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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 12, 1995
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SUBURBAN BANCSHARES, INC.
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(Exact name of registrant as specified in its charter)
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Delaware 0-16595 54-1319411
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(State or other juris- (Commission (IRS Employer
diction of incorporation) File Number) Identification No.)
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7505 Greenway Center Drive, Greenbelt, Maryland 20770
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(Address of principal executive offices) (ZIP Code)
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Registrant's telephone number, including area code (301) 474-6694
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Not Applicable
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(Former name or former address, if changed since last report)
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CURRENT REPORT ON FORM 8K
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On May 12, 1995, Suburban Bancshares, Inc. completed the disposition
of most of the assets and all of the liabilities of its subsidiary, Suburban
Bank of Virginia, N.A. ("Suburban") to Tysons Financial Corporation and its
subsidiary, Tysons National Bank ("Tysons") in McLean, Virginia.
Assets transferred to Tysons include all cash and cash equivalents,
investments, loans (excluding nonperforming and other loans totalling $3.1
million) and interest receivable associated with those loans, and fixed assets
in one of Suburban's two branches. Liabilities assumed by Tysons include all
deposit accounts, securities sold under agreements to repurchase, and interest
payable associated with those liabilities.
At closing, Suburban paid Tysons $752,000 in cash, representing (1)
the amount by which the liabilities transferred exceeded the assets
transferred, less (2) the $1 million premium Tysons had agreed to pay Suburban
for the assets acquired.
No relationship between the parties existed prior to and none will
exist after the completion of the transaction.
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ITEM 7. PRO FORMA FINANCIAL INFORMATION
The following financial pro forma information reflects the balance
sheet and the income statement for Suburban Bancshares, Inc. as of March 31,
1995, adjusted for the transaction completed on May 12, 1995, disposing of the
assets and liabilities of Suburban Bank of Virginia, N.A.
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BALANCE SHEET Suburban Bancshares, less Disposition = Pro Forma
Inc. at 3/31/95
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Cash & due from $ 8,906 $ 2,099 $ 6,807
Investment securities 22,249 1,658 20,591
Fed funds sold 9,925 2,290 7,635
Loans (gross) 69,051 12,964 56,087
Allowance for loan losses (2,213) - (2,213)
Loans (net) 66,838 12,964 53,874
Other real estate owned 2,248 - 2,248
Premises & Equipment, net 1,109 44 1,065
Other assets 1,486 89 1,397
TOTAL ASSETS $112,761 $19,144 $93,617
Deposits $102,565 $19,494 $83,071
Securities sold under
agreements to repurchase 622 622 -
Other liabilities 541 28 513
Total liabilities 103,728 20,144 83,584
Shareholders' equity 9,033 (1,000) 10,033
TOTAL LIABILITIES & EQUITY $112,761 $19,144 $93,617
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<CAPTION>
INCOME STATEMENT Suburban Bancshares, less Disposition = Pro Forma
Inc.
three months ended 3/31/95
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Interest income 2,099 423 1,676
Interest expense 737 200 537
Net interest income 1,362 223 1,139
Provision for loan losses 45 - 45
Net interest income after
provision 1,317 223 1,094
Noninterest income 166 31 135
Noninterest expenses 1,315 375 940
Net income before taxes 168 (121) 289
Income tax expense
(benefit) - - -
NET INCOME 168 (121) 289
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ITEM 7. PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (CONTINUED)
Exhibits to this Current Report on Form 8K include the following:
EXHIBIT 2 - Purchase and Assumption Agreement dated
February 2, 1995, between Tysons National
Bank and Suburban Bank of Virginia, N.A. and
Joined in by Tysons Financial Corporation and
Suburban Bancshares, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Suburban Bancshares, Inc.
Date May 25, 1995 Sibyl S. Malatras
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Sibyl S. Malatras
Senior Vice President
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EXHIBIT 2
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PURCHASE AND ASSUMPTION AGREEMENT
DATED AS OF FEBRUARY 2, 1995,
BETWEEN
TYSONS NATIONAL BANK
AND
SUBURBAN BANK OF VIRGINIA, N.A.,
AND
JOINED IN
BY
TYSONS FINANCIAL CORPORATION
AND
SUBURBAN BANCSHARES, INC.
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TABLE OF CONTENTS
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I. Sale and Purchase of Transferred Property. . . . . . . . . . . . . . . . . 1
II. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
III. Transfer of Property and Assumption of Qualifying Assumed Liabilities . . 8
3.1 Transfer of Property and Assumption of Qualifying Assumed
Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.2 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.3 Apportionment: Proration . . . . . . . . . . . . . . . . . . . . . . 12
3.4 Sales and Use Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.5 Identification of Fixed Assets . . . . . . . . . . . . . . . . . . . 12
3.6 Possession and Risk of Loss . . . . . . . . . . . . . . . . . . . . . 12
3.7 Allocation of Purchase Price and Reporting . . . . . . . . . . . . . 13
IV. Closing; Post-Closing Procedures and Settlements, and Related Items . . . 14
4.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.2 Post-Closing Procedures and Settlements . . . . . . . . . . . . . . . 14
V. Representations and Warranties of Suburban and Seller . . . . . . . . . . 16
5.1 Corporate Organization . . . . . . . . . . . . . . . . . . . . . . . 16
5.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.3 Financial Statements; Filings . . . . . . . . . . . . . . . . . . . . 17
5.4 Loan Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.5 Certain Loans and Related Matters . . . . . . . . . . . . . . . . . . 19
5.6 Qualifying Other Agreements . . . . . . . . . . . . . . . . . . . . . 21
5.7 Authority; No Violation . . . . . . . . . . . . . . . . . . . . . . . 21
5.8 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . 22
5.9 Broker's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.10 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . 22
5.11 Legal Proceedings; etc . . . . . . . . . . . . . . . . . . . . . . . 22
5.12 Taxes and Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . 23
5.13 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . 24
5.14 Title and Related Matters . . . . . . . . . . . . . . . . . . . . . . 25
5.15 Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.16 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . 26
5.17 Commitments and Contracts . . . . . . . . . . . . . . . . . . . . . . 28
5.18 Regulatory Matters . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.19 Takeover Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.20 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.21 Labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.22 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . 29
5.23 Transactions with Management . . . . . . . . . . . . . . . . . . . . 30
5.24 Deposit Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.25 Untrue Statements and Omissions . . . . . . . . . . . . . . . . . . . 30
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VI. Representations and Warranties of Purchaser and Tysons . . . . . . . . . 30
6.1 Organization and Related Matters of Tysons . . . . . . . . . . . . . 30
6.2 Organization and Related Matters of Purchaser . . . . . . . . . . . . 31
6.3 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.4 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.5 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . 32
6.6 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . 33
6.7 Legal Proceedings, Etc . . . . . . . . . . . . . . . . . . . . . . . 33
6.8 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.9 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . 33
6.10 No Broker's or Finder's Fees . . . . . . . . . . . . . . . . . . . . 33
6.11 Untrue Statements and Omissions . . . . . . . . . . . . . . . . . . . 34
VII. Additional Covenants and Agreements of the Parties . . . . . . . . . . . . 34
7.1 Conduct of the Business of Seller . . . . . . . . . . . . . . . . . . 34
7.2 Current Information . . . . . . . . . . . . . . . . . . . . . . . . 35
7.3 Access to Properties; Personnel and Records . . . . . . . . . . . . 36
7.4 Approval of Seller's Shareholder . . . . . . . . . . . . . . . . . . 37
7.5 No Other Bids . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.6 Notice of Deadlines . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.7 Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . 37
7.8 Compliance Matters . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.9 Best Efforts; Cooperation . . . . . . . . . . . . . . . . . . . . . . 38
7.10 Regulatory Matters . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.11 Current Information . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.12 No Employment Contract . . . . . . . . . . . . . . . . . . . . . . . 38
7.13 Other Matters Relating to Loans . . . . . . . . . . . . . . . . . . . 39
7.14 Compliance with WARN . . . . . . . . . . . . . . . . . . . . . . . . 40
7.15 Compliance with COBRA . . . . . . . . . . . . . . . . . . . . . . . . 40
7.16 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . 40
7.17 Cure and/or Repurchase of Qualifying Loans . . . . . . . . . . . . . 41
7.18 Certain Accounting Matters . . . . . . . . . . . . . . . . . . . . . 41
VIII. Additional Covenants and Agreements of Tysons and Purchaser . . . . . . . 41
8.1 Certain Personnel Matters . . . . . . . . . . . . . . . . . . . . . . 41
8.2 Employment Benefit Plan of Tysons . . . . . . . . . . . . . . . . . . 41
8.3 Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
IX. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
9.1 Indemnification by Seller and Suburban . . . . . . . . . . . . . . . 41
9.2 Indemnification by Purchaser and Tysons . . . . . . . . . . . . . . . 42
9.3 Third-Party Claims, Etc. . . . . . . . . . . . . . . . . . . . . . . 42
9.4 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
X. Mutual Conditions To Closing . . . . . . . . . . . . . . . . . . . . . . . 43
10.1 Consents of Regulatory Authorities . . . . . . . . . . . . . . . . . 43
10.2 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
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XI. Conditions To The Obligations Of Tysons and Purchaser . . . . . . . . . . 44
11.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . 44
11.2 Performance of Obligations . . . . . . . . . . . . . . . . . . . . . 44
11.3 Certificate Representing Satisfaction of Conditions . . . . . . . . . 44
11.4 Absence of Adverse Facts . . . . . . . . . . . . . . . . . . . . . . 44
11.5 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . 44
11.6 Consents Under Agreements . . . . . . . . . . . . . . . . . . . . . 45
11.7 Material Condition . . . . . . . . . . . . . . . . . . . . . . . . . 45
11.8 Certification of Claims . . . . . . . . . . . . . . . . . . . . . . 45
11.9 Due Diligence . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
11.10 Transitional Data Processing Services . . . . . . . . . . . . . . . 45
XII. Conditions to Obligations of Seller and Suburban . . . . . . . . . . . . . 46
12.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . 46
12.2 Performance of Obligations . . . . . . . . . . . . . . . . . . . . . 46
12.3 Certificate Representing Satisfaction of Conditions . . . . . . . . . 46
12.4 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . 46
12.5 Absence of Adverse Facts . . . . . . . . . . . . . . . . . . . . . . 46
XIII. Transactions at Closing . . . . . . . . . . . . . . . . . . . . . . . . . 47
13.1 Items to be Delivered by Seller and Suburban . . . . . . . . . . . . 47
13.2 Items to be Delivered by Purchaser . . . . . . . . . . . . . . . . . 47
XIV. Termination, Waiver And Amendment . . . . . . . . . . . . . . . . . . . . 48
14.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
14.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . 49
14.3 Effect of Wrongful Termination . . . . . . . . . . . . . . . . . . . 49
14.4 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
14.5 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
14.6 Survival of Representations and Warranties . . . . . . . . . . . . . 49
XV. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
15.1 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 50
15.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
15.3 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
15.4 Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 51
15.5 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
15.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
15.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
15.8 Persons Bound; No Assignment . . . . . . . . . . . . . . . . . . . . 51
15.9 Exhibits and Schedules . . . . . . . . . . . . . . . . . . . . . . . 52
15.10 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
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THIS AGREEMENT is made as of the 2nd day of February, 1995, between
Tysons National Bank, a national banking association ("Purchaser"), with its
principal offices at 8200 Greensboro Drive, McLean, Virginia, and Suburban Bank
of Virginia, N.A., a national banking association ("Seller") with its principal
offices at 8201 Greensboro Drive, McLean, Virginia, and is joined into by
Tysons Financial Corporation, a Virginia corporation and the parent of
Purchaser ("Tysons"), and Suburban Bancshares, Inc., a Delaware corporation and
the parent of Seller ("Suburban").
WHEREAS, the Boards of Directors of Purchaser and Seller believe that
it is in the best interests of the parties and their respective shareholders
that the Seller sell to Purchaser the assets and that Purchaser assume the
liabilities associated with Seller's commercial banking operations which the
Seller conducts from its two banking offices (the "Banking Business");
WHEREAS, as a condition to the execution of this Agreement, Purchaser
and Seller have jointly caused a loan review to be conducted of the Loans
pursuant to which certain Loans have been classified substandard, doubtful, or
loss and have been listed on Schedule 2.35 hereof and excluded from the
definition of Qualifying Loans;
NOW, THEREFORE, in consideration of the above, the Compensation Amount
(as hereinafter defined) and the mutual representations, warranties, covenants,
and agreements set forth herein, and subject to the terms and conditions set
forth herein, the parties hereto, intending to be legally bound, agree as
follows:
I. Sale and Purchase of Transferred Property
Upon and subject to all of the terms and conditions of this Agreement,
Seller agrees to sell, assign and transfer to Purchaser, and Purchaser agrees
to purchase, accept and assume from Seller, the following:
(i) Qualifying Fixed Assets;
(ii) Qualifying Assumed Liabilities;
(iii) Any fees or charges related to the Qualifying Deposit
Liabilities that have been prepaid by customers of Seller, and prepaid safe
deposit rental fees paid by customers of Seller, in each case, properly
apportioned to periods subsequent to the Effective Time;
(iv) Qualifying Loans;
(v) Cash on Hand;
(vi) Due From;
(vii) Qualifying Leases;
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(viii) Qualifying Investment Securities;
(ix) Qualifying Other Agreements;
(x) Qualifying Real Estate;
(xi) Qualifying Other Assets.
The items described in (i) through (xi) above (the capitalized terms
used therein are defined below) are referred to in the aggregate as the
"Transferred Property."
II. Definitions
The following terms shall have the following meanings:
2.1 "Agreement" shall mean this agreement, together with all Schedules and
Exhibits attached hereto or delivered herewith, including any modifications,
and amendments to or extensions of any of the foregoing.
2.2 "Banking Business" shall have the meaning set forth in the recitals.
2.3 "Banking Offices" shall mean the main banking office and the branch
banking office of Seller as of the date hereof, whether owned or leased by the
Seller, which are more specifically listed on Schedule 2.3 annexed hereto.
2.4 "Book Value" shall mean, in respect of any Transferred Property, the
dollar amount thereof stated on the books of Seller as of the Effective Time in
accordance with generally accepted accounting principles, consistently applied,
after adjustment for suspense items, unposted debits and credits and other
similar adjustments and corrections.
2.5 "Business Day" shall mean a day other than a Saturday, Sunday or
other day on which the Purchaser is closed.
2.6 "Cash on Hand" shall mean the amount of all actual coinage or
currency on hand at the Banking Offices of Seller or at any off-premises vault
or other cash storage facility of Seller and pertaining to the Banking
Offices, all as of the Effective Time.
2.7 "Closing" shall have the meaning assigned to such term in Section 4.1
hereof.
2.8 "Compensation Amount" shall have the meaning assigned thereto in
Section 3.1(C)(i) hereof.
2.9 "Consent" shall mean a consent, approval or authorization, waiver,
clearance, exemption or similar affirmation by any person pursuant to any
contract, permit, law, regulation or order.
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2.10 "Day of Closing" shall mean the Business Day immediately following
the day on which the Effective Time occurs.
2.11 "Due From" shall mean (i) all accounts of Seller consisting of
amounts due from banks and thrifts, (ii) all cash items of Seller in process,
and (iii) all accounts of Seller consisting of amounts due from the Federal
Reserve System, in each case, as such accounts and items exist as of the
Effective Time.
2.12 "Effective Time" shall mean as of 2:00 p.m. Eastern time, on the next
to last Friday of the calendar month (provided that if any such day is not a
Business Day, then in place thereof, the immediately preceding Business Day),
or any other date mutually agreeable to Seller and Purchaser, that first occurs
following receipt of the last required Consent of any Regulatory Authority or
party to any contract to be assigned to Purchaser hereunder, the expiration of
all waiting and notice periods under applicable law or any directive of any
Regulatory Authority, satisfaction or waiver of the conditions set forth in
Articles X, XI, and XII hereof. However, the Effective Time shall not occur
later than the date set forth in Section 14.1(B) hereof.
2.13 "Employee Benefit Plan" shall mean any "employee benefit plan," as
defined in Section 3(3) of ERISA, that provides benefits for a Transferring
Employee.
2.14 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
2.15 "Final Closing Statement" shall have the meaning assigned such term
in Section 3.1(D)(i).
2.16 "Fixed Assets" shall mean collectively (i) all terminals used in the
operations of the Banking Business (ii) all machinery, materials, trade
fixtures, furniture and all other tangible personal property owned or (to the
extent of the lessee's interest) leased, by Seller and which are located at any
of the Banking Offices, and (iii) the Leasehold Improvements, in all cases as
such items exist at the Effective Time.
2.17 "Gross Qualifying Liability Amount" shall mean the sum of (i) all
Qualifying Deposit Liabilities, plus all safe deposit box rentals and any other
fees and charges that have been pre-paid to the same extent as set forth in
clause (iii) of Section I hereof, (ii) all repurchase obligations under any
repurchase agreement related to Investment Securities, (iii) all liabilities
related to the purchase of federal funds, and (iv) the liabilities related to
the Qualifying Assumed Liabilities listed on Schedule 2.31 annexed hereto.
2.18 "Interim Closing Statement" shall have the meaning assigned to such
term in Section 3.1(D)(iii).
2.19 "Investment Securities" shall mean all United States treasury
securities, all state and municipal securities, and all stocks, bonds,
debentures and other securities owned by Seller as of the Effective Time.
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2.20 "Knowledge of Seller" or "Seller's Knowledge" shall mean matters
that are actually known by any current Director, the President, the Chief
Financial Officer, or any other current Officer of Seller or Suburban or, after
the exercise of reasonable diligence or assuming the exercise of safe and sound
and reasonable banking practices, should have been known by any Director,
President, Chief Financial Officer, or other officer of Seller or Suburban who
served in any such capacity at any time after March 23, 1993 through the
closing.
2.21 "Leasehold Improvements" shall mean all buildings, structures,
structural modifications, roofs, ceilings, walls, flooring, drive-up banking
facilities, vaults and other improvements and fixtures which were constructed
or installed by or for the benefit of Seller or at Seller's expense and are
situated on, incorporated into, or affixed to the Banking Offices of Seller as
of the Effective Time so as to be a part of the Real Estate of Seller,
including all of the foregoing associated with the Leases but not any Fixed
Assets.
2.22 "Leases" shall mean all the lease agreements of Seller relating to
the Fixed Assets and the personal property of Seller.
2.23 "Loans" shall mean all obligations owing to Seller as of the
Effective Time (but only if carried or reflected on the books of Seller as of
the Effective Time), arising from or in connection with any grant of credit by,
on account or behalf of, or any purchase of a loan participation by, or any
extension or grant of any letter of credit by, Seller, or any written
commitment of Seller relating to any of the foregoing, including, without
limitation, the following (determined in each case, as of the Effective Time):
(i) all right, title and interest of Seller in and to the
collateral held as security for the Loans, and all right, title and interest of
Seller in and to any promissory note or other obligation to repay such Loans,
all conditional and installment sales contracts, all notes and other
instruments or chattel paper arising out of such Loans, all proceeds therefrom
and all rights to receive payment thereon, loan agreements, participation
agreements, participation certificates, mortgages or deeds of trust,
certificates of title, liens, pledges, pledged certificates of deposit,
guarantees, endorsements, merchant agreements, security agreements, financing
statements and other such security and security documentation securing or
relating to any of the Loans, together with any and all right, title and
interest of Seller in and to any title insurance policy, title opinions,
property, casualty or fire insurance policy, and the proceeds thereof, and all
other like and similar items relating to such Loans;
(ii) all right, title and interest of Seller in and to any and
all cash, deposits, security deposits, trust fund deposits, prepaid escrow
amounts and similar items relating to the Loans, any and all fees and
commissions associated with the Loans, any and all accrued late charges
applicable to the Loans, and any and all accrued credit life, credit accident,
health, property, casualty and fire insurance premiums applicable to the Loans,
all right, title and interest of Seller in credit life, credit accident,
personal mortgage, health, property, casualty and fire insurance premiums that
may accrue on the Loans after the Effective Time, and any and all payments or
other benefits due to be applied to the Loans or arising under the
documentation associated therewith;
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<PAGE> 10
(iii) all right, title and interest of Seller in and to the
files, computer printouts, loan files, correspondence, Federal Consumer Credit
Protection Act Disclosure Statements, payment histories, ledger cards (which
include, without limitation, all data processing schedules), file jackets,
folders, punch cards, computer tapes, closing or settlement sheets, appraisals,
surveys, certificates of title, placement certificates, credit investigations,
credit reports, and other writings contained in the files, and other data and
documentation associated with or relating to a particular Loan or the assets
related to it and referenced above; and
(iv) all right, title and interest of the Seller in and to any
and all claims, insurance claims, choses in action, causes of action and other
items of intangible personal property associated with or relating to the Loans
or the assets referenced above.
2.24 "Material Adverse Effect" shall mean, as the context requires, any
event, change or occurrence that has a material adverse impact on the value or
use of the Transferred Property (or identified portion of Transferred
Property), or the business, assets, operations, financial condition or results
of operations of the relevant party, taken as a whole. Without limiting the
foregoing in any manner, the following events shall be deemed to have a
Material Adverse Effect on the Transferred Property:
(i) the creation of a specific reserve on any of the Qualifying Loans;
(ii) the requirement to create a specific reserve on any of the
Qualifying Loans; or
(iii) if in the exercise of reasonable banking practices Tysons
or the Purchaser believes that it is necessary to create a specific reserve on
any of the Qualifying Loans.
2.25 "Mediator" shall mean Stephen A. Wannall of the firm Brown, Dakes &
Wannall, Suite 401, 3025 Hammaker Court, Fairfax, Virginia 22031, or if such
person or firm shall decline to perform the functions of the Mediator specified
in this Agreement, then such other firm of certified public accountants as
shall be mutually agreeable to Purchaser and Seller.
2.26 "Offset Amount" shall have the meaning assigned thereto in Section
3.1(C).
2.27 "Other Agreements shall mean all agreements of Seller existing as of
the Effective Time (other than Leases) made by or with respect to the
operations of the Banking Offices of Seller in the normal course of its
business, including, but not limited to, loan sales contracts, loan service
contracts, computer software program licenses, safe deposit contracts,
maintenance and janitorial agreements, vendor agreements of all types, such
other agreements as are identified and described on Schedule 2.26 annexed
hereto and all agreements relating to Qualifying Deposit Liabilities and to
Qualifying Loans identified and described in Schedule 2.27 annexed hereto.
2.28 "Permitted Encumbrances" shall mean (i) statutory liens securing
payments not yet due, and (ii) such imperfections or irregularities of title,
claims, liens, charges, security
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interests or encumbrances as do not materially affect the use of the properties
or assets subject thereto or affected there by or otherwise materially impair
business operations at such properties.
2.29 "Preliminary Closing Statement" shall mean the statement referred to
in Section 3.1(B).
2.30 "Premium" shall mean $1,000,000.
2.31 "Qualifying Assumed Liabilities" shall mean, as of the Effective
Time (i) the Qualifying Deposit Liabilities, (ii) the liabilities and
obligations of Seller pursuant to the Qualifying Leases, the Qualifying Other
Agreements, and the Qualifying Loans (including commitments to fund future
advances under any loan agreements or letters of credit), (iii) liabilities
under any repurchase agreement related to the Qualifying Investment Securities,
(iv) liabilities for federal funds purchased by Seller in connection with the
Banking Business; and (v) the liabilities of Seller (including those
represented by general ledger accounts), but only to the extent they are listed
and described in Schedule 2.31 annexed hereto.
2.32 "Qualifying Deposit Liabilities" shall mean those accounts (and any
customer agreements evidencing or relating thereto) that are defined as
deposits pursuant to the Federal Deposit Insurance Act (12 U.S.C. Section
1813), which are maintained by Seller in connection with the Banking Business
as of the Effective Time, including, in all cases, (i) principal and accrued
interest thereon as of the Effective Time, and (ii) any collected or
uncollected deposits associated therewith, but excluding certified and official
checks, bank drafts, and similar instruments charged against depositors'
accounts prior to the Effective Time and outstanding as of that time.
2.33 "Qualifying Fixed Assets" shall mean all Fixed Assets other than (i)
machinery and equipment that is customized for Seller and not compatible with
the present business or equipment of the Purchaser; (ii) the Fixed Assets
described in Schedule 2.33(a) annexed hereto; (iii) the Fixed Assets
located or associated with the McLean, Virginia branch of Seller, (iv) any
tangible personal property owned or leased by Seller and constituting part of
Seller's data processing system and (v) any automatic teller machines used in
the operation of the Banking Business; provided, however, that notwithstanding
the foregoing, Qualifying Fixed Assets shall include the Fixed Assets described
in Schedule 2.33(b).
2.34 "Qualifying Leases" shall mean all Leases other than the Lease for
the McLean, Virginia branch of Seller, but only to the extent that they are
described in Schedule 2.34 hereto.
2.35 "Qualifying Loans" shall mean all Loans listed on Schedule 2.35.
Listed Loans must exclude all participations sold to Suburban by Tysons and all
Loans that would cause Tysons to exceed lending limits.
2.36 "Qualifying Investment Securities" shall mean all Investment
Securities other than those described in Schedule 2.36 annexed hereto.
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2.37 "Qualifying Other Agreements" shall mean all Other Agreements listed
on Schedule 2.37, but specifically excludes the agreements between Seller and
Electronic Data Systems Corporation ("EDS") relating to Seller's data
processing system.
2.38 "Qualifying Other Assets" shall mean those assets (i) consisting of
any trademark, tradename, service mark, copyright, trade secret or other
intellectual property right associated with the Transferred Property and the
goodwill associated therewith, or (ii) described in Schedule 2.38 annexed
hereto (including those referred to by general ledger accounts); provided that
Seller's rights in, to, and under (A) the name "Suburban" and any related
trademarks, trade names, service marks, and associated goodwill, and any forms
or signage including such name and marks, and (B) the net operating loss carry
forward reflected on the Financial Statements of Suburban shall remain with
Seller and not be sold or transferred hereunder.
2.39 "Qualifying Real Estate" shall mean Seller's interest in the lease
described in Schedule 2.39 annexed hereto for Seller's Reston, Virginia office.
2.40 "Real Estate" shall mean all real property or interests therein
(including leasehold tenancies, whether as lessee or lessor) owned by Seller as
of the Effective Time (including real estate owned and in-substance
foreclosure).
2.41 "Regulatory Authorities" shall mean, collectively, the Federal Trade
Commission (the "FTC"), the United States Department of Justice (the "Justice
Department"), the Board of Governors of the Federal Reserve System (the "FRB"),
the Office of the Comptroller of the Currency (the "OCC"), the Federal Deposit
Insurance Corporation (the "FDIC") and all state regulatory agencies having
jurisdiction over the parties and their respective bank subsidiaries, the
National Association of Securities Dealers, Inc., all national securities
exchanges, and the Securities and Exchange Commission (the "SEC").
2.42 "TIN" shall mean a Federal Tax Identification Number.
2.43 "Transferred Property" shall have the meaning assigned to such term
in the last sentence of Section 1 hereof.
2.44 "Verified Compensation Amount" shall have the meaning assigned to
such term in Section 3.1(D)(i) hereof.
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<PAGE> 13
2.45 Other Definitions. The following terms are defined in the sections
indicated:
<TABLE>
<CAPTION>
Term Section in Which Defined
---- ------------------------
<S> <C>
"Acquisition Proposal" 7.5
"Code" 3.7(B)
"Environmental Law" 5.16(G)
"FDIA" 5.24
"Financial Statements of Seller" 5.3(B)
"Financial Statements of Suburban" 5.3(A)
"Financial Statements of Tysons" 6.5
"Hazardous Material" 5.16(G)
"Indemnitee" 9.3
"Indemnitor" 9.3
"Interim Compensation Amount" 3.1(D)(iii)
"Loan Property" 5.16(G)
"Participation Facility" 5.16(G)
"PBGC" 5.13(B)
"Procedure Document" 4.1(B)
"Repos" 5.6
"Seller Shares" 5.2(A)
"Subsidiary" 5.1(D)
"WARN" 7.14
</TABLE>
III. Transfer of Property and Assumption of Qualifying Assumed Liabilities
3.1 Transfer of Property and Assumption of Qualifying Assumed Liabilities
(A) On the Day of Closing and as of the Effective Time, subject to
the terms and conditions set forth in this Agreement, (i) Seller shall sell,
transfer and assign to Purchaser free and clear of all liens, claims,
encumbrances or charges, except Permitted Encumbrances, all of Seller's right,
title and interest in and to (A) the Qualifying Fixed Assets, (B) the
Qualifying Loans, (C) the Cash on Hand and Due From, (D) the Qualifying
Investment Securities, (E) the Qualifying Other Assets, (F) the Qualifying
Other Agreements, (G) the Qualifying Leases, (H) the Qualifying Real Estate,
(I) subject to Section 3.2 hereof, all documents, books and records relating to
the Qualifying Deposit Liabilities and the business of the Banking Offices (but
not to the business of Seller as a whole, except to the extent otherwise
specified in Schedule 3.1(A) annexed hereto), and (J) the Transferred
Property not otherwise mentioned herein; and (ii) Purchaser shall assume all of
the Qualifying Assumed Liabilities.
Without limiting any express covenant, agreement and obligation of
Purchaser under this Agreement and except for Purchaser's assumption of the
Qualifying Assumed Liabilities, Purchaser shall not assume, nor shall it be
deemed to have assumed, any other liability, duty or obligation of Seller,
whether express, contingent or otherwise.
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<PAGE> 14
(B) Five days prior to the Day of Closing, Seller shall deliver a
Preliminary Closing Statement setting forth any items described in paragraph
(c)(i) below and, after taking into account all adjustments indicated by this
Agreement, setting forth the computation of the estimated Compensation Amount.
(C) (i) The "Compensation Amount" shall be determined by
subtracting from the Gross Qualifying Liability Amount the sum of the following
items (referred to collectively as the "Offset Amount"):
(a) the Book Value of the Cash on Hand;
(b) the Book Value of the Due From;
(c) the Book Value of the Qualifying Fixed Assets;
(d) the unaccrued portion, as of the Effective Time, of
interest prepaid by Seller on Qualifying Deposit
Liabilities, if any;
(e) the Book Value of the aggregate principal balance
and accrued but unpaid interest and unearned income
on the Qualifying Loans as of the Effective Time
(not decreased by the amount of any general loan
loss reserves, but decreased, however, by the
amount, if any, of prepaid interest paid to or
received by Seller in respect of such Loans
allocable to any period beginning on or after the
Effective Time (Seller hereby represents that it has
no specific reserves with respect to any of its
assets));
(f) the Book Value of the Qualifying Investment
Securities;
(g) the Book Value of the Qualifying Real Estate;
(h) the Book Value of the Qualifying Other Assets;
(i) any amounts that shall have been prepaid by Seller
under the Qualifying Other Agreements;
(j) the Premium;
(k) the net of all amounts, if any, to be payable by
Purchaser to Seller pursuant to the apportionment
and proration provisions of this Agreement,
including such amounts as are payable with respect
to the Qualifying Real Estate and under the
Qualifying Leases; and
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<PAGE> 15
(l) all other amounts payable by Purchaser on the Day of
Closing under this Agreement;
provided that particular assets or liabilities which may be includable in more
than one category herein shall only be counted once.
(ii) The Compensation Amount shall be paid on the Effective
Time, as provided in this subparagraph (ii), in cash or immediately available
funds. Not later than 10:00 a.m. on the Day of Closing, representatives of
Seller and Purchaser shall confer in person or by telephone to agree upon the
Compensation Amount and shall execute a writing to confirm such agreement. If
such Compensation Amount is greater than zero on the Day of Closing, Seller
shall pay the Compensation Amount to Purchaser in cash or immediately available
funds, and Purchaser shall retain all of such funds, together with the funds
theretofore remitted to it, as its property. If the Compensation Amount
results in a negative amount, Purchaser shall pay to Seller an amount in cash
or immediately available funds equal to the number reflected by such negative
amount. The party receiving payment shall promptly issue and deliver to the
other a receipt for the Compensation Amount.
(D) (i) Not later than ninety days subsequent to the Day of Closing,
Seller and Purchaser shall agree upon a Final Closing Statement, updating as of
the Effective Time all information set forth on the Preliminary Closing
Statement and making (subject to subparagraph (ii) below) a final determination
of the Compensation Amount (as so recalculated, the "Verified Compensation
Amount"), using the same method described in Section 3.1(C)(i) above, but
using for the items set forth in Section 3.1(C)(i)(a) through 3.1(C)(j)
above, the amount of such items as given on the Final Closing Statement. If
Seller and Purchaser are unable to agree on the Verified Compensation Amount in
such ninety day period, either party may, within ninety-five days after the
Effective Time, refer any disputes regarding the preparation of the Final
Closing Statement and/or the calculation of the Verified Compensation Amount to
the Mediator, whose determination on such matter (which shall be rendered
within forty-five days following such submission) shall be final and binding
upon Seller and Purchaser. The costs and expenses of such submission shall be
apportioned in accordance with paragraph (F) of this section.
(ii) Anything in the foregoing subparagraph (D)(i) to the
contrary notwithstanding, if the ninety day period specified therein for
determination of the Verified Compensation Amount is determined by mutual
agreement of the parties or by the Mediator to be inadequate to take into
account any final adjustments that may be required to be made pursuant to this
Agreement (such as but not limited to any adjustment in respect of the
Qualifying Real Estate and the Qualifying Leases), the period for calculation
of the Verified Compensation Amount shall be appropriately extended.
(iii) Notwithstanding paragraphs (i) and (ii) of Section
3.1(D) above, Purchaser and Seller agree that, at any time that the Compensation
Amount owed the other is greater than $100,000, Purchaser and Seller shall,
following the procedures set forth in
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<PAGE> 16
paragraphs (i) and (ii) of Section 3.1(D) hereof, agree upon an Interim
Closing Statement, updating as of the Effective Time all information set forth
on the Preliminary Closing Statement and making a determination as of such date
of the Compensation Amount (the "Interim Compensation Amount"). If Purchaser
and Seller are unable to agree on the Interim Compensation Amount within ten
days after the amount owed one party hereunder exceeds $100,000, either party
may refer such dispute to the Mediator, whose decision, which shall be rendered
within ten days of such submission, shall be final and binding on the parties.
The costs and expenses of such submission shall be apportioned in accordance
with paragraph (F) of this section.
(E) If the Interim Compensation Amount or the Verified Compensation
Amount is less than the Compensation Amount, Purchaser shall, no later than ten
days after Seller's and Purchaser's agreement on the Interim Compensation
Amount or the Verified Compensation Amount or a decision on any dispute by the
Mediator, as applicable, pay to Seller the amount of such difference, together
with interest thereon for each day from the Effective Time to the date of
payment at a rate per annum equal to 7% per annum. If the Interim
Compensation Amount or the Interim Verified Compensation Amount as so
determined is greater than the Compensation Amount, Seller shall, within the
time period described in the preceding sentence, pay Purchaser the amount of
such excess, together with interest thereon for each day from Effective Time to
the date of payment at a rate per annum equal to 7% per annum. All payments
shall be made in cash or immediately available funds.
(F) If Seller and Purchaser refer any disputes to the Mediator
regarding the preparation of the Final Closing Statement and/or the Verified
Compensation Amount and/or the Interim Closing Statement or Interim
Compensation Amount as is provided above or the allocation of the purchase
price as provided in Section 3.7, the Purchaser and Seller shall upon referring
any such dispute to the Mediator also submit to the Mediator the dollar amount
that each asserts is the proper Verified Compensation Amount or Interim
Compensation Amount or the proper purchase price allocation, as the case may
be. The costs and expenses of the Mediator shall be paid by the party whose
submission is farther from the amount found by the Mediator to be the proper
Verified or Interim Compensation Amount or purchase price allocation.
(G) Nothing contained in this Section 3.1 shall be in limitation of
the respective obligations of the parties, relating to payments and transfers
of funds, pursuant to any other provision of this Agreement.
3.2 Books and Records
Purchaser shall receive possession of, and right, title and interest
in and to, all books and records relating to the Transferred Property and the
Qualifying Assumed Liabilities which Seller ordinarily maintains at the
Banking Offices. Seller may retain possession of all other books and records
relating to Seller or the Banking Offices. In each case the books and records
directly relating to the Transferred Property, the Qualifying
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<PAGE> 17
Assumed Liabilities, or any other aspect of the condition or operations of any
of the Banking Offices, which are retained by one party, shall be open for
inspection by the other party and its authorized agents, representatives and
regulators during regular business hours after the Effective Time, and the
party with the right of inspection may, at its own expense, make copies of and
excerpts from such books and records as it may deem desirable. All books and
records described above shall be maintained for a period which is at least the
period required by law or the normal retention period of the party holding the
records, whichever is longer, unless the parties shall, applicable law
permitting, agree upon a shorter period.
3.3 Apportionment; Proration
Except as otherwise specifically provided in this Agreement, it is the
intention of the parties that Seller shall operate for its own account the
Banking Offices, the related business and the Transferred Property being
transferred under this Agreement up to and as of the Effective Time and that
Purchaser shall operate for its own account the Banking Offices, the related
business and Transferred Property after the Effective Time. Thus, except as
otherwise specifically provided in this Agreement, all items of income and
expense, including ad valorem and other taxes, assessments, utility and water
charges and insurance with respect to the Real Estate, premiums paid to the
Bank Insurance Fund, any and all prepayments, and all payments under the
Leases, shall be prorated as of the Effective Time, whether or not such
adjustment would normally be made as of such time, and all such prorations
shall be reflected in the Preliminary Closing Statement, any Interim Closing
Statement, and the Final Closing Statement.
3.4 Sales and Use Taxes
Any sales and use taxes which are payable or arise as a result of this
Agreement or the consummation of the transactions contemplated by this
Agreement shall be paid by Seller.
3.5 Identification of Fixed Assets
Seller has delivered to Purchaser, or provided Purchaser access to,
Seller's books and records identifying all Fixed Assets (by item or by category
as such records have been historically maintained by Seller) and setting forth
Seller's Book Value thereof as of November 30, 1994, and the rate of
amortization. A summary thereof is set forth on Schedule 3.5 annexed hereto.
3.6 Possession and Risk of Loss
From and after Effective Time, Purchaser shall be entitled to
possession of the Transferred Property, and all risk of loss thereto shall pass
to Purchaser as of Effective Time.
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<PAGE> 18
3.7 Allocation of Purchase Price and Reporting
(A) Purchaser and Seller acknowledge and agree that Schedule 3.7
annexed hereto constitutes a preliminary allocation of the total consideration
that shall flow between the parties hereto in connection with the transfer of
the Transferred Property and the assumption of the Qualifying Assumed
Liabilities among the constituent items of such Transferred Property and other
items set forth on Schedule 3.7, based upon the assumptions set forth in
Schedule 3.7 as to the estimated fair market value of all Transferred Property
expected to be transferred. In connection with reaching agreement upon a Final
Closing Statement pursuant to Section 3.1(D), Purchaser and Seller shall agree
upon adjustments to Schedule 3.7 to reflect the actual items and amounts of
Transferred Property as of the Effective Time, and any disputes regarding such
adjustments shall be resolved by the Mediator in the same manner as provided in
Section 3.1(D).
(B) In the preparation of all federal, state or local tax reports,
returns and/or filings in respect of income or gains taxes that relate in whole
or in part to the transactions contemplated hereby (including reporting
pursuant to applicable requirements of Section 1060 of the Internal Revenue
Code of 1986, as amended (the "Code"), Purchaser and Seller shall account for
such transactions in accordance with the allocation to be set forth in Schedule
3.7 annexed hereto, as finally adjusted.
(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 3.7 as finally
adjusted, the filing party shall, during the audit thereof, assert and maintain
in good faith the validity and correctness of such allocation; provided,
however, that this obligation shall terminate upon the issuance by the taxing
authority of a "30 Day Letter," or a determination of liability equivalent
thereof, 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 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 to this Agreement violates the provisions of this
Section 3.7, it shall pay as damages to the other party, if such other party
has not violated such provisions, 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 such amount,
is equal to the result (but not less than zero) of subtracting the amount as
described in clause (ii) below from the amount determined as described in
clause (i) below:
(i) The total amount of income or gains taxes (including
interest and penalties and calculated at the highest marginal rate applicable
in the relevant jurisdictions) to all jurisdictions imposing such taxes upon
the non-violating party with respect to the transactions which are the subject
of this Agreement; and
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<PAGE> 19
(ii) The total amount of income or gains taxes which would
have been incurred (calculated at the highest marginal rate applicable in the
relevant jurisdictions) to all jurisdictions imposing such taxes upon the
non-violating party with respect to the transactions which are the subject of
this Agreement determined as if such taxing jurisdictions accepted the
allocations specified in Schedule 3.7 annexed hereto.
IV. Closing; Post-Closing Procedures and Settlements, and Related Items
4.1 Closing
The closing of the purchase and sale of the Transferred Property and
assumption of the Qualifying Assumed Liabilities (the "Closing") described in
this Agreement shall take place on the Day of Closing at McNamee, Hosea,
Jernigan & Scott, P.A., Suite 200, 6411 Ivey Lane, Greenbelt, Maryland 20770,
at such time as Seller and Purchaser shall agree.
4.2 Post-Closing Procedures and Settlements
(A) Neither Seller nor Purchaser shall obtain the benefit of or bear
the risk of any items which are in transit as of the Effective Time and that
relate to any Qualifying Deposit Liabilities or Qualifying Loans. Adjustments
shall be made between the parties in respect of such items in the same manner
as if taken into account for determination of the Verified Compensation Amount.
(B) Annexed hereto as Schedule 4.2 is a non-exclusive list of
activities that will require the participation of Seller and Purchaser after
the Effective Time in respect of the Qualifying Deposit Liabilities. Within
ten days of the date hereof, each of Seller and Purchaser shall designate a
representative, and such persons shall, if they so choose, prepare and execute
a mutually agreeable written document (the "Procedure Document") describing the
procedures to be employed and the respective responsibilities of Purchaser and
Seller with respect to matters described on Schedule 4.2. If the Procedure
Document is prepared and executed, the provisions of this Agreement shall
control in the event of any conflict between the Procedure Document and this
Agreement.
(C) Items relating to Qualifying Deposit Liabilities presented or
returned unpaid to Seller after Effective Time shall be handled and settled in
the manner set out in Schedule 4.2 or the Procedure Document.
(D) (i) For four months after the Effective Time, or a shorter
period of time if Purchaser shall so instruct (but for six months with respect
to Federal Recurring Direct Deposits), Seller shall deliver to Purchaser each
Business Day, either via physical tape delivery or computer-to-computer
transmission, in a manner agreed to by Seller and Purchaser and, if by physical
delivery, to be picked up by the Purchaser at a location of Seller as mutually
agreed, the information received by Seller with respect to Automated
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<PAGE> 20
Clearing House ("ACH") debit and credit entries (including adjustment thereto)
to any account that constituted a Qualifying Deposit Liability. Each day's
delivery or transmission:
(a) shall be transmitted or available for pickup, as the
case may be, by 2:00 p.m. of the Business Day such
information is received by Seller;
(b) shall be in approved format;
(c) shall contain all NACHA-prescribed information
received by Seller, except for such changes as are
mutually agreed; and
(d) shall not contain information concerning accounts
which do not constitute Qualifying Deposit
Liabilities. Seller shall promptly notify Purchaser
of any claims or returns communicated to Seller in
respect of such entries.
(ii) Purchaser and Seller shall settle all claims, returns,
error and adjustments thereto.
(iii) Seller shall include in the listing described in
Paragraphs (D)(i)(a)-(d) above all outstanding stop payment orders respecting
ACH debits.
(iv) Purchaser shall, within forty-five days after the
Effective Time:
(a) notify all Federal government agencies which are
originators of Federal Recurring Direct Deposits and
which accept such notifications of each applicable
new account number and routing number; and
(b) inform other customers that they should promptly
notify companies which originate ACH entries to
their accounts of the relevant account changes.
(v) Each party shall defend, indemnify and hold harmless the
other party from and against any and all claims, losses, damages, judgments,
costs and expenses (including attorneys' fees) which the indemnified party may
suffer or be compelled to pay as a result of the negligence or failure to
adhere to the terms of this Section 4.2(D) on the part of the indemnifying
party. This Section 4.2(D)(v) shall survive the termination of this Agreement.
(vi) Each party shall be responsible for its own costs and
expenses in connection with its performance of its responsibilities under this
Section 4.2(D).
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(E) Any written instructions or other mail received by Seller
relating to the Qualifying Deposit Liabilities after the Effective Time will be
made available to Purchaser no later than the Business Day after such mail
arrives at Seller's central processing area and in accordance with such
procedures as Seller and Purchaser may mutually establish.
V. Representations and Warranties of Suburban and Seller
Each of Seller and Suburban hereby jointly and severally represents and
warrants to, and covenants with, Purchaser and Tysons as follows as of the date
hereof and as of all times up to and including the Effective Time (except as
otherwise provided):
5.1 Corporate Organization. (A) Suburban is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Suburban has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as such business is now
being conducted, and Suburban is duly licensed or qualified to do business in
Virginia and elsewhere where the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it make
such qualification necessary, except where the failure to be so licensed or
qualified is not reasonably likely to have a Material Adverse Effect on
Suburban. Suburban is duly registered as a bank holding company under the Bank
Holding Company Act of 1956, as amended. True and correct copies of the
Certificate of Incorporation and the Bylaws of Suburban, each as amended to the
date hereof, are attached hereto as Schedule 5.1(A).
(B) Seller is a national banking association organized, validly
existing and in good standing under the laws of the United States of America.
Seller has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as such business is now
being conducted, and Seller is duly licensed or qualified to do business in
each jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary, except where the failure to be so
licensed or qualified is not reasonably likely to have a Material Adverse
Effect on Seller. True and correct copies of the Charter and Bylaws of
Seller, as amended to the date hereof, are attached hereto as Schedule 5.1(B).
(C) Each of Suburban and Seller has in effect all federal, state,
local and foreign governmental, regulatory and other authorizations, permits
and licenses necessary for each of them to own or lease its properties and
assets and to carry on its business as now conducted, the absence of which,
either individually or in the aggregate, would have a Material Adverse Effect
on Suburban on a consolidated basis or on Seller.
(D) Except for Seller, Suburban does not own any capital stock of any
subsidiary, and Seller does not own any capital stock of any subsidiary, except
as listed on Schedule 5.1(D) attached hereto. Suburban and Seller do not have
any interest in any partnership or joint venture. For purposes of this
Agreement, a "subsidiary" means any
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corporation or other entity of which the party referred to beneficially owns,
controls, or has the power to vote, directly or indirectly, more than 5% of
the outstanding equity securities.
(E) The minute books of Suburban and Seller contain complete and
accurate records in all material respects of all meetings and other corporate
actions held or taken by their respective shareholders and Boards of Directors
(including all committees thereof).
5.2 Capitalization.
(A) The authorized capital stock of Seller consists of 1,055,000
shares of common stock, par value $5.00 per share, 1,055,000 shares of which as
of the date hereof are issued and outstanding (none of which are held in the
treasury of Seller) (the "Seller Shares"). All of the issued and outstanding
Seller Shares have been duly authorized and validly issued and all such
shares are fully paid and nonassessable. As of the date hereof, there are no
outstanding options, warrants, commitments or other rights or instruments to
purchase or acquire any shares of capital stock of Seller, or any securities
or rights convertible into or exchangeable for shares of capital stock of
Seller.
(B) Except as may be limited or required by applicable laws relating
to national banks, all of the issued and outstanding shares of capital stock of
Seller (i) are owned by Suburban; and (ii) are so owned free and clear of all
liens and encumbrances and adverse claims thereto.
5.3 Financial Statements; Filings.
(A) Suburban has previously delivered to Tysons copies of the
financial statements of Suburban as of and for the years ended December 31,
1991, 1992 and 1993, and the financial statements of Suburban as of and for the
periods ended March 31, 1994, June 30, 1994, and September 30, 1994, and
Suburban shall deliver to Tysons, as soon as practicable following the
preparation of additional financial statements for each subsequent calendar
quarter (or other reporting period) or year of Suburban, the financial
statements of Suburban as of and for such subsequent calendar quarter (or other
reporting period) or year through and including the Day of Closing (such
financial statements, unless otherwise indicated, being hereinafter referred to
collectively as the "Financial Statements of Suburban").
(B) Seller has previously delivered to Tysons copies of the financial
statements of Seller as of and for the years ended December 31, 1991, 1992 and
1993, and the financial statements of Seller as of and for the periods ended
March 31, 1994, June 30, 1994, and September 30, 1994, and Seller shall deliver
to Tysons, as soon as practicable following the preparation of additional
financial statements for each subsequent calendar quarter (or other reporting
period) or year of Seller, the financial statements of Seller as of and for
such subsequent calendar quarter (or other reporting period) or year through
and including the Day of Closing (such financial statements, unless otherwise
indicated, being hereinafter referred to collectively as the "Financial
Statements of Seller").
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(C) Each of the Financial Statements of Suburban and each of the
Financial Statements of Seller (including the related notes, where applicable)
have been or will be prepared in all material respects in accordance with
generally accepted accounting principles or regulatory accounting principles,
whichever is applicable, which principles have been or will be consistently
applied during the periods involved, except as otherwise noted therein, and the
books and records of Suburban and Seller have been, are being, and will be
maintained in all material respects in accordance with applicable legal and
accounting requirements and reflect only actual transactions. Each of the
Financial Statements of Suburban and each of the Financial Statements of Seller
(including the related notes, where applicable) fairly present or will fairly
present the financial position of Suburban and Seller (as the case may be) as
of the respective dates thereof in all material respects and fairly present or
will fairly present the results of operations of Suburban and Seller (as the
case may be) for the respective periods therein set forth in all material
respects.
(D) To the extent not prohibited by law, Seller has heretofore
delivered or made available, or caused to be delivered or made available, to
Tysons all reports and filings made or required to be made by Seller with the
Regulatory Authorities, and will from time to time hereafter furnish to Tysons,
upon filing or furnishing the same to the Regulatory Authorities, all such
reports and filings pertaining to, in connection with, or otherwise affecting
any of the Transferred Property made after the date hereof with the Regulatory
Authorities. As of the respective dates of such reports and filings, all such
reports and filings did not and shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not materially misleading.
(E) Since December 31, 1993, neither Suburban nor Seller has incurred
any obligation or liability (contingent or otherwise) that has or might
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Suburban on a consolidated basis or on Seller, except
obligations and liabilities (i) which are accrued or reserved against in the
Financial Statements of Suburban or the Financial Statements of Seller, or
reflected in the notes thereto, or (ii) which were incurred after December 31,
1993, in the ordinary course of business consistent with past practices. Since
December 31, 1993, neither Suburban nor Seller have incurred or paid any
obligation or liability which could have a Material Adverse Effect on Suburban
on a consolidated basis or on Seller, except as may have been incurred or paid
in the ordinary course of business, consistent with past practices.
5.4 Loan Portfolio. Except as set forth in Schedule 5.4, (i) to the
Knowledge of Seller, all evidences of indebtedness in original principal amount
in excess of $5,000 reflected as assets in the Financial Statements of Suburban
and the Financial Statements of Seller as of and for the year ended December
31, 1993, and the period ended September 30, 1994, were as of such dates in all
respects the binding obligations of the respective obligors named therein in
accordance with their respective terms, (ii) the allowances for possible loan
losses shown on the Financial Statements of Seller as of and for the year ended
December 31, 1993, and the period ended September 30, 1994, were, and the
allowance for possible loan losses to be shown on the Financial Statements of
Seller as of any date subsequent to the execution
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<PAGE> 24
of this Agreement will be, as of such dates, adequate to provide for possible
losses, net of recoveries relating to loans previously charged off, in respect
of loans outstanding (including accrued interest receivable) of Seller and other
extensions of credit (including letters of credit or commitments to make loans
or extend credit), (iii) each such allowance described in (ii) above has been
established in accordance with the accounting principles described in Section
5.3(C), and (iv) the Seller has not allocated any portion of any such allowance
described in (ii) to any specific Loans.
5.5 Certain Loans and Related Matters.
(A) Except as set forth in Schedule 5.5(A), Seller is not a party to
any written or oral: (i) loan agreement, note or borrowing arrangement (other
than credit card loans and other loans the unpaid balance of which does not
exceed $5,000 per loan) under the terms of which the obligor is sixty days
delinquent in payment of principal or interest or in default of any other
provision as of the date hereof; (ii) loan agreement, note or borrowing
arrangement which has been classified or, in the exercise of reasonable
diligence by Seller or any Regulatory Authority, should have been classified as
"substandard," "doubtful," "loss," "other loans especially mentioned", "other
assets especially mentioned' or any comparable classifications by such persons;
(iii) loan agreement, note or borrowing arrangement (including any loan
guaranty) with any director or executive officer of Suburban or Seller or any
1O% shareholder of Suburban, or any person, corporation or enterprise
controlling, controlled by or under common control with any of the foregoing;
or (iv) loan agreement, note or borrowing arrangement in violation of any law,
regulation or rule applicable to Seller, including, but not limited to, those
promulgated, interpreted or enforced by any of the Regulatory Authorities and
which violation could have a Material Adverse Effect on Seller. As of the
date of any Financial Statement of Seller and any Call Report of Seller
subsequent to the execution of this Agreement, including the date of
the Financial Statements of Seller that immediately precede the Effective Time,
there shall not have been any material increase in the loan agreements, notes
or borrowing arrangements described in (i) through (iv) above and Schedule
5.5(A).
(B) Except as set forth on Schedule 5.5(B), with respect to each of
the Qualifying Loans: (i) all principal balances, accrued loan interest,
outstanding balances, accrued fee or commission income, security deposits,
escrow accounts and similar items, accrued late charges and accrued credit
life, personal mortgage, credit accident, health, property, casualty and fire
insurance premiums, as reflected in the books and records of Seller are true,
correct and complete, except for discrepancies that are not reasonably likely
to have a Material Adverse Effect on Seller or the Qualifying Loans as a whole;
(ii) to the Seller's Knowledge, all such Qualifying Loans and all related
documentation, including, but not limited to, promissory notes, loan
agreements, deeds of trust, certificates of title, mortgages, liens, pledges,
pledges of certificates of deposit, guarantees, endorsements, security
agreements, financing statements and security interests, have been made and
executed in the course of business, are in full force and effect, and
constitute binding obligations of the named parties therein, as the case may
be, enforceable in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, or similar laws and
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principles of equity; (iii) all payments of principal and interest on the
Qualifying Loans are current (not more than thirty days past due as to
principal or interest); (iv) none of the obligors, including borrowers or
guarantors, on any Qualifying Loan is involved (as a debtor), to the Seller's
Knowledge, in any pending case or proceeding under any provision of the United
States Bankruptcy Code, or is indebted to Seller on any other Loan at the
Closing which would not be in conformity with Seller's representations
contained in (ii), (iii) and (v) of this Section 5.5; (v) to the Seller's
Knowledge, no disputes, defenses, offsets, counterclaims or other discrepancies
exist, are pending, have been threatened in writing, apply to or are assertable
with respect to any of the Qualifying Loans, and none of the Qualifying Loans
is the subject of any pending or written threats of litigation or have been
placed on nonaccrual by Seller on its books, except for disputes and
discrepancies which are not reasonably likely to have a Material Adverse
Effect on Seller or the Qualifying Loans as a whole; (vi) the rate of interest
and all other fees, commissions, and charges imposed on each Qualifying Loan
are duly authorized by law and are not in excess of any maximum allowed by
applicable law, except for discrepancies which are not reasonably likely to
have a Material Adverse Effect on Seller or the Qualifying Loans as a whole;
(vii) to the Seller's Knowledge, all requirements of applicable state, federal
and local laws and regulations have been properly and timely complied with in
connection with each such Qualifying Loan, except for noncompliances which are
not reasonably likely to have a Material Adverse Effect on Seller or the
Qualifying Loans as a whole; and (viii) to the Seller's Knowledge, each
security instrument (including, without limitation, each deed of trust,
mortgage, assignment, pledge and security agreement) taken or granted in
connection with any such Qualifying Loan creates a valid and enforceable
security interest in the property described therein which has been duly
perfected and constitutes a valid first lien, as reflected in the loan file
relating to such Qualifying Loan, subject as to enforceability to the
subsequent application of bankruptcy or similar laws and principles of equity,
except for discrepancies which are reasonably likely to have a Material Adverse
Effect on Seller or the Qualifying Loans as a whole.
(C) Except as set forth on Schedule 5.5(C) hereto, to the Seller's
Knowledge, the collateral securing each of the Qualifying Loans is insured
against property, casualty and fire, loss in an amount at least equal to the
principal balance outstanding under each Qualifying Loan under policies of
insurance that are in full force and effect and on which the premiums have been
paid up through and including the date hereof.
(D) No collateral which secures any of the Qualifying Loans is
collateral for any other Loan or is subject to any cross collaterization
agreement. Seller and Suburban hereby waive any right either of them may have
under any dragnet provision in security documents which relates to any loan
retained by Seller or Suburban and such dragnet provisions shall not reach
collateral which is specifically described as collateral for or transferred
with any Loan purchased by Purchaser.
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5.6 Qualifying Other Agreements. All of the Other Agreements are
described on Schedule 5.6 annexed hereto. All Qualifying Other Agreements
and all repurchase agreements relating to Investment Securities ("Repos") are
valid and binding in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, or similar laws and principles of equity,
and as of the Effective Time, there shall not exist, to Seller's knowledge, any
material default (or condition or event with which notice, lapse of time or
both would constitute a material default) with respect to any such agreements,
and the Seller, as of the Effective Time, shall have the right, power and
authority to assign the Qualifying Other Agreements and Repos to Purchaser and
such assignment shall not constitute, whether with the passage of time or
otherwise, a material breach, default or event of default under the Qualifying
Other Agreements or Repos, as the case may be.
5.7 Authority; No Violation.
(A) Seller has full corporate power and authority to execute and
deliver this Agreement and, subject to the approval of the shareholder of
Seller and to the receipt of the required Consents of the Regulatory
Authorities and other parties, to consummate the transactions contemplated
hereby. The Board of Directors of Seller has duly and validly approved this
Agreement and the transactions contemplated hereby, has authorized the
execution and delivery of this Agreement, has directed that this Agreement and
the transactions contemplated hereby be submitted to Seller's shareholder for
approval at a meeting of such shareholder or by written consent in lieu thereof
and, except for the adoption of such Agreement by its shareholder, no other
corporate proceedings on the part of Seller are necessary to consummate the
transactions so contemplated. This Agreement constitutes a valid and binding
obligation of Seller, and is enforceable against Seller in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors rights generally and except that the availability of
the equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceeding may be brought.
(B) Suburban has full corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder. The Board of
Directors of Suburban has duly and validly approved this Agreement and the
transactions contemplated hereby, has authorized the execution and delivery of
this Agreement, has approved this Agreement as sole shareholder of Seller, has
directed that this Agreement and the transactions contemplated hereby be voted
in favor of and approved by a duly authorized officer of Suburban as a proxy on
behalf of Suburban, and no other corporate proceedings on the part of Suburban
are necessary to consummate the transactions so contemplated. This Agreement,
when duly and validly executed by Suburban and delivered by Suburban, will
constitute a valid and binding obligation of Suburban and will be enforceable
against Suburban in accordance with its terms.
(C) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby, nor compliance with any
of the
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<PAGE> 27
terms or provisions hereof, will (i) violate any provision of the Charter or
Bylaws of Seller or the Certificate of Incorporation or Bylaws of Suburban or
Seller, (ii) assuming that the Consents of the Regulatory Authorities and other
parties referred to herein are duly obtained, violate any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to Suburban or Seller or any of their respective properties or
assets, or (iii) violate, conflict with, result in a breach of any provisions
of, constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, result in the termination of,
accelerate the performance required by or result in the creation of any lien,
security interest, charge or other encumbrance upon any of the respective
properties or assets of Suburban or Seller under, any of the terms, conditions
or provisions of any material note, bond, mortgage, indenture, deed of trust,
license, permit, lease, agreement or other instrument or obligation to which
Suburban or Seller is a party, or by which any of them or any of their
respective properties or assets may be bound or affected, except for such
violations, conflicts, breaches, defaults or other actions which are not
reasonably likely to have a Material Adverse Effect on Seller or consummation
of the transactions contemplated hereby.
5.8 Consents and Approvals. Except for (i) the Consent of the OCC; (ii)
approval of this Agreement by the shareholder of Seller; and (iii) as set forth
in Schedule 5.8, no Consents of any person are necessary in connection with the
execution and delivery by Seller of this Agreement and the consummation by
Seller of the transactions contemplated hereby.
5.9 Broker's Fees. Except for the retention of Baxter Fentriss and
Company by Suburban, which shall bear the fees and expenses thereof, neither
Suburban nor Seller, nor any of their respective officers or directors, has
employed any broker or finder or incurred any liability for any broker's fees,
commissions or finder's fees in connection with any of the transactions
contemplated by this Agreement.
5.10 Absence of Certain Changes or Events. Since December 31, 1993,
there has not been (i) any declaration, payment or setting aside of any
dividend or distribution (whether in cash, stock or property) in respect of
the Seller Shares or (ii) any change or any event involving a prospective
change in the condition of Seller which has had, or is reasonably likely to
have, a Material Adverse Effect on Seller, including, without limitation
any change in the administration or supervisory standing or rating of Seller
with any Regulatory Authority, and no fact or condition exists as of the date
hereof which might reasonably be expected to cause any such event or change in
the future.
5.11 Legal Proceedings; etc. (i) Neither Suburban nor Seller is a party
to any, and there are no pending or, to the Knowledge of Seller, threatened,
judicial, administrative, arbitral or other proceedings, claims, actions,
causes of action or governmental investigations against Suburban or Seller
challenging the validity of the transactions contemplated by this Agreement or
which are reasonably likely to have a Material Adverse Effect on Seller, (ii)
there is no material proceeding, claim, action or governmental investigation
against Suburban or Seller; (iii) no judgment, decree, injunction, rule or
order of any court, governmental department, commission, agency,
instrumentality or arbitrator is outstanding against Suburban
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or Seller which has a Material Adverse Effect on Suburban on a consolidated
basis or on Seller or on the Transferred Property; (iv) there is no default by
Seller under any material contract or agreement to which Suburban or Seller is
a party which is reasonably likely to prevent the consummation of the
transactions contemplated by this Agreement or have a Material Adverse Effect
on the Transferred Property; and (v) neither Suburban nor Seller is a party to
any agreement, order or memorandum in writing by or with any Regulatory
Authority restricting the operations of Suburban or Seller and neither Suburban
nor Seller has been advised by any Regulatory Authority that any such
Regulatory Authority is contemplating issuing or requesting the issuance of any
such order or memorandum in the future; provided that Purchaser and Tysons
acknowledge that Seller has executed a Stipulation and Consent to the Issuance
of an Order to Cease and Desist dated February 6, 1991, which has been
accepted by the OCC and Suburban has executed a letter agreement dated February
6, 1991, with the Federal Reserve, each of which may be deemed to be an
exception to the representations in clauses (iii) and (v) above.
5.12 Taxes and Tax Returns.
(A) Suburban has previously delivered or made available to Tysons
copies of the consolidated federal income tax returns of Suburban and, if
consolidated returns do not exist for all periods, of Seller, for the years
1991, 1992 and 1993, and all schedules and exhibits thereto, and will provide
Tysons with a copy of its federal income tax return for the year 1994 with all
schedules and exhibits thereto, when such return is filed. To the Knowledge of
Seller, such returns have not been examined by the Internal Revenue Service.
Except as reflected in Schedule 5.12(A), Seller has duly filed in materially
correct form all federal, state and local information returns and tax returns
required to be filed by it on or prior to the date hereof, and Seller has duly
paid or made adequate provisions for the payment of all taxes and other
governmental charges which have been incurred or are due or claimed to be due
from it by any federal, state or local taxing authorities (including, without
limitation, those due in respect of the properties, income, business, capital
stock, deposits, franchises, licenses, sales and payrolls of Suburban and
Seller and any entity to which either of them is deemed to be a successor)
other than taxes and other charges which (i) are not yet delinquent, (ii) are
being contested in good faith, or (iii) have not been finally determined. The
amounts set forth as liabilities for taxes on the Financial Statements of
Seller are sufficient, to the Knowledge of the Seller, in the aggregate, for
the payment of all unpaid federal, state and local taxes (including any
interest or penalties thereon), whether or not disputed, accrued or applicable,
for the periods then ended, and have been computed in accordance with generally
accepted accounting principles. Neither Suburban nor Seller is responsible
for the taxes of any other person other than Suburban and Seller under Treasury
Regulation 1.1502-6 or any similar provision of federal, state or foreign law.
(B) (i) Proper and accurate amounts have been withheld by Seller from
its employees and others for all prior periods in compliance in all material
respects with the tax withholding provisions of all applicable federal, state
and local laws and regulations, and proper due diligence steps have been taken
in connection with back-up withholding, (ii) federal, state and local returns
have been filed by Seller for all periods for which returns were
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<PAGE> 29
due with respect to income tax withholding, Social Security and unemployment
taxes and (iii) the amounts shown on such returns to be due and payable have
been paid in full or adequate provision therefor has been included by Seller in
the Financial Statements of Seller, except in each case for any such failure
which is not reasonably likely to have a Material Adverse Effect on Seller or
any of the Transferred Property.
5.13 Employee Benefit Plans.
(A) Seller does not have or maintain any "employee benefit plan," as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), except as described in Schedule 5.13.
(B) Neither Seller nor any pension plan maintained by Seller has
incurred any liability to the Pension Benefit Guaranty Corporation ("PBGC") or
the Internal Revenue Service with respect to any pension plan qualified under
Section 401 of the Code, except liabilities to the PBGC pursuant to Section
4007 of ERISA, all which have been fully paid. No reportable event under
Section 4043(b) of ERISA (including events waived by PBGC regulation) has
occurred with respect to any such pension plan.
(C) Seller has not incurred any material liability under Section 4201
of ERISA for a complete or partial withdrawal from, or agreed to participate
in, any multi-employer plan as such term is defined in Section 3(37) of ERISA.
(D) All "employee benefit plans," as defined in Section 3(3) of
ERISA, that are maintained by Seller comply in all material respects with
ERISA. Seller does not have any material liability under any such plan that is
not reflected in the Financial Statements of Seller or that is reasonably
likely to have a Material Adverse Effect on Seller or any of the Transferred
Property.
(E) No prohibited transaction (which shall mean any transaction
prohibited by Section 406 of ERISA and not exempt under Section 408 of ERISA)
has occurred with respect to any employee benefit plan maintained by Seller (i)
which would result in the imposition, directly or indirectly, of a material
excise tax under Section 4975 of the Code or a material civil penalty under
Section 502(i) of ERISA or which is reasonably likely to have a Material
Adverse Effect on Seller or any of the Transferred Property, or (ii) the
correction of which would have a Material Adverse Effect on Seller; and, to the
best Knowledge of Seller, no actions have occurred which could result in the
imposition of a penalty under any section or provision of ERISA which is
reasonably likely to have a Material Adverse Effect on Seller or any of the
Transferred Property.
(F) No employee benefit plan which is a defined benefit pension plan
has any "unfunded current liability," as that term is defined in Section
302(d)(8)(A) of ERISA, and the present fair market value of the assets of any
such plan exceeds the plan's "benefit liabilities," as that term is defined in
Section 4001(a)(16) of ERISA, when determined under
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<PAGE> 30
actuarial factors that would apply if the plan terminated in accordance with
all applicable legal requirements.
(G) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
material payment (including, without limitation, severance, unemployment
compensation, golden parachute or otherwise) becoming due to any director or
any officer or employee of Seller under any benefit plan or otherwise, (ii)
materially increase any benefits otherwise payable under any benefit plan, or
(iii) result in any acceleration of the time of payment or vesting of any such
benefits to any material extent, in each case if such event could have any
effect on Tysons, Purchaser, any of the Transferred Property, or consummation
of the transactions contemplated hereby.
5.14 Title and Related Matters.
(A) Except as set forth in Schedule 5.14(A), Seller has good title to
all of the Transferred Property, real or personal, tangible or intangible,
reflected as owned by or leased or subleased by or carried under its name on
the Financial Statements of Seller or acquired subsequent thereto (except to
the extent that such assets and properties have been disposed of for fair value
in the ordinary course of business since December 31, 1993), free and clear of
all liens, encumbrances, mortgages, security interests, restrictions, pledges
or claims, except for (i) those liens, encumbrances, mortgages, security
interests, restrictions, pledges or claims reflected in the Financial
Statements of Seller or incurred in the ordinary course of business after
December 31, 1993, (ii) statutory liens for amounts not yet delinquent or which
are being contested in good faith, and (iii) liens, encumbrances, mortgages,
security interests, pledges, claims and title imperfections that are not likely
to have in the aggregate a Material Adverse Effect on Seller.
(B) All the Leases are valid, binding and enforceable in accordance
with their respective terms, and there is not, under any of such Qualifying
Leases, any existing default or event of default, or any event which
with notice or lapse of time, or both, would constitute a default or force
majeure, or provide the basis for any other claim of excusable delay or
nonperformance, except for defaults which individually or in the aggregate
would not have a Material Adverse Effect on Seller.
(C) To Seller's Knowledge, all of the material personal properties
owned, leased or subleased by Seller and included in the Transferred Property
are in good operating condition and repair, subject only to ordinary wear and
tear and/or minor defects which do not interfere with the continued use thereof
in the conduct of normal operations. The Seller as of the Effective Time shall
have the right, power and authority to assign each Qualifying Lease which
constitutes a part of the Transferred Property and such assignment shall not
constitute, with notice, with the passage of time or otherwise, a breach,
default or event of default under such Qualifying Lease or any other agreement
by which the Seller or any of its properties are bound.
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5.15 Real Estate.
(A) Other than the lease described in Schedule 2.39 attached hereto,
neither Suburban nor Seller has any ownership or leasehold interest (other
than in any Real Estate or interest in Real Estate held as collateral for any
Loan) in any Qualifying Real Estate.
(B) Schedule 2.39 lists or otherwise describes the only written or
oral Lease under which Seller is the lessee of any Qualifying Real Estate. All
rentals due under such lease have been paid and there exists no material
default under the terms of such lease and no event has occurred which, upon
the passage of time or giving of notice, or both, would result in any event of
default or prevent Seller from exercising and obtaining the benefits of any
options or other rights contained therein. Seller has all right, title and
interest as a lessee under the terms of each Qualifying Lease, free and clear
of all liens, claims or encumbrances (other than the rights of the lessor),
and each such lease is valid and in full force and effect. Seller has the
right under such lease to occupy, use, possess, and control the property
leased by Seller and, as of the Effective Time, shall have obtained the
consent of the landlord and any other applicable person with respect to the
transfer of each Qualifying Lease, including the lease for the (Qualifying
Real Estate, and shall have the right to transfer each Qualifying Lease
pursuant to this Agreement.
(C) Seller has not violated, or is currently in violation of, any
law, regulation or ordinance relating to the ownership or use of the
Qualifying Real Estate, including, but not limited to any law, regulation or
ordinance relating to zoning, building, occupancy, environmental or comparable
matter which individually or in the aggregate would have a Material Adverse
Effect on Seller.
(D) As to each parcel of Qualifying Real Estate owned or used by
Seller, Seller has not received notice of any pending or, to the Knowledge of
Seller, threatened condemnation proceedings, litigation proceedings or
mechanics or materialmen's liens.
5.16 Environmental Matters.
(A) Each of Seller, the Participation Facilities (as defined
below), and, to the Seller's Knowledge, the Loan Properties (as defined below)
are, and have been, in compliance with all applicable laws, rules,
regulations, standards and requirements of the United States Environmental
Protection Agency and all state and local agencies with jurisdiction over
pollution or protection of the environment, except for violations which,
individually or in the aggregate, will not have a Material Adverse Effect on
Seller or the Transferred Property.
(B) There is no litigation pending or, to the Knowledge of Seller,
threatened before any court, governmental agency or board or other forum in
which Seller or any Participation Facility has been or, with respect to
threatened litigation, may be, named as defendant (i) for alleged
noncompliance (including by any predecessor), with any Environmental Law (as
defined below) or (ii) relating to the release into the environment of
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any Hazardous Material (as defined below) or oil, whether or not occurring or
on a site owned, leased or operated by Suburban or Seller or any Participation
Facility, except for such litigation pending or threatened that will not,
individually or in the aggregate, have a Material Adverse Effect on Seller or
the Transferred Property.
(C) There is no litigation pending or, to the Knowledge of Seller,
threatened before any court, governmental agency or board or other forum in
which any Loan Property (or Seller in respect of such Loan Property) has been
or, with respect to threatened litigation, may be, named as a defendant or
potentially responsible party (i) for alleged noncompliance (including by any
predecessor) with any Environmental Law or (ii) relating to the release into
the environment of any Hazardous Material or oil, whether or not occurring at,
on or involving a Loan Property, except for such litigation pending or
threatened that will not individually or in the aggregate, have a Material
Adverse Effect on Seller or the Transferred Property.
(D) To the Knowledge of Seller, there is no reasonable basis for
any litigation of a type described in Sections 5.16(B) or 5.16(C) of this
Agreement, except as will not have, individually or in the aggregate, a
Material Adverse Effect on Seller or the Transferred Property.
(E) During the period of (i) ownership or operation by Seller of
any of its current properties, (ii) participation by Seller in the management
of any Participation Facility, or (iii) holding by Seller of a security
interest in any Loan Property, there have been no releases of Hazardous
Material or oil in, on, under or affecting such current properties, any such
Participation Facility, or, to the Seller's Knowledge, any such Loan Property,
except where such releases have not and will not, individually or in the
aggregate, have a Material Adverse Effect on Seller or the Transferred
Property.
(F) Prior to the period of (i) ownership or operation by Seller of
any of their respective current properties, (ii) participation by Seller in
the management of any Participation Facility, or (iii) holding by Seller of a
security interest in any Loan Property, to the Knowledge of Seller, there were
no releases of Hazardous Material or oil in, on, under or affecting any such
property, Participation Facility or Loan Property, except where such releases
have not and will not, individually or in the aggregate, have a Material
Adverse Effect on Seller or the Transferred Property.
(G) "Environmental Law" means any federal, state, local or foreign
law, statute, ordinance, role, regulation, code, license, permit,
authorization, approval, consent, order, judgment, decree, injunction or
agreement with any regulatory agency relating to (i) the protection,
preservation or restoration of the environment (including, without limitation,
air, water vapor, surface water, groundwater, drinking water supply, surface
soil, subsurface soil, plant and animal life or any other natural resource),
and/or (ii) the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production, release or
disposal of any substance presently listed, defined, designated or classified
as hazardous, toxic, radioactive or dangerous, or otherwise regulated, whether
by type or by
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substance as a component. "Loan Property" means any property owned by Seller
or in which Seller holds a security interest, and, where required by the
context, includes the owner or operator of such property, but only with
respect to such property; "Hazardous Material" means any pollutant,
contaminant, or hazardous substance within the meaning of the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C.
Section 9601 et seq., or any similar federal, state or local law.
"Participation Facility" means any facility in which Seller participates in
the management and, where required by the context, includes the owner or
operator of such facility, but only with respect to such facility.
5.17 Commitments and Contracts. Except as set forth in Schedule 5.17,
Seller is not a party or subject to any of the following (whether written or
oral, express or implied) that will or may, upon consummation of this
Agreement, bind or otherwise apply to or affect Tysons or Purchaser in any
manner:
(A) Any employment contract or understanding (including any
understandings or obligations with respect to severance or termination pay
liabilities or fringe benefits) with any present or former officer, director,
employee, including in any such person's capacity as a consultant (other than
those which either are terminable at will without any further mount being a
payable thereunder or as a result of such termination by Seller);
(B) Any labor contract or agreement with any labor union;
(C) Any contract covenants which limit the ability of Seller to
compete in any line of business or which involve any restriction of the
geographical area in which Seller may carry on its business (other than as may
be required by law or applicable regulatory authorities);
(D) Any Lease (other than the Lease described on Schedule 2.39) or
other agreements or contracts with annual payments aggregating $5,000 or more;
or
(E) Any other contract or agreement which would be required to be
disclosed in reports filed by Seller with the FDIC and which has not been so
disclosed.
5.18 Regulatory Matters. Neither Suburban nor Seller has agreed to take
any action or has any knowledge of any fact or has agreed to any circumstance
that would materially impede or delay receipt of any Consents of any
Regulatory Authorities referred to in this Agreement including, matters
relating to the Community Reinvestment Act and protests thereunder and the
Home Mortgage Disclosure Act; provided that Purchaser and Tysons acknowledge
that Seller has executed a Stipulation and Consent to the Issuance of an Order
to Cease and Desist dated February 6, 1991, which has been accepted by the OCC
and Suburban has executed a letter agreement dated February 6, 1991, with the
Federal Reserve.
5.19 Takeover Laws. This Agreement and the transactions contemplated
hereby are not subject to or restricted by any applicable bank regulatory
change of control regulation
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or state antitakeover statute or any similar provision contained in or
permitted by Seller's or Suburban's charter or bylaws.
5.20 Insurance. Seller is presently insured, and during each of the past
three calendar years has been insured, for reasonable amounts against such
risks as companies or institutions engaged in a similar business would, in
accordance with good business practice, customarily be insured. To the
Knowledge of Seller, the policies of fire, theft, liability and other
insurance maintained with respect to the assets or businesses of Seller
provide adequate coverage against loss, and the fidelity bonds in effect as to
which Seller is named an insured are sufficient for their purpose. Such
policies of insurance are listed and described in Schedule 5.20.
5.21 Labor. No work stoppage involving Seller is pending as of the date
hereof or, to the Knowledge of Seller, threatened. Seller is not involved in,
or, to the Knowledge of Seller, threatened with or affected by, any proceeding
asserting that Seller has committed an unfair labor practice or any labor
dispute, arbitration, lawsuit or administrative proceeding which might
reasonably be expected to have a Material Adverse Effect on Seller. No union
represents or claims to represent any employees of Seller, and, to the
Knowledge of Seller, no labor union is attempting to organize employees of
Seller.
5.22 Compliance with Laws. Seller has conducted its business in
accordance with all applicable federal, foreign, state and local laws,
regulations and orders, and is in compliance with such laws, regulations and
orders, except for such violations or non-compliance, which when taken
together as a whole, will not have a Material Adverse Effect on Seller or the
Transferred Property. Except as disclosed in Schedule 5.22, Seller:
(A) Is not in violation of any laws, regulations, orders or permits
applicable to its business or the employees or agents or representatives
conducting its business, except for violations which individually or in the
aggregate do not have and will not have a Material Adverse Effect on Seller or
the Transferred Property; and
(B) Has not received a notification or communication from any
agency or department of federal, state or local government or the Regulatory
Authorities or the staff thereof (i) asserting that Seller is not in
compliance with any laws or orders which such governmental authority or
Regulatory Authority enforces, where such noncompliance is not reasonably
likely to have a Material Adverse Effect on Seller or the Transferred
Property, (ii) threatening to revoke any permit, the revocation of which is
not reasonably likely to have a Material Adverse Effect on Seller or the
Transferred Property, (iii) requiring Seller to enter into any cease and
desist order, formal agreement, commitment or memorandum of understanding, or
to adopt any resolutions or similar undertakings, or (iv) directing,
restricting or limiting, or purporting to direct, restrict or limit in any
manner, the operations of Seller, including, without limitation, any
restrictions on the payment of dividends; provided that Purchaser and Tysons
acknowledge that Seller has executed a Stipulation and Consent to the Issuance
of an Order to Cease and Desist dated February 6, 1991, which has been
accepted by the OCC and Suburban has executed a letter agreement dated
February 6, 1991,
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with the Federal Reserve, each of which may be deemed to be an exception to
the representations in clauses (i) and (iii) above.
5.23 Transactions with Management. Except with respect to (A) deposits,
all of which are on terms and conditions comparable to those made available to
other customers of Seller at the time such deposits were entered into, (B)
ordinary payments of salary and employment related benefits, consistent with
past practice, (C) the agreements listed on Schedule 5.17, and (D) the items
described on Schedule 5.23, there are no transactions between, contracts with
or commitments to present or former stockholders, directors, officers or
employees involving the expenditure of more than $1,000 as to any one
individual, including, with respect to any business directly or indirectly
controlled by any such person, or $5,000 for all such contracts for
commitments in the aggregate for all such individuals.
5.24 Deposit Insurance. The deposit accounts of Seller are insured by
the Bank Insurance Fund in accordance with the provisions of the Federal
Deposit Insurance Act (the "FDIA"), and Seller has paid all regular premiums
and special assessments and filed all reports required under the FDIA.
5.25 Untrue Statements and Omissions. No representation or warranty
contained in Article V of this Agreement or in the Schedules of Suburban or
Seller contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
VI. Representations and Warranties of Purchaser and Tysons
Tysons and Purchaser hereby jointly and severally represent and
warrant to, and covenant with, Suburban and Seller as follows as of the date
hereof and also on the Effective Time (except as otherwise provided):
6.1 Organization and Related Matters of Tysons.
(A) Tysons is a corporation duly organized, validly existing and in
good standing under the laws of the State of Virginia. Tysons has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as now conducted, or as proposed to be conducted
pursuant to this Agreement, and Tysons is licensed or qualified to do business
in each jurisdiction in which the nature of the business conducted by Tysons,
or the character or location of the properties and assets owned or leased by
Tysons makes such licensing or qualification necessary, except where the
failure to be so licensed or qualified (or steps necessary to cure such
failure) would not have a Material Adverse Effect on Tysons on a consolidated
basis. Tysons is duly registered as a bank holding company under the Bank
Holding Company Act of 1956, as amended. True and correct copies of the
Articles of Incorporation of Tysons and the Bylaws of Tysons, each as amended
to the date hereof, have been made available to Seller.
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(B) Tysons has in effect all federal, state, local and foreign
governmental, regulatory and other authorizations, permits and licenses
necessary for it to own or lease its properties and assets and to carry on its
business as now conducted, the absence of which, either individually or in the
aggregate, would have a Material Adverse Effect on Tysons on a consolidated
basis.
(C) The minute books of Tysons contain complete and accurate
records in all material respects of all meetings and other corporate actions
held or taken by the shareholders and Boards of Directors of Tysons.
6.2 Organization and Related Matters of Purchaser.
(A) Purchaser is a national banking association duly organized,
validly existing and in good standing under the laws of the United States of
America. Purchaser has the corporate power and authority to own or lease all
of its properties and assets and to carry on its business as now conducted, or
as proposed to be conducted pursuant to this Agreement, and Purchaser is or
will be licensed or qualified to do business in each jurisdiction which the
nature of the business conducted or to be conducted by Purchaser, or the
character or location or the properties and assets owned or leased by
Purchaser make such licensing or qualification necessary, except where the
failure to be so licensed or qualified (or steps necessary to cure such
failure) would not have a Material Adverse Effect on Tysons on a consolidated
basis. True and correct copies of the Articles of Incorporation and Bylaws of
Purchaser, as each may be amended to the date hereof, will be made available
to Seller.
(B) Purchaser, as of the Effective Time, will have in effect all
federal, state, local and foreign governmental, regulatory or other
authorizations, permits and licenses necessary for it to own or lease its
properties and assets and to carry on its business as proposed to be
conducted, the absence of which, either individually or in the aggregate,
would have a Material Adverse Effect on Tysons on a consolidated basis.
(C) As of the Effective Time, the minute books of Purchaser will
contain complete and accurate records in all material respects of all meetings
and other corporate actions held or taken by the shareholders and Board of
Directors of Purchaser.
6.3 Capitalization. As of September 30, 1994, the authorized capital
stock of Tysons consisted of 10,000,000 shares of common stock, par value
$5.00 per share, 668,619 shares of which are issued and outstanding (exclusive
of any such shares held in the treasury of Tysons as of the date hereof), and
10,000,000 shares of preferred stock, par value $1.00 per share, none of which
is issued and outstanding as of the date hereof. All issued and outstanding
shares of common stock of Tysons have been duly authorized and validly issued,
and all such shares am fully paid and nonassessable.
6.4 Authorization. The execution, delivery, and performance of this
Agreement, and the consummation of the transactions contemplated hereby and in
any related agreements, have been or, as of the Effective Time, will have been
duly authorized by the
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Boards of Directors of Tysons and Purchaser, and no other corporate
proceedings on the part of Tysons or Purchaser are or will be necessary to
authorize this Agreement and the transactions contemplated hereby. This
Agreement is the valid and binding obligation of Tysons and Purchaser
enforceable against each in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the
discretion of the court before which any proceeding may be brought. Neither
the execution, delivery or performance of this Agreement nor the consummation
of the transactions contemplated hereby will (i) violate any provision of the
Articles of Incorporation or Bylaws of Tysons or the Articles of Incorporation
or Bylaws of Purchaser or, (ii) to Tysons' knowledge and assuming that any
necessary Consents are duly obtained, (A) violate, conflict with, result in a
breach of any provisions of, constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, result in
the termination of, accelerate the performance required by or result in the
creation of any lien, security interest, charge or other encumbrance upon any
of the properties or assets of Tysons or Purchaser under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of
trust, license, permit, lease, agreement or other instrument or obligation to
which Tysons or Purchaser is a party, or by which Tysons or Purchaser or any
of their respective properties or assets may be bound or affected, (B) violate
any statute, code, ordinance, rule, regulation, judgment, order, writ, decree
or injunction applicable to Tysons or Purchaser or any of their respective
material properties or assets, except for (X) such conflicts, breaches or
defaults as are set forth in Schedule 6.4; and (Y) with respect to (B) above,
such as individually or in the aggregate will not have a Material Adverse
Effect on Tysons on a consolidated basis.
6.5 Financial Statements.
(A) Tysons has made available to Seller copies of the consolidated
financial statements of Tysons as of and for the years ended December 31, 1992
and 1993, and as of and for the periods ended March 31, 1994, June 30, 1994,
and September 30, 1994, and Tysons will make available to Seller, as soon as
practicable following the preparation of additional consolidated financial
statements for each subsequent calendar quarter or year of Tysons, the
consolidated financial statements of Tysons as of and for such subsequent
calendar quarter or year through and including the Day of Closing (such
consolidated financial statements, unless otherwise indicated, being
hereinafter referred to collectively as the "Financial Statements of Tysons").
(B) Each of the Financial Statements of Tysons (including the
related notes) have been or will be prepared in all material respects in
accordance with generally accepted accounting principles, which principles
have been or will be consistently applied during the periods involved, except
as otherwise noted therein, and the books and records of Tysons have been, are
being, and will be maintained in all material respects in accordance with
applicable legal and accounting requirements and reflect only the actual
transactions. Each of the Financial Statements of Tysons (including the
related notes) fairly presents or will
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fairly present the consolidated financial position of Tysons as of the
respective dates thereof in all material respects and fairly presents or will
fairly present the results of operations of Tysons for the respective periods
therein set forth in all material respects.
(C) Since December 31, 1993, Tysons has not incurred any obligation
or liability (contingent or otherwise) that has or might reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect
on Tysons on a consolidated basis, except obligations and liabilities (i)
which are accrued or reserved against in the Financial Statements of Tysons or
reflected in the notes thereto, and (ii) which were incurred after December
31, 1993, in the ordinary course of business consistent with past practices.
Since December, 31, 1993, and except for the matters described in (i) and (ii)
above, Tysons has not incurred or paid any obligation or liability which could
have a Material Adverse Effect on Tysons on a consolidated basis.
6.6 Absence of Certain Changes or Events. Since December 31, 1993,
there has not been any event which has had a Material Adverse Effect on Tysons
on a consolidated basis, and to the knowledge of Tysons, no fact or condition
exists which might reasonably be expected to cause such an event or have such
an effect in the future.
6.7 Legal Proceedings, Etc. Except as set forth on Schedule 6.7 hereto,
Tysons is not a party to any, and there are no pending, or, to the knowledge
of Tysons, threatened, legal, administrative, arbitrary or other proceedings,
claims, actions, causes of action or governmental investigations of any nature
against Tysons challenging the validity or propriety of the transactions
contemplated by this Agreement or which would be required to be reported by
Tysons pursuant to Item 103 of Regulation S-K promulgated by the SEC.
6.8 Insurance. Tysons has in effect insurance coverage with insurers
which, in respect of amounts, premiums, types and risks insured, constitutes
reasonably adequate coverage against all risks customarily insured against by
institutions comparable in size and operation to Tysons.
6.9 Consents and Approvals. Except for (i) the Consents of the
Regulatory Authorities; (ii) approval of this Agreement by the shareholder of
Seller; and (iii) as previously disclosed, no consents or approvals by, or
filings or registrations with, any third party or any public body, agency or
authority are necessary in connection with the execution and delivery by
Tysons and Purchaser or, to the knowledge of Tysons, by Seller of this
Agreement and the consummation the transactions contemplated hereby.
6.10 No Broker's or Finder's Fees. Except for the retention of Bank
Resources, Inc. by Purchaser, which shall bear the fees and expenses thereof,
neither Tysons nor Purchaser or any of their subsidiaries, affiliates or
employers has employed any broker or finder or incurred any liability for any
broker's fees, commissions or finder's fees in connection with this Agreement
or the consummation of any of the transactions contemplated herein.
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6.11 Untrue Statements and Omissions. No representation or warranty
contained in Article VI of this Agreement or in the Schedules of Tysons or
Purchaser contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
VII. Additional Covenants and Agreements of the Parties
7.1 Conduct of the Business of Seller.
(A) During the period from the date of this Agreement to the
Effective Time, Seller shall, and shall cause each direct or indirect
subsidiary to, (i) conduct its business in the usual, regular and ordinary
course consistent with past practice and prudent banking principles, (ii) use
its best efforts to maintain and preserve intact its business organization,
employees, goodwill with customers and advantageous business relationships and
retain the services of its officers and key employees, and (iii) except as
required by law or regulation, take no action which would adversely affect or
delay the ability of Seller or Tysons to obtain any Consent from any
Regulatory Authorities or other approvals required for the consummation of the
transactions contemplated hereby or to perform its covenants and agreements
under this Agreement.
(B) During the period from the date of this Agreement to the
Effective Time, except as required by law or regulation, Seller shall not,
without the prior written consent of Tysons:
(i) change, delete or add any provision of or to the Charter
or Articles of Incorporation or Bylaws of Seller;
(ii) change the number of shares of the authorized, issued or
outstanding capital stock of Seller, including any issuance, purchase,
redemption, split, combination or reclassification thereof, or issue or grant
any option, warrant, call, commitment, subscription, right or agreement to
purchase relating to the authorized or issued capital stock of Seller,
declare, set aside or pay any dividend or other distribution with respect to
the outstanding capital stock of Seller;
(iii) incur any material liabilities or material obligations
(other than deposit liabilities and short-term borrowings in the ordinary
course of business), whether directly or by way of guaranty, including any
obligation for borrowed money, or whether evidenced by any note, bond,
debenture, or similar instrument, except in the ordinary course of business
consistent with past practice;
(iv) make any capital expenditures individually in excess of
$25,000, or in the aggregate in excess of $50,000 other than pursuant to
binding commitments existing on September 30, 1994, and disclosed in a
Schedule delivered pursuant to Article IV of this
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Agreement or in the annexed Schedule 7.1(B)(iv) and other than expenditures
necessary to maintain existing assets in good repair;
(v) sell, transfer, convey or otherwise dispose of any of the
Transferred Property or interest therein having a book value in excess of or
in exchange for aggregate consideration in excess of $10,000;
(vi) enter into any new, or amend in any respect any existing,
employment, consulting, non-competition or independent contractor agreement
with any person; alter the terms of any existing incentive bonus or commission
plan; adopt any new or amend in any material respect any existing employee
benefit plan, except as may be required by law; grant any general increase in
compensation to its employees as a class or to its officers except for
non-executive officers in the ordinary course of business and consistent with
past practices and policies or except in accordance with the terms of an
enforceable written agreement; grant any material increases in fees or other
increases in compensation or in other benefits to any of its directors; or
effect any change in any material respect in retirement benefits to any class
of employees or officers, except as required by law;
(vii) enter into or extend any agreement, lease or license
relating to real property, personal property, data processing or bankcard
functions relating to Seller that involves an aggregate of $10,000; or
(viii) acquire any additional Investment Securities other than
Investment Securities purchased for customers' accounts or ten percent or more
of the assets or equity securities of any person or acquire direct or indirect
control of any person, other than in connection with (A) foreclosures in the
ordinary course of business or (B) acquisitions of control in a fiduciary
capacity.
7.2 Current Information. During the period from the date of this
Agreement to the Effective Time or the time of termination or abandonment of
this Agreement, Seller will cause one or more of its designated
representatives to confer on a regular and frequent basis with representatives
of Tysons and to report the general status of the ongoing operations of
Seller. Seller will promptly notify Tysons of any material change in the
normal course of business or the operations or the properties of Suburban or
Seller, any governmental complaints, investigations or hearings (or
communications indicating that the same may be contemplated) affecting
Suburban or Seller, the institution or the threat of material litigation,
claims, threats or causes of action involving Suburban or Seller, and will
keep Tysons fully informed of such events. Seller will furnish to Tysons,
promptly after the preparation and/or receipt by Seller thereof, copies of its
unaudited periodic financial statements and call reports for the applicable
periods then ended, and such financial statements and call reports shall, upon
delivery to Tysons, be treated, for purposes of Section 5.3 hereof, as among
the Financial Statements of Seller.
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7.3 Access to Properties; Personnel and Records.
(A) So long as this Agreement shall remain in effect, Suburban and
Seller, shall permit Tysons or its agents full access, during normal business
hours, to the properties of Seller, and shall disclose and make available
(together with the right to copy) to Tysons and to its internal auditors, loan
review officers, attorneys, accountants and other representatives, all books,
papers and records relating to the assets, stock, properties, operations,
obligations and liabilities of Seller, including all books of account
(including the general ledger), tax records, minute books of directors' and
shareholders' meetings, organizational documents, bylaws, contracts and
agreements, filings with any regulatory agency, examination reports,
correspondence with regulatory or taxing authorities, documents relating to
assets, titles, abstracts, appraisals, consultant's reports, plans affecting
employees, securities transfer records and stockholder lists, and any other
assets, business activities or prospects in which Tysons may have a reasonable
interest, and Seller shall use their reasonable best efforts to provide Tysons
and its representatives access to the work papers of Seller's accountants. In
exercising its rights described in this Section 7.3(A), Tysons agrees, to the
extent it believes is practicable, to provide advance notification and use its
efforts not to disrupt the operations or business of Seller. Suburban and
Seller shall not be required to provide access to or to disclose information
where such access or disclosure would violate or prejudice the rights of any
customer, would contravene any law, rule, regulation, order or judgment or
would violate any confidentiality agreement; provided that Suburban and Seller
shall cooperate with Tysons in seeking to obtain Consents from appropriate
parties under whose rights or authority access is otherwise restricted. The
foregoing rights granted to Tysons shall not, whether or not and regardless of
the extent to which the same are exercised, affect the representations and
warranties made in this Agreement by Suburban or Seller.
(B) All information furnished by the parties hereto pursuant to
this Agreement shall be treated as the sole property of the party providing
such information until the consummation of the transactions contemplated
hereby and, if such transaction shall not occur, the party receiving the
information shall return to the party which furnished such information, all
documents or other materials containing, reflecting or referring to such
information, shall use its best efforts to keep confidential all such
information, and shall not directly or indirectly use such information for any
competitive or other commercial purposes. The obligation to keep such
information confidential shall continue for two years from the date the
proposed transactions are abandoned but shall not apply to (i) any information
which (A) the party receiving the information was already in possession of
prior to disclosure thereof by the party furnishing the information, (B) was
then available to the public, or (C) became available to the public through no
fault of the party receiving the information; or (ii) disclosures pursuant to
a legal requirement or in accordance with an order of a court of competent
jurisdiction or regulatory agency; provided that the party which is the
subject of any such legal requirement or order shall use its best efforts to
give the other party at least ten business days prior notice thereof. Each
party hereto acknowledges and agrees that a breach of any of their respective
obligations under this Section 7.3 would cause the other irreparable harm for
which there is no adequate remedy
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at law, and that, accordingly, each is entitled to injunctive and other
equitable relief for the enforcement thereof in addition to damages or any
other relief available at law.
7.4 Approval of Seller's Shareholder. Seller will take all steps
necessary under applicable laws to call, give notice of, convene and hold a
meeting of its shareholder at such time as may be mutually agreed to by the
parties, or otherwise seek the written consent of its shareholder in lieu of a
meeting, for the purpose of approving this Agreement and the transactions
contemplated hereby and for such other purposes consistent with the complete
performance of this Agreement as may be necessary or desirable. The Board of
Directors of Seller will recommend to its shareholder the approval of this
Agreement and the transactions contemplated hereby and Suburban hereby agrees
that, as a sole shareholder of Seller, Suburban will approve this Agreement
and the transactions contemplated hereby.
7.5 No Other Bids. Neither Suburban nor Seller, acting through any
director or officer or other agent, shall now, nor shall any of them authorize
or knowingly permit any officer, director or employee of, or any investment
banker, attorney, accountant or other representative retained by Suburban or
Seller, to solicit or encourage, including by way of furnishing information,
any inquiries or the making of any proposal which may reasonably be expected
to lead to any acquisition proposal with respect to Seller. Seller shall
promptly advise Tysons orally and in writing of any such inquiries or
proposals received by Suburban or Seller after the date hereof. As used in
this Section 7.5, "acquisition proposal" shall mean any proposal for a merger
or other business combination involving Seller or for the acquisition of in
excess of a 5% equity interest in Seller or for the acquisition of in excess
of 5% the assets of Seller.
7.6 Notice of Deadlines. Seller shall notify Tysons in writing of any
deadline to exercise an extension or termination of any material lease,
agreement or license (including specifically real property leases and data
processing agreements) to which Seller is a party at least ten days prior to
such deadline.
7.7 Maintenance of Properties. Seller will maintain its properties and
assets in satisfactory condition and repair for the purposes for which they
are intended, ordinary wear and tear excepted. Prior to the Day of Closing,
Seller will cause any automatic teller machines attached to, located at, or
otherwise used in connection with the Banking Business to be removed from the
Qualifying Real Estate and other Transferred Property and the Qualifying Real
Estate and other Transferred Property to be repaired and restored to the
satisfaction of the Purchaser and the landlord of such Qualifying Real Estate.
7.8 Compliance Matters. Prior to the Effective Time, Seller shall take,
or cause to be taken, all steps reasonably requested by Tysons to cure any
deficiencies in regulatory compliance by Seller, including compliance with
Regulations Z and CC of the FRB); provided that neither Tysons nor Purchaser
shall be responsible for discovering or have any obligation to disclose the
existence of such defects to Seller nor shall Tysons or Purchaser have any
liability resulting from such deficiencies or attempts to cure them.
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7.9 Best Efforts; Cooperation. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use its best efforts
promptly to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations, or otherwise, including attempting to obtain all necessary
Consents, to consummate and make effective, as soon as practicable, the
transactions contemplated by this Agreement.
7.10 Regulatory Matters.
(A) Following the execution and delivery of this Agreement, Purchaser
and Seller shall cause to be prepared and filed all required applications and
filings with the Regulatory Authorities which are necessary or contemplated
for the obtaining of the Consents of the Regulatory Authorities for
consummation of the transaction contemplated hereby. Such applications and
filings shall be in such form as may be prescribed by the respective
Regulatory Authorities and shall contain such information as they may require.
The parties hereto will cooperate with each other and use their best efforts
to prepare and execute all necessary documentation, to effect all necessary or
contemplated filings and to obtain all necessary or contemplated permits,
consents, approvals, rulings and authorizations of government agencies and
third parties which are necessary or contemplated to consummate the
transactions contemplated by this Agreement, including, without limitation,
those required or contemplated from the Regulatory Authorities, and the
shareholder of Seller. Each of the parties shall have the right to review and
approve in advance, which approval shall not be unreasonably withheld, any
filing made with, or written material submitted to, any government agencies in
connection with the transactions contemplated by this Agreement.
(B) Each party hereto will furnish the other party with all
information concerning itself, its subsidiaries, directors, trustees,
officers, shareholders and depositors, as applicable, and such other matters
as may be necessary or advisable in connection with any statement or
application made by or on behalf of any such party to any governmental body in
connection with the transactions, applications or filings contemplated by this
Agreement. Upon request, the parties hereto will promptly furnish each other
with copies of written communications received by them or their respective
subsidiaries from, or delivered by any of the foregoing to, any governmental
body in respect of the transactions contemplated hereby.
7.11 Current Information. During the period from the date of this
Agreement to the Effective Time or the time of termination or abandonment
hereunder, Tysons will cause one or more of its designated representatives to
confer on a regular and frequent basis with Seller and to report with respect
to the general status and the ongoing operations of Tysons.
7.12 No Employment Contract The parties acknowledge that nothing in
this Agreement shall be construed as constituting an employment agreement
between Tysons or any of its affiliates and any officer or employee of
Suburban or Seller or an obligation on the part of Tysons or any of its
affiliates to employ any such officers or employees.
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7.13 Other Matters Relating to Loans
(A) If any Qualifying Loan is covered by collateral protection
insurance or other insurance (which is charged to the account of the borrower
under the related Qualifying Loan) when transferred to Purchaser and Purchaser
subsequently determines that the Qualifying Loan is covered by additional
insurance which negates the need for such collateral protection insurance or
other insurance, Seller shall render a cancellation or flat cancellation, as
appropriate, of such collateral protection insurance and shall forward any
rebated premium to Purchaser for credit to the Qualifying Loan account. Prior
to the closing of the transactions contemplated hereby, Seller shall cause
Purchaser to be substituted in the place of Seller as an additional named
insured under such policies of insurance.
(B) If Seller, after the Effective Time, receives payment on any
Qualifying Loan transferred to Purchaser pursuant to this Agreement, Seller
shall send to Purchaser within three business days of the date of receipt of
such payment, a listing or other payment media indicating the note number and
account number of the Qualifying Loan, the date and the amount of payment
received and any instructions in respect to the Qualifying Loan in the form in
which it was received by Seller (with such endorsement of and by Seller as
shall be necessary to transfer or negotiate such payment to Purchaser) or by
Seller's check payable to Purchaser for the amount of such payment. Following
the Effective Time, Seller shall promptly forward to Purchaser all notices and
other information concerning any of the Qualifying Loans.
(C) If Purchaser, after the Effective Time, receives payment on any
Loan not transferred to Purchaser pursuant to this Agreement, Purchaser shall
send to Seller, within three business days of the date of receipt of such
payment (to the extent available), a listing or other payment media indicating
the note number and account number of the Loan, the date and the amount of
payment received and any instructions with respect to the Loan, in the form in
which it was received by Purchaser (with such endorsement of and by Purchaser
as shall be necessary to transfer or negotiate such payment to Seller) or by
Purchaser's check payable to Seller for the amount of such payment.
(D) On Day of Closing, Seller shall assign, transfer and deliver to
Purchaser all collateral security of any nature whatsoever held by Seller as
collateral for all Qualifying Loans.
(E) On the Effective Time, Seller shall designate Purchaser, with
full power of substitution, as Seller's true and lawful attorney-in-fact, for
Seller, and in Seller's name, place and stead and on Seller's behalf, to
execute, endorse and act on, as necessary, any documents, notes, loan
agreements, conditional and installment sales contracts, certificates of
title, certificates of origin, contracts and negotiable documents or
instruments as may be necessary to effect transfer of title, recordation of
assignment of title and interest, substitution of trustee, cancellation of
notes and deeds of trust and to perform any act necessary to effect any of the
transactions contemplated by this Agreement required
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perfection, servicing, discharge and cancellation of the Loans and the
Transferred Assets by Purchaser, and to carry out the letter and spirit of
this Agreement.
(F) If one or more, but not all, of any Cross Collateralized Loans
are sold to Purchaser hereunder, then, unless otherwise provided in any
collateral sharing and lien priority agreement, the principal balances of such
Cross Collateralized Loans may not be increased following the Effective Time
except to the extent that either party shall be contractually obligated for
such increase at the Effective Time. In the event that either Purchaser or
Seller has possession or control of collateral for any such Cross
Collateralized Loans and releases the collateral in good faith without
knowledge of the claim of a security interest in such collateral by the other,
the releasing party shall have no liability to the other party. Neither the
owner nor any third party shall have any rights under this provision with
regard to the interest of the parties hereto in the collateral.
7.14 Compliance with WARN
Seller recognizes and acknowledges its obligations under the Worker
Adjustment and Retraining Notification Act, 29 U.S.C. Sections 2101, et seq.
("WARN") and it hereby agrees to provide appropriate notices to its employees
and various third parties, as may be required by WARN.
7.15 Compliance with COBRA
Seller covenants that it has and will comply with all of its
obligations under Title X of the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended.
7.16 Employee Benefit Plans
All employee benefit plans, as defined in Section 5.13, or any
severance plan or agreements or deferred compensation or retirement plan or
agreement maintained by Seller and Suburban or any of their affiliates as of
the Effective Time shall continue to be maintained by Seller and Suburban or
any of their affiliates after the Effective Time, except that with respect to
any officer or employee of Seller who becomes after the Effective Time an
employee of Purchaser, Seller, and Suburban or any of their affiliates shall
permit such persons to make such disposition of any funds held for their
account by any of the foregoing plans or agreements as may be permitted by
plans or agreements. Seller and Suburban will indemnify and hold Purchaser,
Tysons and their respective officers, directors and affiliates harmless from
and against any and all loss, liabilities, costs, expenses or claims arising
out of the maintenance by Seller and Suburban or any of their affiliates as of
the Effective Time of any employee benefit plan, as defined in Section 5.11 or
any severance plan or agreement or deferred compensation or retirement plan or
agreement. Any indemnification under this Section shall be subject to and
shall be prosecuted in accordance with Article IX hereof.
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7.17 Cure and/or Repurchase of Qualifying Loans If, prior to the Day
of Closing, either party discovers the breach of any of the representations
and warranties set forth in Section 5.4 as to a particular Qualifying Loan,
the party making the discovery shall promptly give notice of such discovery to
the other party, along with a description of the defect in the Qualifying
Loan. Seller shall be allowed an opportunity to cure the defect, and if Seller
is unable to cure such defect to the reasonable satisfaction of Purchaser
prior to the Day of Closing, Seller shall withdraw the Qualifying Loan and
omit it from the Transferred Property, and in such event, the Compensation
Amount shall be appropriately adjusted. Notwithstanding any other provision
herein, Tysons shall not exercise its rights under this Section 7.17 with
respect to any defect in a Qualifying Loan which Tysons discovered during the
loan review described in the premises recited at the beginning of this
Agreement.
7.18 Certain Accounting Matters. Prior to the Effective Time, Seller
shall take such steps as may be necessary to cause a separate accounting
system, including the creation and maintenance of a general ledger, data
processing facilities and all necessary support systems, to be maintained with
respect to the business of the Seller which is substantially related to
Transferred Property and the Qualifying Assumed Liabilities.
VIII. Additional Covenants and Agreements of Tysons and Purchaser
8.1 Certain Personnel Matters. Purchaser may hire or utilize certain
of the current employees of the Banking Offices of Seller following the
transactions contemplated by this Agreement, and Tysons and Purchaser agree to
coordinate with Seller in discussing such employment with such employees.
However, nothing contained in this Section 8.1 shall be construed as
constituting an employment agreement between Tysons or Purchaser and any
employee of the Banking Offices of Seller or an obligation of Tysons or
Purchaser to employ any such employee.
8.2 Employment Benefit Plan Of Tysons. Tysons and Purchaser agree that
if any officers or employees of Seller are employed by Purchaser after the
Effective Time, such persons shall be eligible to participate in the employee
benefit plans of Tysons on the same basis and subject to the same conditions
as are applicable to any newly hired employee of Purchaser.
8.3 Consideration. Tysons shall pay or cause to be paid the
Compensation Amount as, when and if the same shall be required to be issued
and paid pursuant to this Agreement.
IX. Indemnification
9.1 Indemnification by Seller and Suburban. Without limitation of any
other express indemnification provision under this Agreement, Suburban and
Seller agree to indemnify and hold harmless Purchaser, Tysons and their
respective directors, officers, employees and agents, against any loss,
liability, damage, claim or expense of any kind (including reasonable
attorneys' fees whether incurred as party plaintiff or otherwise) arising out
of or in
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connection with (i) any obligation, duty or liability of Seller other than the
Qualifying Assumed Liabilities, (ii) any act or omission of Seller with
respect to the Transferred Property or otherwise relating to the Banking
Offices (unless such act or omission was taken or omitted in reliance on any
of the covenants, representations or warranties of Purchaser, or at
Purchaser's request), (iii) any breach of any representation or warranty made
by Seller or Suburban herein or in any document or certificate delivered
pursuant hereto, or (iv) any failure by Seller or Suburban to perform any
covenant, agreement, undertaking or obligation on its part hereunder.
9.2 Indemnification by Purchaser and Tysons. Without limitation of any
other express indemnification provision under this Agreement, Tysons and
Purchaser agree to indemnify and hold harmless Seller and Suburban and their
respective directors, officers, employees and agents, against any loss,
liability, damage or expense of any kind (including reasonable attorney's fees
whether incurred as party plaintiff or otherwise) arising out of or in
connection with:
(i) any representation or warranty made by Purchaser or Tysons
herein or in any document or certificate delivered pursuant hereto being
untrue, incorrect or misleading as of the time made;
(ii) any failure by Purchaser or Tysons to satisfy or perform any
Qualifying Assumed Liability, or any other covenant, agreement, undertaking or
obligation on its part hereunder; or
(iii) any action against Seller by any borrower which results
exclusively from actions by Tysons and Purchaser.
9.3 Third-Party Claims, Etc. Promptly after any service of process by
any third person in any litigation or proceeding, or the receipt of any claim
or demand, in respect of which indemnity may be sought pursuant to Section 9.1
or 9.2, or as soon as reasonably practicable after a party hereto shall have
acquired notice of any other matter with respect to which indemnity may be so
sought, the party seeking indemnity (the "Indemnitee") will notify the
indemnifying party ("Indemnitor") thereof. Such notice shall recite in
reasonable detail the nature of the claim and the facts that support it and
provide a reasonable estimate of the liability (to the extent such liability
may then be reasonably estimated). The Indemnitor shall have the right to
assume the defense, settlement or compromise of any such claim, action, suit,
or proceeding at its own expense, including the retention of counsel
reasonably satisfactory to the Indemnitee. Any election by the Indemnitor to
defend must be made by written notice to the Indemnitee within fifteen days of
the aforementioned notice to the Indemnitor, or within the shorter period that
the notice states is required by the dispute resolution mechanism of the
underlying claim. The Indemnitee shall have the right, upon prompt written
notice to the Indemnitor, to retain separate counsel in any such action and
participate (subject to control by the Indemnitor) in the defense thereof, but
the fees and expenses of such additional counsel shall be at such Indemnitee's
own expense. If the Indemnitor does not elect to defend such claim, the
Indemnitee shall have the right to assume
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the defense, settlement or compromise of any such claim at the expense of the
Indemnitor, including the retention of counsel. If the Indemnitee in good
faith fails to notify the Indemnitor of any such claim and thereafter defends
or settles such claim, the Indemnitor shall be liable to the Indemnitee for
the indemnifiable losses with respect thereto to the extent that the
Indemnitee demonstrates that the Indemnitor has not been prejudiced by
Indemnitee's actions in defending and settling such claim that would have been
avoided by the Indemnitor's defense and settlement of such claim. If the
Indemnitee notifies the Indemnitor of such claim and the Indemnitor fails or
refuses to defend, the Indemnitee may defend and settle such claim and the
Indemnitor shall not have the right to assert that the amount of such
indemnifiable loss would have been diminished if the Indemnitor had defended
such action. Notwithstanding the foregoing, the Indemnitor shall not settle
any such claim in a manner that would impose sanctions, restrictions, fines or
penalties on the Indemnitee, without the prior written consent of the
Indemnitee, which consent will not be unreasonably withheld. The Indemnitee
and Indemnitor shall cooperate with each other as provided in Section 9.4
below. With respect to any matter as to which there is a right of
indemnification other than in respect of a claim, demand, suit or cause of
action by a third party, the Indemnitee shall submit such statements,
documents and other evidence as is relevant to the establishment of its claims
and the amount thereof, and the Indemnitor shall pay the Indemnitee within
fifteen days thereof.
9.4 Cooperation. Each party hereto shall give the other prompt notice
of any facts coming to its attention that may give rise to a claim for
indemnification. Each party shall cooperate with the other in any
investigation, or in the defense of any litigation or proceeding that might
give rise to a claim for indemnification or that would give rise to a claim
for indemnification if brought against the other party. Such cooperation shall
include providing witnesses, files, documents and records that such party is
uniquely in a position to provide.
X. Mutual Conditions To Closing
The obligations of Tysons and Purchaser, on the one hand, and
Suburban and Seller, on the other hand, to consummate the transactions
provided for herein shall be subject to the satisfaction of the following
conditions, unless waived as hereinafter provided for:
10.1 Consents of Regulatory Authorities. All required Consents of
Regulatory Authorities shall have been obtained and all notice and waiting
periods required by law to pass after granting of such approval shall have
passed.
10.2 Litigation. There shall not be any litigation or threat of
litigation (a) challenging the validity or legality of this Agreement or the
consummation of the transactions contemplated by this Agreement or (b) seeking
damages in respect of or seeking to restrain or invalidate the transactions
contemplated by this Agreement which, in the judgment of either Tysons or
Seller, based upon advice of counsel, would have a Material Adverse Effect on
the Transferred Property, Purchaser, Seller, or the consummation of the
transactions contemplated by this Agreement.
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XI. Conditions To The Obligations Of Tysons and Purchaser
The obligations of Tysons and Purchaser to consummate the
transactions contemplated by this Agreement are subject to the fulfillment of
each of the following conditions, unless waived as hereinafter provided for:
11.1 Representations and Warranties. The representations and warranties
of each of Seller and Suburban set forth in this Agreement and in any
certificate or document delivered pursuant hereto shall be true and correct in
all material respects as of the date of this Agreement and as of all times up
to and including the Effective Time (as though made on and as of the Effective
Time except to the extent such representations and warranties are by their
express provisions made as of a specified date and except for changes therein
contemplated by this Agreement).
11.2 Performance of Obligations. Each of Seller and Suburban shall have
performed and complied with in all material respects all covenants,
obligations and agreements required to be performed by it under this Agreement
prior to the Effective Time.
11.3 Certificate Representing Satisfaction of Conditions. Each of Seller
and Suburban shall have delivered to Tysons and Purchaser a certificate dated
as of the Effective Time as to the satisfaction of the matters described in
Sections 11.1 and 11.2 hereof, and such certificate shall be deemed to
constitute additional representations, warranties, covenants, and agreements
of each of Seller and Suburban under Article V of this Agreement.
11.4 Absence of Adverse Facts. There shall have been no determination by
Tysons that any fact, event or condition exists or has occurred that, in the
reasonable judgment of Tysons, (a) would have a Material Adverse Effect on, or
which may be foreseen to have a Material Adverse Effect on, the Transferred
Property or the consummation of the transactions contemplated by this
Agreement which has not been waived by Tysons (in the exercise of its sole and
exclusive discretion), (b) would be of such significance with respect to the
business or economic benefits expected to be obtained by Purchaser pursuant to
this Agreement as to render inadvisable the consummation of the transactions
pursuant to this Agreement, (c) would be materially adverse to the interests
of Purchaser, or (d) would render the transactions contemplated by this
Agreement impractical because of any material event including but not limited
to a state of war, national emergency, banking moratorium or general
suspension of trading on NASDAQ, the New York Stock Exchange, Inc. or other
national securities exchange.
11.5 Opinion of Counsel. Purchaser shall have received an opinion of
counsel from McNamee, Hosea, Jernigan & Scott, P.A., or other counsel to
Seller acceptable to Purchaser in substantially the form set forth in Exhibit
11.5 hereof.
11.6 Consents Under Agreements. Seller shall have obtained the Consent
of each person (other than the Consents of the Regulatory Authorities) whose
consent or approval
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shall be required in order to permit the succession by the Purchaser to any
obligation, right or interest of Seller under (i) the lease for the Qualifying
Real Estate and (ii) any Qualifying Loan, other Qualifying Lease, or
Qualifying Other Agreement, except, in the case of Consents required under
clause (ii) above, those for which failure to obtain such Consents would not
in the sole opinion of Tysons, individually or in the aggregate, have a
Material Adverse Effect on the Transferred Property, the Purchaser or upon the
consummation of the transactions contemplated by this Agreement.
11.7 Material Condition. There shall not be any action taken, or any
statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the transactions contemplated by this Agreement by any
Regulatory Authority which, in connection with the grant of any Consent by any
Regulatory Authority, imposes, in the judgment of Tysons, any material adverse
requirement upon Purchaser or its affiliates, including, without limitation,
any requirement that Tysons sell or dispose of any significant amount of the
Transferred Property or any banking or other subsidiary of Tysons or branch of
Purchaser, provided that, except for any such requirement relating to the
above-described sale or disposition of any Transferred Property or any banking
or other subsidiary of Tysons, no such term or condition imposed by any
Regulatory Authority in connection with the grant of any Consent by any
Regulatory Authority shall be deemed to be a material adverse requirement
unless it materially differs from terms and conditions customarily imposed by
any such entity in connection with the acquisition of savings associations
under similar circumstances.
11.8 Certification of Claims. Seller shall have delivered a certificate
to Tysons that Seller is not aware of any pending or threatened claim under
the directors and officers insurance policy or the fidelity bond coverage of
Seller.
11.9 Due Diligence. Purchaser and Tysons shall have completed their due
diligence review of the assets, liabilities, and business of Seller. After
the due diligence review Purchaser's and Tysons' respective Boards of
Directors shall have determined in their sole and exclusive opinion that the
transactions contemplated by this Agreement are in the best interest of the
Purchaser and Tysons and their respective shareholders.
11.10 Transitional Data Processing Services. Seller shall have contracted
with Purchaser to provide Purchaser with all data processing services
currently being provided to Seller by EDS under that certain agreement dated
October 1, 1990, between Seller and EDS and Seller shall furnish the employees
necessary to provide such service to Purchaser, which contract shall provide
that Seller shall provide such services in exchange for compensation by
Purchaser equal to that payable by Seller to EDS for similar services, except
that Seller and Purchaser shall mutually agree upon the compensation to be
paid to Seller by Purchaser for the services of Seller's employees for
providing the services contemplated to be performed by user under such
contract, which contract shall expire on September 30, 1993.
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XII. Conditions to Obligations of Seller and Suburban
The obligation of Seller and Suburban to consummate transactions
contemplated herein is subject to each of the following conditions, unless
waived as hereinafter provided for:
12.1 Representations and Warranties. The representations and warranties
of Tysons and Purchaser contained in this Agreement or in any certificate or
document delivered pursuant to the provisions hereof will be true and correct
as of the Effective Time (as though made on and as of the Effective Time).
12.2 Performance of Obligations. Tysons and Purchaser shall have
performed and complied with in all material respects all covenants,
obligations and agreements required to be performed by them and under this
Agreement prior to the Effective Time.
12.3 Certificate Representing Satisfaction of Conditions. Tysons and
Purchaser shall have delivered to Seller a certificate dated as of the
Effective Time as to the satisfaction of the matters described in Sections
12.1 and 12.2 hereof, and such certificate shall be deemed to constitute
additional representations, warranties, covenants, and agreements of Tysons
and Purchaser under Article VI of this Agreement.
12.4 Opinion of Counsel. Seller shall have received the opinion of
Nelson Mullins Riley & Scarborough, counsel to Tysons, dated the Effective
Time, to the effect set forth in Exhibit 12.4 hereof.
12.5 Absence of Adverse Facts. There shall have been no determination by
Seller that any fact, event or condition exists or has occurred that, in the
reasonable judgment of Seller, (a) would have a Material Adverse Effect on, or
which may be foreseen to have a Material Adverse Effect on, the consummation
of the transactions contemplated by this Agreement, (b) would be of such
significance with respect to the business or economic benefits expected to be
obtained by Seller pursuant to this Agreement as to render inadvisable the
consummation of the transactions pursuant to this Agreement, (c) would be
materially adverse to the interests of Seller, or (d) would render the
transactions contemplated by this Agreement impractical because of any state
of war, national emergency, banking moratorium or general suspension of
trading on NASDAQ, the New York Stock Exchange, Inc. or other national
securities exchange.
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XIII. Transactions at Closing
13.1 Items to be Delivered by Seller and Suburban
At the Closing, Seller or Suburban, as the case may be, shall deliver
to Purchaser:
(i) Bills of sale, deeds and assignments that are necessary
or desirable, in the opinion of Purchaser's counsel, for conveying,
transferring and assigning to Purchaser all of Seller's interest in and to the
Transferred Property, including, without limitation, an assignment for the
lease relating to the Qualifying Real Estate, and assignments and other bills
of sale relating to the Qualifying Leases and the Qualifying Leasehold
Improvements, and permitting assumption by Purchaser of the Qualifying Assumed
Liabilities to be transferred to Purchaser pursuant to this Agreement, as well
as any and all statement, instruments and documents as required or described
or by this Agreement.
(ii) Payment in immediately available funds of the
Compensation Amount not later than 2:00 p.m. on the Day of Closing in
accordance with Section 3.1 hereof.
(iii) Certificates signed by duly authorized officers of
Seller and Suburban stating that to the best of Seller's Knowledge, there is
no error or inaccuracy in the information contained in the Preliminary
Individual Statements of their respective dates or in the Preliminary Closing
Statement.
(iv) Copies, certified by Seller's and Suburban's corporation
secretary or assistant corporate secretary as being accurate and complete, of
resolutions of Seller's and Suburban's Boards of Directors authorizing the
transactions contemplated by this Agreement and all actions appropriate to the
consummation thereof, and a certificate of such secretary as to the incumbency
of each officer of Seller and Suburban executing this Agreement and all
instruments, certificates and documents required to be executed and delivered
at the Closing.
13.2 Items to be Delivered by Purchaser
At the Closing, Purchaser and Tysons shall deliver to Seller and
Suburban:
(i) Instruments (a) for acceptance of the Transferred Property
and (b) for assumption of the Qualifying Assumed Liabilities in accordance
with Section 3.1 of this Agreement, all as aforesaid.
(ii) Such other instruments and documents as may be required
as of the Effective Time pursuant to this Agreement, all in form and substance
reasonably satisfactory to Seller.
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(iii) Copies, certified by Purchaser's and Tysons' corporate
secretary or assistant corporate secretary as being accurate and complete, of
resolutions of Purchaser's and Tysons' Boards of Directors authorizing the
transactions contemplated by this Agreement and all actions appropriate to the
consummation thereof, and a certificate of such secretary as to the incumbency
of each officer of Purchaser and Tysons executing this Agreement and all
instruments, certificates and documents required to be executed and delivered
at the Closing.
XIV. Termination, Waiver And Amendment
14.1 Termination. This Agreement may be terminated and the transaction
contemplated hereby abandoned at any time prior to the Effective Time upon the
occurrence of any of the following:
(A) by the mutual consent in writing of Tysons and Seller;
(B) by Tysons or Seller if the transactions contemplated by this
Agreement shall not have been consummated on or prior to June 30, 1995,
provided that the failure to consummate the transactions contemplated by this
Agreement on or before such date is not accompanied by any breach of any of
the representations, warranties, covenants or other agreements contained
herein by the party electing to terminate pursuant to this Section 14.1(B);
(C) by Tysons or Seller (provided that the terminating party is not
then in breach of any representation, warranty, covenant or other agreement
contained herein) in the event that any of the conditions precedent to the
obligations of the nonterminating party to consummate the transactions
contemplated by this Agreement cannot be satisfied or fulfilled;
(D) by Tysons if: (i) Tysons shall have determined that any fact,
event or condition exists that, in the judgment of Tysons, (A) is materially
at variance with any warranty or representation of Suburban or Seller set
forth in the Agreement or is a material breach of any covenant or agreement of
Suburban or Seller contained in the Agreement, (B) has a Material Adverse
Effect or can be reasonably foreseen to have a Material Adverse Effect on
Seller or upon the consummation of the transactions contemplated by the
Agreement, (C) pertains to Suburban or Seller and would be materially adverse to
the interests of Purchaser, (D) pertains to Suburban or Seller and would be of
such significance with respect to the business or economic benefits expected
to be obtained by Purchaser under this Agreement so as to render inadvisable
consummation of the transactions contemplated by the Agreement, (E) renders
the transactions contemplated by this Agreement impractical because of any
state of war, national emergency, banking moratorium or general suspension of
trading on NASDAQ, the New York Stock Exchange, Inc. or any other national
securities exchange; or (ii) there shall be any litigation or threat of
litigation (A) challenging the validity or legality of this Agreement or the
consummation of the transactions contemplated by this Agreement, (B) seeking
damages in connection with the consummation of the
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transactions contemplated by this Agreement, or (C) seeking to restrain or
invalidate the consummation of the transactions contemplated by this
Agreement; or
(E) by Seller if (i) Seller shall have determined that any fact,
event or condition exists that, in the judgment of Seller, (A) is materially
at variance with any warranty or representation of Tysons or Purchaser
contained in the Agreement or is a material breach of any covenant or
agreement of Tysons or Purchaser contained in the Agreement, (B) has a
Material Adverse Effect or can be reasonably seen to have a Material Adverse
Effect upon the consummation of the transactions contemplated by the
Agreement, or (ii) there shall be any litigation or threat of litigation (A)
challenging the validity or legality of this Agreement or the consummation of
the transactions contemplated by this Agreement, (B) seeking damages in
connection with the consummation of the transactions contemplated by this
Agreement, or (C) seeking to restrain or invalidate the consummation of
transactions contemplated by this Agreement.
14.2 Effect of Termination. In the event of the termination and
abandonment of this Agreement, it shall terminate and become void, without
liability on behalf of any party, and have no effect, except as otherwise
provided herein.
14.3 Effect of Wrongful Termination. Notwithstanding the foregoing
provisions of Section 14.2, if the transactions contemplated hereby fail to be
consummated because of the wrongful termination of this Agreement or a
willful, knowing or grossly negligent breach by Tysons or Purchaser, on the
one hand, or Seller and Suburban, on the other hand, of any representation,
warranty, covenant, undertaking, term or restriction contained herein, the
other party shall have all rights and remedies afforded by law.
14.4 Amendments. To the extent permitted by law, this Agreement may be
amended by a subsequent writing signed by each of Tysons, Purchaser, Suburban
and Seller.
14.5 Waivers. Subject to Section 15.10 hereof, prior to or at the
Effective Time, Tysons and Purchaser, on the one hand, and Suburban and
Seller, on the other hand, shall have the right to waive any default in the
performance of any term of this Agreement by the other, to waive or extend the
time for the compliance or fulfillment by the other of any and all of the
other's obligations under this Agreement and to waive any or all of the
conditions to its obligations under this Agreement, except any condition,
which, if not satisfied, would result in the violation of any law or any
applicable governmental regulation.
14.6 Survival of Representations and Warranties. All the
representations, warranties, covenants and agreements in this Agreement and in
any instrument delivered by Tysons, Purchaser, Seller or Suburban shall
survive the Closing. No representation or warranty in this Agreement shall be
affected or deemed waived by reason of the fact that Tysons, Purchaser,
Suburban or Seller and/or its representatives knew or should have known that
any such representation or warranty was, is, might be or might have been
inaccurate in any respect.
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XV. Miscellaneous
15.1 Entire Agreement. This Agreement and the documents referred to
herein contain the entire agreement among Tysons, Purchaser, Suburban and
Seller with respect to the transactions contemplated hereunder and this
Agreement supersedes all prior arrangements or understandings with respect
thereto, whether written or oral.
15.2 Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered personally
or sent by first class or registered or certified mail, postage prepaid,
telegram or telex or other facsimile transmission addressed as follows:
If to Suburban or Seller:
Suburban Bank of Virginia, N.A.
7505 Greenway Center Drive
P.O. Box 298
Greenbelt, Maryland 20768
Attention: Marlin Husted, Chairman
Fax (301) 474-9103
with a copy to:
McNamee, Hosea, Jernigan & Scott, P.A.
Suite 200
6411 Ivey Lane
Greenbelt, Maryland 20770
Attention: Stephen C. Hosea, Esq.
Fax: (301) 441-2420
If to Purchaser or Tysons, then to:
Tysons Financial Corporation
8200 Greensboro Drive
McLean, Virginia 22102
Attention: Terrie G. Spiro
Fax (703) 556-0023
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with a copy to:
Nelson, Mullins, Riley & Scarborough
400 Colony Square
1201 Peachtree Street
Atlanta, Georgia 30361
Attention: Glenn W. Sturm, Esq.
Fax (404) 817-6151
All such notices or other communications shall be deemed to have been
delivered (i) upon receipt when delivery is made by hand, (ii) on the third
business day after deposit in the United States mail when delivery is made by
first class, registered or certified mail, and (iii) upon transmission when
made by telegram, telex or other facsimile transmission if evidenced by a
sender transmission completed confirmation.
15.3 Severability. If any term, provision, covenant or restriction
contained in this Agreement is held by a court of competent jurisdiction or
other competent authority to be invalid, void or unenforceable or against
public or regulatory policy, the remainder of the terms, provisions, covenants
and restrictions contained in this Agreement shall remain in full force and
effect and in no way shall be affected, impaired or invalidated, if, but only
if, pursuant to such remaining terms, provisions, covenants and restrictions
the transactions contemplated hereby may be consummated in substantially the
same manner as set forth in this Agreement as of the later of the date this
Agreement was executed or last amended.
15.4 Costs and Expenses. Except as otherwise expressly provided herein,
expenses incurred by Seller and Suburban on the one hand and Tysons and
Purchaser on the other hand, in connection with or related to the
authorization, preparation and execution of this Agreement, the solicitation
of shareholder approval and all other matters related to the closing of the
transactions contemplated hereby, including all fees and expenses of
agents, representatives, counsel and accountants employed by either such party
or its affiliates, shall be borne solely and entirely by the party which has
incurred same.
15.5 Captions. The captions as to contents of particular articles,
sections or paragraphs contained in this Agreement and the table of contents
hereto are inserted only for convenience and are in no way to be construed as
part of this Agreement or as a limitation on the scope of the particular
articles, sections or paragraphs to which they refer.
15.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document with the same force and
effect as though all parties had executed the same document.
15.7 Governing Law. This Agreement is made and shall be governed by and
construed in accordance with the laws of the State of Virginia without respect
to its conflicts of laws principles except to the extent superseded by laws of
the United States.
15.8 Persons Bound; No Assignment. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors, distributees,
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and assigns, but notwithstanding the foregoing, this Agreement may not be
assigned by any party hereto unless the prior written consent of the other
parties is first obtained (other than by Purchaser to another affiliate of
Tysons). Nothing in this Agreement, expressed or implied, is intended to
confer upon any person, firm, corporation or entity, other than the parties
hereto and their respective successors, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
15.9 Exhibits and Schedules. Each of the exhibits and schedules attached
hereto is an integral part of this Agreement and shall be applicable as if set
forth in full at the point in the Agreement where reference to it is made.
15.10 Waiver. The waiver by any party of the performance of any
agreement, covenant, condition or warranty contained herein shall not
invalidate this Agreement, nor shall it be considered a waiver of any other
agreement, covenant, condition or warranty contained in this Agreement. A
waiver by any party of the time for performing any act shall not be deemed a
waiver of the time for performing any other act or an act required to be
performed at a later time. The exercise of any remedy provided by law, equity
or otherwise and the provisions in this Agreement for any remedy shall not
exclude any other remedy unless it is expressly excluded. The waiver of any
provision of this Agreement must be signed by the party or parties against
whom enforcement of the waiver is sought. This Agreement and any exhibit,
memorandum or schedule hereto or delivered in connection herewith may be
amended only by a writing signed on behalf of each party hereto.
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IN WITNESS WHEREOF, the parties hereby have caused this Agreement to
be executed and delivered, and their respective seals hereunto affixed, by
their officers thereunto duly authorized, and have caused this Agreement to be
dated as of the date and year first above written.
[CORPORATE SEAL]
ATTEST:
By: /s/ LAWRENCE J. BOLTON
------------------------------
Name: LAWRENCE J. BOLTON
Title: SECRETARY
[CORPORATE SEAL]
ATTEST:
By: /s/ SUSAN J. HANSEN
------------------------------
Name: SUSAN J. HANSEN
Title: CORPORATE SECRETARY
[CORPORATE SEAL]
ATTEST:
By: /s/ JOHN P. CARROLL
------------------------------
Name: JOHN P. CARROLL
Title: SENIOR VICE PRESIDENT
[CORPORATE SEAL]
ATTEST:
By: /s/ JOHN P. CARROLL
------------------------------
Name: JOHN P. CARROLL
Title: SENIOR VICE PRESIDENT
SUBURBAN BANK OF VIRGINIA, N.A.
By: /s/ WILLIAM R. JOHNSON
---------------------------
Name: WILLIAM R. JOHNSON
Title: PRESIDENT & CEO
SUBURBAN BANCSHARES, INC.
By: /s/ WILLIAM R. JOHNSON
---------------------------
Name: WILLIAM R. JOHNSON
Title: PRESIDENT & COO
TYSONS NATIONAL BANK
By: /s/ TERRIE G. SPIRO
---------------------------
Name: TERRIE G. SPIRO
Title: PRESIDENT/CEO
TYSONS FINANCIAL CORPORATION
By: /s/ TERRIE G. SPIRO
---------------------------
Name: TERRIE G. SPIRO
Title: PRESIDENT/CEO
53
