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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):
December 10, 1999
NewSouth Bancorp, Inc.
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(Exact Name of Registrant as Specified in Charter)
Virginia 0-22219 56-1999749
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(State or Other (Commission (I.R.S. Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
1311 Carolina Avenue, Washington, North Carolina 27889
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code:
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(252) 946-4178
Not applicable
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS
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On December 10, 1999, First South Bank ("First South" or
the "Bank"), a wholly owned subsidiary of NewSouth Bancorp, Inc.
(the "Registrant"), announced that it had reached agreement with
Centura Bank and Triangle Bank for the Bank to acquire five
branch offices of Triangle Bank located in Rocky Mount, North
Carolina and one branch office located in Tarboro, North
Carolina. The agreement calls for First South to assume the
deposit liabilities and purchase certain other assets of the six
branch offices. These branches had total deposits of
approximately $147 million at October 31, 1999. Five of the six
branch offices are expected to become branch offices of the
Bank, while one of the branch offices is expected to be closed
with the deposits and loans to be serviced out of a nearby
existing First South branch office. The acquisition of these
branches is subject to regulatory approval and certain other
conditions. The transaction is expected to be completed in the
first quarter of 2000.
For more information, reference is made to the Purchase and
Assumption Agreement Among Centura Bank, Triangle Bank and First
South Bank, dated December 10, 1999, attached hereto as Exhibit
2.1, and to the press release of NewSouth Bancorp, Inc. dated
December 10, 1999, which is attached hereto as Exhibit 99.1,
both of which are incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS
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The following exhibits are filed herewith.
(a) Exhibits:
2.1 Purchase and Assumption Agreement Among
Centura Bank, Triangle Bank and First South Bank,
dated December 10, 1999
The following is a list identifying the contents of all
omitted exhibits in Exhibit 2.1:
Exhibit No. Description
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I List of Banking Centers to Be Purchased by
First South Bank
1.1(a)(2) Personal Property/Fixed Assets
1.1(a)(3) Equipment Leases
1.1(b) List of Excluded Assets
1.2(a)(2) Deposit Accounts for Which No Premiums Will Be
Paid
1.2(b) Assignable Operating Contracts
1.3(a) Summary of Deposit Liabilities
1.3(b) Summary of Loans
1.4(k) Power of Attorney
1.6(c) Severance Benefits for Employees in Banking
Centers Owned by Triangle Bank
2.2(b)(2) Form of Bill of Sale
2.2(b)(3) Form of Assignment and Assumption Agreement
2.2(b)(14) Form of Closing Statement
4.7(b) Claims and Demands Relating to Real Property
4.9 Loan Exception Disclosures
The Registrant agrees to furnish supplementally a copy of
any omitted exhibit to the Commission upon request.
99.1 Press Release dated December 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, hereunto duly authorized.
NEWSOUTH BANCORP, INC.
By:/s/ Thomas A. Vann
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Thomas A. Vann
Date: December 22, 1999 President
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PURCHASE AND ASSUMPTION AGREEMENT
AMONG
CENTURA BANK, TRIANGLE BANK
AND
FIRST SOUTH BANK
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PURCHASE AND ASSUMPTION AGREEMENT
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ARTICLE I - TRANSFER OF ASSETS AND LIABILITIES
Section 1.1. Transferred Assets
Section 1.2. Purchase Price
Section 1.3. Deposit Liabilities
Section 1.4. Loans Transferred
Section 1.5. Safe Deposit Business
Section 1.6. Employee Matters
Section 1.7. Records and Data Processing
Section 1.8. Security
Section 1.9. Taxes and Fees; Proration of Certain
Expenses
Section 1.10. Real Property
ARTICLE II - CLOSING AND EFFECTIVE TIME
Section 2.1. Effective Time
Section 2.2. Closing
Section 2.3. Post-Closing Adjustments
ARTICLE III - INDEMNIFICATION
Section 3.1. Seller's Indemnification of Purchaser
Section 3.2. Purchaser's Indemnification of Seller
Section 3.3. Claims for Indemnity
Section 3.4. Limitations on Indemnification
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF SELLER
Section 4.1. Corporate Organization
Section 4.2. No Violation
Section 4.3. Corporate Authority
Section 4.4. Enforceable Agreement
Section 4.5. No Brokers
Section 4.6. Personal Property
Section 4.7. Real Property
Section 4.8. Condition of Property
Section 4.9 Loans
Section 4.10 Environmental Matters
Section 4.11 Litigation and Claims
Section 4.12. Limitation of Representations and
Warranties
Section 4.13 No Agreements with Customers
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF PURCHASER
Section 5.1. Corporate Organization
Section 5.2. No Violation
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Section 5.3. Corporate Authority
Section 5.4. Enforceable Agreement
Section 5.5. No Brokers
ARTICLE VI - OBLIGATIONS OF PARTIES PRIOR TO AND AFTER EFFECTIVE
TIME
Section 6.1. Full Access
Section 6.2 Delivery of Magnetic Media Records
Section 6.3. Application for Approval to Effect
Purchase of Assets and Assumption of
Liabilities
Section 6.4. Conduct of Business; Maintenance of
Properties
Section 6.5. No Solicitation by Seller
Section 6.6. Further Actions
Section 6.7. Fees and Expenses
Section 6.8. Breaches with Third Parties
Section 6.9. Insurance
Section 6.10. Public Announcements
Section 6.11. Tax Reporting
ARTICLE VII - CONDITIONS TO PURCHASER'S OBLIGATION
Section 7.1. Representations and Warranties True
Section 7.2. Obligations Performed
Section 7.3. No Adverse Litigation
Section 7.4. Regulatory Approval
Section 7.5 Data Processing Conversion and Item
Processing
ARTICLE VIII - CONDITIONS TO SELLER'S OBLIGATIONS
Section 8.1. Representations and Warranties True
Section 8.2. Obligations Performed
Section 8.3. No Adverse Litigation
Section 8.4. Regulatory Approval
ARTICLE IX - TERMINATION
Section 9.1. Methods of Termination
Section 9.2. Procedure Upon Termination
Section 9.3. Payment of Expenses
ARTICLE X - MISCELLANEOUS PROVISIONS
Section 10.1. Amendment and Modification
Section 10.2. Waiver or Extension
Section 10.3. Assignment
Section 10.4. Confidentiality
Section 10.5. Addresses for Notices, Etc.
Section 10.6. Counterparts
Section 10.7. Headings
Section 10.8. Governing Law
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Section 10.9. Sole Agreement
Section 10.10. Severability
Section 10.11. Parties in Interest
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PURCHASE AND ASSUMPTION AGREEMENT
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THIS PURCHASE AND ASSUMPTION AGREEMENT (this "Agreement")
is entered into as of December 10, 1999 by and among CENTURA
BANK, a state chartered banking corporation having its principal
offices in Rocky Mount, North Carolina, TRIANGLE BANK, a state
chartered banking corporation having its principal offices in
Raleigh, North Carolina (collectively, "Seller"), and FIRST
SOUTH Bank, a state chartered banking corporation having its
principal offices in Washington, North Carolina ("Purchaser"):
WITNESSETH:
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WHEREAS, Seller wishes to divest, upon the terms and
conditions set forth herein, certain assets and certain deposit
and other liabilities of the offices (the "Banking Centers")
listed on Exhibit I which is attached hereto and incorporated
herein by reference;
WHEREAS, Purchaser wishes to buy such assets and assume the
deposits and other liabilities of the Banking Centers pursuant
to the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and mutual
agreements hereinafter set forth, Seller and Purchaser agree as
follows:
ARTICLE I
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TRANSFER OF ASSETS AND LIABILITIES
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Section 1.1. Transferred Assets.
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(a) As of the Effective Time (as defined in Section 2.1
below) and upon the terms and conditions set forth
herein, Seller will sell, assign, transfer, convey and
deliver to Purchaser, and Purchaser will purchase from
Seller, all of the following assets associated with the
Banking Centers and identified in this Agreement and the
Exhibits hereto, and not otherwise excluded from sale
pursuant to the provisions of Subsection 1.l(b) below:
(1) subject to Section 1.10 hereof, all transferable
right, title and interest of Seller in and to all
real estate and improvements thereon (including
buildings located on leased land) at the Banking
Centers (the "Real Property"), together with all
rights and appurtenances pertaining thereto, as
indicated in Exhibit I;
(2) except as provided in Section 1.1(b), the
furniture, fixtures (including owned and leased
ATMs), leasehold improvements, equipment and other
tangible personal property (including the originals
of all documents and records held by Seller
relating to the Real Property, Personal Property,
Real Property
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Leases, Equipment Leases, Safe Deposit Contracts,
and Deposit Liabilities and other documents listed
in Section 1.3(i)) located on or affixed to the
Real Property (the "Personal Property") (see
Exhibit 1.1(a)(2) attached hereto and incorporated
herein by reference);
(3) all leases affecting the Banking Centers, including
all leases of real property as reflected in Exhibit
I (the "Real Property Leases"), and all equipment
leases for equipment located at the Banking Centers
(the "Equipment Leases") (see Exhibit 1.1(a)(3)
attached hereto and incorporated herein by
reference);
(4) all safe deposit contracts and leases for the safe
deposit boxes located at the Banking Centers as of
the Effective Time (the "Safe Deposit Contracts");
(5) all Loans transferred pursuant to Section 1.4; and
(6) all coins and currency located at the Banking
Centers as of the Effective Time (the "Coins and
Currency").
(b) Excluded from the assets, properties and rights being
transferred, conveyed and assigned to Purchaser under
this Agreement are the assets listed on Exhibit 1.1(b)
hereto, Seller's rights in and to the name "Centura",
"Triangle Bank" and any of Seller's corporate logos,
trademarks, trade names, signs, paper stock, forms and
other supplies containing any such logos, trademarks or
trade names. In addition, Purchaser may choose not to
purchase any fixed assets which it identifies in writing
to Seller within 30 days following the date of this
Agreement. (All such assets to be excluded under the
previous two sentences shall be referred to herein as
the "Excluded Assets"). Seller shall coordinate with
Purchaser to remove the Excluded Assets from the Banking
Centers on or prior to the Effective Time. Seller shall
remove the Excluded Assets at its own cost and, apart
from making any repairs necessitated by Seller's
negligence in removing the Excluded Assets, Seller shall
be under no obligation to restore the Banking Centers'
premises to their original condition, which shall be the
responsibility of Purchaser. Seller also excludes from
the sale, the Seller's following equipment: None.
Section 1.2. Purchase Price.
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(a) As consideration for the purchase of the Banking
Centers, Purchaser shall pay Seller a purchase price
equal to the sum of the following:
(1) Net Book Value (as defined in Section 1.2(d)
hereof) as of the Effective Time for the Real
Property and the Personal Property (net book values
as of October 31, 1999 are shown on Exhibits I and
1.1(a)(2).
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(2) A premium for the Deposit Liabilities (as defined
in Section 1.3(a) hereof) and franchise value
related to the Banking Centers equal to 4.00% of
the Deposit Liabilities, except for (i) the Deposit
Liabilities represented by those certain accounts
shown on Exhibit 1.2(a)(2) attached hereto and
incorporated herein by reference and (ii) all
public funds deposits taken by the Banking Centers
after the date of this Agreement or any renewal of
the accounts shown on Exhibit 1.2(a)(2), for which
there shall be no premium;
(3) The Net Book Value (as defined in Section 1.2(d)
hereof), including accrued interest, for the Loans
as set forth in Section 1.4 hereof; and
(4) The face amount of the Coins and Currency.
(b) In addition, Purchaser shall assume, as of the Effective
Time and subject to Section 1.10 below, all of the
duties, obligations and liabilities of Seller relating
to the Real Property, the Real Property Leases, building
leases, the Equipment Leases, the Safe Deposit
Contracts, the Deposit Liabilities (including all
accrued interest relating thereto) and all assignable
operating contracts of the Banking Centers (excluding
any master contracts), as listed in Exhibit 1.2(b)
attached hereto and incorporated herein by reference;
provided, that any cash items paid by Seller and not
cleared prior to the Effective Time shall be the
responsibility of Seller, subject to the terms of
Section 1.3 below.
(c) Seller shall prepare a balance sheet (the "Pre-Closing
Balance Sheet") in accordance with generally accepted
accounting principles consistently applied as of a date
not earlier than 30 calendar days prior to the Effective
Time anticipated by the parties (the "Pre-Closing
Balance Sheet Date") reflecting the assets to be sold
and assigned hereunder and the liabilities to be
transferred and assumed hereunder all based on the Net
Book Value of the Real Property, the net book value of
the Personal Property and the book value of other assets
and liabilities (including book value of leasehold
improvements as to any leased buildings). Seller agrees
to pay to Purchaser at the Closing (as defined in
Section 2.1 hereof), in immediately available funds, the
excess amount, if any, of the amount of Deposit
Liabilities assumed by Purchaser pursuant to subsection
(b) above as reflected by the Pre-Closing Balance Sheet
over the aggregate purchase price computed in accordance
with subsection (a) above, as reflected by the
Pre-Closing Balance Sheet. Purchaser agrees to pay
Seller at the Closing, in immediately available funds,
the excess, if any, of the aggregate purchase price
computed in accordance with subsection (a) above, as
reflected by the Pre-Closing Balance Sheet over the
amount of Deposit Liabilities assumed by Purchaser
pursuant to subsection (b) above as reflected by the
Pre-Closing Balance Sheet. Amounts paid at Closing shall
be subject to subsequent adjustment based on the
Post-Closing Balance Sheet (as defined in Section 2.3
hereof).
(d) For purposes of this Agreement, "Net Book Value" means
the value as of the Effective Time determined from the
Post-Closing Balance Sheet; provided, however,
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that such value shall not include the loan loss reserve
attributable to any Loan (as defined in Section 1.4
hereof) or any general reserve.
Section 1.3. Deposit Liabilities.
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(a) "Deposit Liabilities" shall mean all of Seller's
duties,obligations and liabilities relating to the
deposit accounts located at the Banking Centers as of
the Effective Time (including accrued but unpaid or
uncredited interest thereon) but excluding deposit
accounts which have been in overdraft status for 30 days
or more. A summary of the Deposit Liabilities showing
type of deposit, maturity date, principal amount, and
interest rate is attached hereto as Exhibit 1.3(a) and
incorporated herein by reference.
(b) Except for those liabilities and obligations
specifically assumed by Purchaser under 1.2(b) above,
Purchaser is not assuming any other liabilities or
obligations. Liabilities not assumed include, but are
not limited to, the following:
(1) Seller's cashier checks, letters of credit, money
orders, interest checks and expense checks issued
prior to closing, consignments of U.S. Government
"E" and "EE" bonds and any and all traveler's
checks.
(2) Liabilities or obligations with respect to any
litigation, suits, claims, demands or governmental
proceedings arising, commenced or otherwise
applicable to Seller prior to Closing and related
to the Banking Centers.
(3) Deposit accounts associated with lines of credit
where the line of credit is excluded in accordance
with Section 1.4 (b).
(4) Deposit accounts associated with qualified
retirement plans where Seller is the trustee of
such plan or the sponsor of a prototype plan used
by such plan.
(5) Deposit accounts associated with Seller's national
or regional account relationships, if any.
(6) Self-directed individual retirement accounts, if
any, it being understood that all other types of
IRA Deposit Liabilities are intended to be
transferred.
(c) Seller does not represent or warrant that any deposit
customers whose accounts are assumed by Purchaser will
become or continue to be customers of Purchaser after
the Effective Time.
(d) Purchaser agrees to pay in accordance with law and
customary banking practices all properly drawn and
presented checks, drafts and withdrawal orders timely
presented to Purchaser by mail, over the counter or
through the check clearing system of the banking
industry, by depositors of the accounts assumed, whether
drawn on the
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checks, withdrawal or draft forms provided by Seller or
by Purchaser, and in all other respects to discharge, in
the usual course of the banking business, the duties and
obligations of Seller with respect to the balances due
and owing to the depositors whose accounts are assumed
by Purchaser; provided that, in the case of any such
payments made by Purchaser with respect to checks dated
prior to the Effective Time and in amounts of greater
than $50,000, where such payments are made by
Purchaser on or before ten business days following the
Effective Time, Seller shall refund to Purchaser that
portion of the premium referred to in Section 1.2(a)(2)
herein attributable to such payments.
(e) If, after the Effective Time, any depositor, instead of
accepting the obligation of Purchaser to pay the Deposit
Liabilities assumed, shall demand payment from Seller
for all or any part of any such assumed Deposit
Liabilities, Seller shall not be liable or responsible
for making any such payment; provided, that if Seller
shall pay the same, Purchaser agrees to reimburse Seller
for any such payments, and Seller shall not be deemed to
have made any representations or warranties to Purchaser
with respect to any such checks, drafts or withdrawal
orders and any such representations or warranties
implied by law are hereby expressly disclaimed. Seller
and Purchaser shall agree upon a plan to provide for the
daily settlement with immediately available funds by
Purchaser of checks, drafts, withdrawal orders, returns
and other items presented to and paid by Seller within
60 calendar days after the Effective Time and drawn on
or chargeable to accounts that have been assumed by
Purchaser; provided, however, that Seller shall be held
harmless and indemnified by Purchaser for acting in
accordance with such plan.
(f) Purchaser agrees, at its cost and expense, (1) to assign
new account numbers to depositors of assumed accounts,
(2) to notify such depositors, on or before the
Effective Time, in a form and on a date mutually
acceptable to Seller and Purchaser, of Purchaser's
assumption of Deposit Liabilities, and (3) to furnish
such depositors with checks on the forms of Purchaser
and with instructions to utilize Purchaser's checks and
to destroy unused check, draft and withdrawal order
forms of Seller. Purchaser shall not provide checks to
depositors prior to the Effective Time. If Purchaser so
elects, Purchaser may offer to buy from such depositors
their unused Seller check, draft and withdrawal order
forms. In addition, Seller will notify its affected
customers by letter of the pending assignment of
Seller's deposit accounts to Purchaser, which notice
shall be at Seller's cost and expense and shall be in a
form and mailed at a time mutually agreeable to Seller
and Purchaser.
(g) Purchaser agrees to pay promptly to Seller an amount
equivalent to the amount of any checks, drafts or
withdrawal orders credited to an assumed account as of
the Effective Time that are returned to Seller after the
Effective Time, provided that Purchaser shall be
required to make such payment only up to the balance of
funds on deposit with Purchaser at the time Seller makes
demand to Purchaser.
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(h) As of the Effective Time, Purchaser will assume and
discharge Seller's duties and obligations in accordance
with the terms and conditions and laws, rules and
regulations that apply to the certificates, accounts and
other Deposit Liabilities assumed under this Agreement.
(i) As of the Effective Time, Purchaser will maintain and
safeguard in accordance with applicable law and sound
banking practices all account documents, deposit
contracts, signature cards, deposit slips, canceled
items and other records related to the Deposit
Liabilities assumed under this Agreement, subject to
Seller's right of access to such records as provided in
this Agreement.
(j) Seller will render a final statement to each depositor
of an account assumed under this Agreement as to
transactions occurring through the Effective Time;
provided, however, that Seller shall not be obligated to
render a final statement on any account not ordinarily
receiving periodic statements in the ordinary course of
Seller's business. Seller will be entitled to impose
normal fees and service charges on a per-item basis, but
Seller will not impose periodic fees or blanket charges
in connection with such final statements.
(k) Subject to Section 6.11 below, Seller will provide
Purchaser 1099 and 1098 data for Purchaser to comply
with all laws, rules and regulations regarding 2000 tax
reporting of transactions of such accounts through the
Effective Time.
(l) As of the Effective Time, Purchaser, at its expense,
will notify all Automated Clearing House ("ACH")
originators of the transfers and assumptions made
pursuant to the Agreement; provided, however, that
Seller may, at its option, notify all such originators
itself (on behalf of Purchaser) also at the expense of
Purchaser. For a period of 60 calendar days beginning on
the Effective Time, Seller will honor all ACH items
related to accounts assumed under this Agreement which
are mistakenly routed or presented to Seller. Seller
will make no charge to Purchaser for honoring such
items, and will electronically transmit such ACH data to
Purchaser on a daily basis. If Purchaser cannot receive
an electronic transmission, Seller will make available
daily to Purchaser at Seller's operations Center
receiving items from the Automated Clearing House tapes
containing such ACH data. Any ACH items presented to
Purchaser by Seller which are not posted by the
Purchaser shall be the responsibility of the Purchaser
to return through its normal ACH return process. Items
mistakenly routed or presented after the 60-day period
should be returned to the presenting party. Seller and
Purchaser shall make arrangements to provide for the
daily settlement with immediately available funds by
Purchaser of any ACH items honored by Seller, and Seller
shall be held harmless and indemnified by Purchaser for
acting in accordance with this arrangement to accept ACH
items.
(m) As of the Effective Time, Purchaser agrees to use its
best efforts to collect from Purchaser's customers (i)
amounts equal to any Visa or MasterCard charge backs
under the MasterCard and Visa Merchant Agreements
between Seller and its
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customers, (ii) amounts equal to any deposit items
returned to Seller after the Effective Time which
were honored by Seller prior to the Effective Time, and
(iii) any ACH reclamations. Purchaser shall remit any
such amounts so collected to Seller. Purchaser agrees to
immediately freeze and remit to Seller any funds, up to
the amount of the charged back or returned item that had
been previously credited by Seller, if such funds are
available at the time of notification by Seller to
Purchaser of the charged back or returned item.
Notwithstanding the foregoing, Purchaser shall have no
duty to remit funds for any item or charge that has been
improperly returned or charged to Seller.
Section 1.4. Loans Transferred.
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(a) Seller will transfer to Purchaser as of the Effective
Time, subject to the terms and conditions of this
Agreement, all of Seller's right, title and interest in
loans maintained, serviced and listed in Seller's
records as loans of the Banking Centers (collectively,
the "Loans"); provided, however, the Loans shall not
include any loans described in subsection (b) below.
Such Loans (as well as any security interest related
thereto) shall be transferred by means of a blanket
(collective) assignment and not individually (except as
may be otherwise required by law). Purchaser shall
inform Seller not less than 30 calendar days prior to
the proposed closing of any case in which filing
information relating to any collateral for the Loans
will be required for preparation of any
assignments of liens. A summary of the Loans showing
loan type, maturity date, principal amount, and interest
rate is attached hereto as Exhibit 1.4(a) and
incorporated herein by reference.
(b) Notwithstanding the provisions of subsection (a) above,
the Loans shall not include:
(1) nonaccruals (which term shall include loans in
which the collateral securing same has been
repossessed or in which collection efforts have
been instituted or, claim and delivery or
foreclosure proceedings have been filed);
(2) loans 90 calendar days or more past due;
(3) loans upon which insurance has been force-placed;
(4) loans in connection with which the borrower has
filed a petition for relief under the United States
Bankruptcy Code prior to the Effective Time;
(5) loans identified by Purchaser in writing 30
calendar days or more prior to the Effective Time
as not being purchased because of failure to meet
the credit standards of Purchaser;
(6) Letters of Credit, unless specifically accepted by
Purchaser, or loans in which the Seller
participates with another bank, unless specifically
accepted by Purchaser.
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(c) Seller and Purchaser agree that Purchaser will become
the beneficiary of credit life insurance written on
direct consumer installment loans and coverage will
continue to be the obligation of the current insurer
after the Effective Time and for the duration of such
insurance as provided under the terms of the policy or
certificate. If Purchaser becomes the beneficiary of
credit life insurance written on direct consumer
installment loans, Seller and Purchaser agree to
cooperate in good faith to develop a mutually
satisfactory method by which the current insurer will
make rebate payments to and satisfy claims of the
holders of such certificates of insurance after the
Effective Time. The parties' obligations in this
section are subject to any restrictions contained in
existing insurance contracts as well as applicable laws
and regulations.
(d) In connection with the transfer of any loans requiring
notice to the borrower, Purchaser and Seller agree to
comply with all notice and reporting requirements of the
loan documents or of any law or regulation.
(e) All Loans transferred to Purchaser shall be valued at
their Net Book Value, such value to include accrued
interest.
(f) Subject to Section 1.4(l) below, all Loans will be
transferred without recourse and without any warranties
or representations as to their collectibility or the
creditworthiness of any of the obligors of such Loans.
(g) Purchaser will at its expense issue new coupon books for
payment of Loans for which Seller provides coupon books
with instructions to utilize Purchaser's coupons and to
destroy coupons furnished by Seller.
(h) For a period of 60 calendar days after the Effective
Time, Seller will forward to Purchaser loan payments
received by Seller. Purchaser shall reimburse Seller
upon demand for checks returned on payments forwarded to
Purchaser or on a daily basis through a settlement
account established under a working agreement between
the parties.
(i) As of the Effective Time, Seller shall transfer and
assign all files, documents and records related to the
Loans to Purchaser, and Purchaser will be responsible
for maintaining and safeguarding all such materials in
accordance with applicable law and sound banking
practices.
(j) If the balance due on any Loan purchased pursuant to
this Section 1.4 has been reduced by Seller as a result
of a payment by check received prior to the Effective
Time, which item is returned after the Effective Time,
the asset value represented by the Loan transferred
shall be correspondingly increased and an amount in cash
equal to such increase shall be paid by Purchaser to
Seller promptly upon demand.
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(k) Seller shall grant to Purchaser as of the Effective Time
a limited power of attorney, in substantially the form
attached hereto as Exhibit 1.4(k) (the "Power of
Attorney").
(l) Notwithstanding anything else herein to the contrary, in
the event Purchaser, in its sole discretion, determines,
within 90 days after it receives the Loan documents from
Seller, that any Loans purchased at the Closing (i)
should have been excluded pursuant to Section 1.4(b)
above at the Effective Time or (ii) subsequent to the
Closing but within such 90-day period become subject to
one or more of the criteria listed in Section 1.4(b)
(with subsection (5) being applicable to any Loans which
Purchaser determines fails to meet its credit standards
during such 90-day period), Purchaser may require Seller
to repurchase such Loans for the net book value of such
Loans at the time of notice to Seller. If the balance
due on any Loan repurchased pursuant to this Section
1.4(l) has been reduced by Purchaser as a result of a
payment by check received prior to the repurchase, which
item is returned after the repurchase, the asset value
represented by the repurchased Loan shall be
correspondingly increased and an amount in cash equal to
such increase shall be paid by Seller to Purchaser
promptly upon demand.
Section 1.5. Safe Deposit Business.
- ----------- ---------------------
(a) As of the Effective Time, Purchaser will assume and
discharge Seller's obligations with respect to the safe
deposit box business at the Banking Centers in
accordance with the terms and conditions of contracts or
rental agreements related to such business, and
Purchaser will maintain all facilities necessary for the
use of such safe deposit boxes by persons entitled to
use them.
(b) As of the Effective Time, Seller shall transfer and
assign the records related to such safe deposit box
business to Purchaser, and Purchaser shall maintain and
safeguard all such records and be responsible for
granting access to and protecting the contents of safe
deposit boxes at the Banking Centers.
(c) Safe deposit box rental payments (not including late
payment fees) collected by Seller before the Effective
Time shall be prorated as of the Effective Time.
Section 1.6. Employee Matters.
- ----------- ----------------
(a) Subject to Section 10.11 hereof, Purchaser shall offer
employment to all employees employed by Seller (does not
include temporary agency workers) at the Banking Centers
(not including the employees at the Rocky Mount-Franklin
Street office, only some of whom may be offered
employment) as of the Effective Time (the "Employees"),
in their then current functional positions at each
office with remuneration not less than current levels
(subject to normal salary increases) and benefits
generally equivalent to benefits accorded to similarly
situated of Purchaser's employees. Nothing herein
contained shall be construed as an employment contract
enforceable by any Employee. Except for Purchaser's
pension plan and ESOP,
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Employees who become employees of Purchaser shall
receive full credit for their prior service with Seller
under Purchaser's benefit plans and policies, including
its vacation and sick leave policies. As of the
Effective Time, the Employees who become employees of
Purchaser and their dependents, if any, previously
covered under Seller's health insurance plan shall be
covered (to the extent covered under Seller's plan)
under Purchaser's health insurance plan without being
subject to any pre-existing condition limitations or
exclusions except those excluded under Seller's health
insurance plan. Employees who become employees of
Purchaser shall not be required to satisfy the
deductible and employee payments required by Purchaser's
comprehensive medical plan for the calendar year of the
Effective Time to the extent of amounts previously
credited during such calendar year under comparable
plans maintained by Seller. Employees who become
employees of Purchaser shall receive full credit for
their prior service with Seller for purposes of
determining their participation eligibility and vesting
rights (but not for benefit accrual purposes) under
Purchaser's pension plan; benefits under Purchaser's
pension plan shall accrue from the first day of service
with Purchaser and shall be based on the number of years
of service with Purchaser thereafter. Employees who
become employees of Purchaser shall be eligible to
participate in Purchaser's ESOP no earlier than October
1, 2000.
(b) Seller makes no representations or warranties about
whether any of the Employees will remain employed at the
Banking Centers after the Effective Time. Seller will
use its best efforts to maintain the Employees as
employees of Seller at the Banking Centers until the
Effective Time. Any Employee whose employment shall be
terminated for any reason prior to the Effective Time or
who shall elect not to be an employee of Purchaser shall
be dealt with by Seller in its sole and absolute
discretion. Seller agrees that, for a period of
12 months after the Effective Time, it will not solicit
for employment any Employee who remains employed by
Purchaser. All salaries, benefits, unused (but accrued)
vacation, if any, withholding taxes, FICA taxes and any
other liabilities of every nature which arise or
originate prior to the Closing will be discharged in
full by Seller, and Seller agrees to indemnify Purchaser
from all liability therefor.
(c) Purchaser agrees for a period of 12 months after the
Effective Time it will not terminate a transferred
Employee without cause without paying to such Employee a
severance benefit no less than the applicable severance
benefit set forth in Exhibit 1.6(c).
Section 1.7. Records and Data Processing.
- ----------- ---------------------------
(a) As of the Effective Time, Purchaser shall become
responsible for maintaining the files, documents and
records referred to in this Agreement. Purchaser will
preserve and safekeep them as required by applicable law
and sound banking practice for the joint benefit of
Seller and Purchaser. After the Effective Time,
Purchaser will permit Seller and its representatives,
for reasonable cause, at reasonable times and upon
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reasonable notice and at Seller's expense, to examine,
inspect, copy and reproduce any such files, documents or
records as Seller deems reasonably necessary.
(b) As of the Effective Time, Seller will permit Purchaser
and its representatives, for reasonable cause, at
reasonable times and upon reasonable notice and at
Purchaser's expense, to examine, inspect, copy and
reproduce files, documents or records retained by Seller
regarding the assets and liabilities transferred under
this Agreement as Purchaser deems reasonably necessary.
(c) It is understood that certain of Seller's records may be
available only in the form of photocopies, film copies
or other non-original and non-paper media.
Section 1.8. Security.
- ----------- --------
As of the Effective Time, Purchaser shall be solely
responsible for the security of and insurance on all persons and
property located in or about the Banking Centers. Purchaser
reserves the right to make its own security arrangements and not
assume any existing agreements between Seller and a security
vendor or be responsible for any penalty with respect thereto.
Section 1.9. Taxes and Fees; Proration of Certain Expenses.
- ----------- ---------------------------------------------
Purchaser shall be responsible for the payment of all
public authority fees and taxes related to this transaction;
except that Purchaser shall not be responsible for, or have any
liability with respect to, taxes on any income to Seller arising
out of this transaction. Purchaser shall not be responsible for
any income tax liability of Seller arising from the business or
operations of the Banking Centers before the Effective Time, and
Seller shall not be responsible for any tax liabilities of
Purchaser arising from the business or operations of the Banking
Centers after the Effective Time. Utility payments, telephone
charges, real property taxes, personal property taxes, rent,
salaries, deposit insurance premiums, other ordinary operating
expenses of the Banking Centers and other expenses related to
the liabilities assumed or assets purchased hereunder shall be
prorated between the parties as of the Effective Time. To the
extent any such item has been prepaid by Seller for a period
extending beyond the Effective Time, there shall be a
proportionate monetary adjustment in favor of Seller.
Section 1.10. Real Property.
- ------------ -------------
(a) Title and Leasehold Matters.
(i) Seller agrees to deliver to Purchaser within 15
days after the date of this Agreement copies of all
title and/or lease information in possession of
Seller, including, but not limited to, title
insurance policies, attorneys' opinions on title,
surveys, covenants, deeds, Real Property Leases,
notes and mortgages and easements relating to the
Real Property. Such delivery shall constitute no
warranty by Seller as to the accuracy or
completeness thereof or that Purchaser is entitled
to rely thereon.
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(ii) Purchaser agrees to notify Seller in writing within
30 calendar days prior to the Closing of any
mortgages, pledges, material liens, encumbrances,
reservations, tenancies, encroachments, overlaps or
other title exceptions or zoning or similar land
use violations (excluding legal but nonconforming
uses) related to the Real Property to which
Purchaser reasonably objects (the "Title Defects").
Purchaser agrees that Title Defects shall not
include real property taxes not yet due and payable
or easements, restrictions, tenancies, and rights
of way which do not materially interfere with the
use of the Real Property as a Banking Centers.
Seller shall make a good faith effort to correct
any such Title Defect to Purchaser's reasonable
satisfaction at least 10 calendar days prior to
Closing; provided, however, that Seller shall not
be obligated to bring any lawsuit or make any
payments of money (except to pay liens that Seller
does not dispute in good faith) to cure a Title
Defect. If Seller is unable or unwilling to cure
any such Title Defects to Purchaser's reasonable
satisfaction, Purchaser shall have the option
either to (upon written notice to Seller) receive
title in its then existing condition, to accept the
assets and assume the liabilities of the Banking
Centers without the Real Property on which the
Banking is located or to lease the Real Property
from Seller for a period of 12 months at fair
market rental value in order to allow for
relocation of the business to another facility.
Upon termination of this Agreement with respect to
the Real Property of a Banking Centers pursuant to
this Section 1.10, neither party shall have any
further liability to the other party under this
Agreement with respect to such Real Property and
the purchase price shall be adjusted accordingly
for the value of the Real Property.
(iii) Purchaser shall have the right to update title
matters at Closing for any changes which may have
arisen between the date of Purchaser's original
title search and the Closing Date. If such update
indicates that any Title Defects have been placed
of record since the date of Purchaser's original
title search, and Purchaser reasonably objects
thereto, then Seller may elect to delay the Closing
with respect to the affected Banking for up to 30
calendar days while Seller makes a good faith
effort to cure any such Title Defect to Purchaser's
reasonable satisfaction; provided that Seller shall
not be obligated to bring any lawsuit or make any
payments of money (except to pay liens that Seller
does not dispute in good faith) to cure a Title
Defect. If Seller is unable or unwilling to cure
any such Title Defect within such 30 day period,
Purchaser shall have the option to receive title in
the then existing condition (upon written notice to
Seller), to accept the assets and assume the
liabilities of the Banking without the Real
Property on which the Banking is located (in which
event neither party shall have any further
liability to the other party under this Agreement
with respect to the Real Property of such Banking
and the purchase price shall be adjusted
accordingly) or to lease the Real Property
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from Seller for a period of 12 months at fair
market rental value in order to allow for
relocation of the business to another facility.
(b) Environmental Matters.
Seller shall provide to Purchaser as soon as possible
any Phase I and/or other environmental reports on the Real
Property in its possession. In addition, Purchaser shall
have the right to conduct such investigation of
environmental matters with respect to the Real Property as
it may reasonably require and shall report the results of
any such investigation, together with the existence of any
environmental hazard or contamination which impacts the
Real Property or the use thereof as a Banking Center, if
any, to Seller no later than 30 calendar days prior to the
Closing; provided, however, that without the prior written
consent of Seller, Purchaser shall not conduct any ground
water monitoring or install any test well or undertake any
other investigation which requires a permit or license
from, or the reporting of the investigation or the results
thereof to, a local or state environmental regulatory
authority or the United States Environmental Protection
Agency. If Purchaser objects to the existence of any
environmental hazard or contamination which materially
impacts the Real Property or the use thereof as a Banking
Centers, Seller shall have the right, but not the
obligation, to cure any such matter which is discovered by
Purchaser's investigation at Seller's expense. If Seller
either refuses to give such written consent or refuses to
cure, Purchaser shall have the option either to purchase
the Real Property in its then existing condition (upon
written notice to Seller) with respect to the Banking
Centers at which the Real Property affected by such
refusal is located, to accept the assets and assume the
liabilities of the Banking Centers without the Real
Property on which the Banking Centers is located (in which
event neither party shall have any further liability to the
other under this Agreement with respect to the Real
Property on which such Banking Centers is located and the
purchase price shall be adjusted accordingly) or to lease
the Real Property from Seller for a period of 12 months at
fair market rental value in order to allow for relocation
of the business to another facility.
ARTICLE II
----------
CLOSING AND EFFECTIVE TIME
--------------------------
Section 2.1. Effective Time.
- ----------- --------------
The purchase of assets and assumption of liabilities
provided for in this Agreement shall occur at a closing (the
"Closing") to be held at the offices of Seller in Raleigh, North
Carolina, at 10:00 a.m. local time on the first Friday following
the date of all approvals by regulatory agencies and after all
statutory waiting periods have expired and all material terms
and conditions in the Agreement have been satisfied, or at such
other place, time or date on which the parties shall mutually
agree. The effective time (the "Effective Time") shall be 2:00
p.m., local time, on the day on which the Closing occurs (the
"Closing Date").
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Section 2.2. Closing.
- ----------- -------
(a) All actions taken and documents delivered at the Closing
shall be deemed to have been taken and executed
simultaneously, and no action shall be deemed taken nor
any document delivered until all have been taken and
delivered.
(b) At the Closing, subject to all the terms and conditions
of this Agreement, Seller shall deliver to Purchaser or,
in the case of subsections (b)(5)(ii), (6), (7) and
(10), make reasonably available to Purchaser:
(1) (i) With respect to Real Property owned by Seller,
a special warranty deed transferring title to such
Real Property to Purchaser;
(ii) With respect to Real Property leased by
Seller, the original lease agreements held by
Seller, an assignment or sublease of each of the
lease agreements, and all rights thereunder,
together with all required lessor consents in
connection therewith (the "Lease Agreements");
(2) A Bill of Sale, in substantially the form attached
hereto as Exhibit 2.2(b)(2) (the "Bill of Sale"),
transferring to Purchaser all of Seller's
interest in the Personal Property and in the
Loans;
(3) An Assignment and Assumption Agreement, in
substantially the form attached hereto as Exhibit
2.2(b)(3) (the "Assignment and Assumption
Agreement"), assigning Seller's interest in the
Equipment Leases, the Real Property Leases, the
Safe Deposit Contracts, and the Deposit
Liabilities, together with the original records
of all such Equipment Leases, Real Property
Leases, Safe Deposit Contracts, and Deposit
Liabilities held by Seller;
(4) Consents, in form and substance satisfactory to
Purchaser, from third persons that are required
to effect the assignments set forth in the
Assignment and Assumption Agreement, including
but not limited to, the lessors under the
Equipment Leases and the Real Property Leases (to
the extent required by such leases);
(5) (i) Seller's keys to the safe deposit boxes and
(ii) Seller's records (including all contracts)
related to the safe deposit box business at the
Banking Centers;
(6) Seller's files, documents and records related to
the Loans;
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(7) Seller's records (including all signature cards
and other documents referred to in Section 1.3(i))
related to the deposit accounts assumed by
Purchaser;
(8) Immediately available funds in the net amount
shown as owing to Purchaser by Seller on the
Closing Statement, if any;
(9) The Coins and Currency;
(10) Such of the other assets to be purchased as shall
be capable of physical delivery, together with
such documents or instruments of transfer as
Purchaser shall reasonably request to vest title
in Purchaser;
(11) A certificate of a proper officer of Seller, dated
as of the date of Closing, certifying to the
fulfillment of all conditions which are the
obligation of Seller and that all of the
representations and warranties of Seller set
forth in this Agreement remain true and correct
in all material respects as of the Effective
Time;
(12) A certified copy of a resolution of the Board of
Directors of Seller, or its Executive Committee,
approving the sale of the Banking Centers
contemplated hereby;
(13) Such certificates and other documents as Purchaser
and its counsel may reasonably require to evidence
the receipt by Seller of all necessary corporate
and regulatory authorizations and approvals for
the consummation of the transactions provided for
in this Agreement;
(14) A Closing Statement, substantially in the form
attached hereto as Exhibit 2.2(b)(14) (the
"Closing Statement");
(15) An affidavit of Seller certifying that Seller is
not a "foreign person" as defined in the federal
Foreign Investment in Real Property Tax Act of
1980;
(16) The Power of Attorney; and
(17) Such other documents and instruments necessary to
effect and evidence transfers of title,
recordation of assignments of title to the loans,
where necessary, and the security for the loans,
perfection of security interests being transferred
to Purchaser and to carry out the letter and
spirit of this Agreement.
It is understood that the items listed in
subsections b(5) and (9) shall be transferred
after the Banking Centers have closed for business
on the Closing Date and that the records listed
in subsections b(6) and (7) will be transferred as
soon as possible after the Closing, but in no
event more than five business days after the
Closing.
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(18) Title insurance policies, deeds and other
instruments relating to the Real Property not
already delivered to Purchaser.
(19) Forms for the transfer of IRA accounts and the
appointment of successor trustees.
(20) Assignment of credit life insurance policies
pursuant to Section 1.4(c).
(c) At the Closing, subject to all the terms and conditions
of this Agreement, Purchaser shall deliver to Seller:
(1) The Assignment and Assumption Agreement;
(2) A certificate and receipt acknowledging the
delivery and receipt of possession of the property
and records referred to in this Agreement;
(3) Immediately available funds in the net amount
shown as owing to Seller by Purchaser on the
Closing Statement, if any;
(4) A certificate of a proper officer of Purchaser,
dated as of the Date of Closing, certifying to the
fulfillment of all conditions which are the
obligation of Purchaser and that all of the
representations and warranties of Purchaser set
forth in this Agreement remain true and correct in
all material respects as of the Effective Time;
(5) A certified copy of a resolution of the Board of
Directors, or its Executive Committee, of
Purchaser approving the purchase of the Banking
Centers contemplated hereby;
(6) Such certificates and other documents as Seller
and its counsel may reasonably require to evidence
the receipt of Purchaser of all necessary
corporate and regulatory authorizations and
approvals for the consummation of the transactions
provided for in this Agreement; and
(7) The Closing Statement.
(d) All instruments, agreements and certificates described
in this Section 2.2 shall be in form and substance
reasonably satisfactory to the parties' respective legal
counsel.
Section 2.3. Post-Closing Adjustments.
- ----------- ------------------------
(a) Not later than 30 business days after the Effective Time
(the "Post-Closing Balance Sheet Delivery Date"), Seller
shall deliver to Purchaser a balance sheet dated as of
the Effective Time and prepared in accordance with
generally accepted accounting principles consistently
applied reflecting the assets sold and assigned and the
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liabilities transferred and assumed hereunder (the
"Post-Closing Balance Sheet"). Additionally, Seller
shall deliver to Purchaser a list of loans purchased,
individually identified by account number, which list
shall be appended to the Bill of Sale. Seller shall
afford Purchaser and its accountants and attorneys the
opportunity to review all work papers and documentation
used by Seller in preparing the Post-Closing Balance
Sheet and to be satisfied with the Post-Closing Balance
Sheet. Within 15 business days following the
Post-Closing Balance Sheet Delivery Date (the
"Adjustment Payment Date"), Seller and Purchaser shall
meet at the offices of Seller in Raleigh, North
Carolina, or such other location as may be mutually
agreed, to effect the transfer of any funds as may be
necessary to reflect changes in such assets and
liabilities between the Pre-Closing Balance Sheet and
the Post-Closing Balance Sheet together with interest
thereon computed from the Effective Time to the
Adjustment Payment Date at the applicable Federal Funds
Rate (as hereinafter defined).
(b) In the event that a dispute arises as to the appropriate
amounts to be paid to either party on the Adjustment
Payment Date, each party shall pay to the other on such
Adjustment Payment Date all amounts other than those as
to which a dispute exists. Any disputed amounts retained
by a party which are later found to be due to the other
party shall be paid to such other party promptly upon
resolution with interest thereon from the Effective Time
to the date paid at the applicable Federal Funds Rate.
In the event representatives of each party are unable to
resolve a dispute as to amounts to be paid hereunder,
the parties will refer the disputed amounts to their
respective public accountants to determine the correct
amounts due. In the event the public accountants are
unable to resolve the dispute, all information bearing
on the issue shall be referred to an independent
third-party accountant agreed on by the parties' public
accountants, whose determination of the amounts due
shall be final.
(c) The Federal Funds Rate shall be the mean of the high and
low rates quoted for Federal Funds in the Money Rates
Column of the Wall Street Journal adjusted as such mean
may increase or decrease during the period between the
Effective Time and the Adjustment Payment Date.
ARTICLE III
-----------
INDEMNIFICATION
---------------
Section 3.1. Seller's Indemnification of Purchaser.
- ----------- -------------------------------------
Seller shall indemnify, hold harmless and defend Purchaser
from and against any breach by Seller of any representation,
warranty or covenant contained herein and all claims, losses,
liabilities, demands and obligations, including reasonable
attorneys' fees and expenses, arising out of any actions, suits
or proceedings commenced prior to the Effective Time (other than
proceedings to prevent or limit the consummation of this
transaction) relating to operations at the Banking Centers or
which arise out of actions, suits, or proceedings commenced on
or after the
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Effective Time but which relate to operations at the Banking
Centers which occurred prior to the Effective Time; and, except
as otherwise provided in this Agreement, Seller shall further
indemnify, hold harmless and defend Purchaser from and against
all claims, losses, liabilities, demands and obligations,
including reasonable attorneys' fees and expenses, real estate
taxes, intangibles and franchise taxes, sales and use taxes,
social security and unemployment taxes, all accounts payable
and operating expenses (including salaries, rents and utility
charges) incurred by Seller prior to the Effective Time and
which are claimed or demanded on or after the Effective Time, or
which arise out of any actions, suits or proceedings commenced
on or after the Effective Time and which relate to operations at
the Banking Centers prior to the Effective Time.
Section 3.2. Purchaser's Indemnification of Seller.
- ----------- -------------------------------------
Purchaser shall indemnify, hold harmless and defend Seller
from and against any breach by Purchaser of any representation,
warranty or covenant contained herein and all claims, losses,
liabilities, demands and obligations, including reasonable
attorneys' fees and expenses, real estate taxes, intangibles and
franchise taxes, sales and use taxes, social security and
unemployment taxes, all accounts payable and operating expenses
(including salaries, rents and utility charges), which Seller
may receive, suffer or incur in connection with operations and
transactions occurring after the Effective Time and which
involve the Banking Centers, the assets transferred or the
liabilities assumed pursuant to this Agreement.
Section 3.3. Claims for Indemnity.
- ----------- --------------------
(a) A claim for indemnity under Sections 3.1 or 3.2 of this
Agreement may be made by the claiming party at any time
prior to twelve (12) months after the Effective Time by
the giving of written notice thereof to the other party,
provided that any claims for indemnity arising from
fraud or intentional misrepresentation may be made at
any time prior to the expiration of the applicable
statute of limitations or repose. Such written notice
shall set forth in reasonable detail the basis upon
which such claim for indemnity is made. In the event
that any such claim is made within such prescribed claim
period, the indemnity relating to such claim shall
survive until such claim is resolved. Claims not made
within such claim period shall cease and no indemnity
shall be made therefor.
(b) In the event that any person or entity not a party to
this Agreement shall make any demand or claim or file or
threaten to file any lawsuit, which demand, claim or
lawsuit may result in any liability, damage or loss to
one party hereto of the kind for which such party is
entitled to indemnification pursuant to Section 3.1 or
3.2 hereof, then, after written notice is provided by
the indemnified party to the indemnifying party of such
demand, claim or lawsuit, the indemnifying party shall
have the option, at its cost and expense, to retain
counsel for the indemnified party to defend any such
demand, claim or lawsuit. In the event that the
indemnifying party shall fail to respond within five
calendar days after receipt of such notice of any such
demand, claim or lawsuit, then the indemnified party
shall retain counsel and conduct the defense of such
demand, claim or lawsuit as it may in its discretion
deem proper,
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at the cost and expense of the indemnifying party. In
effecting the settlement of any such demand, claim or
lawsuit, an indemnified party shall act in good faith,
shall consult with the indemnifying party and shall
enter into only such settlement as the indemnifying
party shall approve (the indemnifying party's approval
will be implied if it does not respond within ten
calendar days of its receipt of the notice of such
settlement offer).
Section 3.4. Limitations on Indemnification.
- ----------- ------------------------------
Notwithstanding anything to the contrary contained in this
Article III, no indemnification shall be required to be made by
any party until the aggregate amount of all such claims by a
party exceeds $25,000. Once such aggregate amount exceeds
$25,000, such party shall thereupon be entitled to
indemnification for all amounts in excess of such $25,000. IN
ADDITION, THE PARTIES SHALL HAVE NO OBLIGATIONS UNDER THIS
ARTICLE III FOR ANY CONSEQUENTIAL LIABILITY, DAMAGE OR LOSS THE
INDEMNIFIED PARTY MAY SUFFER AS THE RESULT OF ANY DEMAND, CLAIM
OR LAWSUIT.
ARTICLE IV
----------
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
Seller hereby represents and warrants to Purchaser as
follows, which representations and warranties shall survive the
Effective Time for a period of 12 months, unless claims for
violations of Seller's representations and warranties are based
on fraud or intentional misrepresentation, in which case such
claims will be governed by the applicable statute of limitations
or repose:
Section 4.1. Corporate Organization.
- ----------- ----------------------
Seller is a state banking corporation duly organized,
validly existing and in good standing under the laws of North
Carolina. Seller has the corporate power and authority to own
its properties, to carry on its business as currently conducted
and to effect the transactions contemplated herein.
Section 4.2. No Violation.
- ----------- ------------
Since the dates the Banking Centers have been owned and
operated by their respective Seller, the Banking Centers have
been operated in all material respects in accordance with
applicable laws, rules and regulations. Neither the execution
and delivery of this Agreement, nor the consummation of the
transactions contemplated herein, will violate or conflict with
(a) Seller's Articles of Incorporation or Bylaws; (b) any
material provision of any material agreement or any other
material restriction of any kind to which Seller is a party or
by which Seller is bound; (c) any material statute, law, decree,
regulation or order of any governmental authority; or (d) any
material provision which will result in a default under, or
cause the acceleration of the maturity of, any material
obligation or loan to which Seller is a party.
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Section 4.3. Corporate Authority.
- ----------- -------------------
The execution and delivery of this Agreement, and the
consummation of the transactions contemplated herein, have been
duly authorized by Seller's Board of Directors (or the Executive
Committee thereof). No further corporate authorization is
necessary for Seller to consummate the transactions contemplated
hereunder.
Section 4.4. Enforceable Agreement.
- ----------- ---------------------
This Agreement has been duly authorized, executed and
delivered by Seller and is the legal, valid and binding
agreement of Seller, enforceable in accordance with its terms.
Section 4.5. No Brokers.
- ----------- ----------
All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by Seller,
or an agent of Seller's behalf. Seller will be responsible for
any commissions and other fees owed to such agents acting on
Seller's behalf.
Section 4.6. Personal Property.
- ----------- -----------------
Seller owns, and will convey to Purchaser at the Closing,
all of Seller's right, title and interest to all of the Personal
Property (including the Loans) free and clear of any claims,
mortgages, liens, security interests, pledges or encumbrances of
any kind, except as may otherwise be set forth in this
Agreement. The Deposit Liabilities are insured by the FDIC to
the fullest extent permitted under federal law.
Section 4.7. Real Property.
- ----------- -------------
Seller makes the following representations regarding the
Real Property:
(a) Except as specifically set forth herein, Seller has no
knowledge of any condemnation proceedings pending
against the Real Property.
(b) Except as specifically set forth in Exhibit 4.7(b)
attached hereto and incorporated herein by reference,
Seller has not entered into any agreement regarding the
Real Property, and the Real Property is not subject to
any claim, demand, suit, lien, proceeding or litigation
of any kind (including any pursuant to environmental
laws, rules or regulations), pending or outstanding, or
to the knowledge of Seller, threatened or likely to be
made or instituted, which would in any way be
binding upon Purchaser or its successors or assigns or
materially affect or limit Purchaser's or its
successors' or assigns' use and enjoyment of the Real
Property or which would materially limit or restrict
Purchaser's right or ability to enter into this
Agreement and consummate the sale and purchase
contemplated hereby.
20
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<PAGE>
(c) As to Real Property owned by Seller, Seller has or will
have at Closing good and marketable fee simple title to
the Real Property and, at Closing, will own the Real
Property outright subject to no mortgage, pledge, lien,
security interest, lease, charge, encumbrance or
conditional sales or other title retention agreement
except for real property taxes not yet due and payable,
and easements and rights of way which do not materially
interfere with the use of the Real Property as a Banking
Centers. Purchaser's sole remedy for a breach of the
representations and warranties in this Section 4.7 shall
be to elect not to purchase the Real Property on which a
Banking Centers is located as provided in Section 1.10.
(d) As to Real Property leased by Seller, the Real Property
Leases are valid and enforceable according to their
terms, no rental or other payments are past due, and
Seller has the right to assign the Real Property Leases.
Seller has provided Purchaser with true and accurate
copies of all Real Property Leases.
Section 4.8. Condition of Property.
- ----------- ---------------------
Except as may be otherwise specifically set forth in this
Agreement, the Real Property and Personal Property to be
purchased by Purchaser hereunder are sold AS IS, WHERE IS, with
no warranties or representations whatsoever, except as may be
expressly represented or warranted in this Agreement. Seller
has valid title to all Personal Property and the Loans and has
the right to transfer them as provided in this Agreement.
Section 4.9. Loans.
- ----------- -----
Each Loan is in all respects what it purports to be, and,
if originated by Seller, was made in the ordinary course of
business, and, if originated by Seller, was not known to be
uncollectible at the time it was made and, with respect to all
Loans, is not now known to be uncollectible, and accrues
interest in accordance with the terms of the Loan. To the best
knowledge of Seller, the records of Seller regarding all Loans
outstanding are accurate in all material respects and the risk
classifications for the Loans outstanding are, in the best
judgment of the management of Seller, appropriate. To the best
knowledge of Seller except as disclosed in Exhibit 4.9 attached
hereto and incorporated herein by reference, each Loan is the
legal, valid and binding obligation of the obligor and any
guarantor, subject to bankruptcy, insolvency, fraudulent
conveyance and other laws of general applicability relating to
or affecting creditors' rights and to general principles of
equity, and no defense, offset or counterclaim has been asserted
with respect to any such Loan. None of the Loans is in
violation of any laws, regulations or rulings, and each of the
Loans complies with applicable federal and state consumer
protection, contract and usury laws, except for violations or
failures to comply which, in the aggregate, would not result in
an expense to Purchaser in excess of $25,000, provided that
Purchaser shall have the duty to mitigate its damages in the
event it discovers any violations or failures to comply among
the Loans.
21
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<PAGE>
Section 4.10. Environmental Matters.
- ------------ ---------------------
For purposes of this subsection, the following terms shall
have the indicated meaning; "Environmental Law" means any
federal, state or local law, statute, ordinance, rule,
regulation, code, license, permit, authorization, approval,
consent order, judgment, decree, injunction or agreement with
any governmental entity relating to (i) the protection,
preservation or restoration of the environment (including,
without limitation, air, water vapor, surface water,
groundwater, drinking water supply, surface soil, subsurface
soil, plant and animal life or any other natural resources),
and/or (ii) the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production,
release or disposal of Hazardous Substances. The term
"Environmental Law" includes without limitation (i) the
Comprehensive Environmental Response, Compensation and Liability
Act, as amended, 42 U.S.C. Section 9601, et seq; the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. Section
6901, et seq; the Clean Air Act, as amended, 42 U.S.C. Section
7401, et seq; the Federal Water Pollution Control Act, as
amended, 33 U.S.C. Section 1251, et seq; the Toxic Substances
Control Act, as amended, 15 U.S.C. Section 9601, et seq; the
Emergency Planning and Community Right to Know Act, 42 U.S.C.
Section 11001, et seq; the Safe Drinking Water Act, 42 U.S.C.
Section 300f, et seq; and all comparable state and local laws,
and (ii) any common law (including without limitation common law
that may impose strict liability) that may impose liability or
obligations for injuries or damages due to, or threatened as a
result of, the presence of or exposure to any Hazardous
Substance. "Hazardous Substance" means any substance presently
listed, defined, designated or classified as hazardous, toxic,
radioactive or dangerous, or otherwise regulated, under any
Environmental Law, whether by type or by quantity, including any
material containing any such substance as a component. Hazardous
Substances include without limitation petroleum or any
derivative or by-product thereof, asbestos, radioactive
material, and polychlorinated biphenyls.
Except as disclosed in Exhibit 4.10, or in any Phase I
and/or other environmental reports made available by Seller to
Purchaser, to the knowledge of Seller without further
inspection, Seller has not been nor is in material violation of
Environmental Law as to the Real Property on which the Banking
Centers are located. Seller makes no representation as to the
accuracy of the Phase I environmental reports made available to
Purchaser.
Section 4.11. Litigation and Claims.
- ------------ ---------------------
There is no pending or threatened litigation relating to
the operations of the Banking Centers, and Seller has no
knowledge of any state of facts or the occurrence of any event
which could form the basis for any claim which could affect the
Banking Centers or the transactions contemplated herein.
Section 4.12. Limitation of Representations and Warranties.
- ------------ --------------------------------------------
Except as may be expressly represented or warranted in this
Agreement by Seller, Seller makes no representations or
warranties whatsoever with regard to any asset being transferred
to Purchaser or any liability or obligation being assumed by
Purchaser or as to any other matter or thing.
22
<PAGE>
<PAGE>
Section 4.13. No Agreement with Customers.
- ------------ ---------------------------
Seller has made no agreement with any customer of the
Banking Centers to retain that customer's deposits which would
be a part of the Deposit Liabilities transferred as provided
herein.
ARTICLE V
---------
REPRESENTATIONS AND WARRANTIES OF PURCHASER
-------------------------------------------
Purchaser hereby represents and warrants to Seller as
follows:
Section 5.1. Corporate Organization.
- ----------- ----------------------
Purchaser is state banking association, duly organized,
validly existing and in good standing under the laws of the
State of North Carolina. Purchaser has the corporate power and
authority to own the properties being acquired, to assume the
liabilities being transferred and to effect the transactions
contemplated herein.
Section 5.2. No Violation.
- ----------- ------------
Neither the execution and delivery of this Agreement, nor
the consummation of the transactions contemplated herein, will
violate or conflict with (a) the Articles of Incorporation or
Bylaws of Purchaser; any material provision of any material
agreement or any other material restriction of any kind to which
Purchaser is a party or by which Purchaser is bound; (b) any
material statute, law, decree, regulation or order of any
governmental authority; or (c) any material provision which will
result in a default under, or cause the acceleration of the
maturity of, any material obligation or loan to which Purchaser
is a party.
Section 5.3. Corporate Authority.
- ----------- -------------------
The execution and delivery of this Agreement, and the
consummation of the transactions contemplated herein, have been
duly authorized by the Board of Directors (or Executive
Committee) of Purchaser. No further corporate authorization on
the part of Purchaser is necessary to consummate the
transactions contemplated hereunder.
Section 5.4. Enforceable Agreement.
- ----------- ---------------------
This Agreement has been duly authorized, executed and
delivered by Purchaser and is the legal, valid and binding
agreement of Purchaser enforceable in accordance with its terms.
Section 5.5. No Brokers.
- ----------- ----------
All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by Seller
or Seller's agent and Purchaser, and there has been no
participation or
23
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<PAGE>
intervention by any other person, firm or corporation employed
or engaged by or on behalf of Purchaser in such a manner as to
give rise to any valid claim against Seller for a brokerage
commission, finder's fee or like commission.
ARTICLE VI
----------
OBLIGATIONS OF PARTIES PRIOR TO AND AFTER EFFECTIVE TIME
- --------------------------------------------------------
Section 6.1. Full Access.
- ----------- -----------
Seller shall afford to the officers and authorized
representatives of Purchaser, upon prior notice and subject to
Seller's normal security requirements, access to the properties,
books and records pertaining to the Banking Centers (including
loans to be conveyed under this Agreement) in order that
Purchaser may have full opportunity to make reasonable
investigations, at reasonable times without interfering with the
normal business and operations of the Banking Centers, or the
affairs of Seller relating to the Banking Centers. The officers
of Seller shall furnish Purchaser with one standard set of such
additional financial and operating data and other information as
to its business and properties at the Banking Centers, or where
otherwise located, as Purchaser may, from time to time,
reasonably request and as shall be available, including, without
limitation, information required for inclusion in all
governmental applications necessary to effect this transaction.
Any additional copies of such information shall be produced and
provided at Purchaser's expense. Nothing in this Section 6.1
shall require Seller to breach any obligation of confidentiality
or to reveal any proprietary information, trade secrets or
marketing or strategic plans. Records, including credit
information, relating to the Loans will be made available for
review by Purchaser no later than 3 calendar days after the
execution of this Agreement. It is understood that certain of
Seller's records may be available only in the form of
photocopies, film copies or other non-original and non-paper
media. Seller shall permit Purchaser from and after the
date of public notice of the transactions provided under this
Agreement to perform training of Seller's personnel at the
Banking Centers regarding Purchaser's systems and methods of
doing business, such training to be performed at the Banking
Centers or at other locations selected by Purchaser. Seller
shall permit Purchaser, from and after the date of public
announcement of the transactions provided under this Agreement,
to install equipment at the Banking Centers that will be used
for branch operations after the Closing. Purchaser shall not
perform such training or install such equipment in a manner that
unreasonably disrupts Seller's operations prior to Closing.
Section 6.2. Delivery of Magnetic Media Records.
- ----------- ----------------------------------
Seller shall prepare or cause to be prepared at its expense
and make available to Purchaser at Seller's data processing
center magnetic media records in Seller's field format after the
execution of this Agreement as soon as practical and in no event
later than 15 calendar days from the date of this Agreement and
further shall make available to Purchaser such records updated
as of the Closing Date, which records shall contain the
information related to the items described in Subsections
2.2(b)(6) and (b)(6) above. Such updated records shall be made
available at the Closing or at such time after Closing as agreed
to by the parties. If agreed by the parties, Seller may provide
some or all of such reports in paper format instead of magnetic
media format.
24
<PAGE>
<PAGE>
Seller agrees to provide Purchaser with copies of this
information which relate to assets purchased and liabilities
assumed by Purchaser .
Section 6.3. Application for Approval to Effect Purchase of
- ----------- ----------------------------------------------
Assets and Assumption of Liabilities.
------------------------------------
On or before December 17, 1999, Purchaser shall prepare and
file applications required by law with the appropriate
regulatory authorities for approval to purchase and assume the
aforesaid assets and liabilities, to establish branches at the
locations of the Banking Centers, and to effect in all other
respects the transactions contemplated herein. Purchaser agrees
to process such applications in a diligent manner and on a
priority basis and to provide Seller promptly with a copy of
such applications as filed (except for any confidential portions
thereof) and all material notices, orders, opinions,
correspondence and other documents with respect thereto, and to
use its best efforts to obtain all necessary regulatory
approvals. On the date hereof, neither Seller nor Purchaser
knows of any reason why such applications should not receive all
such approvals. Purchaser shall promptly notify Seller upon
receipt by Purchaser of notification that any application
provided for hereunder has been denied. Seller shall provide
such assistance and information to Purchaser as shall be
reasonably necessary for Purchaser to comply with the
requirements of the applicable regulatory authorities.
Section 6.4. Conduct of Business; Maintenance of Properties.
- ----------- ----------------------------------------------
From the date hereof until the Effective Time, Seller
covenants that it will:
(a) Carry on, or caused to be carried on, the business of
the Banking Centers substantially in the ordinary course
and in the same manner as on the date hereof; use all
reasonable efforts to preserve intact its current
business organization and preserve its business
relationships with depositors, customers and others
having business relationships with it and whose accounts
will be retained at the Banking Centers; and make new or
renew existing Loans at the Banking Centers only in the
ordinary course consistent with past practices;
provided, however, that Seller need not, in its sole
discretion, advertise or promote new or substantially
new customer services in the principal market area of
the Banking Centers;
(b) Cooperate with and assist Purchaser in assuring the
orderly transition of the business of the Banking
Centers to Purchaser from Seller;
(c) Maintain the Real Property and the Personal Property in
its current condition, ordinary wear and tear excepted;
(d) Not increase the salary of any employee of the Banking
Centers except for ordinary merit increases granted
under Seller's current personnel policies and not hire
any new employees for the Banking Centers other than
replacement employees;
25
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<PAGE>
(e) Not change interest rates paid in the Banking Centers
except as on a basis consistent with past practices on a
regional or statewide basis; and
(f) Not make any commitments for expenditures for capital
improvements at any of the Banking centers without
Purchaser's prior written consent.
Section 6.5. No Solicitation by Seller.
- ----------- -------------------------
For a period of 12 months after the Effective Time, neither
Seller nor its affiliates nor its employees will specifically
target and solicit customers of the Banking Centers personally
or utilizing any customer or mailing list which consists
primarily of customers of the Banking Centers; provided,
however, these restrictions shall not restrict (i) general mass
mailings, telemarketing calls, statement stuffers and other
similar communications directed to the then current customers of
Seller or Seller's affiliates, or to the public (but not through
the use of lists consisting solely of Banking Center customers)
or newspaper, radio or television advertisements of a general
nature, (ii) restrict Seller from soliciting any of the accounts
listed in Exhibit 1.2(a)(2) or responding to requests for bids
from any customers in accordance with their usual and customary
bidding procedures, or (iii) otherwise prevent Seller from
taking such actions as may be required to comply with any
applicable federal or state laws, rules or regulations. In
addition, these restrictions shall not restrict (a) the
solicitation of (i) commercial accounts normally established and
maintained in offices other than the Banking Centers or (ii) any
credit or debit card customer which has an agreement with Seller
for merchant services or (b) the ability of Seller to install,
operate and serve customers needs through automated teller
machines at any location.
Section 6.6. Further Actions.
- ----------- ---------------
The parties hereto shall, whether before or after the
Effective Time, execute and deliver such instruments and take
such other actions as the other party may reasonably require in
order to carry out the intent of this Agreement.
Section 6.7. Fees and Expenses.
- ----------- -----------------
Purchaser shall be responsible for the costs of all title
examinations, title insurance fees, surveys, its own attorneys'
and accountants' fees and expenses, recording costs, transfer
fees, documentary stamps, and other expenses arising in
connection therewith. Seller shall be responsible for its own
attorneys' and accountants' fees and expenses related to this
transaction.
Section 6.8. Breaches with Third Parties.
- ----------- ---------------------------
If the assignment of any material claim, contract, license,
lease, commitment, sales order or purchase order (or any
material claim or right or any benefit arising thereunder)
without the consent of a third party would constitute a breach
thereof or materially affect the rights of Purchaser or Seller
thereunder, then such assignment is hereby made subject to such
consent or approval being obtained.
26
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<PAGE>
Section 6.9. Insurance.
- ----------- ---------
As of the Effective Time, Seller will discontinue its
insurance coverage maintained in connection with the Banking
Centers and the activities conducted thereon. Purchaser shall be
responsible for all insurance protection for the Banking
Centers' premises and the activities conducted thereon
immediately following the Effective Time. Pending the Closing,
risk of loss shall be the responsibility of Seller. In the
event of a total or major loss to a Banking Center prior to
Closing such that Seller, at its option, decided not to replace
and reopen the Banking Center, the Deposit Liabilities, Loans
and other assets and liabilities to be transferred to Purchaser
under this Agreement shall be transferred to the nearest Banking
Center covered by the Agreement, unless the damaged Banking
Center is Tarboro, in which case the parties may agree that
Seller may provide a temporary facility for use by Purchaser for
a period not to exceed 12 months after Closing.
Section 6.10. Public Announcements.
- ------------ --------------------
Seller and Purchaser agree that, from the date hereof,
neither shall make any public announcement or public comment
regarding this Agreement or the transactions contemplated
herein, unless otherwise required by law, without first
consulting with the other party hereto and reaching an agreement
upon the substance and timing of such announcement or comment.
Further, Seller and Purchaser acknowledge the sensitivity of
this transaction to the Employees and no announcements or
communications with the public or these Employees shall be made
without the prior approval of Seller.
Section 6.11. Tax Reporting.
- ------------ -------------
Purchaser will comply with all 2000 tax reporting
obligations with respect to the transferred assets and
liabilities. Seller will provide Purchaser with all 1098 and
1099 data on the transferred assets and liabilities for the
partial year prior to the Effective Time. Seller agrees to
indemnify and hold Purchaser harmless from any loss, including
reasonable attorneys' fees and expenses, which it may incur due
to the inaccuracy or incompleteness of data provided by Seller
pursuant to this Section 6.11. Notwithstanding any other
provision in this Agreement to the contrary and subject to any
applicable statutes of limitations or repose with respect to the
subject matter underlying the claim for indemnification, any
claim for indemnity pursuant to the Section 6.11 may be made by
the Purchaser at any time after the Effective Time.
ARTICLE VII
-----------
CONDITIONS TO PURCHASER'S OBLIGATIONS
-------------------------------------
The obligation of Purchaser to complete the transactions
contemplated in this Agreement are conditioned upon fulfillment,
on or before the Closing, of each of the following conditions:
Section 7.1. Representations and Warranties True.
- ----------- -----------------------------------
27
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<PAGE>
The representations and warranties made by Seller in this
Agreement shall be true in all material respects on and as of
the Effective Time as though such representations and warranties
were made at and as of such time, except for any changes
permitted by the terms hereof or consented to by Purchaser.
Section 7.2. Obligations Performed.
- ----------- ---------------------
Seller shall (a) deliver or make available to Purchaser
those items required by Section 2.2 hereof, and (b) perform and
comply in all material respects with all obligations and
agreements required by this Agreement to be performed or
complied with by it prior to or on the Effective Time.
Section 7.3. No Adverse Litigation.
- ----------- ---------------------
As of the Effective Time, no action, suit or proceeding
shall be pending or threatened against Seller which is
reasonably likely to (a) materially and adversely affect the
business, properties and assets of the Banking Centers, or (b)
materially and adversely affect the transactions contemplated
herein.
Section 7.4. Regulatory Approval.
- ----------- -------------------
(a) Purchaser and Seller shall have received all necessary
regulatory approvals of the transactions provided in
this Agreement, all notice and waiting periods required
by law to pass shall have passed, no proceeding to
enjoin, restrain, prohibit or invalidate such
transactions shall have been instituted or threatened,
and any conditions of any regulatory approval shall
have been met.
(b) Such approvals shall not have imposed any condition
which is materially disadvantageous or burdensome to
Purchaser.
Section 7.5. Data Processing Conversion and Item Processing.
- ----------- ----------------------------------------------
Arrangements satisfactory to Purchaser shall have been
agreed to with Seller with respect to (i) the conversion of
applicable deposit and loan data and files from Seller's to
Purchaser's data processing system and (ii) the processing of
items received by Seller after the Effective Time which are
drawn on or chargeable to the Deposit Liabilities.
ARTICLE VIII
------------
CONDITIONS TO SELLER'S OBLIGATIONS
----------------------------------
The obligation of Seller to complete the transactions
contemplated in this Agreement are conditioned upon fulfillment,
on or before the Closing, of each of the following conditions:
28
<PAGE>
<PAGE>
Section 8.1. Representations and Warranties True.
- ----------- -----------------------------------
The representations and warranties made by Purchaser in
this Agreement shall be true in all material respects at and as
of the Effective Time as though such representations and
warranties were made at and as of such time, except for any
changes permitted by the terms hereof or consented to by Seller.
Section 8.2. Obligations Performed.
- ----------- ---------------------
Purchaser shall (a) deliver to Seller those items required
by Section 2.2 hereof, and (b) perform and comply in all
material respects with all obligations and agreements required
by this Agreement to be performed or complied with by it prior
to or on the Effective Time.
Section 8.3. No Adverse Litigation.
- ----------- ---------------------
As of the Effective Time, no action, suit or proceeding
shall be pending or threatened against Purchaser or Seller which
might materially and adversely affect the transactions
contemplated hereunder.
Section 8.4. Regulatory Approval.
- ----------- -------------------
(a) Seller and Purchaser shall have received from the
appropriate regulatory authorities approval of the
transactions contemplated herein, waiting periods
required by law to pass shall have passed, no proceeding
to enjoin, restrain, prohibit or invalidate such
transactions shall have been instituted or threatened,
and any conditions of any regulatory approval shall have
been met.
(b) Such approvals shall not have imposed any condition
which is materially disadvantageous or burdensome to
Seller.
ARTICLE IX
----------
TERMINATION
-----------
Section 9.1. Methods of Termination.
- ----------- ----------------------
This Agreement may be terminated in any of the following
ways:
(a) at any time on or prior to the Effective Time by the
mutual consent in writing of Purchaser and Seller;
(b) by Purchaser in writing if the conditions set forth in
Article VII of this Agreement shall not have been met by
Seller or waived in writing by Purchaser within 31
calendar days following the date of all approvals by
regulatory agencies and after all statutory waiting
periods have expired;
29
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<PAGE>
(c) by Seller in writing if the conditions set forth in
Article VIII of this Agreement shall not have been met
by Purchaser or waived in writing by Seller within 31
calendar days following the date of all approvals by
regulatory agencies and after all statutory waiting
periods have expired;
(d) any time prior to the Effective Time, by Purchaser or
Seller in writing if the other shall have been in breach
of any representation and warranty in any material
respect (as if such representation and warranty had been
made on and as of the date hereof and on the date of the
notice of breach referred to below), or in breach of any
covenant, undertaking or obligation contained herein,
and such breach has not been cured by the earlier of 30
calendar days after the giving of notice to the
breaching party of such breach or the Effective Time;
provided, however, that there shall be no cure period in
connection with any breach of Section 6.3 hereof, so
long as such breach by Purchaser was not caused by any
action or inaction of Seller, and Seller may terminate
this Agreement immediately if regulatory applications
are not filed on or before December 17, 1999, as
provided in that Section; or
(e) by Seller or Purchaser in writing at any time after any
applicable regulatory authority has denied approval of
any application of Purchaser for approval of the
transactions contemplated herein.
Section 9.2. Procedure Upon Termination.
- ----------- --------------------------
In the event of termination pursuant to Section 9.1 hereof,
and except as otherwise stated therein, written notice thereof
shall be given to the other party, and this Agreement shall
terminate immediately upon receipt of such notice unless an
extension is consented to by the party having the right to
terminate.
If this Agreement is terminated as provided herein,
(1) each party will return all documents, work papers
and other materials of the other party, including
photocopies or other duplications thereof, relating
to this transaction, whether obtained before or
after the execution hereof, to the party furnishing
the same; and
(2) all information received by either party hereto
with respect to the business of the other party
(other than information which is a matter of public
knowledge or which has heretofore been published in
any publication for public distribution or filed as
public information with any governmental authority)
shall not at any time be used for any business
purpose by such party or disclosed by such party to
third persons.
Section 9.3. Payment of Expenses.
- ----------- -------------------
30
<PAGE>
<PAGE>
Should the transactions contemplated herein not be
consummated because of a party's willful breach of this
Agreement, in addition to such damages as may be recoverable in
law or equity, the other party shall be entitled to recover from
the breaching party upon demand, itemization and documentation,
its reasonable outside legal, accounting, consulting and other
out-of-pocket expenses.
ARTICLE X
---------
MISCELLANEOUS PROVISIONS
------------------------
Section 10.1. Amendment and Modification.
- ------------ --------------------------
The parties hereto, by mutual consent of their duly
authorized officers, may amend, modify and supplement this
Agreement in such manner as may be agreed upon by them in
writing. In addition to this Agreement, the parties may operate
also according to guidelines in a Working Agreement. In the
event of a conflict between this Agreement and the Working
Agreement, the terms and conditions of this Agreement shall
control.
Section 10.2. Waiver or Extension.
- ------------ -------------------
Except with respect to required approvals of the applicable
governmental authorities, either party, by written instrument
signed by a duly authorized officer, may extend the time for the
performance of any of the obligations or other acts of the other
party and may waive (a) any inaccuracies in the representations
and warranties contained herein or in any document delivered
pursuant hereto or (b) compliance with any of the undertakings,
obligations, covenants or other acts contained herein.
Section 10.3. Assignment.
- ------------ ----------
This Agreement and all of the provisions hereof shall be
binding upon, and shall inure to the benefit of, the parties
hereto and their permitted assigns, but neither this Agreement
nor any of the rights, interests or obligations hereunder shall
be assigned by either of the parties hereto without the prior
written consent of the other.
Section 10.4. Confidentiality.
- ------------ ---------------
Seller and Purchaser agree that the Confidentiality
Agreement dated November 19, 1999, between Seller and Purchaser
(the "Confidentiality Agreement") shall survive the execution
hereof and the consummation of the transactions contemplated
herein.
Section 10.5. Addresses for Notices, Etc.
- ------------ --------------------------
All notices, requests, demands, consents and other
communications provided for hereunder and under the related
documents shall be in writing and mailed (by registered or
31
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<PAGE>
certified mail, return receipt requested), telegraphed, telexed,
telecopied or personally delivered (with receipt thereof
acknowledged) to the applicable party at the address indicated
below:
<TABLE>
<CAPTION>
If to Seller:
- ------------
<S> <C>
Centura Bank
Triangle Bank P.O. Box 1220
4300 Glenwood Avenue Mailcode 000-901-0104
Raleigh, NC 27612 and to: Rocky Mount, NC 27802-1220
Fax Number (919) 781-6042 ------ Fax Number (252) 454-8283
Attention: Alexander M. Donaldson Attention: John B. Fleming, Jr.
If to Purchaser:
- --------------- Housley, Kantarian & Bronstein, P.C.
First South Bank 1220 19th Street, N.W.
1311 Carolina Avenue Street Suite 700
Washington, NC 27889 Washington, DC 20026
Fax Number (252) 946-3873 Fax Number (202) 822-0140
Attention: Thomas A. Vann, President Attention: Joel E. Rappoport, Esq.
</TABLE>
or, as to each party, at such other address as shall be
designated by such party in a written notice to the other party
complying as to delivery with the terms of this Section.
Section 10.6. Counterparts.
- ------------ ------------
This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same
instrument.
Section 10.7. Headings.
- ------------ --------
The headings of the Sections and Articles of this
Agreement are inserted for convenience only and shall not
constitute a part thereof.
Section 10.8. Governing Law
- ------------ -------------
This Agreement shall be governed by, and construed in
accordance with, the laws of the State of North Carolina.
Section 10.9. Sole Agreement.
- ------------ --------------
Except for the Confidentiality Agreement, this Agreement
and the exhibits and attachments hereto represent the sole
agreement between the parties hereto respecting the transactions
contemplated hereby and all prior or contemporaneous written or
oral proposals, agreements in principle, representations,
warranties and understandings between the parties with respect
to such matters are superseded hereby and merged herein.
32
<PAGE>
<PAGE>
Section 10.10. Severability.
- ------------- ------------
If any provision of this Agreement is invalid or
unenforceable, the balance of this Agreement shall remain in
effect.
Section 10.11. Parties In Interest.
- ------------- -------------------
Nothing in this Agreement, express or implied, expressly
including, without limiting the generality of the foregoing in
any way, the provisions of Section 1.6(a) hereof, is intended or
shall be construed to confer upon or give to any person (other
than the parties hereto, their successors and permitted assigns)
any rights or remedies under or by reason of this Agreement, or
any term, provision, condition, undertaking, warranty,
representation, indemnity, covenant or agreement contained
herein.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their duly authorized officers
as of the date first written above.
SELLER:
ATTEST: TRIANGLE BANK
By: /s/ Alexander M. Donaldson By: /s/ Michael S. Patterson
-------------------------- -------------------------
Name: Alexander M. Donaldson Name: Michael S. Patterson
Title: Assistant Secretary Title: President and Chief
Executive Officer
ATTEST: CENTURA BANK
By: /s/ John D. Fleming, Jr. By: /s/ Frank L. Patillo
------------------------ --------------------
Name: John D. Fleming, Jr. Name: Frank L. Patillo
Title: Assistant Secretary Title: Vice Chairman
PURCHASER:
ATTEST: FIRST SOUTH BANK
By:/s/ William L. Wall By: /s/ Thomas A. Vann
------------------- -------------------
Name: William L. Wall Name: Thomas A. Vann
Title: Executive Vice Title: President
President and
Secretary
33
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PRESS RELEASE FOR IMMEDIATE RELEASE
DECEMBER 10, 1999 ---------------------
NEWSOUTH BANCORP, INC. For More Information Contact:
Bill Wall or Tom Vann
(252) 946-4178
FIRST SOUTH BANK
ANNOUNCES AGREEMENT TO ACQUIRE
SIX BRANCHES OF TRIANGLE BANK
Washington, North Carolina - NewSouth Bancorp, Inc. (Nasdaq: NSBC)
First South Bank, a wholly owned subsidiary of NewSouth Bancorp
Inc. (Nasdaq:NSBC), announced today that it has reached an
agreement with Centura Bank and Triangle Bank for First South Bank
to acquire five of Triangle's branch offices located in Rocky
Mount, North Carolina and one office located in Tarboro, North
Carolina.
Under terms of the agreement, First South will assume deposits of
six of Triangle's branch offices and purchase certain other assets,
subject to regulatory approval and certain other conditions. The
deposits of these branch offices totaled approximately $147 million
at October 31, 1999. Five of the six branch offices are expected
to become branches of First South, while one of the branch offices
is expected to be closed with the deposits and loans to be serviced
out of a nearby existing First South branch office. The
transaction is expected to be completed in the first quarter of
2000.
On announcing this transaction, Tom Vann, President of First South
Bank, stated "This acquisition represents a continuation of the
growth of our existing branch network, and is expected to benefit
First South Bank's earnings in future periods. We look forward to
offering the services of First South Bank to the customers of these
branch offices and welcome them to the First South Bank family."
At November 30, 1999, NewSouth Bancorp had total assets of
approximately $425 million, deposits of approximately $340 million
and stockholders' equity of approximately $43 million (unaudited).
First South Bank currently serves eastern North Carolina from its
main office located in Washington, North Carolina with full service
branch offices located in Chocowinity, Greenville, Elizabeth City,
Fayetteville, Kinston, Lumberton, New Bern, Rocky Mount and
Washington, North Carolina.
