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: June 27, 1997
ARROW FINANCIAL CORPORATION
A New York Corporation
0-12507 22-2448962
Commission File Number I.R.S. Employer
Identification No.
250 Glen Street
GLENS FALLS, NEW YORK 12801
Registrant's telephone number: (518) 745-1000
Item 2. Acquisition or Disposition of Assets.
On June 27, 1997, Glens Falls National Bank and Trust
Company, Glens Falls, New York ("GFNB"), a national
banking association and the principal banking subsidiary of the
Registrant, Arrow Financial Corporation, completed its
acquisition of six bank branches and related deposits and loans
from Fleet Bank, Albany, New York ("Fleet"), a subsidiary of Fleet
Financial Group, Providence, Rhode Island. The six branches (the
"Branches") are located in northeastern New York state, in the
communities of Plattsburgh (2), Port Henry, Ticonderoga, Lake
Luzerne and Warrensburg.
The transaction was effected pursuant to a Purchase and
Assumption Agreement, dated as of March 21, 1997 (the
"Agreement"). Under the Agreement, GFNB purchased from
Fleet substantially all the assets of the Branches, consisting of
virtually all loans relating to the Branches (having an aggregate
principal value at closing of approximately $34 million), and
approximately $1.6 million in other Branch-related assets,
including the personal property of the Branches and Fleet's real
property interests in the Branches (five owned in fee and one
leased). Also in the transaction, GFNB acquired from Fleet
approximately $10 million of additional residential real estate
loans not relating to the Branches. GFNB assumed from Fleet
at closing all customer deposit liabilities maintained at the
Branches, totalling approximately $140 million, and certain
other liabilities relating to the Branches. GFNB paid to Fleet
a premium of 8.5% on the deposits transferred. In
consideration for its assumption of the deposits and other
liabilities, GFNB received the assets set forth above and a total
net cash payment equal to approximately $81 million.
The amount of consideration paid by GFNB in the transaction
was determined by arms-length negotiation between the parties
and was based upon, among other factors, the market value of
the real property and the book value of the other assets being
transferred and the liabilities being assumed.
The following two tables provide additional information on the
deposit liabilities assumed and loans acquired:
<TABLE>
<CAPTION>
Deposit Liabilities Assumed (Dollars In Thousands)
As of June 27, 1997
Weighted
Average
Balance Rate
<S> <C> <C>
Demand Deposits $ 17,302 --- %
N.O.W. & Super N.O.W. 23,621 1.46
Savings & Money Market Accounts 42,672 3.02
Time Deposits of $100,000 or More --- ---
Other Time Deposits 56,199 5.01
Total Deposit Liabilities Assumed $139,794 3.13%
</TABLE>
<TABLE>
<CAPTION>
Loans Acquired (Dollars In Thousands)
As of June 27, 1997
Weighted
Average
Balance Rate
<S> <C> <C>
Consumer Loans $16,644 9.69%
Home Equity Loans 7,102 9.35
Commercial Loans 10,366 9.61
Residential Real Estate Loans 10,078 8.76
Total Loans Acquired $44,190 9.35%
</TABLE>
Item 7. Financial Statements and Exhibits.
The following unaudited pro forma consolidated balance sheet
of Registrant gives effect to the acquisition of assets and
assumption of liabilities by the Registrant's subsidiary, GFNB,
and related purchase accounting adjustments as though the
transaction had occurred on March 31, 1997.
For informational purposes only, an unaudited pro forma
consolidated balance sheet has been provided.
Unaudited Pro Forma Balance Sheet
The following unaudited pro forma consolidated balance sheet
gives effect to the acquisition of assets and assumption of
liabilities by the Company and related purchase accounting
adjustments as though the transaction had occurred on March
31, 1997.
<TABLE>
<CAPTION>
Assets Arrow
Arrow Acquired & Purchase Financial
Financial Liabilities Deposit Accounting Corporation
Corporation Assumed Premium Adjustments Pro Forma
Assets (1) (2) (3)
<S> <C> <C> <C> <C> <C>
Cash and Due From Banks $ 21,488 $ 1,071 $ --- $ (653) $ 21,906
Federal Funds Sold 12,500 93,324 (12,086) --- 93,738
Securities Available-for-Sale 159,456 --- --- --- 159,456
Securities Held-to-Maturity 42,915 --- --- --- 42,915
Loans (4) 398,581 44,190 --- --- 442,771
Less: Allowance for
Loan Losses (5,625) --- --- (700) (6,355)
Net Loans 392,956 44,190 --- (700) 436,446
Premises and Equipment 9,365 1,338 --- --- 10,703
Other Real Estate Owned 340 --- --- --- 340
Goodwill 341 --- 12,086 1,067 13,494
Other Assets 15,002 289 --- 286 15,557
Total Assets $654,363 $140,212 $ --- $ --- $794,575
Liabilities &
Shareholders' Equity
Deposits:
Demand $ 65,955 $17,302 $ --- $ --- $ 83,297
Regular Savings, NOW &
Money Market 248,341 66,293 --- --- 314,634
Time Deposits of $100,000
or More 93,145 --- --- --- 93,145
Other Time Deposits 142,185 56,199 --- --- 198,384
Total Deposits 549,666 139,794 --- --- 689,460
Short Term Borrowings 21,053 --- --- --- 21,053
Other Liabilities 12,230 418 --- --- 12,648
Total Liabilities 582,949 140,212 --- --- 723,161
Shareholder's Equity 71,414 --- --- --- 71,414
Total Liabilities &
Shareholders' Equity $654,363 $140,212 $ --- $ --- $794,575
</TABLE>
See notes to unaudited pro forma
consolidated balance sheet.
Notes to Unaudited Pro Forma
Consolidated Balance Sheet
(1) Represents the assets acquired and
liabilities assumed in the Acquisition.
Net cash received in the settlement of
the transaction is shown as Federal
funds sold in the unaudited pro forma
balance sheet.
(2) Represents the tax deductible
deposit premium of 8.5% of deposit
liabilities assumed, including accrued
interest
payable, calculated on the basis of the
average amount of deposits (including
accrued interest payable) outstanding
over the 30 day period ending on June
24, 1997.
(3) The purchase accounting adjustments
incorporated in this unaudited pro forma
consolidated balance sheet are
as follows:
Debit Credit
Goodwill 653
Cash and Due from Banks 653
Represents capitalized direct
acquisition costs, principally legal,
financial and other professional fees
included in the cost of the Acquisition.
Goodwill 414
Deferred Tax Asset 286
Allowance for Loan Losses 700
Represents the allowance for
loan losses established for inherent
risk of loss in the loans acquired in an
amount the Company believes is
materially consistent with the general
loss reserve on the books of Fleet
applicable to these loans.
(4) Unused lines of credit, primarily
home equity loans, were approximately
$6.3 million at June 27, 1997.
<TABLE>
<CAPTION>
(c) Exhibits.
Exhibit No. Document
<S> <C>
2.1 Purchase and Assumption Agreement, dated as of March 21, 1997, between
Fleet Bank ("Fleet") and Glens Falls National Bank and Trust Company
("GFN").
2.2 Letter Agreement, dated May 20, 1997, between Fleet and GFN, relating
to GFN's election to purchase certain residential real estate loans as
part of the transaction.
99 Press Release dated June 30, 1997.
</TABLE>
SIGNATURE
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.
Date: July 9, 1997
ARROW FINANCIAL CORPORATION
By: /s/ Thomas L. Hoy
Thomas L. Hoy
President and Chief Executive Officer
<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit No. Document
<S> <C>
2.1 Purchase and Assumption Agreement, dated as of March 21, 1997, between
Fleet Bank ("Fleet") and Glens Falls National Bank and Trust Company
("GFN").
2.2 Letter Agreement, dated May 20, 1997, between Fleet and GFN, relating
to GFN's election to purchase certain residential real estate loans as
part of the transaction.
99 Press Release dated June 30, 1997.
</TABLE>
Exhibit 2.1
PURCHASE AND ASSUMPTION AGREEMENT
between
FLEET BANK
and
GLENS FALLS NATIONAL BANK AND TRUST COMPANY
Dated as of March 21, 1997<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS. . . . . . . . 1
Section 1.1. Defined Terms. . . 1
ARTICLE II PURCHASE AND SALE OF ASSETS AND
ASSIGNMENT AND ASSUMPTION OF LIABILITIES 5
Section 2.1. Purchase and Sale of Assets 5
Section 2.2. Assumed Liabilities: No Other Liabilities
Assumed. . . . . . . . . . 6
Section 2.3. Liabilities Honored 7
Section 2.4. Actions With Respect to IRA and Keogh
Plan Deposit Liabilities . 7
Section 2.5. Transitional Matters 8
ARTICLE III PURCHASE PRICE; PAYMENT; SETTLEMENT:
AND TAX ALLOCATION. . 12
Section 3.2. Payment at Claim . 12
Section 3.3. Adjustment of Estimated Payment Amount 12
Section 3.4. Tax Allocation of Purchase Price 13
Section 3.5. Proration; Other Closing Date Adjustments 14
ARTICLE IV TAXES . . . . . . . . 14
Section 4.1. Sales and Use Taxes 14
ARTICLE V CLOSING. . . . . . . . . . 14
Section 5.1. Closing Date . . . 14
Section 5.2. Place of Closing . 14
Section 5.3. Seller Deliveries. 15
Section 5.4. Purchaser Deliveries 15
ARTICLE VI CONDITIONS TO OBLIGATIONS OF SELLER 16
Section 6.1. Conditions to Obligations of Seller 16
ARTICLE VII CONDITIONS TO OBLIGATIONS OF PURCHASER 17
Section 7.1. Conditions to Obligations of Purchaser 17
ARTICLE VIII REPRESENTATIONS AND WARRANTIES OF
SELLER. . . . . . . . 17
Section 8.1. Organization . . . 17
Section 8.2. Authority. . . . . 17
Section 8.3. Non-Contravention. 17
Section 8.4. Compliance with Law 18
Section 8.5. Legal Proceedings. 18
Section 8.6. Personalty . . . . 18
Section 8.7. Tenants; Branch Leases 18
Section 8.8. Loans. . . . . . . 18
ARTICLE IX REPRESENTATIONS AND WARRANTIES OF
PURCHASER . . . . . . 18
Section 9.1. Organization . . . 18
Section 9.2. Authority. . . . . 19
Section 9.3. Non-Contravention. 19
Section 9.4. Legal Proceedings. 19
Section 9.5. Regulatory Matters 19
Section 9.6. Financing Available 19
ARTICLE X COVENANTS OF SELLER. . . . 20
Section 10.1 Regulatory Approvals 20
Section 10.2. Conduct of the Business 20
Section 10.3. Corporate and Other Consents. 20
Section 10.4. Noncompetition. . 21
Section 10.5. Deposit Rates . . 21
ARTICLE XI COVENANTS OF PURCHASER 21
Section 11.1. Regulatory Approvals and Standards. 21
Section 11.2. Corporate and Other Consents;
Compliance with Law: Real Property. 22
Section 11.3. Solicitation of Accounts 22
Section 11.4. Nonsolicitation of Seller's Employees 22
Section 11.5. Transferred Employees 23
ARTICLE XII ENVIRONMENTAL DUE DILIGENCE, EMPLOYEE
AND CUSTOMER NOTICES; ETC. 24
Section 12.1 Environmental Due Diligence 24
Section 12.2. Access to Branches by Purchaser 25
Section 12.3. Communications to Employees: Training 25
Section 12.4. Communications with Branch Customers 26
ARTICLE XIII INDEMNITY . . . . . . 26
Section 13.1. Seller's Indemnity 26
Section 13.2. Purchaser's Indemnity 26
Section 13.3. Indemnification Procedure 27
Section 13.4. Nonsolicitation . 27
Section 13.5. Survival. . . . . 27
Section 13.6. Basket. . . . . . 27
ARTICLE XIV POST CLOSING MATTERS. 27
Section 14.1. Further Assurances 27
Section 14.2. Access to and Retention of Books and
Records. . . . . . . . . . 28
Section 14.3. Deposit Histories 28
Section 14.4. Appraisal of Real Property 28
ARTICLE XV MISCELLANEOUS . . . . 29
Section 15.1. Expenses. . . . . 29
Section 15.2. Communications, Notices, etc. 29
Section 15.3. Trade Names and Trademarks 30
Section 15.4. Termination; Extension of Closing Date 30
Section 15.5. Brokers-Finders . 30
Section 15.6. Modification and Waiver 30
Section 15.7. Binding Effect; Assignment 30
Section 15.8. Confidentiality.. 30
Section 15.9. Entire Agreement; Governing Law 31
Section 15.10. Consent to Jurisdiction, Waiver of Jury
Trial. . . . . . . . . . . 31
Section 15.11. Severability . . 31
Section 15.12. Counterparts . . 32
Section 15.13. Notices. . . . . 32
Section 15.14. Interpretation . 32
Section 15.15. Specific Performance 33
PURCHASE AND ASSUMPTION AGREEMENT
Agreement dated as of March 21, 1997, between FLEET BANK,
a state-chartered bank with its principal offices at Peter D. Kiernan Plaza,
Albany, New York 12207 ("Seller"), and Glens Falls National Bank and
Trust Company, a national bank with its principal offices at Glens Falls, New
York ("Purchaser").
WHEREAS, Seller desires to sell, and Purchaser desires to acquire
certain assets of Seller in accordance with the terms and provisions of this
Agreement; and
WHEREAS, Seller desires to assign to Purchaser, and Purchaser
desires to assume from Seller, certain liabilities of Seller in accordance with
the terms and provisions of this Agreement;
NOW, THEREFORE, in consideration of the premises and the
mutual promises and covenants contained herein, subject to the terms and
conditions set forth herein, Seller and Purchaser agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Defined Terms. As used herein, the following terms
shall have the following meanings:
"Accrued Interest" shall mean (a) with respect to the Deposit
Liabilities, the interest that has been accrued but not paid or credited on the
Deposit Liabilities, and (b) with respect to the Loans, the interest, fees,
costs and other charges that have accrued on or been charged to the Loans but
not paid by the applicable borrower, or a guarantor or surety therefor, or
otherwise collected by offset or recourse to collateral for the applicable
Loan.
"ADA" shall mean the Americans with Disabilities Act of 1990, as
amended, 104 STAT. 327.
"ATMs" shall mean the automatic teller machines designated on
Schedule 3.1.
"Adjusted Payment Amount" shall have the meaning specified in
Section 3.3(a).
"Affiliate" shall mean as to any person, a person controlled by,
controlling or under common control with, the former person, or a director,
officer, partner, joint venturer or member of the former person or the latter
person.
"Appraised Value" shall have the meaning set forth in Section
14.4(e).
"Assets" shall have the meaning specified in Section 2. 1.
"Assignment and Assumption Agreement" shall have the meaning
set forth in Section 5.3(c).
"Assumed Liabilities" shall have the meaning specified in Section
2.2.
"Assumed Severance Obligations" shall mean Seller's obligations
under its severance plan described on Schedule 1. I (a) attached hereto
relating to the transactions contemplated hereby, including without limitation
its obligations to pay severance and provide benefits to any Transferred
Employee upon or following any termination or deemed termination by
Purchaser of any such employee, on or before the first anniversary of the
Closing Date.
"Board" shall mean the Board of Governors of the Federal Reserve
System.
"Branch Customers" shall mean the persons named as the owners
of the deposit accounts relating to the Deposit Liabilities, the primary
obligors under the Loans and parties to Safe Deposit Agreements with the
Seller.
"Branch Employees" shall mean the employees of the Seller
working at the branches on the date hereof and listed on Schedule 1.1(b)
attached hereto, subject to any transfers permitted pursuant to Section 10.2
and replacement in the ordinary course of business of employees who shall
leave Seller's employ between the date hereof and the Closing Date.
"Cash" shall mean all petty cash, vault cash, teller cash, ATM cash
and prepaid postage.
"Branches" shall mean the Seller's branches listed on Schedule
1.1(c) attached hereto.
"Branch Leases" shall mean the leases for the Branches listed on
Schedule 1.1 (d) attached hereto.
"Branch Related Employees" shall mean the employees of the
Seller listed on Schedule 1.1. ( ) attached hereto, involved in branch
management, administration and operations or small business or commercial
lending.
"CERCLA" shall mean Comprehensive Environmental Response,
Compensation, and Liability Act, as amended, 42 U.S.C. 9601 et seq.
"Closing" shall have the meaning specified in Section 5.2.
"Closing Date" shall have the meaning specified in Section 5.1.
"Competitive Business" shall have the meaning specified in Section
10.4.
"Confidentiality Agreement" shall mean that certain letter
agreement between Purchaser and Seller dated as of January 27, 1997.
"Customer Notice" shall have the meaning specified in Section
12.4.
"Deposit Liabilities" or "Deposit Liability" shall mean deposit
liabilities with respect to accounts, which are being transferred by Seller
with the Branches as of the date hereof, as of the close of business on the
Closing Date, which are defined as deposits in the Federal Deposit Insurance
Act, 12 U.S.C. 1813, including in each case collected and uncollected
deposits plus Accrued Interest, except that Deposit Liabilities shall not
include the Excluded Deposits.
"Draft Closing Statement" shall mean a draft closing statement
dated as of the close of business of the third business day preceding the
Closing Date setting forth an estimate of the Purchase Price (including all
adjustments and prorations thereto) and the Deposit Liabilities.
"Environmental Consultant" shall have the meaning specified in
Section 12.1.
"Environmental Due Diligence Date" shall mean the thirtieth (30th)
day following the execution hereof or, if such day shall not be a business day,
the next business day thereafter.
"Environmental Due Diligence Period" shall mean the period
commencing on the date hereof and ending on the Environmental Due
Diligence Date.
"Environmental Hazard" shall mean the presence of any hazardous
substance (as defined in CERCLA or RCRA) or petroleum or petroleum-based
products in violation of any Environmental Laws.
"Environmental Laws" shall mean CERCLA and RCRA and similar
state environmental laws.
"Estimated Payment Amount" shall have the meaning specified in
Section 3.2.
"Estimated Purchase Price" shall mean the estimate of the Purchase
Price set forth on the Draft Closing Statement.
"Excluded Deposits" shall mean deposit liabilities (i) with respect
to sweep accounts relating to any investment services provided by Seller, or
(ii) Excluded IRA/Keogh Deposits, in each case as of the close of business
on the Closing Date.
"Excluded IRA/Keogh Deposits" shall have the meaning specified
in Section 2.5.
"Excluded Personality" shall mean (a) supplies, signs, trade fixtures
or equipment specifically identifying or relating to Seller or any of its
Affiliates located at the Branches (b) telephone systems located at the
Branches, (c) software, source and object code, user manuals and related
documents and all updates, upgrades or other revisions thereto and all copies
or duplicates thereof, (d) computers, printers, modems, peripheral
equipment, electronic teller station hardware and other hardware related to
teller stations and platforms located at the Branches. and (e) any other
personal property of Seller located at the Branches identified on Schedule
1.1(g), less any such items consumed or disposed of, pius new similar items
acquired or obtained, in the ordinary course of the operation of the Branches
through the close of business on the Closing Date.
"Federal Funds Rate" shall mean, for the period involved, the
average of the interest rates for each day of the period set forth in H.15(519)
opposite the caption "Federal Funds (Effective)". H.15(519) means the
weekly statistical release designated as such, or any successor publication,
published by the Board.
"Final" as applied to any Governmental order or action, shall mean
that such order or action has not been stayed, vacated or otherwise rendered
ineffective and either (a) the time period for taking an appeal therefrom shall
have passed without an appeal therefrom having been taken, or (b) if any
such appeal shall have been dismissed or resolved, all applicable periods for
further appeal of such order or action shall have passed.
"Final Approval Date" shall mean the date upon which the last of
the following has occurred (a) all Regulatory Approvals have been obtained;
(b) the publication of all regulatory notices; (c) the filing of all regulatory
reports; and (d) the expiration of all regulatory comment and waiting
periods.
"Fleet" shall mean Fleet Financial Group, Inc., a Rhode Island
corporation.
"IRA" shall mean an Individual Retirement Account.
"Items" shall mean (a) transfer of funds by wire or through the
Automated Clearing House, checks, drafts, negotiable orders of withdrawal
and items of the like kind which are drawn on or deposited and credited to
the Deposit Liabilities, and (b) payments, advances, disbursements, fees,
reimbursements and items of a like kind which are debited or credited to the
Loans.
"Landlord Consents" shall have the meaning set forth in Section
5.3(e).
"Lease Agreement" shall mean a lease entered into pursuant
Sections 2.1(b) or 12.1 upon such specific terms and conditions as
contemplated by such Sections and such other terms and conditions as are
customary and reasonable in a "triple net" lease of a bank branch facility.
"Lease Assignment" shall have the meaning set forth in Section
5.3(d).
"Loan Value" shall mean as of any date the unpaid principal
balance of the Loans, plus Accrued Interest thereon.
"Loans" shall mean:
(a) all loans (exclusive of any reserve for possible
loan losses) that are attributable to the Branches, including all
loans made in the ordinary course of business consistent with
Seller's credit standards between the date of this Agreement and the
Closing (the "Loans"); and
(b) pending applications to Seller attributable to the
Branches and unfunded commitments,
including but not limited to Letters of Credit, of Seller attributable
to the Branches,
subject to (i) any repayments or prepayments, in whole or in part, advances,
credits, debits, charges or other actions affecting the balance of any such
loans as of the date hereof from the date hereof through the close of business
on the Closing Date, and, in each case, including all documents executed or
delivered in connection with any Loan and any and all collateral held as
security therefor or in which a security interest, lien or mortgage has been
granted, and all rights in relation thereto, together with Accrued Interest
thereon, all as of the close of business on the Closing Date, and Seller's loan
files and records relating thereto.
"Marketable Title" shall have the meaning set forth in Section
5.3(a).
"Material Condition" applicable to Seller or Purchaser shall mean
with respect to any Regulatory Approval obtained by either Seller or
Purchaser, a condition or requirement, which does not relate to or arise from
the Community Reinvestment Act (or any amendment, modification or
successor thereto or similar federal or state statute thereto) or compliance
therewith or performance of its obligations thereunder, included in such
Regulatory Approval that, individually or in the aggregate, would (i) result
in a material adverse effect on either Seller or Purchaser, as applicable, or
(ii) reduce the benefits to Seller or Purchaser, as applicable, of the
transactions contemplated by the Agreement in so material a manner that it
would not have entered into this Agreement had such condition or
requirement been known as of the date hereof.
"Personalty" shall mean all of the personal property of Seller
located in the Branches consisting of the trade fixtures, shelving, furniture,
equipment, security systems, safe deposit boxes (exclusive of contents),
vaults and supplies, less any items consumed or disposed of, plus new items
acquired or obtained, in the ordinary course of the operation of the Branches
through the close of business on the Closing Date, but excluding the
Excluded Personalty.
"Purchase Price" shall have the meaning specified in Section 3.1.
"Purchaser" shall have the meaning specified in the Preamble.
"Purchaser's Account" shall have the meaning specified in Section
3.2.
"Quitclaim Deed" shall have the meaning set forth in Section
5.3(a).
"RCRA" shall mean the Resource Conservation and Recovery Act
of 1976, as amended, 42 U.S.C. 6921 et seq.
"Real Property" shall mean the parcels of real property and
improvements thereon for the Branches listed on Schedule 1.1(e).
"Real Property Purchase Price" shall mean, with respect to any
parcel or parcels of Real Property relating to a Branch, the purchase price
specified on Schedule 1.1(e).
"Regulatory Approvals" shall have the meaning specified in Section
6.1(c).
"Residential Mortgage Loan" shall mean a first mortgage residential
loan.
"Safe Deposit Agreements" shall mean the agreements relating to
safe deposit boxes located in the Branches.
"Seller" shall have the meaning specified in the Preamble.
"Tenant Leases" shall mean leases or subleases between Seller and
the tenants, if any, listed on Schedule 8.7.
"Transferred Employees" shall mean Branch Employees and
Branch Related Employees who accept offers of employment from Purchaser
contemplated by Section 11.5(a).
Section 1.2. Accounting Terms. All accounting terms not
otherwise defined herein shall have the respective meanings assigned to
them in accordance with 'Generally accepted accounting principles"
consistently applied as are in effect from time to time in the United States of
America.
ARTICLE II
PURCHASE AND SALE OF ASSETS AND
ASSIGNMENT AND ASSUMPTION OF LIABILITIES
Section 2.1. Purchase and Sale of Assets.
(a) Upon the Closing Date, Seller shall sell, convey,
assign, transfer and deliver to Purchaser, and Purchaser shall
purchase and accept from Seller, all of Seller's right, title and
interest in and to the following (collectively, the "Assets"):
(i) the Real Property;
(ii) the Personalty;
(iii) the Loans;
(iv) the ATMs;
(v) the Branch Leases, Tenant Leases and Safe
Deposit Agreements-,
(vi) all rights of Seller under any service or
similar contract in effect as of the Closing Date
relating to the operations of the Branches to the
extent such contracts are assignable;
(vii) the Cash; and
(viii) all prepaid expenses identified as an asset
on the Draft Closing Statement.
(b) Notwithstanding anything to the contrary contained in any
Section hereof, other than Section 12.1(d)(iii), if Seller shall be unable to
deliver Marketable Title to Real Property on which a Branch is located on
the Closing Date and Purchaser elects not to acquire such Real Property with
such exceptions as render title thereto not to be Marketable Title, Seller and
Purchaser shall lease such Real Property pursuant to a Lease Agreement for
the current market rental as agreed to by the parties hereto or, if no such
agreement is reached within thirty (30) days of the Closing Date, as
determined pursuant to an appraisal for such Branch obtained pursuant to
Section 14.4; provided that such Lease Agreement shall provide as follows:
(i) Seller may sell such Real Property to any person,
subject to such Lease Agreement, for any price;
(ii) Such Lease Agreement shall be for a term of one (1)
year, which shall automatically renew for a term of one (1) year at
the end of the tenn and each renewal term on the same terms and
conditions, except as to rental, which shall be changed to the then
current market rental, as agreed to by the parties hereto or, if no
such agreement as to such market rental shall have been reached
within thirty (30) days of the commencement of the applicable
renewal term, as determined pursuant to an appraisal for such
Branch obtained pursuant to Section 14.4; provided that such
Lease Agreement shall be terminable by Seller, or its successors
and assigns thereto, or Purchaser upon such number of days written
notice as shall equal the lesser of (A) the minimum number of days
permitted to close such Branch under applicable law, or (B) ninety
(90) days; and
(iii) In the event it is able to deliver Marketable Title,
Seller may by written notice given on or prior to the first
anniversary of the Closing Date require Purchaser to purchase such
Real Property, whether or not such Lease Agreement has been
terminated, for the applicable Real Property Purchase Price, or,
thereafter, so long as such Lease Agreement has not been
terminated prior to the giving of such notice, for the fair market
value as agreed to by the parties hereto or, if no such agreement is
reached within thirty (30) days of such notice, as determined by
appraisal in the manner described in Section 14.4.
(c) (i) In the event that Seller desires to sell Real Property
pursuant to Subsection 2.1(b)(i), to a bona fide purchaser during the one
year period following the Closing Date or proposes to terminate any Lease
Agreement under Section 2.1(b)(ii) at any time during the term thereof, it
shall provide Purchaser with written notice of such intent to sell ("Notice of
Proposed Transfer") or intent to terminate ("Notice of Termination").
During the ten (10) day consecutive period commencing on the date of the
Purchaser's receipt of the Notice of Proposed Transfer or the thirty (30) day
period after receipt of the Notice of Termination, the Purchaser shall have
the first option to purchase the Real Property, before the same may be sold
to any other person. The Purchaser must give written notice of its election
to purchase during such ten (10) or thirty (30) day period.
(ii) The purchase price to be paid by the Purchasers for
the Real Property shall be equal to the fair market value as
indicated by the internal appraisals prepared by Seller and
previously provided to Purchaser, in the case of a proposed sale, or
the fair market value as agreed to by the parties hereto in the case
of a proposed termination, or if no such agreement is reached
within thirty (30) days of such notice, as determined by appraisal
in the manner described in Section 14.4.
Section 2.2. Assumed Liabilities: No Other Liabilities Assumed.
(a) Upon the Closing Date, Purchaser agrees to assume,
pay, perform and discharge, and to indemnify and hold harmless
Seller against all of the following liabilities and obligations of
Seller arising from and after the close of business on the Closing
Date (collectively, the "Assumed Liabilities"):
(i) the Deposit Liabilities;
(ii) the Branch Leases and Tenant Leases;
(iii) the Safe Deposit Agreements;
(iv) the Loans;
(v) the IRA and Keogh Plan accounts included in the
Deposit Liabilities, as
contemplated by Section 2.5;
(vi) the Assumed Severance Obligations;
(vii) all obligations due under any service or similar
contract, in effect at the Closing, relating to the operations of the
Branches, to the extent such contracts are included in Section
2.1(a)(vi).
(b) Purchaser shall not assume or be bound by any duties,
responsibilities, obligations or liabilities of Seller of any kind or
nature, known, unknown, contingent or otherwise, other than the
Assumed Liabilities. Notwithstanding anything to the contrary
contained herein, Purchaser shall not assume, and Seller shall
remain obligated to pay, perform and discharge and shall indemnify
and hold harmless Purchaser against, any liabilities and obligations
of Seller arising prior to the close of business on the Closing Date.
Section 2.3. Liabilities Honored. It is Seller's intent that all Deposit
Liability transactions will be referred to Purchaser; provided however that,
if, on or after the Closing Date, Seller shall, inadvertently and in good faith
honor and pay any Deposit Liabilities which are presented to Seller for due
payment, Purchaser shall make a diligent effort to charge the applicable
Deposit Liability account to which the payment relates and, to the extent
funds are available in such Deposit Liability account, Purchaser shall
promptly disburse said moneys to Seller. In the event sufficient funds are not
available to cover such payment, Purchaser shall make diligent effort to
collect any shortfall of funds from the applicable account holder.
Section 2.4. Actions With Respect to IRA and Keogh Plan Deposit
Liabilities.
(a) Seller shall (i) resign as of the close of business on the
Closing Date as the trustee or custodian, as applicable, of each IRA
Deposit Liability and Keogh Plan Deposit Liability of which it is
the trustee or custodian, (ii) to the extent permitted by the
documentation governing each such IRA or Keogh Plan and
applicable law, appoint Purchaser as successor trustee or
custodian, as applicable, of each such IRA or Keogh Plan, and
Purchaser agrees to accept each such trusteeship or custodianship
and assume all fiduciary obligations with respect thereto as of the
close of business on the Closing Date, and (iii) deliver to the IRA
grantor or Keogh Plan named fiduciary of each such IRA or Keogh
Plan such notice of the foregoing as is required by the
documentation governing each such IRA or Keogh Plan or
applicable law. If, pursuant to the terms of the documentation
governing any such IRA or Keogh Plan or applicable law, (X)
Seller is not permitted to name Purchaser as successor trustee or
custodian or the IRA grantor or Keogh Plan named fiduciary
objects in writing to such assignment, or is entitled to, and does, in
fact, name a successor trustee or custodian other than Purchaser, or
(Y) such IRA or Keogh Plan includes assets, which are not deposit
liabilities of Seller and are not being transferred to Purchaser, and
the assumption of the deposit liabilities of Seller included in such
IRA or Keogh Plan would result in a loss of qualification of such
IRA or Keogh Plan under the Internal Revenue Code or applicable
Internal Revenue Service regulations, all deposits liabilities of
Seller held under such IRA or Keogh Plan shall be excluded from
the Deposit Liabilities (such excluded deposits liabilities being
herein called the "Excluded IRA/Keogh Deposits").
(b) The Deposit Liabilities include certain IRAs of
account owners who have attained the age of 70.5 years with
respect to each of which the account owner is required under
applicable law to take a minimum distribution by December 31st
of each year after the account owner attains the age of 70.5 years.
Effective as of the close of business on the Closing Date, Purchaser
hereby assumes the obligation to make such minimum distributions
and agrees to pay each such minimum distribution required to be
paid under applicable law with respect to such IRAs by December
31st of the calendar year in which the Closing occurs and, in
consideration thereof on the Closing Date, Seller shall transfer to
Purchaser an amount equal to such minimum distributions required
to be paid with respect to such IRAs by such December 31`st by
Purchaser as Deposit Liabilities.
Section 2.5. Transitional Matters.
(a) Payment of Assumed Deposit Liabilities. After the
Closing Date, Purchaser shall: (i) pay all properly drawn and presented
checks, negotiable orders of withdrawal, drafts, debits, and other withdrawal
orders presented to Purchaser by Deposit Liability account customers,
whether drawn on checks, negotiable orders of withdrawal, drafts, or other
withdrawal order forms provided by Seller or by Purchaser; (ii) in all other
respects discharge, in the usual course of the banking business, the duties
and obligations of Seller with respect to the balances due and owing to the
Deposit Liability account customers; provided, however, that Purchaser's
obligations pursuant to this paragraph to honor checks, negotiable orders of
withdrawal drafts, and other withdrawal orders on forms provided by Seller
and carrying its imprint (including its name and transit routing number) shall
not apply to any such check, negotiable order of withdrawal draft, or other
withdrawal order presented to Purchaser more than one hundred and twenty
(120) days following the Closing Date.
(b) Customer Demand for Termination of Assumed Deposit
Liabilities. Purchaser hereby acknowledges that if, after the Closing Date,
any Deposit Liability account customers, instead of accepting the obligation
of Purchaser to pay the Deposit Liabilities (including accrued interest
thereon) assumed hereunder, shall demand payment from Seller for all or any
part of any such Deposit Liabilities (including accrued interest thereon),
Seller shall not be liable or responsible for making such payment. If any
such depositors draw a check, draft, or withdrawal order against the Deposit
Liabilities which is presented or delivered to Seller not later than ninety (90)
days after the Closing Date, Seller shall use its reasonable efforts to batch
all such checks, drafts, or withdrawal orders and to deliver the same to
Purchaser at Purchaser's cost. Purchaser acknowledges that any delay,
failure, or inability on its part to comply with the obligations imposed upon
it as a depository institution under applicable federal or state law, with
regard to such checks, drafts, or withdrawal orders shall not result in any
liability or obligation of Seller and shall not affect any of the rights of
Seller under this Agreement. In the event Seller, in its sole discretion,
should pay any such check, draft, or withdrawal order, Purchaser shall immed-
iately upon demand by Seller, reimburse Seller for such payment or charge.
Seller shall not be deemed to have made any representations or warranties to
Purchaser with respect to any such checks, drafts, or withdrawal orders and any
such representations or warranties implied by law are hereby disclaimed and are
the responsibility of Purchaser, except that Seller shall be chargeable with
the warranties and representations implied by law with respect to any such
check, draft, or withdrawal order which may be paid by Seller over the
counter.
(c) Delivery of Purchaser's Check Forms. Purchaser shall, on
or before the Closing Date, at its sole cost and expense, notify all such
customers by letter, in a form reasonably acceptable to Seller, of Purchaser's
assumption of the Deposit Liabilities (which shall include a notification to
those Deposit Liability account customers whose accounts are then covered
by any type of overdraft protection offered by Seller, that from and after the
Closing Date all such overdraft protection from Seller shall terminate) and
furnish each Deposit Liability account customer with checks using the forms
of Purchaser and with instructions to the customer to utilize such checks on
Purchaser's forms on and after the Closing Date and thereafter to destroy any
unused checks on Seller's forms; such notice and such delivery of checks by
Purchaser shall be by first class U.S. mail.
(d) Uncollected Checks Returned to Seller. Purchaser shall
promptly pay to Seller an amount equivalent to the amount of any checks,
negotiable orders of withdrawal drafts, or any other withdrawal orders (net
of the applicable Deposit Premium paid by Purchaser with respect to the
Deposit Liabilities represented by any such instrument) credited as of the
Closing Date to any Deposit Liability accounts which are returned
uncollected to Seller after the Closing Date and which shall include an
amount equivalent to holds placed upon such Deposit Liability accounts for
items cashed by Seller (net of the applicable Deposit Premium paid by
Purchaser with respect to the Deposit Liabilities represented by any such
instrument), as of the Closing Date which items are subsequently
dishonored; provided, however, that if Seller shall have failed to make or
properly reflect in the information provided to Purchaser any provisional
credit or hold on any such Deposit Liability accounts in respect of
uncollected funds represented by any such item, Purchaser's obligations
under this subsection (d) in respect of such item shall be limited to the
amount of collected funds in such Deposit Liability accounts.
(e) Default on Loan Payments to Seller. If the balance due on
any Loan which constitutes an Asset has been reduced by Seller as a result
of a payment by check or draft received prior to the Closing Date, which
item is returned to Seller after the Closing Date, the asset value represented
by such Loan shall be correspondingly increased and an amount in cash
equal to such increase shall be promptly paid by Purchaser to Seller.
(f) Notices to Obligors on Loans. Subject to the provisions
of Sections 12.4 and 15.2 herein, Purchaser shall, prior to the Closing Date,
prepare and transmit, at Purchaser's sole cost and expense, to each obligor
on each Loan which constitutes an Asset, a notice to the effect that the Loan
has been transferred and directing that payments be made to Purchaser at any
address of Purchaser specified by Purchaser, with Purchaser's name as payee
on any checks or other instruments used to make such payments, and, with
respect to all such Loans on which payment notices or coupon books have
been issued, to issue new notices or coupon books reflecting the name and
address of Purchaser as the person to whom and place at which payments are
to be made. To the extent Seller shall be solely obligated with respect
thereto and Purchaser's notice pursuant to the prior sentence shall be legally
insufficient, Seller agrees to provide all Loan customers with all required
notices of the assignment or transfer of the Loans.
(g) Data Processing. All tasks and obligations concerning the
provision of data processing services to or for the Branches after the Closing
Date, other than those specifically set forth in, and to the extent assumed by
Seller pursuant to Section 2.5(m) hereof shall be performed solely and
exclusively by, the Purchaser. Purchaser acknowledges its assumption of all
such tasks and obligations, and further acknowledges that any delay, failure,
or inability on its part to perform such tasks or to comply with such
obligations, except as and to the extent attributable to any delay, failure, or
inability on the part of Seller in performing those tasks or complying with
those obligations specifically set forth in, and to the extent assumed by Seller
pursuant to Section 2.5(m) hereof shall not result in any liability or
obligation of Seller and shall not affect any of the rights of Seller under this
Agreement.
(h) New Telephone Numbers. Purchaser shall, at least ten
(10) days prior to the Closing Date, obtain new telephone numbers for the
Branches in Purchaser's name.
(i) New ATM/Debit Cards. Purchaser shall, prior to the
Closing, furnish ATM/Debit cards to Deposit Liability account customers to
replace Seller's ATM/Debit cards. Purchaser shall notify affected customers
to destroy the old ATM/Debit cards and shall notify customers of standard
withdrawal limits for the weekend immediately following the Closing Date.
(j) Security for Public Deposits. If public deposits constitute
any of the Deposit Liabilities, Purchaser shall, not later than midnight on the
Business Day immediately following the Closing Date, supply suitable
government-backed securities as security for any deposits of Governmental
units included among the Deposit Liabilities for which Seller had provided
similar security.
(k) Branch Closings. If Purchaser intends to close any
Branches after the Closing Date, Purchaser shall be entirely and solely
responsible for the delivery of any required notices to any regulatory
agencies or customers. Purchaser shall not be permitted to deliver or
otherwise provide any notices to any regulatory agencies or customers
regarding the proposed closing of any Branch prior to the receipt of all
Regulatory Approvals. Notwithstanding this paragraph (k), the Closing will
occur as set forth in Article V of the Agreement.
(l) Notices to Customers. Not more than thirty-five (35) days
prior to the anticipated Closing Date, and subject to Seller's approval, and
at its sole cost a nd expense, Purchaser will notify Deposit Liability account
customers by letter in a form reasonably acceptable to Seller of the pending
transaction utilizing Seller's files to create the mailing.
(m) Seller's Responsibility Regarding Data Processing.
Within four (4) weeks following the date of this Agreement, Seller shall
provide Purchaser with applicable product functions maintained at the
Branches and to be transferred to Purchaser hereunder (such Loan and
Deposit Liability accounts and safety deposit business, if applicable,
hereinafter called the "Accounts") and specifications relating to the data
processing support required for the Accounts. No later than six (6) weeks
after the date of this Agreement, Seller shall provide to Purchaser file
formats relating to the Accounts. No later than eight (8) weeks after the date
of this Agreement, Seller shall provide to Purchaser test tapes relating to the
Accounts formatted as defined by the file formats previously delivered. The
data files defined by the file formats shall be extracts of current master files
as they exist on the Seller's system. The number of files to be produced by
Seller shall be two (2) versions of test file tapes (frequency not to be less
than two (2) week intervals) and one (1) version of the
production/divestiture file tapes.
As early as practicable after the Closing Date, Seller shall produce
the production/ divestiture file tapes and a trial balance of records of account
containing the pertinent data and descriptive information relating to the
Accounts and provide such data and information to Purchaser provided,
however, that such data and information shall not include either detailed
transaction history or overdraft protection information. Except as otherwise
provided above, Seller shall bear all normal and reasonable costs and
expenses relating to the performance of its obligations pursuant to this
paragraph. Seller shall have no responsibility for the difference, if any,
between its methods of accrual of interest or other amounts payable with
respect to Accounts and Purchaser's methods of accrual of interest and other
amounts payable with respect to deposit, loan, and safety deposit accounts
and business.
(n) Installation of Equipment by Purchaser. At least twenty-five (25)
days prior to the Closing Date, Seller shall cooperate with and
permit Purchaser, at Purchaser's option and sole cost and expense, to make
provision for the installation of teller equipment in the Branches; provided,
however, that Purchaser shall arrange for the installation of such equipment
at such times and in a manner that does not significantly interfere with the
normal business activities and operation of the Branches.
(o) Statements to Customers. At Seller's sole cost and
expense, Seller shall issue, as of the Closing Date, standard account
statements for each statement savings, NOW, and checking account included
in the Deposit Liabilities. Seller may at its option elect to mail such account
statements on its next regularly scheduled mail date. Passbook transaction
information that has not been posted to a passbook as of the Closing Date
will be passed by Seller to Purchaser via paper report listings or magnetic
tape. Purchaser shall be responsible for posting on passbooks the
transactions reflected on such paper report listings or magnetic tape for
passbook accounts.
(p) Payment of Accrued Interest. Seller will credit the
Deposit Liability accounts with interest earned on such Deposit Liability
accounts through the Closing Date. Seller will include in its calculations on
the final closing statement interest earned on the Deposit Liability accounts
through the Closing Date and such amount shall be included in the
calculation of the Adjusted Payment Amount (as hereinafter defined).
(q) Deactivation of ATMs and ATM/Debit Cards. Seller will
deactivate all ATM/Debit cards issued with respect to all Deposit Liability
accounts and will electronically block access of those cards to the Deposit
Liability accounts, and will deactivate the ATMs not later than 3:00 p.m. on
the Closing Date. Point of sale transactions will be settled between
Purchaser and Seller for a period of forty-five (45) days after the Closing
Date.
(r) Cooperation in Transaction. Purchaser and Seller shall
use their best efforts to cooperate with each other in assuring an orderly
transition of ownership of the Assets and responsibility for the Deposit
Liabilities for a period of sixty (60) days following the Closing Date, or such
longer period as may be specified in this Agreement with respect to specific
actions.
(s) Automated Clearing House System. After the Closing
Date, Purchaser will make every reasonable effort to notify all originators of
Automated Clearing House ("ACH") entries affecting Deposit Liability
accounts or Loans which constitute Assets of the terms and effect of the
transaction. For a period not to exceed ninety (90) days after the Closing
Date, on each business day, Seller will deliver to Purchaser each previous
business day's transactions via an ACH format tape or paper listing of all
ACH entries received by Seller for debit or credit to such a Loan or Deposit
Liability accounts, accompanied by either a check, or deposit advice to a
settlement account with the Seller, for the amount by which such credits
exceed debits or an invoice, or charge advice to a settlement account with the
Seller, for the amount by which such debits exceed credits, which invoice
shall be paid by Purchaser on the same Business Day if received before
12:00 noon local time or on the next Business Day if received after 12:00
noon local time.
(t) Loss Due to Late Posting. In the event of loss due to the
late posting and late return to the bank of first deposit (as defined in
Regulation CC) on closed Deposit Liability accounts, Purchaser and Seller
agree to share any such loss equally between them, provided that, Purchaser
and Seller processed said items with due care.
(u) Deposit Liability Accounts Overdrafts. Deposit Liability
account overdrafts approved with respect to ledger dates on or after the
Closing Date will be the responsibility and risk of Purchaser. Deposit
Liability account overdrafts approved with respect to ledger dates more than
five (5) days prior to the Closing Date, inclusive, will initially be the
responsibility and risk of Purchaser; provided, however, that Purchaser shall
have the right to retransfer any such overdrafts (other than overdrafts of
customers who are specifically identified in writing by Purchaser to Seller
not less than five (5) days prior to the Closing Date) back to Seller for its
responsibility and risk within five (5) days following the Closing Date, and
Seller will repurchase all rights in respect of such overdrafts from Purchaser
for the amount of the overdrafts outstanding at the time they retransferred
back to Seller (net of any Deposit Premium paid by Purchaser to Seller
attributable to such overdrafts), and provided further, that Purchaser has
closed all Deposit Liability accounts on which such overdrafts exist not later
than the date of their retransfer and has notified such Deposit Liability
customer if required by law.
(v) Signage. During the seven (7) day period immediately
preceding the Closing Date, Seller shall cooperate with any reasonable
request of Purchaser directed to accomplishing the installation of signage of
Purchaser's choosing at the Branches prior to the Closing Date; provided,
however, that all such installations shall be at the sole cost and expense of
Purchaser, that such installation shall be performed in such a manner that
does not significantly interfere with the normal business activities and
operations of the Branches and that all such installed signage shall be
covered in such a way as to be unreadable at all times prior to the Closing
Date. Immediately following the Closing Date, Seller shall, at its sole cost
and expense, commence activities directed to accomplishing the removal of
all of Seller's existing signage at the Branches and will diligently pursue such
activities in good faith so that such removal may be effected as promptly as
practicable following the Closing.
(w) Interest Reporting and Withholding. Unless otherwise
agreed to by the parties, Seller will report to applicable taxing authorities
and holders of Deposit Liability accounts transferred on the Closing Date,
with respect to all periods through to the Closing Date, all interest credit to,
withheld from and any early withdrawal penalties imposed upon the Deposit
Liability accounts and Purchaser will report to the applicable taxing
authorities and holders of Deposit Liability accounts, with respect to all
periods commencing after the Closing Date all such interest credited to,
withheld from and early withdrawal penalties imposed upon such Deposit
Liability accounts. Seller will continue backup withholding and remittance
through the Closing Date. Any amounts required by any governmental
agencies to be withheld from any of the Deposit Liability accounts through
the Closing Date will be withheld by Seller in accordance with applicable
law or appropriate notice from any governmental agency and will be remitted
by Seller to the appropriate agency on or prior to the applicable due date.
Any such withholding required to be made subsequent to the Closing Date
shall be withheld by Purchaser in accordance with applicable law or the
appropriate notice from any governmental agency and will be remitted by
Purchaser to the appropriate agency on or prior to the applicable due date.
Unless otherwise agreed by the parties, Seller shall be responsible
for delivering to payees all IRS notices with respect to information reporting
and tax identification numbers required to be delivered for all periods
through the Closing Date with respect to the Deposit Liability accounts, and
Purchaser shall be responsible for delivery to payees all such notices
required to be delivered for all periods following the Closing Date with
respect to the Deposit Liability accounts. Purchaser and Seller shall, prior
to the Closing Date, consult (and Seller shall take such actions as are
necessary) to permit Purchaser timely to deliver notices required to be
delivered after the Closing Date.
Unless otherwise agreed by the parties, Seller will make all
required reports to applicable tax authorities and to obligors on Loans
purchased on the Closing Date, with respect to all periods through the
Closing Date, concerning all interest and points received by the Seller.
Purchaser will make all required reports to applicable tax authorities and to
obligors on Loans purchased on the Closing Date, with respect to all periods
beginning the date after the Closing Date, concerning all such interest and
points received. Seller shall bear the responsibility and liability for and pay
all penalties associated with missing taxpayer identification numbers and
U.S. Treasury reclamations, and any failures to comply with IRS regulations
that occurred prior to the Closing Date.
(x) Settlement Procedures. Seller shall establish such other
settlement procedures for the forwarding to Purchaser of Items for the
Deposit Liabilities and Loans assumed and purchased by Purchaser that
come into Seller's possession on or after the Closing Date. To the extent
that Seller bears any of the cost for couriers to deliver Items outside of the
state (or states) in which the Branches are located. Purchaser will reimburse
Seller for such cost. Seller agrees to maintain such settlement procedures for
at least thirty (30) days following the Closing Date. Any government checks
shall continue to be processed under the settlement procedures for a period
of three (3) months from the Closing Date.
ARTICLE III
PURCHASE PRICE; PAYMENT;
SETTLEMENT; AND TAX ALLOCATION
Section 3.1. Purchase Price. The "Purchase Price" for the Assets
shall be an amount computed as follows:
(a) an amount equal to 8.5% of the average aggregate
daily balance (including Accrued Interest) of Deposit Liabilities for
the period commencing thirty (30) days prior to the third business
day prior to the Closing Date and ending on such third business day
prior to the Closing Date; PLUS
(b) the aggregate Real Property Purchase Prices for all of
the Real Property; PLUS
(c) the net book value of the Personalty as reflected on the
books of Seller, as of the close of business on the Closing Date;
PLUS
(d) the Loan Value of the Loans as of the close of business
on the Closing Date; PLUS
(e) the net book value of the ATMs as reflected on the
books of Seller, list of such ATMs is provided at Schedule 3. 1;
PLUS
(f) the aggregate amount of the cash; PLUS
(g) the aggregate amount of the prepaid expenses.
Section 3.2. Payment at Claim. On the Closing Date, Seller shall
pay to Purchaser by wire transfer of immediately available Federal Funds to
such account as Purchaser shall advise Seller at the Closing ("Purchaser's
Account") the amount by which the aggregate balance (including Accrued
Interest) of the Deposit Liabilities as of the close of business on the third
business day preceding the Closing Date exceeds the Estimated Purchase
Price (the "Estimated Payment Amount").
Section 3.3. Adjustment of Estimated Payment Amount.
(a) On or before 12:00 noon on the tenth business day
following the Closing Date, Seller shall deliver to Purchaser a
statement setting forth the amount of the items of proration, as
provided in Section 3.5, Deposit Liabilities and cash and cash
equivalents held in the Branches and the Purchase Price as
determined in accordance with the provisions of this Agreement as
of the close of business on the Closing Date and shall make
available such work papers, schedules and other supporting data as
may be reasonably requested by Purchaser to enable it to verify
such determination. Such statement shall also set forth the amount
(the "Adjusted Payment Amount") by which the amount of such
Deposit Liabilities, exceeded the aggregate of the Purchase Price
and such cash and cash equivalents calculated as of the close of
business on the Closing Date.
(b) On or before 12:00 noon on the fifteenth business day
after the Closing Date, Seller shall pay to Purchaser by wire
transfer of immediately available Federal Funds to Purchaser's
Account an amount equal to the excess of the Adjusted Payment
Amount over the Estimated Payment Amount, plus interest on such
excess amount from the Closing Date to but excluding the payment
date, at the Federal Funds Rate or, if the Estimated Payment
Amount exceeds the Adjusted Payment Amount, Purchaser shall
pay to the Seller by wire transfer of immediately available Federal
Funds to such account as Seller shall advise Purchaser an amount
equal to such excess, plus interest from the Closing Date to but
excluding the payment date.
Section 3.4. Tax Allocation of Purchase Price.
(a) Purchaser and Seller agree that, upon final determination of the
Purchase Price, the Purchase Price shall be allocated to the Assets in
accordance with Schedule 3.4 attached hereto.
(b) Purchaser and Seller shall report the transaction contemplated
by this Agreement (including income tax reporting requirements imposed
pursuant to Section 1060 of the Internal Revenue Code of 1986, as
amended) in accordance with the allocation specified in Schedule 3.4. In the
event any party hereto receives notice of an audit in respect of the allocation
of the Purchase Price specified herein, such party shall immediately notify
the other party in writing as to the date and subject of such audit.
(c) If any federal, state or local tax return report or filing by
Purchaser or Seller relating to the transactions contemplated hereby is
challenged by the taxing authority with which such return, report or filing
was filed on the basis of the allocation set forth in Schedule 3.4, as finally
adjusted, the filing party shall assert and maintain in good faith the validity
and correctness of such allocation during the audit thereof until the issuance
by the taxing authority of a "30 Day Letter", or a determination of liability
equivalent thereto, to such party, whereupon such party shall, in its sole
discretion, have the right to pay, compromise, settle, dispute or otherwise
deal with its alleged tax liability. If such a tax return, report or filing is
challenged as herein described, the party filing such return, report or filing
shall keep the other party apprised of its decisions and the current status and
progress of all administrative and judicial proceedings, if any, that are
undertaken at the election of such party.
(d) If either party (including permitted successors and assigns
thereof) to this Agreement defaults under this Section 3.4, it shall pay as
damages to the other party, so long as such other party is not in default under
this Section 3.4, an amount which, after reduction for all taxes which would
be incurred (calculated at the highest marginal rate applicable in the relevant
jurisdictions) as a result of receiving said amount, is equal to the result (but
not less than zero) of subtracting the amount in (ii) below from the amount
in (i) below:
(i) The total amount of income or gains taxes (including
interest and penalties calculated at the highest marginal rate
applicable in the relevant jurisdictions) to all jurisdictions imposing
such taxes upon the nondefaulting party with respect to the
transactions contemplated hereby; and
(ii) The total amount of income or gains taxes which
would have been incurred (including interest and penalties
calculated at the highest marginal rate applicable in the relevant
jurisdictions) to all jurisdictions imposing such taxes upon the
nondefaulting party with respect to the transactions contemplated
hereby, if such taxing jurisdictions had accepted the allocations
specified in Schedule 3.4.
Section 3.5. Proration; Other Closing Date Adjustments.
(a) Except as otherwise specifically provided in this Agreement, it
is the intention of the parties that Seller will operate the Branches for its
own account until the close of business on the Closing Date, and that Purchaser
shall operate the Branches, hold the Loans and assume the Deposit
Liabilities and any other liabilities of Seller assumed by Purchaser pursuant
hereto for its own account from and after the Closing Date. Thus, except as
otherwise specifically provided in this Agreement, items of income and
expense, shall be prorated as of the close of business on the Closing Date,
and settled between Seller, and Purchaser on the Closing Date, whether or
not such adjustment would normally be made as of such time. Items of
proration will be handled pursuant to Section 3.3 as an adjustment to the
Purchase Price unless other-wise agreed by the parties hereto.
(b) For purposes of this Agreement, items of proration and other
adjustments shall include, without limitation, (i) amounts prepaid and unused
for safe deposit rentals; (ii) rental payments under Tenant Leases; (iii) sales
and use taxes (other than such sales and use taxes that arise as a result of the
transactions contemplated by this Agreement); (iv) cash and cash equivalents
on hand at the Branches; (v) foreign currency on hand at the Branches, and
(vi) other prepaid items, as of the close of business on the Closing Date.
ARTICLE IV
TAXES
Section 4.1. Sales and Use Taxes. Except as otherwise provided
in this Agreement, any sales, use or similar taxes which are payable or arise
as a result of this Agreement or the consummation of the transactions
contemplated hereby shall be paid by Purchaser on the Closing Date.
Purchaser shall indemnify and hold harmless Seller from and against any
such taxes including those arising upon subsequent audit by any taxing
authority, including interest and penalties. Purchaser and Seller will
cooperate in the preparation of any filings or returns. Notwithstanding the
above, Purchaser shall not be liable for any sales or use tax or similar tax
deficiencies, including interest and penalties, incurred in connection with
transactions of Seller prior to the Closing Date.
ARTICLE V
CLOSING
Section 5.1. Closing Date.
(a) The "Closing Date" shall be a Friday, which is a
business day, not later than seven (7) days after the Final Approval
Date.
(b) It is anticipated that the Closing Date shall coincide
with the conversion of Seller's account information as to the
Deposit Liabilities and the Loans onto Purchaser's data processing
system. The parties shall work diligently to be able to complete
conversion on the anticipated Closing Date. However,
notwithstanding the foregoing, in the event of an extraordinary data
processing occurrence on or prior to the Closing Date which
prevents conversion, then at Seller's option (i) the Closing Date
may be postponed, or (ii) the Closing shall take place and Seller
shall assist Purchaser in servicing the Deposit Liabilities and the
Loans upon such terms and for such fees as are customarily
charged in such arrangements including any out-of-pocket costs
incurred by seller or its Affiliates as a result of it providing such
service.
Section 5.2. Place of Closing. The "Closing" shall take place at
10:00 a.m. on the Closing Date but shall be effective as of the close of
business on the Closing Date in the offices of Edwards & Angell, 101
Federal Street, Boston, Massachusetts 02110.
Section 5.3. Seller Deliveries. At the Closing, Seller shall deliver
to Purchaser:
(a) Quitclaim deeds for the Real Property in the form of
Schedule 5.3(a) attached hereto, pursuant to which the Real
Property shall be transferred to Purchaser "AS IS", "WHERE IS"
and with all faults (the "Quitclaim Deeds"); provided that, with
respect to each parcel of Real Property, Seller shall only be
required to convey to Purchaser good and marketable fee simple
title to the Real Property, which is in a condition that permits a
reputable title insurance company of national standing and typically
accepted by reputable commercial lenders to issue an owner's title
insurance policy in at least the amount of the Real Property
Purchase Price applicable thereto, subject only to such exceptions
as would not render title unmarketable and other customary
exceptions to title not affecting insurability of title ("Marketable
Title");
(b) A bill of sale for the Personalty in the form of
Schedule 5.3(b) attached hereto, pursuant to which the Personalty
shall be transferred to Purchaser "AS IS", "WHERE IS" and with
all faults;
(c) An assignment and assumption agreement with
respect to the Assumed Liabilities in the form of Schedule 5.3(c)
attached hereto (the "Assignment and Assumption Agreement");
(d) Lease assignment and assumption agreements with
respect to each of the Branch Leases in the form of Schedule 5.3(d)
attached hereto (the "Lease Assignments");
(e) Subject to the provisions of Section 10.3, such
consents of landlords under the Branch Leases, as shall be required
pursuant to the terms of such Branch Leases, to the assignment of
the Branch Leases to Purchaser in the form of Schedule 5.3(e)
attached hereto (the "Landlord Consents");
(f) An Officer's Certificate in the form of Schedule 5.3(f)
attached hereto;
(g) An opinion of Edwards & Angell, counsel to Seller,
dated the Closing Date in form and substance reasonably
satisfactory to Purchaser to the effect that: (i) Seller is a state bank,
duly organized, validly existing and in good standing under the
laws of the state of New York, with full corporate power and
authority to enter into and perform its obligations under this
Agreement; and (ii) this Agreement has been duly and validly
authorized, executed and delivered by Seller and (assuming due
authorization, execution and delivery by Purchaser) is a legal, valid
and binding obligation of Seller enforceable against Seller in
accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws
of general applicability relating to or affecting creditors' rights, or
the limiting effect of rules of law governing specific performance,
equitable relief and other equitable remedies or the waiver of rights
or remedies;
(h) The Draft Closing Statement;
(i) Seller's resignation as trustee or custodian, as
applicable, with respect to each IRA or Keogh Plan account
included in the Deposit Liabilities and designation of Purchaser as
successor trustee or custodian with respect thereto, as
contemplated by Section 2.5; and
(j) Such other documents necessary to effect the
transactions contemplated hereby as Purchaser shall reasonably
request.
Section 5.4. Purchaser Deliveries. At the Closing, Purchaser shall
deliver to Seller:
(a) The Assignment and Assumption Agreement;
(b) Purchaser's acceptance of its appointment as
successor trustee or custodian, as applicable, of the IRA and Keogh
Plan accounts included in the Deposit Liabilities and assumption
of the fiduciary obligations of the trustee or custodian with respect
thereto, as contemplated by Section 2.5;
(c) The Lease Assignments and, as contemplated by
Section 11.2, such other instruments and documents as any
landlord under a Branch Lease may reasonably require as necessary
or desirable for providing for the assumption by Purchaser of a
Branch Lease, each such instrument and document in the form and
substance reasonably satisfactory to the parties and dated as of the
Closing Date;
(d) An Officer's Certificate in the form of Schedule 5.4(d)
attached hereto;
(e) An opinion of Purchaser's counsel, dated the Closing
Date, in the form and substance reasonably satisfactory to Seller,
to the effect that (i) Purchaser is a national bank, duly organized,
validly existing and in good standing under the laws of the United
States, with full corporate power and authority to enter into and
perform its obligations under this Agreement; and (ii) this
Agreement has been duly and validly authorized, executed and
delivered by Purchaser and (assuming due authorization, execution
and delivery by Seller) is a legal, valid and binding obligation of
Purchaser enforceable against Purchaser in accordance with its
terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws of general
applicability relating to or affecting creditors' rights, or the limiting
effect of rules of law governing specific performance, equitable
relief and other equitable remedies or the waiver of rights or
remedies;
(f) The Draft Closing Statement; and
(g) Such other documents necessary to effect the
transactions contemplated hereby as Seller shall reasonably
request.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF SELLER
Section 6.1. Conditions to Obligations of Seller. The obligations
of Seller under this Agreement are subject to the satisfaction (or, if
applicable, waiver in the sole discretion of Seller, except as to the condition
described in (c)), as of the Closing, of each of the following conditions:
(a) All of the covenants required by this Agreement to be
complied with and performed by Purchaser on or before the
Closing Date shall have been duly complied with and performed in
all material respects;
(b) The representations and warranties made by
Purchaser herein or in any certificate or other document delivered
pursuant to the provisions hereof or thereof or in connection with
the transactions contemplated hereby or thereby shall be correct in
all material respects, on and as of the Closing Date, with the same
force and effect as though such representations and warranties had
been made on the Closing Date;
(c) Approvals in writing of all relevant regulatory
agencies shall have been obtained by Purchaser, and approvals in
writing of all relevant regulatory agencies, where applicable, shall
have been obtained by Seller, and all necessary conditions,
including any additional governmental approvals, permissions or
consents, if any, including the giving of all legally required notices
and the expiration of all legally required waiting or protest periods,
of or relating to licenses, approvals and consents shall have been
met (all of such approvals, conditions, permissions, licenses and
consents being herein collectively called the "Regulatory
Approvals"'), and such Regulatory Approvals shall include no
Material Condition applicable to Seller,
(d) Seller shall have received the items to be delivered by
Purchaser pursuant to Section 5.4; and
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF PURCHASER
Section 7.1. Conditions to Obligations of Purchaser. The
obligations of Purchaser under this Agreement are subject to the satisfaction
(or, if applicable, waiver in the sole discretion of Purchaser, except as to the
condition described in (c)) as of the Closing, of each of the following
conditions:
(a) All of the covenants required by this Agreement to be
complied with and performed by Seller on or before the Closing
Date shall have been duly complied with and performed in all
material respects;
(b) All of the representations and warranties made by
Seller herein or in any certificate or other document delivered
pursuant to the provisions hereof or thereof or in connection with
the transactions contemplated hereby or thereby shall be correct in
all material respects, on and as of the Closing Date, with the same
force and effect as though such representations and warranties had
been made on the Closing Date;
(c) The Regulatory Approvals, which shall include no
Material Condition applicable to Purchaser, shall have been
obtained;
(d) The Estimated Payment Amount shall have been paid
by Seller to Purchaser, as contemplated by Section 3.2; and
(e) Purchaser shall have received the items to be
delivered by Seller pursuant to Section 5.3.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser as follows:
Section 8.1. Organization. Seller is a bank duly organized, validly
existing and in good standing under the laws of the state of New York.
Section 8.2. Authority. Seller has the power and authority to enter
into and perform this Agreement. This Agreement and the execution,
delivery and performance hereof have been duly authorized and approved by
the Board of Directors of Seller, and this Agreement constitutes a valid and
binding obligation of Seller, enforceable against Seller in accordance with
its terms, except as enforcement may be limited by federal and state
regulators of Seller or by bankruptcy, insolvency, reorganization,
moratorium or other laws of general applicability relating to or affecting
creditors' rights, or the limiting effect of rules of law governing specific
performance, equitable relief and other equitable remedies or the waiver of
rights or remedies.
Section 8.3. Non-Contravention. The execution and delivery of this
Agreement by Seller do not and, subject to the receipt of all required
approvals and consents, the consummation of the transactions contemplated
by this Agreement will not constitute (a) a breach or violation of or default
under any law, rule, regulation, judgment, order, Governmental permit or
license, agreement, indenture, or instrument of Seller or to which Seller is
subject, which breach, violation, or default would have a material and
adverse effect on Seller or the business or properties of the Branches; or (b)
a breach or violation of or a default under the charter or Bylaws of Seller or
any material contract or other instrument to which Seller is a party or by
which Seller is bound.
Section 8.4. Compliance with Law. The business and operations
of the Branches have been and are being conducted in accordance with all
applicable laws, rules and regulations of all authorities (other than
Environmental Laws or the ADA), the penalty or liability for the violation of
which, if imposed or asserted, could have a material adverse effect on the
business, operations, revenues, financial condition, property or business
properties of the Branches.
Section 8.5. Legal Proceedings. There are no actions, suits, or
proceedings, whether civil, criminal or administrative (including local
zoning, condemnation, eminent domain or similar proceedings), pending or,
to Seller's best knowledge, threatened against or affecting Seller which could
have a material adverse effect on the Branches, Assets, Loans, Deposit
Liabilities, or consummation of the transactions contemplated hereby.
Section 8.6. Personalty. Seller has good and marketable title to the
Personalty, free and clear of all liens and encumbrances.
Section 8.7. Tenants; Branch Leases
(a) Except for the tenants listed on Schedule 8.7 attached
hereto, there are no tenants or other occupants of the Real Property.
(b) Except as set forth in Schedule 8.7, each of the Branch
Leases is in full force and effect, and Seller is not in default under
any of its obligations thereunder.
Section 8.8. Loans
(a) Each of the Loans is based upon a valid, binding and
enforceable note to which Seller has good and marketable title, free
and clear of all liens and encumbrances; and
(b) The collateral for each of the Loans that is secured is
(i) the collateral described in the applicable security agreement,
mortgage, pledge, collateral assignment or other security
document, and (h) is subject to a valid, enforceable and perfected
lien.
Section 8.9. Limitations on Representations and Warranties.
Notwithstanding anything to the contrary contained herein:
(a) Seller makes no warranties as to the physical condition
of the Branches or Personalty, all of which are being sold "AS IS",
"WHERE IS" and with all faults at the Closing Date.
(b) Seller makes no representations or warranties to
Purchaser as to whether, or the length of time during which, any
accounts relating to Depository Liabilities will be maintained by
the depositors at the Branches after the Closing Date.
ARTICLE IX
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller as follows:
Section 9.1. Organization. Purchaser is a national bank duly
organized, validly existing and in good standing under the laws of the state
of United States.
Section 9.2. Authority. Purchaser has the corporate power and
authority to enter into and perform this Agreement. This Agreement and the
execution, delivery and performance hereof have been duly authorized and
approved by the Board of Directors of Purchaser, and this Agreement
constitutes a valid and binding obligation of Purchaser, enforceable against
Purchaser in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other laws
of general applicability relating to or affecting creditors' rights, or the
limiting effect of rules of law governing specific performance, equitable
relief and other equitable remedies or the waiver of rights or remedies.
Section 9.3. Non-Contravention. The execution and delivery of this
Agreement by Purchaser do not and, subject to the receipt of all required
approvals and consents, the consummation of the transactions contemplated
by this Agreement will not constitute (a) a breach or violation of or default
under any law, rule, regulation, judgment, order, Governmental permit or
license agreement, indenture or instrument of Purchaser or to which it is
subject, which breach, violation or default would have a material and adverse
effect on Purchaser, or (b) a breach or violation of or a default under the
charter or Bylaws of Purchaser or any material contract or other instrument
to which it is a party or by which it is bound.
Section 9.4. Legal Proceedings.
There are no actions, suits, or proceedings, whether civil, criminal
or administrative, pending or, to Purchaser's best knowledge, threatened
against or affecting Purchaser which could have a material adverse effect on
the consummation of the transactions contemplated hereby.
Section 9.5. Regulatory Matters. To Purchaser's best knowledge:
(a) As of the date hereof, without giving effect to the
transactions contemplated hereby, and following the consummation
of the transactions contemplated hereby, on a pro forma basis
Purchaser will (i) remain "adequately capitalized", as defined in the
Federal Deposit Insurance Corporation Improvement Act of 1991,
as amended (12 U.S.C. 1831o), and (ii) meet all capital
requirements, standards and ratios required by each state or federal
bank regulator with jurisdiction over Purchaser, including without
limitation, any such higher requirement, standard or ratio as shall
apply to institutions engaging in the acquisition of insured
institution deposits, assets or branches, and no such regulator is
likely to, or has indicated that it will, condition any of the
Regulatory Approvals upon an increase in Purchaser's capital or
compliance with any capital requirement, standard or ratio.
(b) Purchaser will not be required to divest deposit
liabilities, branches, loans or any business or line of business as a
condition to the receipt of any of the Regulatory Approvals.
(c) Each of the subsidiaries or Affiliates of Purchaser,
which is an insured depository institution, was rated "Satisfactory"
or "Outstanding" following its most recent Community
Reinvestment Act examination by the regulatory agency
responsible for its supervision. Purchaser has received no notice
of and has no knowledge of any planned or threatened objection by
any community group to the transactions contemplated hereby.
Section 9.6. Financing Available. Purchaser has available
sufficient cash or other liquid assets or Financing, pursuant to binding
agreements or commitments which may be used to fund the Purchase Price
and its ability to pay the Purchase Price hereunder is not contingent on
raising any equity capital, obtaining specific financing therefor, consent of
any lender or any other matter.
ARTICLE X
COVENANTS OF SELLER
Seller covenants and agrees with Purchaser as follows:
Section 10.1 Regulatory Approvals. Seller shall use its reasonable
efforts to assist Purchaser in obtaining the Regulatory Approvals. Seller
shall provide Purchaser or the appropriate regulatory authorities all
information reasonable required to be submitted by Seller in connection with
the Regulatory Approvals.
Section 10.2. Conduct of the Business. From the date hereof
through the Closing Date, Seller shall (a) conduct its business of banking in
the usual, regular and ordinary course consistent with past practice, (b) use
reasonable efforts to maintain and preserve intact its relationships with its
Branch Employees and advantageous business relationships, including
relationships with the Branch Customers, and (c) take no action which would
adversely affect or delay the ability of any party hereto to obtain any
Regulatory Approval or to perform its covenants and agreements under this
Agreement. Without limiting the effect of the foregoing sentence, Seller
shall not transfer any of the Branch Employees to any of its facilities other
than the Branches from the date hereof through the Closing Date, except
upon the request of a Branch Employee, which has not been solicited,
induced or otherwise sought by Seller.
Section 10.3. Corporate and Other Consents.
(a) Seller shall use its reasonable efforts to secure all
necessary corporate and other nonregulatory consents (except those
involving Purchaser) and shall provide certified copies to
Purchaser upon Purchaser's request.
(b) Seller shall promptly comply with all applicable laws,
regulations, and rulings in connection with this Agreement and the
consummation of the transactions contemplated hereby.
(c) (i) Seller shall use its reasonable efforts (which shall
not require Seller to pay any money or other consideration to any
person or to initiate any claim or proceeding against any person) to
cause every landlord under a Branch Lease, the consent of which
is required under the terms of such Branch Lease to the assignment
of such Branch Lease to Purchaser, to execute in favor of Purchaser
a Landlord Consent.
(ii) Notwithstanding anything to the contrary contained in this
Agreement, Seller's failure to obtain a Landlord Consent from a
landlord under a Branch Lease after using such reasonable efforts
to obtain the same shall not entitle Purchaser to terminate this
Agreement and Purchaser shall remain obligated to perform all of
its obligations hereunder with respect to the applicable Branch,
including without limitation the assumption of the Deposit
Liabilities relating thereto and the payment of the full Purchase
Price without any reduction or adjustment, but excluding only its
obligation to assume such Branch Lease.
(iii) If Seller shall be unable to deliver a Landlord Consent with
respect to a Branch Lease, Seller shall (A) deliver to Purchaser at
the Closing a certificate from Seller, as tenant under the applicable
Branch Lease in the form of Schedule 10.3 attached hereto (B)
make available to Seller the space necessary for the operations of
the applicable Branch for a cost equal to the rent and other amounts
payable under such Branch Lease, and (C) indemnify and hold
harmless Purchaser against any cost and expense (including
reasonable attorneys' fees) relating to any claim, proceeding or
action commenced by the applicable landlord, but in no event shall
Purchaser be indemnified for its actual or consequential damages
or nonlitigation costs or expenses relating to or arising from its
eviction from such space or relocation of such Branch.
Section 10.4. Noncompetition. For a period of eighteen (18)
months following the Closing Date, neither Seller nor any of its Affiliates
will (i) acquire or establish any new branch or ATM in the Territory (as
hereinafter defined) (ii) directly solicit any Branch Customers for insured
deposit products or small business and consumer loans or (iii) permit any
others to obtain or use any listing of Branch Customers, for purposes of such
solicitation. Notwithstanding the foregoing sentence Seller, Fleet and their
respective Affiliates shall be permitted to (a) engage in advertising,
solicitations or marketing campaigns, programs or other efforts not primarily
directed to or targeted at such Branch Customers, including without
limitation such campaigns, programs or efforts in connection with lending,
deposit, safe deposit, trust or other financial services relationships with such
Branch Customers, (b) engage in lending, deposit, safe deposit, trust or other
financial services relationships existing as of the Closing Date with such
Branch Customers, which are not acquired or assured by Purchaser pursuant
hereto, through other branch offices of Seller, (c) respond to unsolicited
inquiries by such Branch Customers with respect to banking or other
financial services and (d) provide notices or communications relating to tile
transactions contemplated hereby in accordance with the provisions hereof.
This Section 10.4 shall not be binding on any successor to the business of
Seller, Fleet or their respective Affiliates through merger, consolidation,
conversion or the sale of substantially all the assets of Seller, Fleet or any
of their respective Affiliates, which successor has already established the
business which is in competition with Purchaser or the Seller, nor shall this
noncompetition provision be deemed to prohibit the purchase and
continuation of the business by Seller, Fleet or any of their respective
Affiliates of another entity, which entity is already in competition with
Purchaser or Seller, Fleet or their respective Affiliates. For purposes of this
Section 10.4, "Territory" shall mean Clinton, Essex and Franklin counties
and the towns of Warrensburg and Lake Lucerne, New York.
Section 10.5. Deposit Rates. Seller shall not initiate any deposit
rate promotions that result in a material increase in the amount of jumbo
certificates of deposits at the Branches from the date hereof to the Closing
Date.
Section 10.6. Loans. (a) If the aggregate amount of commercial
loans decreases by more than ten (10) percent from the date hereof to the
Closing Date, Seller shall make available to Purchaser additional residential
mortgage loans from the pool of loans previously provided to Purchaser,
including, but not limited to those loans attached as Schedule 10.6 so that
Purchaser at its option may select such residential mortgage loans so that the
aggregate amount of commercial loans and residential mortgage loans is
equal or greater than 90% of the aggregate commercial loans as of the date
hereof.
(b) Purchaser may purchase up to $10 million of residential
mortgage loans from the pool of loans attached as Schedule 10.6.
ARTICLE XI
COVENANTS OF PURCHASER
Purchaser covenants and agrees with Seller as follows:
Section 11.1. Regulatory Approvals and Standards.
(a) Purchaser will use its best efforts to obtain as
expeditiously as possible the Regulatory Approvals and will use its
best efforts to prepare and file within fifteen (15) days after the
execution of this Agreement all necessary applications of Purchaser
for Regulatory Approvals. As of the Closing Date, Purchaser will
satisfy each and all of the standards and requirements reasonably
within its control imposed as a condition to obtaining or necessary
to comply with Regulatory Approvals. Purchaser shall pay any
fees charged by any regulatory authorities to which it must apply
for any of the Regulatory Approvals. Purchaser shall take no
action which would adversely affect or delay the ability of any party
hereto to obtain any Regulatory Approval or to perform its
covenants and agreements under this Agreement.
(b) From the date hereof through the Closing Date,
Purchaser shall (i) remain "adequately capitalized", as defined in
the Federal Deposit Insurance Corporation Improvement Act of
1991, as amended (12 U.S.C. 1831o), and (ii) meet all capital
requirements, standards and ratios required by each state or federal
bank regulator with jurisdiction over Purchaser, including without
limitation, any such higher requirement, standard or ratio as shall
apply to institutions engaging in the acquisition of insured
institution deposits, assets or branches.
Section 11.2. Corporate and Other Consents; Compliance with
Law: Real Property.
(a) Purchaser shall use its best efforts to secure all
necessary corporate and other non-regulatory consents (except
those involving Seller) and shall provide certified copies to Seller
upon Seller's request.
(b) Purchaser shall promptly comply with all
applicable laws, regulations, and rulings in connection with this
Agreement and the consummation of the transactions contemplated
hereby.
(c) Purchaser shall provide such financial and other
information as shall be reasonably requested by landlords under the
Branch Leases in connection with obtaining the Landlord Consents.
Notwithstanding anything to the contrary contained herein,
Purchaser agrees that the form of Landlord Consent with respect to
a Branch Lease may be modified at the request of a landlord to
incorporate any and all conditions, terms and agreements such
landlord may require with respect to such landlord's required
consent to the assignment of such Branch Lease to Purchaser;
provided that such conditions, terms and agreements do not
constitute a material or monetary modification or alteration of the
terms, covenants and conditions of such Branch Lease or otherwise
impose any burden on Seller or Purchaser not otherwise
contemplated by such Branch Lease.
(d) Purchaser shall promptly order any title certificates or
title searches required in connection with the transfer of the Real
Property under applicable state or local practice or necessary to
obtain the title insurance described in Section 5.3(a).
Section 11.3. Solicitation of Accounts. Prior to the
Closing Date, Purchaser shall not attempt directly to solicit Branch
Customers through advertising specifically referencing or targeted
to such Branch Customers nor transact its business in a way which
would specifically induce such Branch Customers to close Deposit
Liability accounts and open accounts directly with Purchaser or
would other-wise result in the transfer of all or a portion of an
existing Deposit Liability from Seller. Notwithstanding the
foregoing sentence Purchaser and its Affiliates shall be permitted
to (a) engage in advertising, solicitations or marketing campaigns
not primarily directed to or targeted at such Branch Customers, (b)
engage in lending, deposit, safe deposit, trust or other financial
services relationships existing as of the date hereof with such
Branch Customers through other branch offices of Purchaser, (c)
respond to unsolicited inquiries by such Branch Customers with
respect to banking or other financial services, and (d) provide
notices or communications relating to the transactions
contemplated hereby in accordance with the provisions hereof.
Section 11.4. Nonsolicitation of Seller's Employees. Purchaser
agrees that, except in accordance with Section 11.5, for a period of one year
following the Closing Date, it shall not, directly or indirectly, solicit for
employment, retain as an independent contractor or consultant, induce to
terminate employment with Seller or otherwise interfere with Seller's
employment relationship with, any branch employee or branch related
employee, who is not employed by Purchaser pursuant to Section 11.5, or
any other employee or officer of Seller, Fleet, or any of their respective
Affiliates, whose responsibilities or duties relate to banking or other
businesses of Seller, Fleet, or any of their respective Affiliates within the
state in which the Branches are located. It is expressly acknowledged by the
parties hereto that Purchaser may employ or retain as an independent
contractor or consultant any employee or officer, who shall terminate his or
her employment with Seller, Fleet or any of their respective Affiliates
without any such direct or indirect inducement or interference by, or other
pre-termination contact with, Purchaser or who shall be terminated by Seller,
Fleet or any of their respective Affiliates in either case after the Closing
Date; provided that such employment or retention shall not be prohibited by
any agreement between such employee or officer and Seller, Fleet or any of
their respective Affiliates.
Section 11.5. Transferred Employees.
(a) Purchaser shall offer employment to all Branch
Employees and Branch Related Employees, at least twenty (20)
days prior to the Closing Date upon terms and conditions described
below conditioned upon the Closing. Subject to the provisions of
this Section, Transferred Employees will be subject to the
employment terms, conditions and rules applicable to other
employees of Purchaser. Nothing contained in this Agreement
shall be construed as an employment contract between Purchaser
and any Transferred Employees.
(b) Severance Pay and Benefits. For a period of one (1)
year following the Closing Date, Purchaser agrees to pay to any
involuntary terminated Transferred Employee cash severance equal
to the cash severance to which the Branch Employee and Branch
Related Employee would have been entitled under Seller's
Severance Pay and Benefits Plan (a copy of which is provided at
Schedule 1.1) and equivalent non-cash benefits (the "Assumed
Severance Obligations").
(c) To the extent permitted under, and in accordance with,
the terms and conditions of Purchaser's 401(k) plan, Transferred
Employees may "rollover" any eligible distributions of their
accounts in Seller's qualified pension or profit-sharing plans to
Purchaser's 401(k) plan.
(d) Purchaser shall be solely responsible for any activity
in connection with interviewing the Branch Employees and Branch
Related Employees. Purchaser indemnifies and holds Seller
harmless from and against any claim, liability, losses, costs or
expenses, including reasonable attorneys' fees, resulting or arising
from Purchaser's acts or omissions in connection with said
interviews.
(e) Each Transferred Employee shall be provided
employment subject to the following terms and conditions:
(i) Salary shall be equivalent to base salary paid
by Seller to such Transferred Employee as of the close of
business on the Closing Date.
(ii) Vacation benefits shall be equivalent to
vacation benefit provided by Seller to such Transferred
Employee as of the close of business on the Closing Date.
Thereafter, such employee shall receive the same
vacation benefit provided by Seller until such time that
Purchasers vacation policy would entitle employee to an
increased vacation benefit, thereafter the employee shall
receive vacation benefits as determined by the
Purchaser's vacation policy.
(iii) Purchaser shall treat each Transferred
Employee as a new hire of Purchaser but shall provide
such Transferred Employee with credit for the period of
years of service with Seller towards the calculation of
eligibility for such purposes as vacation, severance and
other similar benefits and participation and vesting in
Purchaser's qualified pension or profit sharing plan, as
such plans may exist (but not for purpose of benefit
accruals, including without limitation, funding of accrued
pension or profit sharing plans for such Transferred
Employee with respect to any period prior to the Closing
Date).
(iv) Each Transferred Employee shall be
eligible to participate in the medical and dental plans of
Purchaser, as such plans may exist, effective as of the
Closing Date and any pre-existing conditions provisions
of such plans shall be waived with respect to such
Transferred Employee.
(v) Upon conclusion of his or her short term
disability or temporary leave of absence, subject to the
terms and conditions of the Purchaser's plans and policies
and applicable law, each Transferred Employee on such
leave shall receive the salary and vacation benefit in
effect when he or she went on leave, shall otherwise be
treated as a Transferred Employee and, to the extent
practicable, shall be offered by Purchaser the same or a
substantially equivalent position to his or her position
with Seller prior to leave.
(vi) Upon the first anniversary of the
consummation of the transactions contemplated hereby,
each Transferred Employee, who is still employed by
Purchaser, shall be eligible for benefits under any
severance or similar plans maintained by Purchaser with
credit for the period of years service with Seller towards
the calculation of benefits.
(g) Except as provided in Section 12.3, Purchaser shall
not be responsible for any benefits of the Branch Employees up to
the Closing Date.
ARTICLE XII
ENVIRONMENTAL DUE DILIGENCE, EMPLOYEE AND
CUSTOMER NOTICES; ETC.
Section 12.1 Environmental Due Diligence.
(a) Purchaser may conduct at its own expense
environmental audits by an independent qualified environmental
engineer or consultant (the "Environmental Consultant") of the
Real Property during the Environmental Due Diligence Period. In
the event Purchaser conducts a Phase I audit, Purchaser shall use
its best efforts to commence such audit within seven (7) days from
the date hereof.
(b) In the event the Phase I audit of any of the Real
Property is not completed within the Environmental Due Diligence
Period through no fault of Purchaser or its Environmental
Consultant, Purchaser may request an extension of the
Environmental Due Diligence Period for a reasonable period not
exceeding fifteen (15) days solely to permit completion of such
Phase I audit.
(c) In the event that as a result of such Phase I audit,
Purchaser elects in the exercise of its reasonable business judgment
to conduct a Phase II environmental audit by the Environmental
Consultant of any of the Real Property, upon receipt of written
notice of such election and a copy of any report prepared with
respect to such Phase I audit evidencing a reasonable basis for such
election prior to the conclusion of the Environmental Due
Diligence Period, Seller shall extend such Environmental Due
Diligence Period for an additional thirty (30) days solely to permit
completion of such Phase II audit.
(d) In the event that during the Environmental Due
Diligence Period or any extension thereof pursuant to this Section,
Purchaser shall notify Seller in writing that the Environmental
Consultant has discovered an Environmental Hazards at or on any
parcel of the Real Property, the remediation of which, in the
reasonable judgment of the Environmental Consultant, is or will be
the responsibility of Seller, or Purchaser should it acquire such
parcel, and will cost more than $25,000, Seller may elect to:
(i) make an adjustment to the Purchase Price for
the estimated remediation costs of any such
Environmental Hazard, which shall not have been
remediated on or prior to the Closing Date, in excess of
$25,000 with respect to such parcel of Real Property; or
(ii) take such remediation steps as are necessary
to make the Real Property comply with Environmental
Laws by the Closing Date (or make provisions to such
remediation steps following the Closing Date as shall be
reasonably satisfactory to Purchaser); or
(iii) lease to Purchaser such parcel of Real
Property for a period of ten (10) years pursuant to a Lease
Agreement; provided that such Environmental Hazards
do no jeopardize the health and safety of Buyer's
employees or the public, or prevent Purchaser from using
the Real Property as it is currently used; provided,
further, that if, during the term of such Lease Agreement
or renewal or extension thereof, Seller shall deliver to
Purchaser a report of a qualified environmental engineer
or consultant certifying that the Environmental Hazard at
or on any such leased parcel of Real Property has been
remediated to the extent required under applicable
Environmental Laws, Purchaser shall be required to
purchase such parcel of Real Property, at the Real
Property Purchase Price, in the event such report is
delivered within six (6) months of the Closing Date, and,
thereafter, at the fair market value of such real property as
agreed to by the parties hereto or, if no such agreement is
reached within thirty (30) days of delivery of such report,
as determined pursuant to an appraisal pursuant to
Section 14.4.
(e) Purchaser agrees that it and its Environmental
Consultant shall conduct any Phase I or if audits or other
investigations pursuant to this Section with reasonable care and
subject to customary practices among environmental consultants
and engineers, including without limitation, following completion
thereof the restoration of any site to the extent practicable to its
condition prior to such audit or investigation and the removal of all
monitoring wells.
Section 12.2. Access to Branches by Purchaser. Upon execution
of this Agreement, Seller shall provide Purchaser and its representatives,
accountants and counsel reasonable access to the Branches, Branch
Employees, Branch Related Employees, depository records, Loan files, and
all other documents and other information concerning the Branches as
Purchaser may reasonably request in order for Purchaser to perform a review
of the same; provided that with respect to Branch Employees Seller's sole
obligation shall be to provide Purchaser with information concerning the
name, position, date of hire and salary of Branch Employees and shall not be
required to provide any information concerning its "credit scoring" system
or any other proprietary information as to its business, branch or credit
practices, policies or procedures. Seller shall provide Purchaser assistance
in Purchaser's investigation relating to the Branches, Assets and Deposit
Liabilities; provided that Purchaser's investigation shall be conducted in a
manner which does not unreasonably interfere with Seller's normal
operations, customers and employee relations and provided further, that if
Purchaser's investigation occurs during non-business hours, the expenses
incurred by Seller as a result of such investigation during non-business hours
shall be paid by Purchaser to Seller prior to or on the Closing Date.
Section 12.3. Communications to Employees: Training. Seller and
Purchaser agree that promptly following the execution of this Agreement,
meetings, joint or several, of Seller and Purchaser as the parties may agree,
shall be held at the Branches or at such other location as Purchaser and
Seller shall mutually agree, to announce Purchaser's proposed acquisition of
the Branches to the Branch Employees. Seller and Purchaser shall mutually
agree as to the scope and content of all initial communications to the Branch
Employees. Thereafter, Purchaser shall be permitted to meet with the
Branch Employees working at the Branches on the date of this Agreement,
at times mutually convenient to Purchaser and Seller to discuss employment
opportunities with Purchaser. Seller may temporarily transfer employees
from other branches to the Branches, but none of such employees shall be
treated as Branch Employees. At a reasonable time prior to the Closing
Date, Purchaser shall be permitted to conduct training sessions during
normal business hours or at other times with the Branch Employees and
Branch Related Employees (if applicable); provided that Purchaser will in
good faith attempt to schedule such training sessions in a manner which does
not unreasonably interfere with Seller's normal business operations.
Purchaser shall reimburse the Branch Employees for transportation costs to
and from the location where Purchaser shall train such employees and
compensate the Branch Employees and Branch Related Employees (if
applicable) or reimburse Seller at the Branch Employees respective
applicable standard or overtime rates for the time spent in such training.
Section 12.4. Communications with Branch Customers.
(a) On such date or dates prior to the Closing Date, the
parties hereto may mutually agree, or otherwise may be
contemplated by this Agreement, Purchaser may send statements
to the Branch Customers announcing the transactions contemplated
hereby (such statements being herein called "Customer Notices").
The form and content of each Customer Notice shall be subject to
the approval of both parties and the cost of printing and mailing a
party's Customer Notice shall be borne solely by it. On or after the
day that is thirty-five (35) days prior the anticipated Closing Date,
Purchaser shall be entitled to provide at its own expense such
notices or communications to Branch Customers relating to the
transactions contemplated hereby, as it deems appropriate or as
may be required; provided that the text of any such notice or
communication and the timing of such notice or communication
which is provided prior to the Closing shall be approved in
advance by the other party, which approval shall not unreasonably
be withheld or delayed.
(b) Except as specifically provided herein, in no event
will Purchaser contact any Branch Customers prior to receipt of
Regulatory Approval without the prior written consent of Seller
which may be granted or withheld in its sole discretion; provided
that Purchaser may contact Branch Customers in connection with
(i) advertising, solicitations or marketing campaigns not primarily
directed to or targeted at Branch Customers, (ii) lending, deposit,
safe deposit, trust or other financial services relationships of
Purchaser with Branch Customers through branch offices of
Purchaser existing as of the date hereof, (iii) unsolicited inquiries
by Branch Customers to Purchaser with respect to banking or other
financial services, and (iv) notices or communications relating to
the transactions contemplated hereby in accordance with the
provisions hereof.
ARTICLE XIII
INDEMNITY
Section 13.1. Seller's Indemnity. Except as otherwise provided in
this Agreement, Seller shall indemnify, hold harmless and defend Purchaser,
its Affiliates, and their respective officers, agents and employees from and
against all claims, losses, liabilities, demands and obligations (including
reasonable legal fees and expenses) which Purchaser or any of its Affiliates
shall receive, suffer or incur arising out of or resulting from (a) any
liability of Seller not assumed by Purchaser hereunder, (b) any actions taken or
omitted to be taken by Seller prior to the Closing Date and relating to the
Branches, Assets, Assumed Liabilities, Branch Employees, Branch Related
Employees, and any suits or proceedings commenced in connection
therewith (other than proceedings to prevent or limit the consummation of
this Agreement), and (c) the breach of any material representation, warranty
or covenant made by Seller in this Agreement.
Section 13.2. Purchaser's Indemnity. Except as otherwise provided
in this Agreement, Purchaser shall indemnify, hold harmless and defend
Seller, its Affiliates and their respective officers, agents and employees from
and against all claims, losses, liabilities, demands and obligations (including
reasonable legal fees and expenses) which Seller or any of its Affiliates shall
receive, suffer or incur arising out of or resulting from (a) any liability of
Seller assumed by Purchaser hereunder, (b) any actions taken or omitted to
be taken by Purchaser from or after the Closing Date and relating to the
Branches, Assets, Assumed Liabilities, Branch Employees, Branch Related
Employees, and any suits or proceedings commenced in connection
therewith (other than proceedings to prevent or limit the consummation of
the transactions contemplated in this Agreement), (c) any actions taken or
omitted by Purchaser or its Environmental Consultant in connection with any
Phase I or II audit or other investigation conducted pursuant to Section 12.1
provided that Purchase Price adjustments or remediation costs pursuant to
Section 12.1 (d) are not indemnified or indemnifiable hereunder), and (d) the
breach of any material representation, warranty or covenant made by
Purchaser in this Agreement.
Section 13.3. Indemnification Procedure. Promptly after receipt by
either party of notice of the assertion of any claim or the commencement of
any action, suit or proceeding with respect to this Agreement, such party
("Indemnified Party") shall give written notice thereof to the other party
("Indemnitor") and will thereafter keep the Indemnitor reasonably informed
with respect thereto, provided that failure of the Indemnified Party to give the
Indemnitor prompt notice as provided herein shall not relieve the Indemnitor
of its obligations hereunder except to the extent, if any, it shall have been
prejudiced thereby. In case any such action, suit or proceeding is brought
against an Indemnified Party, the Indemnitor shall be entitled to participate
in (and, in its discretion, to assume) the defense thereof with counsel
satisfactory to the Indemnified Party, provided, however, that the
Indemnified Party shall be entitled to participate in any such action, suit or
proceeding with counsel of its own choice at the expense of the Indemnitor
if, in the good faith judgment of the Indemnified Party's counsel,
representation by the Indemnitor's counsel may present a conflict of interest
or that there may be defenses available to the Indemnified Party which are
different from or in addition to those available to the Indemnitor. The
Indemnitor will not settle any claim, action, suit or proceeding which would
give rise to the Indemnitor's liability under its indemnity unless such
settlement includes as an unconditional term thereof the giving by the
claimant or plaintiff of a release of the Indemnified Party, in form and
substance satisfactory to the Indemnified Party and its counsel, from all
liability with respect to such claim, action, suit or proceeding. If the
Indemnitor assumes the defense of any claim, action, suit or proceeding as
provided in this Section, the Indemnified Party shall be permitted to join in
the defense thereof with counsel of its own selection and at its own expense.
If the Indemnitor shall not assume the defense of any claim, action, suit or
proceeding, the Indemnified Party may defend against such claim, action, suit
or proceeding in such manner as it may deem appropriate, provided that an
Indemnified Party shall not settle any claim, action, suit or proceeding which
would give rise to the Indemnitor's liability under its indemnity without the
prior written consent of the Indemnitor, which consent shall not be
unreasonably withheld.
Section 13.4. Nonsolicitation. Notwithstanding anything to the
contrary contained herein, if Seller shall breach its covenants set forth in
Section 10.4 and obtain a relationship from a Branch Customer through a
solicitation not permitted by such Section, Purchaser's sole remedy with
respect thereto shall be to notify Seller in writing thereof on or before
eighteen months after the Closing Date, in which event Seller shall, to the
extent practicable, transfer any deposit or loan account relating to such
relationship to Purchaser for a purchase price equivalent to what would have
been paid for such account (without a deposit premium if Purchaser had
previously paid such premium) if it had been included in the Deposit
Liabilities or the Loans on the Closing Date.
Section 13.5. Survival. All indemnities contained in or made
pursuant to this Agreement shall survive the any third party claim for which
written notice shall have been given prior to such date.
Section 13.6. Basket. Notwithstanding anything to the contrary
contained in Sections 13.1 and 13.2, no party shall be entitled to
indemnification pursuant to Section 13.1 or 13.2 until its aggregate claims
for indemnification under such applicable Section against the other party
shall be in excess of $175,000, at which time such party shall be entitled to
indemnification for the full amount of its indemnifiable claims above such
amount.
ARTICLE XIV
POST CLOSING MATTERS
Section 14.1. Further Assurances. On and after the Closing Date:
(a) Except as specifically provided otherwise herein,
Seller shall assist Purchaser in the orderly transition of the
operations of the Branches and shall give such further assurances
and execute, acknowledge and deliver all such instruments as may
be necessary and appropriate to effectively vest in Purchaser title
in the Assets in the manner contemplated hereby; provided that
Seller need not incur any costs or expenses in connection with its
agreements in this Section unless such costs or expenses are paid
by Purchaser; and
(b) Except as specifically provided otherwise herein,
Purchaser shall give such further assurances to Seller and shall
execute, acknowledge and deliver all such acknowledgments and
other instruments and take such further action as may be necessary
and appropriate to effectively relieve and discharge Seller from any
obligations remaining with respect to the Deposit Liabilities or
other liabilities of Seller assumed by Purchaser hereunder;
provided that Purchaser need not incur any costs or expenses in
connection with its agreements in this Section unless such costs or
expenses are paid by Seller.
Section 14.2. Access to and Retention of Books and Records. On
the Closing Date, to the extent practicable, Purchaser shall receive
possession of, and all right, title and interest in, all books and records
relating to and located at the Branches which are in the possession of Seller;
provided that for a period of at least six (6) years from the Closing Date,
each party shall have reasonable access to said books and records of the
other party and the books and records of the Branches and the requesting
party, at its own expense, may make copies and extracts when such copies
and extracts are required by regulatory authorities, for litigation purposes,
accounting purposes or as otherwise appropriate; provided further that in the
event that as of the end of such period, any tax year of the Seller is under
examination by any taxing authority, such books and records shall be
maintained by Purchaser until a final determination of the tax liability of
Seller for that year has been made. If such copies or extracts require use of
a party's equipment or facilities, the user shall reimburse the other party for
all costs incurred, including without limitation employee expenses.
Notwithstanding the foregoing, neither party shall have any obligation to
retain records beyond any statutory required or commonly acceptable time
limit. Purchaser agrees to maintain records with respect to the Branches for
the applicable period. Notwithstanding anything to the contrary contained
herein the obligations of the parties hereto under this Section shall be subject
to all applicable laws relating to the confidentiality of bank records.
Section 14.3. Deposit Histories. In case of any dispute with or
inquiry by any Branch Customer whose Deposit Liability account is subject
to this Agreement, which dispute or inquiry relates to the servicing of such
account by Seller prior to the date for which a deposit history has been
provided to Purchaser, Seller will provide Purchaser with the appropriate
information where available and to the extent not already provided to
Purchaser regarding the Deposit Liability account and copies of pertinent
documents or instruments with respect to such dispute or inquiry so as to
permit Purchaser to respond to the Deposit Liability account holder within
a period of time and in a manner which would comply with standard banking
practices and customs.
Section 14.4. Appraisal of Real Property.
(a) As contemplated by Sections 2.1(b) or (c) or 12.1(d),
either party may designate by written notice to the other an
independent certified appraiser or appraisers to determine the fair
market value of the Real Property or its fair rental value.
(b) Unless such other party shall object in writing within
ten (10) days of receipt of such designation, such appraiser or
appraisers shall conduct appraisals of the fair market or rental
value of the Real Property and deliver two copies of reports thereof
to each of Seller and Purchaser.
(c) In the event the other party shall so object to the first
party's designation, the other party's written objection shall
designate an independent certified appraiser or appraisers
acceptable to it, which shall conduct such appraisals and deliver
such copies of reports thereof unless the first party shall object in
writing to the appraiser or appraisers designated by the other party
within ten (10) days of such objection.
(d) In the event the first party shall so object to the other
party's designation, the appraisers designated by Seller and the
Purchaser shall mutually designate an independent certified
appraiser to conduct such appraisals and deliver such copies of
reports thereof.
(e) The fair market or rental value of the Real Property
(the "Appraised Value") as determined by the appraiser or
appraisers designated pursuant to (a), (c) or (d) above shall be final
and binding upon the parties hereto.
(f) The parties hereto shall each pay one half of the cost
of retaining the appraiser or appraisers which determines the
Appraised Value in accordance with this Section.
(g) Without limiting or restricting in any manner the
procedure or method utilized by the appraisers or appraiser to
determine the Appraised Value in accordance with the terms
hereof, the reports of appraisals prepared pursuant hereto shall
include such appraiser's or appraisers' determination of the fair
market rental value of the Real Property for use as a bank branch.
ARTICLE XV
MISCELLANEOUS
Section 15.1. Expenses. Except as otherwise provided herein,
Seller and Purchaser each shall pay all of their own out-of-pocket expenses
in connection with this Agreement, including appraisal, accounting,
consulting professional and legal fees, if any, whether or not the transactions
contemplated by this Agreement are consummated. Purchaser shall pay all
(a) recording, filing or other fees, cost and expenses (including fees, costs
and expenses for (i) preparation of title certificates or searches, surveys,
inspections, environmental audits or other investigations, (ii) filing of any
forms (including without limitation tax forms) with Governmental
instrumentalities in connection with the transfer of the Real Property or
Personalty, and (iii) recording instruments or documents evidencing any
transfers of interests in real property), and (b) costs and expenses relating to
the preparation, execution and recording of assignments of mortgages,
financing statements, notes, security agreements or other instruments (other
than the items to be delivered by Seller pursuant to Section 5.3), applicable
to or arising in connection with the transfer, assignment or assumption of the
Loans (and mortgages, financing statements, notes, security agreements and
other instruments relating thereto), the Real Property, the Branch Leases or
the Personalty, but Seller shall pay any real property transfer stamps or taxes
imposed on any transfers or interest in real property and any fees or charges
payable to landlords in connection with Landlord Consents.
Section 15.2. Communications, Notices, etc. Subject to regulatory
restrictions and the provisions of Sections 12.4 and 15.8:
(a) Purchaser shall, at Purchaser's expense and subject to
the other provisions of this Agreement, be entitled after the receipt
of all required Regulatory Approvals, Final Approval Date to
communicate with, and deliver information, notices, brochures,
bulletins, press releases and other communications to Branch
Employees, Branch Related Employees, Branch Customers and
members of the communities in which the Branches are located,
concerning the transactions contemplated by this Agreement and
the business and operations of Purchaser, and Seller shall assist
Purchaser by providing upon Purchaser's request mailing lists of
such Branch Employees, Branch Related Employees and Branch
Customers, or by itself mailing such materials or communications
to such persons; and
(b) Purchaser and Seller shall each furnish to the other
copies of the text of all notices, advertisements, information or
communications, written or oral, proposed to be sent or transmitted
by the furnishing party to Branch Employees, Branch Related
Employees, Branch Customers or the public generally regarding
the proposed or actual transfer of Deposit Liabilities and/or the
purchase and sale of the Branches (including any public notices
required to be given by law or regulation in connection with such
transactions or applications for approval thereof, and the furnishing
party shall not send or transmit such notices, advertisements,
information or communications or otherwise make them public
unless and until the prior consent of the other party shall have been
received (such consent not to be unreasonably withheld).
Section 15.3. Trade Names and Trademarks. Purchaser shall not
acquire hereunder any right to the use of any trade name, trademark or
service mark, if any, of Fleet or any of their respective Affiliates.
Section 15.4. Termination; Extension of Closing Date. This
Agreement shall terminate and shall be of no further force or effect as
between the parties hereto, except as to the liability for actual direct damages
due to breach of any representation, warranty or covenant occurring or
arising prior to the date of termination, upon the occurrence of any of the
following
(a) Upon mutual agreement of the parties;
(b) Immediately upon receipt by Purchaser or Seller of
notice from any regulatory authority that purchaser or Seller, as the
case has been denied any Regulatory Approval by Final order; or
(c) Upon written notice by either party to the other, if the
Closing has not occurred within six (6) months of the date hereof,
unless the parties shall by mutual agreement extend the time for
Closing.
Section 15.5. Brokers-Finders.
(a) Purchaser hereby represents and warrants to Seller
that other than M.A. Schapiro & Co., Inc., it has not employed or
agreed to retain any broker of finder in connection with the
transactions contemplated by this Agreement, and Purchaser agrees
to indemnify Seller against any claim arising out of any such
employment of or agreement to retain any such broker or finder by
Purchaser.
(b) Seller hereby represents and warrants to Purchaser
that it has not employed or agreed to retain any broker of finder in
connection with the transactions contemplated by this Agreement,
and Seller agrees to indemnify Purchaser against any claim arising
out of any such employment of or agreement to retain any such
broker or finder by Seller.
Section 15.6. Modification and Waiver. No modification of any
provision of this Agreement shall be binding unless in writing and executed
by the party sought to be bound thereby. Performance of or compliance with
any covenant given herein or satisfaction of any condition to the obligations
of either party hereunder may be waived by the party to whom such covenant
is given or whom such condition is intended to benefit, except to the extent
any such condition is required by law; provided, any such waiver must be in
writing.
Section 15.7. Binding Effect; Assignment. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that neither this
Agreement nor any rights, privileges, duties or obligations of the parties
hereto may be assigned by either such party prior to the day after the Closing
Date without the written consent of the other party hereto, and provided
further that in the case of any such assignment the assigning party shall also
remain responsible as a party hereto.
Section 15.8. Confidentiality.
(a) From and after execution hereof, the parties hereto
shall keep confidential the terms of this Agreement and the
negotiations relating hereto and all documents and information
obtained by a party from another party in connection with the
transactions contemplated hereby (collectively, the "Confidential
Information") (except (i) to the extent that the Agreement and such
negotiations must be disclosed to obtain the Regulatory Approvals,
(ii) for disclosures made in accordance with the terms and
conditions of this Agreement, (iii) to the extent required by
applicable law, or (iv) as made public prior to the date of the
Confidentiality Agreement by either party or thereafter by any
person not a party hereto without the assistance of any such party).
(b) From the date hereof through the Closing Date,
Purchaser shall not use the Confidential Information obtained by it
to compete with Seller, and neither party shall use the Confidential
Information otherwise then in connection with this Agreement or
as contemplated hereby.
(c) This section shall survive the termination or
consummation of this Agreement.
(d) In the event of termination of this Agreement,
Purchaser shall not use any Confidential Information obtained by
it from Seller to solicit accounts or other business from customers
of the Branches and each party shall immediately return the
Confidential Information obtained by it from another party or its
affiliates (and all copies thereof).
(e) In the event any term or provision of this Section 15.8
shall be inconsistent with any tenn or provision of the
Confidentiality Agreement, such term or provision of the
Confidentiality Agreement shall prevail and such term or provision
of this Section 15.8 shall be interpreted so as to be consistent with
the Confidentiality Agreement.
Section 15.9. Entire Agreement; Governing Law. This Agreement,
together with the exhibits attached hereto and made a part hereof, and the
Confidentiality Agreement contain the entire agreement between the parties
hereto with respect to the transactions covered and contemplated hereunder,
and supersedes all prior agreements or understandings between the parties
hereto relating to the subject matter hereof. This Agreement shall be
governed by and construed in accordance with the laws of the State of New
York.
Section 15.10. Consent to Jurisdiction, Waiver of Jury Trial.
EACH PARTY HERETO, TO THE EXTENT IT MAY LAWFULLY DO
SO, HEREBY SUBMITS TO THE JURISDICTION OF THE COURTS
OF THE STATE OF NEW YORK AND THE UNITED STATES
DISTRICT COURT FOR THE DISTRICT OF NEW YORK, AS WELL AS
TO THE JURISDICTION OF ALL COURTS FROM WHICH AN
APPEAL MAY BE TAKEN OR OTHER REVIEW SOUGHT FROM THE
AFORESAID COURTS, FOR THE PURPOSE OF ANY SUIT, ACTION
OR OTHER PROCEEDING ARISING OUT OF SUCH PARTY'S
OBLIGATIONS UNDER OR WITH RESPECT TO THIS AGREEMENT
OR ANY OF THE AGREEMENTS, INSTRUMENTS OR DOCUMENTS
CONTEMPLATED HEREBY, AND EXPRESSLY WAIVES ANY AND
ALL OBJECTIONS IT MAY HAVE AS TO VENUE IN ANY OF SUCH
COURTS.
EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING
OUT OF OR IN ANY WAY CONCERNED WITH THIS AGREEMENT
OR ANY OF THE AGREEMENTS, INSTRUMENTS OR DOCUMENTS
CONTEMPLATED HEREBY. NO PARTY HERETO, NOR ANY
ASSIGNEE OR SUCCESSOR OF A PARTY HERETO TO SHALL SEEK
A JURY TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM
OR ANY OTHER LITIGATION PROCEDURE BASED UPON, OR
ARISING OUT OF, THIS AGREEMENT OR ANY OF THE
AGREEMENTS, INSTRUMENTS OR DOCUMENTS
CONTEMPLATED HEREBY. NO PARTY WILL SEEK TO
CONSOLIDATE ANY SUCH ACTION, IN WHICH A JURY TRIAL HAS
BEEN WAIVED, WITH ANY OTHER ACTION IN WHICH A JURY
TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THE
PROVISIONS OF THIS HAVE BEEN FULLY DISCUSSED BY THE
PARTIES HERETO, AND THE PROVISIONS SHALL BE SUBJECT TO
NO EXCEPTIONS. NO PARTY HAS IN ANY WAY AGREED WITH
OR REPRESENTED TO ANY OTHER PARTY THAT THE
PROVISIONS OF THIS SECTION WILL NOT BE FULLY ENFORCED
IN ALL INSTANCES.
Section 15.11. Severability. In the event that any provision of this
Agreement which both Seller and Purchaser agree is not material shall be
held invalid, illegal, or unenforceable in any respect, the validity, legality,
and enforceability of the remaining provisions contained in this Agreement
shall not in any way be affected or impaired thereby, and this Agreement
shall otherwise remain in full force and effect.
Section 15.12. Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have
been signed by each of the parties hereto.
Section 15.13. Notices. All notices, consents, requests,
instructions, approvals, waivers, stipulations and other communications
provided for herein to be given by one party hereto to the other party shall
be deemed validly given, made or served, if in writing and delivered
personally or sent by certified mail, return receipt requested, nationally
recognized overnight delivery service, or facsimile transmission, if to Seller
addressed to:
Fleet Financial Group, Inc.
1 Federal Street
Boston, MA 02110
Attention: Brian T. Moynihan
Facsimile number: (617) 346-0465
with copies to:
William C. Mutterperl, Esq.
Senior Vice President, General Counsel
and Secretary
Fleet Financial Group, Inc.
1 Federal Street
Boston, MA 02110
Facsimile number: (617) 346-0131
and to:
V. Duncan Johnson, Esq.
Edwards & Angell
2700 Hospital Trust Tower
Providence, Rhode Island 02903
Facsimile number: (401)276-6611
and if to Purchaser addressed to:
Glens Falls National Bank and Trust Company
250 Glen Street
Glens Falls, New York 12801
Attention: Thomas L. Hoy, President
Facsimile number: (518) 793-7405
with a copy to:
[]
[]
Attention: []
Facsimile number: []
Notice by certified mail shall be deemed to be received three (3) business
days after mailing of the same. Either party may chancre the persons or
addresses to whom or to which notices may be sent by written notice to the
other.
Section 15.14. Interpretation. Any reference herein to a Section,
Exhibit or Schedule shall be deemed a reference to a Section of, or Exhibit
of Schedule to, this Agreement. The Section and Article headings contained
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
Section 15.15. Specific Performance. The parties hereto
acknowledge that monetary damages could not adequately compensate either
party hereto in the event of a breach of this Agreement by the other, that the
former party would suffer irreparable harm in the event of such breach and
that the former party shall have, in addition to any other rights or remedies
it may have at law or in equity, specific performance and injunctive relief as
a remedy for the enforcement hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed, by their duly authorized representatives, as of the
day and year first above written.
FLEET
BANK
By:
Title:
GLEN
FALLS
NATIONAL
BANK
AND
TRUST
COMPANY
By:
Thomas L. Hoy
President
<PAGE>
Exhibit 2.2
Glens Falls National Bank
and Trust Company
250 Glen Street
P.O. Box 307
Glens Falls, New York
128001-9989
(518) 793-4121
Thomas L. Hoy
President
May 20, 1997
Mr. Matthew A. Kerin
Senior Vice President
Corporation Strategy & Development
Fleet Corporate Administration
777 Main Street
Hartford, CT 06115
Dear Matthew:
The purpose of this letter is to give you notice that we
at Glens Falls National Bank and Trust Company ("GFNB")
intend to acquire from you a group of mortgage loans referred
to in Section 10.6(b) of the Purchase and Assumption
Agreement, dated March 21, 1997 (the "Agreement"),
between us and to clarify certain matters relating to these
loans. Terms used in this letter and not otherwise defined in
this letter shall have the meaning ascribed thereto in the
Agreement.
Specifically, you are hereby notified that, subject to the
conditions set forth below, GFNB will acquire certain
mortgage loans offered by you to us and identified on a new
Schedule 10.6 to the Agreement, a copy of which is attached
to this letter (the "Mortgages").
We agree that the "Loan Value" fro purposes of
calculating the Purchase Price under Section 3.1(d) of the
Agreement shall include the "Loan Value of the Mortgages"
which will equal One Hundred Percent (100%) of the unpaid
principal balance of such Mortgages plus accrued interest
thereon as of the close of business on the Closing Date. It is
also agreed that Section 3.1 of the Agreement shall be
amended by adding at the end of subsection (g) thereof the
following: "...MINUS (h) an amount equal to one percent
(1%) of the Unpaid Principal Balance of the Mortgages at
Closing."
We agree to acquire the Mortgages with the
understanding that the Mortgages, although not attributable to
the Branches, shall be "Loans" for all purposes under the
Agreement, including your representations and warranties
relating to Loans.
We will not purchase any mortgage loan now listed on
Schedule 10.6 if such loan as of the Closing Date (i) has been
subject to a delinquency of 30 days or more in the preceding
12 months, or (ii) is the subject of any pending or threatened
litigation, and any such mortgage loan listed on Schedule 10.6
prior to the Closing Date will be deleted therefrom as of the
Closing.
If the terms of this letter are acceptable to you, please
sign where indicated and this letter will thereupon serve to
amend the Agreement between us and constitute our
commitment to purchase the Mortgages as provided herein
and therein.
Sincerely,
s/ Thomas L. Hoy
TLH/ams
FLEET Bank
By: s/
Title: Executive Vice President
Exhibit 99
News Release
Arrow Financial Corporation
250 Glen Street
Glens Falls, New York 12801
Contact: Timothy C. Badger
Tel: 518-745-1000
Fax 518-745-1976
TO: All Media
Date: June 30, 1997
FOR IMMEDIATE RELEASE
GLENS FALL NATIONAL'S PURCHASE OF SIX FLEET
BANK OFFICES FINALIZED
Glens Fall, New York, June 30, 1997 - Arrow
Financial Corporation has announced that its subsidiary, Glens
Falls National Bank and Trust Company, has finalized the
previously announced purchase of six Fleet Bank branch
offices in Upstate New York. The offices, located in Lake
Luzerne, Plattsburgh (2), Port Henry, Ticonderoga and
Warrensburg, are now offices of Glens Falls National Bank
and Trust Company. The transaction included the transfer of
approximately $140 million in deposits and $44 million in
loans to Glens Falls National Bank and Trust Company.
Thomas L. Hoy, President and Chief Executive Officer
of Glens Falls National stated, "We are delighted to welcome
our new customers to Glens Falls National and bring our type
of community banking to Plattsburgh, Port Henry,
Ticonderoga, Warrensburg and Lake Luzerne areas. Our new
market area now extends north, nearly to the Canadian border.
We are very please with the positive customer feedback we've
received to date. We look forward to our staff providing
increased involvement in these communities."
Glens Falls National Bank and Trust Company, which
was established in 1851, is headquartered in Glens Falls, New
York. The Bank now has assets of approximately $700
million and provides a full range of banking services through
its twenty-one offices in Upstate New York.
