Exhibit (2)C
PURCHASE AND ASSUMPTION AGREEMENT
This Agreement, dated as of September , 2000, is by and between First
National Bank, a national banking association organized under the laws of the
United States of America ("Buyer"), and First Union National Bank, a national
banking association organized under the laws of the United States of America
("Seller").
RECITALS
WHEREAS, Seller desires to sell certain of its Branches, together with
the Assets, the Deposits and the other Liabilities (each as hereinafter
defined) set forth herein; and
WHEREAS, Buyer desires to purchase the Branches, including the Assets,
and to assume the Deposits and the other Liabilities set forth herein;
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the parties hereto hereby agree as follows:
I. DEFINITIONS
1.1 Certain Defined Terms.
Some of the capitalized terms appearing in this Agreement are
defined below. The definition of a term expressed in the singular also
applies to that term as used in the plural and vice versa. The word
"including" as used herein shall mean "including without limitation."
"Adjusted Closing Statement" has the meaning set forth in Section
3.2(b) of this Agreement.
"Affiliate" means a Person that directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with, a specified Person, except in those cases where the controlling
Person exercises control solely in a fiduciary capacity.
"Amount of Premium" has the meaning set forth in Section 3.1 of
this Agreement.
"Assets" has the meaning set forth in Section 2.1 of this
Agreement.
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"Benefit Plan" means any pension, profit-sharing, or other
employee benefit, fringe benefit, severance or welfare plan maintained by or
with respect to which contributions are made by, Seller or any of its
Affiliates with respect to Seller's Employees.
"Branches" means those branch offices and/or financial centers of
Seller listed on Schedule 1.1(a), indicating whether such Branch is Owned Real
Property or subject to a Ground Lease.
"Business Day" means any Monday, Tuesday, Wednesday, Thursday or
Friday on which Seller is open for business.
"Buyer Material Adverse Effect" means an event, occurrence or
circumstance which has a material adverse effect on Buyer's ability to timely
perform its obligations under this Agreement or consummate the transactions
contemplated by this Agreement.
"Cash Reserve Lines of Credit" means those consumer lines of
credit made available to customers of the Branches as a protection against
overdrafts on the Deposit Accounts.
"Cash Reserve Loans" means those loans outstanding on the
Closing Date pursuant to Cash Reserve Lines of Credit.
"Closing" means the purchase of the Assets by Buyer and the
assumption of the Liabilities by Buyer on the Closing Date.
"Closing Date" has the meaning set forth in Section 9.1 of this
Agreement.
"Closing Statement" has the meaning set forth in Section 3.2(a)
of this Agreement.
"Consumer Loans" means the consumer direct installment loans and
certain other consumer lines of credit and loans relating to the Branches, as
of the Closing Date. A listing of all such loans, as of July 31, 2000, is set
forth on Schedule 1.1(b), and such schedule shall be updated by Seller in
connection with the preparation of the Closing Statement and the Adjusted
Closing Statement as set forth in Sections 3.1 and 3.2, respectively.
"Conversion Fee" has the meaning set forth in Section 2.6 of
this Agreement.
"Deposit Accounts" means the deposit accounts at the Branches, the
balances of which are included in the Deposits or would be so included if the
Deposit Account had a positive balance.
"Deposits" means all deposits (as defined in 12 U.S.C. Section
1813(l)) which are booked at each of the Branches on the Closing Date,
including, without limitation, consumer and business and commercial (i)
demand deposits, (ii) interest checking accounts, (iii) money market accounts,
(iv) savings deposits, (v) time deposits, (vi) jumbo time deposits, (vii)
deposits held pursuant to Retirement Plans, and (viii) deposits relating to
debit cards and ATM cards, including in each case accrued but unpaid interest
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and both collected and uncollected funds, but excluding (x) deposits held in
accounts for which Seller acts as fiduciary (other than deposits held by
Retirement Plans); (y) deposits held pursuant to Seller's CAP asset management
accounts; and (z) deposits constituting official checks, travelers checks,
money orders or certified checks.
"Employees" means the employees of Seller employed at the
Branches on the Closing Date, and listed on Schedule 8.1, as such schedule may
be adjusted on the Closing Date.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" means any entity that is considered one employer
with Seller under Section 4001 of ERISA or Section 414 of the Internal Revenue
Code of 1986, as amended.
"Excluded Loan" has the meaning set forth in this Section 1.1 in
the definition of Loans.
"Federal Funds Rate" means, for any day, the rate per annum
(expressed on a basis of calculation of actual days in a year) equal to the
"near closing bid" federal funds rate published in The Wall Street Journal on
the Business Day following the Closing Date.
"Fixed Assets" means all fixtures (including signage poles),
leasehold improvements, furnishings (excluding artwork owned by Seller),
vaults, safe deposit boxes, equipment (including, for example, all ATM
machines, but excluding any proprietary software), communications equipment,
supplies (other than forms and other supplies which bear Seller's name or
logo), and other personal property, which are owned by Seller and which are
located at the Owned Real Property and the Leased Facilities on the Closing
Date, and which are set forth on Schedule 1.1(c).
"Governmental Entity" means any government or any agency, bureau,
board, commission, court, department, official, political subdivision,
tribunal or other instrumentality of any government having authority in the
United States, whether federal, state or local.
"Ground Lease" means the lease agreement relating to the ground
lease associated with the Wytheville Branch.
"Hazardous Material" means any substance presently listed,
defined, designated or classified as hazardous, toxic, radioactive or
dangerous or otherwise regulated, under any applicable state or federal law
relating to the protection, preservation or restoration of the environment,
including, but not limited to, the following federal environmental laws: the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
the Superfund Amendment and Reauthorization Act, the Water Pollution Control
Act of 1972, the Clean Air Act, the Clean Water Act, the Resource Conservation
and Recovery Act of 1976, the Solid Waste Disposal Act, the Toxic Substances
Control Act and the Insecticide, Fungicide and Rodenticide Act, each as
amended.
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"Leased Facilities" means the land relating to the Wytheville
Branch that is leased pursuant to the Ground Lease.
"Liabilities" has the meaning set forth in Section 2.2 of this
Agreement.
"Loan Instruments" means the loan agreements, promissory notes,
mortgages, deeds of trust, security agreements, pledge agreements, guaranty
agreements, insurance policies, financing statements, and any other such
contract documents relating to the Loans.
"Loans" means the Consumer Loans to be transferred to Buyer on
the Closing Date; provided, however, Loans shall not include (i) non-accrual
loans (which term shall include loans in which the collateral securing the
same has been repossessed or as to which collection efforts have been
instituted or claim and delivery or foreclosure proceedings have been filed);
(ii) loans 90 days or more past due as to principal or interest; or (iii)
loans in connection with which the obligor has filed a petition for relief
under the United States Bankruptcy Code, or otherwise has indicated an
inability or refusal to pay the Loan as it becomes due, prior to the Closing
(Loans that satisfy any of such conditions set forth in (i), (ii) or (iii)
shall be referred to as "Excluded Loans").
"Mediator" means a firm of independent accountants of nationally
recognized standing (other than a firm that has performed services for Seller
or Buyer or any of their Affiliates during the past three years) mutually
agreeable to Seller and Buyer.
"Overdrafts" means those overdrafts of the book balance of any
Deposit Accounts, which are not subject to Cash Reserve Lines of Credit.
"Owned Real Property" means (i) the land (including the
improvements thereon) on which are located any Branches that are listed as
"Owned Real Property" on Schedule 1.1(a), and (ii) any building or other
improvements relating to such owned real estate (including, without
limitation, any construction in progress) that are owned by Seller pursuant to
which a Branch is operated.
"Pearisburg Branch" means the Branch located at 605 Wenonah
Avenue, Pearisburg, Virginia.
"Person" means an association, a corporation, an individual, a
partnership, a trust or any other entity or organization, including a
Governmental Entity.
"Retirement Plans" means those non-discretionary individual
retirement accounts and qualified retirement plan accounts relating to the
Deposits for which Seller acts as custodian or trustee.
"Seller Material Adverse Effect" shall mean an event, occurrence
or circumstance which has a material adverse effect on the Assets, taken as a
whole, or Seller's ability to timely perform its obligations under this
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Agreement or consummate the transactions contemplated by this Agreement;
provided, that a Seller Material Adverse Effect shall not include (i) events
or conditions generally affecting the financial services industry or effects
resulting from general economic conditions (including changes in interest
rates), changes in accounting practices or changes to statutes, regulations or
regulatory policies, that do not have a materially more adverse effect on
Seller than that experienced by similarly situated financial services
companies, or (ii) events, impacts or conditions caused by the public
announcement of, and response or reaction of customers, vendors, licensors or
employees of Seller to, this Agreement or any of the transactions contemplated
by this Agreement.
"Welfare Benefit Plans" means those Benefit Plans which are
"welfare benefit plans" as defined by ERISA.
"Working Agreement" has the meaning set forth in Section 2.7 of
the Agreement.
"Wytheville Branch" means the Branch located at 320 West Main
Street in Wytheville, Virginia.
II. PURCHASE OF ASSETS AND ASSUMPTION OF LIABILITIES
2.1 Purchase of Assets.
Subject to the terms and conditions of this Agreement, including
Sections 6.5 and 7.3, Seller agrees to sell, assign and transfer possession of
and all right, title and interest of the Seller in and to the following assets
to Buyer (the "Assets") and Buyer agrees to purchase the same from Seller, as
of the close of business on the Closing Date:
(a) the Owned Real Property;
(b) Seller's rights under the Ground Lease;
(c) the Fixed Assets;
(d) the Loans, including the collateral for the Loans, and the
Loan Instruments;
(e) cash on hand in the Branches;
(f) the Cash Reserve Loans;
(g) the Overdrafts; and
(h) Seller's rights under the Cash Reserve Lines of Credit and
any safe deposit box rental agreements relating to safe deposit boxes
located at the Branches.
2.2 Assumption of Liabilities.
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Subject to the terms and conditions of this Agreement, including
Sections 6.5 and 7.3, Buyer agrees to assume, pay, perform and discharge the
following liabilities of Seller (the "Liabilities") as of the close of
business on the Closing Date:
(a) the Deposits and all terms and agreements relating to the
Deposit Accounts;
(b) Seller's duties and responsibilities relating to the
Deposits with respect to: (i) the abandoned property laws of any state,
(ii) any legal process which is served on Seller on or before the
Closing Date with respect to claims against or for the Deposits that is
not over and above the amount of the Deposits; or (iii) any other
applicable law;
(c) Seller's duties and responsibilities with respect to the
Ground Lease;
(d) Seller's duties and responsibilities with respect to the
Loans, including the collateral for the Loans, and the Loan Instruments;
(e) Seller's duties and responsibilities with respect to the Cash
Reserve Lines of Credit;
(f) Seller's duties and responsibilities with respect to the Cash
Reserve Loans;
(g) Seller's duties and responsibilities with respect to the
Overdrafts;
(h) Seller's duties and responsibilities with respect to the safe
deposit boxes located at the Branches; and
(i) Seller's duties and responsibilities with respect to the
Retirement Plans.
Buyer shall not assume any other liabilities of Seller which
relate to or arise out of the operation of the Branches before the Closing
Date or relate to or arise out of any item excluded pursuant to Sections 6.5
and 7.3.
2.3 Transfer and Availability of Books and Records.
On the Closing Date, or as soon thereafter as is practicable,
Seller will transfer and deliver to Buyer such books and records relating to
the Assets and the Liabilities (other than such books and records relating to
the Loans, which are provided pursuant to the Loan Instruments) as exist and
are in the possession or control of Seller (except that, subject to the same
exceptions set forth in the next to last sentence of this Section 2.3, Seller
shall be permitted to retain such books and records that contain information
primarily relating to other assets and liabilities not constituting Assets and
Liabilities; provided that in any such case Seller shall provide to Buyer such
portions or copies of such books and records as are reasonably necessary to
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service the Deposits and the Loans on an ongoing basis). All books and
records relating to the Assets and the Liabilities held by Seller or Buyer
after the Closing Date shall be maintained in accordance with (and for the
period provided in) that party's standard recordkeeping policies and
procedures. Throughout such period, the party holding such books and records
shall comply with the reasonable request of the other party to provide copies
of specified documents, at the expense of the requesting party; provided,
however, the parties shall not be required to provide access to, or copies of,
any documents or information to the other party to the extent that such access
or copies would violate or prejudice the legal rights of any customer or
employee or attorney-client privilege or would be contrary to law, rule,
regulation or any legal or regulatory order or process. The requesting party
shall give reasonable notice of any such request.
2.4 Tax Matters.
(a) Notwithstanding Section 2.5, Buyer shall pay to Seller or the
relevant taxing jurisdiction (as appropriate under the circumstances),
or reimburse Seller if Seller shall have paid, any sales and use taxes
and any interest and penalties thereon which are payable or arise as a
result of this Agreement or the consummation of any of the transactions
contemplated by this Agreement.
(b) Notwithstanding Section 2.5, Buyer shall pay to Seller or the
relevant taxing jurisdiction (as appropriate under the circumstances),
or reimburse Seller if Seller shall have paid, any real property
transfer, recording and similar documentary taxes arising out of the
transfer of the Owned Real Property, the Leased Facilities, the Ground
Lease, the Loans and the Fixed Assets; provided, however, Seller shall
be responsible for the "grantor's tax" under Virginia law.
2.5 Proration of Certain Expenses.
Subject to the provisions of Section 2.4, all rentals, real estate
taxes, personal property taxes (tangible or intangible), and utility, water
and sewer charges and assessments, as well as semiannual assessments paid to
the Bank Insurance Fund or the Savings Association Insurance Fund with respect
to the Deposits, shall be prorated between Buyer and Seller as of the close of
business on the Closing Date.
2.6 Back Office Conversion and Expenses.
Seller and Buyer shall cooperate with each other and shall use
their reasonable best efforts (consistent with their internal day-to-day
operations) in order to cause the timely transfer of information concerning
the Assets and the Liabilities which is maintained on Seller's data processing
systems so that Buyer can incorporate such information into Buyer's data
processing systems no later than the opening of business on the Business Day
following the Closing Date. Buyer hereby agrees to pay Seller a nonrefundable
conversion fee (except as provided below) in the amount of $100,000 for the
Assets and Liabilities to be acquired and assumed hereunder in consideration
of Seller's expenses relating to the Conversion (the "Conversion Fee"). The
Conversion Fee shall be payable, by wire transfer of immediately available
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funds, by the close of business on the Friday preceding the thirtieth (30th)
calendar day before the Closing Date; provided, however, if such Friday is not
a Business Day, then such payment shall be due on the next Business Day. Any
Conversion Fee paid under this Section 2.6 shall be refundable to Buyer only
upon termination of this Agreement by Buyer under Section 10.1(a). Buyer also
agrees to pay a per item fee of $1.00 for each ACH or paper item after ninety
(90) days. In addition to the foregoing, Buyer hereby agrees to pay all fees
and expenses relating to the assignment of the Loans from Seller to Buyer.
2.7 Processing of Certain Items Pre and Post Closing.
A draft of the written practices and procedures under which Buyer
and Seller shall, among other things, complete the conversion of the Branches
and handle certain post closing matters, including, without limitation, all
items (including, for example, automated clearing house and electronic funds
transfer items) relating to the Assets and the Liabilities, which are
presented or returned following the Closing Date, and any claims relating to
such items, is attached to this Agreement as Exhibit A (the "Working
Agreement"). As promptly as practicable following the execution of this
Agreement, the parties agree to finalize the Working Agreement, which shall be
substantially in the form of Exhibit A. Notwithstanding the foregoing, it is
understood and agreed that the post-Closing exchange of ACH and paper items
(checks and deposits) between Seller and Buyer shall continue for a period of
90 days after the Closing Date, and any items submitted to Seller following
the expiration of such 90 day period shall be returned by Seller.
2.8 Information Returns.
Unless otherwise agreed by Buyer and Seller in writing, (i) Seller
will report to the applicable tax authorities and customers of the Branches
all reportable payments made or received in connection with the Branches
(including without limitation amounts reportable on Internal Revenue Service
Form 1099) from January 1 of the year of the Closing Date through and
including the Closing Date and, in connection with any such payments, shall
withhold and pay over to the applicable tax authorities any amounts required
to be so withheld and paid over and (ii) Buyer will report to the applicable
tax authorities and customers of the Branches all reportable payments made or
received in connection with the Branches (including without limitation amounts
reportable on Internal Revenue Service Form 1099) from the day after the
Closing Date through and including December 31 of the year of the Closing Date
and, in connection with any such payments, shall withhold and pay over to the
applicable tax authorities any amounts required to be so withheld and paid
over. For purposes of the foregoing, the term reportable payments as used in
this Section 2.8 shall include, but shall not be limited to, interest paid on
the Deposits, interest received on the Loans and the Cash Reserve Loans, and
any other information returns required with respect to the Assets and the
Liabilities.
III. CONSIDERATION
3.1 Calculation.
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In consideration of Buyer's purchase of the Assets and its
assumption of the Liabilities, Seller agree to pay to Buyer an amount equal to
the Deposits, plus accrued interest thereon, less the sum of the following
(the "Purchase Price"), in each case calculated as of the close of business
on the Closing Date:
(a) the net book value of the Fixed Assets as of the Closing
Date;
(b) $1,675,000 in consideration of the Owned Real Property as of
the Closing Date;
(c) the principal amount of the Loans and the Cash Reserve Loans,
plus accrued interest thereon;
(d) the amount of cash on hand at the Branches;
(e) the principal amount of the Overdrafts;
(f) the net amount (which may be a negative amount) of taxes
payable by Buyer and Seller under Section 2.4 (i.e., the amount payable
by Buyer less the amount payable by Seller);
(g) the net amount (which may be a negative amount) of any
adjustments under Section 2.5 (i.e., the amount payable by Buyer less
the amount payable by Seller); and
(h) an amount equal to the sum of (i) 8 percent of the daily
Deposit average with respect to the Pearisburg Branch for the calendar
month preceding the month during which the Closing Date occurs and (ii)
subject to the potential adjustment set forth in Section 7.3(b)(ii), 5
percent of the daily Deposit average with respect to the Wytheville
Branch for the calendar month preceding the month during which the
Closing Date occurs (the "Amount of Premium").
3.2 Settlement.
(a) Not later than the Saturday following the Closing Date,
Seller shall deliver to Buyer the closing statement prepared in
accordance with Seller's customary practices and procedures used in
preparing financial statements and in accordance with the terms of this
Agreement, substantially in the form of Exhibit B to this Agreement (the
"Closing Statement"), which shall be completed as of the close of
business on the Closing Date and be the basis of the payment to be made
to Buyer's account on the Monday following the Closing Date (the
"Settlement Payment").
(b) The parties shall cooperate in the preparation of the
adjusted closing statement within 30 days after the Closing Date which
shall be prepared in accordance with Seller's customary practices and
procedures used in preparing financial statements and in accordance with
the terms of this Agreement, substantially in the form of Exhibit C to
this Agreement (the "Adjusted Closing Statement"), which shall be
completed as of the close of business on the Closing Date. On the
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Business Day after Buyer and Seller agree to the Adjusted Closing
Statement, or Buyer and Seller receive notice of any determination of
the Adjusted Closing Statement under subsection (c) below, Seller shall
pay to Buyer (or Buyer shall pay to Seller, as the case may be) an
amount (the "Adjustment Payment") equal to the amount due stated on the
Adjusted Closing Statement, plus interest from the day after the Closing
Date until the calendar day before the Adjustment Payment is made at a
rate per annum (calculated daily based on a 360-day year) equal to the
Federal Funds Rate.
(c) If the parties are unable to agree on the Adjusted Closing
Statement within 30 days after the Closing Date, either party may
submit the matter to the Mediator, which shall determine all disputed
portions of the Adjusted Closing Statement in accordance with the terms
and conditions of this Agreement within 30 days after the submission.
The parties shall each pay half of the fees and expenses of the
Mediator, except that the Mediator may assess the full amount of its
fees and expenses against either party if it determines that party
negotiated the Adjusted Closing Statement in bad faith. The Adjusted
Closing Statement, as agreed upon by the parties and/or determined under
this subsection, shall be final and binding upon the parties.
(d) The Settlement Payment and the Adjustment Payment shall each
be made by wire transfer of immediately available funds to the account
of the party receiving the payment, which account shall be identified by
the party receiving the funds to the other party not less than two
Business Days prior to such payment.
IV. SELLER'S REPRESENTATIONS AND WARRANTIES
Seller makes the following representations and warranties to Buyer.
4.1 Organization, Power and Authority.
(a) Seller is a national banking association duly organized under
the laws of the United States, validly existing and in good standing.
Seller has the corporate power and authority to enter into and perform
this Agreement. The execution and delivery of this Agreement has been
duly authorized by all necessary corporate action by Seller. Upon
execution and delivery by the parties, this Agreement will constitute a
valid and binding obligation of Seller, enforceable in accordance with
its terms, subject to conservatorship, receivership, and a court's right
under general principles of equity to refuse to direct specific
performance.
(b) The performance of this Agreement by Seller will not violate
any provision of the Articles of Association or charter or Bylaws of
Seller, or any applicable law, rule, regulation, or order or any
contract or instrument by which Seller is bound, except for such
violations which alone, or taken in the aggregate, would not reasonably
be expected to have a Seller Material Adverse Effect.
4.2 Litigation and Regulatory Proceedings.
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There are no actions, complaints, petitions, suits or other
proceedings, or any decree, injunction, judgment, order or ruling, entered,
promulgated or pending or (to Seller's knowledge) threatened against Seller or
any of the Assets or the Liabilities, which alone, or taken in the aggregate,
reasonably would be expected to have a Seller Material Adverse Effect. No
governmental agency has notified Seller that it would oppose or not approve or
consent to the transactions contemplated by this Agreement and Seller knows of
no reason for any such opposition, disapproval or nonconsent.
4.3 Consents and Approvals.
No consents, approvals, filings or registrations with any third
party or any public body, agency or authority are required in connection with
Seller's consummation of the transactions contemplated by this Agreement,
other than any required lessor consents to the assignment of the Ground Lease
and as may be required as a result of any facts or circumstances relating
solely to Buyer.
4.4 Owned Real Property.
(a) Seller will convey good and marketable title, such as is
insurable by any reputable title insurance company, to the Owned Real
Property, free and clear of all encumbrances, except for easements and
restrictions of record or visible from the ground, applicable zoning
laws, building restrictions and all other laws of duly constituted
public authorities, grants of public rights of way, standard exceptions
in the title insurance policy, the rights of any tenants or landlords
pursuant to any ground leases relating to the Owned Real Property, and
liens for taxes and assessments not delinquent. Seller shall maintain
in effect from the date of this Agreement until the Closing Date, all
property, liability, fire and casualty insurance in effect as of the
date hereof with regard to the Owned Real Property, including the
structures, leasehold improvements and Fixed Assets relating to the
Branches.
(b) To the knowledge of Seller, Seller has not received any
written notice of violation, citations, summonses, subpoenas, compliance
orders, directives, suits, other legal process, or other written notice
of potential liability under applicable environmental, zoning, building,
fire and other applicable laws and regulations relating to the Owned
Real Property.
(c) To the knowledge of Seller, Seller has not received any
written notice of a condemnation proceeding relating to the Branches.
4.5 Fixed Assets.
Seller has good and marketable title to the Fixed Assets, free and
clear of all encumbrances, claims, charges, security interests, or liens, if
any, which do not materially detract from the value of or interfere with the
use of the Fixed Assets.
4.6 Ownership of Cash Reserve Loans.
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Seller has full power and authority to hold each Cash Reserve
Loan, and has good title to the Cash Reserve Loans free and clear of all liens
and encumbrances. Seller is authorized to sell and assign the Cash Reserve
Loans to Buyer and, upon such assignment, Buyer will have the rights of Seller
with respect to the Cash Reserve Loans in accordance with the terms and
conditions thereof.
7.3 Loans.
(a) Seller has full power and authority to hold each Loan, and has
good and marketable title to the Loans free and clear of all liens and
encumbrances. Seller is authorized to sell and assign the Loans to
Buyer and, upon assignment, Buyer will have the rights of Seller with
respect to the Loans in accordance with the terms and conditions
thereof.
(b) Each Loan was originated in conformity in all material
respects with applicable laws and regulations; and its principal balance
as shown on Seller's books and records is true and correct as of the
last day shown thereon. None of the Loans is an Excluded Loan. Seller
has complied in all material respects with all of its obligations under
the Loan Instruments.
(c) Other than the representations and warranties in Section
4.7(a) and (b), all Loans and Loan Instruments transferred to Buyer on
the Closing Date pursuant to Section 2.1(d) shall be transferred on an
"AS IS" basis and without recourse to Seller and without any
representations or warranties as to the collectibility of any such Loan
or the creditworthiness of any such obligor.
4.8 Validity of and Compliance with Ground Lease.
The Ground Lease is a valid and existing lease under which Seller,
as lessee, is entitled to possession of the leased premises. To Seller's
knowledge, no event has occurred and is continuing, which constitutes a
default under the Ground Lease. Subject to Seller's obtaining any necessary
landlord consents, the assignment of such lease will transfer to Buyer all of
Seller's rights under the Ground Lease.
4.9 Compliance with Certain Laws.
The Deposit Accounts and the Cash Reserve Lines of Credit were
opened, extended or made, and have been maintained, in accordance with all
applicable federal and state laws, regulations, rules and orders, and the
Branches have been operated in compliance with Seller's policies and
procedures and all applicable federal and state laws, regulations, rules and
orders, except for such instances of noncompliance which do not have, and are
not reasonably likely to have, a Seller Material Adverse Effect.
4.10 FDIC Insurance.
The Deposits are insured by the Federal Deposit Insurance
Corporation through the Bank Insurance Fund to the extent permitted by law,
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and all premiums and assessments required to be paid in connection therewith
have been paid when due by Seller.
V. BUYER'S REPRESENTATIONS AND WARRANTIES
Buyer makes the following representations and warranties to Seller.
5.1 Organization, Power and Authority.
(a) Buyer is a national banking association duly organized under
the laws of the United States, validly existing and in good standing.
Buyer has the corporate power and authority to enter into and perform
this Agreement. The execution and delivery of this Agreement has been
duly authorized by all necessary corporate action by Buyer. Upon
execution and delivery by both parties, this Agreement will constitute a
valid and binding obligation of Buyer, enforceable in accordance with
its terms subject to conservatorship, receivership, and a court's right
under general principles of equity to refuse to direct specific
performance.
(b) The performance of this Agreement by Buyer will not violate
any provision of the Articles of Association, charter, Bylaws or similar
governing documents of Buyer, or any applicable law, rule, regulation,
or order or any contract or instrument by which Buyer is bound except
for such violations which alone, or taken in the aggregate, would not
reasonably be expected to have a Buyer Material Adverse Effect.
5.2 Litigation and Regulatory Proceedings.
There are no actions, complaints, petitions, suits or other
proceedings, or any decree, injunction, judgment, order or ruling, entered,
promulgated or pending or (to Buyer's knowledge) threatened against Buyer or
any of its properties or assets which alone, or taken in the aggregate,
reasonably would be expected to have a Buyer Material Adverse Effect. No
governmental agency has notified Buyer that it would oppose or not approve or
consent to the transactions contemplated by this Agreement, and Buyer knows of
no reason for any such opposition, disapproval or nonconsent.
5.3 Consents and Approvals.
Except for required regulatory approvals set forth on Schedule
5.3, no consents, approvals, filings or registrations with any third party or
any public body, agency or authority are required in connection with Buyer's
consummation of the transactions contemplated by this Agreement other than
what may be required as a result of any facts or circumstances relating solely
to Seller.
5.4 Regulatory Capital and Condition.
Buyer is in compliance with all capital standards as of the date
hereof, and has no reason to believe that it will be unable to obtain the
required regulatory approvals for the transactions contemplated by this
Agreement solely as a result of its current level of regulatory capital. As
of the date of this Agreement, there is no pending or threatened legal or
<PAGE>
governmental proceedings against Buyer or any Affiliate that would affect
Buyer's ability to obtain the required regulatory approvals or satisfy any of
the other conditions required to be satisfied in order to consummate any of
the transactions contemplated by this Agreement.
VI. ADDITIONAL AGREEMENTS OF SELLER
6.1 Access to Seller's Premises, Records and Personnel.
(a) Upon execution of this Agreement, Seller shall give Buyer and
its representatives such access to the Branches as Buyer may reasonably
request, provided that Buyer does not unreasonably interfere with the
business operations of the Branches. Seller shall not be required to
provide access to or to disclose information where such access or
disclosure would violate or prejudice the legal rights of any customer
or employee or attorney-client privilege or would be contrary to law,
rule, regulation or any legal or regulatory order or process or any
fiduciary duty or binding agreement entered into prior to the date of
this Agreement.
(b) Anything contained in this Agreement to the contrary
notwithstanding, Seller shall not be required to disclose, or to cause
the disclosure to Buyer or its representatives (or provide access to any
offices, properties, books or records of Seller, that could result in
the disclosure to such Persons or others), of any tax returns and/or any
work papers relating thereto or any other confidential information
relating to income or franchise taxes or other taxes of Seller, or trade
secrets, patent or trademark applications, or product research and
development belonging to or performed by or for Seller, nor shall Seller
be required to permit or to cause others to permit Buyer or its
representatives to copy or remove from the offices or properties of
Seller any documents, drawings or other materials that might reveal any
such confidential information; provided, however, Buyer shall have
access to tax returns to the extent that liability for the taxes at
issue could be imposed on Buyer.
(c) At Buyer's request and subject to Section 11.11, Seller shall
authorize and permit certain of its officers and members of management
to engage in discussions with Buyer for the purposes of discussing the
operations of the Branches and negotiating and concluding management
employment contracts, employee benefit plans, and new incentive plans
and Buyer shall maintain the confidentiality of any information
furnished by such officers or members of management of Seller pursuant
to such discussions with Buyer.
6.2 Regulatory Approvals.
Seller agrees to use its reasonable best efforts to obtain
promptly any regulatory approval on which its consummation of the transactions
contemplated by this Agreement is conditioned. Seller also agrees to
cooperate with Buyer in obtaining any regulatory approval which Buyer must
obtain before the Closing. Seller shall notify Buyer promptly of any
significant development with respect to any application it files under this
Section. Seller also shall provide Buyer with a copy of any regulatory
<PAGE>
approval it receives under this Section, promptly after Seller's receipt of
the same.
6.3 Conduct of Business.
Except as provided in this Agreement or as may otherwise be agreed
upon by Buyer, Seller will continue to carry on its operations at the Branches
until the Closing in the ordinary course of business, consistent with prudent
business practices. Seller shall maintain the Owned Real Property and the
Leased Facilities in their current condition, ordinary wear and tear excepted
and shall not terminate the operation of any Branch, unless those operations
cease due to events beyond Seller's control or as required by law. Seller
agrees that it will not, without the prior written consent of the Buyer, which
consent shall not be unreasonably withheld or delayed, increase or agree to
increase the salary, severance or compensation of any Employee between the
date hereof and the Closing Date other than normal individual increases in
salary or compensation to Employees in the ordinary course of business
consistent with past practice. Seller will notify Buyer of any event of which
Seller obtain knowledge which would make any of Seller's representations under
Article IV of this Agreement false in any material respect.
6.4 Covenant of Seller's Not to Solicit.
Seller hereby agrees that for a period of one (1) year from the
Closing Date, Seller shall not specifically target and solicit customers of
the Branches whose Deposits or Loans are being assumed or purchased by Buyer;
provided, however, that nothing in this Section 6.4 shall (i) restrict general
mass mailings, telemarketing calls, statement stuffers, advertisements or
other similar communications whether in print, on radio, television, the
Internet, or by other means that are directed to the general public or to a
group of customers who may include customers of the Branches, provided that
such group is defined by criteria other than primarily as customers of the
Branches,(ii) otherwise prevent Seller from taking such actions as may be
required to comply with applicable federal or state laws, rules or regulations
or from servicing or communicating with the then-current customers of Seller,
or (iii) restrict or prevent Seller or its Affiliates from soliciting or
providing any deposit, lending, brokerage, capital markets, trust, investment
advisory or any other financial services or products to any customer whose
Deposits are assumed by, or whose Loan is assigned to, Buyer pursuant to this
Agreement or any other customer, except that neither Seller nor any of its
Affiliates may solicit any deposit or lending business that has the purpose or
effect of replacing in whole or in part any Deposit assumed by, or Loan
assigned to, Buyer pursuant to this Agreement.
6.5 Consents.
Seller agrees to use its reasonable best efforts to obtain from
lessors and any other parties to the Ground Lease any required consents to the
assignment of such lease and agreements that will occur as a result of this
Agreement or the transactions contemplated hereby. If any such required
consent cannot be obtained, notwithstanding any other provision hereof, all
Assets and Liabilities associated with the Owned Real Property or Leased
Facility, other than any such lease or agreement as to which consent cannot be
obtained, shall nevertheless be transferred to Buyer at the Closing and the
<PAGE>
parties shall negotiate in good faith and Seller shall use reasonable efforts
to make alternative arrangements reasonably satisfactory to Buyer and Seller
that provide Buyer, to the maximum extent reasonably possible, the benefits of
such Branch or other Owned Real Property or Leased Facility in a manner that
does not violate the underlying lease or agreement. Notwithstanding the
foregoing or any other provision hereof, in the event that Seller is unable to
obtain any required consent of the lessor of the Leased Facility subject to
the Ground Lease for the assignment thereof to Buyer hereunder and Seller and
Buyer are unable to reach a mutually satisfactory alternative arrangement
pursuant to the immediately preceding sentence, then, if Seller and Buyer
mutually agree, Buyer may lease alternative facilities for the subject Branch
or other Owned Real Property or Leased Facility and the applicable Ground
Lease shall not be assigned or transferred to Buyer, and in such case, and in
the case of any alternative arrangements implemented as aforesaid in order to
provide Buyer the benefits of any Owned Real Property or Leased Facility, the
Purchase Price shall be appropriately and reasonably reduced in order to
compensate Buyer for the exclusion of such Owned Real Property or Leased
Facility. If any alternative arrangement is implemented between Seller and
Buyer at or prior to the Closing, the parties shall continue after the Closing
to exercise reasonable efforts to obtain the related consents which could not
be obtained prior to the Closing, and if such consent is obtained, Seller
shall assign the applicable lease or agreement and the parties shall
restructure the applicable alternative arrangement, including appropriate
reimbursement to Seller of any reduction in the Purchase Price relating to
such alternative arrangement.
VII. ADDITIONAL AGREEMENTS OF BUYER
7.1 Regulatory Approvals.
Buyer shall prepare and file, with the assistance of Seller, as
soon as practicable, but not later than ten (10) calendar days following the
date of this Agreement, all applications, as required by law, to the
appropriate federal and/or state regulatory authorities for approval to effect
the transactions contemplated by this Agreement and shall use its good faith
efforts to obtain such approvals. Buyer also agrees to cooperate with Seller
in obtaining any regulatory approval which Seller must obtain before the
Closing. Buyer shall notify Seller promptly of any significant development
with respect to any application it files under this Section. Buyer also shall
provide Seller with a copy of any regulatory approval it receives under this
Section, promptly after Buyer's receipt of the same.
7.2 Change of Name, Etc.
Immediately after the Closing, Buyer will (a) change the name and
logo on all documents and facilities relating to the Assets and the
Liabilities to Buyer's name and logo, (b) notify all persons whose Cash
Reserve Loans, Loans, or Deposits are transferred under this Agreement of the
consummation of the transactions contemplated by this Agreement, and (c)
provide all appropriate notices to the Federal Deposit Insurance Corporation
and any other regulatory authorities required as a result of the consummation
<PAGE>
of such transactions. Seller shall cooperate with any commercially reasonable
request of Buyer directed to accomplish the removal of Seller's signage by
Buyer and the installation of Buyer signage by Buyer at the Branches;
provided, however, that (i) all such removals and all such installations shall
be at the expense of Buyer, (ii) such removals and installations shall be
performed in such a manner that does not unreasonably interfere with the
normal business activities and operations of the Branches, (iii) such
installed signage shall comply with the applicable Ground Lease relating to
such Branch and all applicable zoning and permitting laws and regulations, and
(iv) such installed signage shall have, if necessary, received the prior
approval of the owner or landlord of the facility, and such installed signage
shall be covered in such a way as to make the Buyer signage unreadable at all
times prior to the Closing, but such cover shall display the name and/or logo
of Seller in a manner reasonably acceptable to Seller. Buyer agrees not to
use any forms or other documents bearing Seller's or any Affiliates' name or
logo after the Closing without the prior written consent of Seller, and, if
such consent is given, Buyer agrees that all such forms or other documents to
which such consent relates will be stamped or otherwise marked in such a way
that identifies Buyer as the party using the form or other document. As soon
as practicable and, in any event, not more than five (5) nor less than two (2)
calendar days prior to the Closing Date, Buyer will mail new checks reflecting
its transit and routing number to customers of the Branches with check writing
privileges. Buyer shall use its best efforts to encourage these customers to
begin using such checks and cease using checks bearing Seller's name.
7.3 Owned Real Property and Leased Facilities.
(a) Except as expressly set forth herein, Buyer hereby
acknowledges and agrees that: (i) Buyer is expressly purchasing the
Owned Real Property and is taking assignments of and assuming the Leased
Facilities in its existing condition "AS IS, WHERE IS, AND WITH ALL
FAULTS" with respect to any facts, circumstances, conditions and
defects; (ii) Seller has no obligation to repair or correct any such
facts, circumstances, conditions or defects or to compensate Buyer for
same; (iii) Seller has specifically bargained for the assumption by
Buyer of all responsibility to inspect and investigate the Owned Real
Property and the Leased Facilities and of all risk of adverse
conditions; and (iv) Buyer has or will have prior to the Closing
undertaken all such physical inspections and examinations of the Owned
Real Property and the Leased Facilities as Buyer deems necessary or
appropriate as to the condition of the Owned Real Property and the
Leased Facilities. Except as expressly set forth herein, Buyer
acknowledges that Seller has made no representations or warranties and
shall have no liability to Buyer (and Buyer hereby waives any right to
recourse against Seller) with respect to the conditions of the soil, the
existence or nonexistence of hazardous substances, any past use of the
Owned Real Property, the economic feasibility of the Owned Real Property
and the Leased Facilities, or the Owned Real Property's and Leased
Facilities' compliance or noncompliance with all laws, rules or
regulations affecting the Owned Real Property and the Leased Facilities.
(b) Buyer may, at Buyer's option, within forty-five (45) days
from the date of this Agreement, undertake such physical inspections and
<PAGE>
examinations of the Owned Real Property and the Leased Facilities
(subject to any landlord's approval or consent as may be required), and
the legal title thereto, including such inspections of the buildings
thereon, as Buyer deems necessary or appropriate. The cost of any such
inspections and examinations shall be responsibility of Buyer.
(i) If Buyer shall discover a Material Defect, as defined
herein, as a result of Buyer's inspections and examinations, Buyer
shall give Seller written notice as soon as possible (but in no
event later than the expiration of the 45 day period) describing
the facts or conditions constituting such Material Defect and the
measures which Buyer reasonably believes are necessary to correct
such Material Defect. "Material Defect" shall mean the existence
of (x) a lien or encumbrance on the legal title to the Owned Real
Property, except as previously disclosed in writing to Buyer by
Seller, which materially detracts from the value of the Owned Real
Property and Seller cannot clear title by providing an
indemnification to the title insurance company or using reasonable
efforts and expending no more than $25,000 with respect to one
Owned Real Property, (y) any discharge, disposal, release or
emission of any Hazardous Material in the ground or the structure
of the Owned Real Property or the existence of any underground
storage tank for which the Buyer has been advised in writing by
its legal counsel that the tank is not in compliance with Federal,
state or local laws and in which Buyer reasonably believes, based
on the advice of its legal counsel and documented findings of its
environmental consultant/contractor, that the amount of expense or
liability which Buyer could reasonably incur or for which it could
reasonably become responsible or liable following consummation of
the transactions contemplated by this Agreement at any time or
over any period of time could equal or exceed $25,000 in the case
of each affected Owned Real Property or Leased Facility, or (z)
with respect to the buildings, material deficiencies in the
plumbing, electrical, HVAC, drive thru air transport system, roof,
walls, or foundations as to which Buyer reasonably believes the
cost of repairs or corrections would equal or exceed $25,000 in
the case of each affected Owned Real Property or Leased Facility.
It being understood and agreed that Buyer shall bear the risk and
responsibility (in each case with respect to clauses (x), (y) and
(z) above) of the first $25,000 in expense relating to the
remediation of a Material Defect at each of the Owned Real
Property and Leased Facilities, as applicable, and that the
provisions set forth in Section 7.3(b)(ii) shall govern the risk
and responsibility of any such expense in excess of such amounts
with respect to each Owned Real Property and Leased Facilities.
(ii) If Seller does not elect to cure any such Material
Defect or is unable to cure such Material Defect to Buyer's
reasonable satisfaction at least ten (10) days prior to the
Closing, and Buyer does not elect to waive such Material Defect,
the parties shall negotiate in good faith with a view towards
arriving at a mutually acceptable resolution of the issue. The
parties further intend that the effort to identify a mutually
acceptable resolution shall generally be approached in the
<PAGE>
following order of priority: (i) indemnification of Buyer by
Seller; provided, however, with regard to the Leased Facilities,
Seller shall only indemnify and defend Buyer from any expenses
arising out of a Material Defect set forth in Section
7.3(b)(i)(z), identified by Buyer during the review period set
forth in Section 7.3(b) and for which timely notice has been given
to Seller, existing on the Leased Facilities on the date of
assignment of the Ground Lease to Buyer which is the
responsibility of Seller as lessee under such Ground Lease, it
being understood that this covenant shall be effective only during
the initial term of Buyer's leasehold interest (excluding
renewals, extensions, and new leases) and shall not extend to
liability arising out of Buyer's acts or omissions, and provided,
further, that Seller's obligation to indemnify Buyer shall not
exceed $100,000 in the aggregate; (ii) adjustment of the Purchase
Price; provided, however, any such Purchase Price adjustment shall
not exceed $100,000 in the aggregate; or (iii) subject to Seller's
ability to do so pursuant to the terms of the Ground Lease
relating to any Leased Facilities, Buyer shall purchase the assets
related to the subject Owned Real Property or Leased Facility
other than the Owned Real Property (in which case the Purchase
Price shall be adjusted accordingly) and assume the liabilities
(other than the Ground Lease) associated with the Owned Real
Property or Leased Facility affected by the Material Defect, and
lease (or sublet in the case of any Leased Facilities) the real
estate and improvements associated therewith from Seller for a
period of 12 months at their fair market rental value (or, in the
case of a sublease, Seller's then current rental payments) and on
such other terms as shall be mutually agreeable to Seller and
Buyer and during which time Buyer may construct or arrange for
another facility in which to operate the business of the affected
Owned Real Property or Leased Facility. In the event the parties
are unable to reach a mutually identified solution (as referred to
above) within 30 days after Buyer's delivery to Seller of notice
of the Material Defect, then Buyer may terminate the provisions of
this Agreement that relate to Buyer's purchase of the affected
Owned Real Property or assumption of the affected Leased Facility,
as well as the purchase of the related Fixed Assets, and Buyer
shall purchase only the assets related to the subject Owned Real
Property or Leased Facility other than the Owned Real Property and
Fixed Assets (in which case the Purchase Price shall be adjusted
accordingly) and assume the liabilities (other than the Ground
Lease) associated with the Owned Real Property or Leased Facility
affected by the Material Defect. In addition, notwithstanding
anything to the contrary set forth herein, in the event Buyer
exercises such right of termination with respect to the Wytheville
Branch, then the Amount of Premium set forth in Section 3.1(h)(ii)
of this Agreement shall be increased from 5 percent to 6 percent.
(iii) With regard to the Leased Facilities, Buyer and Seller
understand that conducting the inspections and affecting the cure
of a Material Defect, if any, may require the action or the
consent of the lessor.
<PAGE>
(c) No information or the contents of any environmental audits,
nor the results of any investigation of the Owned Real Property or the
Leased Facilities conducted pursuant to this section, including, but not
limited to, the contents of the report issued in connection therewith,
shall be disclosed by Buyer or its agents, consultants or employees to
any third party without Seller's prior written approval, unless and
until Buyer is legally compelled to make such disclosure under
applicable laws or until Buyer completes its purchase of the Owned Real
Property or assumes the Ground Lease pursuant to this Agreement.
Notwithstanding the foregoing, Buyer may disclose such matters to its
directors, executive officers, legal counsel and such employees who are
reasonably required to receive such disclosure (such parties being
referred to as "Buyer" for purposes of this section), the specific
identities of whom shall be supplied to Seller prior to any permitted
disclosure to such party by Buyer. If this Agreement is terminated for
any reason, Buyer shall immediately deliver and/or return to Seller any
and all documents, plans and other items furnished to Buyer pursuant to
this section.
7.4 Closing of Branches.
Prior to the Closing Date, Buyer shall not provide any notification to
customers, regulatory agencies or any other party as to its intention to close
any of the Branches.
VIII. SELLER'S EMPLOYEES
8.1 Transferred Employees.
(a) Buyer will offer to employ all of the Employees effective as
of the Closing Date. Buyer will communicate offers of employment in
accordance with legal requirements and in a form mutually acceptable to
Seller and Buyer. All such Employees shall be offered employment with
Buyer in all cases (i) in a position requiring comparable skills and
abilities as such Employee's position with Seller on the Closing Date,
(ii) with annual base salary, or weekly or hourly rate of pay which is
equal to such Employee's pay with Seller on the Closing Date, (iii) at a
work location not more than 30 miles from such Employee's work location
with Seller on the Closing Date, and (iv) with a work schedule that is
not changed by more than 10% from such Employee's work schedule with
Seller on the Closing Date (a "Comparable Job Offer"). Buyer hereby
agrees to pay any severance benefits to any Employee who is not offered
a Comparable Job Offer and does not otherwise accept employment with
Buyer in accordance with the payment terms set forth on Schedule 8.1(a).
Each Employee who accepts Buyer's offer of employment and commences
employment with Buyer hereunder shall be referred to as a "Transferred
Employee" for purposes of this Agreement. Buyer hereby agrees to
cooperate with Seller in obtaining, in connection with any acceptance of
an offer of employment with Buyer, an executed release from such
Transferred Employee providing that Seller and its Affiliates shall not
be responsible for any severance claims or obligations for such
Transferred Employee with respect to any severance plan, policy or
practices of Seller or any of its Affiliates or predecessors. With
respect to any Employee who accepts an offer of employment from Buyer
<PAGE>
who on the Closing Date is on military leave, sick leave, maternity
leave, short-term disability or other leave of absence approved by
Seller (but excluding any Employee absent by reason of long-term
disability, for whom Seller will retain all liability), except as
required by applicable law, Buyer need only employ such Employee for the
period beginning after such absence if such Employee returns to
employment in accordance with the terms of such Employee's leave. Any
such Employee will cease employment with Seller at the end of such leave
of absence.
(b) Seller is responsible for the filing of Forms W-2 with the
Internal Revenue Service and any required filing with state tax
authorities, with respect to wages and benefits paid to each Transferred
Employee for periods ending on or prior to the Closing Date.
8.2 Certain Other Obligations of Buyer.
(a) (i) Following the Closing, Buyer shall not have any liability
or obligation under any Benefit Plans or any other program or
arrangement of Seller or an ERISA Affiliate thereof under which any
current or former employee of Seller or any of its Affiliates has any
right to any benefits;
(ii) Upon the Closing, the participation of Transferred Employees
in the Benefit Plans shall cease in accordance with the terms of such
plans; and
(iii) With respect to the Transferred Employees, Seller shall be
responsible for any welfare benefits or claims which, by reason of
events which take place on or prior to the Closing Date, become payable
under the terms of any Welfare Benefit Plan. With respect to
Transferred Employees, Buyer shall be responsible for any welfare
benefits or claims which become payable by reason of events that take
place after the Closing Date.
(b) (i) From and after the Closing Date, Buyer shall provide the
Transferred Employees with employee benefit plans, programs, and
arrangements (including a "group health plan" within the meaning of
Section 5000(b)(1) of the Code) that are no less favorable in the
aggregate than the employee benefit plans, programs, and arrangements
generally provided on the Closing Date to other similarly situated
employees of Buyer. Subject to the terms and conditions of such
arrangements, such Transferred Employees will be fully eligible to
participate in Buyer's bonus and other incentive arrangements from the
commencement of such Transferred Employees employment with Buyer to the
same extent as Buyer's similarly situated employees;
(ii) Buyer will grant for purposes of vacation benefits,
severance pay and all welfare benefit plans (as defined in ERISA) past
service credit to all Transferred Employees for periods of time credited
to such Transferred Employees under the Welfare Benefit Plans. To the
extent that any Transferred Employee has satisfied in whole or in part
any annual deductible under a Welfare Benefit Plan, or has paid any
out-of-pocket expenses pursuant to any Welfare Benefit Plan co-insurance
<PAGE>
provision, such amount shall be counted toward the satisfaction of any
applicable deductible or out-of-pocket expense maximum, respectively,
under the benefit plans and programs provided to Transferred Employees
by Buyer, and such plans and programs shall be applied without regard to
any limitations relating to preexisting conditions or required physical
examinations that would not otherwise apply under the respective Welfare
Benefit Plans to the extent that such Transferred Employees are covered
by the Welfare Benefit Plans on the Closing Date;
(iii) Buyer shall take whatever action is necessary, including
amendment of its defined contribution pension plan, to grant to each
Transferred Employee past service credit for all purposes (including any
waiting period) under Buyer's defined contribution pension plan for all
periods of service credited to each such Transferred Employee under the
Seller's defined contribution pension plan. As soon as reasonably
practicable after the Closing Date, Seller shall provide to Buyer such
information as Buyer reasonably requires to establish the service for
the Transferred Employees credited under the Seller's defined
contribution pension plan;
(iv) As of the Closing Date, Seller will permit participants in
Seller's defined contribution pension plan who become Transferred
Employees to initiate a distribution from Seller's 401(k) plan;
(v) Buyer shall take whatever action is necessary, including
amendment of its defined benefit pension plan, to grant to each
Transferred Employee past service credit for service which has been
granted under Seller's defined benefit pension plan, for all purposes,
other than benefit accrual, under Buyer's defined benefit pension plan;
and
(vi) Buyer shall provide coverage under Buyer's severance plan,
policies and practices for each Transferred Employee as of the Closing
Date, and for a period of 12 months following the Closing Date any
Transferred Employee entitled to any such severance shall receive from
Buyer the greater of the benefits under either Buyer's severance plan,
policies and practices or Seller's current severance plan, policies and
practices.
8.3 Training.
Seller shall permit Buyer to train the Transferred Employees
before Closing with regard to Buyer's operations, policies and procedures at
Buyer's sole cost and expense. This training shall take place outside of
business hours and may, at Seller's option, take place at the Branches.
IX. CLOSING AND CONDITIONS TO CLOSING
9.1 Time and Place of Closing.
The date of the Closing (the "Closing Date"), which shall be
after the last regulatory approval (and the expiration of any statutory
waiting periods following such approval) necessary for the Closing has been
obtained, shall be on a Friday and, unless otherwise mutually agreed upon by
<PAGE>
the parties, shall be on March 23, 2001, and in no event later than March 30,
2001. The Closing shall take place at Seller's offices located at One First
Union Center, Charlotte, North Carolina 28288, at 10:00 a.m. on the Closing
Date, or at a time and place otherwise determined by mutual agreement of the
parties.
9.2 Exchange of Closing Documents.
The parties shall exchange drafts of all documents to be delivered
at the Closing (other than the Closing Statement) at least ten Business Days
prior to the Closing Date.
9.3 Buyer's Conditions to Closing.
Buyer's obligations to purchase the Assets and assume the
Liabilities is contingent upon and subject to the fulfillment of the following
conditions:
(a) the parties obtaining all regulatory approvals which are
required in order for them to proceed with the transactions contemplated
by this Agreement and the expiration of any required waiting period
without the commencement of adverse proceedings by any governmental
authority with jurisdiction over the transactions contemplated by this
Agreement;
(b) the representations and warranties of Seller in this
Agreement being true and correct as of the Closing Date (except that
representations and warranties as of a specified date need be true and
correct only as of such date); (provided, however, that for purposes of
determining the satisfaction of the condition contained in this Section
9.3(b), such representations and warranties shall be deemed to be true
and correct if the failure or failures of such representations and
warranties to be so true and correct (excluding the effect of any
qualification set forth therein relating to "materiality" or "Seller
Material Adverse Effect") do not constitute or give rise to, and are
not reasonably likely to constitute or give rise to, individually or in
the aggregate, a Seller Material Adverse Effect), and all covenants and
conditions of Seller to be performed or met by Seller on or before the
Closing Date having been performed or met in all material respects;
(c) Seller's delivery to Buyer of the following documents in form
and substance reasonably satisfactory to Buyer:
(i) Subject to Section 7.3, special warranty deeds
conveying the Owned Real Property;
(ii) bills of sale, assignments and other instruments of
transfer sufficient to convey to Buyer all of Seller's right,
title, and interest in and to the remaining Assets;
(iii) a certificate executed by an appropriate officer of
Seller attesting, to the officer's best knowledge, to Seller's
compliance with the conditions set forth in Section 9.3(b); and
<PAGE>
(iv) estoppel certificates executed by the lessors of the
Leased Facilities, to the extent Seller can obtain such
certificates using its reasonable efforts and without the payment
of any fees to such lessors; and
(d) Buyer's agreement to receive the Closing Statement and the
Settlement Payment as provided in Section 3.2.
9.4 Seller's Conditions to Closing.
Seller's obligation to sell the Assets and transfer the
Liabilities to Buyer is contingent upon and subject to the fulfillment of the
following conditions:
(a) the parties obtaining all regulatory approvals which are
required in order for them to proceed with the transactions contemplated
by this Agreement and the expiration of any required waiting period
without the commencement of adverse proceedings by any governmental
authority with jurisdiction over the transactions contemplated by this
Agreement;
(b) the representations and warranties of Buyer in this Agreement
being true and correct as of the Closing Date (except that
representations and warranties as of a specified date need be true and
correct only as of such date); (provided, however, that for purposes of
determining the satisfaction of the condition contained in this Section
9.4(b), such representations and warranties shall be deemed to be true
and correct if the failure or failures of such representations and
warranties to be so true and correct (excluding the effect of any
qualification set forth therein relating to "materiality" or "Buyer
Material Adverse Effect") do not constitute or give rise to, and are
not reasonably likely to constitute or give rise to, individually or in
the aggregate, a Buyer Material Adverse Effect), and all covenants and
conditions of Buyer to be performed or met by Buyer on or before the
Closing Date having been performed or met in all material respects;
(c) Buyer's delivery to Seller of the following documents in form
and substance reasonably satisfactory to Seller:
(i) one or more executed assumptions of the Ground Lease;
(ii) one or more executed instruments assuming the remaining
Liabilities; and
(iii) a certificate executed by an appropriate officer of
Buyer attesting, to the officer's best knowledge, to Buyer's
compliance with the conditions set forth in Section 9.4(b).
9.5 Survival of Representations, Warranties and Covenants.
Unless provided otherwise in this Agreement, Buyer's and Seller's
representations and warranties under this Agreement or contained in any
certificate or instrument delivered by either party at the Closing shall
survive for a period of one year following the Closing Date. The agreements
<PAGE>
and covenants contained in this Agreement shall not survive the Closing except
to the extent expressly set forth herein; provided that the agreements and
covenants set forth in Section 11.12 shall survive the Closing or any
termination of this Agreement.
X. TERMINATION
10.1 Termination by Either Party.
Either party may terminate this Agreement upon written notice to
the other if:
(a) as a result of any material breach of any representation,
warranty or covenant of Seller (in the case of a termination by Buyer)
or of Buyer (in the case of termination by Seller), the party
terminating this Agreement has given the other party written notice of
such breach and such breach is not cured within 30 days thereafter;
(b) the Closing does not occur within two hundred seventy (270)
days after the date of this Agreement; provided, however, that Seller
may not terminate this Agreement pursuant to this paragraph (b) to the
extent that the failure of the Closing to occur within such period
arises out of or results from the actions or omissions of Seller, and
that Buyer may not terminate this Agreement pursuant to this paragraph
(b) to the extent that the failure of the Closing to occur within such
period arises out of or results from the actions or omissions of Buyer;
or
(c) the other party so agrees in writing.
The termination of this Agreement under subsection (a) shall not
absolve the breaching party from any liability to the other party arising out
of its breach of this Agreement.
XI. MISCELLANEOUS
11.1 Continuing Cooperation.
(a) On and after the Closing Date, Seller agrees to execute,
acknowledge and deliver such documents and instruments as Buyer may
reasonably request to vest in Buyer the full legal and equitable title
to the Assets and Liabilities.
(b) On and after the Closing Date, Buyer shall execute,
acknowledge and deliver such documents and instruments as Seller may
reasonably request to relieve and discharge Seller from its obligations
with respect to the Liabilities.
(c) Seller and Buyer shall cooperate with each other in
connection with any examination conducted by any tax authority
subsequent to the Closing Date by promptly providing upon request
information relating to the tax liability of any business operated by
Seller or Buyer with respect to the Branches and promptly informing the
<PAGE>
other of the institution of, any material developments concerning, and
the outcome of, the same.
(d) Except as provided in Section 7.2, no interest in or right to
use First Union National Bank's logo or the name "First Union" or any
other similar word, name, symbol or device in which Seller has any
interest by itself or in combination with any other word, name, symbol
or device, or any similar variation of any of the foregoing
(collectively, the "Retained Names and Marks") is being transferred to
Buyer pursuant to the transactions contemplated hereby. Unless
permitted pursuant to Section 7.2, Buyer shall not after the Closing
Date in any way knowingly use any materials or property, whether or not
in existence on the Closing Date, that bear any Retained Name or Mark.
Buyer agrees that Seller shall have no responsibility for claims by
third parties arising out of, or relating to, the use by the Buyer of
any Retained Name or Mark after the Closing Date, and Buyer agrees to
indemnify and hold harmless Seller from any and all claims (and all
expenses, including reasonable attorneys' fees and disbursements
incurred in connection with any such claim) that may arise out of the
use thereof by Buyer.
(e) Buyer agrees to provide reasonable assistance and cooperation
to Seller and its Affiliates in activities related to the prosecution or
defense of any pending or future lawsuits, arbitrations, other
proceedings or claims involving the Seller's or its Affiliates and the
Branches ("Seller's Litigation"). In addition, Buyer shall facilitate,
without expense to Seller, the reasonable availability to Seller of the
Transferred Employees, without the need for issuance of any subpoena or
similar process, to testify or assist Seller in the Seller's Litigation.
11.2 Merger and Amendment.
This Agreement sets out the complete agreement of the parties with
respect to the matters discussed in this Agreement, and it supersedes all
prior agreements between the parties, whether written or oral, which apply to
these matters. No provision of this Agreement may be changed or waived except
as expressly stated in a document executed by both parties.
11.3 Dispute Resolution.
(a) Neither Seller nor Buyer shall assert any claim arising out
of or relating to this Agreement (except with respect to claims to be
handled under the Working Agreement or submitted to the Mediator under
Section 3.2(c)), unless:
(i) except for claims arising under or in respect of
Sections 2.4, 2.5, or 11.1(d), the amount in dispute with respect
to any claim exceeds $5,000;
(ii) except for claims arising in respect of Sections 2.4,
2.5 or 11.1(d), the aggregate amount of all claims by Buyer or
Seller (as the case may be) which satisfy the preceding clause
<PAGE>
exceeds $100,000, in which case a claim may be asserted only to
the extent that such threshold has been exceeded;
(iii) except for claims arising under Sections 2.4, 2.5, or
11.1(d), the aggregate amount of all claims by Buyer or Seller (as
the case may be) shall not exceed $500,000; and
(iv) except for claims arising under Sections 2.4, 2.5 or
11.1(d), the notification required by Section 11.3(b) (if any) is
given on or before the first anniversary of the Closing Date.
(b) The parties shall attempt in good faith to resolve any
dispute arising out of or relating to this Agreement promptly by
negotiations, as provided in this subsection (b). Either party shall
give the other party written notice of any dispute not resolved in the
normal course of business. Executives of both parties at comparable
levels at least one step above the personnel who have previously been
involved in the dispute shall meet at a mutually acceptable time and
place within ten days after delivery of such notice, and thereafter as
often as they reasonably deem necessary, to exchange relevant
information and to attempt to resolve the dispute. If the matter has
not been resolved by these persons within 30 days of the disputing
party's notice, or if the parties fail to meet within ten days, the
dispute shall be referred to more senior executives of both parties who
have authority to settle the dispute and who shall likewise meet to
attempt to resolve the dispute. All negotiations under this subsection
(b) are confidential and shall be treated as compromise and settlement
negotiations for purposes of the Federal Rules of Evidence, applicable
state rules of evidence, and common law. The procedures set forth above
will be followed in advance of litigation of any dispute between the
parties; nevertheless, either party may seek a preliminary injunction or
other provisional judicial relief if in its judgment such an action is
necessary to avoid irreparable damage or to preserve the status quo.
Despite any such action, the parties will continue to participate in
good faith in the procedures set forth in this subsection (b).
(c) Neither party shall have any liability for lost profits or
punitive damages with respect to any claim arising out of or relating to
this Agreement. The sole recourse and remedy of a party hereto for
breach of this Agreement by the other party hereto shall be against such
other party and its assets, and no officer, director, employee,
stockholder or affiliate of any party shall be liable at law or in
equity for the breach by such party of any of its obligations under this
Agreement.
11.4 Indemnification.
After the Closing Date, and unless otherwise provided in the
Agreement:
(a) Buyer shall indemnify and hold Seller harmless from and
against all claims, lawsuits, costs (including reasonable counsel fees)
and liabilities which arise out of or relate to transactions or
operations at the Branches after the Closing Date, and from any loss or
damage resulting from any breach by Buyer of any representation,
<PAGE>
warranty or covenant of Buyer contained in this Agreement. If any claim
or lawsuit is made or commenced as to which Seller proposes to demand
such indemnification, it shall notify Buyer with reasonable promptness;
provided, however, that any failure by Seller to notify Buyer shall not
relieve Buyer from its obligations hereunder, except to the extent that
Buyer is actually prejudiced by such failure to give notice. Buyer
shall have the option of defending such claim or lawsuit with counsel of
its own choosing at its own cost and expense and such counsel shall, to
the extent consistent with its professional responsibilities, cooperate
with Seller and any counsel designated by Seller. Buyer shall be liable
for any settlement of any claim or lawsuit against Seller made with
Buyer's written consent, which consent shall not be unreasonably
withheld.
(b) Seller shall indemnify and hold Buyer harmless from and
against all claims, lawsuits, costs (including reasonable counsel fees)
and liabilities which arise out of or relate to transactions or
operations at the Branches on or before the Closing Date, and from any
loss or damage resulting from any breach by Seller of any
representation, warranty or covenant of Seller contained in this
Agreement. If any claim or lawsuit is made or commenced as to which
Buyer proposes to demand such indemnification, it shall notify Seller
with reasonable promptness; provided, however, that any failure by Buyer
to notify Seller shall not relieve Seller from its obligations
hereunder, except to the extent the Seller is actually prejudiced by
such failure to give notice. Seller shall have the option of defending
such claim or lawsuit with counsel of its own choosing at its own cost
and expense and such counsel shall, to the extent consistent with its
professional responsibilities, cooperate with Buyer and any counsel
designated by Buyer. Seller shall be liable for any settlement of any
claim or lawsuit against Buyer made with Seller's written consent, which
consent shall not be unreasonably withheld.
(c) Any claims for indemnification brought under this Section
shall be subject to the provisions of Section 11.3.
11.5 Counterparts.
This Agreement may be executed in any number of counterparts, each
of which will constitute an original, but all of which taken together shall
constitute one and the same instrument.
11.6 Exhibits and Schedules.
All exhibits and schedules referred to in this Agreement shall
constitute a part of this Agreement.
11.7 Assignment.
This Agreement is not assignable by either party without the
written consent of the other party, which shall not be unreasonably withheld.
11.8 Headings.
<PAGE>
The headings contained in this Agreement are inserted for
convenience only and shall not affect the meaning of this Agreement or any of
its provisions.
11.9 Notices.
Any notice under this Agreement shall be made in writing and shall
be deemed given when delivered in person, when delivered by first class mail
postage prepaid (in which case the notice shall be deemed given on the third
Business Day following the date on which the notice is postmarked), or when
delivered by facsimile transmission, which transmission also shall be sent by
first class mail, postage prepaid before the second Business Day following the
transmission (in which case the notice shall be deemed given on the day
transmitted if transmitted before or during normal business hours or,
otherwise, on the next succeeding Business Day) to the parties at the
respective addresses set forth below or at such other addresses as each party
shall inform the other in writing.
If to Seller to: Janet J. Hemming
Senior Vice President
First Union National Bank
1525 West W.T. Harris Boulevard
Charlotte, North Carolina 28288-0909
Facsimile: (704) 590-0997
with a copy to: Mark C. Treanor, Esq.
Executive Vice President
and General Counsel
First Union Corporation
One First Union Center
Charlotte, North Carolina 28288-0013
Facsimile: (704) 374-3425
If to Buyer to: J. Daniel Hardy, Jr.
President and CEO
First National Bank
P.O. Box 600
Christiansburg, Virginia 24068-0600
Facsimile: (540) 381-6768
with a copy to: Peter A. Seitz, Esq.
EVP and General Counsel
First National Bank
P.O. Box 600
Christiansburg, Virginia 24068-0600
Facsimile: (540) 381-6768
11.10 Expenses.
Unless specifically stated to the contrary in this Agreement, each
party will assume and pay for the expenses it incurs with respect to the
purchase and sale of the Assets and assumption of the Liabilities under this
Agreement; provided, however, that Buyer shall pay all fees and expenses
<PAGE>
associated with the regulatory application process. Each party shall be
responsible for any fee payable to any agent, broker or finder acting on its
behalf in this transaction.
11.11 Communications.
During the period from the date of this Agreement to the Closing
Date, Buyer and Seller shall not communicate with the Employees, depositors,
or customers of the Branches, except as specifically required by the relevant
regulatory agencies as part of the approval process, or as specifically
provided for herein:
(a) As soon as practicable following the date of this Agreement,
Seller and Buyer shall jointly communicate, at Buyer's and Seller's equal
expense, with the Employees, depositors or customers of the Branches advising
them of the transactions contemplated by this Agreement. Such communication
shall be in form and substance mutually satisfactory to the parties hereto and
to any regulatory authorities as may be required by applicable law or
regulation. Any and all public announcements or press releases by either
party must comply with Section 11.12 of this Agreement.
(b) With the exception of the communications provided for in
paragraph (a) above, and in Section 8.1 (to the extent necessary to convey an
offer of employment), Buyer may not communicate with the Employees, depositors
and other customers of the Branches without the prior written consent of
Seller. Any such permitted communications may not interrupt or interfere with
the normal operations of the Branches, and shall be at Buyer's sole cost and
expense.
(c) In addition to the communications provided for in paragraph
(a) above, Seller at its own cost and expense may communicate with the
Employees, depositors and other customers of the Branches at such times and in
such form as deemed appropriate by Seller; provided, that no such
communication shall recommend any actions by any person that shall be in
contravention with the terms of this Agreement or reflect adversely upon
Buyer.
11.12 Public Announcements.
Each party shall consult with the other before making any
announcement or other public communication with respect to the transactions
contemplated by this Agreement and, prior to such announcement or other public
communication, shall mutually agree upon the substance and timing thereof.
11.13 Governing Law; Jurisdiction.
This Agreement and the legal relations between the parties shall
be governed by and construed in accordance with the laws of the State of North
Carolina applicable to contracts made and to be performed entirely within the
State of North Carolina.
11.14 No Third Party Beneficiaries.
<PAGE>
The parties intend that this Agreement shall not benefit or create
any right or cause of action in or on behalf of any Person other than Seller
and Buyer.
IN WITNESS WHEREOF, each of the parties to this Agreement has
caused this Agreement to be executed by a duly authorized officer as of the
date written on page one of this Agreement.
FIRST NATIONAL BANK
By:
Its:
FIRST UNION NATIONAL BANK
By:
Its:
EXHIBIT B
FORM OF CLOSING STATEMENT
Amount of Liabilities Settlement Amount
Principal Amount of Deposits
Accrued Interest
(Less) Value of Assets
and Amount of Premium
Owned Real Property ( )
Fixed Assets ( )
Cash on Hand ( )
Cash Reserve Loans ( )
Loans ( )
Overdrafts ( )
Amount of Premium ( )
<PAGE>
(Less) Plus Taxes ( )
(Less) Plus Prorated Tax and Expense
Items ( )
Payment Amount
EXHIBIT C
FORM OF ADJUSTED CLOSING STATEMENT
Settlement Adjusted
Amount of Liabilities Amount Amount
Principal Amount of Deposits
Accrued Interest
(Less) Value of Assets
and Amount of Premium
Owned Real Property ( ) ( )
Fixed Assets ( ) ( )
Cash on Hand ( ) ( )
Cash Reserve Loans ( ) ( )
Loans ( ) ( )
Overdrafts ( ) ( )
Amount of Premium ( ) ( )
(Less) Plus Taxes ( ) ( )
(Less) Plus Prorated Tax and Expense
Items ( ) ( )
Adjustment Payment
Settlement Payment Amount
Increase (Decrease) from
Settlement Payment Amount
Payment of Training Expenses
Total Increase (Decrease)
and Reimbursement
Interest
Amount Due from Seller
(Buyer)
(Total Adjustment Payment)
