SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
May 10, 1999
SUN BANCORP, INC.
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(Exact name of Registrant as specified in its Charter)
New Jersey 0-20957 52-1382541
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(State or other jurisdiction (SEC File No.) (IRS Employer
of incorporation) Identification
Number)
226 Landis Avenue, Vineland, New Jersey 08360
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 691-7700
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Not Applicable
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(Former name or former address, if changed since last Report)
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SUN BANCORP, INC.
INFORMATION TO BE INCLUDED IN REPORT
------------------------------------
Item 5. Other Events.
------------
On May 10, 1999, Sun Bancorp, Inc. (the "Corporation"), the holding
company for Sun National Bank (the "Bank"), announced that the Bank had entered
into a Purchase and Assumption Agreement (the "Agreement") to acquire fourteen
branch offices, certain loans and $250 million of deposits from First Union
National Bank, Charlotte, North Carolina ("First Union"). Consummation of the
transaction is subject to, among other conditions, regulatory approval.
A copy of the Agreement dated May 10, 1999, and the press release
issued by the Corporation on May 10, 1999 are attached hereto as Exhibits 99.1
and 99.2, respectively, and incorporated herein by reference in their entirety.
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits
------------------------
(c) Exhibits:
99.1 Purchase and Assumption Agreement dated May 10, 1999.
99.2 Press Release dated May 10, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SUN BANCORP, INC.
Date: May 13, 1999 By: /s/Robert F. Mack
---------------------------------
Robert F. Mack
Executive Vice President
PURCHASE AND ASSUMPTION AGREEMENT
---------------------------------
This Agreement, dated as of May 10, 1999, is by and between Sun
National Bank, a national bank organized under the laws of the United States of
America and having its principal place of business in Vineland, New Jersey
("Buyer"), and First Union National Bank, a national banking association having
its principal place of business in Charlotte, North Carolina ("Seller").
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.
"Adjustment Amount" means the sum of (i) $200,000, which
amount relates to certain employee related expenses of Buyer, and (ii) an amount
to be mutually agreed upon by Buyer and Seller on or prior to the Closing Date
and set forth on Schedule 1.2, which amount shall be in full satisfaction of
Seller's agreement to pay Buyer the operating expenses of the Medford Branch for
one year.
"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.
"ATM" means automatic teller machine.
"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 of Seller listed on
Schedule 1.1 to this Agreement.
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"Business Day" means any Monday, Tuesday, Wednesday, Thursday
or Friday on which Seller is open for business.
"Cash Reserve Lines of Credit" means those consumer lines of
credit made available to customers of the Branches in accordance with Seller's
customary policies and procedures 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.
"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 the Branches on the Closing Date, including in each
case accrued but unpaid interest and both collected and uncollected funds, but
excluding (i) deposits held in accounts for which Seller acts as fiduciary
(other than deposits held by Retirement Plans), (ii) deposits constituting
official checks, travelers checks, money orders or certified checks, (iii)
purchased deposits, or (iv) deposits held in CAP Accounts.
"Equipment Leases" means those operating and financial leases
and conditional sales contracts covering Fixed Assets which Seller may assign to
Buyer without restriction or with the lessor's written consent.
"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.
"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
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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's, but excluding
any computer or telecommunications equipment), supplies (other than forms and
other supplies which bear Seller's name or logo), and other personal property,
which are owned or (to the extent of Seller's interest as lessee) leased by
Seller, which are located at the Branches on the Closing Date.
"Full Service Banking Facility" means a brick and mortar, full
service branch banking facility (it being understood and agreed that a Full
Service Banking Facility shall not include, among other things, (i) any facility
that is not intended to service the general public, or (ii) any ATM).
"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.
"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.
"Leased Branches" means all premises of the Branches which are
leased under the Real Property Leases.
"Liabilities" has the meaning set forth in Section 2.2 of this
Agreement.
"Mediator" means the firm of KPMG LLP or if such firm declines
to perform the functions of the Mediator specified in
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this Agreement, then another firm of certified public accountants 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,
excluding Overdrafts that remain uncollected as of 30 days following the Closing
Date.
"Person" means an association, a corporation, an individual, a
partnership, a trust or any other entity or organization, including a
Governmental Entity.
"Real Property" means the land (including the improvements
thereon) owned by Seller on which any Branches are located and such real
property appurtenant thereto, as set forth on Schedule 4.4(a).
"Real Property Leases" means the lease agreements pursuant to
which any Branches are leased by Seller, as set forth on Schedule 4.3.
"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.
"Systems Conversion Date" means the date on which Seller's
operational systems relating to the Branches are converted to Buyer's
operational systems, which date shall be either (i) the date immediately
following the Closing Date if the Buyer obtains written regulatory approval for
consummation of the transactions contemplated by this Agreement on or prior to
August 6, 1999 or (ii) the date mutually agreed to by Seller and Buyer after
January 1, 2000 but no later than April 30, 2000 if the Buyer obtains written
regulatory approval for consummation of the transactions contemplated by this
Agreement after August 6, 1999. In the event that the Systems Conversion Date is
not on the date immediately following the Closing Date, then Seller and Buyer
shall enter into a mutually satisfactory services agreement, pursuant to which
Seller shall perform certain banking services on behalf of Buyer until the
Systems Conversion Date.
"Training Expenses" means the overtime and out-of-pocket
expenses (meals and mileage) incurred by Seller as a result of Buyer's training
schedule prior to Closing.
"Welfare Benefit Plans" means those Benefit Plans which are
"welfare benefit plans" as defined by ERISA.
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"Working Agreement" has the meaning set forth in Section 2.7
of this Agreement and the terms of the Working Agreement shall be incorporated
into this Agreement.
II. PURCHASE OF ASSETS AND ASSUMPTION OF LIABILITIES
2.1 Purchase of Assets.
------------------
Subject to the terms and conditions of this Agreement, Seller agrees
to sell, assign and transfer possession of and all right, title and interest of
Seller in and to the following assets to Buyer (collectively, the "Assets") and
Buyer agrees to purchase the same from Seller, as of the close of business on
the Closing Date:
(a) the Real Property;
(b) the Fixed Assets;
(c) cash on hand in the Branches, including vault cash, drawer
cash and ATM cash ("Branch Cash");
(d) the Cash Reserve Loans;
(e) the Overdrafts; and
(f) 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, including any prepaid
rental income under such safe deposit box rental agreements.
2.2 Assumption of Liabilities.
-------------------------
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 other than claims arising out of
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or relating to Seller's conduct with respect to the
Deposits; or (iii) any other applicable law;
(c) Seller's duties and responsibilities with respect to the
Real Property Leases and the Equipment Leases;
(d) Seller's duties and responsibilities with respect to the
Cash Reserve Lines of Credit;
(e) Seller's duties and responsibilities with respect to the
safe deposit boxes located at the Branches; and
(f) 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.
2.3 Transfer of Records.
-------------------
(a) At the Closing, Seller also shall transfer to Buyer
possession and all right, title and interest of Seller in
and to all books and records relating to the Assets and the
Liabilities which are maintained at the Branches.
(b) All books and records relating to the Assets and the
Liabilities held by either 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.
The requesting party shall give reasonable notice of any
such request.
2.4 Tax Matters.
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(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, excluding any taxes as a
result of the sale and transfer of the Real Property. Seller
shall be responsible for the payment of
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any taxes or levies that may arise under the New Jersey Bulk
Sales Act with respect to the sale or transfer of the
Branches; provided, however, Buyer hereby agrees to prepare
and file any forms or documents required to be filed by
Buyer with respect to the payment of any such taxes or
levies by Seller, or, if applicable, assist Seller in the
preparation and filing of any such forms or documents to be
filed by Seller.
(b) Notwithstanding Section 2.5, Seller shall pay all taxes or
fees associated with the sale or transfer of the Real
Property, or reimburse Buyer if Buyer shall have paid any
such real property transfer, recording and similar
documentary taxes arising out of the sale or transfer of the
Real Property, the Leased Branches, the Real Property Leases
and the Fixed Assets.
2.5 Proration of Certain Items.
--------------------------
Except as set forth in Section 2.4 of this Agreement, all
rental income or expenses associated with the operation of the Branches, real
estate taxes, personal property taxes (tangible or intangible), and utility,
water and sewer charges and assessments shall be prorated between Buyer and
Seller as of the close of business on the Closing Date. In addition, any
quarterly assessments actually paid to the Bank Insurance Fund or the Savings
Association Insurance Fund prior to the Closing Date for the quarterly
assessment period containing the Closing Date with respect to the Deposits,
shall be prorated between Buyer and Seller as of the close of business on the
Closing Date based upon the daily assessment rate in effect as of such
assessment quarter with respect to Seller, the Deposits subject to assessment
that actually transfer as of the Closing Date and the number of calendar days
remaining until the end of such assessment quarter.
2.6 Back Office Conversion.
----------------------
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 Systems
Conversion Date.
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2.7 Processing of Certain Items After the Systems Conversion Date.
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A draft of the written practices and procedures under which
Buyer and Seller shall handle 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 Systems
Conversion Date, and any claims relating to such items are attached to this
Agreement as Exhibit A, including certain other matters relating to consummation
of the transactions contemplated hereby (the "Working Agreement"). As promptly
as practicable following the execution of this Agreement, the parties agree to
finalize the Working Agreement.
2.8 Information Returns.
-------------------
Buyer shall file all required information returns with the
Internal Revenue Service with respect to interest paid on the Deposits after the
Systems Conversion Date, interest received on the Cash Reserve Loans after the
Systems Conversion Date, and any other information returns required with respect
to the Assets and the Liabilities for the periods beginning after the Systems
Conversion Date. Seller will file all required information returns with the
Internal Revenue Service and any information returns required by state or local
tax authorities with respect to interest paid on the Deposits on or before the
Systems Conversion Date, interest received on the Cash Reserve Loans on or
before the Systems Conversion Date, and any other information returns required
with respect to the Assets and the Liabilities for periods ending on or before
the Systems Conversion Date.
III. CONSIDERATION
3.1 Calculation.
-----------
In consideration of Buyer's purchase of the Assets and its
assumption of the Liabilities, Seller agrees to pay to Buyer in immediately
available funds on the day immediately following the Closing Date an amount
equal to the Deposits, plus accrued interest thereon, plus the Adjustment
Amount, less the sum of the following, 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;
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(b) the net book value of the Real Property as of the Closing
Date;
(c) the principal amount of the Cash Reserve Loans, plus accrued
interest thereon;
(d) the amount of Branch Cash;
(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);
(h) an amount equal to ten percent of the average monthly Deposit
average for the three calendar months preceding the month during which
the Closing Date occurs for each of the Branches (except, however, for
the Holland Branch, such premium amount shall be calculated based upon
eight percent rather than ten percent)(the "Amount of Premium");
provided, however, that for purposes of this subparagraph, Deposits
shall exclude (i) retail certificates of deposit of $100,000 or more
with maturities of one year or less as of the Closing Date, (ii)
certificates of deposit of $100,000 or more with maturities of one
year or less held by local, county, municipal, state, federal or
governmental authorities or agencies, and (iii) brokered or purchased
deposits; and
(i) the Training Expenses.
3.2 Settlement.
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(a) Not later than the calendar day immediately 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, substantially in
the form of Exhibit B to this Agreement, 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 date immediately
following the Closing Date (the "Settlement Payment").
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(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, substantially in
the form of Exhibit C to this Agreement, which shall be completed as
of the close of business on the Closing Date. On the 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) (the "Adjusted Settlement
Date"), 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.
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4.1 Power and Authority.
-------------------
(a) 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 both 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 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 material adverse effect on the financial
condition, business or operations of the Branches, taken as a whole, or
the consummation of the transactions contemplated by this Agreement (a
"Seller Material Adverse Effect").
4.2 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 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, including, but not
limited to, Seller's compliance with banking regulatory policies in Year 2000
preparedness.
4.3 Consents and Approvals.
---------------------
Except for required regulatory 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 Real Property Leases, as set forth on Schedule
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4.3, and the Equipment Leases, and as may be required as a result of any facts
or circumstances relating solely to Buyer.
4.4 Real Property.
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(a) Schedule 4.4(a) contains a list of all the Real
Property.
(b) Seller will execute and deliver to Buyer a Bargain and
Sale Deed without covenants conveying fee simple title and
interest in the Real Property ("Title"), which Title shall be
insurable at regular rates by a title insurance company licensed
to do business in the State of New Jersey. Such Title shall be
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
landlords under any ground leases relating to the Real Property,
the rights of any tenants, 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 Branches, including the structures, leasehold
improvements and Fixed Assets relating to the Branches.
(c) 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 Branches.
(d) To the knowledge of Seller, Seller has received no
written notice of a condemnation proceeding relating to the
Branches or the Real Property.
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.
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4.6 Ownership of Cash Reserve Loans.
-------------------------------
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.
4.7 Validity of and Compliance with Real Property Leases.
----------------------------------------------------
The Real Property Leases are valid and existing leases 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 any of the Real Property Leases. Subject to Seller obtaining any
necessary landlord consents, the assignment of such leases will transfer to
Buyer all of Seller's rights under the Real Property Leases.
4.8 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.
4.9 FDIC Insurance.
--------------
The Deposits are insured by the Federal Deposit Insurance
Corporation through the Bank Insurance Fund or the Savings Association Insurance
Fund to the extent permitted by law, and all premiums and assessments required
to be paid in connection therewith have been paid when due by Seller.
4.10 Absence of Employment Agreements.
--------------------------------
There are no employment agreements, contracts, or similar type
agreements between Seller and any of Seller's employees who are employed at the
Branches, and there are no labor disputes between Seller and any such employees.
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V. BUYER'S REPRESENTATIONS AND WARRANTIES
Buyer makes the following representations and warranties to Seller.
5.1 Power and Authority.
-------------------
(a) 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, 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 material adverse effect on the
consummation of the transactions contemplated by this Agreement (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, including, but not limited to,
Buyer's compliance with banking regulatory policies in Year 2000 preparedness.
5.3 Consents and Approvals.
----------------------
Except for required regulatory approvals, 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
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Agreement other than what may be required as a result of any facts or
circumstances relating solely to Seller.
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 Branches' business operations. Seller shall not be required to
provide access to or to disclose information where such access or
disclosure might violate or prejudice the rights of any customer or
employee 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, 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 Branches'
business 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.
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6.2 Matters Relating to Branch Closing.
----------------------------------
In the event that Buyer intends to close any of the Branches
on the Closing Date or before ninety (90) days thereafter, Buyer and Seller
agree to the following:
(a) Subject to subsection (b), Seller and Buyer shall prepare
Branch closing notices to Seller's customers, to be mailed by Seller at
Buyer's request and expense, at such time as shall be mutually agreed
upon between Buyer and Seller. Seller and Buyer also shall prepare
another notice to Seller's customers, to be mailed by Seller at Buyer's
request and expense, of Buyer's impending acquisition of the Branches
within ten Business Days following Seller's receipt of notice that
Buyer has obtained any and all required regulatory approvals for the
transactions contemplated by this Agreement or such earlier date as
Seller and Buyer may mutually agree upon. After Seller mails this
notice, Buyer shall be permitted to provide to Seller material to be
sent, at Buyer's expense, to the depositors, borrowers and other
customers of the Branches concerning the proposed acquisition and
Buyer's products. Each party's communication shall be subject to the
approval of the other party, which approval shall not be unreasonably
withheld.
(b) Unless Buyer shall certify in writing at the time that (x)
Buyer is not aware of the occurrence of any event or condition, which,
if not corrected, would be reasonably expected to result in the failure
of any condition to Closing under Sections 9.3 or 9.4; (y) Buyer has no
reason to believe that any regulatory approval required under Section
9.3(a) will not be forthcoming, and (z) no challenge has been
threatened or filed and is pending with respect to any such regulatory
approval:
(i) Buyer shall not take any action with respect to
any of the Branches which would require that notices be posted
or provided to customers or regulators, as required by 12
U.S.C. Section 1831r-1, on or prior to the Closing Date; and
(ii) Seller shall not be required to participate in
the closing of any Branch or in any notice to customers
relating to such a closing.
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6.3 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 approval it receives under this
Section, promptly after Seller's receipt of the same.
6.4 Conduct of Business.
-------------------
Except as provided in this Agreement or as may otherwise be
agreed upon by Buyer, Seller will continue to carry on the business at the
Branches until the Closing in the ordinary course of business, consistent with
prudent business practices. Seller shall not terminate the operation of any
Branch, unless those operations cease due to events beyond Seller's control.
Seller will notify Buyer of any event of which Seller obtains knowledge which
would make any of Seller's representations under Article IV of this Agreement
false in any material respect.
6.5 Covenant of Seller not to Compete.
---------------------------------
Seller hereby agrees not to purchase or open a de novo Full
Service Banking Facility within the counties of Cape May and Cumberland in New
Jersey, excluding the city of Ocean City, New Jersey, and within an area
extending three (3) miles in all directions from the location of the Holland,
Hopewell and Medford Branches for a period of three (3) years from the Closing
Date; provided, however, that Seller, or any of its Affiliates, shall be
expressly permitted to acquire a financial institution notwithstanding the fact
that the financial institution to be acquired has a Full Service Banking
Facility or any other facility in such location.
6.6 Covenant of Seller not to Solicit.
---------------------------------
Seller hereby agrees that from the date of this Agreement and
for a period of three (3) years after the Closing Date, Seller shall not
specifically target and solicit the deposit business of the customers of the
Branches whose Deposits are being purchased by Buyer hereunder; provided,
however, that nothing in this Section shall (i) restrict general mass mailings,
telemarketing calls, statement stuffers, advertisements or other
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similar communications whether in print, on radio, television or 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 solely as customers of the Branches, or (ii)
otherwise prevent Seller from taking such actions as may be required to comply
with any applicable federal or state laws, rules or regulations or from
servicing or communicating with the then-current customers of Seller or its
Affiliates.
6.7 Assignment of Real Property Leases.
----------------------------------
Seller shall use its reasonable best efforts to cause the
landlord to furnish Buyer with a statement of the balance of any security
deposits held under such Real Property Leases related to the Sea Isle City and
Medford Branches as of the Closing Date, giving effect to all deductions that
are deemed necessary by the landlord following an inspection of the Leased
Branches as of the Closing Date.
6.8 Prior Real Property Data.
------------------------
Within thirty (30) days of the date of this Agreement, Seller
shall use its reasonable best efforts to furnish Buyer with copies of any prior
environmental or title information and land survey information relating to the
Real Property that is readily in Seller's possession.
6.9 Employee Payroll.
----------------
Seller shall not increase the wages of any of employees
employed at the Branches, except for normal individual or general increases in
regular compensation in the ordinary course of business consistent with past
practice.
VII. ADDITIONAL AGREEMENTS OF BUYER
7.1 Regulatory Approvals.
--------------------
Buyer 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, and to the extent any such
regulatory approval is reasonably expected to be conditioned on Buyer obtaining
financing, or is conditioned on Buyer obtaining financing, Buyer hereby agrees
that it shall obtain such financing in a timely manner so that such regulatory
condition shall not impede or delay the consummation of the transactions
contemplated hereby.
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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 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 of such transactions. Buyer
agrees not to use any forms or other documents bearing Seller's 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, within seven calendar days after the Closing
Date, Buyer will issue 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 Real Property.
-------------
(a) Except as expressly set forth herein, Buyer hereby
acknowledges and agrees that: (i) Buyer is expressly purchasing the
Real Property 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 Real
Property 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 Real Property as Buyer deems necessary or
appropriate as to the condition of the Real Property.
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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 Real
Property, the economic feasibility of the Real Property, or the Real
Property's compliance or noncompliance with all laws, rules or
regulations affecting the Real Property.
(b) Buyer may, at Buyer's option, within forty-five (45) days
from the date of this Agreement, undertake such physical inspections
and examinations of the Real Property and the Leased Real Property, 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. In the
event Buyer conducts any such inspection and examination and as a
result of such inspection and examination determines that a Phase II
study is required, Buyer shall deliver to Seller a copy of the Phase I
study and Seller shall have the option to either permit a Phase II
study to be performed by a licensed and reputable environmental
inspection company or to terminate the Agreement with respect to the
subject Real Property.
(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 describing the facts or conditions constituting
such Material Defect and the measures which Buyer reasonably
believes are necessary to correct such Material Defect. Seller
shall promptly notify Buyer whether Seller elects to cure such
Material Defect or terminate the Agreement with respect to
such Branch, unless Buyer elects to waive such Material
Defect. If Seller elects to cure, then Seller shall have
thirty (30) days from the date of the receipt of Buyer's
notice, or such later time, which shall not be later than the
Closing Date, as shall be mutually agreeable to the parties,
in which to cure such Material Defect to Buyer's reasonable
satisfaction and Seller's reasonable cure shall be a condition
to Buyer's obligation to purchase the Assets and assume the
Liabilities with respect to such Branch under this Agreement.
"Material Defect" shall mean the existence of (x) a lien or
encumbrance on the legal title to the Real Property, except as
previously disclosed in
20
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writing to Buyer by Seller, which materially detracts from
the value of the Real Property, (y) any discharge, disposal,
release, threatened release or emission of any Hazardous
Material in the ground or the structure of the Branch or the
existence of any underground storage tank for which the
Buyer has been advised in writing by its legal counsel that
Buyer could become responsible for the assessment, removal
or remediation of such discharge, disposal, release,
threatened release, emission, the existence of such tank or
for other corrective action, (z) with respect to the
buildings, material deficiencies in the plumbing,
electrical, HVAC, drive thru air transport system, roof,
walls, or foundations.
(ii) With respect to the Branch buildings, Seller
shall cure any Material Defect described in subsection
7.3(b)(i)(z) if the estimated cost of such cure is less than
$12,500 per Branch. If the estimated cost of such cure exceeds
$12,500 per Branch and Seller elects not to cure, then Buyer
may terminate the Agreement with respect to such Branch,
unless Buyer agrees to accept the obligations to cure in
excess of $12,500 per Branch.
(iii) With regard to the Leased Branches, 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. In the event that the
lessor elects not to undertake such action or give such
consent relating to the cure of a Material Defect, then Buyer
may terminate the Agreement with respect to such Branch.
(iv) With regard to any Material Defect in the title
to the Real Property associated with a Branch, if Seller
cannot clear title by providing an indemnification to the
title insurance company or using reasonable efforts and
expending no more than $5,000, then Seller shall have the
option of terminating the Agreement with respect to such
Branch.
(c) No information or the contents of any environmental
audits, nor the results of any investigation of the Real Property
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
21
<PAGE>
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 Real Property 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.
(d) Seller shall provide Buyer with a Certificate of Occupancy
and/or a Fire Safety Certificate, as and if applicable, to be issued by
the appropriate municipal or county authority as of the Closing Date.
In the event repairs are required in order to qualify for such
Certificate(s), Seller shall be responsible for the costs of such
repairs, subject to the limitations set forth in Section 7.3(b)(ii) of
this Agreement.
VIII. SELLER'S EMPLOYEES
8.1 Transferred Employees.
---------------------
(a) Buyer will offer to employ all of Seller's employees who
are employed at the Branches on the Closing Date. From and after the
Closing Date, Buyer shall provide the employees of Seller who are
offered employment with Buyer, and who accept such employment with a
salary or hourly wage comparable to that earned by them at the time of
the Closing. (Such employees who become employees of Buyer after the
Closing shall be referred to as "Transferred Employees.")
(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 Employee Benefits.
-----------------
(a) (i) Following the Closing, Buyer shall not have any
liability or obligation under any Benefit Plans or any other
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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 the employee benefits, if any, provided
to employees of Buyer and its Affiliates, subject to the terms of
Buyer's benefit plans;
(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 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. Within 45 days
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<PAGE>
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) If applicable, Buyer agrees to permit and shall modify
its existing defined 401-K plan to the extent necessary to permit a
trustee-to-trustee transfer from Seller's 401(k) plan of the vested
account balances of participants in that plan who become employees of
Buyer. Seller will cause the vested account balances of participants in
Seller's 401(k) plan who become employees of Buyer to be transferred to
Buyer's 401(k) plan in a trustee-to-trustee transfer; and
(v) Seller shall pay the Transferred Employees any amounts due
to such Transferred Employees as of the Closing Date for earned but
unused paid time off.
8.3 Training.
--------
Seller shall permit Buyer to train the Transferred Employees
during the thirty (30) day period 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 Closing shall be on a date mutually agreed upon by the
parties (the "Closing Date") which shall be on a Thursday and shall be no more
than 30 days after the last regulatory approval necessary for the Closing has
been obtained (without regard to any statutory waiting periods following such
approval). The Closing shall take place at Seller's offices located at First
Union Corporation, 840 Morris Avenue, Union, New Jersey 07083, 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 (including a preliminary Closing Statement) at least
five (5) Business Days prior to the Closing Date.
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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 in all material respects:
(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) each representation and warranty of Seller in this
Agreement being true and correct in all material respects as of the
Closing Date 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) Titles conveying the 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, and
appropriate documentation with respect to the transfer of the
trusteeships under the Retirement Plans;
(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
(iv) estoppel certificates executed by the lessors of
the Leased Branches, to the extent Seller can obtain such
certificates using its reasonable best efforts and without the
payment of any unreasonable fees to such lessors; and
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(d) Buyer's agreement to receive the Closing Statement and the
Settlement Payment as provided in Section 3.2, in a form substantially
similar to that furnished to Buyer pursuant to Section 9.2 of this
Agreement.
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 in all material respects:
(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) each representation and warranty of Buyer in this
Agreement being true and correct in all material respects as of the
Closing Date 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 Real Property
Leases;
(ii) one or more executed instruments assuming the remaining
Liabilities, and appropriate documentation with respect to the
transfer of the trusteeships under the Retirement Plans; 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 and Warranties.
------------------------------------------
Unless provided otherwise in this Agreement, Buyer's and
Seller's representations and warranties under this Agreement
26
<PAGE>
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.
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, 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; 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
other of
27
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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.
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 $5,000.00;
(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 exceeds $50,000.00,
28
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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 the Amount of
Premium; 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 may 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
29
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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 Branch after the Closing Date, and from any loss or
damage resulting from any breach by Buyer of any representation,
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 Branch 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
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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.
--------
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.
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If to Seller to: Donald Ward
Vice President
First Union Corporation
840 Morris Avenue, 3rd Floor
Union, New Jersey 07083
with a copy to: Keith D. Lembo, Esq.
Senior Vice President
and Deputy General Counsel
First Union Corporation
One First Union Center, Leg-0630,
31st Floor
Charlotte, North Carolina 28288-0603
If to Buyer to: Ron Seagraves
Director of Corporate Development
Sun National Bank
226 Landis Avenue
Vineland, New Jersey 08360
with a copy to: Richard Fisch, Esq.
Malizia, Spidi, Sloane & Fisch, PC
1301 K Street, NW
Suite 700 east
Washington, D.C. 20005
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
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 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 shall furnish a copy of the text to the other
party of the announcement or other communication.
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11.12 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 New Jersey applicable to contracts made and to be performed
entirely within the State of New Jersey.
11.13 No Third Party Beneficiaries.
----------------------------
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.
<PAGE>
NEWS RELEASE NEWS RELEASE NEWS RELEASE NEWS RELEASE NEWS RELEASE
** *FOR IMMEDIATE RELEASE***
FOR MORE INFORMATION, CONTACT: Robert F. Mack, Executive Vice President
(609) 691-7700
SUN BANCORP, INC. TO PURCHASE 14 FIRST UNION BRANCHES
Vineland, NJ. . . . . . . . . . .May 10, 1999 Page 1 of 1
Philip W. Koebig, III, President of Sun Bancorp, Inc., the Vineland New
Jersey parent holding company for Sun National Bank and Sun National Bank,
Delaware, announced today that Sun National Bank has signed a definitive
agreement to purchase 14 New Jersey branches from First Union National Bank. The
branches are located in Burlington, Cape May, Cumberland, Hunterdon and Mercer
Counties in New Jersey. The branches have approximately $250 million in
deposits.
"We are pleased to have another opportunity to strengthen our presence
in southern and central New Jersey," commented Koebig. "When this transaction is
complete, Sun will have over 70 financial service centers serving southern and
central New Jersey as well as New Castle County, Delaware," he added.
Sun has developed a reputation for being a community bank that focuses
on the needs of its customers," remarked Koebig, who also serves as President
and Chief Executive Officer of Sun National Bank. "This is an exciting
opportunity to offer our new customers the continuation of a wide range of
products and services, while also giving them the personalized attention of a
community bank."
The transaction includes deposit accounts and certain loans. First
Union financial center employees will be offered employment with Sun National
Bank. Terms of the transaction were not disclosed.
Koebig also commented that this is the 14th in a series of purchases
during the past five years that have continued to fulfill Sun's strategic growth
goals. During that period of time, the total assets of Sun will have grown from
$113 million in 1994 to total assets in excess of $1.7 billion following the
completion of this transaction with First Union. The transaction is subject to
regulatory approval and may require the raising of additional capital. It is
expected to close during the third quarter of 1999.
The Company's common stock is traded in the Nasdaq National Market
under the symbol "SNBC." Its deposits are insured to the legal maximum by the
Federal Deposit Insurance Corporation.
