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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): July 13, 1998
Surety Capital Corporation
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(Exact name of registrant as specified in its charter)
Delaware 33-1983 75-2065607
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) Number)
1845 Precinct Line Road, Suite 100, Hurst, Texas 76054
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(Address of principal executive offices)
Registrant's telephone number, including area code: 817-498-2749
Not applicable
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(Former name or former address, if changed since last report)
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Item 5. Other Event
On July 13, 1998 the Registrant's subsidiary, Surety Bank,
National Association (the "Bank"), entered into a Branch Purchase
and Assumption Agreement (the "Agreement") with Commercial Bank
of Texas, National Association ("Commercial Bank"), Nacogdoches,
Texas, to sell to Commercial Bank the Bank's four east Texas
branches located in Lufkin, Kennard, Wells and Chester (the
"Branches").
Pursuant to the Agreement, the purchase price for the Branches
will be equal to 4% of the deposit base of the Branches as of the
closing date. This transaction will be structured as an assumption
of certain liabilities of the Branches, including deposits, and a
purchase of certain assets of the Branches, including loans and
fixed assets, by Commercial Bank.
As of May 31, 1998, the Branches had total deposits of
approximately $55.2 million, total net loans of approximately $11.7
million and fixed assets of approximately $657,000. The Bank is
currently a $240 million asset-based bank with thirteen full
service-banking facilities. If the sale had been completed as of
May 31, 1998, the Bank would have had approximately $164 million in
total deposits, approximately $123 million in total net loans and
approximately $7 million in fixed assets. The Bank will continue
to operate its remaining nine banking branches, located in north-
central and south-central Texas, as full service community banking
facilities serving the local retail and small business markets, and
the Registrant will continue to market insurance premium financing
loans.
Pursuant to the Agreement, the Bank agreed, for a period of
two (2) years following the consummation of the purchase and
assumption contemplated by the Agreement, that it will not (i)
solicit the banking business of any current customers of the
Branches, (ii) offer employment to any person employed by Commer-
cial Bank or the Bank in any of the Branches, or (iii) open any
office within thirty (30) miles of any of the Branches or any
existing branches of Commercial Bank located in Nacogdoches, Lufkin
or Diboll, Texas.
The completion of the sale is subject to a number of contin-
gencies, including regulatory approvals by applicable banking
authorities and a due diligence review of the Branches by Commer-
cial Bank. There can be no assurance that the transaction will be
completed. If consummated, the transaction is expected to close by
December 31, 1998, upon the expiration of all applicable waiting
periods following receipt of all necessary regulatory approvals.
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Item 7. Financial Statements and Exhibits.
(c) Exhibits.
The following exhibits are furnished in accordance with
the provisions of Item 601 of Regulation S-K:
10 Branch Purchase and Assumption Agreement by and between
Surety Bank, National Association and Commercial Bank of
Texas, National Association, dated July 13, 1998.
20 Press Release dated July 20, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
SURETY CAPITAL CORPORATION
DATE: July 22, 1998 By: /s/ B. J. Curley
----------------------------
B. J. Curley, Vice President
and Chief Financial Officer
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EXHIBIT 10
BRANCH PURCHASE AND ASSUMPTION AGREEMENT
dated as of
July 13, 1998
between
SURETY BANK, N.A.
and
COMMERCIAL BANK OF TEXAS, N.A.
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BRANCH PURCHASE AND ASSUMPTION AGREEMENT
THIS BRANCH PURCHASE AND ASSUMPTION AGREEMENT is made and
executed as of the 13th day of July, 1998, by and between SURETY
BANK, N.A., a national banking association ("Seller"), and COMMERCIAL
BANK OF TEXAS, N.A., a national banking association ("Buyer").
WHEREAS, Seller maintains the branches listed at the locations
described on Schedule 1 attached hereto (collectively, the
"Branches", and individually, a "Branch"); and
WHEREAS, Buyer wishes to purchase certain of the assets and
assume certain of the liabilities of the Branches and Seller is
willing to sell and transfer the same upon the terms and subject to
the conditions hereinafter set forth; and
NOW, THEREFORE, in consideration of the premises and the
respective representations, warranties, covenants, agreements and
conditions contained herein, Seller and Buyer hereby agree as
follows:
ARTICLE 1
Definitions
1.1 Definitions. For purposes of this Agreement:
"Account" means a deposit account relationship with a customer
of one of the Branches, whether an asset or a liability of such
Branch at the time of Closing.
"Accrued Expenses" means the accrued and unpaid expenses
appearing as a liability on the Preliminary Closing Statement or
the Final Closing Statement, respectively, pursuant to Section 2.1.
"Accrued Interest" on any Deposits at any date means interest
that is accrued on such Deposits to and including such date and not
yet credited to the Accounts in respect of such Deposits.
"Actual Costs" shall have the meaning set forth in Section 6.5(c).
"Affiliate" of a person or entity means any person or entity
directly or indirectly controlling or controlled by or under direct
or indirect common control with such person or entity, as "control"
is defined under Section 2 of the Bank Holding Company Act of 1956,
as amended.
"Agreement" means this Branch Purchase and Assumption
Agreement, including all schedules, exhibits and addenda and as
modified, amended or extended from time to time.
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"Assets" means the Real Estate, the Furniture, Fixtures and
Equipment, Real Estate Improvements, Leasehold Improvements, Cash
on Hand, safe deposit boxes located at the Branches (exclusive of
the contents thereof), Prepaid Expenses, the Branch Loans, and all
Records existing on the date of the Agreement plus all such Assets
acquired by Seller after the date of the Agreement, but does not
include (i) the Excluded Assets or (ii) any such Assets that are
otherwise permitted to be disposed of or retained by Seller
pursuant to the terms of this Agreement.
"Assumed Contracts" has the meaning set forth in Section 4.9.
"Assumed Deposits" as of the Closing Date, means all Branch
Deposits, net of Deposit Overdrafts, existing on the Closing Date,
together with all Accrued Interest thereon as of the Closing Date.
"Book Value" means the dollar amount of any asset or liability
reflected on the books and records of the Seller as of the Closing
Date, after adjustment for differences or offsets in accounts,
suspense items, unposted debits and credits, depreciation, and
other similar adjustments and corrections all in accordance with
generally accepted accounting principles and regulatory accounting
principles, which amount, in the case of loans, shall be reduced by
any unearned discount on installment loans or loans in process.
"Branch Deposits" means, as of any date, the Deposits
outstanding on such date that are domiciled at the Branches in
accordance with the books and records of Seller; provided, however,
that Branch Deposits do not include brokered certificates of
deposit (i) Withholding Accounts, as defined in Section 6.7 (b),
(ii) Deposits not assumed pursuant to Section 4.3 or 8.3., and any
Deposit not originated in the Branches.
"Branch Loans" means, as of any date, the Loans reflected on
the books and records of the Seller originated at or allocated to
any of the Branches, excluding any of the Loans that Buyer elects
not to purchase pursuant to Section 2.2 hereof.
"Business Day" means any day other than a Saturday, a Sunday
or a day observed as a bank holiday by the Federal Reserve Bank of
Dallas.
"Buyer's Assessments" shall have the meaning set forth in
Section 6.5(b).
"Buyer's Regulatory Agencies" means all governmental agencies
whose approval must be obtained for Buyer to consummate this
Agreement.
"Cash on Hand" means, as of any date, all petty cash, vault
cash, teller cash, automated teller machine ("ATM") cash and
prepaid postage maintained at the Branches.
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"Closing" and "Closing Date" refer to the closing of the sale,
purchase, transfer and assumption provided for herein to be held at
such time and date as provided for in Section 3.2 (a) hereof.
"Collection Advice" shall have the meaning set forth in
Section 4.6(a).
"Commitment" shall have the meaning set forth in Section 4.11(b).
"Deposits" means, as of any date, all deposit liabilities of
Seller including interest due on deposit liabilities through the
Closing Date, including all uncollected items included in
depositors' balances, as of such date, but does not include safe
deposit box contents. The term "Deposit" includes the deposit
agreement itself and any and all rights and obligations of Seller
created pursuant to such agreement.
"Deposit Overdrafts" means, as of any date, overdraft balances
in Branch Deposits.
"Direct Debit Accounts" shall have the meaning set forth in
Section 4.8.
"Direct Deposit Cut-Off Date" shall have the meaning set forth
in Section 4.7.
"Employee" means any employee employed by Seller on the
Closing Date at one of the Branches, including without limitation,
those employees on medical leave, family leave, military leave or
personal leave under Seller's policies.
"Environmental Determination Date" shall have the meaning set
forth in Section 6.5(b).
"Environmental Laws" means the common law and all federal,
state, local and foreign laws or regulations, codes, orders,
decrees, judgments or injunctions issued, promulgated, approved or
entered thereunder, now or hereafter in effect, relating to
pollution or protection of public or employee health or safety or
the environment, including, without limitation, laws relating to
(i) emissions, discharges, releases or threatened releases of
Hazardous Materials, into the environment (including, without
limitation, ambient air, indoor air, surface water, ground water,
land surface or subsurface strata), (ii) the manufacture,
processing, distribution, use, generation, treatment, storage,
disposal, transport or handling of Hazardous Materials, and (iii)
underground and above ground storage tanks, and related piping, and
emissions, discharges, releases or threatened releases therefrom.
"Estimated Costs" shall have the meaning set forth in Section 6.5(b).
"Excluded Assets" means all investment securities owned by
Seller; all securities purchased by Seller subject to repurchase
agreements; all other real estate owned and properties carried as
in substance foreclosures that are associated with the Branches;
all loans or participations in loans that are not Branch Loans; all
assets and records associated with the investment or brokerage
business of Seller or its affiliates, whether conducted at the
Branches or any other location of Seller; all intangible assets,
including goodwill and mortgage servicing rights, of Seller; all
rights to the name Surety Bank, N.A., as well as any of Seller's
corporate logos, trademarks, trade names, signs, paper stock,
monetary instruments (including, but not limited to, traveler's
checks and cashier's checks), forms and other supplies containing
any such logos, trademarks or trade names; all customer and
merchant credit card accounts; and all trust assets and trust accounts.
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"Federal Funds Rate" on any day means the per annum rate of
interest (rounded upward to the nearest 1/100 of 1%) that is the
weighted mean of the high and low rates quoted for Federal Funds in
the Money Rates Column of the Wall Street Journal, Southwestern
Edition, on the preceding business day.
"Final Closing Statement" means the actual balance sheet of
the Branches as of 12:01 a.m. Dallas, Texas time, on the day
following the Closing Date, prepared by Seller on or before the
Settlement Date in accordance with Seller's normal practices and
procedures (except that such normal practices and procedures shall
be modified as necessary to reflect amounts prorated under Section
2.1 as Prepaid Expenses or Accrued Expenses, as the case may be).
The Final Closing Statement shall be in a form substantially
similar to that attached hereto as Exhibit "A."
"Furniture, Fixtures and Equipment" means all furniture,
fixtures and equipment owned by Seller that are located in the
Branches including, without limitation, all ATM's and security
devices and systems on the premises of the Branches, as listed on
Schedule 2.; but does not include any teller automation equipment,
proprietary branch automation or marketing signage or materials,
and does not include furniture, fixtures or equipment leased by
Seller.
"Hazardous Materials" means any pollutant, contaminant,
chemical, or toxic or hazardous substance, constituent, material or
waste, or any other chemical, substances, constituent or waste
including, without limitation, petroleum, including crude oil or
any fraction thereof, or any petroleum product.
"Head Office Accounts" has the meaning set forth in Section 8.3.
"Initial Base Amount" has the meaning set forth in Section 2.1.
"IRA Deposits" has the meaning set forth in Section 4.2.
"IRC" means the Internal Revenue Code of 1986, as amended.
"Keogh Accounts" has the meaning set forth in Section 4.3.
"Lease" means any lease or sublease of a lease by which Seller
has rights to use the real property on which any of the Branches is
located or any lease or sublease by which Seller has granted a
third party the right to use the Real Estate or any Real Estate
Improvements or Leasehold Improvements.
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"Leasehold Improvements" means all improvements to the real
estate subject to a Lease, if any, purchased, installed or
constructed by or on behalf of Seller and used in connection with
the operation or maintenance of the Branches, including, without
limitation, buildings, structures, parking facilities and drive-in
teller facilities.
"Liabilities" means (i) the Assumed Deposits, (ii) the Leases,
if any, (iii) the Assumed Contracts, (iv) Seller's obligations to
provide services from and after the Closing Date in connection with
the Assets and the Assumed Deposits, including all obligations with
respect to the safe deposit boxes located at the Branches as set
forth in the agreements relating to such boxes and their contents
but excluding obligations relating to investment or brokerage
services, (v) Accrued Expenses, (vi) any liabilities or obligations
for compliance with any Environmental Law associated with the Real
Estate, Real Estate Improvements, Leasehold Improvements or other
Assets (subject only to Buyer's right of reimbursement pursuant to
Section 6.5(c) for Actual Costs as defined Section 6.5(c)), and
(vii) such other liabilities of Seller with respect to the
operations of the Branches as may be described on Schedule 1 (the
"Other Liabilities"); excluding, however, any Leases or Assumed
Contracts as to which any consents required to transfer the same to
Buyer at Closing cannot be obtained.
"Lien" means any lien, claim, security interest, charge,
encumbrance, option or adverse claim, except for (i) statutory
liens securing payments not yet due, (ii) obligations pursuant to
Chapter 72 to 74 of the Texas Property Code relating to Deposits
and safe deposit box contents which become subject to escheat to
the State of Texas under such law in the year the Closing occurs,
and (iii) such imperfections of title as do not materially and
adversely affect the use of the properties or Assets subject
thereto or affected thereby or otherwise materially impair business
operations at such properties.
"Loans" means, as of any date, all loans reflected on the
books and records of Seller, and shall include any United States
and/or state guaranteed student loans, and lease-financing
contracts, provided, however, that Loans does not include any (i)
loans that have been wholly charged off the books of the Seller or
(ii) letters of credit.
"Material Asset" means any Asset that Buyer reasonably
determines is necessary or important to the operations of the
Branch, including, without limitation, the Real Estate, the Real
Estate Improvements and any automated teller machines. Buyer shall
furnish to Seller a list of the Material Assets within fourteen
(14) days of the date hereof, which list may change prior to the
Closing Date upon mutual consent of Seller and Buyer.
"Non-Assumed Liabilities" means any liabilities or obligations
of Seller (whether accrued, absolute, contingent, liquidated,
unliquidated, known or unknown, due or to become due) other than
those specifically described in the term "Liabilities." Non-Assumed
Liabilities include, but are not limited to, the following:
cashier's checks, money orders, interest checks, official checks,
drafts and expense checks issued by Seller prior to or at Closing.
"Permitted Exceptions" has the meaning set forth in Section 4.11(b).
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"Preliminary Closing Statement" means the balance sheet of the
Branches prepared by Seller as of 12:01 a.m. Hurst, Texas time, as
of a date that is fourteen (14) calendar days prior to the Closing
Date, in accordance with Seller's normal practices and procedures
(except that such normal practices and procedures shall be modified
as necessary to reflect amounts prorated under Section 2.1 as
Prepaid Expenses or Accrued Expenses, as the case may be). The
Preliminary Closing Statement shall be in a form substantially
similar to that attached hereto as Exhibit "A."
"Prepaid Expenses" means the prepaid expenses appearing as an
asset on the Preliminary Closing Statement or the Final Closing
Statement, respectively, pursuant to Section 2.1.
"Purchase Premium" means an amount equal to 4.0% of the Branch
Deposits as of the Closing Date.
"Real Estate" means any real property owned by Seller on which
any of the Branches is located, as listed on Schedule 7.1 (k).
"Real Estate Improvements" means all improvements to the Real
Estate, if any, purchased, installed or constructed by or on behalf
of Seller and used in connection with the operation or maintenance
of the Branches, including, without limitation, buildings,
structures, parking facilities and drive-in teller facilities.
"Records" means the books, records, files and documentation
relating to the Assets and the Liabilities.
"Reported Amounts" shall have the meaning set forth in Section 6.7(a).
"Repurchase Price" means the price paid by Buyer for a Loan,
less any principal or interest payments received by the Buyer
between the Closing Date and the date of repurchase with respect to
such Loan, plus interest accrued from the Closing Date to the date
of repurchase at the Federal Funds Rate (calculated on the average
monthly Loan balance remaining after deductions for principal
payments or collections made after the Closing Date.
"Retained Records" means the records to remain in the
possession of Seller pursuant to the terms of the Records
Agreement, a copy of which is attached hereto as Exhibit "B" (the
"Records Agreement").
"Returned Deposit Items" or "RDIs" has the meaning set forth
in Section 4.6.
"Seller's Assessments" shall have the meaning set forth in
Section 6.5(a).
"Seller's Knowledge" or other similar phrases means
information that is known to each regional or district manager of
Seller responsible for such Branch or any Employee (but only as to
information as to such Branch).
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"Seller's Notice Period" shall have the meaning set forth in
Section 4.11(b).
"Seller's Title Notice" shall have the meaning set forth in
Section 4.11(b).
"Settlement Date" means the date as soon as practicable after
the Closing Date as determined by mutual agreement between Buyer
and Seller, but in no event later than the thirtith (30th) calendar
day following the Closing Date, and the parties agree to exert
their reasonable best efforts to determine such Settlement Date at
the earliest possible time following the Closing Date.
"Survey" shall have the meaning set forth in Section 4.11(a).
"Surveyor" shall have the meaning set forth in Section 4.11(a).
"Title Company" means Commonwealth Land Title Company of Dallas.
"Title Documents" shall have the meaning set forth in Section 4.11(b).
"Title Objection" shall have the meaning set forth in Section 4.11(b).
"Title Objection Period" shall have the meaning set forth in
Section 4.11(b).
"Title Policy" shall have the meaning set forth in Section 4.11(b).
"Transaction Deposit" means any Deposit for which the funds
may be withdrawn in practice upon demand or upon which third party
drafts may be drawn by the depositor, including a checking Account,
NOW Account or money market deposit Account.
"Withholding Accounts" shall have the meaning set forth in
Section 6.7(b).
"Y2K Guidance" shall have the meaning set forth in Section 7.2(i).
The foregoing definitions apply equally, where applicable and
with appropriate modifications, to both singular and plural forms
of the term defined. Other terms are defined in the text of this
Agreement and have the meanings assigned herein.
ARTICLE 2
2.1 Preliminary Closing Statement and Price. On or prior to
the Closing Date, Seller shall present Buyer with the Preliminary
Closing Statement, and the parties will use the amounts reflected
on the Preliminary Closing Statement to determine all amounts to be
transferred to or from each other at the Closing. At the Closing,
Seller shall transfer to Buyer cash in the amount equal to the
difference between (a) the sum of (i) the amount of the Assumed
Deposits, plus (ii) the amount of the Accrued Expenses, minus (b)
the Initial Base Amount. For purposes of this Section 2.1, the
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"Initial Base Amount" shall be equal to the sum of the following
amounts: (i) Cash on Hand, (ii) Prepaid Expenses, (iii) the unpaid
principal and accrued interest receivable on the Branch Loans, (iv)
the Book Value of any Real Estate and any Real Estate Improvements
as specified on Schedule 2.1(iv), (v) the Book Value of any
Leasehold Improvements as specified on Schedule 2.1(v), (vi) the
Book Value of the Furniture, Fixtures and Equipment as specified on
Schedule 2.1 (vi), (vii) the Book Value of the Branch Loans and
(viii) the Purchase Premium.
2.2 Treatment of Branch Loans. Within fourteen (14) days
following the execution of this Agreement, the Buyer shall by
written notice to the Seller identify each of the Branch Loans, if
any, that Buyer, for whatever reason, declines to purchase from
Seller pursuant to this Agreement. Within five (5) days following
receipt of such notice, Seller may by written notice to Buyer elect
to terminate this Agreement failing which Branch Loans conveyed to
Buyer upon the Closing shall exclude any of the Loans so
identified. However, except for that certain loan to "Piney Woods
Mobile Homes," Buyer agrees to service for Seller loans of the
Branches not purchased by Buyer and Seller agrees to reimburse
Buyer for its out-of-pocket expenses incurred in performing such
servicing of these loans. For the periods of ninety (90) days
following the Closing Date, as of the end of each thirty (30) days
during such period, Buyer shall by written notice to Seller
identify each of the Branch Loans (the "Scheduled Loans") that, as
of the date of such notice, are (i) sixty (60) days or more past
due; (ii) subject to bankruptcy or any other form of legal
proceedings arising after the Closing; or (iii) subject to any
material contingency, which substantially impairs the prospects for
collection of such Loan. Thereupon, provided none of the Scheduled
Loans have been amended, terminated or altered without the consent
of Seller, Seller agrees at Seller's election either to repurchase
the Scheduled Loans for the Repurchase Price or to indemnify and
hold Buyer harmless from any losses that it may sustain on account
of any of the Scheduled Loans not so repurchased. Buyer agrees to
service all of the Branch Loans acquired by Buyer in accordance
with prudent banking practices and standards.
2.3 Adjustments. Subject to the provisions of Article 11,
the assignments, transfers, acceptances and assumptions of the
Assets and the Liabilities and the payment of the amounts due in
respect thereof in accordance with Sections 3.2 and 2.1 shall be
final and without recourse and not subject to any claim for
reimbursement, repayment, rescission or avoidance; provided,
however, that:
(a) On the Settlement Date, Seller shall deliver the
Final Closing Statement to Buyer. Subject to Buyer's right of
indemnification pursuant to Article 11, the Final Closing Statement
shall become final and binding on Buyer and Seller ten (10)
Business Days after its delivery to Buyer, unless Buyer gives
written notice to Seller of its disagreement with respect to any
item included in such statement. Seller and Buyer shall use
reasonable efforts to resolve the disagreement during the ten (10)
day period following receipt by Seller of the notice. If the
disagreement is not resolved during such ten (10) day period, the
parties agree to follow the procedures set forth in Section 11.4 to
resolve such dispute, and such Final Closing Statement shall be
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modified by any such resolution, whereupon the Final Closing
Statement shall become final and binding. When the Final Closing
Statement becomes final and binding, Seller shall pay Buyer, or
Buyer shall pay Seller, as appropriate, the difference between the
amount paid at the Closing and the amount calculated in accordance
with Section 2.1 based on the figures on the Final Closing
Statement, plus interest accrued from the Closing Date to the date
such payment is made at the Federal Funds Rate. Such amounts shall
be debited or credited, where applicable, from Buyer's account
maintained with the Federal Reserve Bank of Dallas.
(b) If Seller determines that any Asset other than a
Material Asset is not assignable as of the Closing Date for any
reason, then Seller shall use reasonable efforts to assign such
Assets to Buyer as soon as possible after the Closing Date but in
any event no later than on the Settlement Date. In the event
Seller is unable to assign any Asset that is not a Material Asset
to Buyer on the Settlement Date, then Seller shall (i) no longer
have any obligation to assign such Asset to Buyer, and (ii) refund
to Buyer the value of such Asset as reflected on the Preliminary
Closing Statement together with interest at the Federal Funds Rate
from the Closing Date through the date of such refund.
(c) All operating expenses and fees accrued or prepaid
on or prior to the Closing Date, including, without limitation,
wages, salaries, rent, estimated additional rent, security
deposits, deposit insurance premiums, utility payments, telephone
charges, maintenance contract payments, personal property taxes,
real property taxes and assessments, other ordinary operating
expenses of the Branches and other expenses related to the Assets
or Liabilities, but excluding fees for use of safe deposit boxes,
shall be prorated between the parties as of the Closing Date. All
real and personal property taxes and current installments of
special assessments levied or assessed with respect to the Real
Estate, the Real Estate Improvements, the Leasehold Improvements,
and the Furniture, Fixtures and Equipment shall be prorated between
Seller and Buyer on a daily basis as of the Closing Date based upon
the fiscal year of the appropriate taxing authority. Utilities and
any other normal maintenance and operating expenses relating to the
Real Estate, Real Estate Improvements, and the Leasehold
Improvements shall be prorated between Seller and Buyer as of the
Closing Date on a daily basis. Notwithstanding Seller's normal
practices and procedures, to the extent that Seller has paid
expenses that are expenses allocable to Buyer pursuant to this
Section 2.3(c), such expenses shall appear as "Prepaid Expenses" on
the Preliminary Closing Statement or, if not allocable as of the
date the Preliminary Closing Statement is calculated (the
"Preliminary Closing Statement Date"), on the Final Closing
Statement. Notwithstanding Seller's normal practices and
procedures, to the extent that expenses have been incurred but not
paid by Seller on or prior to the Closing Date, they shall appear
as an Accrued Expense on the Preliminary Closing Statement or, if
not incurred by the Preliminary Closing Statement Date, on the
Final Closing Statement.
(d) With respect to the proration of deposit insurance
premiums, Buyer shall reimburse Seller for the amount of any
deposit insurance assessments that Seller is required to pay for
periods in which the Assumed Deposits are included in Seller's
deposit insurance assessment base but during which periods Buyer
has liability for the Assumed Deposits. The amount of such
reimbursement, based on Seller's effective assessment rate
(regardless of Buyer's assessment rate), will be included as a
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Prepaid Expense on the Preliminary Closing Statement and will be
adjusted as necessary on the Final Closing Statement.
ARTICLE 3
Purchase and Sale
3.1 Purchase and Sale. Upon the terms and subject to the
conditions of this Agreement, Seller agrees to sell and transfer
and Buyer agrees to purchase and assume the Assets and the
Liabilities at the Closing as provided in Section 3.2.
3.2 Closing.
(a) Closing Date and Place. The closing for the
transactions provided for herein will be held at the offices of
Seller, in Hurst, Texas, 10:00 (local time), or at such other place
mutually agreed in writing by Buyer and Seller, which may include
the exchange of documents by mail or facsimile. The Closing shall
be held on a date mutually agreeable to Buyer and Seller as soon as
reasonably practicable following the date on which Buyer has
received all government and other approvals and consents necessary
for the consummation of the transactions contemplated hereby
(including the expiration of any statutory waiting periods),
provided that the parties shall agree in any event upon a date for
the Closing that shall be on or prior to December 31, 1998.
(b) Deliveries by Seller at the Closing. At the
Closing, Seller shall execute and/or deliver to Buyer, with such
instruments to be in form and substance reasonably satisfactory to
Seller and Buyer, the following:
(i) A special warranty deed conveying good and
indefeasible fee simple title to each parcel of Real Estate and the
related Real Estate Improvements in the form of Exhibit "C" hereto,
subject only to the ad valorem taxes for the year of Closing and
the Permitted Exceptions;
(ii) A bill of sale in the form of Exhibit "D"
hereto, conveying to Buyer the Leasehold Improvements, the
Furniture, Fixtures, and Equipment and certain other Assets that
are personal property, with a warranty by Seller that as of the
Closing Date there are no outstanding Liens or claims against such
Assets and a general warranty of title;
(iii) One or more assignments of all of
Seller's rights, title and interests in the Leases and the Assumed
Contracts;
(iv) Copies of written consents to the assignment
of any Leases or Assumed Contracts requiring such consent;
(v) The Records Agreement pursuant to which Seller
shall provide Buyer with access to certain records with respect to
the Branches;
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(vi) The officer's certificate required by Section
9.2(b) in the form of Exhibit "E" hereto;
(vii) The Preliminary Closing Statement;
(viii) Original notes for all Branch Loans,
endorsed without recourse, and all related loan files;
(ix) Payment to Buyer as may be required pursuant
to Section 2.1 of this Agreement in immediately available funds
(such payment to be made at a time no later than 12:00 Noon Hurst,
Texas time, on the Closing Date);
(x) All collateral security of any nature
whatsoever held by Seller as collateral for any of the Assets;
(xi) All documents, contracts, certificates,
instruments, keys and records necessary or appropriate to transfer
the safe deposit and safekeeping businesses, if any, of the
Branches, to be delivered at the close of business on the Closing
Date;
(xii) Possession of the Assets and access to
and keys for each of the offices of the Branches, to be delivered
at the close of business on the Closing Date;
(xiii) A non-foreign affidavit as required by
Section 1445 of the IRC;
(xiv) Such other documents as may be reasonably
required by the Title Company in connection with the issuance of
the Title Policy, as defined in Section 4.11(b), including an
affidavit as to debts and liens; and
(xv) An opinion of counsel to Seller in form and
substance reasonably acceptable to Buyer containing the opinions
set forth in Exhibit "F" hereto.
(c) Deliveries by Buyer at the Closing. At the
Closing, Buyer shall execute and/or deliver to Seller, with such
instruments to be in form and substance satisfactory to Seller and
Buyer, the following:
(i) A Liability Assumption Agreement in the form
of Exhibit "G" hereto, pursuant to which Buyer agrees to assume and
discharge all of the Liabilities;
(ii) The Records Agreement;
(iii) The officer's certificate required by
Section 9.1(b) in the form of Exhibit "H" attached hereto;
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(iv) A certificate duly executed by an authorized
officer of Buyer, dated as of the Closing Date, acknowledging
receipt of possession of the Assets; and
(v) An opinion of counsel for Buyer in form and
substance reasonably satisfactory to Seller, containing the
opinions set forth in Exhibit "I" hereto.
(d) Closing Costs and Recording. Seller and Buyer
shall each pay one-half of any documentary, stamp or other transfer
taxes, recording fees and escrow fees relating to the sale of the
Real Estate and the Real Estate Improvements. Except as otherwise
specified in this Agreement, Buyer shall be responsible for filing
or recording any instruments or documents evidencing, or otherwise
notifying persons who are not parties to this Agreement regarding,
the consummation of the transactions contemplated by this
Agreement.
ARTICLE 4
Operational Covenants
4.1 Data Processing Conversion. The conversion of the
data processing with respect to the Branches and the Assets and the
Liabilities to be transferred hereunder will be completed no later
than the next Business Day following the Closing Date. In
connection with the data processing conversion, Seller and Buyer
shall each pay their own costs and expenses associated with the
data processing conversion and shall bear equally the duties and
responsibilities relating to such conversion. Seller will use its
reasonable efforts to have available to Buyer at the offices of
McCoy Meyer, 3900 Georgia, Amarillo, Texas, at a mutually agreed
date and time after the Closing Date, a list (which may be in the
form of machine-readable data tapes or disks) of the Assumed
Deposits as of the most recent practicable date, which list
identifies each Assumed Deposit by type, with appropriate
information regarding the depositor and the terms of the Assumed
Deposit as well as reasonable and customary data necessary to Buyer
to effect the conversion, including source information, file
structure lay-outs, test tapes, and similar materials. Buyer will
have the responsibility of making and paying for courier pick-up of
such information from Seller and delivery to Buyer's data
processor. In no event shall Seller be required to provide any
computer programming, source code or changes in existing file
layouts.
4.2 IRA Deposits. With respect to Deposits that are
individual retirement accounts created by a trust for the exclusive
benefit of an individual or his or her beneficiaries in accordance
with the provisions of Section 408 of the IRC ("IRA Deposits"),
Seller will appoint Buyer as successor custodian of all such IRA
Deposits, including but not limited to, sending to the depositors
thereof appropriate notices, and filing any appropriate
applications with applicable regulatory authorities, with copies of
such notices and applications being furnished to Buyer. Effective
as of the Closing Date, Buyer will accept appointment as custodian
with respect to such IRA Deposits and will perform all of the
duties so transferred and comply with the terms of Seller's
agreement with the depositor of the IRA Deposits affected thereby.
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4.3 Keogh Accounts. With respect to Deposits that are
Keogh Accounts created by a trust for the benefit of employees and
that comply with the provisions of Section 401 of the IRC ("Keogh
Accounts"), Seller will use reasonable efforts and cooperate with
Buyer to invite depositors thereof to direct a transfer of each
such depositor's Keogh Account and the related Deposit to Buyer, as
custodian thereof, and to adopt Buyer's form of Keogh master plan
as a successor to the Keogh master plan of Seller. Buyer will
assume no Deposits that are Keogh Accounts unless Buyer has
received the documents necessary for such assumption or transfer at
or before the Closing. With respect to any depositors who do not
transfer such Keogh Accounts to Buyer's form of Keogh master plan,
Seller will use reasonable efforts in order to enable Buyer to
retain such Keogh Accounts at the Branches.
4.4 Replacement of Customer Check Stock and ATM Cards. As
soon as practicable, but in no event later than five (5) days after
the Closing Date, Buyer shall mail to each depositor in respect of
a Transaction Deposit that was included in the Assumed Deposits a
letter approved by Seller requesting that such depositor promptly
cease writing checks on Seller's check stock against such
Transaction Deposit. At such time as Buyer mails each such notice
to each depositor, Buyer shall also forward to each depositor new
checks on Buyer's check stock, which checks the depositor may draw
upon Buyer for the purpose of effecting transactions with respect
to such Transaction Deposits. Simultaneously with the Closing,
Buyer shall change each depositor's account number, and the letter
mailed to each customer pursuant to this Section 4.4 shall include
notice to each customer of such customer's new account number
The parties will use reasonable efforts to develop procedures
(i) that will cause checks drawn on Seller's form of check stock
against Transaction Deposits that are received after the Closing
Date to be cleared through Buyer's then current clearing procedures
and (ii) to provide for the delivery of new ATM cards by Buyer and
the orderly processing of ATM transactions, it being understood
that Seller will cut-off Seller's ATM debit cards as of the Closing
Date.
4.5 Clearing Items. During the sixty (60) day period
following the Closing Date, if it is not possible to clear checks
and other items drawn on the Assumed Deposit Accounts through
Buyer's then current clearing procedures, Seller will make
provisional settlement to the presenting institution and will
forward such checks and other items on the Assumed Deposits to
Buyer, via courier, at Buyer's expense, no later than the next
Business Day after receipt thereof, and Buyer will reimburse Seller
for such provisional settlement. Upon the expiration of such sixty
(60) day period, Seller shall cease forwarding checks and other
debits against Assumed Deposit Accounts and return them to the
originators marked "Account Closed". During this sixty (60) day
period, Buyer will not be obligated to pay Seller for any item
processed, but after such ninety day period, Buyer will pay Seller
$0.05 for each item processed by Seller. After sixty (60) days
from the Closing Date, Buyer will pay Seller $1.00 for each item
returned by Seller. Upon timely presentation to Buyer, Buyer will
assume all responsibility for such items (except for such items
that have not been handled by Seller in accordance with applicable
law or regulation), including but not limited to determining
whether to honor or dishonor such items and giving any required
notification for the return of large items.
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4.6 Returned Deposit Items. Any items that were credited
for deposit to or cashed against an Assumed Deposit prior to the
Closing and are returned unpaid after the Closing Date (each
"Returned Deposit Item" or "RDI") will be handled as follows:
(a) Within one (1) Business Day after receipt of any
RDI by Seller, Seller will fax to Buyer a list reflecting the
amount of such RDI, the date of deposit and depositor's account
number (if available) and Seller will forward a consolidated
collection request with the original RDIs (a "Collection Advice"),
to Buyer via courier.
(b) Upon receipt of a Collection Advice, Buyer will
place holds on the respective customers' Assumed Deposit(s) in an
amount not less than the amount of the RDI and take any actions
necessary to ensure that such deposits are not withdrawn.
(c) Within one (1) Business Day after receipt of such
Collection Advice and original RDI, Buyer will debit the available
Assumed Deposits and/or overdraw the depositor's account and return
the paid Collection Advice to Seller. RDIs that overdraw an
account balance shall be held by Buyer unless requested by Seller
during the collection process. Buyer will release RDIs to
depositors only upon receipt of sufficient good funds to cover any
deficient balances.
(d) A list reflecting name, address, phone number and
amount of accounts overdrawn $500 or more, resulting from an RDI
forwarded by Seller being charged to the customer's account, shall
be faxed to Seller, Attention: Loss Prevention Manager, fax number
512/889-7816, on the date such item is charged back.
(e) Seller will be responsible for collecting overdrawn
balances of RDIs over $500. Buyer will reasonably cooperate with
Seller with respect to providing information or records that may be
needed to pursue resolution of amounts due to Seller. Buyer will
be responsible for reasonable collection efforts on overdrawn
balances of RDIs of $500 or less and shall reimburse Seller for
RDIs not so collected.
(f) After a period of 60 days from the date an account
is charged for an RDI and becomes overdrawn, Buyer will submit a
collection request to Seller for any remaining balances that could
not be collected. The original RDIs received shall be returned
with the collection letter to Seller via courier, at Seller's
expense.
(g) Customer disputes regarding Buyer's rights to debit
assumed deposits will be reviewed with Seller's Loss Prevention
Manager for resolution. Buyer agrees to reasonably cooperate with
Seller in debiting Assumed Deposits for RDIs, except in such cases
when Seller's negligence is the basis of a defense by the customer
to Buyer' s right to debit the Assumed Deposit(s).
(h) Claims involving checks paid prior to Closing,
drawn against accounts sold, which are subsequently disputed to be
forged or otherwise unauthorized, shall be referred to Seller's
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Loss Prevention Manager for resolution. Seller shall defend and
indemnify Buyer and shall hold Buyer harmless from such disputed
and unauthorized amounts including any debits presented or closed
or NSF accounts.
The collection process described above shall also be applied to
RDIs that may be received within the applicable statute of
limitations period for altered or forged endorsed instruments.
4.7 Direct Deposit Arrangements. Seller will use reasonable
efforts to transfer to Buyer on the Closing Date all of those
automated clearing house and Fed wire direct deposit arrangements
that are tied by agreement or other standing arrangement to the
Assumed Deposits. For a period of sixty (60) days, in the case of
automated clearing house direct deposits and thirty (30) days, in
the case of Fed wire direct deposits, after the Closing Date (each,
a "Direct Deposit Cut-off Date"), Seller will, no later than the
next Business Day following the date of receipt thereof, remit and
transfer by electronic transmission to Buyer all direct deposits
intended for Assumed Deposits. After the applicable Direct Deposit
Cut-off Date, Seller may discontinue accepting and forwarding
automated-clearing-house and Fed-wire entries and funds and return
such direct deposits to the originators marked "Account Closed".
Seller will not be liable for any Deposit Overdrafts that may
thereby be created or for any other matter. Seller will not be
obligated to accept new direct deposit arrangements on any Branch
Deposits after the date that all regulatory approvals required
under Sections 9.1(c) and 9.2(c) (except for statutory waiting
periods), have been received, nor will Seller be obligated to remit
or transfer with respect to any direct deposit arrangements other
than by electronic transmission. As soon as practicable following
the Closing Date, Buyer will provide the direct deposit originators
with routing and Account numbers and conversion tapes relating to
Assumed Deposits that have direct deposit arrangements in effect.
4.8 Direct Debit Arrangements. With respect to all Branch
Deposits that have arrangements providing for direct debit of such
Accounts by third parties ("Direct Debit Accounts"), Buyer will
send appropriate notice to all holders of Direct Debit Accounts as
soon as practicable after the receipt of all regulatory approvals
required under Sections 9.1(c) and 9.2(c) (except for statutory
waiting periods), and after the notices provided in Section 6.4,
instructing such customers concerning transfer of customer direct
debit authorizations from Seller to Buyer. Seller shall cooperate
with Buyer in soliciting the transfer of such authorizations. Such
notice shall be in a form agreed to by the parties. For a period
of sixty (60) days following the Closing Date, Seller will forward
by electronic transmission to Buyer all direct debits on Direct
Debit Accounts, if any, received by Seller on the Business Day
following the date of receipt thereof, and will give Buyer a daily
accounting by electronic transmission of such debits to Buyer's
dealing account. Thereafter, Seller may discontinue forwarding
such entries and return them to the originators marked "Account
Closed". Seller will not be obligated to accept new direct debit
arrangements on Branch Deposits after the date when all regulatory
approvals have been obtained, nor will Seller be obligated to
forward such direct debits or give an accounting thereof other than
by electronic transmission. As soon as practicable after the
Closing Date, Buyer will provide Direct Debit originators with the
Account and routing numbers and conversion tapes relating to
Assumed Deposits that have direct debit arrangements in effect.
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4.9 Assumption of Contracts. Attached hereto as Schedule
4.9 is a list of all contracts, agreements, and other obligations
to which Seller is a signatory that relate specifically to the
operation of the Branches (other than those relating to Loans, the
Deposits, the safe deposit box contracts with customers or as
listed in Schedule 7. l (j)), including without limitation, service
contracts, maintenance contracts, consulting contracts, agency
agreements and licensing agreements (but excluding contracts that
relate to Seller's bank operations generally and that are not being
assumed by Buyer). Not later than thirty (30) days after the date
of this Agreement, Buyer shall deliver to Seller a list of all
contracts and agreements reflected on Schedule 4.9 that Buyer
wishes to assume (the "Assumed Contracts"); provided, however, that
if Seller notifies Buyer in writing not later than thirty (30) days
prior to the Closing Date that one or more of such contracts or
agreements may not be legally assigned, Seller shall not be
required to assign such contracts or agreements at Closing except
for contracts that constitute Material Assets and shall have no
liability to Buyer as a result of its inability to accomplish such
assignments; and further provided that Seller shall be permitted to
terminate this Agreement by notice to Buyer within five (5) days
after receipt of the aforesaid list if such list is materially
different from the list provided as Schedule 4.9 hereto.
4.10 Branch Loans. In connection with the transfer of the
Branch Loans, Seller and Buyer agree as follows:
(a) The parties will cooperate and use their best
efforts to cause Buyer to become the beneficiary of credit life,
accident and health, vendor's single interest premium or similar
insurance purchased by or on behalf of such customer on the Branch
Loans, but excluding any lines of credit. For the duration of such
insurance, Seller and Buyer agree to cooperate in good faith to
develop a mutually satisfactory method by which the issuer of such
insurance will make rebate payments to and satisfy claims of the
holders of such certificates of insurance after the Closing Date.
(b) Each of Buyer and Seller will use their best
efforts to comply with all notice and reporting requirements of the
loan documents or of any law or regulation with respect to the
transfer of such loans.
(c) Within thirty (30) days after the Closing Date,
Buyer will, at its expense, issue new coupon books or similar
payment notices for payment of Branch Loans with instructions to
use Buyer's coupons or statements and to destroy unused coupons
furnished by Seller.
(d) For a period of sixty (60) days after the Closing
Date, within five (5) Business Days after receipt by Seller of any
check or money order made payable to Seller representing payment on
a Branch Loan, Seller shall issue and forward a cashier's check
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made payable to Buyer or wire transfer to the benefit of Buyer in
the amount of such item, and forward the item for collection. If
the item is returned unpaid, however, Seller shall promptly notify
Buyer of such item's return and shall forward the original of such
item to Buyer. Within three (3) Business Days after receipt of
such returned item, Buyer shall issue and forward a cashier's check
or wire transfer to Seller in the amount of such item, and Buyer
shall be responsible for any further efforts to collect such item.
(e) If the balance due on any Branch Loan has been
reduced by Seller as a result of a payment by check received prior
to the Closing Date, which item is returned after the Closing Date,
the asset value representing the Branch Loan transferred shall be
correspondingly increased and an amount in cash equal to such
increase shall be paid by Buyer to Seller promptly upon demand.
Such amounts shall be debited or credited, where applicable, from
Buyer's correspondent bank account maintained with Seller.
4.11 Real Estate.
(a) Seller shall, within thirty (30) days after the
date hereof, at its sole cost and expense, cause to be furnished to
Buyer and the Title Company one (1) copy each of a "Land Title
Survey" (as that term is defined in the latest edition of the
"Manual of Practice for Land Surveying in Texas" published by the
Texas Society of Professional Surveyors) (the "Survey") of the Real
Estate prepared and certified as to all matters shown thereon by a
surveyor licensed by the State of Texas ("Surveyor"). The Survey
shall bear a certificate and a notation stating whether or not a
portion of the Real Estate is located in a 100-year flood plain,
flood-prone area of special flood hazard and shall show the
specific location of any portions of the Real Estate that may be
located in any such flood areas.
(b) Within sixty (60) days after the date of this
Agreement, Seller shall cause the Title Company to furnish to Buyer
(i) a title commitment ("Commitment"), showing Seller as the record
title owner of the Real Estate by the terms of which Title Company
agrees to issue to Buyer at Closing an owner's policy of title
insurance ("Title Policy") in the amount of the Book Value of the
Real Estate and Real Estate Improvements on the standard form there
for promulgated by the Texas Board of Insurance insuring Buyer's
fee simple title to the Real Estate to be good and indefeasible
subject to the terms of such policy and the Schedule B exceptions;
and (ii) a photocopy of all documents ("Title Documents")
describing all Schedule B title exceptions shown on the Commitment.
As used herein, the term "Title Objection Period" shall mean a
period commencing on the first day following Seller's delivery to
Buyer of the last of the Survey, Commitment and Title Documents and
ending twenty (20) days thereafter. All matters shown on the
Survey and exceptions listed in the Commitment that are not
objected to by Buyer by delivery of written notice to Seller within
the Title Objection Period shall be conclusively deemed to be
acceptable to Buyer. In the event Buyer timely objects to any
title exception or Survey matter which would materially impair the
ability of Buyer to utilize the Real Estate as a banking facility
("Title Objection"), Seller may, but shall not be obligated to,
cure such Title Objection; provided, however, if Seller is able and
willing to eliminate or cure such Title Objections, Seller shall
notify Buyer in writing within ten (10) days after the Title
Objection Period ("Seller's Notice Period") of such facts (said
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notice hereinafter called "Seller's Title Notice") and in which
case the limitation or curing by Seller of the Title Objections
shall be complete to the satisfaction of Buyer on or before the
Closing Date. In the event Seller does not deliver Seller's Title
Notice to Buyer within Seller's Notice Period, Buyer is deemed to
be notified that Seller is unable or unwilling to cure the Title
Objections. In the event Seller (i) does not deliver Seller's
Title Notice, or (ii) notifies Buyer that Seller is unable or
unwilling to cure any Title Objection, Buyer shall be deemed to
have waived the Title Objections unless, within ten (10) days
following the expiration of Seller's Notice Period, Buyer delivers
to Seller written notice terminating its obligation to purchase the
Real Estate, whereupon Seller shall have an option for ten (10)
days following receipt of such notice to terminate the Agreement by
giving written notice of such termination to Buyer. As used in
this Agreement, the term "Permitted Exceptions" shall mean the
matters listed on Schedule 4.11(b), all title exceptions or Survey
matters which would not materially impair the ability of Buyer to
utilize the Real Estate as a banking facility, and all matters
either shown on the Survey or listed in the Commitment to which
Buyer does not raise a Title Objection within the Title Objection
Period, or, having objected, Buyer waives or is deemed to have
waived in accordance with the provisions of this Section 4.11(b).
Seller shall provide to Buyer the Title Policy, reflecting only the
Permitted Exceptions, as soon as practicable after the Closing
Date. Seller and Buyer shall share equally in the cost and expense
of the Title Policy and for the "survey deletion" to be made in the
Title Policy.
(c) Upon consummation of the transactions contemplated
by this Agreement, Seller shall notify the appropriate taxing
authorities of the transfer of the Real Estate to Buyer and request
that such taxing authorities reflect such change in ownership on
the tax rolls.
4.12 Noncompetition Agreement. For and in consideration of
the purchase by Buyer of the Assets and the assumption of the
Liabilities, the payment of the Purchase Premium and the other
agreements and covenants contained in this Agreement, for a period
of two (2) years following the Closing Date, Seller will not
solicit the banking business of any current customers of each
Branch whose Deposits or other banking business is transferred to
Buyer pursuant to the terms of this Agreement or offer employment
to any person employed by Buyer or Seller in any of the Branches or
open any office within thirty (30) miles of any of the Branches or
any other Branches of Buyer existing as of the date of this
Agreement. Notwithstanding the foregoing sentence, Seller shall
not be deemed to be in violation of this Section 4.12 by virtue of
(a) Seller's advertising (i) in publications that are normally
distributed, or (ii) by means of radio or television advertising
over stations that broadcast in geographic areas that include the
primary market area of such Branches and geographic markets served
by Seller's locations other than such Branches, (b) mass mailings
and telemarketing not targeted at the primary market area of such
Branches, (c) statement stuffers mailed to current customers of the
Branches who also maintain accounts with banking offices of Seller
other than the Branches, (d) Seller taking such actions as may be
required to comply with applicable laws, rules or regulations,
(e) Seller's solicitation of commercial accounts normally
established and maintained in locations other than the Branches, or
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(f) Seller's solicitation of customers associated with the
insurance premium financing investment, brokerage or insurance
business of Seller, provided that Seller shall not solicit such
customers to purchase certificates of deposit, including brokered
certificates of deposit. For purposes of this Section 4.13, the
primary market area of each Branch means the area encompassed
within a thirty (30) mile radius of the location of such Branch.
If any court of competent jurisdiction should determine that any
term or terms of this covenant are too broad in terms of time,
geographic area, lines of commerce or otherwise, such court shall
modify and revise any such term or terms so that they comply with
applicable law.
4.13 Assumption of Liabilities. At the Closing, Buyer shall
succeed to all obligations and liabilities of Seller in respect of
the Branches to the extent included among the Liabilities as of the
Closing Date, and shall be liable from then and thereafter to pay,
discharge and perform all of the Liabilities as if Buyer had itself
incurred such obligations and liabilities, and Buyer shall succeed
to all rights, offsets and defenses of Seller in connection
therewith. Subject to the provisions of law, from and after the
Closing, Buyer shall honor all the terms and conditions of existing
deposit agreements. Buyer is not assuming any Non-Assumed
Liabilities.
4.14 Collection of Deposit Overdrafts. At the Closing, Buyer
shall succeed to all rights, offsets and defenses of Seller for
Deposit Overdrafts. If collection is effected by Buyer, at its
sole discretion, such collection shall be the sole responsibility
of Buyer. At Buyer's request, Seller will use reasonable efforts
to assist Buyer in the collection of Deposit Overdrafts, but Seller
shall not be required to incur any fees or expenses (including
legal or other professional fees) other than the indirect costs
associated with the employment of Seller's existing employees in
connection with rendering such assistance.
4.15 Forwarding of Mail or Other Correspondence. Each of the
parties hereto agrees that following the Closing Date, each party
shall, at its own expense, deliver to the other as soon as
practicable, but in no event later than three (3) Business Days
after receipt, any mail or other correspondence received by such
party that was intended to be delivered to the other party, all of
which shall remain unopened.
ARTICLE 5
Employee Matters
5.1 Employee Considerations.
(a) With respect to all employees of Seller affiliated
with the Branch ("Employees"), as soon as reasonably practicable
after the date hereof, and in any event within three (3) days after
the date hereof, Seller shall provide notice to (the
"Notification") to each Employee that the Seller and Buyer have
entered into an agreement with respect to the Buyer's acquisition
of the Branch. Seller shall also furnish to Buyer within the
designated time period a schedule containing the name of each
Employee, such Employee's salary and benefits, and a synopsis of
each Employee's tenure with Seller and other information relevant
to such Employee. Seller shall inform Buyer of the date of the
Notification, and shall, with the Employee's consent, provide Buyer
with an opportunity within five (5) business days before the
Closing to inspect Seller's records with respect to the Employees
and visit with the Employees for the purpose of discussing an offer
of employment with each Employee as of the Closing.
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(b) Seller shall pay any and all costs (including
without limitation, severance pay and accrued vacation pay)
associated with the termination of any Employee who chooses not to
accept employment with Buyer.
(c) Buyer and Seller shall coordinate all
communications of employment offers to, or plans to terminate,
Employees in the Branch; provided, however, this paragraph shall
not be construed to require Buyer and Seller to act jointly at any
time; and further provided that Buyer will not advise any such
employee that such employee will not be hired by Buyer prior to
five (5) business days before the Closing Date.
(d) All Employees may be treated by Buyer as "new
hires" for all purposes. Except as otherwise provided herein,
Buyer shall not be obligated to make any contribution to any plan
or program on behalf of any of such employees, or to otherwise
provide any compensation or benefits to any of such employees with
respect to any period prior to the Closing. It is further provided
that Buyer shall not be liable for any claims of any Employees or
other employees of the Branch that any of them may have against
Seller and Seller shall hold Buyer harmless from any such claims.
(e) Nothing in this Section or this Agreement on a
whole is intended, nor shall it be construed, to confer any rights
or benefits upon any person other than Buyer and Seller or to imply
that the Buyer is a successor to the Seller so far as any federal
employment regulations are concerned.
(f) Seller agrees to remain responsible for the payment
of all benefits accrued under the terms of Seller's retirement
plans with respect to any Employee. Buyer shall not at any time
assume any liability for the benefits of any active or any
terminated, vested or retired participants in Seller's retirement
plans, except that Buyer will give credit to Employees of Seller
hired by Buyer for years of service with Seller for purposes of the
vesting requirements of Buyer's 401K plan provided benefits accrued
under Seller's 401K plan are transferred to Buyer's plan.
(g) Seller shall be responsible for payments for
accrued vacation not taken by an Employee prior to the Closing Date
and for timely payment as required by law of all wages, salaries,
bonuses, if any, and other compensation with respect to service
completed on or prior to the Closing Date. Seller shall offer
Employees who accept employment with Buyer the option to receive
cash or to transfer to Buyer their accrued vacation days or
fractions thereof earned but unused while employed by Seller. In
the event any Employee elects to receive cash upon employment by
Buyer, Seller shall make a cash payment to such Employee within ten
(10) days after the Closing Date or earlier if required by law. In
the event any such Employee elects to have his or her accrued
vacation transferred upon employment by Buyer, Buyer shall give
such Employee credit after the Closing Date for the same number of
vacation days or fractions thereof he or she has accrued with
Seller as of the Closing Date. For purposes of this Section
5.1(g), personal choice days or fractions thereof will be treated
as vacation days. In the event Employees elect to have their
accrued vacation carried over to Buyer, the amount equal to the net
cash value of each such Employee's accrued vacation before payroll
deductions will be treated as an Accrued Expense on the Final
Closing Statement.
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(h) Seller shall retain the responsibility for payment
of all medical, dental, health and disability claims incurred by
any Employee prior to the Closing Date, and Buyer shall not assume
any liability with respect to such claims. On or after the Closing
Date, all medical, dental, health and disability claims incurred by
Employees in Buyer's employ shall be determined under Buyer's
benefit plans.
(i) Seller shall be responsible for providing any
Employee whose "qualifying event," within the meaning of Section
4980B(f) of the IRC, occurs on or prior to the Closing Date (and
such Employee's ''qualified beneficiaries" are within the meaning
of Section 4980B(f) of the IRC) with the continuation of group
health coverage required by Section 4980B(f) of the IRC under the
terms of the health plan maintained by Seller. Buyer shall be
responsible for such continuation coverage to any Employee in
Buyer's employ (and each Employee's qualified beneficiaries) whose
qualifying event occurs after the Closing Date to the extent
required by law.
(j) Seller agrees that it shall retain, consistent with
its normal employment practices, all liability and obligation, if
any (including, without limitation, the liability and obligation
for all wages, salary, vacation pay and unemployment, medical,
dental, health and disability benefits), for those former employees
of the Branches who retired or terminated employment prior to the
Closing Date or who otherwise do not become employees of Buyer.
(k) In the event the transaction contemplated by this
Agreement is not consummated, Buyer agrees not to employ any
Employee for a period of one (1) year following the date of
termination of this Agreement. This provision shall survive any
termination of this Agreement.
(i) Buyer shall be responsible for advising Employees
of the details of any offers and terms of employment, and answering
any questions relating thereto, but Seller shall be allowed to
review and promptly approve any communication that refers to any of
Seller's benefits or policies prior to its distribution.
ARTICLE 6
Additional Covenants
6.1 Seller's Covenants. Seller agrees to:
(a) In addition to required deliveries hereunder, use
reasonable efforts to sign and deliver to Buyer such additional
agreements and other documents, and to do such other acts and
things, as may be required to complete the transactions
contemplated by this Agreement;
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(b) Cooperate with Buyer in obtaining all governmental
and regulatory consents, approvals, licenses, waivers and the like
required to be fulfilled or obtained for the completion of the
transactions contemplated by this Agreement;
(c) Seller shall promptly, but in no event later than
ten (10) business days after receipt of a request by Buyer, furnish
Buyer with all information concerning Seller required for inclusion
in any application or statement to be made by Buyer or to be filed
by Buyer with any governmental body in connection with the
transactions contemplate by this Agreement, and Seller represents
and warrants that all information so furnished for such statements
and applications shall be true and correct in all material respects
and shall not omit any material fact required to be stated therein
or necessary to make the statements made, in light of the
circumstances under which they were made, not misleading;
(d) Remove all signage from the Branches at the expense
of Seller on or before the Closing Date or within seventy-two (72)
hours thereafter, it being understood that Buyer shall be
responsible for installation of its signage at its expense on or
after the Closing Date;
(e) During the period from the date hereof until the
Closing or the earlier termination of this Agreement, and except as
expressly permitted by this Agreement or otherwise consented to or
approved by Buyer in writing (such consent or approval not to be
unreasonably withheld):
(i) Not permit the Branches to incur any material
liabilities or material obligations (whether directly or by way of
guaranty, endorsement, surety contract or otherwise) including
without limitation any obligation for borrowed money or evidenced
by any note, bond, debenture or similar instrument, except for (a)
such liabilities or obligations not exceeding $5,000 individually
or $10,000 in the aggregate per Branch, (b) deposit liabilities
incurred in the ordinary course of business pursuant to Seller' s
customary rate schedules, and (c) other liabilities and obligations
incurred in the ordinary course of business;
(ii) Not sell, transfer, mortgage, encumber or
otherwise dispose of any of the Assets except for the disposition
of Assets (other than the Real Estate, Real Estate Improvements or
Leasehold Improvements) in the ordinary course of business or as
contemplated in Schedule 6.1(e)(ii);
(iii) Except as provided in Article 8, not cause or
solicit any of Seller's customers to cause the transfer from the
Branches to Seller's other operations of any deposits of the type
included in the Liabilities, provided, however, that Seller may
transfer deposits to Seller's other branches or offices upon
request of the depositors;
(iv) Not make any capital commitments with respect
to the Real Estate, Real Estate Improvements, and the Leasehold
Improvements except capital commitments made in the ordinary course
of business not exceeding $5,000 per Branch in the aggregate;
provided that Seller can make any emergency repairs required to
restore any Branch to a safe operating condition;
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(v) Maintain the Real Estate, the Real Estate
Improvements, the Leasehold Improvements, and the Furniture,
Fixtures and Equipment substantially in accordance with its normal
practices, and keep such property in its present condition,
ordinary wear and tear excepted;
(vi) Operate the Branches and the business thereof
in the ordinary course and use reasonable efforts prior to Closing
to preserve for the benefit of Buyer after the Closing its
business, goodwill and relationships with customers and suppliers;
(vii) Upon prior reasonable notice, provide to
Buyer reasonable access during normal business hours to and the
opportunity to review and inspect the Real Estate, the Real Estate
Improvements, the Leasehold Improvements, the Furniture, Fixtures
and Equipment, and the Records (including without limitation any
review Buyer elects to conduct pursuant to Section 6.5); furnish to
Buyer such reports and compilations pertaining thereto as Buyer
shall reasonably request from time to time (provided that Seller
shall have no obligation to assemble any new reports or
compilations not already prepared in the ordinary course of
Seller's business); and furnish to Buyer such other information
within Seller's possession pertaining to the Assets and the
Liabilities and the business of the Branches as Buyer may
reasonably request. In no event, however, will Seller be obligated
to incur any fees or expenses (including accounting or other
professional fees) other than the indirect costs associated with
the employment of Seller's existing employees in connection with
the furnishing of any such information or reports. In addition,
Seller shall provide Buyer reasonable access to the Branches for a
mutually agreeable period of time preceding the Closing Date for
the purpose of installing teller terminals and other equipment.
Buyer agrees to cause the installation of such equipment to be
effected in a manner intended to minimize disruption to the
operations of the Branches;
(viii) Not enter into any service, maintenance
or other contract or any equipment lease, relating to the
operations of the Branches for which Buyer shall have any
responsibility after the Closing;
(ix) Not introduce any new material method of
management or operation of the Branches;
(x) Not take any action that may result in a
material adverse change in the business of the Branches or the
Assets;
(xi) Not take or fail to take any action that would
cause or permit the representations made in Section 7.1 to be
inaccurate at the time of the Closing or preclude Seller from
making such representations and warranties at the time of the
Closing; or
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(xii) Except in the ordinary course of business, not
make any material modifications, including, but not limited to, any
changes in collateral, repayment terms or interest rates, to any of
the Assets or Liabilities.
(e) Seller shall promptly, but in no event later than
thirty (30) days after the date of this Agreement, unless delayed
by Buyer, file or cause to be filed applications for all regulatory
approvals required to be obtained by Seller in connection with the
transactions contemplated hereby. Seller shall use its best
efforts to obtain such regulatory approvals at the earliest
practicable time.
(f) If prearranged in advance, Seller shall provide one
designee of Buyer (the "Designee") with full access to the
properties, books and records of the Branches. Seller shall
provide the Designee with invitations to and allow the Designee to
attend committee meetings of the Branches and generally to
participate in Branch functions, except that the Designee shall not
interact with customers of the Branch. The Designee may hold
himself or herself out to the public as a representative of Buyer.
(g) Seller shall furnish Buyer with financial
statements as of each month end until the Closing Date for the
Branches.
(h) Seller shall promptly notify Buyer in writing if
Seller becomes aware of (i) any fact or condition that makes
untrue, or shows to have been untrue, in any material respect, any
schedule or any other information furnished to Buyer or any
representation or warranty made in or pursuant to this Agreement or
that results in Seller's failure to comply with any covenant,
condition or agreement contained in this Agreement, (ii) any
litigation, or any claim, controversy or contingent liability that
might become the subject of litigation, against Seller or affecting
the Branches, if such litigation or potential litigation might, in
the event of any unfavorable outcome, otherwise, of the Branches,
(iii) any change that has occurred or has been threatened (or any
development has occurred or been threatened involving a prospective
change) in the business, financial condition, operations or
prospects of Seller that is or may reasonably be expected to have a
material adverse effect on the Assets or the Liabilities.
(i) Unless advised to the contrary by Seller's legal
counsel based upon a threatened breach of fiduciary duty by Seller
or its directors, Seller shall not, directly or indirectly, nor
shall it permit any of its officers, directors, employees,
representatives or agents to, directly or indirectly, encourage,
solicit or initiate discussions or negotiations with, or discuss or
negotiate with, or provide any information to, any corporation,
partnership, person or other entity or group (other than Buyer or
an affiliate or an associate of Buyer or an officer, partner,
employee or other authorized representative of Buyer or such
affiliate or associate) concerning any merger, tender offer or
other takeover offer, sale of substantial assets, sale of shares of
capital stock or similar transaction involving the Assets or the
Liabilities.
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(j) Following receipt of all necessary regulatory
approvals for Buyer's purchase of the Assets from Seller, and upon
the request of the Buyer, Seller shall assist Buyer in the transfer
of all utilities relating to Seller's banking facilities into the
name of the Buyer.
6.2 Buyer's Covenants. Buyer agrees to:
(a) Use reasonable efforts to sign and deliver to
Seller such additional agreements and other documents, and to do
such other acts and things, as may be required to complete the
transactions contemplated by this Agreement;
(b) Promptly, but in no event later than thirty (30)
days of the date of this Agreement, file or cause to be filed
applications to fulfill all governmental, regulatory and other
requirements (including, without limitation, obtaining the approval
of the Office of the Comptroller of the Currency, and/or any other
governmental entity having jurisdiction over the Branches or Buyer
and pay all fees and expenses associated therewith) required to be
fulfilled by Buyer for the completion of the transactions
contemplated by this Agreement; promptly furnish Seller with copies
of all such regulatory filings and all correspondence for which
confidential treatment has not been requested; and use its best
efforts to obtain all such regulatory approvals at the earliest
practicable time;
(c) Pay, honor, discharge and perform, in accordance
with applicable law, all liabilities and obligations in respect of
the Assets and the Liabilities and any other liabilities of the
Branches arising, accruing or subsisting after the Closing Date,
which Buyer is obligated to assume pursuant to this Agreement,
subject to applicable indemnification rights of Buyer;
(d) Not use, keep or claim any registered or
unregistered trademark, service mark or other identification
commonly associated with Seller, or any sign, display or similar
material of Seller or any banking or other forms, stationery,
passbooks, checks, traveler's checks, cashier's checks, manager's
checks or similar banking material of Seller or bearing Seller's
name or other similar marks or identification (except to the extent
necessary to conduct business operations and with Seller's prior
consent following Closing, and then only if Seller's name, marks or
identification are obliterated from such material, and such
material is clearly identified as that of Buyer), or any
proprietary material of Seller including without limitation
operating manuals, training manuals and public relations,
explanatory or advertising materials;
(e) As of the Closing Date, become the "holder", as
that term is defined in the Texas Property Code (Tex. Prop. Code
Ann. 73.001), of all Assumed Deposits and safe deposit boxes that
Buyer assumes under this Agreement. Buyer will be responsible for
the escheat of any property for which it becomes the holder and
that becomes abandoned during the calendar year in which the
Closing occurs;
(f) On and following the Closing Date, honor and comply
with the terms of all holds, levies, garnishments, tax liens,
orders, pledges, guardianship agreements and other restrictions
that are in effect on the Assumed Deposits as of the Closing Date;
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(g) On and following the Closing Date, assume and
discharge, in the usual course of banking business, Seller's
obligations with respect to the safe deposit box business at the
Branches in accordance with the terms and conditions of contracts
or rental agreements related to such business, and to maintain all
records related to such agreements and facilities necessary for the
use of such safe deposit boxes by persons entitled to use them;
(h) Continue to operate or cause its assignee(s) to
operate each of the Branches at its current location for a period
of ninety (90) days after the Closing Date (unless Buyer has
provided Seller written confirmation from Buyer's appropriate
federal banking agency that any earlier change in location by Buyer
would be exempt from the notice and other requirements of 12 U.S.C.
ss.1831r-1); and
(i) Not take any actions that will injure Seller's
present business relations with its depositors, customers and
others, and not, either before or after the Closing, commit any
act, or in any way assist others to commit any act that injures
Seller or the business heretofore conducted by Seller, and, without
limiting the generality of the foregoing, not divulge any
confidential information or make available to any others any
documents, files or other papers concerning the business or
financial affairs of Seller.
6.3 Consents. Seller shall use reasonable efforts to obtain
all nongovernmental consents required to transfer the Assets, the
Leases and the Assumed Contracts to Buyer pursuant to this
Agreement; provided, however, that Seller shall not be required to
pay any additional compensation or fee to any person or entity to
obtain such consent, and provided further that Buyer provides
reasonable assistance to Seller to obtain such consent.
6.4 Notices.
(a) In addition to required deliveries hereunder, no
later than five (5) days prior to the Closing Date (unless earlier
required by law, regulation or regulatory policy), Seller shall
notify the holders of Deposits to be transferred on the Closing
Date that, subject to Closing, Buyer will be assuming liability for
such Deposits.
(b) Each of Seller and Buyer will provide, or join in
providing where appropriate, all notices to holders of Deposits and
other persons that Seller or Buyer, as the case may be, is required
to give by any regulatory authority having jurisdiction or under
applicable law or the terms of any other agreement between Seller
and any customer in connection with the transactions contemplated
hereby.
(c) Following or concurrently with the notice referred
to in Section 6.4(a), Buyer may communicate with and deliver
information, brochures, bulletins and other communications to
holders of Deposits concerning the transactions contemplated by
this Agreement and concerning the business and operations of Buyer.
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(d) A party proposing to send or publish any notice or
communication pursuant to Section 6.4(a), (b) or (c), shall furnish
to the other party a copy of the proposed form of such notice or
communication as soon as practicable in advance of the proposed
date of the first mailing, posting or other dissemination thereof
to customers, and such party shall promptly amend such notice or
other communication to incorporate any reasonable changes that the
other party proposes to such notice or other communication. All
costs and expenses of any notice or communication sent or published
by Buyer or Seller shall be the responsibility of the party sending
such notice or communication and all costs and expenses of any
joint notice or communication shall be shared equally by Seller and
Buyer.
(e) Following the giving of any notice referred to in
Section 6.4(a), (b) or (c), Seller shall deliver to each new
customer of the Branches such notice or notices as may be
reasonably necessary to notify such new customers of Buyer's
pending assumption of the Deposits and to comply with the
requirements of any regulatory authority or applicable law. Buyer
and Seller shall cooperate in determining the content of such
notices to such new customers, and the cost of such notices shall
be shared equally by Seller and Buyer.
6.5 Environmental Matters.
(a) Seller has provided Buyer with a report or reports
reflecting the results of a Phase I and/or Phase II Environmental
Assessment (including an asbestos survey) performed on the Branches
("Seller's Assessments"). Buyer acknowledges that Buyer has the
right and opportunity to conduct its own inspections and reviews of
the Branches, Real Estate and Real Estate Improvements, and that
Buyer is not purchasing the Branches, Real Estate and Real Estate
Improvements in reliance upon Seller's Assessments or upon any
representations or warranties of any kind whatsoever made by Seller
(or any representatives, agents or employees of Seller), except
those made pursuant to this Agreement. Buyer will be responsible
for the costs to remove or otherwise remediate any Hazardous
Materials the presence of which is disclosed in Seller's
Assessments, to the extent, if any, such removal or remediation, is
required by law or otherwise determined by Buyer to be necessary or
appropriate.
(b) If Buyer elects to perform any additional
environmental assessments, Buyer shall, on or before the forty-
fifth (45th) day after the date of this Agreement, (i) complete all
further environmental surveys of the Branches that Buyer wishes to
conduct, (ii) furnish to Seller a copy of all reports received by
Buyer with respect to any environmental surveys of the Branches
conducted by or on behalf of Buyer (the "Buyer's Assessments"),
(iii) make a determination (as shown by reliable estimates
contained in Buyer' s Assessments or by competitive bid) of the
costs to remediate any additional Hazardous Materials not disclosed
in Seller's Assessments (the "Estimated Costs"), and (iv) provide
notice to Seller of the Estimated Costs. The date by which all of
the events in the preceding sentence shall have occurred is
hereinafter referred to as the "Environmental Determination Date."
All of Buyer's Assessments shall be conducted at Buyer's sole cost
and expense, and Seller shall cooperate in the performance of any
such assessments, provided that such assessments are (i) conducted
at a mutually agreeable date and time after at least three (3)
Business Days' prior notice to Seller by Buyer, and (ii)
accomplished in a manner intended to minimize disruption to the
operations of the Branches.
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(c) If any of Buyer's Assessments reveal or indicate
the actual presence of any Hazardous Material on, under or within
the Real Estate or Real Estate Improvements not disclosed in
Seller's Assessments that requires remediation under any
Environmental Law, and remediation is possible, then the parties
agree to share equally in the costs, actually incurred and properly
documented within one year from the Closing Date, to remediate any
additional Hazardous Materials not disclosed in Seller's
Assessments (the "Actual Costs"); provided, however that the
maximum amount of Actual Costs payable by Seller hereunder with
respect to any Branch shall not exceed $10,000, unless Seller
otherwise agrees in writing. Notwithstanding the foregoing, if the
Estimated Costs exceed $20,000 for any Branch, Buyer may terminate
its obligation to purchase such Branch's Real Estate and any Real
Estate Improvements, or Seller may terminate its obligation to sell
such Branch's Real Estate and any Real Estate Improvements, by
delivering written notice to the other party within fifteen (15)
days after the Environmental Determination Date unless, within a
period of (15) days after receipt of such written notice, such
other party agrees in writing to be responsible for the amount by
which the Estimated Costs for such Branch exceed $20,000, in which
instance Seller's and Buyer's respective obligations to purchase
and sell the Real Estate and any Real Estate Improvements shall not
terminate. In the event Buyer's obligation to purchase any of the
Real Estate is terminated as hereinabove provided, Seller shall
thereupon have a right exercisable within ten (10) days following
such termination to terminate this Agreement by written notice to
Buyer. In the event Seller elects to be responsible for the
Estimated Costs in excess of $20,000 for any Branch, Seller's
liability for such excess costs shall be limited to the lesser of
(i) the amount of the Actual Costs in excess of $20,000 or (ii) the
amount of the Estimated Costs in excess of $20,000.
Notwithstanding the commencement of remediation procedures as
provided hereunder, in the event that all other conditions to the
Closing set forth in Article 9 are satisfied or waived, the parties
shall consummate the Closing as contemplated hereunder. The
provisions of this Section 6.5 shall exclusively govern the
obligations of the parties to this Agreement with respect to
Hazardous Materials.
6.6 IRA Deposits and Keogh Accounts. Seller will deliver to
Buyer on the Closing Date all of the documents in Seller's
possession governing each IRA Deposit and Keogh Account that is
included in the Assumed Deposits. Seller will prepare and file all
reports to government authorities required to be filed for the
period ending on the Closing Date and all prior periods (except for
filing IRS Form 1099's for the calendar year in which the Closing
occurs, for which filings Buyer will be responsible pursuant to
Section 6.7 (a) and (b)). Buyer will be responsible for all such
reporting for periods commencing on the day after the Closing.
6.7 Interest Reporting and Withholding.
(a) Except as set forth in Section 6.7(b), for the
period from January 1 of the year in which the Closing occurs
through the Closing Date, Seller will provide all information
necessary for Buyer to report to applicable taxing authorities and
owners of Assumed Deposits transferred on the Closing Date, all
interest credited to, withheld from and any early withdrawal
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penalties imposed upon the Assumed Deposits during such period
(collectively, the "Reported Amounts"). With respect to all
periods beginning on or after January 1 of the year in which the
Closing occurs, Buyer will report all Reported Amounts to
applicable taxing authorities and owners of Assumed Deposits
transferred on the Closing Date.
(b) With respect to any Accounts for which amounts are
required by any governmental agency to be withheld (the
"Withholding Accounts")
Seller will: (i) for the period from January 1 of the year in
which the Closing occurs through the Closing Date, report all
Reported Amounts incurred during such period on the Withholding
Accounts to applicable taxing authorities and to the owners of the
Withholding Accounts; and (ii) withhold any amounts required by any
governmental agencies to be withheld from the Withholding Accounts
on or before the Closing Date in accordance with applicable law or
appropriate notice from any governmental agency and remit such
amounts to the appropriate agency on or prior to the applicable due
date.
Buyer will: (i) for the period from the day after the Closing
Date to the end of the calendar year (and all periods thereafter),
report all Reported Amounts incurred during such period on the
Withholding Accounts to applicable taxing authorities and to the
owners of the Withholding Accounts; and (ii) withhold any amounts
required by any governmental agencies to be withheld from the
Withholding Accounts after the Closing Date in accordance with
applicable law or appropriate notice from any governmental agency
and remit such amounts to the appropriate agency on or prior to the
applicable due date.
(c) Buyer shall report to applicable authorities and
the borrowers of the Branch Loans all interest paid on such loans
for the year in which such loans are acquired by Buyer.
(d) Seller shall make such reports for the period from
January 1 of the year in which the Closing occurs through the
Closing Date.
ARTICLE 7
Representations and Warranties
7.1 Seller's Representations and Warranties. Seller
represents and warrants to Buyer that, as of the date of this
Agreement (or, as to any information specified in a schedule to
have been compiled as of some earlier date, as of such earlier
date):
(a) Seller is a national banking association, duly
organized and in good standing under the laws of the United States
of America;
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(b) Seller has the requisite power and authority to
execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby; all corporate action necessary to
be taken by or on the part of Seller to execute, deliver and
perform this Agreement and to consummate the transactions
contemplated hereby has been duly and validly taken; and this
Agreement has been duly executed and delivered by, and constitutes
the valid and binding agreement of, Seller, enforceable in
accordance with its terms except as limited by bankruptcy,
insolvency, reorganization, fraudulent transfer, moratorium and
similar laws affecting creditors generally and by the availability
of equitable remedies;
(c) The execution, delivery and performance by Seller
of this Agreement do not, and the consummation by Seller of the
transactions contemplated hereby will not, violate or conflict with
the charter or bylaws of Seller, or any law or regulation currently
applicable to Seller, or any material agreement or instrument, or
currently applicable award, order, judgment or decree to which
Seller is a party or by which it is bound, or require any filing by
Seller with, or authorization, approval, consent or other action
with respect to Seller by, any governmental agency except such as
have been made or obtained and are in full force and effect or as
identified in this Agreement;
(d) Upon payment by Buyer of the amounts specified in
Articles 2 and 3 in the manner and at the times provided therein,
Buyer will acquire good and indefeasible title to or a valid
leasehold interest in the Real Estate and valid title to or a valid
leasehold interest in the other Assets, free and clear of any lien,
charge, encumbrance, option or adverse claim except as set forth in
Schedule 7.1(i);
(e) Schedule 4.9 sets forth a list of all contracts,
agreements, and other obligations to which Seller is a signatory
that relate specifically to the operation of the Branches (other
than those relating to the Deposits, the safe deposit box contracts
with customers or as listed in Schedule 7.l(j)), including without
limitation, service contracts, maintenance contracts, consulting
contracts, agency agreements and licensing agreements (but
excluding contracts that relate to Seller's bank operations
generally and that are not being assumed by Buyer);
(f) Except as set forth in Schedule 7.1(f): there is no
litigation, claim, action, suit or proceeding pending, or to
Seller's Knowledge, threatened, that, if adversely determined,
would materially and adversely affect the use of the Assets or the
Liabilities, would constitute a material lien or encumbrance on the
Assets or prohibit consummation of the transactions contemplated by
this Agreement;
(g) Seller has provided Buyer separately a list with
the names of all Employees as of the date specified thereon and
states for each such individual his or her position, dates of
employment with Seller, years of service and present compensation;
(h) Seller has not paid or agreed to pay any fee or
commission to any agent, broker, finder or other person for or as a
result of services rendered as a broker or finder in connection
with this Agreement or the transactions covered and contemplated
hereby. Except as expressly provided herein, Buyer shall not have
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any responsibility or liability for any fees, expenses or
commissions payable to any person, firm or corporation in
connection with this Agreement or the transactions contemplated
hereby, insofar as any such claim is alleged to be based upon any
conversation or contract with Seller;
(i) Seller has valid title to all of the Assets, which
are free and clear of all Liens except as set forth in Schedule
7.l(i) . Except as set forth in Schedule 7.l(i), no person or
entity other than Seller has any right, title or interest in and to
any of the Assets;
(j) Schedule 7.l(j) contains an accurate and complete
list of all Leases, if any. True and correct copies of all Leases
referred to in Schedule 7.1 (j) have been provided to Buyer.
Seller has good and valid leasehold interests in the Assets held by
it under such Leases. No waiver, indulgence or postponement of
Seller's obligations under any such Lease has been granted by the
lessor or of the lessor's obligations thereunder by Seller. Seller
is not in breach of or in default under any such Lease, and no
event has occurred and no condition exists that (with or without
the giving of notice or the passage of time or both) would
constitute a default by Seller under any such Lease, and Seller has
not received any notice from, or given any notice to, the lessor
indicating that Seller or the lessor is in breach of or in default
under such Lease. To Seller's Knowledge, none of the lessors under
such Leases is in breach thereof or in default thereunder. Seller
has full right and power to occupy or possess, as the case may be,
all the property covered by each such Lease. No brokerage or
leasing commissions are due or payable by Seller with respect to
any Lease;
(k) Schedule 7.1(k) contains an accurate and complete
description of all Real Estate. Seller has received no notice of,
or is not otherwise aware of, any proposed condemnation or eminent
domain proceeding with respect to the Real Estate or any portion
thereof; and
(l) Since the date of the financial statements, Seller
has conducted its business at the Branch only in the ordinary
course and has not, other than in the ordinary course of business
and consistent with past practices and safe and sound banking
practices:
(i) Incurred any obligation or liability,
absolute, accrued, contingent or otherwise, whether due or to
become due;
(ii) Mortgaged, pledged or subjected to lien,
charge, security interest or any other encumbrance or restriction
any of the Assets;
(iii) Sold, transferred, leased to others or
otherwise disposed of any of the Assets;
(iv) Terminated, canceled or surrendered, or
received any notice of or threat of termination or cancellation of
any contract, lease or other agreement or suffered any damage,
destruction or loss (whether or not covered by insurance) which, in
any case or in the aggregate, has had a materially adverse affect
on the Assets;
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(v) Suffered any change, event or condition that,
in any case or in the aggregate, has had or may have a materially
adverse effect on the Assets or the Liabilities;
(vi) Entered into any agreement or made any
commitment to take any of the types of action described in the
subsections (i) through (v) above;
(m) Except as disclosed in the representations and
warranties made hereunder, there has been no material adverse
change nor any event or condition that has had, nor has a
reasonable possibility of having in the future, a material adverse
change, financial or otherwise, in the Assets of Liabilities since
the date of the Financial Statements;
(n) The books and records of the Branch of Seller have
been kept accurately in the ordinary course of business, the
transactions entered therein present bona fide transactions and the
revenues, expenses, assets and liabilities of Seller have been
properly recorded in such books and records;
(o) Except as disclosed in writing to Buyer, all
reports, records, and other documents or information involving any
of the Assets or the Liabilities or the operation of the Branch
that are required to be filed by Seller with any regulatory
authority have been duly and timely filed and all information and
data contained in such reports, records or other documents is true,
accurate and correct; and
(p) No representation or warranty by Seller contained
in this Agreement, and no statement made by Seller contained in any
other agreement or document contemplated hereby, contains or will
contain any untrue statement of material fact or omits or will omit
to state any material fact necessary to make the statements herein
or therein, in light of the circumstances under which it was or
will be made, not misleading.
7.2 Buyer's Representations and Warranties. Buyer
represents and warrants to Seller that, as of the date of this
Agreement:
(a) Buyer is a national banking association, duly
established and in good standing under the laws of the United
States;
(b) Subject to the satisfaction of any applicable
governmental or regulatory requirements referred to in Section
6.2(b), Buyer has the requisite power and authority to execute,
deliver and perform this Agreement and to consummate the
transactions contemplated hereby; all acts and other proceedings
required to be taken by or on the part of Buyer to execute, deliver
and perform this Agreement and to consummate the transactions
contemplated hereby have been duly and validly taken; and this
Agreement has been duly executed and delivered by, and constitutes
the valid and binding agreement of, Buyer, enforceable in
accordance with its terms except as limited by bankruptcy,
insolvency, reorganization and similar laws affecting creditors
generally and by the availability of equitable remedies;
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(c) Subject to the satisfaction of any applicable
governmental or regulatory requirements referred to in Section
6.2(b), the execution, delivery and performance by Buyer of this
Agreement do not, and the consummation by Buyer of the transactions
contemplated hereby will not, violate or conflict with the articles
of association or bylaws of Buyer, or any law or regulation
currently applicable to Buyer, or any agreement or instrument, or
currently applicable award, order, judgment or decree to which
Buyer is a party or by which it is bound or require any prior
filing by Buyer with, or authorization, approval, consent or other
action with respect to Buyer by, any governmental or regulatory
agency, except such as have been made or obtained and are in full
force and effect or will be made or obtained and in full force and
effect as of the Closing;
(d) Except as set forth in Schedule 7.2(d), there is no
litigation, claim, action, suit or proceeding pending or, to the
knowledge of Buyer, threatened, which would cause a material
adverse change in Buyer's business or financial condition or
prohibit consummation of the transactions contemplated hereunder;
(e) Buyer has not paid or agreed to pay any fee or
commission to any agent, broker, finder or other person for or as a
result of services rendered as a broker or finder in connection
with this Agreement or the transactions covered and contemplated
hereby, except for fees or commissions for which Buyer is solely
responsible for payment. Except as expressly provided herein,
Seller shall not have any responsibility or liability for any fees,
expenses or commissions payable to any person, firm or corporation
in connection with this Agreement or the transactions contemplated
hereby, insofar as any such claim is alleged to be based upon any
conversation or contract with Buyer;
(f) Buyer has not received written notice from any
governmental or regulatory authority indicating that it would
oppose or not grant or issue its consent or approval, if required,
with respect to the transactions contemplated by this Agreement;
(g) Buyer satisfies each and all of the standards and
requirements lawfully within the control of Buyer of which it is
aware (and, as of the Closing Date, will satisfy each and all of
the standards and requirements lawfully within the control of
Buyer) imposed as a condition to obtaining or necessary to comply
with and in order to obtain any of the governmental or regulatory
approvals referred to in Section 6.2(b) of this Agreement;
provided, however, nothing contained herein shall be deemed to
require Buyer to dispose of any of its assets or to undertake any
other action that is not otherwise contemplated by this Agreement
that would result in a material change in Buyer's business or the
conduct of Buyer's business;
(h) At its most recent regulatory evaluation of Buyer's
performance under the Community Reinvestment Act (the "CRA"),
Buyer's record of performance was deemed to be "outstanding" or
"satisfactory," and no proceedings are pending or, to the knowledge
of Buyer, threatened, that would result in a change in such
evaluation. Buyer has not received any adverse public comments
with respect to its compliance under the CRA since the date of its
most recent regulatory evaluation of its performance under the CRA;
and
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(i) Buyer has not received a deficiency notification
letter from its primary federal banking agency related to its
compliance with all Interagency Statements issued by the Federal
Financial Institutions Examination Council related to the Year 2000
problem (the "Y2K Guidance"), and Buyer has no knowledge of any
deficiency identified by its primary federal banking agency related
to its compliance with the Y2K Guidance.
ARTICLE 8
Understandings
Buyer and Seller understand and agree as follows:
8.1 Depositors' Rights. All transfers to Buyer of the
Deposits included among the Liabilities are subject to the
individual depositors' continuing rights to withdraw, and Seller
makes no representation or warranty to the Buyer concerning the
continuing maintenance of such deposits at the Branches.
8.2 Unclaimed Property. If Seller has opened any safe
deposit boxes, inventoried the contents, and is holding the
contents in safekeeping in preparation for escheat to the State of
Texas, Seller shall remove any and all such contents from the
Branches prior to the Closing Date.
8.3 Head Office Accounts. Schedule 8.3 sets forth certain
Deposits at the Branches that have been designated by Seller as
"Head Office Accounts", with the amount of such Deposits as of the
date specified thereon. Seller may remove from the Branches any
and all Head Office Accounts, provided that any Head Office
Accounts so removed shall not be included in the Assumed Deposits.
8.4 Limitation of Warranties. Except as may be expressly
represented or warranted by Seller in this Agreement or any
agreement or document contemplated hereby, Seller makes no
representation or warranties whatsoever with regard to any Asset,
any Liability or the business or operations of any of the Branches,
it being expressly understood that such Assets and Liabilities are
being transferred AS IS, WHERE IS, WITHOUT RECOURSE, WITH ALL
FAULTS AND WITH NO WARRANTIES OTHER THAN AS EXPRESSLY PROVIDED
HEREIN. Buyer agrees that it is relying solely upon its judgment,
after such investigation and inspection as it deems necessary or
appropriate, as to the quality, condition, fitness and value of the
Assets, and Seller hereby disclaims any representations or
warranties made by Seller as to their condition or value except
those made pursuant to Section 7.1 of this Agreement.
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ARTICLE 9
Conditions to the Closing
9.1 Seller's Conditions. The obligations of Seller to
consummate the transactions contemplated hereunder to be
consummated at the Closing shall be subject to the satisfaction, at
or prior to Closing, of all of the following conditions, any one or
more of which may be waived, in whole or in part, by Seller:
(a) Buyer shall have complied in all material respects
with each of its covenants and agreements contained herein to be
performed on or prior to the Closing Date, and each of the
representations and warranties of Buyer in Section 7.2 hereof shall
be true and correct in all material respects as if made at and as
of the Closing Date;
(b) Buyer shall have delivered to Seller a duly
authorized and signed officer's certificate, dated as of the
Closing Date, certifying as to the matters specified in Section
9.1(a);
(c) All consents, approvals and authorizations required
to be obtained prior to the Closing from governmental and
regulatory authorities in connection with the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby to be consummated at the Closing shall have
been made or obtained, and shall remain in full force and effect,
all waiting periods applicable to the consummation of the
transactions contemplated hereby shall have expired or been
terminated and all required regulatory filings shall have been
made; provided, however, that no governmental or regulatory
consent, approval or authorization shall have imposed any condition
or requirement that Seller in good faith determines to be
materially burdensome upon the business of Seller or upon the
consummation of the transactions contemplated hereby; and
(d) There shall not be in effect any nonappealable
final order, decree or judgment of any court or governmental body
having competent jurisdiction that would be violated by
consummation of the transactions contemplated hereby, nor any
material pending or threatened action, proceeding or investigation,
the adverse determination of which would result in such order,
decree or judgment; provided, that in the case of such material
pending or threatened action, proceeding or investigation, neither
party shall decline to proceed with the Closing pending final
resolution thereof without exercising its reasonable efforts
promptly to determine jointly with the other party the merit
thereof and the likelihood of an adverse determination in such
proceeding.
(e) There shall not have been any decrease by more than
ten percent (10%) in the aggregate deposits of the Branches from
the date of this Agreement to the Closing Date and there shall not
have been any increase by more than 100 basis points in the average
cost of the Deposits.
9.2 Buyer's Conditions. The obligations of Buyer to
consummate the transactions contemplated hereunder to be
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consummated at the Closing shall be subject to the satisfaction, at
or prior to Closing, of all of the following conditions, any one or
more of which may be waived, in whole or in part, by Buyer:
(a) Seller shall have complied in all material respects
with each of its covenants and agreements herein to be performed at
or prior to the Closing Date and each of the representations and
warranties of Seller contained in this Agreement shall be true and
correct in all material respects as if made at and as of the
Closing Date, except to the extent of changes that have occurred
prior to Closing that are consistent with the provisions of Section
6.1(e);
(b) Seller shall have delivered to Buyer a duly
authorized and signed officer's certificate, dated as of the
Closing Date, certifying as to the matters specified in Section
9.2(a);
(c) All consents, approvals and authorizations required
to be obtained prior to the Closing from governmental and
regulatory authorities in connection with the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby to be consummated at the Closing shall have
been made or obtained, and shall remain in full force and effect,
all waiting periods applicable to the consummation of the
transactions contemplated hereby shall have expired or been
terminated and all required regulatory filings shall have been
made; provided, however, that no governmental or regulatory
consent, approval or authorization shall have imposed any condition
or requirement that would result in a material adverse effect on
the business of the Branches or Buyer, or on the consummation of
the transactions contemplated hereby;
(d) There shall not be in effect any nonappealable
final order, decree or judgment of any court or governmental body
having competent jurisdiction that would be violated by
consummation of the transactions contemplated hereby, nor any
material pending or threatened action, proceeding or investigation,
the adverse determination of which would result in such order,
decree or judgment; provided, that in the case of such pending or
threatened action, proceeding or investigation, neither party shall
decline to proceed with the Closing pending final resolution
thereof without exercising its reasonable efforts promptly to
determine jointly with the other party the merit thereof and the
likelihood of an adverse determination in such proceeding; and
(e) There shall not have been any decrease by more than
ten percent (10%) in the aggregate deposits of the Branches from
the date of this Agreement to the Closing Date and there shall not
have been any increase by more than 100 basis points in the average
cost of the Deposits.
ARTICLE 10
Termination
10.1 Events of Termination. This Agreement may be terminated
at any time prior to Closing:
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(a) By the mutual written agreement of Seller and
Buyer;
(b) By Seller or Buyer in the event that the Closing
has not occurred by December 31, 1998, or such other date as Seller
and Buyer shall agree in writing, unless the failure to so
consummate by such time is due to a breach of this Agreement by the
party seeking to terminate;
(c) By Seller or Buyer if consummation of the
transactions contemplated hereby would violate any non appealable
final order, decree or judgment of any court or governmental body
having competent jurisdiction;
(d) By Seller or Buyer, in the event of a material
breach by the other of any representation, warranty or agreement
contained herein that is not cured or cannot be cured within thirty
(30) days after written notice of such termination has been
delivered to the breaching party; provided, however, that
termination pursuant to this Section 10.1(d) shall not relieve the
breaching party of liability for such breach or otherwise; or
(e) By Seller in the event that
(i) at the expiration of thirty (30) days after
the date of this Agreement, Buyer has failed to file substantially
complete applications requesting approval of the transactions
contemplated by this Agreement with all Buyer's Regulatory
Agencies; or
(ii) at the expiration of sixty (60) days after the
date of this Agreement, any of Buyer's Regulatory Agencies has
failed to accept Buyer's application pending before such agency as
informationally complete; or
(iii) at the expiration of one hundred fifty (150)
days after the date of this Agreement, any of Buyer's Regulatory
Agencies has failed to issue formal approval of Buyer's
application;
(iv) Buyer's application is disapproved by any of
Buyer' s Regulatory Agencies; or
(v) Any of the events occur otherwise affording
Seller a right to terminate this Agreement pursuant to the
provisions of Section 2.2, Section 4.9, Section 4.11, or Section
6.5(c) hereof.
Any party desiring to terminate this Agreement pursuant
to any of the foregoing clauses shall give notice of such
termination to the other party in accordance with Section 13.1.
(f) By Buyer in the event that any material adverse
changes have occurred in the financial condition or prospects of
any of the Branches.
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(g) By Buyer within twenty-one (21) days after the date
of this Agreement if Buyer's preliminary due diligence
investigations of the Branches shall not be satisfactory in Buyer's
sole discretion or if Buyer's Board of Directors shall have failed
to finalize, approve and authorize this Agreement following
completion of such preliminary due diligence investigations.
10.2 Liability for Termination. If this Agreement is
terminated as permitted by Section 10.1, except as provided in
Section 10.1(d), such termination shall be without liability of
either party (or any shareholder, director, officer, employee,
agent, consultant or representative of such party) to the other
party to this Agreement, except that if such termination shall
result from the willful failure of a party to fulfill a condition
to the performance of the obligations of the other party or to
perform a covenant of this Agreement or from a willful breach by
any party to this Agreement, such party shall be fully liable for
any and all damages, costs and expenses (including, but not limited
to, reasonable counsel fees) sustained or incurred by the other
party or parties as a result of such failure or breach.
10.3 Procedures Upon Termination. In the event of
termination pursuant to the terms of this Agreement, and except as
otherwise stated herein, written notice thereof shall be given to
the other party, and this Agreement shall terminate immediately
upon receipt of such notice unless an extension is consented to by
the party having the right to terminate. If this Agreement is
terminated as provided herein:
(a) Each party will return all documents, work papers
and other materials of the other party, including photocopies or
other duplications thereof, relating to this transaction, whether
obtained before or after the execution hereof, to the party
furnishing the same; and
(b) All information received by either party thereto
with respect to the business of the other party (other than
information that is a matter of public knowledge or that has
heretofore been published in any publication for public
distribution or filed as public information with any governmental
authority) shall not at any time be used for any business purpose
by such party or disclosed by such party to third persons.
ARTICLE 11
Survival, Indemnification
11.1 Survival. The covenants, agreements, representations
and warranties of the parties hereto made, contained in or to be
performed pursuant to this Agreement shall survive Closing until
six (6) months after the Closing Date, except for the provisions of
Article 5 and Article 12, Section 12.l, and Buyer's right of
reimbursement for Actual Costs pursuant to Section 6.5(c), which
shall survive such date. Notwithstanding the preceding sentence,
any covenant, agreement, representation, warranty or claim in
respect of which indemnity may be sought under Sections 11.2 or
11.3 shall survive the time at which it would otherwise terminate
pursuant to the preceding sentence, if notice of the claim,
inaccuracy or breach giving rise to such right to indemnify shall
have been given to the party against whom such indemnity may be
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sought prior to such time. After Closing, the sole and exclusive
remedy of Buyer and Seller for any breach of any covenant or
agreement or inaccuracy of any such representation or warranty by
Seller or Buyer shall be the indemnities contained in Sections 11.2
and 11.3, respectively. The indemnities contained in Sections
11.2(iii) and 11.3(iii) shall survive Closing until the first
anniversary date thereof. The indemnities contained in Sections
11.2(i) and (ii) and 11.3(i) and (ii) shall not terminate but shall
survive Closing without any limitation as to duration.
11.2 Seller's Indemnity. Seller hereby indemnifies Buyer
against and agrees to hold it harmless from any and all damage,
loss, liability and expense (including, without limitation,
reasonable expenses of investigation and attorney's fees and
expenses in connection with any action, suit or proceeding brought
against Buyer) demanded, claimed or threatened in writing against
Buyer or incurred or suffered by Buyer arising out of (i) ownership
or operation of the Branches or their respective business and
properties prior to Closing, but excluding all Liabilities assumed
by Buyer pursuant to this Agreement and any damage, loss, liability
or expense resulting from actions taken by Seller at the written
direction of Buyer; and (ii) all Non-Assumed Liabilities and (iii)
any misrepresentation or breach of warranty covenant or agreement
made, contained in or to be performed by Seller under this
Agreement. Any direct claim by Buyer against Seller, as
distinguished from a claim against Buyer by a third party, shall be
settled by arbitration pursuant to Section 11.4. Seller shall not
be liable under this Section 11.2 for any settlement effected
without its consent (which consent shall not be unreasonably
withheld) of any claim, litigation or proceeding in respect of
which indemnity may be sought hereunder. Buyer agrees to give
prompt notice to Seller of the assertion of any claim, or the
commencement of any suit, action or proceeding in respect of that
indemnity may be sought hereunder. Seller may, and at the request
of Buyer shall, participate in and control the defense of any such
suit, action or proceeding at its own expense.
11.3 Buyer's Indemnity. Buyer hereby indemnifies Seller
against and agrees to hold it harmless from any and all damage,
loss, liability and expense (including, without limitation,
reasonable expenses of investigation and attorney's fees and
expenses in connection with any action, suit or proceeding brought
against Seller) demanded, claimed or threatened in writing against
Seller or incurred or suffered by Seller arising out of (i)
ownership or operation of the Branches or their respective business
and properties after Closing (except as to such damage, liability,
loss or expense resulting from actions taken by Buyer at the
written direction of Seller); and (ii) all Liabilities (which term
excludes Non-Assumed Liabilities) and (iii) any misrepresentation
or breach of warranty covenant or agreement made, contained in or
to be performed by Buyer under this Agreement. Any direct claim by
Seller against Buyer, as distinguished from a claim against Seller
by a third party, shall be settled by arbitration pursuant to
Section 11.4. Buyer shall not be liable under this Section 11.3
for any settlement effected by Seller without its consent (which
consent shall not be unreasonably withheld) of any claim,
litigation or proceeding in respect of which indemnity may be
sought hereunder. Seller agrees to give prompt notice to Buyer of
the assertion of any claim, or the commencement of any suit, action
or proceeding in respect of which indemnity may be sought
hereunder. Buyer may, and at the request of Seller shall,
participate in and control the defense of any such suit, action or
proceeding at its own expense.
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11.4 Arbitration.
(a) Any controversy or claim between Buyer and Seller
arising out of or relating to this Agreement or any agreements or
instruments relating hereto or delivered in connection herewith,
including, but not limited to, a claim based on or arising from an
alleged tort, will, at the request of any party, be determined by
arbitration in accordance with the United States Arbitration Act
(Title 9, U.S. Code), notwithstanding any choice of law provision
in this Agreement, and under the Commercial Rules of the American
Arbitration Association ("AAA"). The AAA will be instructed by
either or both parties to prepare a list of proposed arbitrators.
Within ten (10) days of receipt of the list, each party may strike
one name from the list. The AAA will then appoint one arbitrator
from the name(s) remaining on the list. The arbitration will be
conducted in Fort Worth, Texas. The arbitrator shall give effect
to statutes of limitation in determining any claim. Any
controversy concerning whether an issue is arbitrable shall be
determined by the arbitrator. The award rendered by the arbitrator
shall set forth findings of the facts and conclusions of law and
shall be final, and the judgment may be entered in any court having
jurisdiction thereof. A failure by the arbitrator to make findings
of fact and conclusions of law shall be grounds for overturning the
award. The institution and maintenance of an action for judicial
relief or pursuit of a provisional or ancillary remedy shall not
constitute a waiver of the right of any party, including the
plaintiff, to submit the controversy or claim to arbitration if any
other party contests such action for judicial relief.
(b) In any arbitration proceeding, the arbitrator is
authorized to apportion costs and expenses, including
investigation, legal and other expense, which will include, if
applicable, a reasonable estimate of allocated costs and expense of
in-house legal counsel and legal staff. Such costs and expenses
are to be awarded only after the conclusion of the arbitration and
will not be advanced during the course of such arbitration.
11.5 Limit on Indemnities.
(a) Notwithstanding any other provision hereof, an
indemnifying party shall not be liable under this Article 11 for
any losses sustained by the indemnified party unless and until the
aggregate amount of all such losses sustained by the indemnified
party shall exceed $100,000 in the aggregate, in which event the
indemnifying party shall be liable only for such losses in excess
of $100,000. An indemnifying party shall not be liable under this
Article 11 for any settlement effected by the other party, without
its consent, of any claim or liability or proceeding for which
indemnity may be sought hereunder. In no event shall the losses
for which an indemnifying party may be liable hereunder exceed the
amount of the Initial Base Amount. IN ADDITION, THE PARTIES SHALL
HAVE NO OBLIGATIONS UNDER THIS AGREEMENT FOR ANY CONSEQUENTIAL
LIABILITY, DAMAGE OR LOSS OF THE INDEMNIFIED PARTY THAT THE
INDEMNIFIED PARTY MAY SUFFER.
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(b) Each party' s right to indemnification under this
Article 11 shall preclude any other monetary award (whether at law
or in equity) and shall preclude assertion by such party of any
right to any such monetary award from the indemnifying party.
ARTICLE 12
Tax and Related Matters
12.1 Obligations. Buyer shall pay, and shall indemnify
Seller for, any sales tax, use tax, deed tax or property transfer
tax imposed on the sale or transfer of the Assets or the
Liabilities or any part thereof.
12.2 Access to Information. For the applicable period
required by law, Seller and Buyer shall have a right to have
reasonable access to and to copy all of the records of the other
party relevant to the Assets and the Liabilities and necessary for
the preparation of the income tax returns, employee tax returns,
employee reports, employee benefits calculations, customary
accounting functions and other similar bona fide purposes.
Additionally, Buyer and Seller each agree to make available to the
other party, at reasonable times and upon reasonable advance
notice, relevant records and personnel in connection with an
investigation or the preparation of or participation in a defense,
negotiation or settlement relating to any pending, future, or
threatened litigation or government agency proceeding (including a
tax audit) involving the conduct or interest of such other party.
ARTICLE 13
Miscellaneous
13.1 Notices. Notices and legal process to be delivered to
or served upon either party hereto shall be deemed to have been
duly delivered or served when delivered in written form by hand or
by telegraph, telex or facsimile transmission, or the day after
being sent from within the continental United States by overnight
delivery or courier service, or three (3) days after posting by
registered mail or certified mail with return receipt requested, to
the parties hereto at the following addresses:
If to Seller:
Surety Bank, N.A.
1845 Precinct Line Rd., Suite 100
Hurst, TX 76054
Attn: Bobby W. Hackler
Fax: 817/498-0647
E-Mail: [email protected]
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With a copy to:
Margaret E. Holland
Tracy & Holland, L.L.P.
306 W. 7th Street, Suite 500
Fort Worth, TX 76102-4982
Fax: 817/332-3140
E-Mail: [email protected]
If to Buyer:
Commercial Bank of Texas, N.A.
215 East Main
Nacogdoches, TX 75961
Attn: Thomas W. Ellison
Fax: 409/569-1868
E-Mail: [email protected]
and to
Ford & Ferraro, L.L.P.
98 San Jacinto Blvd., Suite 2000
Austin, TX 78759
Attn: Joseph M. Ford
Fax: 512/477-5267
E-Mail: [email protected]
or to such other authorized agent or address as either party may
hereafter select by written notice to the other party.
13.2 Public Notice. All written notices to third parties
(including customers of the Branches but excluding requests for
consent or approval of regulatory agencies, contractors, and other
third parties) and all public announcements and press releases
concerning the transactions contemplated by this Agreement made
prior to Closing shall be jointly planned and coordinated by Buyer
and Seller. Neither party shall act unilaterally in this regard
without the prior approval of the other party, which shall not be
unreasonably withheld or delayed; provided, however, that in the
event that a party reasonably concludes that a public announcement
or release is required by applicable law and the parties cannot
reach agreement upon a mutually acceptable release, the party
releasing the information, announcement or public statement shall
not be deemed to be in breach of this Agreement.
13.3 Assignment. This Agreement shall bind and inure to the
benefit of the parties hereto and their respective successors and
assigns; provided, however, that Buyer shall not assign this
Agreement or any of the rights, duties, or obligations of Buyer
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hereunder, including without limitation any right, title or
interest in any one or more of the Assets until all amounts owed by
Buyer under Articles 2 and 3 hereof have been paid in full, unless
Buyer shall have obtained the prior written consent of Seller.
13.4 Time. Time is of the essence for all purposes with
respect to this Agreement.
13.5 Expenses. Except as otherwise expressly provided
herein, Buyer and Seller shall each bear its own out-of-pocket
expenses incurred in connection with the transactions contemplated
by this Agreement.
13.6 Communications. If for any reason any payment or
communication to which one party is entitled is received by the
other party hereto, the receiving party shall promptly forward such
payment or communication to the other party.
13.7 Entire Agreement. This Agreement embodies the entire
agreement and understanding between the parties hereto and
supersedes all prior agreements and understandings relating to the
subject matter of this Agreement.
13.8 Amendment. Neither this Agreement nor any provision
hereof may be changed, waived, discharged or terminated orally.
Any such change, waiver, discharge or termination may be effected
only by an instrument in writing signed by the party against that
enforcement of such change, waiver, discharge or termination is
sought.
13.9 Governing Law, Severability. This Agreement shall be
governed by and construed in accordance with the laws of the State
of Texas. If any one or more of the provisions of this Agreement
shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this
Agreement, and this Agreement shall be construed as if such
invalid, illegal or unenforceable provision were not contained
herein.
13.10 Waiver. No delay or omission to exercise any right,
power or remedy accruing to any party upon any breach or default
under this Agreement shall impair any such right, power or remedy
of such party, nor shall it be construed to be a waiver of any such
breach or default, or an acquiescence therein, or in any similar
breach or default thereafter occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach of
default theretofore or thereafter occurring. Any waiver, permit,
consent or approval or any kind or character of any breach or
default under this Agreement, or any waiver of any provision or
condition of this Agreement, must be in writing and shall be
effective only to the extent specifically set forth in such
writing. All rights and remedies, either under this Agreement or
by law or otherwise afforded to a party, shall be cumulative and
not alternative.
13.11 Third Party Rights. Other than the provisions of Article
5, nothing contained in this Agreement, whether express or implied,
is intended to confer any rights or remedies upon any persons other
than the parties hereto and their respective successors and
-43-
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<PAGE>
assigns; nor is anything in this Agreement intended to relieve or
discharge the obligations or liabilities of any third person to any
party to this Agreement nor shall any provision hereof give any
third person any right of subrogation or action over any party to
this Agreement.
13.12 Rules of Construction. All sections referred to herein
are sections of this Agreement and all exhibits and schedules
referred to herein are exhibits and schedules, respectively,
attached to this Agreement. Descriptive headings as to the
contents of particular sections are for convenience only and shall
not control or affect the meaning, construction or interpretation
of any provision of this Agreement. The schedules to this
Agreement (and any appendices thereto) referred to in this
Agreement and attached hereto are and shall be incorporated herein
and made a part hereof for all purposes as though set forth herein
verbatim. Each use herein of the masculine, neuter or feminine
gender shall be deemed to include the other genders. Each use
herein of the plural shall include the singular and vice versa, in
each case as the context requires or as it is otherwise
appropriate. The word "or" is used in the inclusive sense.
13.13 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an
original instrument, but all of which together shall constitute one
and the same instrument.
13.14 Confidential Information. Except as may be required by
applicable securities laws or as may be necessary to obtain the
regulatory approvals as described in Section 6.2(b), Seller and
Buyer will treat as confidential any information related to the
transactions described herein obtained from each other or any other
party. In any filings that may be required by applicable
securities laws or as may be necessary to obtain the regulatory
approvals as described in Section 6.2 (b), Seller and Buyer will
request confidential treatment of this Agreement, including the
Exhibits and Schedules hereto, and the amount of the Purchase
Premium and will consult with the other party hereto prior to the
disclosure of this Agreement, the Exhibits or the Schedules or the
amount of the Purchase Premium in the event such request is denied.
Seller and Buyer will use such information, and not disclose it to
others, except their employees, advisors, directors and agents,
expressly for the purposes of evaluating the potential of
consummating the transactions proposed herein. The term
"information" does not include any information that (a) at the time
of disclosure or thereafter is generally available to and known by
the public, (b) was properly or legally available on a
nonconfidential basis from a source other than Seller or Buyer or
(c) was independently acquired or developed without violating any
laws or obligations under this Agreement.
13.15 Confidentiality. Upon any termination of the
Agreement, the provision of that certain Mutual Non-Disclosure
Agreement dated June 9, 1998, between Buyer and Seller will
continue in effect.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers or
representatives as of the date first above written.
SELLER:
SURETY BANK, N.A.
By: /s/ Bobby W. Hackler
Name: Bobby W. Hackler
Title: President
BUYER:
COMMERCIAL BANK OF TEXAS, N.A.
By: /s/ Thomas W. Ellison
Name: Thomas W. Ellison
Title: Chairman of the Board
and President
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EXHIBIT "A"
FORM OF CLOSING STATEMENT
<TABLE>
<CAPTION>
Preliminary Agreed Upon Final
Closing Statement Adjustments Closing Statement
as of as of
__________, 199__ __________, 199__
<S> <C> <C> <C>
Liabilities Assumed
- -------------------
(i) Assumed Deposits $________________ $________________ $________________
Accounts and Accrued Interest Thereon $________________ $________________ $________________
Savings Accounts, Time Deposits and
Accrued Interest Thereon $________________ $________________ $________________
Overdrafts $________________ $________________ $________________
Total Assumed Deposits $________________ $________________ $________________
(ii) Accrued Expenses $________________ $________________ $________________
(iii) Other $________________ $________________ $________________
SUBTOTAL $________________ $________________ $________________
---------------- ---------------- ----------------
Initial Base Amount
- -------------------
(i) Cash on Hand $________________ $________________ $________________
(ii) Prepaid Expenses $________________ $________________ $________________
(iii) Branch Loans, including Principal and
Accrued Interest Receivable $________________ $________________ $________________
(iv) Real Estate $________________ $________________ $________________
Real Estate Improvements $________________ $________________ $________________
(v) Leasehold Improvements $________________ $________________ $________________
(vi) Furniture, Fixtures and Equipment $________________ $________________ $________________
(vii) Purchase Premium $________________ $________________ $________________
(viii)Other $________________ $________________ $________________
SUBTOTAL $________________ $________________ $________________
---------------- ---------------- ----------------
Liabilities Assumed Less Initial Base Amount $________________ $________________ $________________
---------------- ---------------- ----------------
Less One Day of Interest due to Seller
Calculated at mean of the high and low
federal Funds Rate as of ______________,
199__ (______%) $________________ $________________ $________________
Cash Transferred by Seller to Buyer $________________ $________________ $________________
---------------- ---------------- ----------------
Plus interest due to Seller (Buyer) calculated
at the mean of the high and low Federal Funds
Rate as of __________, 199__ (______%) for
interest from ___________, 199__ through
____________, 199__ $________________
Cash transferred by Buyer to Seller/
(Seller to Buyer) $________________
----------------
</TABLE>
PAGE
<PAGE>
EXHIBIT "B"
RECORDS AGREEMENT
THIS RECORDS AGREEMENT (this "Records Agreement") is entered
into effective as of the _____ day of _______________, 1998, by
and between Surety Bank, N.A., a national banking association
("Seller"), and Commercial Bank of Texas, N.A., a national
banking association ("Buyer") (collectively, the "Parties," and
individually, a "Party").
RECITALS:
A. Seller and Buyer entered into a Branch Purchase and
Assumption Agreement dated as of ________________ ___, 1998,
(the "Agreement"), pursuant to which Seller has agreed to sell
certain assets and to transfer certain liabilities to Buyer, and
Buyer has agreed to purchase such assets and to assume such
liabilities.
B. The Parties wish to set forth their agreement as to the
cooperation needed to assist in retrieval of the records that will
be retained by Seller concerning the Deposits processed prior to
customer statements issued by Seller before the Closing Date (the
"Retained Records").
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises herein
contained and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Parties
hereby agree as follows:
Section 1. Unless otherwise specifically defined herein, all
of the terms used herein shall have the respective meanings set
forth in the Agreement.
Section 2. The Retained Records shall remain in the
possession of Seller pursuant to the terms of this Records
Agreement. The Retained Records shall be stored at one or more of
Seller's on-site or off-site storage facilities as Seller may from
time to time establish for the storage of its own records. The
Retained Records shall be maintained as part of Seller's other
records of which the Retained Records form a portion, and shall be
afforded the same care and protection as Seller's other similar
records. Seller shall retain the Retained Records and only dispose
of such records pursuant to the normal retention guidelines of
Seller as then in existence.
Section 3. Seller agrees to provide research, retrieval,
photocopying and delivery of copies of, or other information with
respect to, the Retained Records. For and in consideration of such
services, Buyer agrees to pay to Seller all costs of research,
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<PAGE>
retrieval, photocopying and delivery of copies of, or other
information with respect to, the Retained Records at the rate of
$10.00 per hour and any portion thereof until thirty (30) days
after the date of this Records Agreement, and $25.00 per hour and
any portion thereof after such date.
Section 4. Seller will send bills to Buyer on or before the
tenth day of each calendar month after the date of this Agreement
for research, retrieval and photocopying services that have been
incurred during the previous calendar month. Such bills are due and
payable upon receipt and will be deemed delinquent if not paid in
full within thirty (30) days of receipt.
Section 5. Research, retrieval and photocopying requests
shall be processed in the following manner and shall be subject to
the following additional terms and conditions:
A. Buyer shall furnish Seller with a written list of
personnel who are authorized to request research, retrieval and
photocopying of Retained Records and the signatures of such
personnel. Seller shall release documents and information only
pursuant to the written instructions of such personnel. Names and
signatures may be added and deleted from such lists by written
instructions signed by an Executive Vice President, Senior Vice
President or the President of Buyer.
B. Requests for research, retrieval and photocopying
shall be made in writing only on forms designed by Seller. Buyer
shall reproduce at its own costs additional quantities of such
forms.
C. Requests to Seller for information or documentation
may be delivered to Seller by facsimile machine, regular or
certified mail, or by courier, at the sole expense of Buyer,
addressed as provided in the request form supplied by Seller.
D.
(1) For routine record retrieval and photocopying
of deposit information on or before thirty (30) days after the date
of this Records Agreement, Seller shall return requested
information or documentation, or make available such information or
documentation for pickup by Buyer, within four (4) Business Days
following Seller's receipt of a request for the same made in
accordance with the terms and conditions of this Records Agreement.
(2) For retrieval and photocopying of deposit
information after thirty (30) days after the date of this Records
Agreement, Seller shall return requested information or
documentation, or make available such information or documentation
for pickup by Buyer, within ten (10) Business Days following
Seller's receipt of a request for the same made in accordance with
the terms and conditions of this Records Agreement.
(3) For research requests, Seller shall return
requested information or documentation, or make available such
information or documentation for pickup by Buyer, within fifteen
(15) Business Days following Seller's receipt of a request for the
same made in accordance with the terms and conditions of this
Records Agreement; provided, however, that Seller may extend this
time period by a reasonable number of days if absolutely necessary
and Seller notifies Buyer of such extension in writing and explains
the basis for such extension. Notwithstanding the foregoing time
period requirements, Seller shall respond to requests for items
needed by Buyer to respond to requests for production of documents,
subpoenas or inquiries of governmental authorities within such
period of time as to permit Buyer to comply with the requirements
imposed upon it by third parties, on the condition that Buyer
promptly notifies Seller of such inquiries and the applicable
production deadline. Buyer will, however, endeavor to avail itself
of all reasonable extensions of time that may be available from or
granted by such third parties.
-2-
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<PAGE>
Section 6. Seller shall not be deemed to have breached its
obligations hereunder if the ability of Seller to perform any of
its obligations is delayed or prevented by riots, wars, acts of
God, acts of enemies, national emergency, strikes, floods, fires,
equipment failure, or by any other cause not within the control of
Seller, whether of the class of causes enumerated above or not,
provided such event(s) was the cause of such failure. Seller shall
use its best efforts to comply with the terns of this Records
Agreement as promptly as reasonably possible under such exigencies.
Section 7. Seller shall designate representatives of Seller
to serve as "Custodian of Record" for the Retained Records. The
representatives shall bear the responsibilities of custodians of
records with respect to the Retained Records, which
responsibilities shall include, but not be limited to, the
execution of business records affidavits, appearances, and
production of documents pursuant to federal and state criminal and
civil subpoenas, depositions, interrogatories or other requests.
Section 8. Notwithstanding any reference in this Records
Agreement to the Agreement, this Records Agreement constitutes the
entire agreement between the Parties pertaining to the subject
matter hereof, supersedes all prior and contemporaneous agreements
and understandings of the Parties in connection with the Retained
Records, and confers no rights or benefits upon any person not a
Party hereto. No modification or termination of this Records
Agreement shall be binding unless executed in writing by the
Parties. No waiver of any provision of this Records Agreement shall
be deemed or shall constitute a waiver of any other provision
hereof (whether similar or not) nor shall any such waiver
constitute a continuing waiver.
Section 9. All of the terms and provisions of this Records
Agreement shall be binding upon and inure to the benefit of the
Parties and their respective transferees, successors and assigns,
but rights under this Records Agreement may not be assigned and
duties hereunder may not be delegated by either Party without the
prior written consent of the other Party.
Section 10. Communications regarding this Records Agreement
should be forwarded to:
If to Seller:
Surety Bank, N.A.
1845 Precinct Line Road #100
Hurst, TX 76054
Attn: Bobby W. Hackler
Title: President
Fax: 817/498-0647
-3-
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<PAGE>
With a copy to:
Margaret E. Holland
Tracy & Holland
306 W. 7th Street
Fort Worth, TX 76102-4982
Fax: 817/332-3140
If to Buyer:
Commercial Bank of Texas, N.A.
215 East Main
Nacogdoches, TX 75961
Attn: Thomas W. Ellison
Chairman of the Board and President
Fax: 409/569-1868
With a copy to:
Ford & Ferraro, L.L.P.
98 San Jacinto Blvd., Suite 2000
Austin, TX 78701
Attn: Joseph M. Ford
Fax: 512/477-5267
Section 11. This Records Agreement may be executed in one or
more counterparts, all of which taken together shall constitute one
instrument. A telecopy or facsimile transmission of a signed
counterpart of this Records Agreement shall be sufficient to bind
the Pity or Parties whose signature(s) appear thereon.
Section 12. THIS RECORDS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS
THEREOF, EXCEPT TO THE EXTENT FEDERAL LAW IS CONTROLLING.
Section 13. The term of this Records Agreement shall commence
on the date first written above and, unless sooner terminated as
otherwise provided herein or by mutual written agreement of the
Parties, shall end with respect to any given Retained Record, when
Seller would dispose of such record pursuant to its own record
retention policy.
-4-
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<PAGE>
IN WITNESS WHEREOF, the Parties have duly executed this
Records Agreement as of the day and year first above written.
SURETY BANK, N.A.
By:
Name: Bobby W. Hackler
Title: President
COMMERCIAL BANK OF TEXAS, N.A.
By:
Name: Thomas W. Ellison
Title: Chairman of the Board
and President
-5-
PAGE
<PAGE>
EXHIBIT "C"
SPECIAL WARRANTY DEED
GRANTEE'S ADDRESS:
Commercial Bank of Texas, N.A.
215 East Main
Nacogdoches, TX 75961
Attn: Thomas W. Ellison
Chairman of the Board and President
THE STATE OF TEXAS ss.
ss. KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF TARRANT ss.
That SURETY BANK, N.A., a national banking association,
hereinafter called ("Grantor"), in consideration of the sum of TEN
AND NO/100 ($10.00) DOLLARS and other good and valuable
consideration in hand paid by Commercial Bank of Texas, N.A., a
national banking association (hereinafter called "Grantee"), the
receipt and sufficiency of which are hereby acknowledged and
confessed, has GRANTED, BARGAINED, SOLD AND CONVEYS, and by these
presents does hereby GRANT, BARGAIN, SELL and CONVEY unto Grantee,
all of the real property located in Tarrant County, Texas, that is
more particularly described on Schedule 1 attached hereto and made
a part hereof for all purposes, together with all improvements,
rights, benefits, privileges, easements, tenements, and
appurtenances thereon and pertaining thereto (said real property,
together with such rights, appurtenances, interests and
improvements being collectively called the "Property"), subject to,
however, those exceptions and encumbrances set forth on Schedule 2
attached hereto and made a part hereof for all purposes (said
exceptions and encumbrances being called the "Permitted
Encumbrances").
TO HAVE AND TO HOLD the Property unto Grantee, its successors
and assigns FOREVER, and Grantor does hereby bind itself and its
successors and assigns to WARRANT AND FOREVER DEFEND all and
singular the Property, subject to the Permitted Encumbrances, unto
Grantee, its successors and assigns, against every person
whomsoever lawfully claiming or to claim the same or any part
thereof by, through or under Grantor, but not otherwise.
Grantee assumes the payment of 199__ ad valorem taxes, the
same having been prorated between Grantor and Grantee.
PAGE
<PAGE>
EXECUTED as of the ______ day of _________________, 1998.
GRANTOR:
SURETY BANK, N.A.
By:
Name: Bobby W. Hackler
Title: President
STATE OF TEXAS ss.
ss.
COUNTY OF TARRANT ss.
BEFORE ME, the undersigned authority, a Notary Public, in said
County and State, on this day personally appeared Bobby W. Hackler,
known to me to be the person whose name is subscribed to the
foregoing instrument and acknowledged to me that he executed the
same for the purposes and consideration therein expressed.
SWORN TO AND SUBSCRIBED BEFORE ME, the undersigned Notary
Public, this _______ day of ______________, 1998.
_____________________________
Notary Public, State of Texas
Identification of Affiant confirmed by:
[ ] Known to Me Personally
[ ] Proved to Me on the Oath of
[ ] Texas Driver's License Number
[ ] Other Identification
-2-
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EXHIBIT "D"
BILL OF SALE
For and in consideration of the sum of Ten Dollars ($10.00)
and other good and valuable consideration, and the further
consideration of the mutual promises and covenants set out herein
and in the Branch Purchase and Assumption Agreement dated as of
___________________, 1998, (the "Agreement") by and between Surety
Bank, N.A., a national banking association ("Seller") and
Commercial Bank of Texas, N.A., a national banking association
("Buyer") (capitalized terms not otherwise defined herein have the
meanings given them in the Agreement), the receipt and sufficiency
of which consideration are hereby acknowledged, Seller hereby
SELLS, CONVEYS, ASSIGNS AND TRANSFERS unto Buyer, all right, title
and interest in and to the following personal property, free and
clear of any liens or Claims:
1. All Leasehold Improvements, as specifically described on
Schedule 1 attached hereto.
2. All Furniture, Fixtures and Equipment, as specifically
described on Schedule 2 attached hereto.
3. All Branch Loans, as specifically described on Schedule
3 attached hereto.
4. All Deposit Overdrafts, as specifically described on
Schedule 4 attached hereto.
5. All Cash on Hand.
6. All safe deposit boxes at the Branches (exclusive of the
contents thereof).
7. All Prepaid Expenses existing on the Closing Date
(including any Prepaid Expenses resulting from
prorations made under Section 2.3(c) of the Agreement).
8. All Records relating to the Assets and the Liabilities.
Seller hereby binds Seller and its successors and assigns to
warrant and defend the title to the Assets herein conveyed to Buyer
and its successors and assigns against every person lawfully
claiming such Assets or any part thereof.
The Assets do not include the Excluded Assets (as defined in
Section 1.1 of the Agreement) or any items of property related to
the Branches that have been disposed of by Seller prior to the
Closing Date as permitted by the Agreement.
This Bill of Sale is made by Seller and accepted by Buyer
without warranty or representation of any kind, whether express,
implied, oral or written, except as expressly set forth in the
Agreement and/or expressly set forth herein or in any other
conveyance document executed pursuant to the Agreement.
-1-
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Each of the parties hereto agrees to take such further
actions, and to execute such further documents and instruments as
may be necessary or reasonably required in order to consummate
fully the transaction set out herein. Buyer is hereby authorized by
Seller to endorse Seller's name on, and deposit into Buyer's
account(s) for collection, all checks and other collections made on
the Branch Loans or other assets.
EXECUTED as of the _______ day of __________________, 1998.
SURETY BANK, N.A.
By:
Name: Bobby W. Hackler
Title: President
COMMERCIAL BANK OF TEXAS, N.A.
By:
Name: Thomas W. Ellison
Title: Chairman of the Board
and President
-2-
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EXHIBIT "E"
OFFICER'S CERTIFICATE
OF
SELLER
The undersigned, in his official capacity as an officer of
Surety Bank, N.A. ("Seller") as indicated below (and not in his
individual capacity), hereby certifies as follows:
1. The undersigned is authorized, on behalf of Seller, to
execute this certificate in connection with that certain
Branch Purchase and Assumption Agreement, dated as of
___________________, 1998, (the "Agreement"), by
and between Seller and Commercial Bank of Texas, N.A. a
national banking association ("Buyer"). Terms with their
initial letter capitalized and not otherwise defined
herein have the meanings given them in the Agreement.
2. Seller has complied in all material respects with each
of its covenants and agreements contained in the
Agreement to be performed on or prior to the Closing
Date.
3. Each of the representations and warranties of Seller in
Section 7.1 of the Agreement is true and correct in all
material respects as if made on the date hereof, except
to the extent of changes that have occurred prior to
Closing that are consistent with the provisions of the
Agreement.
IN WITNESS WHEREOF, I hereupon set my hand effective as of the
_______ day of ___________________, 1998.
SURETY BANK, N.A.
By:
Name: Bobby W. Hackler
Title: President
PAGE
<PAGE>
EXHIBIT "F"
OPINION OF SELLER'S COUNSEL
1. Seller is a national banking association, duly
organized, validly existing and in good standing under the laws of
the United States of America;
2. Seller has the corporate power to enter into and carry
out the terms of the Agreement, the Agreement has been authorized
by the Board of Directors and shareholders of Seller, and the
Agreement and all other documents to be executed and delivered by
Seller in connection with the Agreement have been duly authorized,
executed and delivered by Seller and constitute the legal, valid
and binding obligations of Seller;
3. The execution and delivery of the Agreement and all
other documents to be executed and delivered in connection
therewith and the consummation of the transactions contemplated
thereby by Seller will not, to our best knowledge, violate any
provision of, or constitute a default under, any law, regulation,
order or judgment or any contract or other agreement to which
Seller is bound or conflict with its Articles of Association or
Bylaws;
4. All necessary approvals and consents for Seller to
consummate the transactions contemplated by the Agreement have been
obtained.
PAGE
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EXHIBIT "G"
LIABILITY ASSUMPTION AGREEMENT
This Liability Assumption Agreement (the "Agreement") is made
and entered into by and between Surety Bank, N.A., a national
banking association established under the laws of the United States
("Seller), and Commercial Bank of Texas, N.A., a national banking
association established under the laws of the United States
("Buyer"), effective as of the Effective Time of Closing (as
defined herein), in light of the following recitals, to wit:
R E C I T A L S :
Seller and Buyer heretofore entered into that certain Branch
Purchase and Assumption Agreement dated as of ________________, 1998,
(the "Acquisition Agreement") pursuant to which,
among other agreements, Buyer agreed to acquire certain of the
assets and to assume certain of the liabilities of Seller.
All capitalized terms not defined in this Agreement shall have
the same meaning ascribed to them in the Acquisition Agreement.
In consideration of the consummation of the transactions
contemplated by the Acquisition Agreement, and to effectuate the
agreements of Seller and Buyer set forth therein, the parties
hereto hereby agree as follows:
1. Assumption of Certain Liabilities. Subject to the
further provisions of this Section 1, Buyer hereby assumes all of
Seller's liabilities and obligations (collectively, "Liabilities")
as of 12:01 a.m. on __________________________, 1998, (the
"Effective Time of Closing"), in respect to:
(a) The Assumed Deposits, as set forth on Schedule 1
attached hereto;
(b) The Leases, as set forth on Schedule 2 attached
hereto;
(c) The Assumed Contracts, as set forth on Schedule 3
attached hereto;
(d) Seller's obligations to provide services from and
after the Closing Date in connection with the Assets
and the Assumed Deposits, including all obligations
with respect to the safe deposit boxes located at the
Branch as set forth in the agreements relating to
such boxes and their contents;
(e) Accrued Expenses, as set forth on Schedule 4
attached hereto;
(f) Any liabilities or obligations for compliance with
any Environmental Law associated with the Real Estate,
Real Estate Improvements, Leasehold Improvements or
other Assets (subject only to Buyer's right of
reimbursement pursuant to Section 6.5(c) of the
Acquisition Agreement for Actual Costs as defined in
such Section 6.5(c); and
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(g) The Other Liabilities, as set forth in Schedule 5
attached hereto.
Notwithstanding any provision of this Agreement or the Acquisition
Agreement that might be constructed to the contrary, Liabilities do
not include any of the Non-Assumed Liabilities or any liabilities
with respect to Leases or Assumed Contracts as to which any
consents required to transfer the same to Buyer at Closing have not
been obtained by Seller
Buyer hereby accepts the transfer of all IRA Deposits to
Buyer, and Buyer accepts appointment as the successor custodian
under all IRA Deposits.
2. Incorporation of Provisions from the Acquisition
Agreement. Notices to the parties shall be in accordance with the
notice provisions of the Acquisition Agreement and all other terms
and provisions of Article 13 of the Acquisition Agreement shall be
applicable to this Agreement except to the extent inconsistent with
a specific provision of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed on its behalf by its officers thereto duly
authorized, all as of the day and year first above written.
SURETY BANK, N.A.
By:
Name: Bobby W. Hackler
Title: President
COMMERCIAL BANK OF TEXAS, N.A.
By:
Name: Thomas W. Ellison
Title:Chairman of the Board
and President
-2-
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EXHIBIT "H"
OFFICER'S CERTIFICATE
OF
BUYER
The undersigned, in his official capacity as an officer of
Commercial Bank of Texas, N.A. ("Buyer") as indicated below (and
not in his individual capacity), hereby certifies as follows:
1. The undersigned is authorized, on behalf of Buyer, to
execute this certificate in connection with that certain
Branch Purchase and Assumption Agreement, dated as of
_____________________, 1998, (the "Agreement"), by
and between Buyer and Surety Bank, N.A. a national
banking association ("Seller"). Terms with their initial
letter capitalized and not otherwise defined herein have
the meanings given them in the Agreement.
2. Buyer has complied in all material respects with each of
its covenants and agreements contained in the Agreement
to be performed on or prior to the Closing Date.
3. Each of the representations and warranties of Buyer in
Section 7.2 of the Agreement is true and correct in all
material respects as if made on the date hereof, except
to the extent of changes that have occurred prior to
Closing that are consistent with the provisions of the
Agreement.
IN WITNESS WHEREOF, I hereupon set my hand effective as of the
_______ day of ___________________, 1998.
COMMERCIAL BANK OF TEXAS, N.A.
By:
Name: Thomas W. Ellison
Title: Chairman of the Board
and President
PAGE
<PAGE>
EXHIBIT "I"
OPINION OF BUYER'S COUNSEL
1. Buyer is a national banking association, duly organized,
validly existing and in good standing under the laws of the United
States of America;
2. Buyer has the corporate power to enter into and carry
out the terms of the Agreement, the Agreement has been authorized
by the Board of Directors and shareholders of Buyer, and the
Agreement and all other documents to be executed and delivered by
Buyer in connection with the Agreement have been duly authorized,
executed and delivered by Buyer and constitute the legal, valid and
binding obligations of Buyer;
3. The execution and delivery of the Agreement and all
other documents to be executed and delivered in connection
therewith and the consummation of the transactions contemplated
thereby by Buyer will not, to our best knowledge, violate any
provision of, or constitute a default under, any law, regulation,
order or judgment or any contract or other agreement to which Buyer
is bound or conflict with its Articles of Association or Bylaws;
4. All necessary approvals and consents for Buyer to
consummate the transactions contemplated by the Agreement have been
obtained.
PAGE
<PAGE>
List of schedules to Branch Purchase and Assumption Agreement by
and between Surety Bank, National Association and Commercial Bank
of Texas, National Association, dated as of July 13, 1998, which
are not filed herewith:
Schedule Description
- -------- -----------
1 Branches
2 Furniture, Fixtures and Equipment
2.1(iv) Book Value of Real Estate and Real Estate Improvements
2.1(v) Book Value of any Leasehold Improvements
2.1(vi) Book Value of Furniture, Fixtures and Equipment
4.9 Assumed Contracts
4.11(b) Permitted Exceptions
6.1(e)(ii) Disposition of Assets
7.1(f) Litigation Involving Seller
7.1(i) Liens
7.1(j) Leases
7.1(k) Real Estate
The registrant will furnish supplementally a copy of any omitted
exhibit or schedule to the Securities and Exchange Commission upon
request.
EXHIBIT 20
**News Release**
SURETY CAPITAL CORPORATION
Announces the Sale of Four Branches
For Release: Immediately Contact: Bob Hackler, COO
Date: July 20, 1998 B. J. Curley, CFO
AMEX Symbol: SRY 1 (800) SRY-5995
Hurst, Texas, July 20, 1998 - Surety Capital Corporation ("Surety
Capital") announced today that its subsidiary, Surety Bank,
National Association ("Surety Bank"), has entered into an
agreement with Commercial Bank of Texas, National Association
("Commercial Bank"), Nacogdoches, Texas, to sell to Commercial
Bank Surety Bank's four east Texas branches located in Lufkin,
Kennard, Wells and Chester (the "Branches").
The purchase price for the Branches will be equal to 4% of the
deposit base of the Branches as of the closing date. This
transaction will be structured as an assumption of certain
liabilities of the Branches, including deposits, and a purchase
of certain assets of the Branches, including loans and fixed
assets, by Commercial Bank.
As of May 31, 1998, the Branches had total deposits of
approximately $55,200,000, total net loans of approximately
$11,700,000 and fixed assets of approximately $657,000. Surety
Bank is currently a $240,000,000 asset-based bank with thirteen
full service-banking facilities. After the sale is completed,
Surety Bank will have approximately $186,000,000 in assets and
approximately $123,000,000 in loans. Surety Bank will continue
to operate its remaining nine banking branches, located in north-
central and south-central Texas, as full service community
banking facilities serving the local retail and small business
markets. Surety Bank's operating division, Surety Premium
Finance ("Surety Premium"), will continue to market its niche
lending product, insurance premium financing. Surety Bank uses
its Surety Premium division to utilize investable funds that are
not used by Surety Bank in its traditional lending programs,
rather than investing in lower yielding investment securities.
The completion of the sale is subject to a number of
contingencies, including regulatory approvals by applicable
banking authorities and a due diligence review of the Branches by
Commercial Bank. There can be no assurance that the transaction
will be completed. If consummated, the transaction is expected
to close no later than December 31, 1998, upon the expiration of
all applicable waiting periods following receipt of all necessary
regulatory approvals.
C. Jack Bean, Chairman of the Board of Surety Capital, stated,
"The sale of these four east Texas branches is the result of an
evolution of Surety Capital's strategic business plan. Surety
Capital's basic premise of funding its insurance premium finance
niche lending product with excess investable funds generated by
underutilized community banks has not changed. What has changed
is Surety Capital's concept of the types of banks that best serve
this role. These branches were the first four banks acquired by
Surety Capital in the early 1990's and their sale should allow
Surety Capital to operate more efficiently and free up needed
capital that can be leveraged into higher performing assets. As
Surety Capital has grown and matured over the past several years,
it has acquired banks with larger asset bases and higher loan-to-
deposit ratios located in larger and more dynamic markets.
Surety Capital's strategy is to continue to increase its deposit
base through acquisitions and/or branching in stable or growing
market areas that are rural or suburban in nature. We believe
that increasing our banking organization's presence in more
dynamic locations and using excess funds to fund our Surety
Premium division, will increase the franchise value of both
Surety Capital's banking business and its Surety Premium
division."
www.sry.com
E-mail [email protected]
[email protected]
