EXHIBIT 2.2
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PURCHASE AND ASSUMPTION AGREEMENT
BETWEEN
STERLING BANK
AND
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
DATED AS OF
JULY 12, 2002
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Table of Contents
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ARTICLE I DEFINITIONS ...................................................... 1
ARTICLE II ASSUMPTION OF LIABILITIES AND OBLIGATIONS ........................ 6
2.1 Liabilities Assumed by the Assuming Bank. ........................ 6
2.2 Interest on Deposits ............................................. 6
2.3 Assumption of Contracts .......................................... 7
2.4 Informational Tax Reporting ...................................... 7
ARTICLE III PURCHASE OF ASSETS ............................................... 7
3.1 Assets Purchased by the Assuming Bank ............................ 7
3.2 Manner of Conveyance; Limited Warranty; Nonrecourse; Etc. ........ 7
3.3 Assets Not Purchased by the Assuming Bank ........................ 8
ARTICLE IV BANK PREMISES; SAFE DEPOSIT BOXES; LETTERS OF CREDIT ............. 9
4.1 Bank Premises .................................................... 9
4.2 Agreement with Respect to Safe Deposit Business .................. 10
4.3 Letters of Credit ................................................ 10
ARTICLE V DUTIES WITH RESPECT TO DEPOSITORS OF THE PURCHASED BRANCHES ...... 10
5.1 Payment of Checks, Drafts and Orders ............................. 10
5.2 Certain Agreements Related to Deposits ........................... 10
5.3 Correspondent Banking Relationship ............................... 10
5.4 Settlement and Return Items ...................................... 11
ARTICLE VI RECORDS .......................................................... 11
6.1 Transfer of Records .............................................. 11
6.2 Delivery of Assigned Records ..................................... 12
6.3 Preservation of Records .......................................... 12
6.4 Access to Records; Copies ........................................ 12
ARTICLE VII PURCHASE PRICE; CLOSING .......................................... 12
7.1 Purchase Price. .................................................. 12
7.2 Form of Payment .................................................. 13
7.3 Interest ......................................................... 13
7.4 Subsequent Adjustments ........................................... 13
Table of Contents
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7.5 Closing ............................................................ 13
ARTICLE VIII CONTINUING COOPERATION ............................................. 13
8.1 General Matters .................................................... 13
8.2 Additional Title Documents ......................................... 14
8.3 Payment of Deposits ................................................ 14
ARTICLE IX CONDITIONS PRECEDENT ............................................... 14
9.1 Conditions to Obligations of Each Party ............................ 14
9.2 Additional Conditions to the Obligations of the Assuming Bank ...... 14
9.3 Additional Conditions to the Obligations of Seller ................. 15
ARTICLE X REPRESENTATIONS AND WARRANTIES ..................................... 16
10.1 Representations and Warranties of Seller ........................... 16
10.2 Representations and Warranties of ▇▇▇▇▇▇ ........................... 18
ARTICLE XI CERTAIN COVENANTS OF SELLER AND THE ASSUMING BANK .................. 19
11.1 Covenants of Seller. ............................................... 19
11.2 Covenants of ▇▇▇▇▇▇. ............................................... 23
11.3 Best Efforts; Taking of Necessary Action ........................... 23
11.4 Use of Names, Trademarks and Service Marks ......................... 24
11.5 Allocation of Purchase Price ....................................... 25
ARTICLE XII EMPLOYEE PLANS ..................................................... 25
12.1 Participation in Company Plans ..................................... 25
12.2 Claims Incurred Prior to and After Closing ......................... 25
12.3 Termination or Hiring of Employees ................................. 26
12.4 Inactive Employees ................................................. 26
ARTICLE XIII INDEMNIFICATION .................................................... 26
13.1 Indemnification. ................................................... 26
13.2 Limitations on Indemnification ..................................... 28
13.3 Exclusivity of Remedies ............................................ 28
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Table of Contents
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ARTICLE XIV MISCELLANEOUS ................................................. 29
14.1 Entire Agreement .............................................. 29
14.2 Headings ...................................................... 29
14.3 Governing Law ................................................. 29
14.4 Successors .................................................... 29
14.5 Modification; Assignment. ..................................... 29
14.6 Notice ........................................................ 29
14.7 Manner of Payment ............................................. 30
14.8 Costs, Fees and Expenses ...................................... 31
14.9 Waiver ........................................................ 31
14.10 Severability .................................................. 31
14.11 Termination of Agreement. ..................................... 31
14.12 Survival of Representations and Warranties .................... 32
14.13 Public Notice ................................................. 32
14.14 Counterparts .................................................. 32
Exhibits:
Exhibit A - Form of Special Warranty Deed
Exhibit B - Form of Service Agreement
Exhibit C - Form of General Assignment and ▇▇▇▇ of Sale
Exhibit D - Form of Instrument of Assumption
Exhibit E - Form of Amendment
Exhibit F - Form of Certificate
Exhibit G - Processing Fees
Schedules:
Schedule 2.3 Contracts
Schedule 3.1 Furniture and Equipment
Schedule 10.1(b) Seller Consents
Schedule 10.1(h) Environmental Compliance
Schedule 12.1 Severance Plan Summary
Schedule 13.3 Environmental Laws
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PURCHASE AND ASSUMPTION AGREEMENT
THIS AGREEMENT, made and entered into as of the 12th day of July, 2002
is by and between STERLING BANK, organized under the laws of the State of Texas
and having its principal place of business in Houston, Texas ("Seller"), and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇").
WITNESSETH:
WHEREAS, Seller desires to sell certain of the assets and liabilities
of its branches located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇; ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇; and ▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇ (collectively, the "Purchased Branches");
WHEREAS, Seller desires to sell and ▇▇▇▇▇▇ desires to purchase
indirectly the banking business of Seller at the Purchased Branches on the terms
and conditions set forth in this Agreement; and
WHEREAS, the Purchased Branches will be acquired by a new bank to be
formed by ▇▇▇▇▇▇ and made a party to this Agreement after the date herein (the
"Assuming Bank") in the manner provided by, and subject to the terms and
conditions set forth in, this Agreement.
NOW THEREFORE, in consideration of the mutual promises herein set forth
and other valuable consideration, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used herein, words imparting the singular include the plural and
vice versa.
"ACH" means automated clearing house.
"Acquired Assets" means, without duplication, the operating assets of
the Purchased Branches as of the date immediately preceding the Closing Date
(other than the Excluded Assets) including (i) all Loans of the Purchased
Branches other than Loans which are Excluded Assets, (ii) Bank Premises,
Furniture and Equipment, and Fixtures including, but not limited to, all
Furniture (including works of art, paintings, etc.) and Equipment and Fixtures
identified on Schedule 3.1 hereto, and (iii) ▇▇▇▇▇ cash tickets and cash float
related to the Purchased Branches on the Closing Date.
"Affiliates" of a person means any director, officer or employee of
such Person and any other Person (i) who is directly or indirectly controlling,
or controlled by, or under common control with, such Person, or (ii) who is an
affiliate of such Person as the term "affiliate" is defined in Section 2 of the
Bank Holding Company Act of 1956, as amended.
"Agreement" means this Purchase and Assumption Agreement by and between
Seller, ▇▇▇▇▇▇, and the Assuming Bank, as amended or otherwise modified from
time to time.
"Assumed Commitments" means all commitments and all amendments,
modifications, renewals, and extensions thereof, as reflected on the books and
records of the Purchased Branches, that were legally binding on the Seller as of
the Closing Date.
"Assumed Contracts" shall have the meaning provided in Section 2.3 of
this Agreement.
"Assuming Bank" shall have the meaning provided in the recitals on page
one of this Agreement.
"Assuming Bank Indemnified Persons" shall have the meaning provided in
Section 13.1(a) of this Agreement.
"Bank Premises" means the banking and teller facilities (staffed or
automated) together with appurtenant storage and service facilities, that are
owned or leased by Seller which relate to the Purchased Branches.
"Book Value" means, with respect to any Acquired Asset and any
Liability Assumed, the dollar amount thereof stated on the accounting records of
Seller. The Book Value of any item shall be determined as of the Closing Date
after adjustments made by Seller for differences in accounts, suspense items,
unposted debits and credits, and other similar adjustments or corrections.
Without limiting the generality of the foregoing, the Book Value of (i) a
Liability Assumed shall include all accrued and unpaid interest thereon as of
the Closing Date, (ii) a Loan shall reflect adjustments for earned or unearned
interest (as it relates to the "rule of 78s" or add-on-interest loans, as
applicable), if any, as of the Closing Date, and adjustments for the portion of
earned or unearned loan-related credit life and/or disability insurance premiums
and FAS 91 costs, if any, attributable to Seller as of the Closing Date, in each
case as determined for financial reporting purposes, and (iii) an Assumed
Commitment shall be deemed to be zero. The Book Value of an Acquired Asset shall
not include any adjustment for any general or specific reserves on the
accounting records of Seller.
"Business Day" means a day other than (i) a Saturday, Sunday, Federal
legal holiday, or legal holiday under the laws of the State of Texas, or (ii) a
day on which the principal office of Seller is closed.
"Closing" shall have the meaning provided in Section 7.5 of this
Agreement.
"Closing Date" shall have the meaning provided in Section 7.5 of this
Agreement.
"Closing Balance Sheet" shall have the meaning provided in Section
7.1(a) of this Agreement.
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"COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended.
"Commitment" shall have the meaning provided in Section 4.1 of this
Agreement.
"Deposit" means a deposit, as defined in 12 U.S.C. Section 1813(l),
including, without limitation, all uncollected items included in the depositors'
balances and credited on the books of the Purchased Branches.
"Excluded Assets" shall have the meaning provided in Section 3.3 of
this Agreement.
"Excluded Liabilities" shall have the meaning provided in Section
2.1(b) of this Agreement.
"Fixtures" means those leasehold improvements, additions, alterations
and installations constituting all or a part of Bank Premises and which were
acquired, added, built, installed, or purchased at the expense of Seller,
regardless of the holder of legal title thereto as of the Closing Date.
"Furniture and Equipment" means the furniture and equipment, leased or
owned by Seller and used by the Purchased Branches and reflected on the
accounting records of Seller as of the Closing Date, including, without
limitation, the furniture and equipment (other than personal computers) listed
on Schedule 3.1 and all other carpeting, furniture, office machinery (excluding
personal computers), shelving, office supplies, telephone, surveillance, and
security systems, and artwork.
"Governmental Authority" means any foreign governmental authority, the
United States of America, any State of the United States, any local authority
and any political subdivision of any of the foregoing, any multi-national
organization or body, any agency, department, commission, board, bureau, court
or other authority thereof, or any quasi-governmental or private body
exercising, or purporting to exercise, any executive, legislative, judicial,
administrative, police, regulatory or taxing authority or power of any nature.
"Inquiries" shall have the meaning provided in Section 6.3 of this
Agreement.
"Interim Balance Sheet" shall have the meaning provided in Section
7.1(b) of this Agreement.
"Knowledge" or "Known" means an individual shall be deemed to have
"knowledge" of or to have "known" a particular fact or other matter if such
individual is actually aware of such fact or other matter. Seller shall be
deemed to have "knowledge" of or to have "known" a particular fact or other
matter if any individual who is serving as an senior vice president or more
senior officer of Seller has, or at any time had, actual awareness of such fact
or other matter.
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"Liabilities Assumed" shall have the meaning provided in Section 2.1 of
this Agreement.
"Liens" means any mortgage, lien, pledge, charge, assignment for
security purposes, security interest, or encumbrance of any kind with respect to
an Acquired Asset, including any conditional sale agreement or capital lease or
other title retention agreement relating to such Acquired Asset.
"Loans" means all of the following owed to or held by the Purchased
Branches as of the Closing Date and reflected on the Closing Balance Sheet:
(i) loans, interests in loan participations, funded
portions of lines of credit or credit plans (whether revolving or
not, and whether commercial or consumer), consumer loans,
residential mortgage loans, overdrafts of customers (including but
not limited to overdrafts made pursuant to overdraft protection
plans, cash reserve accounts, or similar extensions of credit in
connection with demand deposit accounts) ("overdrafts"), and
United States and/or state-guaranteed student loans;
(ii) all Liens, rights (including rights of set-off),
remedies, powers, privileges, demands, claims, priorities,
equities and benefits owned or held by, or accruing or to accrue
to or for the benefit of, the holder of the obligations or
instruments referred to in clause (i) above, including, but not
limited to, those arising under or based upon the credit
documents, casualty insurance policies and binders, standby
letters of credit, mortgagee title insurance policies and binders,
payment bonds and performance bonds at any time and from time to
time existing with respect to any of the obligations or
instruments referred to in clause (i) above; and
(iii) all written amendments, modifications, renewals,
extensions, refinancings, and refundings of or for any of the
foregoing.
"Material Adverse Effect" shall mean any material adverse change in the
financial condition, assets, liabilities (absolute, accrued, contingent or
otherwise), reserves, business or results of operations.
"Permitted Encumbrances" shall mean with respect to any Acquired
Assets, (i) statutory liens for taxes and special assessments not yet
delinquent, (ii) covenants and restrictions, right-of-way, easements and other
matters of public records (other than liens voluntarily created by Seller),
(iii) any and all provisions of any ordinance, municipal regulation or public
law, and (iv) other matters to which like properties commonly are subject which
does not, individually or in the aggregate, materially interfere with the
current use of such Acquired Asset.
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"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or other
entity, or government or any agency or political subdivision thereof.
"Prepayment Amount" shall have the meaning provided by Section 14.11(c)
of this Agreement.
"Post-Closing Settlement Payment" shall have the meaning provided in
Section 7.1(b) of this Agreement.
"Providing Party" shall have the meaning provided in Section 11.1(f) of
this Agreement.
"Purchase Price" shall have the meaning provided in Section 7.1 of this
Agreement.
"Qualified Beneficiaries" shall have the meaning provided in COBRA.
"Receiving Party" shall have the meaning provided in Section 11.1(g) of
this Agreement.
"Record" means any document, microfiche, microfilm and computer record
(including but not limited to magnetic tape, disc storage, card forms and
printed copy) or, where reasonable and appropriate, copies thereof, of the
Purchased Branches relating to any of the Acquired Assets or Liabilities
Assumed.
"Safe Deposit Boxes" shall mean the safe deposit boxes of the Purchased
Branches, if any, including the removable safe deposit boxes and safe deposit
stacks in the Purchased Branches vault(s), all rights and benefits under rental
agreements with respect to such safe deposit boxes, and all keys and
combinations thereto.
"Seller's Related Parties" shall have the meaning provided in Section
13.1(b) of this Agreement.
"Settlement Date" shall have the meaning provided in Section 7.1(b) of
this Agreement.
"Settlement Payment" shall have the meaning provided in Section 7.1(b)
of this Agreement.
"Subsidiary" shall have the meaning provided in 12 U.S.C. Section
1813(w)(4).
"Welfare Benefit Plans" shall have the meaning provided in Section 3(1)
of the Employee Retirement Income Security Act of 1974, as amended.
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ARTICLE II
ASSUMPTION OF LIABILITIES AND OBLIGATIONS
2.1 Liabilities Assumed by the Assuming Bank.
(a) Effective as of the Closing Date, except as otherwise provided in
this Agreement, the Assuming Bank hereby expressly assumes at Book Value
and agrees to pay, perform, and discharge (i) all liabilities of Seller
in respect to Deposits of the Purchased Branches as of the Closing Date,
(ii) ad valorem and personal property taxes applicable to any Acquired
Asset, if any, and pro-rated as of the Closing Date (iii) liabilities
with respect to Assumed Commitments, (iv) liabilities with respect to the
Assumed Contracts, and (v) other liabilities, if any, with respect to the
Purchased Branches, the Deposits and the safe deposit businesses, and the
Acquired Assets which are directly attributable to and used in the
business of the Purchased Branches as reflected on the accounting records
of Seller as of the Closing Date (collectively, the "Liabilities
Assumed"). Prepaid expenses, other than expenses related to Federal
Deposit Insurance Corporation premiums ("FDIC Premium"), of the Purchased
Branches shall be prorated as of the Closing Date. The Assuming Bank
shall pay to Seller, the pro rata portion of the FDIC Premium payment
which is attributable to the Deposits being assumed by the Assuming Bank
hereunder.
(b) Except for those liabilities and obligations specifically assumed
by Assuming Bank under Subsection (a) above, Assuming Bank is not
assuming any other liabilities or obligations. Liabilities not assumed
("Excluded Liabilities") include, but are not limited to, the following:
(i) Seller's cashier checks, letters of credit, money orders,
interest checks and expense checks issued prior to Closing,
consignments of U.S. Government "E" and "EE" bonds and any and all
traveler's checks;
(ii) Deposit accounts associated with qualified retirement plans
where Seller is the trustee of such plan or the sponsor of a
prototype plan used by such plan;
(iii) All transactions related to or arising from credit card
relationships with Seller, other than merchant accounts; and
(iv) All liabilities of Seller for individual retirement account
or ▇▇▇▇▇ account deposits in which the custodial duties of Seller
cannot be transferred to and assumed by Assuming Bank.
2.2 Interest on Deposits. The Assuming Bank agrees that, from and after
the Closing Date, it will accrue and pay interest on Deposits assumed under this
Agreement at the rate(s) at which Seller was legally obligated to accrue and pay
interest on such Deposits as of the Closing Date.
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2.3 Assumption of Contracts. Attached hereto as Schedule 2.3 is a list of
all contracts, agreements, and other obligations (the "Assumed Contracts") which
are not month-to-month or cancelable with 30 days notice and to which Seller is
a signatory that relate specifically to the operation of the Purchased Branches,
other than those relating to the Deposits or the safe deposit box contracts with
customers, including without limitation, service contracts, maintenance
contracts, consulting contracts, agency agreements and licensing agreements (but
excluding contracts that relate to Seller's bank operations generally and that
are not being assumed by the Assuming Bank); provided, however, that if Seller
notifies the Assuming Bank not later than thirty (30) days prior to the Closing
Date that one or more of such contracts or agreements may not be legally
assigned, Seller shall not be required to assign such contracts or agreements at
Closing and shall have no liability to the Assuming Bank as a result of its
inability to accomplish such assignments.
2.4 Informational Tax Reporting. Effective as of the Closing Date, the
Assuming Bank agrees to perform all obligations of Seller with respect to
federal and state income tax informational reporting with respect to the
Purchased Branches including, but not limited to filing obligations with respect
to Forms 940, 941, 1099, 1098, W-2 and back up withholding related to (i) the
Acquired Assets and the Liabilities Assumed; and (ii) for periods after the
Closing Date, compensation paid to employees and contractors of the Purchased
Branches; provided, however, that Seller shall report savings bond interest for
the full tax year in which the Closing occurs. Seller and the Assuming Bank
agree to cooperate with each other in order to fulfill the reporting obligations
set forth herein.
ARTICLE III
PURCHASE OF ASSETS
3.1 Assets Purchased by the Assuming Bank. Effective as of the Closing
Date and subject to Section 3.3, the Assuming Bank shall purchase from Seller,
and Seller shall sell, assign, transfer, convey, and deliver to the Assuming
Bank, all right, title, and interest of Seller in and to the Acquired Assets.
3.2 Manner of Conveyance; Limited Warranty; Nonrecourse; Etc. THE
CONVEYANCE OF ALL ACQUIRED ASSETS, INCLUDING REAL AND PERSONAL PROPERTY
INTERESTS, PURCHASED BY THE ASSUMING BANK UNDER THIS AGREEMENT SHALL BE MADE, AS
NECESSARY, BY DEED OR ▇▇▇▇ OF SALE, "AS IS", "WHERE IS", WITHOUT RECOURSE AND,
EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THIS AGREEMENT, WITHOUT ANY
WARRANTIES WHATSOEVER WITH RESPECT TO SUCH ACQUIRED ASSETS, EXPRESS OR IMPLIED,
WITH RESPECT TO TITLE, ENFORCEABILITY, COLLECTIBILITY, DOCUMENTATION, CONDITION,
QUALITY, PERFORMANCE, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR
FREEDOM FROM LIENS OR ENCUMBRANCES (IN WHOLE OR IN PART), OR ANY OTHER MATTERS.
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3.3 Assets Not Purchased by the Assuming Bank.
(a) The Assuming Bank does not purchase, or obtain an option to
purchase under this Agreement, any of the following (the "Excluded
Assets"):
(i) any financial institution bonds, banker's blanket bonds,
or any other similar insurance policy of Seller, or any proceeds
payable with respect to any of the foregoing;
(ii) any interest, right, action, claim, or judgment of
Seller or any of its Affiliates against (i) any officer, director,
employee, accountant, attorney, or any other Person employed or
retained by Seller or any of its Affiliates or any Subsidiary of
Seller on or prior to the Closing Date arising out of any act or
omission of such Person in such capacity, (ii) any underwriter of
financial institution bonds, banker's blanket bonds or any other
insurance policy of Seller, (iii) any shareholder or holding
company of Seller, or (iv) any other Person whose action or
inaction may be related to any loss (exclusive of any loss
resulting from such Person's failure to pay on a Loan on the books
of the Purchased Branches) incurred by Seller; provided, that for
the purposes hereof, the acts, omissions, or other events giving
rise to any such claim shall have occurred on or before the
Closing Date, regardless of when any such claim is discovered and
regardless of whether any such claim is made with respect to a
financial institution bond, banker's blanket bond, or any other
insurance policy of Seller in force as of the Closing Date;
(iii) legal or equitable interests in tax receivables of
Seller, if any, including any claims arising as a result of
Seller, as the case may be, having entered into any agreement or
otherwise being joined with another Person with respect to the
filing of tax returns or the payment of taxes;
(iv) insurance policies and agreements and the rights and
benefits thereunder (including any prepaid assessments or prepaid
insurance premiums, premium refunds derived from cancellation,
proceeds payable with respect to any of the foregoing, and
collateral pledged under such agreements and any rights to such
collateral) of Seller with respect to insurance coverage for
public liability, casualty, fire, extended coverage, and similar
coverage provided with respect to assets of Seller;
(v) any rights in or to any trademarks, service marks,
copyrights, and trade, corporate, or fictitious names registered
in the name of or owned by Seller or any of its Affiliates;
(vi) recoveries from legal actions or claims filed in any
legal proceedings, including without limitation, bankruptcy and
administrative proceedings, before the Closing Date;
8
(vii) any Loans, or portions thereof, charged-off or designated
for charge-off prior to the Closing Date, and any recoveries on Loans
charged-off or designated for charge-off prior to the Closing Date;
(viii) credit card relationships;
(ix) annuity, mutual fund or other brokerage accounts;
(x) software;
(xi) goodwill and other intangibles;
(xii) repossessed assets or other real estate owned; and
(xiii) sign faces.
(b) ▇▇▇▇▇▇ or the Assuming Bank shall inform Seller on or before
October 1, 2002 whether the telephone equipment of the Purchased Branches
set forth on Schedule 3.1 shall constitute part of the Excluded Assets. In
the event ▇▇▇▇▇▇ or the Assuming Bank does not so notify Seller as to
whether such telephone equipment shall constitute part of the Excluded
Assets, such telephone equipment shall constitute part of the Fixtures and
Equipment being acquired by ▇▇▇▇▇▇ and the Assuming Bank.
ARTICLE IV
BANK PREMISES; SAFE DEPOSIT
BOXES; LETTERS OF CREDIT
4.1 Bank Premises. At Closing, Seller agrees to execute and deliver to the
Assuming Bank special warranty deeds for the Bank Premises which are owned by
Seller in substantially the form of Exhibit A attached hereto. The Assuming Bank
may receive, at its expense, a Commitment for Title Insurance (the "Commitment")
and copies of all recorded instruments affecting title to the Bank Premises and
recited as exceptions in such Commitment from a title insurance company
reasonably acceptable to Seller for the issuance of a Owner Policy of Title
Insurance, insuring good and indefeasible title in the Bank Premises as of the
date of Closing, subject to: (i) the standard printed exceptions contained in
the usual form of title policy; (ii) rights of parties in possession; (iii)
standby fees, taxes and assessments for the current year and subsequent years,
and subsequent assessments for prior years due to a change in land usage or
ownership; (iv) any discrepancies, conflicts or shortages in area or boundary
lines, or any encroachments or protrusions, or any overlapping of improvements;
(v) covenants, restrictions, conditions, reservations, exceptions and easements
shown of record; (vi) oil, gas, mineral and royalty conveyances, and leases of
record, if any, in effect and shown of record; (vii) other conditions and
encumbrances validly subsisting and affecting title to the Bank Premises as of
the date of Closing; and (viii) all other matters to which like properties
similarly situated are commonly subject, which do not, individually or in the
aggregate, materially interfere with the current use of the Bank Premises.
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4.2 Agreement with Respect to Safe Deposit Business. The Assuming Bank
hereby assumes and agrees to discharge, from and after the Closing Date, in the
usual course of conducting a banking business, the duties and obligations of
Seller with respect to all Safe Deposit Boxes, if any, of the Purchased Branches
and to maintain all of the necessary facilities for the use of such boxes by the
renters thereof during the period for which such boxes have been rented and the
rent therefor paid to Seller, subject to the provisions of the rental agreements
between Seller, as the case may be, and the respective renters of such boxes.
Seller and the Assuming Bak will pro rate the rent paid for the Safe Deposit
Boxes and Seller or the Assuming Bank, as appropriate, will transfer to the
other party the amount of money necessary to pro rate the rent.
4.3 Letters of Credit. The Assuming Bank will use its reasonable efforts
to replace all letters of credit of the Purchased Branches.
ARTICLE V
DUTIES WITH RESPECT TO
DEPOSITORS OF THE PURCHASED BRANCHES
5.1 Payment of Checks, Drafts and Orders. Effective as of the Closing Date
and subject to Section 8.3, the Assuming Bank agrees to pay all properly drawn
checks, drafts and withdrawal orders including, without limitation, electronic
debit transactions, presented for payment by depositors of the Purchased
Branches, whether drawn on the check or draft forms provided by Seller or the
Assuming Bank, to the extent that the Deposit balances to the credit of the
respective makers or drawers assumed by the Assuming Bank under this Agreement
are sufficient to permit the payment thereof, and in all other respects to
discharge, in the usual course of conducting a banking business, the duties and
obligations of Seller with respect to the Deposit balances due and owing to the
depositors of the Purchased Branches assumed by the Assuming Bank under this
Agreement.
5.2 Certain Agreements Related to Deposits. Effective as of the Closing
Date and subject to Section 2.2, the Assuming Bank agrees to honor the terms and
conditions of any written escrow or mortgage servicing agreement or other
similar agreement relating to a Deposit assumed by the Assuming Bank pursuant to
this Agreement. After the Closing Date, the Assuming Bank, at its sole expense,
will issue to Deposit account customers checks with appropriate routing and
transit numbers for use by such customers after the Closing Date. With respect
to Deposit accounts, Seller will (i) pay interest payable, if any, on
non-certificate deposit accounts and credit such interest to such accounts as of
the Closing Date, and (ii) transfer to Assuming Bank, certificate of deposit
accounts with both principal and accrued, but unpaid, interest.
5.3 Correspondent Banking Relationship. For a period not to exceed sixty
(60) days after Closing Date, Seller agrees to receive all items (including, but
not limited to ACH items) which contain Seller's transit routing number that are
drawn on and presented for payment against a Deposit account of the Purchased
Branches. Such items which Seller receives with respect to the Deposit accounts
of the Purchased Branches shall be promptly transmitted or presented on their
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respective settlement dates to the Assuming Bank. Items received after the
60th day after the Closing Date will be returned by Seller to the originator.
The Assuming Bank agrees to promptly send to the appropriate Federal Reserve
Bank any return items. The Assuming Bank further agrees to issue and furnish to
Seller notifications of change with respect to each ACH item received containing
Seller's transit routing number drawn against a Deposit account of the Purchased
Branches and Assuming Bank agrees to submit a notification of change to the
appropriate Federal Reserve Bank. Seller and the Assuming Bank both agree to
comply with applicable clearinghouse association rules, Regulation CC of the
Board of Governors of the Federal Reserve System and any other applicable law.
During such sixty (60) day period ACH items will be delivered by Seller to
Assuming bank in NACHA format each business morning. Seller shall not be
required to break-out or otherwise isolate ACH items pertaining to the Purchased
Branches received on the last processing day prior to the Closing. In the event
the Assuming Bank reasonably determines that it needs Seller to continue the
services provided by Seller under this Section 5.3 beyond the expiration of such
sixty (60) day period, Seller agrees to perform such services for an additional
sixty (60) day period; provided, however that Seller shall be compensated by the
Assuming Bank for such services in accordance with Exhibit G hereto.
Notwithstanding the foregoing, pursuant to the provisions of Section 11.1(g),
the Assuming Bank shall convert the Purchased Branches' existing electronic data
processing systems to the systems of the Assuming Bank on the Closing Date.
5.4 Settlement and Return Items. Subject to Section 5.3, settlement,
return items, servicing fees, loan payments received and other transaction
matters shall be processed in accordance with a service agreement in
substantially the form of Exhibit B hereto which shall be executed by Seller and
Assuming Bank prior to the Closing Date.
ARTICLE VI
RECORDS
6.1 Transfer of Records. Effective as of the Closing Date, Seller shall
assign, transfer, convey and deliver to the Assuming Bank the following Records
pertaining to Deposits of the Purchased Branches: signature cards, orders,
contracts between the Seller and the depositors of the Purchased Branches, and
Records of similar character pertaining to the Deposit account relationships of
the Purchased Branches assumed by the Assuming Bank under this Agreement, except
as provided in Section 6.4. Effective as of the Closing Date, Seller shall
assign, transfer, convey and deliver to the Assuming bank the following Records
pertaining to the Acquired Assets:
(i) Loan and collateral records and credit documents and other
documents;
(ii) deeds, mortgages, abstracts, surveys, and other instruments
or records of title pertaining to real estate or real estate
mortgages, if any; and
(iii) safe deposit box agreements, if any;
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and all other Records which are required for the Assuming Bank to perform
its obligations under Section 2.4 hereof.
6.2 Delivery of Assigned Records. Seller shall deliver to the Assuming
Bank all Records described in (i) Section 6.1(a) as soon as practicable on or
after the Closing Date.
6.3 Preservation of Records. The Assuming Bank agrees that it will
preserve and maintain for the joint benefit of, Seller and the Assuming Bank,
all Records of which it has custody for such period as may be required by law or
regulation. The Assuming Bank shall have the primary responsibility to respond
to subpoenas, discovery requests, and other similar official inquiries
("Inquiries") with respect to the Records of which it has custody. Seller shall
have primary responsibility to respond to Inquiries with respect to the Records
of which it has custody. Seller and Assuming Bank agree to provide to each other
copies of all Inquiries delivered to Seller or the Assuming Bank promptly upon
determination that such Inquiry relates to the Purchased Branches.
6.4 Access to Records; Copies. Subject to applicable law, the Assuming
Bank agrees to permit Seller access to all Records of which the Assuming Bank
has custody, and to use, inspect, make extracts from or request copies of any
such Records in the manner and to the extent reasonably requested, and to
duplicate, any Record in the form of microfilm or microfiche pertaining to
Deposit account relationships of the Purchased Branches. On or before the 30th
day after the Closing Date, copies of Records will be provided without charge to
the party requesting such copies. Beginning on the 31st day after the Closing
Date, the party requesting a copy of any Record shall bear the cost (based on
standard accepted industry charges to the extent applicable) for providing such
duplicate Records. A copy of each Record requested shall be provided as soon as
practicable by the party having custody thereof.
ARTICLE VII
PURCHASE PRICE; CLOSING
7.1 Purchase Price.
(a) Subject to subsection (c) below, the purchase price ("Purchase
Price") of the Acquired Assets shall equal the sum of (a) an amount (which
may be negative) determined by Seller and the Assuming Bank pursuant to
Articles II and III equal to the aggregate Book Value of the Acquired
Assets, minus the aggregate Book Value of the Liabilities Assumed which
shall be reflected on a balance sheet dated as of the Closing Date and
based on Seller's accounting records as of the close of business on the
Closing Date ("Closing Balance Sheet"), plus (b) a premium in an amount
equal to $1,600,000.
(b) For the purpose of the Closing, the amount due Seller or the
Assuming Bank, respectively, pursuant to subsection (a) hereof shall be
estimated as of the month end prior to Closing Date ("Interim Balance
Sheet") and a settlement payment ("Settlement Payment") shall be made at
Closing based upon the Interim Balance Sheet. Within 30 days after the
Closing Date, or at such time as the parties may mutually agree, Seller and
the Assuming Bank shall jointly determine the actual settlement payment
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required by subsection (a) above and the Closing Balance Sheet, as
applicable, and make appropriate adjustments ("Post-Closing Settlement
Payment").
(c) In the event any bookkeeping omissions or errors are discovered in
preparing any balance sheet for the Purchased Branches or in completing the
transfer and assumptions contemplated hereby, the parties agree to correct
such errors and omissions, it being understood that no adjustments will be
made that are inconsistent with the judgments, methods, policies, or
accounting principles utilized by Seller in preparing and maintaining the
accounting records of the Purchased Branches. Adjustments made pursuant to
this Section 7.1(c) are not intended to bring the accounting records of the
Purchased Branches into accordance with generally accepted accounting
principles.
7.2 Form of Payment. The Settlement Payment shall be made in immediately
available funds on the Closing Date by the Assuming Bank if the Settlement
Payment is a positive number and by Seller if the Settlement Payment is a
negative number.
7.3 Interest. The Post-Closing Settlement Payment shall bear interest at
5% for the period from and including the day following the Closing Date to and
including the day preceding the payment.
7.4 Subsequent Adjustments. In the event that the Assuming Bank or Seller
discovers any errors or omissions as contemplated by Section 7.1(c) or any error
with respect to the payments made under Section 7.1(b) after the Settlement
Date, the Assuming Bank and Seller agree to promptly correct any such error or
omission, make any payments and effect any transfers or assumptions as may be
necessary to reflect any such correction; provided, that interest shall not be
paid with respect to any such payments.
7.5 Closing. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to the
provisions of Section 14.11, and subject to the conditions of Article IX hereof,
the closing (the "Closing") of the purchase and assumption of the Acquired
Assets and Liabilities Assumed as provided by Sections 2.1 and 3.1 shall take
place after receipt of all regulatory approvals, the expiration of all waiting
periods and the satisfaction of all conditions to Closing under this Agreement,
at 10:00 a.m., Houston, Texas time, at the offices of ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP,
on a mutually agreeable date on or before the earlier to occur (i) ninety (90)
days from the date of receipt of the last required regulatory approval, and (ii)
February 28, 2003, at such other place, time and date as the parties may agree.
The date and time of the Closing are herein referred to as the "Closing Date."
For purposes of this Agreement, the Closing shall be deemed to be effective
immediately following the close of business on the date on which the Closing
shall occur.
ARTICLE VIII
CONTINUING COOPERATION
8.1 General Matters. The parties hereto agree that they will, in good
faith and with their best efforts, cooperate with each other to carry out the
transactions contemplated by this Agreement and to effect the purposes hereof.
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8.2 Additional Title Documents. Seller and the Assuming Bank each agree,
at any time, and from time to time, upon the request of any party hereto, to
execute and deliver such additional instruments and documents of conveyance as
shall be reasonably necessary to vest in the appropriate party its full legal or
equitable title in and to the property transferred pursuant to this Agreement or
to be transferred in accordance herewith. The Assuming Bank shall prepare such
instruments and documents of conveyance (in form and substance satisfactory to
Seller) as shall be necessary to vest title in the Assuming Bank to the Acquired
Assets. The Assuming Bank shall be responsible for recording such instruments
and documents of conveyance at its own expense.
8.3 Payment of Deposits. In the event any depositor does not accept the
obligation of the Assuming Bank to pay any Deposit of the Purchased Branches
assumed by the Assuming Bank pursuant to this Agreement and asserts a claim
against Seller for all or any portion of any such Deposit, the Assuming Bank
agrees on demand to provide to Seller, as the case may be, funds sufficient to
pay such claim in an amount not in excess of the Deposit reflected on the books
of the Assuming Bank at the time such claim is made. Upon payment of such amount
by the Assuming Bank to Seller, as the case may be, the Assuming Bank shall be
discharged from any further obligation under this Agreement to pay to any such
depositor the amount of such Deposit paid to Seller.
ARTICLE IX
CONDITIONS PRECEDENT
9.1 Conditions to Obligations of Each Party. The respective obligations
of each party under this Agreement are subject to the fulfillment at or prior to
the Closing Date of the condition precedent that no preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a Governmental Authority nor any statute, rule, regulation or
executive order promulgated or enacted by any Governmental Authority shall be in
effect enjoining or otherwise materially impairing the consummation of the
transactions contemplated by this Agreement.
9.2 Additional Conditions to the Obligations of the Assuming Bank. The
obligations of the Assuming Bank are also subject to fulfillment (or waiver by
the Assuming Bank) at or prior to the Closing Date of each of the following
conditions precedent:
(a) Representations and Warranties True. The representations and
warranties of Seller contained in Section 10.1 of this Agreement shall be
true and correct as of the date hereof and as of the Closing Date (other
than any inaccuracies which individually or in the aggregate would not
materially and adversely affect the ability of Seller to perform, satisfy
or observe any obligation or condition under this Agreement) as though
made at and as of the Closing Date, except to the extent that they
expressly refer to an earlier time.
(b) Performance of Covenants. Seller shall have duly performed and
complied in all material respects with each covenant, agreement and
condition required by this Agreement to be performed or complied with by
it prior to or on the Closing Date.
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(c) Regulatory Approvals. All regulatory approvals necessary for
the consummation by ▇▇▇▇▇▇ and the Assuming Bank of the sale and
assumption contemplated by this Agreement shall have been obtained and be
in full force and effect, and all required waiting periods shall have
expired or been terminated.
(d) Officer's Certificate. The Assuming Bank shall have received
from a duly authorized senior officer of Seller a certificate as to the
matters described in Sections 9.2(a) and 9.3(b).
(e) ▇▇▇▇ of Sale and Assignment. The Assuming Bank shall have
received from Seller a ▇▇▇▇ of sale and assignment in substantially the
form of Exhibit C attached hereto.
(f) No Material Adverse Effect. Nothing shall have occurred which
has a Material Adverse Effect with respect to the Purchased Branches
since the date hereof, provided that, for purposes of this Section
9.2(f), a Material Adverse Effect shall not include any material adverse
change which relates to matters supervised or controlled by ▇▇▇▇▇▇ or ▇▇▇
▇. ▇▇▇▇▇▇▇ or persons within their chains of command.
9.3 Additional Conditions to the Obligations of Seller. The
obligations of Seller are also subject to fulfillment (or waiver by Seller) at
or prior to the Closing Date of each of the following conditions precedent:
(a) Representations and Warranties True. The representations and
warranties of the Assuming Bank contained in Section 10.2 of this
Agreement shall be true and correct as of the date hereof and as of the
Closing Date (other than any inaccuracies which would not materially and
adversely affect the ability of the Assuming Bank to perform, satisfy or
observe any obligation or condition under this Agreement) as though made
at and as of the Closing Date, except to the extent they expressly refer
to an earlier time.
(b) Performance of Covenants. The Assuming Bank shall have duly
performed and complied in all material respects with each covenant,
agreement and condition required by this Agreement to be performed or
complied with by it prior to or on the Closing Date.
(c) Regulatory Approvals. All regulatory approvals necessary for
the consummation by the Assuming Bank of the sale and assumption
contemplated by this Agreement shall have been obtained and be in full
force and effect, and all required waiting periods shall have expired or
been terminated.
(d) Officer's Certificate. Seller shall have received from a duly
authorized senior officer of the Assuming Bank a certificate as to the
matters described in Sections 9.3(a), 9.3(b) and 9.3(c).
15
(e) Instrument of Assumption. Seller shall have received from the
Assuming Bank an instrument of assumption in substantially the form of
Exhibit D attached hereto.
ARTICLE X
REPRESENTATIONS AND WARRANTIES
10.1 Representations and Warranties of Seller. Seller represents and
warrants to the Assuming Bank as follows:
(a) Corporate Existence and Authority. Seller (i) is duly
organized, validly existing and in good standing under the laws of the
State of Texas and has full power and authority to own and operate its
properties and to conduct its business as now conducted by it, and (ii)
subject to regulatory approval, has full power and authority to execute
and deliver this Agreement and to perform its obligations under this
Agreement in accordance with its terms. Seller has taken all necessary
corporate action to authorize the execution, delivery and performance of
this Agreement and the performance of the transactions contemplated
hereby.
(b) Third Party Consents. Except as set forth on Schedule 10.1(b),
no Governmental Authority or other third party consents (including but
not limited to approvals, licenses, registrations, or declarations) are
required in connection with execution, delivery, or performance by Seller
of this Agreement.
(c) Execution and Enforceability. This Agreement has been duly
executed and delivered by Seller. Upon the due authorization, execution
and delivery of this Agreement by the Assuming Bank, this Agreement will
constitute the legal, valid and binding obligation of Seller,
enforceable, (subject to regulatory approval) in accordance with its
terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
or affecting creditors rights generally and by general equity principles.
(d) Title and Right to Convey. Seller has good title to, and is
the sole owner of, all of the Acquired Assets, free and clear of any
lien, pledge, claim, security interest, encumbrance, charge or
restriction of any kind; except for the Permitted Encumbrances.
(e) Compliance with Law.
(i) Seller is not in violation of any statute, regulation,
order, decision, judgment, or decree of, or any restriction
imposed by any Governmental Authority having jurisdiction over
Seller or any assets of Seller, or any foreign government or
agency thereof having such jurisdiction, with respect to the
conduct of the business of Seller, or the ownership of the
properties of Seller, which, either individually or in the
aggregate with all other such violations, would materially and
adversely affect the ability of Seller to perform, satisfy, or
observe any obligation or condition under this Agreement.
16
(ii) Neither the execution and delivery nor the performance by
Seller of this Agreement will result in any violation by Seller
of, or be in conflict with, any provision of any applicable law or
regulation, or any order, writ, or decree of any Governmental
Authority.
(f) Compliance with Law and Other Obligations.
(i) Seller is not in violation or breach of or in default
under (A) any obligation, agreement, covenant, or condition
contained in its charter or organizational documents, articles of
incorporation, or by-laws or (B) any contract, lease, or other
instrument to which Seller is a party (or which is binding on
Seller or any assets of Seller), which violation, breach, or
default, either individually or in the aggregate with all such
other violations, breaches and defaults, would materially and
adversely affect the Seller's ability to perform, satisfy, or
observe any obligation or condition under this Agreement.
(ii) Neither the execution and delivery nor the performance by
Seller of this Agreement will result in a violation, breach of, or
default under or be in conflict with: (A) its organizational
documents or charter, articles of incorporation or association, or
by-laws, or (B) any other agreement or instrument to which Seller
is a party, or which is binding on Seller or the assets of Seller,
or (C) any order, decree, award, or judgment issued by any
Governmental Authority which is binding on Seller or any assets of
Seller, and will not result in the creation of any Lien on the
assets of Seller.
(g) Litigation. There is no legal action, suit, investigation or
proceeding (whether or not Seller is a party thereto) pending or, to
Seller's knowledge, threatened against Seller or any assets of Seller which
questions the validity of this Agreement or any of the transactions
contemplated hereby or which would, if adversely determined, either
individually or in the aggregate with all such other actions, suits,
investigations or proceedings if adversely determined, materially and
adversely affect the use of the Acquired Assets or Seller's ability to
perform, satisfy, or observe any obligation or condition under this
Agreement.
(h) Environmental Compliance. To Seller's knowledge and except as
set forth on Schedule 10.1(h), the Seller is in compliance in all material
respects with all material federal, state, and local laws, regulations, and
ordinances relating to the environment and to the release, emission or
discharge of materials, wastes, substances, pollutants or contaminants into
the air, ground, or water applicable to the Bank Premises. There are no
material actions, suits, or proceedings pending or, to Seller's knowledge,
threatened against Seller by or before any Governmental Authority,
concerning any noncompliance or alleged noncompliance with any such laws,
regulations, and ordinances.
17
10.2 Representations and Warranties of ▇▇▇▇▇▇. ▇▇▇▇▇▇ represents and
warrants to Seller as follows:
(a) Corporate Existence and Authority. ▇▇▇▇▇▇ has full power and
authority to execute and deliver this Agreement and to perform his
obligations under this Agreement in accordance with its terms. ▇▇▇▇▇▇ has
taken all necessary corporate action to authorize the execution, delivery
and performance of this Agreement and the performance of the transactions
contemplated hereby.
(b) Third Party Consents. Except for the consent of the Federal
Deposit Insurance Corporation under 12 U.S.C. Section 1815 and 12 U.S.C.
Section 1828(c) and the consent of the Texas Banking Commissioner
pursuant to the Texas Finance Code, no Governmental Authority or other
third party consents (including but not limited to approvals, licenses,
registrations, or declarations) are required in connection with
execution, delivery, or performance by ▇▇▇▇▇▇ or the Assuming Bank of
this Agreement.
(c) Execution and Enforceability. This Agreement has been duly
executed and delivered by ▇▇▇▇▇▇. Upon the due authorization, execution
and delivery of this Agreement by Seller, this Agreement will constitute
the legal, valid and binding obligation of ▇▇▇▇▇▇, enforceable (subject
to regulatory approval) in accordance with its terms except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors
rights generally and by general equity principles.
(d) Compliance with Law.
(i) ▇▇▇▇▇▇ is not in violation of any statute, regulation,
order, decision, judgment, or decree of, or any restriction
imposed by any Governmental Authority having jurisdiction over
▇▇▇▇▇▇ or the Assuming Bank or any of his or its assets, or any
foreign government or agency thereof having such jurisdiction,
with respect to the conduct of the business of ▇▇▇▇▇▇ or the
Assuming Bank, or the ownership of the properties of ▇▇▇▇▇▇ or the
Assuming Bank, which, either individually or in the aggregate with
all other such violations, would materially and adversely affect
the ability of the Assuming Bank to perform, satisfy, or observe
any obligation or condition under this Agreement.
(ii) Neither the execution and delivery nor the performance
by ▇▇▇▇▇▇ or the Assuming Bank of this Agreement will result in
any violation by ▇▇▇▇▇▇ or the Assuming Bank of, or be in conflict
with, any provision of any applicable law or regulation, or any
order, writ, or decree of any Governmental Authority.
(e) Compliance with Obligations.
(i) ▇▇▇▇▇▇ is not in violation or breach of or in default
under any contract, lease, or other instrument to which ▇▇▇▇▇▇ is
a party (or which is binding on ▇▇▇▇▇▇ or the Assuming Bank or
any assets of ▇▇▇▇▇▇ or the Assuming Bank), which violation,
breach, or default, either individually or in the aggregate with
all such other violations, breaches and defaults, would
materially and adversely affect the Assuming Bank's ability to
perform, satisfy, or observe any obligation or condition under
this Agreement.
18
(ii) Neither the execution and delivery nor the performance by
▇▇▇▇▇▇ of this Agreement will result in a violation, breach of, or
default under or be in conflict with any agreement or instrument
to which ▇▇▇▇▇▇ is a party, or which is binding on ▇▇▇▇▇▇ or the
assets of ▇▇▇▇▇▇, or (C) any order, decree, award, or judgment or
issued by any Governmental Authority which is binding on ▇▇▇▇▇▇
or any assets of ▇▇▇▇▇▇, and will not result in the creation of
any Lien on the assets of ▇▇▇▇▇▇.
(f) Litigation. There is no legal action, suit, investigation or
proceeding (whether or not ▇▇▇▇▇▇ is a party thereto) pending or, to
▇▇▇▇▇▇'▇ knowledge, threatened against ▇▇▇▇▇▇ or of any of his assets
which questions the validity of this Agreement or any of the transactions
contemplated hereby or which would, if adversely determined, either
individually or in the aggregate with all such other actions, suits,
investigations or proceedings if adversely determined, materially and
adversely affect ▇▇▇▇▇▇'▇ or the Assuming Bank's ability to perform,
satisfy, or observe any obligation or condition under this Agreement.
(g) Capital. The Assuming Bank will have minimum capital of
$5,000,000 which the Assuming Bank and ▇▇▇▇▇▇ believe is sufficient
capital so as to preclude denial of regulatory approval of this
transaction on the basis of the adequacy of its capital.
(h) Knowledge of Breach. ▇▇▇▇▇▇ and ▇▇▇ ▇. ▇▇▇▇▇▇▇ do not have
knowledge of any breach of representation or warranty made by Seller in
this Agreement.
ARTICLE XI
CERTAIN COVENANTS OF SELLER
AND THE ASSUMING BANK
11.1 Covenants of Seller.
(a) General Covenants. Except as otherwise provided herein, Seller
hereby covenants and agrees that it shall do or cause to be done at all
times all things necessary to maintain and preserve and keep in full
force and effect its corporate existence, and all rights and franchises
material to the business of Seller.
(b) Operation of the Purchased Branches. (i) During the period
commencing on the date of this Agreement through the Closing, Seller
shall use its best efforts, except as specifically otherwise contemplated
by this Agreement:
19
(A) to preserve intact the Purchased Branches' management,
assets (including, but not limited to, Furniture and Equipment and
Fixtures) licenses, permits, authorizations, and relationships;
(B) to comply with all material contractual obligations
applicable to the Purchased Branches' operations, except those as
to which Seller may in good faith reasonably contest; and
(C) to maintain all the Purchased Branches' properties in
the repair, order and condition, of such properties, reasonable
wear and tear excepted, and maintain the insurance coverages from
reputable insurers which, in respect to amounts, types and risks
insured, are adequate for the Purchased Branches.
(c) Untrue Representations. Seller shall promptly notify ▇▇▇▇▇▇ in
writing if Seller has knowledge of any fact or condition that makes untrue,
or shows to have been untrue, in any material respect, any schedule or any
other information furnished pursuant to this Agreement by Seller to ▇▇▇▇▇▇
or any representation or warranty made in or pursuant to this Agreement or
that results in Seller's failure to comply with any covenant, condition or
agreement contained in this Agreement.
(d) Litigation and Claims. Seller shall promptly notify ▇▇▇▇▇▇ in
writing if Seller has knowledge of any litigation, or of any claim,
controversy or contingent liability that might be expected to become the
subject of litigation affecting the Acquired Assets or the Liabilities
Assumed (other than garnishment proceedings), and Seller shall promptly
notify the Assuming Bank of any legal action, suit or proceeding or
judicial, administrative or governmental investigation, pending or, to the
knowledge of Seller, threatened against Seller that questions or might
question the validity of this Agreement or the agreements contemplated
hereby, or any actions taken or to be taken by Seller pursuant hereto or
thereto or seeks to enjoin or otherwise restrain the transactions
contemplated hereby or thereby.
(e) Adverse Changes. Seller shall promptly notify in writing ▇▇▇▇▇▇
if, to Seller's knowledge, any change or development shall have occurred or
been threatened with regard to Seller, the Acquired Assets or the
Liabilities Assumed that has or may reasonably be expected to have or lead
to a Material Adverse Effect on Seller, the Acquired Assets or the
Liabilities Assumed. Notwithstanding the disclosure to ▇▇▇▇▇▇ of any such
change, Seller shall not be relieved of any liability to ▇▇▇▇▇▇ pursuant to
this Agreement for, nor shall the providing of such information by Seller
to ▇▇▇▇▇▇ be deemed a waiver by the Assuming Bank of, the breach of any
representation or warranty of Seller contained in this Agreement.
(f) Investigation. Between the date of this Agreement and the Closing
Date, Seller shall afford to ▇▇▇▇▇▇ and his authorized agents and
representatives reasonable access at mutually convenient times to the
Purchased Branches and to Records and other information within Seller's
20
possession relating to the Purchased Branches and the Acquired
Assets and Liabilities Assumed. Seller shall cause its personnel
to cooperate with ▇▇▇▇▇▇ and provide to ▇▇▇▇▇▇ reasonable
assistance in ▇▇▇▇▇▇'▇ investigation of matters relating to the
Purchased Branches and to the Acquired Assets and Liabilities
Assumed and ▇▇▇▇▇▇'▇ preparation for an orderly transition.
Notwithstanding the foregoing, the parties agree that ▇▇▇▇▇▇'▇
investigations and preparations for the transition shall be
conducted in a manner which does not unreasonably interfere with
the Purchased Branches' normal operations, customers and employee
relations. All information provided by a party hereto (the
"Providing Party") to the other Party hereto (the "Receiving
Party") will be kept confidential by the Receiving Party and
shall not, except as required by law or with the prior written
consent of Providing Party, be disclosed by the Receiving Party
in any manner whatsoever except as contemplated herein, in whole
or in part, and shall not be used by the Receiving Party, other
than in connection with the transactions contemplated by this
Agreement. In the event that the transactions contemplated by
this Agreement shall not be consummated, all copies of the
information, including that portion of the information which
consists of analyses, compilations, forecasts, studies or other
documents prepared by the Receiving Party which reflect such
information, will be, at the Receiving Party's sole option,
either returned to Providing Party or destroyed upon the written
request of Providing Party. A written certification of such
destruction shall be delivered by the Receiving Party promptly
following such destruction. The foregoing shall not apply to any
information which (i) is or becomes generally available to the
public other than as a result of a disclosure by the Receiving
Party, or (ii) becomes available to the Receiving Party on a
nonconfidential basis from a source which is not prohibited from
disclosing such information to the Receiving Party by a legal,
contractual or fiduciary obligation to Providing Party. In the
event that the Receiving Party becomes legally compelled to
disclose any of the information furnished to it by Providing
Party, the Receiving Party will provide Providing Party with
prompt notice so that Providing Party may seek a protective order
or other appropriate remedy or waive compliance with the
provisions of this Agreement. In the event that such protective
order or other remedy is not obtained, or that Providing Party
waives compliance with the provisions of this Agreement, the
Receiving Party shall furnish only that portion of the
information that is legally required and shall exercise
reasonable efforts to obtain reliable assurance that confidential
treatment will be afforded the information. The Receiving Party
shall not be liable for the disclosure of the information
hereunder to a tribunal compelling such disclosure unless such
disclosure to such tribunal was caused by or resulted from a
previous disclosure by the Receiving Party or any of its agents,
affiliates or advisors not permitted by this Agreement. In any
filings that may be required to obtain the regulatory approvals,
▇▇▇▇▇▇ or the Assuming Bank will request confidential treatment
of this Agreement, including the exhibits and schedules hereto,
and the amount of the Purchase Price and will consult with the
other party hereto prior to the disclosure of this Agreement, the
exhibits or the schedules or the amount of the Purchase Price in
the event such request is denied.
21
Notwithstanding any other provision of this Agreement,
▇▇▇▇▇▇ and his agents or representatives shall not perform any
investigation or study of Seller, or any asset or property of
Seller which may involve the intrusive or destructive sampling or
analysis or chemical testing of any portion of such asset or
property or any improvements thereon, including without
limitation, of any soil, water or groundwater on, under or about
such asset or property ("Phase II Investigation"), without first
(a) submitting to Seller a detailed description of (i) the work to
be performed as part of the Phase II Investigation, (ii) the
persons to undertake such Phase II Investigation, and (iii) the
types and amounts of insurance coverage maintained by such
persons, and (b) obtaining the prior written consent of Seller as
to such matters. Seller may grant or withhold such consent in its
sole discretion and may grant such consent subject to such terms,
conditions or restrictions as Seller may in its sole discretion
require. In all events, Seller or its representatives shall have
the right, but not the obligation, to observe any and all
activities associated with performance of any agreed Phase II
Investigation, and may obtain half of any samples which ▇▇▇▇▇▇ or
his representatives may collect during the Phase II Investigation.
In the event ▇▇▇▇▇▇ or its representatives conduct a Phase II
Investigation, ▇▇▇▇▇▇ shall cause (x) any investigation-derived
waste generated or created in connection with performance of the
Phase II Investigation (including without limitation, drill
cuttings, purged or developed water, or sample remnants) to be
removed from any investigated property, (y) any ▇▇▇▇▇ installed
during the Phase II Investigation to be plugged and abandoned, and
(z) the restoration of any investigated property to substantially
the same physical condition which existed before commencement of
the Phase II Investigation, all within fifteen (15) days after
completion of the field activities related to the Phase II
Investigation, and in compliance with applicable laws and
regulations. ▇▇▇▇▇▇ shall be responsible for executing on his own
behalf, and in compliance with applicable laws and regulations any
and all manifests, shipping documents, plugging and abandoning
reports and similar documents in connection with its obligations
under this paragraph. ▇▇▇▇▇▇ and the Assuming Bank agree to
indemnify and hold Seller harmless from and against any and all
claims, liabilities, damages, expenses, and causes of action
directly or indirectly caused by ▇▇▇▇▇▇'▇ inspections of the real
or personal property of Seller, including without limitation, any
Phase II Investigation.
(g) EDP Conversion. Between the date hereof and the Closing
Date, Seller shall use its best efforts to cooperate in the
conversion of the Purchased Branches' from Seller's existing
electronic data processing systems to the systems of the Assuming
Bank. Assuming Bank shall convert the Purchased Branches' existing
electronic data processing systems to the systems of the Assuming
Bank on the Closing Date. Seller will provide conversions files in
Seller's standard format. Seller will provide to Assuming Bank a
maximum of three test tapes. Service for debit and ATM cards on
Deposit accounts shall be discontinued at the end of Seller's
business day on the Closing Date.
(h) Condemnation. If prior to Closing all or any portion of
the Bank Premises is taken or is made subject to eminent domain or
other governmental acquisition proceedings, then Seller shall
promptly notify Assuming Bank thereof, and on the Closing Date pay
to the Assuming Bank all payments received or to be received in
22
respect thereto; provided, however, that the Assuming Bank shall
have the right to terminate this Agreement in the event of that
the Book Value of the portion of the Bank Premises so taken or
made subject to eminent domain is in excess of $50,000, unless
Seller agrees to pay the Assuming Bank the difference between the
fair market value of such portion and the condemnation award.
(i) Insurance Proceeds and Casualty Payments. In the event
of any damage, or destruction affecting the Acquired Assets
between the date hereof and the time of the Closing, Seller shall
deliver to the Assuming Bank notice of such damage or destruction
and, at the Assuming Bank's election, shall either fix or repair
such damage or destruction or pay to the Assuming Bank the
insurance proceeds, to the extent of the applicable amount set
forth in Section 7.1(a) hereof with respect to Bank Premises,
Fixtures and the replacement cost with respect to the Furniture
and Equipment, as the case may be, received (or with respect to
insurance proceeds, which would be received assuming Seller's
insurance policy had no deductible) by Seller as a result thereof;
provided, however, that the Assuming Bank shall have the right to
terminate this agreement in the event of that the Book Value of
such Acquired Assets so damaged or destroyed is in excess of
$50,000, unless Seller agrees to pay the Assuming Bank the
difference between the fair market value of such Acquired Assets
and the insurance proceeds.
11.2 Covenants of ▇▇▇▇▇▇.
(a) Corporate Existence. Except as otherwise provided
herein ▇▇▇▇▇▇ hereby covenants and agrees that he shall do or
cause to be done at all times all things necessary to maintain and
preserve and keep in full force and effect the Assuming Bank's
corporate existence, and all rights and franchises material to the
business of the Assuming Bank.
(b) Solicitation of Employees. In the event this Agreement
is terminated in accordance with its terms, for a period of one
year after the date of such termination, ▇▇▇▇▇▇ and the Assuming
Bank will not, without the prior approval of Seller, directly or
indirectly (excluding contacts initiated by the employee of Seller
and any contact that results from advertisements in public
journals or mass media or contact by search firms engaged by
▇▇▇▇▇▇ or the Assuming Bank in the ordinary course of business and
directed only as to the position to be filled and not directed as
to a specific employee or group of employees from Seller) hire or
solicit for employment, or otherwise disrupt the employment
relationship with Seller of any person who is employed by Seller,
the Purchased Branches or any of their affiliates, and whose
employment relates to the Purchased Branches or with whom ▇▇▇▇▇▇
or the Assuming Bank has had significant contact.
11.3 Best Efforts; Taking of Necessary Action. Each of the
parties hereto agrees to use its best efforts promptly to take or cause to
be taken all action and promptly to do or cause to be done all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this
Agreement. In case at any time after the Closing Date any further action is
necessary, proper or advisable to carry out the purposes of this Agreement,
23
as soon as reasonably practicable each party to this Agreement shall cause its
proper officers and/or directors to take all such necessary action. Without
limiting the foregoing, ▇▇▇▇▇▇ and the Assuming Bank agree to promptly prepare
and file all applications and other notices required in connection with on or
before the later of July 26, 2002 or the 15th business day after the date
hereof, and to use its best efforts to obtain promptly and comply with all
conditions contained in, the regulatory approvals described in Section 10.2(b)
and any other consent, approval or other action by, or notice to or registration
or filing with, any governmental or administrative agency or authority required
or necessary to be made, obtained or complied with, as the case may be, by
▇▇▇▇▇▇ or the Assuming Bank in connection with the performance of this Agreement
by ▇▇▇▇▇▇ or Assuming Bank or the consummation of the transactions contemplated
hereby; provided, that any delay by Seller in furnishing information for the
application or reviewing the application shall extend the period in which ▇▇▇▇▇▇
or the Assuming Bank is required to file the application under this Section 11.3
▇▇▇▇▇▇ shall provide an information request to Seller for Seller's information
to be included in the application on or before the tenth business day after the
date hereof. To the extent that any application filed in connection with
obtaining any such approval contains any significant information relating to
Seller, prior to submitting such application to any regulatory agency, ▇▇▇▇▇▇
and the Assuming Bank will permit Seller to review such information and will
consider in good faith the suggestions of Seller with respect thereto. Seller
shall have the right to approve any such information that relates to Seller,
provided that such approval shall not be unreasonably withheld. ▇▇▇▇▇▇ and the
Assuming Bank shall use their best efforts to insure that any information
provided by Seller, its Affiliates or representatives to be submitted in
connection with submissions to governmental or administrative agencies or
authorities receives confidential treatment if so requested by Seller.
▇▇▇▇▇▇ and Assuming Bank shall provide to Seller copies of all
applications and other notices required in connection with the regulatory
approvals described in Section 10.2(b) (excluding confidential information of
the Assuming Bank and its Affiliates) and any other consent, approval or other
action by, or notice to, or registration or filing in connection with the
transaction contemplated by this Agreement within five days of such submissions.
▇▇▇▇▇▇ and Assuming Bank shall provide copies of any comments, requests or
actions by governmental or administrative agencies or authorities to Seller
within five days of ▇▇▇▇▇▇ and Assuming Bank's receipt thereof. ▇▇▇▇▇▇ and
Assuming Bank shall not be required to provide copies of any such comments or
requests which relate to personal information of directors or regulatory
examinations of Assuming Bank and its Affiliates, unless such comments or
requests indicate that the applications related thereto may not be approved.
Information provided under this paragraph shall be subject to the provisions of
Section 11.1(f).
11.4 Use of Names, Trademarks and Service Marks. Anything herein to the
contrary notwithstanding, no interest in or right to use any logo, name,
trademark or service ▇▇▇▇ presently or previously used by Seller is being
conveyed pursuant to this Agreement. ▇▇▇▇▇▇ and the Assuming Bank each agree
that on and after the Closing Date neither it nor any of its Affiliates
(including the Purchased Branches) will use names containing the words
"Sterling" or "CaminoReal" in connection with any business or activity engaged
in by ▇▇▇▇▇▇ and Assuming Bank and their Affiliates; provided, however, that
▇▇▇▇▇▇ and Assuming Bank may identify the Acquired Assets and the Liabilities
24
Assumed as being formerly owned by Seller in connection with any customer or
regulatory inquiry. Promptly after the Closing Date, the Assuming Bank shall
commence the removal of the trade names, names, service marks, logos, insignia,
slogans, emblems, symbols, designs, and other identifying characteristics
("names") from all premises, equipment, interior decor items, fixtures and
furnishings. Such removal shall be at the sole expense of the Assuming Bank and
shall be completed not later than five days after the Closing Date. Promptly
after the Closing Date, Seller shall, and the Assuming Bank will permit Seller
(at Seller's expense) to, remove all exterior signs containing Seller's name. On
the Closing Date, Seller will remove all printed materials and related business
literature associated with the Purchased Branches.
11.5 Allocation of Purchase Price. The parties to this Agreement agree to
allocate the Purchase Price in accordance with the rules under Section 1060 of
the Code, and the Treasury Regulations promulgated thereunder. Such allocation
shall be based on the fair market value of the Acquired Assets. The Assuming
Bank agrees to provide Seller with a schedule allocating the Purchase Price
among the Acquired Assets and with a properly completed Internal Revenue Service
Form 8594 within 60 days after the Closing Date but in no event later than 90
days before the due date, including extensions, for the consolidated federal
income tax return that includes Seller for the taxable year including the
Closing Date. If Seller objects to any items reflected on such schedule, Seller
shall notify the Assuming Bank of such objection and its reasons for objecting,
in which case the Assuming Bank and Seller shall attempt to resolve the
disagreement. If the Assuming Bank and Seller cannot resolve the disagreement,
the allocation shall be determined by a nationally recognized independent
appraiser selected by Seller and reasonably acceptable to the Assuming Bank. The
fees and expenses of such appraiser shall be borne equally by the Assuming Bank
and Seller. Seller and the Assuming Bank agree to act in accordance with the
computations and allocations contained in the schedule as finally agreed or
determined by such independent appraiser (including any modifications thereto
reflecting any post-closing adjustments) in any relevant Tax Returns or similar
filings (including any forms or reports required to be filed pursuant to Section
1060 of the Code or the Treasury Regulations promulgated thereunder ("1060
Forms")) and to file such 1060 Forms in the manner required by applicable law.
Seller and the Assuming Bank will promptly notify each other in accordance with
Section 14.6 of any challenge by any tax authority to such computations or
allocations.
ARTICLE XII
EMPLOYEE PLANS
12.1 Participation in Company Plans. Effective as of the Closing Date,
employees of the Purchased Branches shall cease participation in all plans,
programs, policies and arrangements maintained for their benefit by Seller or
any of its Affiliates.
12.2 Claims Incurred Prior to and After Closing. Seller will retain
responsibility for and continue to pay all medical, life insurance, disability
and other welfare plan expenses and benefits for each employee of the Purchased
Branches or their covered dependents which are covered and payable under
Seller's Welfare Benefit Plans with respect to claims incurred by such employees
and former employees or their covered dependents prior to the Closing Date.
Expenses and benefits with respect to claims incurred by employees of the
Purchased Branches or their covered dependents on or after the Closing Date
25
shall be the covered under plans provided by the Assuming Bank. For purposes of
this Section, a claim is deemed incurred when the services that are the subject
of the claim are performed: in the case of life insurance, when the death
occurs; in the case of long-term disability benefits, when the disability
occurs; and, in the case of a hospital stay, when such stay commences. Seller
will retain responsibility for all welfare plan expenses and benefits, if any,
including responsibility for compliance with COBRA, for all former employees of
the Purchased Branches who are not employed by Seller on the Closing Date or
such former employees' Qualified Beneficiaries and for all Qualified
Beneficiaries with respect to Seller's plans who are eligible for COBRA coverage
prior to the Closing Date.
12.3 Termination or Hiring of Employees. ▇▇▇▇▇▇ and the Assuming Bank
agree that no employees of Purchased Branches may be terminated and no persons
may be hired at the Purchased Branches prior to or on the Closing Date without
the prior written approval of the President and Chief Executive Officer or the
Executive Vice President and Chief Financial Officer of Seller.
12.4 Inactive Employees. Notwithstanding anything to the contrary
contained herein, any employee of the Purchased Branches who is not in active
employment status on the Closing Date shall be transferred to the Assuming Bank
unless such employee would be adversely impacted with respect to medical or
other similar benefits ("Adversely Affected Employees"). Adversely Affected
Employees shall remain employees of Seller on such date and shall be entitled to
such benefits and compensation from Seller as otherwise provided immediately
prior to the Closing Date. Any Adversely Affected Employee who returns to active
employment status shall be employed by the Assuming Bank and treated as if
he/she were an employee of the Assuming Bank for all purposes from and after the
Closing Date except that compensation and benefits provided to which he/she is
entitled while not in active employment status shall be the responsibility of
Seller.
ARTICLE XIII
INDEMNIFICATION
13.1 Indemnification.
(a) From the Closing Date and for a period of eighteen (18) months
thereafter, Seller shall indemnify, hold harmless, and defend the
Assuming Bank, its Affiliates and their respective directors, officers,
agents and employees (collectively, "Assuming Bank Indemnified Persons")
from and against any and all costs, losses, liabilities (including,
without limitation, STRICT LIABILITIES), expenses (including, without
limitation, reasonable attorneys' fees and expenses), judgments, fines
and settlements actually and reasonably incurred by any such indemnitee
in connection with any and all actions, suits, claims, investigations or
other proceedings based upon:
(i) any liability of Seller or any of its Affiliates not
expressly assumed by the Assuming Bank pursuant hereto;
26
(ii) any breach by Seller of any of its representations,
warranties, covenants or agreements herein or in any instrument,
certificate, or agreement delivered by Seller to the Assuming Bank
pursuant hereto except to the extent such breach relates to matters
supervised or controlled by ▇▇▇▇▇▇ or ▇▇▇ ▇. ▇▇▇▇▇▇▇ or persons
within their chains of command; or
(iii) any check or other instrument drawn on or deposited into a
Purchased Branches Deposit account prior to the Closing Date upon
which a forgery (signature or endorsement) or alteration claim is
asserted against the Assuming Bank.
(b) From the Closing Date and for a period of eighteen (18) months
thereafter, the Assuming Bank shall indemnify, hold harmless and defend
Seller, its Affiliates and their respective directors, officers, agents
and employees ("Seller's Related Parties") from and against any and all
costs, losses, liabilities (including, without limitation, STRICT
LIABILITIES), expenses (including, without limitation, reasonable
attorneys' fees and expenses), judgments, fines and settlements actually
and reasonably incurred by any such indemnitee in connection with any and
all actions, suits, claims, investigations or other proceedings based
upon:
(i) performance or nonperformance by the Assuming Bank of any
and all liabilities of Seller assumed by the Assuming Bank pursuant
to this Agreement; or
(ii) any breach by the Assuming Bank of any of its
representations, warranties, covenants or agreements herein or in
any instrument, certificate, or agreement delivered by the Assuming
Bank to Seller pursuant thereto.
(c) With respect to any claim made or threatened against any
indemnitee hereunder for which such indemnitee is or may be entitled to
indemnification hereunder, it shall be a condition to such
indemnification that such indemnitee shall:
(i) promptly upon discovering any facts or circumstances that
might reasonably be expected to give rise to such a claim, give
written notice of such facts or circumstances to the indemnitor;
(ii) as soon as practicable after such a claim is made or
threatened, give written notice thereof to the indemnitor, which
notice shall specify in reasonable detail the nature of the claim
and the amount (or an estimate of the amount) of the claim;
(iii) provide to the indemnitor such information and cooperation
with respect to such claim as the indemnitor may reasonably require
including, without limitation, (a) making records and appropriate
personnel available to the indemnitor at such times as the
indemnitor shall request (provided that such personnel are under the
employ of the indemnitee as such time), (b) providing copies of
27
invoices or other evidence of expense incurred, and (c) providing
the indemnitor copies of any process, pleadings, correspondence
or other writings relating to the claim;
(iv) cooperate and take all such steps as the indemnitor may
reasonably request to preserve and protect any defense to such
claim; and
(v) upon reasonable prior notice, afford to the indemnitor the
right, which the indemnitor may exercise at its (or their) sole
discretion and at its (or their) own expense, to participate in
(and/or assume full responsibility for the direction of) the
investigation, defense and/or settlement of such claims.
13.2 Limitations on Indemnification. Notwithstanding anything to the
contrary contained in this Article XIII, no indemnification shall be required to
be made by either party until the aggregate amount of all such claims by a party
exceeds $25,000. Once such aggregate amount exceeds $25,000, such party shall
thereupon be entitled to indemnification for all amounts in excess of such
$25,000. IN ADDITION, THE PARTIES SHALL HAVE NO OBLIGATIONS UNDER THIS ARTICLE
XIII FOR ANY CONSEQUENTIAL LIABILITY, DAMAGE OR LOSS THE INDEMNIFIED PARTY MAY
SUFFER AS THE RESULT OF ANY DEMAND, CLAIM OR LAWSUIT.
13.3 Exclusivity of Remedies. The remedies of the Assuming Bank
Indemnified Persons under Section 13.1(a) and Seller's Related Parties under
Section 13.1(b) shall be considered the Assuming Bank Indemnified Persons' and
Seller's Related Parties sole and exclusive remedies. Without limiting the
generality of the foregoing, except with respect to such remedies specifically
set forth herein, the Assuming Bank hereby releases, waives and agrees not to
▇▇▇ Seller's Related Parties and their successors and assigns for any and all
claims, causes of action, rights of contribution, cost recovery, losses,
liabilities, suits, costs, fees, judgments or expenses which may now exist or
which may hereafter arise, REGARDLESS OF WHETHER CAUSED IN WHOLE OR IN PART BY
THE SOLE, CONTRIBUTORY, PASSIVE OR PARTIAL NEGLIGENCE OR STRICT LIABILITY OF
SELLER OR ANY OF THE SELLER'S RELATED PARTIES, in connection with:
(i) any material, waste, substance, substance, pollutant or
contaminant, the use, collection, handling, recycling, generation,
treatment, storage, disposal, release or transportation of which by the
Seller or any of its predecessors, or is or may become regulated or
controlled by any Governmental Authority, or the improper handling,
management or disposal of which may affect human health or safety,
property (or the use thereof) or the environment, or
(ii) the compliance by Seller or any of its predecessors, or any
of its current or former real or personal property, with applicable laws,
regulations, standards to, pollutant or contaminant limitations, orders
or directives pertaining directly or indirectly to human health or safety
or the environment, including without limitation the laws listed on
Schedule 13.3 as amended from time to time, and any state or local
analogue of the same.
28
ARTICLE XIV
MISCELLANEOUS
14.1 Entire Agreement. This Agreement embodies the entire agreement of
the parties hereto in relation to the subject matter herein and supersedes all
prior understandings or agreements, oral or written, between the parties.
14.2 Headings. The headings and subheadings of the Table of Contents,
Articles and Sections contained in this Agreement, except the terms identified
for definition in Article I and elsewhere in this Agreement, are inserted for
convenience only and shall not affect the meaning or interpretation of this
Agreement or any provision hereof.
14.3 Governing Law. This Agreement and the rights and obligations
hereunder shall be governed by and construed in accordance with the laws of the
State of Texas.
14.4 Successors. All terms and conditions of this Agreement shall be
binding on the successors and assigns of Seller and the Assuming Bank. Except as
otherwise expressly provided in this Agreement, nothing expressed or referred to
in this Agreement is intended or shall be construed to give any Person other
than Seller and the Assuming Bank any legal or equitable right, remedy, or claim
under or with respect to this Agreement or any provisions contained herein, it
being the intention of the parties hereto that this Agreement, the obligations
and statements of responsibilities hereunder, and all other conditions and
provisions hereof are for the sole and exclusive benefit of Seller and the
Assuming Bank and for the benefit of no other Person.
14.5 Modification; Assignment.
(a) No amendment or other modification, rescission, release, or
assignment of any part of this Agreement shall be effective except
pursuant to a written agreement subscribed by the duly authorized
representatives of the parties hereto; and
(b) Seller and ▇▇▇▇▇▇ agree to enter into an amendment of this
Agreement in substantially the form of Exhibit E attached hereto for the
purpose of adding the Assuming Bank as a party hereto. As a condition to
Seller's entry into such an amendment, the Assuming Bank shall deliver to
Seller a certificate in substantially the same form of Exhibit F attached
hereto.
14.6 Notice. Any notice, request, demand, consent, approval or other
communication to any party hereto shall be effective when received and shall be
given in writing, and delivered in person against receipt therefor, or sent by
certified mail, postage prepaid, courier service, telex, or facsimile
transmission to such party (with copies as indicated below) at its address set
forth below or at such other address as it shall hereafter furnish in writing to
the other parties. All such notices and other communications shall be deemed
given on the date received by the addressee.
29
Sterling Bank:
▇. ▇▇▇▇▇▇ Bridgwater
Sterling Bank
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Sterling Bancshares, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ Liddell & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇ or the Assuming Bank
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
P. ▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
J. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Temple & Temple
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
14.7 Manner of Payment. All payments due under this Agreement shall be in
lawful money of the United States of America in immediately available funds as
each party hereto may specify to the other parties.
30
14.8 Costs, Fees and Expenses. Except as otherwise specifically provided
herein, each party hereto agrees to pay all costs, fees and expenses which it
has incurred in connection with or incidental to the matters contained in this
Agreement, including without limitation any fees and disbursements to its
accountants and counsel.
14.9 Waiver. Seller and the Assuming Bank may waive their respective
rights, powers, or privileges under this Agreement; provided, that such waiver
shall be in writing; and further provided, that no failure or delay on the part
of Seller or the Assuming Bank to exercise any right, power, or privilege under
this Agreement shall operate as a waiver thereof, nor will any single or partial
exercise of any right, power, or privilege under this Agreement preclude any
other or further exercise thereof or the exercise of any other right, power, or
privilege by Seller or the Assuming Bank under this Agreement, nor will any such
waiver operate or be construed as a future waiver of such right, power, or
privilege under this Agreement.
14.10 Severability. If any provision of this Agreement is declared
invalid or unenforceable, then, to the extent possible, all of the remaining
provisions of this Agreement shall remain in full force and effect and shall be
binding upon the parties hereto.
14.11 Termination of Agreement.
(a) This Agreement may be terminated at any time prior to the
Closing:
(i) By mutual agreement of Seller and ▇▇▇▇▇▇ and Assuming
Bank;
(ii) By Seller or ▇▇▇▇▇▇ and Assuming Bank upon notice
given to the other in the event that the other shall, contrary to
the terms of this Agreement, fail or refuse to consummate the
Closing contemplated hereby or to take any other action referred
to herein necessary to consummate the Closing contemplated hereby,
after affording such defaulting party a 30 day period after notice
in which to cure;
(iii) By Seller, ▇▇▇▇▇▇ or the Assuming Bank upon notice
given to the other if the Closing shall not have taken place on or
before the earlier to occur of February 28, 2003 and the
expiration of 90 days from the date of the last received required
regulatory approval;
(iv) By Seller if ▇▇▇▇▇▇ and the Assuming Bank have not
filed its or their regulatory applications on or before the later
to occur of the 15th business day after the date hereof or July
26, 2002;
(v) By Seller, ▇▇▇▇▇▇ or the Assuming Bank if ▇▇▇▇▇▇'▇ and
the Assuming Bank's applications are disapproved by the Assuming
Bank's regulatory agencies;
(vi) By Seller or the Assuming Bank upon written notice to
the other party if any court or governmental authority of
competent jurisdiction shall have issued a final permanent order,
enjoining or otherwise prohibiting the transactions contemplated by
31
this Agreement, or shall have issued an order denying approval of the
purchase and assumption and the other transactions contemplated
hereby, and the time for appeal or petition for reconsideration of
such order shall have expired; or
(b) In the event of the termination of this Agreement as provided
in this Section, this Agreement shall forthwith become wholly void and of
no further force and effect other than Section 11.1(f) with respect to
information provided to the Assuming Bank and Section 11.2(b) and, other
than as set forth in Section 14.11(c), there shall be no liability on the
part of Seller, ▇▇▇▇▇▇ or the Assuming Bank or their respective officers
or directors (except as set forth in this Section. The obligations of the
parties to this Agreement under this Section shall survive any such
termination.
(c) Prior to the date hereof, ▇▇▇▇▇▇ has deposited with Seller the
sum of $50,000 ("Prepayment Amount") which sum shall be applied to the
payment of the Purchase Price at Closing. In the event the Closing does
not occur on or before February 28, 2003, the entire Prepayment Amount
shall be forfeited to Seller.
14.12 Survival of Representations and Warranties. The representations and
warranties of the parties in this Agreement shall survive the Closing for a
period of eighteen (18) months.
14.13 Public Notice. All written notices to third parties (including
customers of the Branches) and all public announcements and press releases
concerning the transactions contemplated by this Agreement made prior to the
Closing Date shall be jointly planned, coordinated and reviewed by Seller and
Assuming Bank.
14.14 Counterparts. This Agreement may be executed in any number of
counterparts and by the duly authorized representative of a different party
hereto on separate counterparts, each of which when so executed shall be deemed
to be an original and all of which when taken together shall constitute one and
the same Agreement.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the date first above
written.
STERLING BANK
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., Executive Vice President
and Chief Financial Officer
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
33
FIRST AMENDMENT TO PURCHASE AND ASSUMPTION AGREEMENT
This First Amendment to Purchase and Assumption Agreement (this
"Amendment") dated as of August 2, 2002 is entered into by and among Sterling
Bank ("Seller") and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇").
WHEREAS, Seller and ▇▇▇▇▇▇ entered into a Purchase and Assumption
Agreement dated as of July 12, 2002 (the "P&A Agreement");
WHEREAS, the parties desire to extend the time for filing of
applications necessary to consummate the transactions contemplated by the P&A
Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and in the P&A Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
1. Capitalized terms used herein and not defined herein shall have
the meanings set forth in the P&A Agreement.
2. The third sentence of the first paragraph of Section 11.3 of
the P&A Agreement is hereby amended to replace the phrase "the
later of July 26, 2002 or the 15th business day after the
date hereof" with the phrase "August 9, 2002."
3. Section 14.11(a)(iv) of the P&A Agreement is hereby amended in
full as follows:
(iv) By Seller if ▇▇▇▇▇▇ and the Assuming Bank have
not filed its or their regulatory applications on or
before August 9, 2002;
4. Except as herein provided, the terms of the P&A Agreement shall
remain in full force and effect.
5. This Amendment may be executed in several counterparts, and by
the parties on separate counterparts, and all such counterparts,
when so executed and delivered, shall constitute but one and
the same agreement.
[Signature Page Follows]
IN WITNESS WHEREOF the parties have executed this Amendment as of the
date first written above.
STERLING BANK
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
---------------------------------
Title: Sr. V. P. & General Counsel
--------------------------------
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇