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: December 2, 1996
(Date of earliest event reported)
SANTA BARBARA BANCORP
(Exact Name of Registrant as specified in its charter)
California
(State or other jurisdiction of incorporation)
0-1113 95-3673456
(Commissioner File Number) (IRS Employer Identification No.)
1021 Anacapa Street, Santa Barbara, California 93101
(Address of principal executive offices)
(805) 966-9176
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
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ITEM 5. Acquisition or Disposition of Assets
On December 2, 1996, Santa Barbara Bank & Trust, a wholly-owned subsidiary
of Registrant ("Bank & Trust"), acquired from California Thrift & Loan, a
California corporation ("Cal Thrift"), all of Cal Thrift's finance and
commercial equipment leasing business (the "Line of Business"), including all of
its outstanding equipment leases and related income streams, leased equipment,
lease collateral and related assets. The purchase price payable by Bank & Trust
to Cal Thrift is to be determined on the basis of (a) the Net Book Value of the
Equipment Leases as shown on Cal Thrift's Balance Sheet for the Line of Business
as of the close of business on November 30, 1996, and (b) Cal Thrift's
recoveries (net of collection costs and expenses paid to persons who are not
Affiliates) from and after November 1, 1996 against charged off amounts for
Equipment Leases that are in active collection. At the Closing on December 2,
Bank & Trust paid to Cal Thrift a purchase price of $59 million in cash and
assumed Cal Thrift's obligations under the outstanding equipment leases. Any
adjustment to the cash portion of the purchase price will be determined after
Cal Thrift delivers the Balance Sheet as of November 30, 1996 to Bank & Trust
and the amount of any such adjustment will be paid by Bank & Trust or Cal
Thrift, as appropriate, within ten days after the determination of the amount of
the adjustment. The cash portion of the purchase price has been generated from
Bank & Trust's internal operations. Bank & Trust will operate the acquired
equipment leasing business as a division of its existing business operations.
The description of the transaction is qualified by the terms of the Agreement
For Purchase and Sale of Assets set forth in Exhibit 2 hereto.
ITEM 7. Financial Statements and Exhibits
(a) No financial statements are being filed, as Bank & Trust's acquisition
of the Line of Business from Cal Thrift does not constitute the acquisition of a
significant amount of assets.
(b) Set forth in Exhibit 2 to this Report is a copy of the Agreement For
Purchase and Sale of Assets, without Schedules and Exhibits, between Bank &
Trust and Cal Thrift dated November 25, 1996. A list of the omitted Schedules
and Exhibits is set forth in the Table of Contents to the Agreement. Registrant
will furnish supplementally a copy of any omitted Schedule or Exhibit that the
Commission may request.
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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.
SANTA BARBARA BANCORP
a California corporation
Date: December 5, 1996 By /s/ D.W. Spainhour
David W. Spainhour, President
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<PAGE>
AGREEMENT FOR PURCHASE AND SALE OF ASSETS
BETWEEN
SANTA BARBARA BANK & TRUST
AND
CALIFORNIA THRIFT & LOAN
EXHIBIT 2
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<PAGE>
AGREEMENT FOR PURCHASE AND SALE OF ASSETS
SELLER:
CALIFORNIA THRIFT & LOAN,
a California corporation
BUYER:
SANTA BARBARA BANK & TRUST,
a California banking corporation
LINE OF BUSINESS:
COMMERCIAL EQUIPMENT LEASING AND FINANCING
<PAGE>
TABLE OF CONTENTS
Section Page
1. DEFINITIONS....................................................... 1
1.1 Affiliate.............................................. 1
1.2 Assets................................................. 1
1.3 Assigned Income Contracts.............................. 1
1.4 Assigned Income Stream................................. 1
1.5 Balance Sheet.......................................... 2
1.6 Best Knowledge......................................... 2
1.7 Buyer.................................................. 2
1.8 Closing Date........................................... 2
1.9 Collateral............................................. 2
1.10 Documented in the Lease File........................... 2
1.11 Division Employees..................................... 2
1.12 Equipment.............................................. 2
1.13 Equipment Leases....................................... 2
1.14 Equipment Leasing Portfolio (or the "Portfolio")....... 2
1.15 Excluded Assets........................................ 3
1.16 Excluded Liabilities................................... 3
1.17 Funded Equipment Lease................................. 3
1.18 Income Stream.......................................... 3
1.19 Reasonably Available Information....................... 3
1.20 Lease Documents........................................ 3
1.21 Lease Deposits......................................... 3
1.22 Lease Files............................................ 3
1.23 Lease Guaranties....................................... 4
1.24 Lease Payments......................................... 4
1.25 Lease Security......................................... 4
1.26 Lease Servicing Rights................................. 4
1.27 Line of Business....................................... 4
1.28 Net Book Value......................................... 4
1.29 Person................................................. 4
1.30 Related Assets......................................... 4
1.31 Security Agreements.................................... 4
1.32 Seller................................................. 4
2. PURCHASE AND SALE OF ASSETS....................................... 4
2.1 Assets to be Purchased................................. 4
2.2 Excluded Assets........................................ 6
2.3 Excluded Liabilities................................... 6
2.4 Preparation of Asset and Disclosure Schedules.......... 6
3. PURCHASE PRICE.................................................... 7
3.1 Calculation of Purchase Price.......................... 7
3.2 Payment of Purchase Price.............................. 7
3.3 Allocation of Purchase Price........................... 7
4. REPRESENTATIONS AND WARRANTIES OF THE SELLER...................... 8
4.1 Organization and Good Standing......................... 8
4.2 Corporate Authority.................................... 8
PURCHASE CONTRACT: Page i
<PAGE>
TABLE OF CONTENTS (Cont'd)
Section Page
4.3 Absence of Breach...................................... 8
4.4 Value of Portfolio..................................... 8
4.5 Accuracy of Disclosure Schedule........................ 8
4.6 Required Consents...................................... 8
4.7 Title to Assets........................................ 9
4.8 Material Contracts..................................... 9
4.9 Restrictive Agreements................................. 9
4.10 Employee Relations..................................... 9
4.11 Use of Trade Names..................................... 9
4.12 Intellectual Property Rights........................... 9
4.13 Chief Executive Office................................. 9
4.14 Data Storage........................................... 10
4.15 Tax Matters............................................ 10
4.16 Absence of Proceedings................................. 10
4.17 Compliance with All Laws............................... 10
4.18 Promotional Payments................................... 10
4.19 Equipment Leasing Portfolio............................ 10
5. REPRESENTATIONS AND WARRANTIES OF BUYER........................... 14
5.1 Organization........................................... 14
5.2 Corporate Authority.................................... 14
5.3 Opportunity to Review.................................. 14
5.4 Accuracy on Closing Date............................... 14
6. OBLIGATIONS OF SELLER BEFORE CLOSING ............................. 14
6.1 Affirmative Covenants.................................. 14
6.2 Negative Covenants..................................... 15
7. OBLIGATIONS OF BUYER PRIOR TO CLOSING............................. 17
7.1 Further Assurances..................................... 17
7.2 Conduct of Investigations.............................. 17
7.3 Confidentiality........................................ 17
7.4 Negative Assurances.................................... 17
8. CONDITIONS PRECEDENT TO CLOSING................................... 17
8.1 Conditions to Buyer's Performance...................... 17
8.2 Conditions Precedent to Seller's Performance........... 18
9. CLOSING........................................................... 18
9.1 Closing Date........................................... 18
9.2 Deliveries by Seller................................... 18
9.3 Deliveries by Buyer.................................... 19
10. POSSESSION; PRORATIONS; COSTS AND EXPENSE......................... 20
10.1 Transfer of Title and Possession....................... 20
10.2 Prorations............................................. 21
10.3 Credits, Debits and Offsets............................ 21
10.4 Costs and Fees......................................... 21
PURCHASE CONTRACT: Page ii
<PAGE>
TABLE OF CONTENTS (Cont'd)
Section Page
11. OBLIGATIONS OF PARTIES AFTER CLOSING ............................. 21
11.1 Transfer of Equipment Leases and Lease Files........... 21
11.2 Transfer of Personnel Files............................ 21
11.3 Balance Sheet and Collections Report................... 21
11.4 Reconciliation and Deferred Payment.................... 22
11.5 Notice to Lessees, Insurers, etc....................... 22
11.6 Deposit Account........................................ 22
11.7 Collection of Lease Payments........................... 22
11.8 Delivery of Notices to Buyer........................... 23
11.9 Cooperation and Assistance after Closing............... 23
11.10 Defense of Title....................................... 23
11.11 Transition Agreement................................... 23
11.12 Data Processing and Other Services..................... 24
11.13 Sales and Use Taxes, Etc............................... 24
11.14 Confidential Information............................... 24
11.15 Covenant not to Compete................................ 24
11.16 Payment of Obligations................................. 25
11.17 Survival of Obligations................................ 25
12. INDEMNIFICATION................................................... 25
12.1 Seller's Indemnity..................................... 25
12.2 Buyer's Indemnity...................................... 26
12.3 Notice of Claim........................................ 26
13. TERMINATION RIGHTS................................................ 27
13.1 Right of Termination................................... 27
13.2 Liability Upon Termination............................. 27
13.3 Preservation of Confidential Information............... 27
14. GENERAL PROVISIONS................................................ 28
14.1 Bulk Sales Compliance.................................. 28
14.2 Brokers Commissions.................................... 28
14.3 Captions and Section Headings.......................... 28
14.4 Waivers................................................ 28
14.5 Severability........................................... 28
14.6 Reliance by Third Parties.............................. 28
14.7 Notices................................................ 28
14.8 Facsimile Signatures................................... 28
14.9 Counterparts........................................... 29
14.10 Arbitration............................................ 29
14.11 Costs of Enforcement................................... 29
14.12 Binding Effect......................................... 29
14.13 Governing Law.......................................... 29
14.14 Effective Date......................................... 29
14.15 Complete Agreement..................................... 29
SCHEDULES AND EXHIBITS:
PURCHASE CONTRACT: Page iii
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Schedule 2.4.1: Schedule of Equipment Leases
Schedule 2.4.2: Schedule of Charged-off Accounts in Collection
Schedule 2.4.3: Schedule of non-leased equipment
schedule 2.4.4: Schedule of Collateral
Schedule 2.4.5: Schedule of Certain Related Assets
schedule 2.4.6: Schedule of Pending Actions and Proceedings
Exhibit A: Form of Assignment and Assumption of Equipment Leases
Exhibit B: Form of Power of Attorney
Exhibit C: Form of Assignment and Assumption of Contracts and
Agreements
Exhibit D: Form of Notice to Lessees
PURCHASE CONTRACT: Page iv
<PAGE>
AGREEMENT FOR PURCHASE AND SALE OF ASSETS
THIS AGREEMENT, dated for reference purposes as of November 25, 1996 (the
"Agreement") is entered into by and between SANTA BARBARA BANK & TRUST, a
California banking corporation having its principal place of business at 20 East
Carrillo Street, Santa Barbara, California (the "Buyer"), and CALIFORNIA THRIFT
& LOAN, a California corporation having its principal office at 319 East
Carrillo Street, Santa Barbara, California (the "SELLER").
RECITALS:
A. One of Seller's lines of business is commercial equipment leasing and
financing; and
B. Buyer desires to acquire from Seller certain of the assets comprising
such line of business.
NOW THEREFORE, for valuable consideration, the parties hereto, intending to
be legally bound, hereby agree as follows:
1. DEFINITIONS
1.1 Affiliate. A person or entity that directly or indirectly through one
or more intermediaries controls, is controlled by, or is under common control
with, the designated party, but only for as long as such control relationship
exists. For purposes of this definition, "control" shall include (a) in the case
of a corporation, ownership of more than fifty percent (50%) of the shares of
stock entitled to vote for the election of directors, and (b) in the case of any
other business entity, ownership of more than fifty percent (50%) of the
beneficial interest in capital or profits.
1.2 Assets. The Assets to be sold and transferred by Seller and to be
acquired by Buyer pursuant to Section 2.1 of this Agreement.
1.3 Assigned Income Contracts. All of the documents evidencing, securing,
insuring or amending the right of Seller to receive an Income Stream pursuant to
a transaction in which (a) an assignor assigned to Seller as the assignee the
Lease Servicing Rights and the right of the assignor to receive and retain for
its own account the rents and other payments becoming due under an Equipment
Lease and any related Lease Documents but (b) such assignor retained title to
such Equipment Lease and the residual value thereof while granting the assignee
a security interest in (i) such Equipment Lease and the Lease Documents, or (ii)
the Equipment covered by the Lease Documents, or (iii) both.
1.4 Assigned Income Stream. The Income Stream that is owned by Seller
pursuant to Assigned Income Contracts.
1.5 Balance Sheet. The unaudited balance sheet prepared internally by
Seller from the records and books of account of the Line of Business, as
finalized pursuant to Seller's normal reconciliation and review process.
1.6 Best Knowledge. Information that (a) is actually known to any Person
who either (1) is an officer of Seller or (2) is a current employee of Seller
whose employment activities involve the management, administration and servicing
of Seller's Equipment Leasing Portfolio or the maintenance and updating of the
books and records related thereto, or (b) that would have normally come to the
attention of a Person performing such activities in a reasonable and prudent
manner consistent with customary practices in the Line of Business.
1.7 Buyer. Santa Barbara Bank & Trust.
1.8 Closing Date. December 2, 1996, or such later date to which the closing
of the transaction is postponed pursuant to Section , below.
1.9 Collateral. Any property, whether real or personal and whether tangible
or intangible, pledged as additional security for the performance by a lessee of
its obligations under an Equipment Lease.
1.10 Documented in the Lease File. Information that is either (a) set forth
in a written document contained in a Lease File or (b) recorded in a data or
information base comprising a portion of the Lease File in a manner that makes
such information readily apparent to Persons engaged in the management,
administration and servicing of Seller's Equipment Leasing Portfolio.
1.11 Division Employees. Those employees of Seller whose activities are
related primarily to the Line of Business.
1.12 Equipment. Any machinery, equipment, furniture, furnishings or other
tangible personal property that either (a) is the subject of the Equipment
Leases or (b) has been acquired by Seller as the result of the exercise by
Seller of its remedies under an Equipment Lease, a Security Agreement or an
Assigned Income Contract.
1.13 Equipment Leases. All finance leases, conditional sales contracts, or
other commercial equipment financing agreements, and the Income Streams related
thereto, whether originated by Seller or assigned to Seller by another Person,
including (a) Assigned Income Contracts, and (b) leases that have been charged
off but that are in active collection, but excluding consumer automobile leases
that are originated by Seller's consumer and/or personal auto loan divisions.
1.14 Equipment Leasing Portfolio (or the "Portfolio"). The Equipment Leases
and the their associated Income Streams, together with (a) the Lease Deposits,
(b) the Lease Guaranties, (c) the Lease Security and the Security Agreements,
(d) the Assigned Income Contracts and their associated Assigned Income Streams,
(e) the Lease Files, (f) the Lease Servicing Rights, and (g) any intangible
personal property, other than cash or cash equivalents, owned by Seller that
represents the proceeds obtained through the collection of accounts included in
the Portfolio.
1.15 Excluded Assets. Assets of Seller not comprising a portion of the
Equipment Leasing Portfolio on the Closing Date and not otherwise constituting a
Related Asset as defined in Section , below, including (a) Seller's real estate
loans, automobile contracts or other loan portfolios; (b) amounts represented by
reserves established by Seller with respect to the Equipment Leasing Portfolio;
(c) charged off accounts that have not been identified by Seller as of the
Closing Date for active collection efforts; (d) Assets disposed of in the
ordinary course of business prior to the Closing Date in accordance with the
provisions of this Agreement; (e) general office supplies and materials, office
furniture, furnishings, machinery and equipment, and other tangible and
intangible property not specifically identified in Section of this Agreement;
and (f) tax refunds obtained by Buyer that are allocable to the lease rental
payments that were accrued and collected by Seller prior to the Closing Date.
1.16 Excluded Liabilities. All debts, obligations and liabilities of Seller
and its Affiliates, including all contingent liabilities resulting from or
attributable to Seller's activities and the conduct of the Line of Business
prior to the Closing Date, other than executory contractual obligations arising
under the Equipment Leases and any related contracts and agreements that are
transferred to and assumed by Buyer pursuant to this Agreement.
1.17 Funded Equipment Lease. Any Equipment Lease under which the lessee
named therein has become legally obligated to make Lease Payments and on which
the lessor named therein has relied in making a disbursement of funds.
1.18 Income Stream. The right to receive Lease Payments when and as they
become due under (a) the Equipment Leases and any Lease Guaranties, or (b) the
Assigned Income Contracts.
1.19 Reasonably Available Information. Information that is available to
Seller in its offices in Santa Barbara, California, in the form of a report or
schedule which is substantially in the form requested by Buyer without the
programming of special reports not already in existence or the payment of
additional costs or fees (other than reproduction costs) to assemble, correlate
and present such information in the form requested by Buyer.
1.20 Lease Documents. The Equipment Leases, the Assigned Income Contracts,
and all related documents evidencing, securing, insuring or amending such
Equipment Leases and the obligations of the lessee thereunder, including any
Lease Guaranties, Security Agreements, Financing Statements, amendments of
leases, contracts and agreements, and the like.
1.21 Lease Deposits. All advance payments and customer deposits held by the
Seller with respect to the Equipment Leases to the extent that such payments and
deposits have not been previously applied by the Seller in accordance with the
terms of such Equipment Leases.
1.22 Lease Files. All documents, credit files, customer ledger cards
relating to any and all of the Equipment Leases and the Assigned Income
Contracts, including all information and data bases and the tapes, disks or
other storage media, whether electronic or otherwise, on which such information
and data bases are kept and maintained.
1.23 Lease Guaranties. Any guaranty, surety, endorsement or other agreement
to pay executed by a Person in connection with an Equipment Lease.
1.24 Lease Payments. All payments due or becoming due under or in
connection with any of the Equipment Leases, Lease Guaranties or Assigned Income
Contracts on or after the Closing Date, including (a) any past-due or late
payment charges, and (b) any rights to claims to refunds and adjustments of any
kind, other than tax refunds to the extent such tax refunds constitute Excluded
Assets.
1.25 Lease Security. Any lien or other security interest created in favor
of or held by Seller in any Equipment that is the subject of an Equipment Lease,
including the proceeds of any such lien or security interest.
1.26 Lease Servicing Rights. The right of Seller to Service the Equipment
Leases and to collect and disburse the Lease Payments.
1.27 Line of Business. Seller's commercial equipment leasing and financing
business.
1.28 Net Book Value. The gross of amount of the lease contracts (after
chargeoffs) less deferred income as reflected on the Balance Sheet for the Line
of Business.
1.29 Person. Any individual, corporation, partnership, association, trust
or other entity or organization, including any government or political
subdivision or any agency or instrumentality thereof.
1.30 Related Assets. Those assets described in Section of this Agreement
pertaining to the Line of Business, to the extent that such assets are (a) owned
by or licensed to Seller, and (b) were obtained through or are dedicated to or
held for use primarily in the Line of Business, and (c) are transferrable by
Seller.
1.31 Security Agreements. Any agreement granting to the lessor under an
Equipment Lease a lien or security interest in Collateral as security for the
payment of the amounts becoming due under such Equipment Lease.
1.32 Seller. California Thrift & Loan.
2. PURCHASE AND SALE OF ASSETS
2.1 Assets to be Purchased. Upon the terms and subject to the conditions
set forth in this Agreement, Seller agrees to sell, assign, transfer, and convey
the following Assets to the Buyer at the Closing and Buyer agrees to purchase,
assume and accept such Assets from the Seller at the Closing:
2.1.1 Equipment Leasing Portfolio. Seller's entire right, title and
interest in and to Seller's Equipment Leasing Portfolio and the Income Stream
associated therewith; and
2.1.2 Equipment and Collateral. Seller's entire right, title and interest
in and to (a) the Equipment and (b) the Collateral that is the subject of the
Security Agreements.
2.1.3 Related Assets. Seller's entire right, title and interest in and to
the following Related Assets pertaining to the Line of Business, to the extent
that such assets were obtained through, are dedicated to, or held for use
primarily in the Line of Business and are transferrable by Seller:
A. All lease originations and lease purchases in progress on the Closing
Date;
B. Claims and rights (a) under (i) leases, contracts, notes, guaranties,
judgments and other evidences of indebtedness, (ii) contracts and agreements
being assigned to and assumed by Buyer under this Agreement, and (iii) policies
of insurance insuring the Equipment or the Collateral against loss, and (b)
against lessors, lease originators and assignors from whom Seller acquired any
of the Equipment Leases or Assigned Income Streams being transferred and
assigned to Buyer hereunder.
C. Customer lists, relationships with equipment manufacturers, distributors
and suppliers, brokers, finders and lease originators and any goodwill
associated with the Line of Business;
D. Trademarks, trade names and any intellectual property rights owned by or
licensed to Seller that are used by Seller exclusively in the Line of Business;
E. Contracts and agreements having a term extending beyond the Closing Date
proposed by Seller to be transferred to and assumed by Buyer, including any
contracts with (a) persons providing materials or services to the Line of
Business; (b) brokers, finders and lease originators; and (c) bailees and
storage facilities;
F. Data and information bases pertaining exclu- sively to the Line of
Business, including all tapes, disks or other storage media, whether electronic
or otherwise, on which such information and data bases are kept and maintained;
G. All licenses, registrations, permits and approvals issued by any
governmental agency necessary to the operation of the Line of Business;
H. Subscription and membership rights;
I. All reference materials and supplies that are specific to the Line of
Business; and
J. All books and records of Seller necessary to the conduct of the Line of
Business, but excluding any books and records that are necessary to the conduct
of Seller's on-going business activities.
2.2 Excluded Assets. The assets to be transferred to Buyer pursuant to this
Agreement shall not include (a) any cash or any savings or checking account
balances pertaining to the Line of Business on the day immediately preceding the
Closing Date, or (b) comprising Excluded Assets as defined in Section , above.
2.3 Excluded Liabilities. The Excluded Liabilities shall, as between the
parties, be and remain the obligations of Seller, and Seller shall indemnify and
hold Buyer free and harmless therefrom as provided in Section , below.
2.4 Preparation of Asset and Disclosure Schedules. Promptly after the
execution of this Agreement, and in no event later than the Closing Date, Seller
shall prepare and deliver to Buyer a Disclosure Schedule setting forth (a) the
following schedules of the Assets to be sold and transferred to Buyer, and (b)
each exception to the warranties and representations of Seller contained in this
Agreement:
2.4.1 Schedule of Equipment Leases. An inventory of the Equipment Leases
and Assigned Income Contracts to be sold and transferred to Buyer setting forth
with respect to each Funded Equipment Lease as of October 31, 1996 (a) the name
of the Lessee, (b) the account number, (c) the zip code of the lessee, and (d)
the current net book value of the Equipment Lease, together with any such
Information Reasonably Available to Seller prior to the Closing Date with
respect to Equipment Leases originated after October 31, 1996. Such Schedule
shall, when completed, be attached as Schedule 2.4.1 to this Agreement.
2.4.2 Schedule of Charged-Off Accounts in Collection. A schedule of all
charged-off Equipment Leases that are in active collection, setting forth as of
November 22, 1996 the information called for by Section , above. Such Schedule
shall, when completed, be attached as Schedule 2.4.2 to this Agreement.
2.4.3 Schedule of Non-Leased Equipment. A schedule of repossessed equipment
setting forth as of November 22, 1996 a description and the location of all
machinery, equipment, furniture, furnishings or other tangible personal property
owned by Seller that previously was Equipment covered by an Equipment Lease or
Collateral covered by a Security Agreement which Seller has acquired by
exercising its remedies under such Equipment Lease or Security Agreement on
account of a default under the Equipment Lease. Such schedule shall, when
completed, be attached as Schedule 2.4.3 to this Agreement.
2.4.4 Schedule of Collateral. A schedule of certain Collateral held by
Seller as additional security for the payment of the Equipment Leases, setting
forth as of November 22, 1996, relevant identifying Information Reasonably
Available to Seller with respect to (a) any certificates of deposit, (b) trust
deeds, or (c) motor vehicles, and (d) any other Collateral for an Equipment
Lease, including, to the extent reasonably available, (1) the Equipment Lease
for which such Collateral is additional security, (2) a description of such
Collateral, (3) the owner of such Collateral, (4) the location of such
Collateral, and (5) if the rights of Seller in such Collateral are evidenced by
any document or instrument filed or recorded with any public or governmental
office or agency, the name of such document or instrument and the filing and
recording data applicable thereto. Such schedule shall, when completed, be
attached as Schedule 2.4.4 to this Agreement.
2.4.5 Schedule of Certain Related Assets. A schedule setting forth in
reasonable detail a description of: (a) any contracts and agreements having a
term extending beyond the Closing Date proposed by Seller to be transferred to
and assumed by Buyer, including leases for office equipment and with service
providers; (b) any contracts and agreements not described in clause (a) that are
material to or useful in the conduct of the Line of Business, and (c) any data
and information bases owned by or licensed to Seller pertaining to the Line of
Business. Such schedule shall, when completed, be attached as Schedule 2.4.5 to
this Agreement. Concurrently with the preparation of such Schedule, Seller shall
deliver to Buyer copies of all documents and agreements comprising or evidencing
such intangible personal property and property rights.
2.4.6 Schedule of Pending Actions and Proceedings. Any Information
Reasonably Available to Seller with respect to pending litigation or other
actions or proceedings involving any Equipment Lease, Lease Document, or
Assigned Income Contract (a) identifying the Equipment Lease to which such
action or proceeding relates, and (b) setting forth (1) the names of the parties
to such action or proceeding, (2) the jurisdiction and tribunal in which action
or proceeding is pending, (3) any action or docket number assigned to such
action or proceeding, (4) the names, addresses and telephone numbers of counsel
for the parties thereto, and (5) a brief summary of the nature of such action or
proceeding. Such schedule shall, if completed prior to the Closing Date, be
attached as Schedule 2.4.6 to this Agreement.
3. PURCHASE PRICE
3.1 Calculation of Purchase Price. The total purchase price for the Assets
shall be an amount equal to the difference between (a) the product obtained by
multiplying (1) the Net Book Value of the Equipment Leases, as shown on the
Balance Sheet for the Line of Business as of the close of business on November
30, 1996, by (2) the factor of 1.0233 less (b) the sum of (1) $249,803 plus (2)
Seller's recoveries (net of collection costs and expenses paid to Persons who
are not Affiliates) from and after November 1, 1996 against charged off amounts
for Leases in the Equipment Lease Portfolio that are in active collection .
3.2 Payment of Purchase Price. The purchase price shall be paid by wire
transfer in immediately available funds at the time and in the manner provided
in Section , below, and on the Closing Date, Buyer shall execute an assumption
agreement pursuant to which Buyer assumes liability for the executory
obligations of the Lessor under the each of the Equipment Leases and under any
other contract or agreement being transferred and assigned to Buyer pursuant to
this Agreement.
3.3 Allocation of Purchase Price. The Purchase Price shall be allocated (a)
$100,000 to the covenant not to compete being given by Seller pursuant to
Section , below, and the balance shall be allocated to the Equipment Leasing
Portfolio. Buyer and Seller each agree to report the purchase and sale of the
Assets for tax reporting purposes in accordance with the allocations made by
this Section .
4. REPRESENTATIONS AND WARRANTIES OF THE SELLER
Seller hereby represents and warrants to the Buyer that:
4.1 Organization and Good Standing. Seller is a corporation duly
incorporated and validly existing under the laws of the State of California.
Seller has the corporate power and authority to carry on its business as such
business currently is being conducted. The Seller is duly qualified to do
business as a foreign corporation in all jurisdictions in which the failure to
so qualify would have a material adverse effect on (a) the Sellers ability to
execute, deliver and perform its obligations under this Agreement or (b) the
rights of the parties under the Equipment Leases.
4.2 Corporate Authority. Seller has taken all necessary action to authorize
the execution, delivery and performance of this Agreement and has the power and
authority to execute, deliver and perform its obligations under this Agreement
and all transactions contemplated hereby, including, but not limited to the
authority to sell, assign and transfer the Equipment Leases in accordance with
the terms of this Agreement. This Agreement and all the obligations of the
Seller hereunder are the legal, valid and binding obligations of the Seller,
enforceable in accordance with the terms of this Agreement, except as such
enforcement may be limited by bankruptcy, insolvency, moratorium or similar laws
and general principles of equity affecting the rights of creditors generally.
4.3 Absence of Breach. The execution and delivery of this Agreement and the
performance of its obligations hereunder by Seller do not and will not (a)
require the consent of the Seller's shareholders; (b) contravene or conflict
with the articles of incorporation or the Bylaws of Seller; (c) violate the
provisions of any indenture, contract, Agreement or instrument to which the
Seller is a party or by which Seller or its assets are bound or (d) contravene
or conflict with or constitute a violation of any provision of any law, rule,
regulation, order, writ, judgment, injunction, decree or award to which the
Seller is subject.
4.4 Value of Portfolio. As of October 31, 1996, the Equipment Leasing
Portfolio consisted of 2,105 accounts having a Net Book Value of $60,476,073.64
4.5 Accuracy of Disclosure Schedule. Seller's Disclosure Schedule will be
true, complete and correct in all material respects as of the Closing Date
except for changes thereto occurring in the ordinary course of business or
communicated to Buyer in writing prior to the Closing Date. With respect to the
Schedules prepared and delivered by Seller pursuant to Section 2.4,above, the
foregoing warranty and representation shall be limited to Information Reasonably
Available to Seller contained in such Schedules as of the date thereof.
4.6 Required Consents. Seller has full right and authority to sell,
transfer, convey and assign all of its right, title and interest in and to each
Equipment Lease. Seller has obtained any consent, approval, authorization or
order of any court or governmental agency or body required for the execution,
delivery and performance by the Seller of this Agreement, and no consent,
approval or authorization from any third party is required for the execution and
delivery of this Agreement or for the performance by the Seller of its
obligations under this Agreement.
4.7 Title to Assets. Seller has good and marketable title to all of the
Assets to be sold and transferred to Buyer pursuant to this Agreement, free and
clear of any mortgage, pledge, lien, lease, license, covenant, condition,
restriction, encumbrance, security agreement or any other claim of any kind
whatsoever.
4.8 Material Contracts. Except as set forth in Seller's Disclosure
Schedule, Seller is not a party to any contract, agreement, plan, lease, or
undertaking which (a) is material to the Line of Business, or (b) which limits
the freedom of Seller to engage in the Line of Business or to compete with any
person, or (c) which might reasonably be expected to have a potential adverse
impact on the Line of Business or the Assets being transferred and sold to Buyer
hereunder.
4.9 Restrictive Agreements. Seller is not a party to, or subject to, any
charter, bylaw, mortgage, lien, lease, license, permit, agreement, contract,
instrument, law, rule, ordinance, regulation, order, judgment or decree, or any
other restriction of any kind or character, which would prevent (a) the
consummation of the transaction contemplated by this Agreement or (b) compliance
by any party of the terms, conditions and provisions of this Agreement or (c)
the continued operation of the Line of Business after the date hereof or the
Closing Date on the same basis as heretofore conducted.
4.10 Employee Relations. The Division Employees are not a party to any
collective bargaining agreement, and no labor dispute, strike, or other work
stoppage has occurred and is continuing or is known by Seller to be threatened
with respect to the Line of Business or the Division Employees.
4.11 Use of Trade Names. Seller does not now and has not at any time during
the preceding five years used any trademark, service mark, trade name or
copyright in the Line of Business, and does not have any intellectual property
rights or royalty rights that are used in or that are applicable to the Line of
Business. No person owns any trademark, trademark registration or applica-tion,
service mark, trade name, copyright or copyright registration or application,
the use of which is necessary or contemplated in connection with the operation
of the Line of Business.
4.12 Intellectual Property Rights. Seller has no registered patents,
copyrights or other registered intellectual property rights. The only trade
secrets used by Seller in the Line of Business are the confidential data,
policies and procedures it has developed with respect to its customers,
potential customers and marketing and servicing techniques. Seller is the sole
owner of each of such trade secrets, free of any liens or encumbrances,
restrictions or legal or equitable claims of others. Seller has taken reasonable
measures to protect the secrecy, confidentiality and value of all such trade
secrets. To Seller's knowledge, such trade secrets have not been used, divulged,
or appropriated for the benefit of any past or present employees or other
person, or to the detriment of Seller, except that prospective purchasers of the
Assets have been permitted access to such information under the protection of a
confidentiality agreement with Seller.
4.13 Chief Executive Office. The chief executive office of the Seller is at
the address specified in the preamble to this Agreement.
4.14 Data Storage. Seller does not have any of its records, systems,
controls, data or information pertaining to the Line of Business recorded,
stored, maintained, operated or otherwise wholly or in part dependent upon or
held by means (including any electronic, mechanical or photographic process,
whether computerized or not) which (including all means of access thereto and
therefrom) are not under the exclusive ownership and direct control of Seller,
other than the "Success" software system licensed to Seller by Norwest and the
information contained in the data base for the Line of Business maintained by
Norwest in connection with such license.
4.15 Tax Matters. Seller (a) has filed all federal, state, foreign, and
local franchise, excise, sales, use, employment, and other tax returns, reports
and information statements required to be filed with respect to activities
comprising the Line of Business, (b) has paid, or made adequate provisions for
the payment of, all taxes, interest payments and penalties reflected in such
returns and reports as filed as being due and payable (and/or properly accruable
for all periods ending on or before the date of this Agreement) to any city,
county, state, foreign country, the United States or any other taxing authority
which are material in amount, and (c) to the best of its knowledge, is not
delinquent in the payment of any material tax or governmental charge of any
nature that is applicable to the activities comprising the Line of Business. No
audit, examination or investigation is presently being conducted or, to the best
of the Seller's knowledge, threatened by any taxing authority with respect to
the activities comprising the Line of Business.
4.16 Absence of Proceedings. Except as set forth in the Disclosure
Schedule, there is no action, suit, legal or arbitration proceeding or, to the
knowledge of the Seller, administrative proceeding or investigation pending or,
to the knowledge of the Seller threatened, against the Seller which could have a
material adverse effect on the transactions contemplated hereunder or which in
any manner challenges or seeks to prevent, enjoin, alter or materially delay the
transactions contemplated by this Agreement. No bankruptcy, insolvency or
similar proceeding is pending or contemplated by or, to the knowledge of the
Seller, threatened against the Seller.
4.17 Compliance with All Laws. Seller has complied with, and is not in
violation of, any applicable statute, law or regulation pertaining to the Line
of Business, and no fact or condition exists that creates a risk of
non-compliance with all applicable laws, regulations, order, judgments and
decrees after the date of this Agreement.
4.18 Promotional Payments. Seller has offered no promotional payments or
entered into any compensation or commission arrangements with brokers or finders
for the production or procurement of Equipment Leases, the term of which will
extend beyond the Closing Date.
4.19 Equipment Leasing Portfolio. Seller warrants and represents and
warrants to Buyer that, in all respect material to each Asset included in
Seller's Equipment Leasing Portfolio:
4.19.1 Binding Obligations. Each Lease Document is genuine and each is the
legal and binding obligation of the lessee and the lessor described therein,
enforceable in accordance with its terms except as such enforcement may be
limited by bankruptcy, insolvency, moratorium or similar laws and general
principles of equity affecting the rights of creditors generally.
4.19.2 Validity of Obligation. To Seller's Best Knowledge, each Equipment
Lease was validly executed by the lessees named therein. None of the Equipment
Leases, Lease Guaranties, Security Agreements or other lease documents are
forged, contain false information, or have affixed thereto any unauthorized
signature or have been entered into by persons without the required legal
capacity.
4.19.3 Compliance with Applicable Laws. To Seller's Best Knowledge, Seller
has complied with any and all requirements of any federal, state or local law
including, without limitation, truth-in-lending, truth-in-leasing, consumer
credit protection, equal credit opportunity or disclosure laws applicable to
each Equipment Lease. Each Equipment Lease meets, or is exempt from, applicable
state or federal laws, regulations and other requirements pertaining to usury.
4.19.4 Validity of Assignment. Each Equipment Lease originated by another
Person or in which a Person other than Seller is named as the original lessor
has been duly transferred and assigned to Seller by the Person owning the entire
beneficial interest of the lessor thereunder pursuant to a valid assignment
executed by an authorized signatory transferring to Seller the entire right,
title and interest of the lessor under such Lease. Each such assignment is
evidenced by UCC Form 2 duly recorded with the appropriate regulatory agency,
and notice of such assignment has been given in writing to the lessee under the
Equipment Lease so assigned.
4.19.5 No Satisfaction or Discharge. Except as Documented in the Lease
File, no Equipment Lease has been satisfied, discharged, subordinated, assigned
(other than any assignment from the originator thereof to the Seller), or
rescinded, in whole or in part, nor, to the knowledge of the Seller, has any of
the Equipment covered by such Lease been subleased, in whole or in part.
4.19.6 Perfected Liens on Equipment. Except as Documented in the Lease
File, (a) Seller has a perfected first priority security interest in each item
of Equipment, and to the extent any item of Equipment may constitute a fixture,
Seller has timely filed a fixture filing with respect to such Equipment, and (b)
none of the Equipment described in an Equipment Lease has been released from
such Lease.
4.19.7 Perfected Liens on Collateral. Except as Documented in the Lease
File, (a) Seller has a perfected lien or security interest in each item of
Collateral, and to the extent any such Collateral may constitute a fixture,
Seller has timely filed a fixture filing with respect to such Collateral, and
(b) none of the Collateral covered by a Security Agreement has been released
from the lien created by such Security Agreement.
4.19.8 Perfected Liens on Lease Documents. Seller has a perfected, first
priority security interests in the Lease Documents pertaining to each Assigned
Income Stream that Seller has acquired pursuant to the Assigned Income Contracts
that Seller is transferring and assigning to Buyer pursuant to this Agreement.
4.19.9 Status of Originator. To Seller's Best Knowledge, the originator of
each Equipment Lease and each subsequent assignee thereof was qualified to
transact and do business in the jurisdiction in which the related Equipment is
or at the time of origination was located to the extent such qualification was
required under applicable law.
4.19.10 Commission Obligations. Seller is not obligated to any broker,
finder or lease originator or assignor for any fees, commission or other
compensation with respect to any Funded Equipment Lease.
4.19.11 Lessee's Insurance. Each Equipment Lease obligates the Lessee to
maintain, at the lessee's cost and expense, a policy of casualty insurance
insuring the Equipment against loss due to the perils of fire, theft and the
risks covered by a standard policy of casualty insurance with a standard
lessor's endorsement. To the best of Seller's knowledge, and except as
Documented in the Lease File, each lessee under an Equipment Lease has procured
all such required insurance and nothing has come to the attention of Seller that
would lead Seller to believe that such insurance has been canceled or is no
longer in effect.
4.19.12 Acceptance of Equipment. To Seller's Best Knowledge, the Equipment
covered by each Funded Equipment Lease has been delivered and accepted in a
condition satisfactory to the lessee named therein. The rental term of each such
Equipment Lease has commenced and each such Equipment Lease continues in full
force and effect.
4.19.13 Lease Guaranties. All Lease Guaranties are as reflected in the
Lease Files. No notice to or consent of any guarantor under any Guaranty is
required to consummate the transactions contemplated herein, and Seller has not
received valid notice of the cancellation of guaranty from any such guarantor.
4.19.14 Required Consents. No consent of any lessee is required prior to
the transfer and assignment of an Equipment Lease or to the consummation of the
transactions contemplated hereunder or, if required, has been obtained or will
be obtained prior to the Closing Date.
4.19.15 Accuracy of Documents. The Lease file contains the original,
manually signed copy of each Equipment Lease. Each manually signed Equipment
Lease is the only original, executed version of such Equipment Lease, and each
such manually signed Equipment Lease, together with all related Lease Documents
delivered to the Buyer by the Seller, are the only Lease Documents executed by
the Seller or the originator of such Equipment Lease and the lessee with respect
to the Equipment covered thereby.
4.19.16 Status of Equipment Leases. Except for events which would not have
a material and adverse effect on the value of the Assets, or as otherwise
Documented in the Lease File, no event of default has occurred and is continuing
under any Equipment Lease, no event has occurred which with the lapse of time or
giving of notice or both would constitute an event of default under an Equipment
Lease, and no such event has been waived by the Seller. No lessee has any basis
to assert any defense, right of rescission, counterclaim or set off to its
obligations under any Equipment Lease.
4.19.17 No Undocumented Amendments and Oral Agreements. The Equipment Lease
and the related Lease Documents contained in the Lease Files set forth the
entire agreement between the Seller or the originator of such Equipment Lease
and the lessee named in such Lease. There are no undocumented oral agreements
between Seller and any lessee named in an Equipment Lease and there have been no
amendments to any Equipment Lease that are not reflected in a Lease Document
contained in the Lease File to be delivered by Seller to Buyer pursuant to this
Agreement.
4.19.18 Delinquent Payments. The payment status of each account included in
the Portfolio is as Documented in the Lease File, and there are no delinquencies
in the payment of Lease Payments owing under the Equipment Leases that are not
properly Documented in the Lease File. Except as Documented in the Lease File,
no bankruptcy, insolvency or similar proceeding is pending by or against any
lessee.
4.19.19 Accuracy of Projected Income Stream. The unpaid rent under each
Equipment Lease is as represented to the Buyer in the Disclosure Schedule, and
the Seller has not accepted any prepayment of any rent under any Equipment
Lease, except as specified in the Disclosure Schedule.
4.19.20 Preservation of Collateral and Liens. The Seller has taken all such
actions and precautions as are necessary or appropriate to protect and preserve
the Equipment and the Collateral and Seller's security interest therein,
including the timely recordation in the proper location of any deeds of trust or
mortgages conveying to the lessor for security purposes any real property, and
notation of the Seller as lien holder on any certificates of titles to property,
the nature of which is such that ownership thereof is evidenced by a certificate
of title.
4.19.21 Absence of Competing Liens. Except as disclosed in the Disclosure
Schedule, (a) none of the Equipment constitutes collateral for any obligation
owing to Seller or to a third Person other than the Equipment Lease or is
subject to a lien or security interest which is senior to the lien or security
interest of Seller, and (b) Seller is not a party to any contract or agreement
with a third Person, a default under which would constitute a default under an
Equipment Lease.
4.19.22 Ownership of Income Stream. The Seller is the sole owner of the
right to receive all payments required to be made under each Equipment Lease and
Assigned Income Contract, and Seller has not transferred or assigned any right
or interest in such Income Streams to any other Person.
4.19.23 Absence of Legal Proceedings. Except as Documented in the Lease
File, there is no action, suit, legal or arbitration proceeding or
administrative proceeding or investiga-tion pending or threatened against or
affecting any lessee or any Equipment Lease other than those actions and
proceedings, if any, set forth in the Disclosure Schedule.
5. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer warrants and represents to Seller that:
5.1 Organization and Good Standing. Buyer is a duly formed and validly
existing corporation organized and in good standing under the laws of the state
of California.
5.2 Corporate Authority. Buyer's execution, delivery and performance of
this Agreement has been authorized by all necessary corporate actions.
5.3 Opportunity to Review. Buyer has had a full and adequate opportunity to
review and inspect the Assets, to interview Seller's management regarding the
Line of Business, and to otherwise obtain all information it deems necessary to
make a fully informed decision regarding the transactions contemplated by this
Agreement.
5.4 Accuracy on Closing Date. The warranties and representations of Buyer
set forth in this agreement shall be true and complete in all material respects
on the Closing Date, as if made on such date, without the need for any
additional certificate or affidavit from Buyer with respect thereto.
6. OBLIGATIONS OF SELLER BEFORE CLOSING
Seller covenants to Buyer that:
6.1 Affirmative Covenants. From and after the effective date of this
Agreement and prior to the Closing Date:
6.1.1 Conduct of Business. Seller shall diligently carry on the activities
comprising the Line of Business substantially in the same manner as such
activities have historically been conducted, and will not institute any unusual
or novel methods of management or business operations pertaining to the Line of
Business.
6.1.2 Maintenance of Business Organization. Seller shall use its best
efforts (a) to maintain intact its business organization for the Line of
Business, and (b) to preserve its present relationships with and the goodwill of
equipment suppliers, lessees, brokers and others having equipment leasing
business dealings with Seller.
6.1.3 Lease Administration. Seller shall administer the Equipment Leases in
the ordinary course consistent with past practice, and shall use due diligence
in collecting all Lease Payments attributable to period after November 29, 1996.
All amounts so collected by Seller from and after November 29, 1996 shall be for
the account of Buyer.
6.1.4 Notices of Certain Events. Seller promptly shall notify the Buyer of:
A. Any material notice or other communication from any Person alleging that
the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement; and
B. Any notice or other communication from any governmental or regulatory
authority in connection with any alleged violation by the Seller of any
applicable provision of any law, rule, regulation, or ordinance applicable to
any Equipment Lease, or otherwise in connection with the transactions
contemplated by this Agreement; and
C. Any action, suit, legal or arbitration proceeding or administrative
proceeding or investigation commenced or, to the knowledge of the Seller,
threatened against, relating to, or involving or otherwise affecting the Seller,
any Lessee or any Equipment Lease that, if pending on the date of this
Agreement, would have been required to have been disclosed pursuant to the terms
of this Agreement or that relates to the consummation of the transactions
contemplated by this Agreement.
6.1.5 Compliance with Regulatory Requirements. Seller shall comply with all
applicable laws and regulations which relate to the conduct of its business, the
violation of which would have a material adverse impact upon its ability to
conduct the activities of the Line of Business in the ordinary course, and shall
cause such licenses, permits and other governmental authorizations required by
it for the conduct of its business to continue in effect.
6.1.6 Transition of Employees. Seller will cooperate with Buyer in
developing a plan with respect to the status of the Division Employees. Seller
shall terminate the employment of any employee who has accepted an offer of
employment from Buyer, effective as of the close of business on the last
business day immediately preceding the Closing Date, and shall pay all
compensation, benefits and perquisites accrued by such employees through the
effective date of termination, but nothing herein shall be construed to require
Buyer to offer employment to any employee of Seller.
6.1.7 Access to Information. From the date of this Agreement until the
Closing Date, the Seller shall upon reasonable notice from the Buyer (a) give
the Buyer reasonable access during normal business hours to the Lease Files and
to the employees of Seller who are knowledgeable with respect to the Equipment
Leases and the Lease Files, and (b) furnish to Buyer such financial data and
other information relating to the Equipment Leases as the Buyer may reasonably
request. 6.1.8 Consents. Seller shall use its best efforts to obtain at its own
cost and expense any consents required to be obtained in order to transfer and
assign the Equipment Leases to Buyer or to otherwise consummate the transactions
contemplated by this Agreement.
6.1.9 Further Assurances. Seller shall take such actions as are reasonably
necessary or appropriate to cause the conditions precedent to the obligations of
the parties to consummate the transaction contemplated by this agreement to
occur and be satisfied.
6.2 Negative Covenants. From and after the effective date of this agreement
and prior to the Closing Date, Seller shall not, without the prior consent of
Buyer:
6.2.1 Changes in Business Operations. Make any change in the conduct of the
business or operations of Seller comprising the Line of Business, other than
changes made in the lawful and ordinary course of business which, individually
and in the aggregate, do not materially and adversely affect the Line of
Business.
6.2.2 Changes in Organization. Engage in any corporate restructuring,
including any merger or consolidation with or sale of substantially all of its
assets to any other Person or entity if the effect thereof would be to impair
the ability of Seller to perform its duties and obligations under this Agreement
or to consummate the transactions contemplated hereby.
6.2.3 Changes in Liabilities. Incur any obligation or liability affecting
the Line of Business, whether absolutely or contingent, other than liabilities
incurred in the lawful and ordinary course of business which do not individually
or in the aggregate materially and adversely affect the Assets or the Line of
Business.
6.2.4 Liens and Encumbrances. Subject any of the Assets to any lien, claim,
charge, option or encumbrances.
6.2.5 Disposition of Assets. Sell, lease, dispose of, or waive any
substantial rights relating to, any of the Equipment Leases or the other Assets
to be sold and transferred to Buyer pursuant to this Agreement, whether tangible
or intangible, other than incidental sales made in the ordinary course of
business in the routine exercise of Lease Servicing Rights.
6.2.6 Compensation of Division Employees. Increase or decrease the rate of
compensation or change the benefits and perquisites of any Division Employee,
except in accordance with the provisions of employment agreements in effect
prior to September 30, 1996, or pursuant to regularly scheduled compensation
adjustments that are consistent with past practices.
6.2.7 Dismissal of Division Employees. Dismiss or terminate the employment
of any Division Employee except as provided in Section , above; provided,
however, that nothing in this Agreement is intended and no provisions of this
agreement shall be construed to obligate Buyer or Seller to employ any of
Seller's Division Employees after the Closing Date.
6.2.8 Changes to Contractual Rights. Terminate or amend any Equipment Lease
or other Lease Document, or any material contract or other agreement which
constitutes an Asset to be transferred to Buyer, other than terminations and
amendments entered into in the ordinary course of business in the routine
exercise of Lease Servicing Rights and the settlement of claims against or
disputes with lessees.
6.2.9 Defaults in Performance. Fail to perform any of its obligations or
permit any default to exist in the performance of any of its obligations under
any Equipment Lease or under any material contract or other agreement to which
Seller is a party or by which Seller is bound pertaining to the Line of Business
or the Assets.
6.2.10 Extraordinary Transactions. Enter into or acquire any new Equipment
Lease, or any material contract or agreement affecting the Line of Business,
other than the origination or acquisition of Equipment Leases in the ordinary
course of business consistent with past practices.
6.2.11 Negative Assurances. Take or omit, or agree or commit to take or
omit, any action that would make any representation or warranty of the Seller
under this Agreement inaccurate in any respect on, or as of any time prior to,
the Closing Date.
7. OBLIGATIONS OF BUYER PRIOR TO CLOSING
Buyer covenants to Seller that:
7.1 Further Assurances. Buyer shall take such actions as are reasonably
necessary or appropriate to cause the conditions precedent to the obligations of
the parties to consummate the transaction contemplated by this agreement to
occur and be satisfied.
7.2 Conduct of Investigations. Buyer shall conduct its due diligence and
its investigations under this Agreement in such manner as not to unreasonably
interfere with the Seller's business operations.
7.3 Confidentiality. Buyer and its officers, directors and other
representatives will hold in strict confidence and will not use to the detriment
of Seller any data and information with respect to the Line of Business obtained
by them in connection with the negotiation of this Agreement and the
transactions contemplated hereby, except insofar as such information or data is
required to be disclosed by Buyer's parent corporation in accordance with the
requirements of the Securities Exchange Act of 1934 and the rules and
regulations published thereunder or by any exchange on which the securities of
Buyer's parent corporation are traded.
7.4 Negative Assurances. Buyer will not take or omit, or agree or commit to
take or omit, any action that would make any representation or warranty of the
Buyer under this Agreement inaccurate in any respect on, or as of any time prior
to, the Closing Date.
8. CONDITIONS PRECEDENT TO CLOSING
8.1 Conditions to Buyer's Performance. The obligations of Buyer under this
Agreement are subject to the prior satisfaction of each of the following
conditions on or before the Closing Date (or waiver of such conditions by
Buyer):
8.1.1 Accuracy of Representations. Each of the representations and
warranties made by Seller in this agreement or in any written statement
delivered to Buyer pursuant to this Agreement shall be true and correct in all
material respects on and as of the Closing Date, as though made on the Closing
Date.
8.1.2 Satisfaction of Covenants. Seller shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by this agreement to be performed or complied with by Seller on or
before the Closing Date.
8.1.3 Requisite Consents. The Seller shall have received all consents of
any governmental or regulatory authority and of any other Person required for
execution and delivery of this Agreement and for consummation of the
transactions contemplated hereby.
8.1.4 Requisite Deliveries by Seller. Seller shall have delivered to Buyer
and Buyer shall have received each of the documents required by Section , below,
duly executed and, where appropriate, acknowledged by Seller.
8.2 Conditions Precedent to Seller's Performance. The obligations of Seller
under this Agreement are subject to the prior satisfaction of each of the
following conditions on or before the Closing Date (or waiver of such conditions
by Seller):
8.2.1 Accuracy of Representations. All representations and warranties of
Buyer contained in this Agreement or in any written statement delivered by Buyer
pursuant to this agreement shall be true and correct in all material respects on
and as of the Closing Date, as though made at that time.
8.2.2 Satisfaction of Covenants. Buyer shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement to be performed or complied with by it on or before
the Closing Date.
8.2.3 Requisite Consents. The Seller shall have received all consents of
any governmental or regulatory authority and of any other Person required for
execution and delivery of this Agreement and for consummation of the
transactions contemplated hereby.
8.2.4 Requisite Deliveries by Buyer. Buyer shall have delivered or caused
to be wired to Seller and Seller shall have received the funds required to be
paid by Buyer pursuant to Section , below, and delivered to Seller each of the
documents required by Section , below, duly executed and, where appropriate,
acknowledged by Buyer.
9. CLOSING
9.1 Closing Date. The consummation of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Schley & Larsen,
LLP, attorneys at law, at 10:00 a.m. local time on December 2, 1996, or at such
other time and place as the parties may agree (the "Closing Date").
9.2 Deliveries by Seller. On or before the Closing Date, and as a condition
precedent to the closing, Seller shall execute and deliver to Buyer:
9.2.1 Assignment of Equipment Leases. A duly executed and acknowledged
assignment and assumption agreement substantially in the form attached as
Exhibit A to this Agreement pursuant to which Seller assigns to the Buyer (a)
Seller's entire right, title and interest in and to each Equipment Lease and the
Lease Documents, (b) the Income Stream payable by each Lessee under each such
Equipment Lease, and (c) each item of additional Collateral pledged to the
Seller under any Lease Document.
9.2.2 Title Documents. Any Collateral, and the original documents
evidencing ownership or title to any Collateral, the perfection of a security
interest in which requires possession of such Collateral or title documents.
9.2.3 Power of Attorney. A duly executed and acknowledged power of attorney
in the form attached as Exhibit B to this Agreement, authorizing Buyer to act in
the name, place and stead of Seller for the purpose of taking such actions and
executing, filing and recording such documents and instruments as may be
necessary or proper to (a) vest and perfect in Buyer title in and to the
Equipment Leases and the Equipment, (b) to perfect the rights and security
interests of Buyer under the Lease Documents and any Collateral, (c) to collect
all amounts becoming due under the Lease Documents when and as they become due,
(d) to exercise any of the rights and remedies of the lessor under the Equipment
Leases and the Lease Documents, and (e) to take possession of and to dispose of
any Equipment or Collateral to the extent the lessor is entitled to do so under
the Lease Documents.
9.2.4 Assignment of Contract and Agreements. An assignment and assumption
in the form attached as Exhibit C to this Agreement of all other contracts,
agreements, licenses and contract rights, if any, to be transferred and assigned
to and assumed by Buyer pursuant to this Agreement, together with any necessary
consents from any other party to such contract whose consent is required as a
condition to the assignment thereof, in form satisfactory to Buyer's counsel as
evidenced by Buyer's execution thereof.
9.2.5 Compliance Certificate. A certificate signed by the President or any
other executive officer of Seller, dated as of the Closing Date, certifying
that, to the best of his or her knowledge after making reasonable inquiry, the
representations and warranties of the Seller contained in this Agreement and in
any certificate or other writing delivered by the Seller pursuant to this
Agreement, and the information contained therein or in any Disclosure Schedules
delivered by Seller pursuant to this Agreement, are true, correct and complete
in all material respects on and as of the Closing Date, as if made and given on
and as of the Closing Date, and that Seller has taken all actions required to be
taken by Seller under this Agreement as a condition to the closing of the
transactions contemplated by this Agreement, other than those actions that have
been waived by Buyer.
9.2.6 Certified Resolutions. A certified copy of resolutions adopted by the
Board of Directors or the Executive Committee of Seller in form acceptable to
counsel for the Buyer authorizing the execution and performance of this
Agreement and the actions to be taken by Seller pursuant to this Agreement and
designating the persons authorized by such Board to execute the documents and
agreements to be delivered by Seller hereunder.
9.3 Deliveries by Buyer. At the Closing, and as a condition precedent
thereto, Buyer shall execute and or deliver to Seller:
9.3.1 Initial Payment. Immediately available funds by wire transfer in the
amount of $59,000,000 payable to or in accordance with instructions given by
Seller, with the balance of the purchase price to be paid as provided in Section
, below.
9.3.2 Assumption of Lessor's Obligations under Equipment Leases. A duly
executed and acknowledged assignment and assumption agreement substantially in
the form attached as Exhibit A to this Agreement pursuant to which Buyer assumes
(a) Seller's obligations under each Equipment Lease and the Lease Documents.
9.3.3 Assignment of Contract and Agreements. An assignment and assumption
of all other contracts, agreements, licenses and contract rights, if any, to be
transferred and assigned to and assumed by Buyer pursuant to this Agreement,
together with any necessary consents from any other party to such contract whose
consent is required as a condition to the assignment thereof, in form
satisfactory to Buyer's counsel as evidenced by Buyer's execution thereof.
9.3.4 Compliance Certificate. A certificate signed by a duly authorized
executive officer of Buyer, dated as of the Closing Date, certifying that the
representations and warranties of the Buyer contained in this Agreement and in
any certificate or other writing delivered by the Buyer pursuant to this
Agreement are true, correct and complete in all material respects on and as of
the Closing Date, as if made and given on and as of the Closing Date, and that
Buyer has taken all actions required to be taken by Buyer under this Agreement
as a condition to the closing of the transactions contemplated by this
Agreement, other than those actions that have been waived by Seller.
9.3.5 Certified Resolutions. A certified copy of resolutions adopted by the
Board of Directors of Buyer in form acceptable to counsel for the Seller
authorizing the execution and performance of this Agreement and the actions to
be taken by Buyer pursuant to this Agreement and designating the persons
authorized by such Board to execute the documents and agreements to be delivered
by Buyer hereunder.
10. POSSESSION; PRORATIONS; COSTS AND EXPENSE
10.1 Transfer of Title and Possession. Title to the Assets shall pass to
the Buyer at the Closing.
10.1.1 Seller shall transfer possession of all Assets other than the
Equipment and the Collateral to Buyer as of the Closing Date or as soon
thereafter as is practicable, and in no event more than ten (10) business days
after the Closing Date, but such transfer and assignment shall be given
retroactive effect to December 1, 1996.
10.1.2 Seller shall make arrangements reasonably acceptable to Buyer to
surrender possession to Buyer at the place at which such Equipment or Collateral
is stored of any Equipment or Collateral that is not in the possession of a
lessee under an Equipment Lease.
10.1.3 As between the Buyer and the Seller, the Buyer shall bear the risk
of loss of the Assets from and after the Closing Date.
10.2 Prorations. The following items shall be prorated and apportioned
between Buyer and Seller as of the close of business on November 30, 1996,
regardless of the Closing Date.
10.2.1 All state and local taxes, if any, attributable to the Assets being
transferred to Buyer.
10.2.2 Amounts owing to vendors or suppliers under any contracts or
agreements, including storage or bailment agreements, being transferred to and
assumed by Buyer that are allocable to periods after the closing date.
Any such proration which cannot be made on the Closing Date shall be made
promptly upon delivery of an appropriate statement for any such item by one
party to the other, accompanied by a copy of the billing or invoice from the
person or entity entitled to the payment for which the proration is being made,
and shall be included as part of the reconciliation to be made pursuant to
Section , below.
10.3 Credits, Debits and Offsets. There shall be credited toward the
purchase price payable by Buyer, and debited from the amount due to Seller, the
amount of any security deposits under Equipment Leases that are not remitted to
Buyer at the Closing.
10.4 Costs and Fees. Buyer and Seller shall each bear their own costs and
their respective attorneys fees.
11. OBLIGATIONS OF PARTIES AFTER CLOSING
As soon as practicable after the Closing Date:
11.1 Transfer of Equipment Leases and Lease Files. Seller shall transfer
physical possession of the original Equipment Leases and Lease Files and all
copies thereof in the Seller's possession to Buyer immediately after the Closing
Date.
11.2 Transfer of Personnel Files. Seller shall transfer to Buyer copies of
any personnel files of those of its employees who have accepted employment with
Buyer who have consented in writing to the transfer of their employment record
and personnel file to Buyer, to the extent that the requesting employee has the
right receive the contents of such records.
11.3 Balance Sheet and Collections Report. Seller shall provide to Buyer a
Balance Sheet as of the close of business on November 30, 1996, together with an
accounting of any recoveries (net of collection costs and expenses paid to
Persons who are not Affiliates) from and after November 1, 1996 against charged
off amounts for Equipment Leases and Assigned Income Contracts in the Equipment
Lease Portfolio that are in active collection.
11.4 Reconciliation and Deferred Payment. Promptly after receipt of the
information required to be delivered by Seller pursuant to Section , above,
Buyer shall compute and verify the purchase price for the Assets and shall remit
to Seller any portion of the purchase price remaining to be paid. If an
over-payment has occurred, Seller shall remit any such overpayment to Buyer
promptly upon receipt of notice thereof. Any amount owing from one party to the
other that is not paid within ten (10) days of the date on which first due shall
thereafter bear interest until paid at the lesser of (a) the Santa Barbara Bank
& Trust prime rate plus two percentage points or (b) the maximum rate permitted
by law.
11.5 Notice to Lessees, Insurers, etc. Seller shall cooperate with Buyer in
giving a joint written notice, executed both by Buyer and Seller:
11.5.1 Advising the lessee under each Equipment Lease (substantially in the
form of the notice attached as Exhibit D to this Agreement) that such Lease has
been assigned to Buyer and that all future rental payments are to be made to
Buyer; and
11.5.2 Advising all insurers providing coverage with respect to the
Equipment or the Collateral that Buyer is the new loss payee under all such
insurance policies; and
11.5.3 Advising any banks or other financial institutions holding
certificates of deposits or other cash or cash-equivalent Collateral of the
assignment of such Collateral to Buyer.
11.6 Deposit Account. Buyer shall establish a separate account in the name
of Seller for the benefit of Buyer into which Lease Payments received by Seller
after the Closing may be deposited by Seller. Seller shall be authorized to make
deposits into such account but shall not have any signatory power or withdrawal
authority for such account. Seller shall have no responsibility or liability
arising from the establishment or maintenance of such account.
11.7 Collection of Lease Payments. Seller shall hold in trust for the
account and benefit of Buyer (a) all rent, insurance proceeds, and other
payments received by the Seller with respect to the Equipment, any Equipment
Lease or any Collateral or Lease Guaranty after the Closing Date, including all
amounts collected with respect to Leases that have been charged off but that are
in active collection and (b) all rent and other payments received by the Seller
prior to the Closing Date that are attributable to periods after November 30,
1996.
11.7.1 Seller shall not commingle any such amounts with the funds of the
Seller, and shall deliver any such funds to Buyer or cause them to be deposited
into the account established pursuant to Section , above, promptly after receipt
by Seller in the form received from the payor with any necessary endorsements.
11.7.2 If any instrument or document delivered to the Buyer in payment of
rent, insurance proceeds, or other amounts payable under any Equipment Lease
requires the endorsement of the Seller, and the Seller fails to endorse said
instrument or document, the Buyer is hereby irrevocably authorized to endorse
such instruments or documents on behalf of the Seller.
11.8 Delivery of Notices to Buyer. Seller shall deliver to the Buyer
promptly after receipt thereof copies of all notices received by the Seller with
respect to any Equipment Lease or any item of Equipment, including without
limitation any notices of delinquencies in payment of personal property taxes.
11.9 Cooperation and Assistance after Closing. Seller shall continue to
provide Buyer with reasonable access to Seller's principal executive officers to
respond to Buyer's inquiries regarding the Assets acquired from Seller.
11.9.1 From time to time at Buyer's request and without further
consideration, Seller will execute and deliver such other instruments of sale,
transfer, conveyance, assignment and confirmation and take such action as may be
necessary or proper under applicable laws or regulations or as Buyer may
otherwise reasonably request in order to perfect the transfer and conveyance to
Buyer of the Assets comprising the Line of Business being acquired by Buyer
under this Agreement, to put Buyer in actual possession and operating control
thereof and to assist Buyer in exercising all rights with respect thereto.
11.9.2 Buyer shall make available to Seller such Information Reasonably
Available to Buyer that Seller may request (a) for the purpose of completing and
filing any final sales and use tax reports required to be filed by Seller with
respect to Lease Payments received or other transactions engaged in by Seller
for periods ending with or prior to the Closing Date, or (b) that may otherwise
be necessary or useful in enabling Seller to discharge any residual obligations
arising by reason of its ownership of the Line of Business.
11.10 Defense of Title. Seller shall at the cost and expense of Buyer
appear in any action or proceeding that Buyer may reasonably request for the
purpose of defending the title of Buyer in and to each Equipment Lease
transferred by Seller to Buyer pursuant to this Agreement, and the interest of
Buyer in the Equipment described in each such Lease and in any other collateral
securing the payment of the Lease Payments owing thereunder, against the claim
of any person alleging an interest in such Equipment Lease, the Equipment or
such other collateral that is senior to the interest of Buyer, unless the claim
of seniority is based upon the failure of Buyer to take actions after the
Closing Date required to prevent the expiration of Buyer's lien.
11.11 Transition Agreement. As soon as practicable after the execution of
this Agreement, Buyer and Seller shall prepare and execute a transition
agreement providing for the use by Buyer of Seller's offices and office
facilities for up to ninety (90) days after the Closing Date in order to effect
a transition in the Line of Business from Seller to Buyer and to enable Buyer to
make arrangements to relocate the Line of Business to facilities controlled by
Buyer. Such agreement shall provide for the shared use of Seller's offices and
office facilities by the Line of Business and Seller's other business
activities, and for the payment by Buyer to Seller of the costs and expenses
incurred by Seller in making such office space and facilities available to Buyer
during the transition period. In addition, Seller will provide such assistance
as Buyer may reasonably request for the purpose of (a) arranging for the
transfer to Buyer of Seller's month-to-month lease for Seller's branch office in
Orange and (b) arranging for the lease or relocation of space which Buyer
determines to be appropriate for the maintenance of Concord Office that is now
in space used by other business lines of Seller.
11.12 Data Processing and Other Services. Seller will cooperate with and
assist Buyer in arranging for the continued provision by Norwest of the
"Success" data processing system for records-keeping and servicing of the
Portfolio for a period of ninety (90) days after the Closing Date, and shall
transfer the license for such software to Buyer if Buyer so requests and has
obtained the consent of the licensor to such transfer. Should Buyer elect to
close without Seller's having obtained the consents of any vendors, suppliers or
service providers furnishing goods or services to the Line of Business that are
necessary to the continuing conduct of the Business, then Seller shall take such
actions as are reasonably necessary to assure that such goods and services
continue to be supplied to Seller, and to make such goods and services available
to Buyer on a sub-contracted or licensed basis for a period of up to ninety (90)
days or until Buyer can make arrangements to procure such goods and services
from alternative sources, whichever is sooner, provided that Buyer reimburses to
Seller all costs and expense incurred by Seller for such purposes.
11.13 Sales and Use Taxes, Etc. Buyer shall pay any sales and use taxes
resulting from the transfer of the Assets comprising the Line of Business to
Buyer, but Buyer shall not be responsible for and Seller shall indemnify Buyer
with respect to any business, occupation, sales, use, withholding or similar tax
or any other taxes of any kind relating to any period prior to the Closing Date.
11.14 Confidential Information. Seller will not divulge, communicate, use
to the detriment of Buyer or for the benefit of any other Person, or otherwise
misuse in any way any confidential information or trade secrets of Seller,
including personnel information, policies and procedures, know-how, customer
lists or other proprietary information pertaining to the Line of Business.
11.15 Covenant not to Compete. Seller will not at any time within the one
(1) year period immediately following the Closing Date:
11.15.1 Directly or indirectly engage in or have any interest in any Person
(whether as an employee, officer, director, agent, security holder, creditor,
consultant or otherwise) that engages in the commercial equipment leasing
business in any county (including any county, parish or similar subdivision
outside of California) where Buyer is then originating or purchasing commercial
equipment leases or commercial equipment financing transactions; or
11.15.2 Permit or suffer any Affiliate of Seller to commence a commercial
equipment leasing business in San Luis Obispo, Santa Barbara or Ventura
Counties, but nothing herein shall be deemed to limit or impair the right of
Seller's Affiliates to acquire banks, savings & loan, thrift or other financing
or lending institutions, notwithstanding that such institutions are then engaged
in the commercial equipment leasing business in such counties.
The parties intend that the covenant contained in this Section shall be
construed as a series of separate covenants, one for each county. Except for
geographic coverage, each separate covenant shall be identical in all respects.
If in any judicial proceeding a court declines to enforce any such separate
covenants, then the unenforceable covenant will be considered eliminated from
this Section for the purpose of those proceedings to the extent necessary to
permit the remaining separate covenants to be enforced.
11.16 Payment of Obligations. Except for the obligations expressly assumed
or to be reimbursed by Buyer under this Agreement, Seller will pay all debts and
obligations of Seller in full when and as they become due at no cost or expense
to Buyer.
11.17 Survival of Obligations. All representations, warran-ties, covenants,
obligations and agreements of the parties contained in this agreement or in any
instrument, certificate, opinion or other writing provided for herein, shall
survive the closing of this transaction.
12. INDEMNIFICATION
12.1 Seller's Indemnity. Subject to the provisions of Sections through ,
below, Seller shall indemnify, defend with counsel reasonably acceptable to
Buyer and hold Buyer and its officers, directors, employees, agents,
shareholders and affiliated entities (referred to collectively herein as the
"Buyer Group") free and harmless from and against all claims, demands, losses,
costs, expenses, obligations, liabilities or damages (including, without
limitation, interest, penalties and reasonable attorneys' fees) which any member
of the Buyer Group may suffer or incur by reason of (a) claims arising with
respect to or from the operation of the Line of Business prior to the Closing
Date, including without limitation (i) any claims by employees of Seller,
regardless of when asserted, and (ii) any claims for damages due to injuries to
persons or property resulting from the action, fault or neglect of Seller or its
agents or employees, (b) a breach of any warranty or representation given by
Seller to Buyer under this Agreement or in any document delivered by Seller to
Buyer pursuant to this Agreement, (c) the failure by Seller to perform any of
its covenants or obligations under this Agreement, and (e) all Excluded
Liabilities.
12.1.1 Limitation on Indemnity Obligation. Notwith- standing the provisions
of Section , above, with respect to the Assets being transferred by Seller to
Buyer pursuant to this Agreement:
A. Seller does not warrant the creditworthiness of the lessees under the
Equipment Leases or guarantee the Lease Payments, and Buyer shall assume the
risk of collection with respect to each Equipment Lease Transferred to Buyer
hereunder; and
B. Seller's liability to Buyer with respect to the Equipment Leases or on
account of the breach of any warranty, representation or covenant given by
Seller to Buyer with respect to the Assets shall not exceed the purchase price
for such Assets paid by Buyer to Seller pursuant to this Agreement; and
C. No claim may be asserted against Seller on account of the alleged breach
of any warranty or representation given by Seller pursuant to Section of this
Agreement, or pursuant to Section of this Agreement with respect to any statute,
law or regulation, the violation of which constitutes a violation of federal,
state and local laws of the type described in Section of this Agreement, unless
notice of the claim, specifying the nature of the claims and the basis therefor,
is given to Seller within 120 days after the Closing Date; and
D. Seller shall not be liable to Buyer on account of any breach of a
warranty, representation or covenant given by Seller with respect to a single
Equipment Lease or other single Asset unless the individual claim, loss,
expense, obligation or other liability exceeds $75,000, but if the aggregate of
all such claims, losses, obligations and liabilities, whether or not exceeding
$75,000 individually, exceeds $1,000,000 in the aggregate then, subject to the
limitation set forth in Section , above, Seller shall be liable in full for all
claims, losses expenses, obligations or other liabilities resulting from or
attributable to Seller's breach of its warranties, representations and covenants
under this Agreement with respect to the Assets. By way of example of the
foregoing limitation, if Buyer suffers a loss under one or more Equipment Leases
for which Buyer would be entitled to be indemnified by Seller but for the
limitation contained in this Section , then:
(1) Seller would not be liable if the loss were less than $75,000 with
respect to any individual Equipment Lease unless Buyer's aggregate losses as to
all Equipment Leases exceeded $1,000,000; and
(2) Seller would be liable for any loss of more than $75,000 with respect
to any individual Equipment Lease, even though Buyer's aggregate losses as to
all Equipment Leases was less than $1,000,000; and
(3) If Buyer's aggregate losses as to all Equipment Leases exceed
$1,000,000, then Seller would be liable for all losses suffered by Buyer under
the Equipment Leases, regardless of the amount of the loss under any individual
Equipment Lease.
12.1.2 Claims Attributable to Conduct of Buyer. The indemnification
obligation of Seller shall not extend to claims that are based upon the conduct
of Buyer or its agents or employees.
12.1.3 Indemnity from Excluded Liabilities. The limitations on liability
set forth in Section , above, shall not extend or apply to the obligation of
Seller to indemnify, defend and hold Buyer free and harmless from the Excluded
Liabilities.
12.2 Buyer's Indemnity. Buyer shall indemnify, defend with counsel
reasonably acceptable to Seller and hold Seller and its officers, directors,
employees, agents, shareholders and affiliated entities (referred to
collectively herein as the "Seller Group") free and harmless from and against
all claims, demands, losses, costs, expenses, obligations, liabilities or
damages (including, without limitation, interest, penalties and reasonable
attorneys' fees) which any member of the Seller Group may suffer or incur by
reason of claims arising with respect to or from the operation of the Line of
Business subsequent to the Closing Date, including without limitation (a) a
breach of any warranty or representation given by Buyer to Seller under this
Agreement or in any document delivered by Buyer to Seller pursuant to this
Agreement, (b) the failure by Buyer to perform any of its covenants or
obligations under this Agreement, (c) claims resulting from or attributable to
conduct of Buyer prior to the Closing Date, and (d) claims based on a liability
assumed by Buyer pursuant to the provisions of this Agreement.
12.3 Notice of Claim. Any person who receives notice of an actual or
potential claim with respect to which such person may have a right of
indemnification pursuant to this Section (herein, a "Protected Party") shall
promptly give written notice thereof, together with a summary of the facts upon
which such claim is or may be based, to the party obligated to provide such
indemnification (the "Indemnifying Party"). The Indemnifying Party shall appear
for and defend the Protected Party in any action or proceeding arising out of
any such claim, and if the interests of the Protected Party and the Indemnifying
Party are or may be in conflict, then the Indemnifying Party shall be obligated
to engage at its expense independent counsel reasonably satisfactory to the
Protected Party to represent the interests of such Protected Party.
13. TERMINATION RIGHTS
13.1 Right of Termination. This Agreement may be terminated at any time
prior to the Closing Date:
13.1.1 By the prior written consent of all parties hereto; or
13.1.2 By any party who is not in default under this Agreement if the other
party commits a material breach in the performance of its obligations under this
Agreement and such default is not cured within a reasonable time after the
delivery of notice of such default, specifying the nature thereof; or
13.1.3 By a party whose duty to proceed is subject to a condition precedent
specified in Section if (a) such condition has not been satisfied (or the
satisfaction thereof will not occur) prior to the Closing Date; or (b) if the
other party to this agreement (i) has failed to perform the covenants and
agreements contained herein which such other party is obligated to perform prior
to the Closing Date, or (ii) becomes subject to any bankruptcy or insolvency
proceeding, or makes an assignment for the benefit of its creditors, or if a
receiver is appointed for all or a substantial part of its assets.
13.2 Liability Upon Termination. Upon a termination of this agreement
pursuant to this Section for reasons other than the failure of a party to cure a
material default, (a) the obligations of the parties under this Agreement shall
terminate and be of no further force or effect, and (b) each party shall be
mutually released and discharged from liability to the other party or to any
third party for any costs or expenses paid or incurred in connection herewith.
Upon a termination of this agreement due to the failure of a party to cure a
material breach of its obligations under this Agreement, the non-breaching party
shall be entitled to institute proceedings for damages or pursue any other legal
or equitable remedy available against the breaching party.
13.3 Preservation of Confidential Information. Upon a termination of this
agreement for any reason, Buyer will return to Seller all data and information
previously supplied by Seller to Buyer that Seller may reasonably request,
including worksheets, test reports, manuals, lists, memoranda, disclosure
schedules, and other documents prepared or made available to Buyer, and Buyer
shall continue to be bound by the provisions of Section , above.
14. GENERAL PROVISIONS
14.1 Bulk Sales Compliance. Seller and the Buyer each hereby waives
compliance by the Seller with the provisions of the "bulk sales," "bulk
transfer" or similar laws of any state or other jurisdiction. The Seller agrees
to indemnify and hold the Buyer harmless against any and all claims, losses,
damages, liabilities, costs and expenses incurred by the Buyer as a result of
any failure to comply with any such "bulk sales," "bulk transfer" or similar
laws.
14.2 Brokers Commissions. Each party warrants that it has not engaged the
services of any broker or finder in connection with this transaction and that,
to the best of its knowledge, no broker or other Person is entitled to any
commission or finder's fee in connection with the transactions contemplated by
this Agreement.
14.3 Captions and Section Headings. The captions of the sections and
paragraphs of this agreement are for convenience and reference only, and are not
intended and shall not be construed to define or limit the provisions to which
they relate.
14.4 Waivers. No waiver of any right hereunder shall be effective for any
purpose unless in writing and signed by the party possessing the right alleged
to have been waived. Any such written waiver shall not be construed to waive any
subsequent right or other term or provision of this agreement.
14.5 Severability. Each term and provision of this agreement shall be valid
and enforceable to the fullest extent permitted by law. If any term or provision
of this agreement or the application thereof to any person or circumstance
shall, to any extent, be invalid or unenforceable, then the remainder of this
agreement or the application of such term or provision to persons or
circumstances other than those to which it is held invalid or unenforceable,
shall not be affected thereby.
14.6 Reliance by Third Parties. No person other than Seller is an intended
beneficiary of the covenants of Buyer given in this Agreement. No employee of
Seller shall have the right to be offered employment by Buyer or to continue
employment with the Line of Business, and Buyer shall not assume any obligation
or liability under any employee benefit plan or program maintained by Seller.
14.7 Notices. Any notices permitted or required hereunder shall be in
writing and shall be deemed to have been given (a) on the date of delivery if
delivery of a legible copy was made personally or by facsimile transmission, or
(b) on the third business day after the date on which mailed by registered or
certified mail, return receipt requested, addressed to the party for whom
intended at the address set forth on the signature page of this agreement or
such other address, notice of which is given as provided herein.
14.8 Facsimile Signatures. Signatures of the parties on this agreement or
on any document or instrument delivered pursuant to this agreement shall be
deemed to be original signatures and shall be sufficient to bind the parties.
Each party covenants to deposit the original, manually signed document for
delivery by courier or by registered or certified mail to the party to whom such
facsimile signature was transmitted within two business days after the date of
any such facsimile transmission.
14.9 Counterparts. This agreement may be executed in any number of
counterparts, each of which shall be an original, but such counterparts shall
together constitute one and the same instrument.
14.10 Arbitration. Unless the relief sought requires the exercise of the
equity powers of a court of competent jurisdiction, any dispute arising in
connection with the interpretation or enforcement of the provisions of this
Agreement, or the application or validity thereof, shall be submitted to
arbitration. Such arbitration proceedings shall be conducted by a panel of three
arbitrators in Santa Barbara, California, in accordance with the rules then
obtaining of the American Arbitration Association. This Agreement to arbitrate
shall be specifically enforceable. Any award rendered in any such arbitration
proceedings shall be final and binding on each of the parties hereto, and
judgment may be entered thereon in any court of competent jurisdiction.
14.11 Costs of Enforcement. Should any action or proceeding be necessary to
construe or enforce the provisions of this Agreement, or the rights and duties
of the parties hereunder, then the party prevailing in any such action or
proceeding shall be entitled to recover all court costs and reasonable attorneys
fees, to be fixed by the court and taxed as part of any judgment entered
therein, and the costs and fees incurred in enforcing or collecting any such
judgment.
14.12 Binding Effect. All covenants contained in this agreement shall be
binding upon and shall inure to the benefit of each of the parties and their
respective successors, assigns and personal representatives. No party to this
agreement may assign its rights hereunder or delegate its duties hereunder to
any other person or entity without the prior written consent of the other party
hereto.
14.13 Governing Law. This Agreement and the rights and duties of the
parties hereunder shall be construed and interpreted in accordance with the laws
of the State of California.
14.14 Effective Date. This Agreement shall become effective on the date on
which it has been executed by each of the parties whose signature is required on
the signature page or on the Stipulation following the signature page.
14.15 Complete Agreement. This agreement constitutes and contains the
entire understanding of Buyer and Seller with respect to the purchase of the
Assets comprising the Line of Business being acquired by Buyer, and supersedes
any prior agreement by the parties, whether written or oral.
IN WITNESS WHEREOF, the parties have executed this Agreement for Purchase
and Sale of Assets on the dates set forth below.
SELLER:
Date:
CALIFORNIA THRIFT & LOAN,
a California corporation
By
Michael A. Iachelli,
its President
Address for Notices:
CALIFORNIA THRIFT & LOAN
319 East Carrillo Street
Santa Barbara, CA 93101
Attn: Michael Iachelli
President and COO
with a copy to:
Bay View Capital Corporation
2121 El Camino Real
San Mateo, CA 94403
Attn: Robert J. Flax
Exec. V.P & General Counsel
with a copy to:
Schley & Larsen, LLP
505 Bath Street
Santa Barbara, CA 93101
Attn: Michael D. Schley
BUYER:
Date:
SANTA BARBARA BANK & TRUST,
a California corporation
By:
John J. McGrath
Senior Vice President
Address for Notices:
SANTA BARBARA BANK & TRUST,
1021 Anacapa Street
Santa Barbara, CA 93101
Attn: John J. McGrath
Senior V.P. & COO
with a copy to:
Jay D. Smith, Esq.
Senior V.P & General Counsel
SANTA BARBARA BANK & TRUST, 1021 Anacapa Street
Santa Barbara, CA 93101
<PAGE>
STIPULATION BY PARENT CORPORATION
By its signature below, Bay View Capital Corporation, being the parent
corporation of the Seller named in the foregoing agreement, hereby stipulates
and agrees to be bound by the provisions of Section of the foregoing Agreement
for Purchase and Sale of Assets.
Bay View Capital Corporation
a California corporation
By
its
