Purchase Price
specified in paragraph 2.2 (prior to adjustments) shall be placed in escrow at
Closing pursuant to the terms of Escrow Agreement Number Two attached hereto as
Schedule 2.2.2, which ▇▇▇▇▇▇ will execute at Closing.
2.3. Post-Closing Adjustment.
(A) Preparation of Closing Date Balance Sheet. Within ninety (90) to
one hundred twenty (120) days after the Closing Date, First Security shall cause
a balance sheet to be prepared for First Security as of the Closing Date (the
"Closing Date Balance Sheet"). The Closing Date Balance Sheet shall be prepared
in accordance with GAAP and audited by Coopers & ▇▇▇▇▇▇▇, the cost to be borne
by First Security and shall present fairly First Security's financial position
as of the Closing Date. Upon completion of the Closing Date Balance Sheet,
copies thereof shall promptly be provided to Buyer and ▇▇▇▇▇▇.
(B) Determination of Closing Net Book Value. Closing Net Book value
shall mean that value determined by the Closing Date Balance Sheet as being (1)
the total assets of First Security as of the Closing Date, over (2) the total
liabilities of First Security as of the Closing Date. As used herein, the terms
"total assets" and "total liabilities" shall mean the aggregate amount of all
assets or liabilities, respectively, of First Security (whether
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classifiable in accordance with GAAP as current or long-term) determined in
accordance with GAAP.
(C) Adjustment of Purchase Price; Payment. The Purchase Price shall
be adjusted by multiplying the Closing Net Book Value plus One Hundred Fifty
Thousand Dollars ($150,000.00) by ▇▇▇▇▇▇'▇ proportionate share of all
outstanding shares in First Security. By way of example:
Assuming Closing Net Book Value is
the same as the end of March, 1995 $3,800,000.00
Premium Over Book +150,000.00
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$3,950,000.00
▇▇▇▇▇▇'▇ Proportionate Share 87.31937%
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Adjusted Purchase Price
(including deposit) $3,449,115.00
2.4. Closing Date. The closing (the "Closing") of the sale and purchase of
the Shares shall take place on February 29, 1996, or as soon thereafter as all
regulatory approvals have been obtained, at the offices of Payne, Gates,
▇▇▇▇▇▇▇▇ & Radd, P. C., at 1515 Dominion Tower, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at 10:00 A.M. local time, or at such other time or place or on
such earlier date as the Buyer and ▇▇▇▇▇▇ may agree to in writing. The actual
date of the Closing is herein sometimes referred to as the "Closing Date." The
parties agree that if through no fault of ▇▇▇▇▇▇ the actual closing has not
taken place on or before the expiration of a period of seven (7) months
following the tenth (10th) day after the date of this Share Purchase Agreement,
then ▇▇▇▇▇▇ may for a period of thirty (30) days thereafter terminate this
Agreement by giving written notice to Buyer and neither party will have any
further liability or obligation to the other.
2.5. Deliveries. At the Closing, subject to the provisions of this
Agreement, ▇▇▇▇▇▇ shall deliver to the Buyer, free and clear of all Liens, the
certificates for the Shares in negotiable form, duly endorsed in blank, or with
separate notarized stock transfer powers attached thereto and signed in blank,
in exchange for Purchase Price less the escrow at Closing. At the Closing,
▇▇▇▇▇▇ will make available to the Buyer the written resignations of all the
directors and officers of First Security effective as of the Closing Date except
for such directors and officers as the Buyer shall designate in writing, and
shall cause to be made available to the successor directors and officers all
minute books, stock record books, books of account, corporate seals, current
written contracts and other documents, instruments and papers belonging to First
Security and shall cause full possession and control of all of the Assets and of
all other things and matters pertaining to the
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operation of the Business to be transferred and delivered to the directors and
officers elected to succeed the resigned directors and officers of First
Security.
2.6. Default by ▇▇▇▇▇▇ at the Closing. If ▇▇▇▇▇▇ shall fail or refuse to
deliver any of the Shares as provided in Section 2.1, the Buyer, at its option
and without prejudice to its rights against ▇▇▇▇▇▇ may refuse to make the
Acquisition and thereby, terminate all of its obligations hereunder without
liability. ▇▇▇▇▇▇ acknowledges that the Shares are unique and otherwise not
available and agrees that in addition to any other remedies, including damages,
the Buyer may invoke any equitable remedies to enforce delivery of the Shares
hereunder, including, without limitation, an action or suit for specific
performance. ▇▇▇▇▇▇ agrees to use his best efforts to get the other shareholders
to sell their shares to Buyer.
2.7. Intentional Refusal to Close. In the event that after receiving OTS
approval, Buyer should intentionally without justification refuse to close the
transaction after having all conditions precedent to closing satisfied, and in
the absence of any misrepresentation, breach of contract or termination by
▇▇▇▇▇▇, then ▇▇▇▇▇▇ may bring a lawsuit against Buyer under this paragraph for
material breach of contract. If the courts after expiration of further appellate
rights have finally ruled that there was a material breach by Buyer under this
paragraph, then ▇▇▇▇▇▇ shall be entitled to a sum of liquidated damages in the
amount of $300,000.00 including the $50,000.00 deposit, which amount shall be in
lieu of any other damages or remedies of ▇▇▇▇▇▇. If a court enters a judgment in
favor of ▇▇▇▇▇▇ under this paragraph, then Buyer will pay interest from the date
of judgment (at NationsBank prime) on the $300,000.00 if Buyer appeals the
judgment. Also, the non-prevailing party will, pursuant to paragraph 8.14, be
required to pay costs and expenses including reasonable attorneys' fees of the
prevailing party.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER
▇▇▇▇▇▇ represents and warrants to Buyer as follows:
3.1. Organization. First Security Federal Savings Bank is a federally
chartered savings bank duly organized, validly existing and in good standing
under the laws of the United States. The deposits of First Security Federal
Savings Bank are insured pursuant to the Federal Deposit Insurance Act, as
amended, to the fullest extent permitted by law. First Security Mortgage
Bankers, Inc. is a Virginia corporation duly organized, validly existing and in
good standing under the laws of Virginia. First Security Mortgage Bankers, Inc.
is wholly owned by First Security Federal Savings Bank. First Security has full
power and authority (including all licenses, franchises, permits and other
governmental
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authorizations which are legally required) to own or lease its properties, and
to engage in the business and activities now conducted. First Security Mortgage
Bankers, Inc. is not licensed by any regulatory authorities.
Schedule 3.1 sets forth true and complete copies of the Charter and Bylaws
of First Security and its subsidiary as amended to date and expressly designates
any amendments that have been proposed and are pending. First Security (i) does
not have any subsidiaries or affiliates, (except for First Security Mortgage
Bankers, Inc., a Virginia corporation), (ii) is not a general partner or owner
in any joint venture, general partnership, limited partnership, trust or other
non-corporate entity, and (iii) does not know of any arrangement pursuant to
which the stock of any corporation is or has been held in trust (whether
express, constructive, resulting or otherwise) for the benefit of all
shareholders of First Security.
3.2. Capitalization. The authorized capital stock of First Security
Federal Savings Bank consists of 1,000,000 shares of which 1,000,000 shares are
common stock, par value $2.50 per share and 0 shares are preferred stock, no par
value per share. As of the date of this Agreement, 12,941 shares of First
Security common stock and no shares of preferred stock were issued and
outstanding. All of the issued and outstanding shares of First Security Federal
Savings Bank common stock are validly issued, fully paid and nonassessable. The
Shares are free and clear of any liens, encumbrances, charges, restrictions or
rights of third parties. There are no shares of First Security Federal Savings
Bank common stock issuable upon exercise of outstanding stock options, warrants
or otherwise.
The authorized capital stock of First Security Mortgage Bankers, Inc.
consists of 1,000 shares of which 1,000 shares are common stock, par value $5.00
per share and 0 shares are preferred stock. As of the date of this Agreement,
135 shares of First Security Mortgage Bankers, Inc. common stock and 0 shares of
Preferred stock were issued and outstanding. All of the issued and outstanding
shares of First Security Mortgage Bankers, Inc. common stock are validly issued,
fully paid and nonassessable. The Shares are free and clear of any liens,
encumbrances, charges, restrictions or rights of third parties. There are no
shares of First Security Mortgage Bankers, Inc. common stock issuable upon
exercise of outstanding stock options, warrants or otherwise.
Except as set forth in this Agreement, First Security is not bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the transfer, purchase or issuance of any shares of
capital stock of First Security or any securities representing the right to
purchase or otherwise receive any shares of such capital stock or any securities
convertible into or representing the right to purchase or subscribe for any such
shares, and there are no agreements or
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understandings with respect to voting of any of ▇▇▇▇▇▇'▇ shares. Except as set
forth in this Agreement, First Security has no outstanding commitment or
obligation to repurchase, reacquire or redeem any of its outstanding capital
stock. Except as disclosed on Schedule 3.2, there are no voting trusts, voting
agreements, buy-sell agreements or other similar arrangements affecting the
shares.
3.3. Authority; No Violation.
(a) ▇▇▇▇▇▇ has full power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby in accordance
with the terms hereof. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have to the extent required
been duly and validly approved by the Board of Directors and requisite number of
shareholders of First Security in accordance with the Charter and Bylaws of
First Security and applicable laws and regulations. Except for such approvals,
no other corporate proceedings on the part of First Security are necessary to
consummate the transactions so contemplated. This Agreement has been duly and
validly executed and delivered by ▇▇▇▇▇▇ and constitutes a valid and binding
obligation of ▇▇▇▇▇▇, enforceable against him in accordance with its terms,
except to the extent that enforceability may be limited by (i) bankruptcy,
insolvency, moratorium, liquidation, reorganization or similar laws affecting
creditors' rights generally, regardless of whether such enforceability is
considered in equity or at law, and (ii) general equity principles.
(b) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby in accordance with the
terms hereof, nor compliance by First Security with any of the terms or
provisions hereof, will (i) violate any provision of First Security's Charter or
Bylaws, (ii) violate any statute, code, ordinance, rule, regulation, judgment,
order, writ, decree or injunction applicable to First Security or any of its
properties or assets, or (iii) except as set forth in Schedule 3.3, violate or
conflict with, result in a breach of any provisions of, constitute a default (or
any event which, with notice or lapse of time, or both, would constitute a
default) under, result in the termination of, accelerate the performance
required by, or result in the creation of any lien, security interest, charge or
other encumbrance upon any of the respective properties or assets of First
Security under, any of the terms, conditions or provisions of any material note,
bond, mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which First Security is a party, or by which it or
any of its respective material properties or assets may be bound or affected,
except, with respect to (ii) and (iii) above, such as individually or in the
aggregate will not have a material adverse effect on the business, operations,
assets or financial condition of First
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Security taken as a whole and which will not prevent or materially delay the
consummation of the transactions contemplated hereby. Except for consents and
approvals of or filings or registrations with or notices to the Office of Thrift
Supervision of the Department of Treasury ("OTS"), no consents or approvals of
or filings or registrations with or notices to any third party or any public
body or authority are necessary on behalf of First Security in connection with
(a) the execution and delivery of this Agreement and (b) the consummation of the
other transactions contemplated hereby.
3.4. Financial Statements.
(a) Schedule 3.4(a) sets forth true and complete copies of First
Security's balance sheets on a consolidated basis, income statements, changes in
stockholders' equity, together with the notes thereto, as of and for the nine
(9) months ended June 30, 1995 and for the years 1992, 1993 and 1994, (the
"First Security Financial Statements"). The First Security Financial Statements
(including the related notes) have been prepared in accordance with generally
accepted accounting principles and fairly present the consolidated financial
condition of First Security as of the dates set forth therein, and the related
consolidated statements of income and stockholders, equity fairly present the
results of the consolidated operations and stockholders' equity of First
Security for the respective periods set forth therein.
(b) Schedule 3.4(b) sets forth a copy of the Thrift Financial
Reports filed by First Security as of and for the three months ended June 30,
1995 and as of and for the year ended September 30, 1994 (the "First Security
Reports"). The First Security Financial Reports fairly present the financial
position of First Security and the results of its respective operations at the
dates and for the periods indicated in conformity with agreed upon selected
procedures applied on a consistent basis with previous accounting periods.
(c) The books and records of First Security are being maintained in
material compliance with applicable legal, regulatory and accounting
requirements, and reflect only actual transactions (subject to accrual items in
compliance with GAAP).
(d) Except as and to the extent reflected, disclosed or reserved
against in the First Security Financial Statements or the First Security
Reports, as of June 30, 1995, First Security did not have any liabilities,
whether absolute, accrued, contingent or otherwise material to the business,
operations, assets or financial condition of First Security, taken as a whole.
Since June 30, 1995, First Security has not incurred any liabilities except in
the ordinary course of business and consistent with prudent banking practice and
there have not been any material adverse changes, subject to normal business
fluctuations.
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3.5. Real Property. Schedule 3.5 lists all real property owned or leased
by First Security and all mortgages, deeds of trust and security agreements to
which such property is subject. Copies of all leases are attached to Schedule
3.5, and there are no breaches or defaults under any of the leases, and there
will be none as of Closing (except for matters which First Security may in good
faith dispute with its respective Landlord as disclosed on Schedule 3.5). All
lease agreements will be current as of Closing, except for matters which First
Security may in good faith dispute with its respective Landlord, which shall be
disclosed on Schedule 3.5.
3.6. Subleases. Schedule 3.6 lists all subleases under which First
Security as a lessee subleases to another lessee. Copies of all subleases are
attached to Schedule 3.6 and there are no breaches or defaults under any of the
subleases. All subleases will be current at Closing.
3.7. Environmental Laws. Except as set forth on Schedule 3.7, (i) First
Security has not received written notice of any violation of, or claim,
citation, assessment, proposed assessment or demand for abatement in connection
with any applicable federal and state environmental laws and permits required
thereunder (such laws and permits being "Environmental Laws"), or generated,
stored, or disposed of any materials designated as hazardous materials or
substances under any Environmental Laws (such materials or substances being
"Hazardous Materials,") and to the actual knowledge of First Security and
▇▇▇▇▇▇, none are subject to any claim or lien under any Environmental Laws; and
(ii) no real estate currently owned, operated, or leased by First Security has
been designated in writing addressed to First Security as requiring any
environmental cleanup or response action to comply with Environmental Laws, or
to the actual knowledge of First Security or ▇▇▇▇▇▇, has been the site of
release of any Hazardous Materials.
3.8. Litigation and Other Proceedings. Except as set forth in Schedule
3.8, there are no legal, quasi-judicial or administrative proceedings of any
kind or nature now pending or, to the actual knowledge of First Security,
threatened, before any court or administrative body in any manner against First
Security, or any of its properties or capital stock, which could have a material
adverse effect, taken as a whole, on First Security, or its financial condition,
assets, operations or earnings or the transactions proposed by this Agreement.
First Security and ▇▇▇▇▇▇ do not know of any basis on which any litigation or
proceeding could be brought which could have a materially adverse effect, taken
as a whole, on the business, operations, assets or financial condition of First
Security or which could question the validity of any action taken or to be taken
in connection with this Agreement and the transactions contemplated hereby.
First Security is not in material default with respect to any judgment, order,
writ,
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injunction, decree, award, rule or regulation of any court, arbitrator or
governmental agency or instrumentality.
3.9. Taxes. First Security has filed with the appropriate federal, state
and local governmental agencies, or have filed applications for extension with
respect to, all tax returns and reports required to be filed, and have paid all
taxes and assessments shown or claimed to be due on filed returns or reports.
First Security has not executed or filed with the Internal Revenue Service
("IRS") any agreement extending the period for assessment and collection of any
federal tax nor is First Security a party to any action or proceeding by any
governmental authority for assessment or collection of taxes, nor has any claim
for assessment or collection of taxes been asserted in writing against First
Security. First Security has not waived any statute of limitations with respect
to any tax or other assessment or levy, and all such taxes and other assessments
and levies which First Security is required by law to withhold or to collect
have been duly withheld and collected and have been paid over to the proper
governmental agency, domestic and foreign, or segregated and set aside for such
payment and, if so segregated and set aside, will be so paid by First Security
as required by law.
First Security has established (and until the Closing Date will establish)
on their books accrued amounts that are adequate for the payment of all federal,
state and local taxes (including, but not limited to, income (including
alternative minimum tax), FICA, FUTA, backup withholding, SUTA, personal
property and franchise taxes) not yet due and payable, but incurred in respect
of First Security through such date. Except as set forth in Schedule 3.9, the
federal income tax returns of First Security have been filed with the IRS, and
no deficiencies were asserted which have not been resolved and paid in full.
Except as set forth in Schedule 3.9, any applicable state franchise tax returns
of First Security have been examined by the applicable authorities (or are
closed to examination due to the expiration of the statute of limitations) and
no deficiencies were asserted as a result of such examinations which have not
been resolved and paid in full. To the actual knowledge of First Security, there
are no audits or other administrative or court proceedings presently pending nor
any other disputes pending, or claims asserted for, taxes or assessments upon
First Security. Schedule 3.9 sets forth true and complete copies of the federal
and state income tax returns of First Security as filed for the years ended
1992, 1993 and 1994.
3.10. Contracts. Except as otherwise noted in Schedule 3.10, First
Security is not a party to or bound by any (i) employment contract (including
without limitation any collective bargaining contract or union agreement) which
is not terminable by First Security on less than sixty (60) days notice without
payment of any amount on account of such termination; (ii) bonus, stock option,
deferred compensation or profit-sharing, pension or retirement plan
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or other employee benefit arrangement; (iii) lease or license with respect to
any property, real or personal, whether as landlord, tenant, licensor or
licensee; (iv) contract or commitment for capital expenditures; (v) contract or
commitment made in the ordinary course of business for the purchase of materials
or supplies or for the performance of services over a period of more than sixty
(60) days from the date of this Agreement, (vi) contract or option to purchase
or sell any real or personal property; (vii) contract, agreement or letter with
respect to the management of First Security imposed by any bank regulatory
authority having supervisory jurisdiction over First Security, (viii) agreement,
contract or indenture related to the borrowing by First Security of money other
than those entered into in the ordinary course of business; (ix) guaranty of any
obligation for the borrowing of money, excluding endorsements made for
collection, repurchase or resell agreements, letters of credit and guaranties
made in the ordinary course of business; (x) agreement with or extension of
credit to any executive officer or director of First Security or holder of more
than ten percent (10) of the First Security Common Stock, or any affiliate of
such person, which is not on substantially the same terms (including, without
limitation, in the case of lending transactions, interest rates and collateral)
as, and following credit underwriting practices that are not less stringent
than, those prevailing at the time for comparable transactions with unrelated
parties or which involve more than the normal risk of collectibility or other
unfavorable features; (xi) applications or contracts with respect to branching
or site location or relocation; (xii) contracts limiting or restraining it from
engaging or competing in any line of business with any person or entity; or
(xiii) material contracts, other than the foregoing, and not made in the
ordinary course of business and not otherwise disclosed in this Agreement, in
any schedule attached hereto.
3.11. Insurance. Attached hereto as Schedule 3.11 is a list of all
insurance policies owned or held by or on behalf of First Security all of which
are valid, binding and enforceable policies, or bonds issued by insurers of
recognized responsibility. Copies of each policy is attached to Schedule 3.11.
In the judgment of the Boards of Directors of First Security, such insurance
policies are adequate for the business conducted by First Security in respect of
amounts, types and risks insured. As of the date hereof, First Security has not
received any notice of cancellation or notice of a material amendment of any
such insurance policy or bond or is in default under such policy or bond, no
coverage thereunder is being disputed and all material claims thereunder have
been filed in a timely fashion.
3.12. Laws. Except as otherwise noted on Schedule 3.12, First Security is
in compliance with all applicable federal, state and local laws, rules,
regulations and orders, except where a failure to comply will not result in a
material adverse effect on the business, operations, assets or financial
condition of First
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Security taken as a whole. First Security has filed all reports (except for a
three-year business plan), registrations and statements, together with any
amendments required to be made thereto, that are required to be filed with the
OTS or any other regulatory authority having jurisdiction over First Security,
and such reports, registrations and statements are true and correct in all
material respects. Schedule 3.12 lists all examinations of First Security
conducted by the OTS since their organization and the dates of any responses
thereto submitted by First Security. Schedule 3.12 discloses and contains copies
of any supervisory agreement, corrective action agreement or any other similar
directive by the OTS relating to First Security and the current status of each
as of execution of this Agreement, which status will be updated immediately
prior to closing.
3.13. Conduct. Since June 30, 1995, First Security has not (i) issued,
sold or purchased any of its capital stock or corporate debt obligations; (ii)
declared or set aside or paid any dividend, or issued or granted any option,
warrant, call commitment, right to purchase or agreement of any character
regarding the authorized or issued common stock of First Security, or made any
other distribution in respect of or, directly or indirectly, purchased, redeemed
or otherwise acquired any shares of its issued and outstanding capital stock;
(iii) incurred any material obligations or liabilities (fixed or contingent),
except obligations or liabilities incurred in the ordinary course of business,
or mortgaged, pledged or subjected any of its assets to a lien or encumbrance,
other than in the ordinary course of business and other than statutory liens not
yet delinquent; (iv) discharged or satisfied any lien or encumbrance or paid any
obligation or liability (fixed or contingent), other than accruals, accounts and
notes payable included in the balance sheet, accruals, accounts and notes
payable incurred since the date of the balance sheet in the ordinary course of
business and accruals, accounts and notes payable incurred in connection with
the transactions contemplated by this Agreement; (v) sold, exchanged or
otherwise disposed of any of its capital assets other than in the ordinary
course of business; (vi) except as set forth in Schedule 3.13 made any general
or individual wage or salary increase, paid any bonus or instituted any employee
welfare, retirement or similar plan or arrangement; (vii) suffered any damage,
destruction or casualty loss, whether or not covered by insurance; or (viii)
except in the ordinary course of business, entered or agreed to enter into any
agreement or arrangement granting any preferential rights to purchase any of its
assets, properties or rights or requiring the consent of any party to the
transfer and assignment of any such assets, properties or rights.
3.14. Reserve for Possible Loan Losses. The reserve for possible loan
losses of First Security has been calculated in accordance with all applicable
rules and regulations. As of the date hereof, the reserve for possible loan
losses in the First
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Security Financial Statements and in the First Security Reports is adequate
based upon past loan loss experiences and potential losses in the current
portfolio to cover all known or anticipated loan losses. On the date hereof and
on the Closing Date, no material facts relevant to the adequacy of the reserve
for possible loan losses shall have been withheld from Buyer.
3.15. Employment Relations. The relations of First Security with their
respective employees are satisfactory, and First Security has not received any
notice of any controversies with, or organizational efforts or other pending
actions by, representatives of its employees. First Security has materially
complied with all laws relating to the employment of labor with respect to its
respective employees, including any provisions thereof relating to wages, hours,
collective bargaining and the payment of ▇▇▇▇▇▇▇'▇ compensation insurance and
social security and similar taxes, and, except as disclosed in Schedule 3.15, no
person has asserted in writing that First Security is liable for any arrearage
of wages, ▇▇▇▇▇▇▇'▇ compensation insurance premiums or any taxes or penalties
for failure to comply with any of the foregoing. Attached on Schedule 3.15 is a
list of employees with a general job description, current salary rates or hourly
wages and the commencement date of employment for each. Shareholder has no
knowledge that any employees do not intend to remain with First Security after
the Acquisition except as expressly disclosed on Schedule 3.15.
3.16. Employee Benefit Plans. (a) Except for a 401(k) plan attached hereto
as Schedule 3.16(a), First Security does not maintain or contribute to any
"employee pension benefit plan" (the "First Security Pension Plans"), as such
term is defined in Section 3 of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), "employee welfare benefit plan" (the "First Security
Welfare Plans"), as such term is defined in Section 3 of ERISA, a stock option
plan, stock purchase plan, deferred compensation plan, severance plan, bonus
plan, employment agreement or other similar plan, program or arrangement. The
First Security Pension Plans and the First Security Welfare Plans are herein
referred to as the First Security Plans".
(b) The 401(k) plan which is currently in effect at First Security
has been operated in all material respects in compliance with ERISA and any
other applicable laws or regulations.
3.17. Reports to Shareholders. Schedule 3.17 sets forth a complete copy of
each annual, quarterly or special report and definitive proxy statement or other
communication (other than general advertising material) provided by First
Security to its stockholders since September 30, 1994, and each such annual,
quarterly or special report, definitive proxy statement or communication, as of
its date, complied in all material respects with any applicable statutes, rules
and regulations enforced or
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promulgated by any applicable regulatory agency, and did not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading; provided
that information as of a later date shall be deemed to modify information as of
an earlier date.
3.18. Minute Books. The minute book of First Security contains accurate
records of all meetings and other corporate action held of their respective
stockholders and Board of Directors (including committees of the Board of
Directors), except where the failure to so maintain such records would not have
a material adverse effect on the business, operations, assets or financial
condition of First Security, as the case may be. The Minute Books shall be
provided to buyer for review prior to closing and shall be transferred to Buyer
at Closing.
3.19. Broker's and Other Fees. Except as set forth in Schedule 3.19,
neither First Security nor any of its directors or officers has employed any
broker or finder or incurred any liability for any broker's or finder's fees or
commissions in connection with any of the transactions contemplated by this
Agreement.
3.20. Absence of Certain Changes or Events. Except for normal business
fluctuations, there has not been any material adverse change in the business,
operations, assets or financial condition of First Security since June 30, 1995,
and to the best of ▇▇▇▇▇▇'▇ knowledge, no facts or condition exists which he
believes will cause such a material adverse change in the future.
3.21. Disclosure. Except for normal business fluctuations, there are no
material facts concerning the business, operations, assets or financial
condition of First Security, which have not been disclosed to Buyer which could
have a material adverse effect on the business, operations, assets or financial
condition of First Security. No representation or warranty of ▇▇▇▇▇▇ or First
Security contained in this Agreement contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements herein
not misleading.
3.22. Mortgages. All representations set forth in Schedule 3.22 relating
to mortgages owned by First Security as part of its assets are now and shall be
true and accurate and will be updated on the Closing Date.
3.23. Counsel Opinion. ▇▇▇▇▇▇ shall cause his counsel to issue a legal
opinion in the form of Schedule 3.23 to be delivered at closing.
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3.24. Representations Accurate at Closing. All representations and
warranties shall be accurate and unchanged as of closing (except for changes in
the ordinary course of business that have no material adverse effect), and
▇▇▇▇▇▇ will certify the accuracy in a certificate at Closing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
4.1. Organization. Buyer is a corporation duly organized, validly
subsisting and in good standing under the laws of the State of Virginia. Buyer
has full power and authority (including all licenses, franchises, permits and
other governmental authorizations which are legally required) to own or lease
its respective properties, and to engage in the business and activities now
conducted by Buyer.
4.2. Authority; No Violation. (a) Buyer has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby and thereby in accordance with the terms hereof
and thereof. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and validly approved by
the Board of Directors of Buyer. This Agreement has been duly and validly
executed and delivered by Buyer and constitutes a valid and binding obligation,
in accordance with its terms, except to the extent that enforceability may be
limited by (i) bankruptcy, insolvency, moratorium, liquidation, reorganization
or similar laws affecting creditors' rights generally, regardless of whether
such enforceability is considered in equity or at law, and (ii) general equity
principles.
(b) Neither the execution and delivery of this Agreement by, nor the
consummation by, Buyer of the transactions contemplated hereby in accordance
with the terms hereof and thereof will violate any provision of the Articles of
Incorporation or Bylaws of Buyer.
4.3. Class Stock. The Buyer has issued and outstanding only one class of
common voting stock such that ▇▇▇▇▇▇ will receive the same class of common stock
of the Buyer as is currently publicly traded. Buyer has only one other
outstanding class of stock, which is Series A preferred, with 70 shares held by
existing directors.
4.4. Regulation Application and Approval. Buyer will use best efforts to
obtain OTS approval of Buyer's application as expeditiously as possible and any
other necessary permits, consents, approvals, and authorizations of third
parties and governmental bodies necessary to consummate the transactions
contemplated by this Agreement.
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ARTICLE V
COVENANTS OF THE PARTIES
5.1. Conduct of the Business of First Security. (a) From and after the
date of this Agreement to the Closing Date, First Security shall (i) conduct its
businesses in substantially the same manner as they have been conducted and in
accordance with prudent business and banking practices, (ii) maintain and keep
its properties in as good repair and condition as at present, except for
deterioration due to ordinary wear and tear and damage due to casualty, (iii)
maintain in full force and effect insurance comparable in amount and scope of
coverage to that currently maintained, (iv) substantially perform all its
obligations under material contracts, leases and documents relating to or
affecting its assets, properties, and business, except such obligations as it
may in good faith reasonably dispute, (v) use its best efforts to maintain and
preserve its business organization and present employees and relationships with
depositors and customers of First Security, as the case may be, and (vi)
materially comply with and perform all obligations and duties imposed upon it by
all federal, state and local laws, and all rules, regulations and orders imposed
by federal, state or local governmental authorities, except with respect to
(iii) and (iv) above, such as individually or in the aggregate will not have a
materially adverse effect, taken as a whole, on the business, operations, assets
or financial condition of Buyer or First Security, as the case may be.
(b) First Security will not without the prior written consent of
Buyer, (i) permit any amendment or change to be made in the Charter or Bylaws of
First Security; (ii) take, or allow First Security to take, any action described
or do any of the things listed in Section 3.13 hereof; (iii) enter into or
amend, or allow First Security to enter into or amend, any contract, agreement
or other instrument of any of the types listed in Section 3.10 hereof; (iv) make
any material change in its accounting methods or practices other than changes
required in accordance with generally accepted accounting principles; (v) take
any action that would result in any of its representations and warranties
contained in Article III of this Agreement not being true and correct in any
material respect at the Effective Date; (vi) increase the rate of interest being
paid on its deposit products prior to the Closing Date to an amount which is
greater than any rate being paid on a similar product by a direct competitor in
First Security's local market; (vii) waive any right of substantial value;
(viii) introduce any new products or services; (ix) make any change in policies;
(xi) change securities portfolio policies; (xii) make any loans to any
directors, officers, employees or affiliates of First Security; (xiii) make any
unsecured loan or any non-single family residential mortgage loan; (xiv) approve
any loan, the underwriting of which varies from the written credit policies of
First Security; (xv) propose or take any action with respect to the closing of
any branches; (xvi) except in the ordinary course, make, or permit
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First Security to make, any changes in the titles, salaries, bonuses or other
compensation of any employee, officer or director, or (xvii) agree to do any of
the foregoing. First Security further agrees that, between the date of this
Agreement and the Effective Date, it will consult and cooperate with Buyer
regarding (i) loan portfolio management, including management and work-out of
nonperforming assets, and credit review and approval procedures and (ii)
securities portfolio and funds management, including management of interest rate
risk.
5.3. Access to Properties and Records. (a) First Security has afforded
since August 4, 1995 and will afford the executive officers, employees and
authorized representatives (including legal counsel, accountants and
consultants) of the Buyer, reasonable access to their properties, books and
records including, but not limited to, all books of account (including the
general ledger), tax records, minute books of directors' and stockholders'
meetings, organizational documents, bylaws, material contracts and agreements,
filings with any regulatory authority, accountants' work papers, litigation
files, plans affecting employees, and any other business activities or prospects
in which such party and its designated representatives may have a reasonable
interest and shall make their directors, officers, employees, agents,
representatives and accountants available to confer with the other parties and
their designated representatives; provided, however, that such investigations
shall be conducted with reasonable prior notice in a manner so as not to
unreasonably interfere with the operations of the affected party. The officers
of First Security will furnish the Buyer and its designated representatives with
such additional financial and operating data and other information as to their
business and properties as the other shall, from time to time, reasonably
request.
(b) All information furnished by the parties hereto previously in
connection with transactions contemplated by this Agreement or pursuant hereto
shall be used solely for the purpose of evaluating the Acquisition contemplated
hereby and shall be treated as the sole property of the party delivering the
information until consummation of the acquisition contemplated hereby and, if
such acquisition shall not occur, each party and each party's advisors shall
return to the other party all documents or other materials containing,
reflecting or referring to such information, will not retain any copies of such
information, shall use its best efforts to keep confidential all such
information, and shall not directly or indirectly use such information for any
competitive or other commercial purposes. In the event that the Acquisition
contemplated hereby does not occur, all documents, notes and other writings
prepared by a party hereto or its advisors based on information furnished by the
other party shall be promptly destroyed. The obligation to keep such information
confidential shall continue for five years from the date the proposed
acquisition is abandoned but shall not apply to (i) any information
-17-
which (A) the party receiving the information can establish by convincing
evidence was already in its possession prior to the disclosure thereof to it by
the other party; (B) was then generally known to the public; (C) became known to
the public through no fault of the party receiving such information; or (D) was
disclosed to the party receiving such information by a third party not bound by
an obligation of confidentiality; or (ii) disclosures pursuant to a legal
requirement or in accordance with an order of a court of competent jurisdiction.
5.4. Regulatory Applications. (a) The parties hereto will cooperate with
each other and use their best efforts to obtain OTS approval to Buyer's
application and any other necessary permits, consents, approvals and
authorizations of third parties and governmental bodies necessary to consummate
the transactions contemplated by this Agreement.
(b) First Security will promptly furnish Buyer with copies of all
material filings with governmental bodies and material written communications
received by it from any governmental body including the OTS.
5.5. Further Assistance. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its reasonable best efforts
to take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
satisfy the conditions to Closing and to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation,
using reasonable efforts to lift or rescind any injunction or restraining order
or other order adversely affecting the ability of the parties to consummate the
transactions contemplated by this Agreement and using its best efforts to
prevent the breach of any representation, warranty, covenant or agreement of
such party contained or referred to in this Agreement and to promptly remedy the
same. In case at any time after the Effective Date any further action is
necessary or desirable to carry out the purposes of this Agreement, the proper
officers and directors of each party to this Agreement shall take all such
necessary action. Nothing in this section shall be construed to require any
party to participate in any threatened or actual legal, administrative or other
proceedings (other than proceedings, actions or investigations to which it is a
party or subject or threatened to be made a party or subject) in connection with
the consummation of the transactions contemplated by this Agreement unless such
party shall consent in advance and in writing to such participation and the
other party agrees to reimburse and indemnify such party for and against any and
all costs and damages related thereto.
5.6. Public Announcements. The parties hereto shall cooperate with each
other in the development and distribution of all news
-18-
releases and other public disclosures with respect to this Agreement or any of
the transactions contemplated hereby, except as may be otherwise required by law
or regulation or as to which the party releasing such information has used its
best efforts to discuss with the other party in advance.
5.7. Disclosure Supplements. From time to time prior to the Closing Date,
each party hereto will promptly supplement or amend (by written notice to the
other) its respective Schedules delivered pursuant hereto with respect to any
matter hereafter arising which, if existing, occurring or known at the date of
this Agreement, would have been required to be set forth or described in such
Schedule or which is necessary to correct any information in such Schedules
which has been rendered materially inaccurate thereby. For the purpose of
determining satisfaction of the conditions set forth in Article III, no
supplement or amendment to such Schedule shall correct or cure any warranty
which was untrue when made, but shall enable the disclosure of subsequent facts
or events to maintain the truthfulness of any warranty.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE BUYER
6.1. Representations True at Closing. The representations and warranties
of the Shareholder shall be true and correct on the Closing Date with the same
effect as if made at that time.
6.2. Regulatory Compliance and Approvals. The Acquisition shall not be
violative of any applicable laws or regulations. All approvals, consents and
authorizations of third parties required to carry out the Acquisition, including
OTS unconditional approval of Buyer's application as submitted, shall have been
obtained.
ARTICLE VII
TERMINATION
7.1. Termination.
This Agreement may be terminated by action of the Board of Directors of
Buyer or by ▇▇▇▇▇▇ at any time prior to the Closing Date if any application for
regulatory or governmental approval or proposal by Buyer necessary to consummate
the transaction contemplated hereby shall have been denied or withdrawn at the
request or recommendation of the applicable regulatory agency or governmental
authority or by Buyer. This Agreement may be terminated if any condition
precedent to the obligations of the terminating party to close is not satisfied.
7.2. Effect of Termination. In the event of termination of this Agreement
pursuant to Section 7.1, this Agreement shall become void and have no effect,
without any liability on the part of any
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party or its directors, officers or shareholders. Nothing contained in this
Section 7.2 shall relieve any party hereto of any liability for a breach of this
Agreement.
ARTICLE VIII
MISCELLANEOUS
8.1. Noncompetition. From the Closing Date until the end of the fifth year
following the closing Date (the "Noncompete Period"), ▇▇▇▇▇▇, unless acting in
accordance with the Buyer's prior written consent, will not (directly or
indirectly), own, manage, operate, join, control, finance or participate in the
ownership, management, operation, control or financing of, or be connected as an
officer, director, employee, principal, agent, representative, consultant,
investor, owner, partner, manager, joint venturer or otherwise with, or permit
his name to be used by or in connection with, or lease, sell or permit to use
any real property or interest therein owned by ▇▇▇▇▇▇ to any business or
enterprise engaged in providing banking services or products competitive to
those provided by First Security in the geographical area served by First
Security at any time within twelve (12) months preceding Closing; provided,
however, that the provisions of this Section shall not be deemed to prohibit the
ownership by ▇▇▇▇▇▇ of not more than one percent of any class of securities of
any corporation having a class of securities registered pursuant to the
Securities Exchange Act of 1934. ▇▇▇▇▇▇ acknowledges that (1) the provisions of
this Section are reasonable and necessary to protect the legitimate interests of
the buyer, (2) any violation of this Section will result in irreparable injury
to the Buyer and First Security and that damages at law would not be reasonable
or adequate compensation to the buyer and First Security shall be entitled to
have the provisions of this Section specifically enforced by preliminary and
permanent injunctive relief without the necessity of proving actual damages and
without posting bond or other security as well as to an equitable accounting of
all earnings, profits and other benefits arising out of any violation of this
Section. In the event that the provisions of this Section 8.1 should ever be
deemed to exceed the time, geographic, product or any other limitations
permitted by applicable law, then such provisions shall be deemed reformed to
the maximum permitted by applicable law. Notwithstanding anything to the
contrary, ▇▇▇▇▇▇ may, on his own account or as a part of any entity in which
▇▇▇▇▇▇ owns at least twenty percent (20%), make mortgage loans not to exceed Two
Million Dollars ($2,000,000.00) in any one year.
8.2. Nonsolicitation. ▇▇▇▇▇▇ agrees that, for the Noncompete Period, he
will not (directly or indirectly), without first offering the opportunity to
Buyer, call on, solicit, divert or take away from First Security the business of
any person, firm, corporation or other entity who or which at the Closing Date
was, or at any time during the three years preceding the Closing Date had been,
a customer of First Security or whose identity is known
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to ▇▇▇▇▇▇ at the Closing Date as one whom First Security intends to solicit
within the succeeding year. Nothing contained in this Section 8.2 shall be
deemed to limit or impair, or be limited or impaired by, the provisions of
Section 8.1. Sections 8.1, 8.2 are 8.3 are each independent and severable.
8.3. Hiring of the Company's Employees. Without prior written consent of
Buyer, during the Noncompete Period, ▇▇▇▇▇▇ will not (directly or indirectly)
hire or offer employment to any employee of First Security whose employment is
continued by First Security or the Buyer after the Closing Date unless First
Security or the Buyer first terminates the employment of such employee. Nothing
contained in this Section 8.3 shall affect or be deemed to affect in any manner
any other provision of this Agreement.
8.4. "No Shop" Provision. Shareholder agrees that during the period
commencing with the date on which this Agreement is executed until Closing,
Shareholder shall neither, directly or indirectly, through brokers, agents or
otherwise, sell, transfer or otherwise encumber nor offer to sell, transfer or
otherwise encumber nor solicit, discuss, accept or take any other action with
respect to any offer from any other potential purchaser to acquire any of the
business of First Security whether by asset purchases, stock purchase or
otherwise, except for the sale of products or services in the ordinary course of
business.
8.5. Confidentiality. All parties agree that they (and their agents,
advisors and employees) shall at all times keep all information regarding the
transaction contemplated hereby strictly confidential, except to the extent such
information is required to be disclosed or submitted for licensing approval to
the appropriate authorities, for the purpose of obtaining financing or to its
financial and legal advisors or Board of Directors or other shareholders of
First Security. Announcements regarding the transaction contemplated hereby
shall be made only with the prior written consent of ▇▇▇▇▇▇ and Buyer.
8.6. Board of Directors. If this matter is consummated, Buyer will use its
best efforts to provide ▇▇▇▇▇▇ with a seat on the Board of Directors of First
Security.
8.7. Brokers' and Finders' Fees. ▇▇▇▇▇▇ and the Buyer each to the other
represents and warrants that all negotiations relative to this Agreement have
been carried on by them directly without the intervention of any person, firm,
corporation or other entity who or which may be entitled to any brokerage fee or
other commission in respect of the execution of this Agreement or the
consummation of the transactions contemplated hereby, and each of them shall
indemnify and hold the other or any affiliate of them harmless against any and
all claims, losses, liabilities or expenses which may be asserted against any of
them as a result of any dealings,
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arrangements or agreements by the indemnifying party with any such personal
firm, corporation or other entity.
8.8. Schedules. All Schedules referred to herein are intended to be and
hereby are specifically made a part of this Agreement. Attached as Schedule 8.8
is a list of all Schedules herein.
8.9. Investment Intent of ▇▇▇▇▇▇. ▇▇▇▇▇▇ is acquiring the stock of AILA
for his own account for investment purposes only and not with a view to, or for
resale in connection with, any distribution within the meaning of the United
States Securities Act of 1933, as amended, and it does not presently intend to
resell, distribute, assign, or otherwise dispose of all or any part of the stock
(except as provided in this Agreement). ▇▇▇▇▇▇ is fully capable of bearing the
risk of this investment and is a sophisticated investor having invested in and
having current substantial holdings in numerous marketable and unmarketable
stocks, bonds and real estate. ▇▇▇▇▇▇ represents that he is an Accredited
Investor within the meaning of Regulation D of the Securities Act of 1933.
▇▇▇▇▇▇ represents that he has received information and documents from AILA
equivalent to that which would be contained in a registration statement
including but not limited to annual reports, financial statements, and other
material matters which he has requested to review. ▇▇▇▇▇▇ acknowledges that the
shares being purchased are restricted within the meaning of Rule 144 of the
Securities Act and that he understands the resale limitations of Rule 144
including the volume limitations and holding period. ▇▇▇▇▇▇ further acknowledges
that certificates representing the Shares will contain a legend indicating that
said Shares are issued in reliance on exemptions from registration under
relevant securities laws, which legend will prohibit further transfer, sale or
conveyance of such securities until such securities may be transferred, sold or
conveyed without a violation of any state or federal securities law.
8.10. Survival of Representations and Warranties. The representations,
warranties, covenants, and indemnities of the parties hereto contained in this
Agreement shall survive the Closing Date.
8.11. Amendments. This Agreement may be amended only by a writing signed
by the parties hereto, at any time prior to the Closing Date with respect to any
of the terms contained herein.
8.12. Expenses. Whether or not the transactions provided for herein are
consummated, each party to this Agreement will pay its respective expenses
incurred in connection with the preparation and performance of its obligations
under this Agreement, including legal, filing fees, publication expense and
accounting fees and expenses.
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8.13. Time of the Essence. Time is of the essence in this Agreement.
8.14. Attorneys' Fees. In the event of any action at law or equity between
the parties in relation to this Agreement, the nonprevailing party shall be
required to pay to the prevailing party all costs and expenses of such
litigation, including reasonable attorneys' fees.
8.15. Notices. Any notice given hereunder shall be in writing and shall be
delivered in person or mailed by first class mail, postage prepaid or sent by
facsimile, courier or personal delivery to the parties at the following
addresses unless by such notice a different address shall have been designated:
IF TO BUYER:
American Industrial Loan Association
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
With a copy to:
Payne, Gates, ▇▇▇▇▇▇▇▇ & Radd, P.C.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
IF TO ▇▇▇▇▇ ▇▇▇▇▇▇:
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
c/o First Security Federal Savings Bank
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
All notices sent by mail as provided above shall be deemed delivered five (5)
days after deposit in the mail. All notices
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sent by facsimile or courier as provided above shall be deemed delivered one day
after being sent. All other notice shall be deemed delivered when actually
received. Any party to this Agreement may change its address for the giving of
notice specified above by giving notice as herein provided.
8.16. Controlling Law. All questions concerning the validity, operation
and interpretation of this Agreement and the performance of the obligations
imposed upon the parties hereunder shall be governed by the laws of the State of
Virginia and, to the extent applicable, by the laws of the United States.
8.17. Headings. The headings and titles to the sections of this Agreement
are inserted for convenience only and shall not be deemed a part hereof of
affect the construction or interpretation of any provision hereof.
8.18. Modifications or Waiver. The parties may, at any time prior to the
Effective Date, (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto; (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto; or (iii) waive compliance with any of the
agreements or conditions contained herein. However, no termination,
cancellation, modification, amendment deletion, addition or other change in this
Agreement, or any provision hereof, or waiver of any right or remedy herein
provided, shall be effective for any purpose unless specifically set forth in a
writing signed by the party or parties to be bound thereby. The waiver of any
right or remedy in respect to any occurrence or event on one occasion shall not
be deemed a waiver of such right or remedy in respect to such occurrence or
event on any other occasion.
8.19. Severability. Any provision hereof prohibited by or unlawful or
unenforceable under any applicable law or any jurisdiction shall as to such
jurisdiction be ineffective, without affecting any other provision of this
Agreement, or shall be deemed to be severed or modified to conform with such
law, and the remaining provisions of this Agreement shall remain in force,
provided that the purpose of this Agreement can be effected. To the full extent,
however, that the provisions of such applicable law may be waived, they are
hereby waived, to the end that this Agreement be deemed to be a valid and
binding agreement enforceable in accordance with its terms.
8.20. Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns, but
shall not be assigned by any party without the prior written consent of the
other party.
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8.21. Consolidation of Agreements. All understandings and agreements
heretofore made between the parties hereto are merged in this Agreement, which
includes the Schedules hereto and the other documents, agreements and
instruments executed and delivered pursuant to or in connection with this
Agreement. This Agreement shall be the sole expression of the agreement of the
parties respecting the Transaction.
8.22. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which shall
be deemed to constitute one and the same instrument.
8.23. Gender. Any pronoun used herein shall refer to any gender, either
masculine, feminine or neuter, as the context requires.
8.24. ▇▇▇▇▇▇ Assistance After Closing. ▇▇▇▇▇▇ agrees that he will remain
as an employee of First Security for a period of up to six (6) months after
Closing at his current salary within the sole discretion of Buyer. ▇▇▇▇▇▇ agrees
that if Buyer obtains a new CEO prior to Closing that person may come to work at
First Security prior to Closing for training so long as Buyer pays the salary
and benefits; however, the new CEO will be under the direction of ▇▇▇▇▇▇ until
closing.
8.25. Section 338 IRC ELECTION. The parties agree that Buyer may under
Section 338 of the Internal Revenue Code treat this Acquisition as an asset
purchase.
IN WITNESS WHEREOF, the parties hereto set forth below their signatures
and seals:
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇ (SEAL)
-----------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
AMERICAN INDUSTRIAL LOAN ASSOCIATION
By /s/ ▇▇▇▇▇ ▇▇▇▇▇ (SEAL)
--------------------------
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