<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) May 20, 1995
------------
UnionFed Financial Corporation
------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
DELAWARE 1-9594 95-4074126
- --------------------------- ---------------- --------------------
State or Other Jurisdiction Commission IRS Employer
of Incorporation File Number Identification No.
330 EAST LAMBERT ROAD, BREA, CALIFORNIA 92621
----------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (714) 255-8100
--------------
N/A
-------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
Total of sequentially numbered pages: .
-------
The Exhibit Index for this Form 8-K is located at sequentially numbered page
.
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ITEM 5. OTHER EVENTS.
GLENDALE FEDERAL TRANSACTION
On May 20, 1995, Union Federal Bank ("Bank"), a federal savings bank
and wholly-owned subsidiary of UnionFed Financial Corporation, a Delaware
corporation ("Registrant") entered into a definitive Asset Purchase and
Liability Assumption Agreement ("Purchase Agreement") with Glendale Federal
Bank, Federal Savings Bank ("Glendale Federal") pursuant to which Glendale
Federal will acquire 13 of the Bank's 14 retail banking offices and related
deposit liabilities ("Glendale Federal Transaction"). At May 15, 1995, the Bank
had approximately $820 million of consumer deposits in the 13 Southern
California neighborhood banking offices expected to be transferred to Glendale
Federal. The Glendale Federal Transaction is expected to be completed within 60
days from the date of the definitive agreement, subject to receipt of necessary
regulatory approvals, primarily the approval of the U.S. Office of Thrift
Supervision ("OTS") and satisfaction of other closing conditions.
Under the Purchase Agreement, the Bank is expected to retain its
downtown Los Angeles office and related deposits. At closing, the Bank will
transfer to Glendale Federal cash and other assets, principally single family
and non-classified commercial and multi-family real estate loans valued at the
Bank's book value, in an amount necessary to offset the deposit and other
liabilities assumed by Glendale Federal, less the purchase price of $6.6 million
(subject to adjustment depending on the level of deposits transferred at
closing).
The Bank will also obtain a right to receive a contingent payment
based upon the actual performance of certain multi-family, commercial and
industrial real estate loans ("Contingent Portfolio") transferred to Glendale
Federal to the extent that such loans are repaid or otherwise finally resolved
by June 30, 1998 ("Resolved Loans"). The amount of such contingent payment, if
any, will equal 50% of the amount by which the aggregate net proceeds collected
by Glendale Federal on Resolved Loans exceed the agreed-upon aggregate base
amount assigned to such loans as of the closing date after taking into account
interim costs or recoveries as provided in the Purchase Agreement. At March 31,
1995, loans in the Contingent Portfolio had an aggregate unpaid principal
balance of $187 million and a net book value of $185 million. The Contingent
Portfolio has an agreed upon aggregate base amount of $174 million as of March
31, 1995. Under the Purchase Agreement, Glendale Federal is entitled to treat
the Contingent Portfolio as its sole property and is free to determine whether
to hold, sell, foreclose upon or otherwise deal with loans in the Contingent
Portfolio without regard to the impact, if any, of such action on the contingent
payment. The Bank will not be entitled to any contingent payment based upon
Contingent Portfolio loans paid or otherwise finally resolved after June 30,
1998. There are no assurances as to whether the Bank will receive any
contingent payment, or if it does, the amount of such contingent payment.
THE GLENDALE FEDERAL TRANSACTION REQUIRES THE APPROVAL OF THE OTS.
IN ADDITION, THE OTS MAY AT ANY TIME AT ITS SOLE DISCRETION DETERMINE TO TAKE
SUPERVISORY ACTION, INCLUDING THE APPOINTMENT OF A RECEIVER OR CONSERVATOR FOR
THE BANK, REGARDLESS OF THE EXECUTION OF THE PURCHASE AGREEMENT WITH GLENDALE
FEDERAL. NO ASSURANCES CAN BE GIVEN THAT THE OTS WILL APPROVE THE GLENDALE
FEDERAL TRANSACTION AS AGREED UPON OR AS SUCH TRANSACTION MAY BE AMENDED PRIOR
TO THE CLOSING OR THAT THE OTS WILL NOT TAKE SUPERVISORY ACTION AGAINST THE
BANK. THE REGISTRANT EXPECTS THAT THE BANK WILL BE PLACED IN A RECEIVERSHIP OR
CONSERVATORSHIP BY THE OTS IF THE BANK IS NOT ABLE TO CONSUMMATE THE GLENDALE
FEDERAL TRANSACTION OR IF THE OTS DOES NOT APPROVE THE TRANSACTION. THE
APPOINTMENT OF A CONSERVATOR OR RECEIVER FOR THE BANK EFFECTIVELY WOULD
ELIMINATE THE
2
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INTERESTS OF THE REGISTRANT'S STOCKHOLDERS SINCE THE BANK IS THE REGISTRANT'S
ONLY SIGNIFICANT ASSET.
CLASSIFIED ASSET SALES AND OTHER TRANSACTIONS
In order to facilitate the Glendale Federal Transaction, the Bank
has determined, with OTS approval, to sell approximately $136 million in book
value of its classified commercial, industrial and multi-family loan and real
estate portfolio, principally to "bulk sale" institutional buyers ("Classified
Asset Sales"). Such sales are expected to be completed in early June and net
approximately $102 million (including amounts escrowed for potential
representation and warranty breaches). Consummation of the Classified Asset
Sales are not conditioned upon consummation of the Glendale Federal Transaction;
however, the Bank will need to complete the Classified Asset Sales on or before
the closing of the Glendale Federal Transaction to permit the Bank to have
sufficient resources to close the Glendale Federal Transaction.
The Bank also has taken advantage of the current bond market rally
to raise $209 million from the sale of substantially all of its investment
securities portfolio at a net gain of approximately $400 thousand.
RESULTING BANK
Upon completion of the Glendale Federal Transaction and the
contemplated Classified Asset Sales, it is currently anticipated that the Bank
will operate a single retail office, retain approximately $35 million in assets,
primarily classified loans and real estate, and have a net worth of
approximately $2 million or less. It is currently anticipated that the Bank's
principal assets will include approximately $28 million in book value of
classified loan and real estate assets, principally two commercial real estate
owned (REO) properties in Key West, Florida and Los Angeles, California and
cash. Rather than incur a substantial discount from book value from the
immediate bulk sale of these classified assets, the Bank has elected to retain
these assets to attempt to maximize the values of these assets.
It is anticipated that the cash remaining after the Glendale Federal
Transaction and Classified Asset Sales would be required to support the Bank's
ongoing operations. Accordingly, there will be no distribution to the Company's
stockholders as of the closing of the Glendale Federal Transaction. The
potential sources for generating a future return for the Company's stockholders
primarily consist of the gain, if any, realized upon the disposition of the
classified assets retained by the Bank, the contingent consideration, if any, to
be received from Glendale Federal in three years, and any consideration received
from a sale of the Company's remaining business operations. There can be no
assurance that the Company will be able to generate sufficient resources to
provide any return to stockholders. In addition, Union Federal's operations and
future prospects as a federally-chartered thrift will continue to be subject to
regulatory attitudes and actions, including those of the OTS and the Federal
Deposit Insurance Corporation, within applicable legal constraints.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
Not Applicable
3
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(b) Pro Forma Financial Information.
Not Applicable
(c) Exhibits.
EXHIBIT DESCRIPTION
2.1 Asset Purchase and Liability Assumption Agreement dated May 20, 1995
between Glendale Federal Bank, Federal Savings Bank and Union
Federal Bank, a federal savings Bank
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
UnionFed Financial Corporation
Date: June 2, 1995 By: /s/ Ronald M. Griffith
----------------------------------
Ronald M. Griffith,
Senior Vice President, General Counsel,
and Secretary
4
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EXHIBIT INDEX
Exhibit Sequentially
Number Description Numbered Page
- ------ ----------- -------------
2.1 Asset Purchase and Liability Assumption Agreement
dated May 20, 1995 between Glendale Federal Bank,
Federal Savings Bank and Union Federal Bank, a
federal savings Bank* ------
- -----------------------
* Exhibit 2.1 contains a listing of the schedules to the exhibit document.
Registrant agrees to furnish supplementally a copy of any omitted schedules
to the Securities and Exchange Commission upon request.
5
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__________________________________________________
ASSET PURCHASE AND LIABILITY ASSUMPTION AGREEMENT
BETWEEN
GLENDALE FEDERAL BANK, FEDERAL SAVINGS BANK
AND
UNION FEDERAL BANK, A FEDERAL SAVINGS BANK
__________________________________________________
MAY 20, 1995
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TABLE OF CONTENTS
PAGE
ARTICLE I. CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II. TERMS OF PURCHASE AND ASSUMPTION . . . . . . . . . . . . . . . . 6
2.1 Purchase and Sale of Assets. . . . . . . . . . . . . . . . . . . . 6
(a) Office Facilities . . . . . . . . . . . . . . . . . . . . . . 6
(b) Fixed Assets. . . . . . . . . . . . . . . . . . . . . . . . . 6
(c) Loans and REO . . . . . . . . . . . . . . . . . . . . . . . . 7
(d) Securities and Other Investment Assets. . . . . . . . . . . . 7
(e) Books and Records . . . . . . . . . . . . . . . . . . . . . . 7
(f) Contract and Other Rights, Licenses and
Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(g) Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(h) Other Specified Assets. . . . . . . . . . . . . . . . . . . . 8
2.2 Assumption of Liabilities. . . . . . . . . . . . . . . . . . . . . 8
(a) Deposit Liabilities . . . . . . . . . . . . . . . . . . . . . 9
(b) Contract Obligations. . . . . . . . . . . . . . . . . . . . . 9
(c) Employee Severance Payments . . . . . . . . . . . . . . . . . 9
(d) Other Specified Liabilities . . . . . . . . . . . . . . . . . 9
2.3 Payment of Certain Accounts Payable. . . . . . . . . . . . . . . . 10
2.4 Purchase Price; Method of Payment. . . . . . . . . . . . . . . . . 10
(a) Determination of Asset Amounts. . . . . . . . . . . . . . . . 10
(i) Cash . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(ii) Securities and Other Investments . . . . . . . . . . . . 11
(iii) Loans. . . . . . . . . . . . . . . . . . . . . . . . . 11
(iv) Fixed Assets . . . . . . . . . . . . . . . . . . . . . . 11
(v) Real Estate. . . . . . . . . . . . . . . . . . . . . . . 11
(vi) Other Specified Assets . . . . . . . . . . . . . . . . . 11
(vii) Leasehold Interests; Other Assets. . . . . . . . . . . 11
(b) Determination of Liability Amounts. . . . . . . . . . . . . . 11
2.5 Alternative Bank Transaction . . . . . . . . . . . . . . . . . . . 12
2.6 Review of Closing Schedules. . . . . . . . . . . . . . . . . . . . 13
2.7 Limitation on Liabilities Assumed and Assets
Purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.8 Contingent Payment . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLER. . . . . . . . . . . . 15
3.1 Organization and Related Matters . . . . . . . . . . . . . . . . . 15
3.2 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.3 No Breaches of Statute or Contract . . . . . . . . . . . . . . . . 16
3.4 No Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.5 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . 16
3.6 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.7 Financial Statements and Reports . . . . . . . . . . . . . . . . . 18
3.8 No Broker's or Finder's Fees . . . . . . . . . . . . . . . . . . . 19
3.9 Records and Documents. . . . . . . . . . . . . . . . . . . . . . . 19
3.10 Hazardous Materials. . . . . . . . . . . . . . . . . . . . . . . . 19
3.11 Damage to Mortgaged Properties . . . . . . . . . . . . . . . . . . 20
3.12 Contracts and Defaults . . . . . . . . . . . . . . . . . . . . . . 20
3.13 Labor Contracts and Relations. . . . . . . . . . . . . . . . . . . 20
3.14 Employee Benefits. . . . . . . . . . . . . . . . . . . . . . . . . 21
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TABLE OF CONTENTS
(continued)
PAGE
3.15 Litigation and Liabilities . . . . . . . . . . . . . . . . . . . . 22
3.16 Employment and Similar Agreements; Obligations
Upon Change in Control. . . . . . . . . . . . . . . . . . . . . . 22
3.17 Regulatory Applications. . . . . . . . . . . . . . . . . . . . . . 22
3.18 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.19 Americans with Disabilities Act. . . . . . . . . . . . . . . . . . 22
3.20 Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.21 IRAs and Keogh Plans . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF BUYER. . . . . . . . . . . . . 27
4.1 Organization and Related Matters . . . . . . . . . . . . . . . . . 27
4.2 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.3 No Breaches of Statute or Contract; Required
Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.4 Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . 28
4.5 No Broker's or Finder's Fees . . . . . . . . . . . . . . . . . . . 28
ARTICLE V. PRE-CLOSING COVENANTS OF SELLER . . . . . . . . . . . . . . . . . 28
5.1 Operations in Ordinary Course. . . . . . . . . . . . . . . . . . . 28
5.2 Preservation of Business . . . . . . . . . . . . . . . . . . . . . 28
5.3 Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.4 Facility Leases. . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.5 Negative Covenants of Seller . . . . . . . . . . . . . . . . . . . 29
(a) Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(b) Issuance of Securities. . . . . . . . . . . . . . . . . . . . 30
(c) Contracts; Asset Sales. . . . . . . . . . . . . . . . . . . . 30
(d) Employee Matters. . . . . . . . . . . . . . . . . . . . . . . 30
(e) Modification, Waiver or Foreclosure of Loans. . . . . . . . . 30
(f) Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . 30
(g) Investments . . . . . . . . . . . . . . . . . . . . . . . . . 31
(h) Business Practices. . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE VI. TRANSFER OF DEPOSIT ACCOUNTS . . . . . . . . . . . . . . . . . . 31
6.1 Notice to Customers. . . . . . . . . . . . . . . . . . . . . . . . 31
6.2 Interest Reporting . . . . . . . . . . . . . . . . . . . . . . . . 32
6.3 Retirement Accounts. . . . . . . . . . . . . . . . . . . . . . . . 32
6.4 Operational Cooperation. . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE VII. ADDITIONAL AGREEMENTS; TAXES. . . . . . . . . . . . . . . . . . 33
7.1 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.2 Required Approvals . . . . . . . . . . . . . . . . . . . . . . . . 33
7.3 Assistance in Obtaining Regulatory Approvals . . . . . . . . . . . 33
7.4 Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.5 Investigations; Confidentiality. . . . . . . . . . . . . . . . . . 35
7.6 Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.7 WARN Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.8 Sales and Transfer Taxes . . . . . . . . . . . . . . . . . . . . . 36
7.9 Information Returns. . . . . . . . . . . . . . . . . . . . . . . . 36
7.10 Sales Tax Clearance. . . . . . . . . . . . . . . . . . . . . . . . 36
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(continued)
PAGE
ARTICLE VIII. CONDITIONS TO CLOSING. . . . . . . . . . . . . . . . . . . . . 36
8.1 Conditions to Buyer's Obligations. . . . . . . . . . . . . . . . . 36
(a) Performance by Seller; Third Party Consents . . . . . . . . . 36
(b) Representations . . . . . . . . . . . . . . . . . . . . . . . 37
(c) Destruction of Property . . . . . . . . . . . . . . . . . . . 37
(d) No Material Adverse Effect. . . . . . . . . . . . . . . . . . 37
(e) Amount of Deposits. . . . . . . . . . . . . . . . . . . . . . 37
(f) Opinion of Counsel. . . . . . . . . . . . . . . . . . . . . . 37
(g) No Resolution Amendments. . . . . . . . . . . . . . . . . . . 37
(h) Third Party Consents. . . . . . . . . . . . . . . . . . . . . 38
8.2 Conditions to Seller's Obligations . . . . . . . . . . . . . . . . 38
(a) Performance by Buyer. . . . . . . . . . . . . . . . . . . . . 38
(b) Representations . . . . . . . . . . . . . . . . . . . . . . . 38
(c) Opinion of Counsel. . . . . . . . . . . . . . . . . . . . . . 38
8.3 Conditions to Obligations of All Parties . . . . . . . . . . . . . 38
(a) Absence of Litigation or Government Action. . . . . . . . . . 38
(b) Regulatory Approvals. . . . . . . . . . . . . . . . . . . . . 39
ARTICLE IX. THE CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.1 Time and Place of Closing. . . . . . . . . . . . . . . . . . . . . 39
9.2 Procedure at Closing . . . . . . . . . . . . . . . . . . . . . . . 39
9.3 Deliveries by Seller . . . . . . . . . . . . . . . . . . . . . . . 40
9.4 Deliveries by Buyer. . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE X. POST-CLOSING OBLIGATIONS. . . . . . . . . . . . . . . . . . . . . 42
10.1 Holdback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.2 Post-Closing Adjustments . . . . . . . . . . . . . . . . . . . . . 42
(a) General . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(b) Returned Items. . . . . . . . . . . . . . . . . . . . . . . . 43
(c) Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.3 Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.4 Non-Competition Agreement. . . . . . . . . . . . . . . . . . . . . 43
10.5 Use of Office Space. . . . . . . . . . . . . . . . . . . . . . . . 43
10.6 Loan Interest Reporting. . . . . . . . . . . . . . . . . . . . . . 43
10.7 Conduct of Business; Compliance with Law . . . . . . . . . . . . . 44
10.8 Provision of Processing Services . . . . . . . . . . . . . . . . . 44
11.1 Events of Termination. . . . . . . . . . . . . . . . . . . . . . . 44
11.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE XII. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 45
12.1 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
12.2 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
12.3 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
12.4 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
12.5 Prorations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
12.6 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . 47
12.7 Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
12.8 Survival of Representations and Warranties . . . . . . . . . . . . 49
12.9 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . 49
12.10 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . 49
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PAGE
12.11 Method of Consent or Waiver . . . . . . . . . . . . . . . . . . . 49
12.12 Binding Effect; No Assignment . . . . . . . . . . . . . . . . . . 49
12.13 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . 49
12.14 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
12.15 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . 50
12.16 No Third Party Beneficiaries. . . . . . . . . . . . . . . . . . . 50
12.17 Effect of Investigations. . . . . . . . . . . . . . . . . . . . . 50
EXHIBITS
Exhibit A Opinion of Seller's Counsel
Exhibit B Opinion of Buyer's Counsel
Exhibit C Bill of Sale
Exhibit D Assignment and Assumption of Lease
Exhibit E Consent
Exhibit F Assumption Agreement
SCHEDULES
Schedule 2.1(a) Office Facilities
Schedule 2.1(b) Fixed Assets
Schedule 2.1(c) Loans and REO
Schedule 2.1(d) Securities and Other Investment Assets
Schedule 2.1(f) Contract and Other Rights, Licenses and
Benefits
Schedule 2.1(h) Other Specified Assets
Schedule 2.2(a) Deposit Liabilities
Schedule 2.2(c) Employee Severance Payments
Schedule 2.2(d) Other Specified Liabilities
Schedule 2.8(a) Contingent Portfolio
Resolved Loan Schedule Contingent Payment
Seller Schedule Representations and Warranties of Seller
Schedule 3.6 Insurance Policies and Bonds
Schedule 3.14 Employee Benefit Plans
Schedule 3.15 Litigation and Liabilities
Schedule 3.20(a) Third Party Loan Servicers
Schedule 3.21. IRAs and Keogh Plans
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(continued)
PAGE
CLOSING SCHEDULES
Closing Schedule 2.1(a) Office Facilities
Closing Schedule 2.1(b) Fixed Assets
Closing Schedule 2.1(c) Loans and REO
Closing Schedule 2.1(d) Securities and Other Investment Assets
Closing Schedule 2.1(f) Contract and Other Rights, Licenses and
Benefits
Closing Schedule 2.1(h) Other Specified Assets
Closing Schedule 2.2(a) Deposit Liabilities
Closing Schedule 2.2(b) Contract Obligations
Closing Schedule 2.2(c) Employee Severance Payments
Closing Schedule 2.2(d) Other Specified Liabilities
Closing Schedule 2.3 Accounts Payable
Closing Schedule 2.8(a) Contingent Portfolio
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ASSET PURCHASE AND LIABILITY ASSUMPTION AGREEMENT
THIS ASSET PURCHASE AND LIABILITY ASSUMPTION AGREEMENT ("AGREEMENT") is
entered into as of the 20th day of May, 1995 between GLENDALE FEDERAL BANK,
FEDERAL SAVINGS BANK ("BUYER") and UNION FEDERAL BANK, a federal savings bank
("SELLER") with respect to the following facts:
A. Seller desires to sell and transfer to Buyer the deposit-gathering and
other office facilities of Seller, together with certain loans, securities and
other specified assets of Seller, and to induce Buyer to assume the deposit
liabilities and certain other specified liabilities of Seller, all as provided
herein.
B. Buyer desires to acquire the deposit-gathering facilities and related
deposit liabilities and customer relationships of Seller, together with those
other assets and liabilities of Seller specified herein.
C. Seller is a wholly-owned subsidiary of UNIONFED FINANCIAL CORPORATION,
a Delaware Corporation ("HOLDING COMPANY").
D. It is contemplated by the parties hereto that Seller will, in separate
transactions that are to be completed concurrently with or prior to the
transactions provided for herein, sell and transfer to third parties various of
its other assets, principally consisting of defaulted, problem or "classified"
loans and foreclosed real estate, together with certain related liabilities.
THEREFORE, in consideration of the premises and the mutual covenants set
forth herein, the parties hereto agree as follows:
ARTICLE I.
CERTAIN DEFINITIONS
As used in this Agreement the following terms shall have the meanings set
forth below:
"ADA" means the Americans with Disabilities Act, 42 U.S.C. Section 12101 ET
SEQ., as amended, and the regulations issued pursuant thereto.
"AGREEMENT" means this Asset Purchase and Liability Assumption Agreement
between Glendale Federal Bank, Federal Savings Bank and Union Federal Bank, a
federal savings bank.
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"BEST KNOWLEDGE": a representation or warranty made to the "best knowledge"
of a party to this Agreement includes the representation and warranty that the
senior executives of such party have made, or caused to be made, appropriate and
reasonable inquiry and review of the records of such party and, if applicable,
of the officers and employees of such party having responsibility for the matter
or matters as to which such representation and warranty is made and that based
on such inquiry and review, and on their own actual knowledge, such senior
executives believe the representation or warranty given to be true.
"BUYER" means Glendale Federal Bank, Federal Savings Bank.
"COBRA" means those provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985 which require an employer to offer a continuation of
certain benefits to its former employees.
"DEPOSIT" and/or "DEPOSITS" mean and refer to a deposit or deposits, as
defined in Section 3(l)(1) of the Federal Deposit Insurance Act, as amended, 12
U.S.C.A. Section 1813(l)(1), that is, or are, to be transferred and assumed by
Buyer pursuant to this Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FDIC" means the Federal Deposit Insurance Corporation.
"FHLB-SAN FRANCISCO" means the Federal Home Loan Bank of San Francisco.
"HOLA" means the Home Owners' Loan Act, as amended, 12 U.S.C.A. Section
1461, et. seq.
"HOLDING COMPANY" means UnionFed Financial Corporation, a Delaware
corporation.
"IRS" means the Internal Revenue Service.
"LEASEHOLD IMPROVEMENTS" means all improvements owned by Seller and
installed or constructed by or on behalf of Seller and used in connection with
the operation or maintenance of any Leased Facility.
"LOAN DOCUMENTS" means all notes, deeds of trust, mortgages, security
agreements, guaranties, indemnities, financing statements, assignments,
endorsements, title insurance policies, UCC financing statements, ground leases,
assumption, modification and
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substitution agreements, correspondence, bonds, letters of credit, accounts,
insurance contracts and policies, credit reports, tax returns, appraisals,
environmental reports, escrow documents, participation agreements (if
applicable), original loan applications, loan files, Servicing Files and all
other documents evidencing, securing or pertaining to the Loans listed on
SCHEDULE 2.1(C) or CLOSING SCHEDULE 2.1(C).
"MORTGAGE" shall mean the original mortgage, deed of trust or other
instrument securing a Mortgage Note relating to a Loan.
"MORTGAGE NOTE" means a note or other evidence of indebtedness evidencing
the indebtedness of a Mortgagor under a Loan.
"MORTGAGED PROPERTY" means each parcel of real property securing any Loan.
"MORTGAGOR" means a mortgagor under a Mortgage, together with any
successors or assignees of such mortgagor.
"NET BOOK VALUE" means the net book value of the item as reflected in the
financial statements of Seller in conformity with generally accepted accounting
principles, as modified by applicable regulations or policies of the OTS.
"OTS" means the Office of Thrift Supervision.
"OTS REPORTS" means the following OTS reports of examinations of Seller:
January 19, 1995 (Federal Regular); March 6, 1995 (Regular Compliance); March 6,
1995 (Community Reinvestment Act).
"SAIF" means the Savings Association Insurance Fund.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLER" means Union Federal Bank, a federal savings bank.
"SERVICING FILES" means the documents, files and other items pertaining to
the Loans, including without limitation the computer files, data disks, books,
records, data tapes, notes, and all additional documents generated as a result
of or utilized in originating or servicing the Loans.
"TAX RETURN" means any return or other report required to be filed with
respect to any Tax, including declarations of estimated tax and information
returns.
"TAX" or"TAXES" means any federal, state, local, or foreign taxes,
including but not limited to taxes on or measured by income,
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estimated income, franchise, capital stock, employee withholding, non-resident
alien or foreign person withholding, backup withholding, social security,
occupation, unemployment, disability, value added taxes, taxes on services, real
property, personal property, sales, use, excise, transfer, gross receipts,
inventory and merchandise, business privilege, and any other taxes or
governmental fees or charges or amounts required to be withheld and paid over to
any government in respect of any tax or governmental fee or charge, including
any interest, penalties, or additions to tax on the foregoing whether or not
disputed.
As used in this Agreement, the following terms have the meanings assigned
to them in the Sections of this Agreement indicated below:
TERM SECTION
"Accounts Payable Amount" Section 2.3
"Alternative Bank Transaction" Section 2.5
"Assets" Section 2.1
"Base Amount" Section 2.8(a)
"California Code" Section 8.1(i)
"Cash Payment" Section 9.2(a)
"Classified Assets Sales" Section 5.1
"Closing" Section 9.1
"Closing Date" Section 9.1
"Confidential Information" Section 7.5
"Contingent Payment" Section 2.8(a)
"Contingent Portfolio" Section 2.8(a)
"Contingent Period" Section 2.8(b)
"ERISA Affiliate" Section 3.14(c)
"Evaluation Date" Section 2.8(b)
"Facilities" Section 2.1(a)
"Fixed Assets" Section 2.1(b)
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TERM SECTION
"Governmental Authority" Section 3.4
"Hazardous Material(s)" Section 3.10(a)
"Holdback Charges" Section 10.1(a)
"Holdback Period" Section 10.1
"Indemnified Party" Section 12.6(d)
"Indemnifying Party" Section 12.6(d)
"Initial List" Section 6.1
"Investment Amount" Section 2.8(b)
"LA Main Facility" Section 2.5(i)
"Leased Facilities" Section 2.1(a)
"Liabilities" Section 2.2
"Loans" Section 2.1(c)
"Owned Facilities" Section 2.1(a)
"Pension Plan" Section 3.14(b)
"Plans" Section 3.14(a)
"Prototype Plans" Section 3.21
"Purchase Price Holdback" Section 10.1
"REO" Section 2.1(c)
"Records" Section 2.1(e)
"Recovery Amount" Section 2.8(b)
"Recovery Proceeds" Section 2.8(b)
"Reduced Holdback Amount" Section 10.1(a)
"Regulatory Approval" Section 7.3
"Resolved Loans" Section 2.8(b)
"Resolved Loan Schedule" Section 2.8(b)
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TERM SECTION
"Retirement Accounts" Section 6.3
"Sales Tax Certificate" Section 7.10
"SEC Filings" Section 3.7(a)
"Seller Schedule" The first paragraph of Article III
"Shortfall" Section 2.4
"Title Policy" Section 3.20(b)(1)(xvii)
"Termination Date" Section 9.1
"WARN ACT" Section 7.7
ARTICLE II.
TERMS OF PURCHASE AND ASSUMPTION
2.1 PURCHASE AND SALE OF ASSETS. Pursuant to the terms and subject to the
conditions of this Agreement, Seller shall sell, transfer, convey and assign to
Buyer, and Buyer shall purchase and acquire from Seller, the following assets of
Buyer (collectively, the "ASSETS"), in each case free and clear of all liens,
claims and encumbrances, except as otherwise permitted in this Agreement, as of
the Closing:
(a) OFFICE FACILITIES. Each of the office facilities of Seller
listed and described in SCHEDULE 2.1(A) hereto (which Schedule also includes the
Net Book Value of such office facilities), including, in the case of such
facilities that are owned by Seller (the "OWNED FACILITIES"), the fee interest
of Seller therein and, in the case of such facilities that are leased by Seller
(the "LEASED FACILITIES"), the leasehold interests of Seller therein, and
including all interests of Seller as lessor or lessee of all or any portion of
such facilities. The Owned Facilities and the Leased Facilities are
collectively referred to herein as the "FACILITIES". Seller shall prepare and
deliver to Buyer as soon as practicable prior to the Closing a revised SCHEDULE
2.1(A), which shall include the Net Book Value at the Closing of the Owned
Facilities to be transferred (the "CLOSING SCHEDULE 2.1(A)").
(b) FIXED ASSETS. All of the furniture, fixtures, equipment,
leasehold improvements and other fixed assets owned by Seller located at or used
in connection with the Facilities or the
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business of Seller conducted therein, including safe deposit boxes (but not the
contents thereof) (collectively, the "FIXED ASSETS"), all of which assets,
together with the Net Book Value thereof, are listed in SCHEDULE 2.1(B) hereto,
with such additions thereto and deletions therefrom as shall be agreed to by
Buyer and listed in a revised Schedule 2.1(b), which shall include the Net Book
Value of all such assets at the Closing, (the "CLOSING SCHEDULE 2.1(B)")
prepared by Seller and delivered to Buyer as soon as practicable prior to the
Closing.
(c) LOANS AND REO. Those residential real estate and other loans of
Seller (which include, without limitation, loans secured by the Deposits and, to
the extent accepted by Buyer, overdrafts relating to Deposits) (such loans being
collectively referred to herein as the "LOANS") and properties and other assets
acquired through foreclosure or deed in lieu of foreclosure ("REO") that are
listed and identified individually or in groupings, together with the Net Book
Value thereof, in SCHEDULE 2.1(C) hereto, with such additions thereto and
deletions therefrom as shall be agreed to by Buyer (which approval shall be
deemed given in the case of Loans repaid in full and REO resulting from
foreclosure of Loans listed on Schedule 2.1(c)) and listed in a revised Schedule
2.1(c), which shall include Net Book Value of all such assets at the Closing,
(the "CLOSING SCHEDULE 2.1(C)") prepared by Seller and delivered to Buyer as
soon as practicable prior to the Closing.
(d) SECURITIES AND OTHER INVESTMENT ASSETS. All amounts due from
banks, federal funds, mortgage-backed securities and other securities
investments of Seller that are listed, together with the Net Book Value thereof,
in SCHEDULE 2.1(D) hereto, with such additions thereto and deletions therefrom
as shall be agreed to by Buyer and listed in a revised Schedule 2.1(d), which
shall include Net Book Value of all such assets at the Closing, (the "CLOSING
SCHEDULE 2.1(D)") prepared by Seller and delivered to Buyer as soon as
practicable prior to the Closing.
(e) BOOKS AND RECORDS. All books, records and other documentation of
Seller relating to those employees of Seller who are offered and accept
employment with Buyer after the Closing (subject to obtaining such employees'
consents to such delivery to Buyer), the Assets and the Liabilities to be
purchased or assumed by Buyer pursuant to this Agreement (collectively, the
"RECORDS").
(f) CONTRACT AND OTHER RIGHTS, LICENSES AND BENEFITS. All benefits,
rights and entitlements of Seller arising pursuant to any contract, license,
agreement, franchise, governmental approval or authority (to the extent
transferable) or other entitlements of Seller relating to any of the Assets or
business of Seller to be acquired by Buyer pursuant to this Agreement,
including, without
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limitation, facilities or maintenance contracts relating to any of the
Facilities which Buyer agrees to assume, data processing contracts, loan
servicing agreements pursuant to which third parties service any of the Loans
for Seller or loan subservicing contracts, loan servicing agreements pursuant to
which Seller services loans for third parties and receives compensation therefor
and any other contracts or agreements pursuant to which Seller receives
compensation or benefits and which Buyer agrees to assume pursuant to this
Agreement; PROVIDED, HOWEVER, that such benefits, rights and entitlements shall
not include amounts which are due or may become due to Seller under any
insurance contracts or litigation to which Seller has been, is or will be a
party, and Seller shall retain its right to conduct its business, subject to
SECTION 10.4 hereof, as a federally-chartered savings bank under any permissible
name other than "Union Federal Bank" or any variant thereof which employs the
names "Union" or "UnionFed". The contract and other rights, benefits and
entitlements referred to in this SECTION 2.1(F) that may be assumed by Buyer are
reflected in SCHEDULE 2.1(F), which schedule shall be revised, to the extent
necessary, to reflect all such rights, benefits and entitlements as of the
Closing and delivered to Buyer as soon as practicable prior to the Closing (as
so revised, the "CLOSING SCHEDULE 2.1(F)"). Schedule 2.1(f) designates certain
of the contracts referred to herein which Buyer has already agreed with Seller
that Buyer will assume. Within ten (10) days after the date of this Agreement
or promptly after Buyer's receipt of CLOSING SCHEDULE 2.1(F), but in any event
prior to the Closing, Buyer shall notify Seller in writing of any additional
contract listed on either such Schedule that it will not assume at the Closing
and shall assume at the Closing only those obligations of Seller under the
contracts not so identified in such notice.
(g) CASH. Cash to the extent necessary to result in the aggregate
amount (as determined pursuant to SECTION 2.4(A) hereof) of the Assets
transferred to Buyer at the Closing hereunder, including such cash, being equal
to the amount (as determined pursuant to SECTION 2.4(B) hereof) of the
Liabilities assumed by Buyer at such Closing, other than Liabilities for
severance payments assumed in accordance with SECTION 2.2(C) below.
(h) OTHER SPECIFIED ASSETS. Those other assets of Seller, specified
and described in SCHEDULE 2.1(H) hereto, with such additions thereto and
deletions therefrom as shall be agreed to by Buyer and listed in a revised
Schedule 2.1(h) (the "CLOSING SCHEDULE 2.1(H)") prepared by Seller and delivered
to Buyer as soon as practicable prior to the Closing.
2.2 ASSUMPTION OF LIABILITIES. Pursuant to the terms and subject to the
conditions of this Agreement, Buyer shall assume, as of the Closing, only the
following liabilities, duties and
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obligations of Seller (collectively, the "LIABILITIES"), and no other
liabilities, duties or obligations:
(a) DEPOSIT LIABILITIES. All of the liabilities and obligations of
Seller with respect to principal of, interest on and the provision of
information or services relating to, the Deposits that are listed and described
in SCHEDULE 2.2(A) hereto, together with such additions thereto and deletions
therefrom as shall be reflected in an updated schedule (the "CLOSING SCHEDULE
2.2(A)") prepared as of the Closing Date.
(b) CONTRACT OBLIGATIONS. The obligations of Seller to pay amounts
due or accrued as of the Closing with respect to those contracts and other
agreements of Seller referred to in SECTION 2.1(F) that Buyer agrees to assume
as of the Closing which are incurred in the ordinary course of the business of
Seller not in violation of any law, regulation, contract or duty and not
including any amounts payable in respect of any Taxes (except for real estate
and, to the extent applicable, personal property taxes prorated in the manner
set forth in SECTION 12.5 hereof), tort claims, litigation or other disputes,
all of which amounts shall be listed and described in a schedule (the "CLOSING
SCHEDULE 2.2(B)") prepared by Seller and delivered to Buyer as soon as
practicable prior to the Closing.
(c) EMPLOYEE SEVERANCE PAYMENTS. Amounts payable by Seller pursuant
to severance agreements and severance payment policies in respect of employees
of Seller, in each case to the extent listed and described in SCHEDULE 2.2(C);
PROVIDED, HOWEVER, that such amounts shall not include any amounts payable to
David S. Engelman pursuant to any employment agreement, severance agreement,
supplemental executive retirement plan or other agreement or arrangement or
understanding between Seller or Holding Company and Mr. Engelman or any third
party. Schedule 2.2(c) includes the amounts that would be payable under the
agreements and policies referred to in this SECTION 2.2(C) as of the date of
this Agreement. A revised schedule (the "CLOSING SCHEDULE 2.2(C)") setting
forth the actual amounts so payable as of the Closing shall be prepared by
Seller and delivered to Buyer as soon as practicable prior to the Closing.
Except for such amounts as may be payable to employees temporarily employed by
Buyer to assist in transition activities following the Closing, which amounts
shall be paid by Buyer to such employees, all such amounts shall be paid by
Seller at the time of termination of such employees and reimbursed to Seller by
Buyer upon request accompanied by evidence of such payment.
(d) OTHER SPECIFIED LIABILITIES. Those other liabilities of Seller,
specified and described in SCHEDULE 2.2(D) hereto, with such additions thereto
and deletions therefrom as shall be agreed to by Buyer and listed in a revised
Schedule 2.2(d)
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(the "CLOSING SCHEDULE 2.2(D)") prepared by Seller and delivered to Buyer as of
the Closing.
2.3 PAYMENT OF CERTAIN ACCOUNTS PAYABLE. In addition to the contract
obligations that are assumed by Buyer pursuant to SECTION 2.2(B), and as an
accommodation to Seller and to facilitate the consummation of the transactions
contemplated herein, Buyer will, as agent for Seller, pay certain accounts
payable of Seller that are due as of the Closing, which accounts payable,
including the respective amounts thereof (in the aggregate, the "ACCOUNTS
PAYABLE AMOUNT"), shall be specified and described in a schedule (the "CLOSING
SCHEDULE 2.3"), which schedule shall be prepared by Seller and delivered to
Buyer as soon as practicable prior to the Closing and shall be subject to
Buyer's approval; PROVIDED, HOWEVER, that Buyer shall be obligated to make such
payments only to the extent that Seller provides to Buyer additional cash at the
Closing for such payments, as provided in SECTION 9.2(A).
2.4 PURCHASE PRICE; METHOD OF PAYMENT. In consideration of the transfer
by Seller to Buyer of the Deposits, together with the related deposit-gathering
facilities and customer relationships of Seller, pursuant to this Agreement,
Buyer shall pay to Seller a total purchase price (the "PURCHASE PRICE") equal to
$7,700,000, subject to adjustment as provided below, that shall be payable in
immediately available funds as of the Closing. As a condition to payment of the
Purchase Price provided above, Seller shall deliver to Buyer at the Closing
Assets in an aggregate amount, determined in accordance with the provisions of
SECTION 2.4(A) below, that is equal to the amount of the Liabilities, as
determined in accordance with the provisions of SECTION 2.4(B) below, assumed by
Buyer pursuant to this Agreement, other than Liabilities for severance payments
assumed in accordance with SECTION 2.2(C). If Seller is unable to deliver
Assets in such an amount (a "SHORTFALL"), or as soon as it shall become apparent
that Seller cannot do so, then, if Buyer elects not to waive such Shortfall, the
provisions of SECTION 2.5 shall immediately become operative, the Purchase Price
shall be adjusted as therein provided, and the parties hereto shall thereupon
become obligated to use their respective best efforts to complete the
Alternative Bank Transaction provided for therein. The amount of the Purchase
Price payable by Buyer at the Closing, whether pursuant to this SECTION 2.4 or
pursuant to the Alternative Bank Transaction, shall be reduced by the amount of
the Purchase Price Holdback.
(a) DETERMINATION OF ASSET AMOUNTS. Solely for purposes of
determining the amounts of Assets to be transferred at the Closing, but without
representation as to the value, for tax or accounting purposes, of such Assets:
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(i) CASH. Assets consisting of cash, amounts due from banks,
and federal funds shall be transferred at the stated or face amount thereof,
together with any applicable accrued interest.
(ii) SECURITIES AND OTHER INVESTMENTS. Securities and other
investments shall be transferred at the respective Net Book Values indicated
therefor in CLOSING SCHEDULE 2.1(D), together with accrued unpaid interest
thereon; PROVIDED, that if any securities are proposed to be delivered by Seller
at the Closing that are not listed in CLOSING SCHEDULE 2.1(D) such securities
shall be transferred at such amount as Buyer and Seller shall agree.
(iii) LOANS. Loans shall be transferred at the respective Net
Book Values indicated therefor in CLOSING SCHEDULE 2.1(C), together with accrued
unpaid interest thereon through the Closing; PROVIDED, that Loans more than
ninety (90) days delinquent at Closing shall be transferred at Net Book Value
without the addition of any accrued unpaid interest. Any other Loans proposed
to be delivered by Seller at the Closing shall be transferred at such amount as
Buyer and Seller shall agree.
(iv) FIXED ASSETS. Fixed Assets shall be transferred at the Net
Book Value thereof reflected in the financial statements of Seller as of the
month-end preceding the Closing (or the month-end prior thereto if the Closing
occurs on or before the 15th of the month).
(v) REAL ESTATE. Real estate interests comprising Owned
Facilities or REO shall be transferred at the respective Net Book Values
indicated therefor in CLOSING SCHEDULE 2.1(A) or CLOSING SCHEDULE 2.1(C).
(vi) OTHER SPECIFIED ASSETS. Those Assets to which an amount has
been assigned in CLOSING SCHEDULE 2.1(H) shall be transferred at the amount so
assigned.
(vii) LEASEHOLD INTERESTS; OTHER ASSETS. No amount shall be
ascribed to any of the Leased Facilities (except to the extent of leasehold
improvements included in Fixed Assets) or other Assets acquired by Buyer
pursuant to this Agreement that are not specifically referred to and provided
for in any of the preceding clauses of this SECTION 2.4(A).
(b) DETERMINATION OF LIABILITY AMOUNTS. Solely for purposes of
determining the amounts of Liabilities assumed by Buyer at the Closing, but
without representation as to the value, for tax or accounting purposes, of such
Liabilities, each of the Liabilities to be assumed by Buyer pursuant to this
Agreement shall be transferred at their respective Net Book Values, together
with accrued unpaid interest thereon, if any. No amount shall be
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ascribed to any Liability assumed by Buyer that is not recorded in accordance
with generally accepted accounting principles as a liability on the statement of
financial condition of Seller as of the Closing.
2.5 ALTERNATIVE BANK TRANSACTION. In the event the provisions of this
SECTION 2.5 become operative as provided in SECTION 2.4, the parties hereto
shall use their best efforts to complete the transactions provided for in the
other provisions of this Agreement on the following modified basis (such
transactions as so modified being referred to in this Agreement as the
"ALTERNATIVE BANK TRANSACTION"):
(i) Seller shall retain the Facility referred to as "LA Main" in the
attached SCHEDULE 2.1(A) (the "LA MAIN FACILITY") and shall also retain the
liabilities related to the Deposits identified to such Facility in Seller's
Deposit records (the approximate amount of such Deposits as of the date of this
Agreement being $23,700,000) and the Fixed Assets relating to such Facility;
(ii) The Purchase Price payable by Buyer shall be reduced by the
amount by which the Deposits specified in SECTION 8.1(E) transferred at Closing
to Buyer are less than the amount of the Deposits listed and described in
SCHEDULE 2.2(A) multiplied by .047;
(iii) The prohibition on use of the name "Union Federal Bank" and
variations thereof set forth in SECTION 2.1(F) hereof and the prohibitions of
SECTION 10.4 hereof shall be deemed modified to the extent necessary to permit
Seller to conduct business at the LA Main Facility after the Closing;
(iv) the minimum level of the Deposits specified in SECTION 8.1(E) as
a condition to the Closing shall be $800,000,000 rather than $840,000,000;
(v) Any other provision of this Agreement that may appear to prohibit
or impact completion of the Alternative Bank Transaction shall be deemed amended
in such manner as the parties hereto shall, as a condition to the Closing, in
good faith agree in order to permit such completion in accordance with
applicable law or regulatory forbearance; and
(vi) For a period of two years commencing on the Closing Date, Buyer
shall not solicit for hire or hire any employee of Seller at the LA Main
Facility without Seller's prior written consent.
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2.6 REVIEW OF CLOSING SCHEDULES. Buyer shall have the right to review and
approve all Closing Schedules and supporting documentation therefor prior to the
Closing.
2.7 LIMITATION ON LIABILITIES ASSUMED AND ASSETS PURCHASED.
NOTWITHSTANDING ANYTHING IN THIS AGREEMENT THAT MAY APPEAR TO BE TO THE
CONTRARY, (I) BUYER IS AGREEING TO ASSUME, AND UPON COMPLETION OF THE CLOSING
SHALL BE DEEMED TO HAVE ASSUMED, ONLY THOSE SPECIFIC LIABILITIES, OBLIGATIONS OR
DUTIES OF SELLER THAT ARE SPECIFIED IN THIS AGREEMENT AND SHALL NOT ASSUME OR BE
DEEMED TO HAVE ASSUMED ANY OTHER LIABILITIES, OBLIGATIONS OR DUTIES OF SELLER,
HOLDING COMPANY OR ANY OF THEIR RESPECTIVE SUBSIDIARIES OR AFFILIATES OF ANY
KIND OR NATURE WHATSOEVER, WHETHER OR NOT ACCRUED OR FIXED, ABSOLUTE OR
CONTINGENT, DETERMINED OR DETERMINABLE (INCLUDING, WITHOUT LIMITATION, ANY
PENALTIES, FINES, COMPENSATORY OR PUNITIVE DAMAGES AND ANY TAX LIABILITIES OF
ANY KIND WHATSOEVER) EXISTING AT THE TIME OF OR ARISING OUT OF OR RELATING TO
ACTS, EVENTS OR OMISSIONS TO ACT THAT OCCURRED PRIOR TO THE CLOSING; AND
(II) BUYER IS HEREBY PURCHASING ONLY THOSE ASSETS SPECIFIED HEREIN. SELLER
SHALL RETAIN ALL OF ITS OTHER LIABILITIES, OBLIGATIONS, DUTIES AND ASSETS;
PROVIDED, THAT SELLER SHALL BE FREE TO ASSIGN, TRANSFER AND SELL ANY AND ALL OF
SUCH OTHER LIABILITIES AND ASSETS TO ANY THIRD PARTIES THAT IT MAY CHOOSE.
2.8 CONTINGENT PAYMENT.
(a) As additional consideration for the transactions provided for
herein, Seller shall be entitled to receive additional, contingent consideration
(the "CONTINGENT PAYMENT") based upon the performance of certain of the multi-
family, commercial and industrial real estate loans transferred to Buyer
pursuant to this Agreement that have principal balances in excess of $500,000 on
the Closing Date (the "CONTINGENT PORTFOLIO") as specified and described, and in
respect of which a "BASE AMOUNT" is assigned, in SCHEDULE 2.8(A) hereto, with
such additions thereto and deletions therefrom as shall be agreed by Seller and
Buyer and shall be listed in a revised schedule, which schedule shall also
reflect for any new such Loan an assigned "BASE AMOUNT", (the "CLOSING SCHEDULE
2.8(A)") and shall be prepared by Seller and delivered to Buyer as soon as
practicable prior to the Closing.
(b) Within 60 days after June 30, 1998 (the "EVALUATION DATE"), Buyer
will deliver to Seller a schedule (the "RESOLVED LOAN SCHEDULE") identifying
those Loans from the Contingent Portfolio that have been disposed of or resolved
(the "RESOLVED LOANS") during the period from the Closing through the Evaluation
Date (the "CONTINGENT PERIOD"), together with the "RECOVERY AMOUNT" with respect
to each of such Loans. Resolved Loans shall include any Loan included in the
Contingent Portfolio that has been, during the Contingent Period: (i) repaid in
full, whether at maturity or otherwise, including Loans rolled-over or
refinanced with the
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proceeds of a new loan from Buyer made at market rates and terms; (ii) repaid,
with the consent of Buyer, at an amount less than the full unpaid principal
amount; (iii) sold by Buyer, whether in bulk with other Loans or loans of Buyer
or individually; (iv) with respect to which Buyer has acquired title to the
collateral property through foreclosure, trustee's sale, acceptance of deed-in-
lieu or otherwise; (v) charged-off in full by Buyer, or (vi) otherwise disposed
of and removed from the financial statements of Buyer as an asset. Recovery
Amounts shall be determined by comparing the "INVESTMENT AMOUNT", as defined
below, of each Resolved Loan to the aggregate proceeds received by the Buyer
with respect to such Resolved Loan during the Contingent Period ("RECOVERY
PROCEEDS"), and may be either positive, reflecting total Recovery Proceeds in
excess of the Investment Amount, or negative, reflecting total Recovery Proceeds
less than the Investment Amount. The Investment Amount with respect to each
Loan included in the Contingent Portfolio shall be the sum of (a) the Base
Amount for such Loan set forth in Closing Schedule 2.8(a) hereto; (b) interest
accrued at the contract rate at the Closing for such Loan from the Closing
through the date on which the Loan is finally resolved; and (c) all costs and
expenses paid to third parties in connection with loan administration as allowed
by the Loan Documents or disposition of the Loan or the related collateral
therefor, including without limitation, tax and insurance advances, fees of
trustees, receivers, counsel, appraisers, brokers or agents, or property
managers, costs related to maintenance or refurbishment of the collateral for
such Loan and costs of marketing and sale of the Loan or related collateral
therefor. Recovery Proceeds with respect to a Resolved Loan shall be the sum
of: (x) all payments of principal and interest actually received by Buyer on
such Loan during the period from the Closing through the date on which the Loan
is finally resolved; (y) with respect to Loans rolled-over or refinanced during
the Contingent Period, the principal amount of the new loan plus any cash
payment made to Buyer as a repayment of principal or unpaid interest on the Loan
and not as any points, costs, fees or charges relating to the origination of the
new loan; and (z) with respect to Loans foreclosed or satisfied by trustee's
sale or by acceptance of a deed-in-lieu of foreclosure, if the acquired
collateral property is sold during the Contingent Period, the proceeds of such
sale, and if the acquired collateral property has not been finally disposed of
during the Contingent Period, the fair value of such property at the end of the
Contingent Period as recorded in accordance with generally accepted accounting
principles in the financial statements of Buyer.
(c) The aggregate net Recovery Amount of the Resolved Loans shall be
determined by Buyer in accordance with the provisions of SECTION 2.8(B). Buyer
shall be entitled to offset against such aggregate net Recovery Amount the
amount of its damages resulting from breaches by Seller of its representations,
warranties and covenants made herein, including, without
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limitation, any amounts due to Buyer under the provisions of SECTIONS 12.6(A)
and 12.6(B) hereof, that remain unpaid at the Evaluation Date. Buyer shall pay
to Seller at the time of delivery of the Resolved Loan Schedule an amount equal
to fifty percent (50%) of any positive amount of the aggregate net Recovery
Amount of the Resolved Loans remaining after the offset described in the
preceding sentence of this SECTION 2.8(C).
(d) Notwithstanding anything in this Agreement which may be asserted
to be to the contrary, Buyer shall at all times have sole and complete
discretion in determining how to deal with and to account for any Loan included
in the Contingent Portfolio. Without limiting the generality of the foregoing,
Buyer shall at all times be free, without liability or obligation to Seller, to
determine to hold, sell, foreclose upon, modify or amend, or refuse to modify or
amend, or to accept partial payment of, or to extend or renew any such Loan on
such basis as it shall choose and without regard to the effect of any such
action on the possibility that Seller or any successor of Seller may or may not
receive any Contingent Payment provided for herein, it being the express
agreement and understanding of the parties hereto that Buyer shall at all times
be entitled to treat all Loans included in the Contingent Portfolio as its sole
property.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as otherwise disclosed to Buyer in a schedule dated as of the date
hereof and delivered concurrently with the execution of this Agreement (the
"SELLER SCHEDULE"), which Schedule lists exceptions to the following
representations and warranties,
Seller represents and warrants to Buyer as set forth in this ARTICLE III.
3.1 ORGANIZATION AND RELATED MATTERS.
Seller is a federally chartered stock savings bank, validly existing
and in good standing under the laws of the United States of America, has the
requisite power and authority to accept and maintain the Deposits, to own, lease
and operate the Assets and to carry on the business currently conducted by it.
Holding Company owns, of record and beneficially, all of the outstanding stock
of Seller. Seller has the requisite corporate power and authority to execute,
deliver and perform this Agreement.
3.2 AUTHORIZATION. This Agreement has been duly and validly authorized,
executed and delivered by Seller and is a valid and binding agreement of Seller,
enforceable against Seller in
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accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the
rights of creditors of federal savings banks generally or general equitable
principles. As the sole stockholder of Seller, Holding Company has approved
this Agreement and the transactions contemplated thereby, and no actions are
required by law, or by the certificate of incorporation or by-laws of Holding
Company, to be taken by the stockholders of Holding Company to authorize either
the execution, delivery and performance of this Agreement or the transactions
contemplated thereby.
3.3 NO BREACHES OF STATUTE OR CONTRACT. Neither the execution, delivery
and performance of this Agreement by Seller, nor the consummation by it of the
transactions contemplated hereby, nor compliance by it with any of the
provisions hereof will (a) conflict with its charter or by-laws; (b) violate any
applicable law, order or regulation; or (c) conflict with or result in a breach
of any judgment, order, decree or ruling to which Seller is a party, or by which
it or any of its property or assets is bound, or any injunction of any court or
governmental authority to which it or any of its property or assets is subject,
or any material agreement to which it is a party or by which any of its property
or assets is affected.
3.4 NO CONSENT. Except for the Regulatory Approval, no consents,
approvals, orders, resolutions, by or from any governmental or regulatory
agency, authority, corporation, board, commission, department or other
governmental instrumentality (a "GOVERNMENTAL AUTHORITY") or any other party,
are required in order for Seller to enter into this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
3.5 COMPLIANCE WITH LAWS.
a. Except for the reports and directive referred to in (b) below,
Seller has conducted its business in compliance with all laws, regulations,
ordinances, permits, reporting and licensing requirements and orders applicable
to its business or properties or any of its employees, the breach or violation
of which could, individually or in the aggregate, have a material adverse effect
on the Facilities, or on the Deposits or on the Assets and business of Seller to
be transferred to Buyer hereunder. Seller has all licenses, permits, orders and
other authorizations of all federal, state and local governments and
governmental authorities necessary for the lawful conduct of its business at
each of the Facilities as now conducted, except for any of the foregoing as to
which the failure to have such item would not have a material adverse effect on
the Facilities, or on the Deposits or on the Assets and business of Seller to be
transferred to Buyer hereunder, and all such licenses, permits, orders and other
authorizations, are valid and in good standing. The Facilities, their operation
and existence,
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the Deposits and the administration thereof are and at all times have been in
compliance in all material respects with all applicable laws, orders and
regulations relating to a federal savings bank (including IRS information
reporting, backup withholding and customer certification regulations) and the
Deposits are insured by the FDIC through the Savings Association Insurance Fund
up to the current applicable maximum limits.
b. Except as set forth in the OTS Reports, Seller has not received
any notification from any Governmental Authority asserting that it or any of its
subsidiaries is not in compliance with any of the statutes, regulations or
ordinances that such Governmental Authority enforces. Except for the OTS
Capital Directive dated November 28, 1994 and Board resolutions adopted in
connection therewith, true and complete copies of which have been made available
to Buyer, Seller is not a party to or the subject of any supervisory agreement,
memorandum of understanding, cease-and-desist order, consent decree, assistance
agreement or any similar agreement or arrangement with any Governmental
Authority with respect to its assets, capital, operations or business (nor has
Seller adopted any board resolutions or made any written commitments with
respect to any of the foregoing at the request of any Governmental Authority),
and Seller has not been advised by any Governmental Authority that such
Governmental Authority contemplates issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such supervisory agreement,
memorandum of understanding, cease-and-desist order, consent decree, assistance
agreement or similar agreement or arrangement or any such board resolutions or
written commitments. Except for routine examinations by Governmental
Authorities charged with the supervision or regulation of savings and loan
holding companies and savings associations, no investigation by any Governmental
Authority is pending or threatened against Seller or any subsidiary or probable
of assertion after the date hereof.
3.6 PROPERTIES.
(a) Seller has, and will sell, transfer, convey and assign to Buyer,
good and, as to Assets consisting of real property interests, marketable and
insurable title to the Assets, free and clear of all liens, claims, charges,
security interests or other encumbrances, other than liens, claims, charges,
security interests and encumbrances approved in writing by Buyer and liens for
real estate taxes and special assessments not yet due and payable. The Fixed
Assets are in adequate working condition for the conduct of the business of the
Facilities as currently conducted by Seller.
(b) All Fixed Assets held by Seller under lease and all of the Leased
Facilities are held under valid instruments, enforceable in accordance with
their terms, except as may be limited by bankruptcy, insolvency, moratorium,
reorganization or
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similar laws affecting the rights of creditors generally or general equitable
principles or to the extent that the nonenforceability thereof would not
constitute a material adverse effect on the Facilities or on the business of
Seller to be transferred to Buyer hereunder. As of the date hereof, there is no
material default (or event or circumstance which, with the giving of notice or
lapse of time or both, would constitute such a default) by the lessee or the
lessor under any such lease.
(c) Seller is insured with reputable insurers, in such amounts as
have been disclosed to Buyer and against all risks normally insured against by
savings banks in similar lines of business, and all insurance policies and bonds
maintained by Seller as of the date hereof are listed in SCHEDULE 3.6 hereto and
are in full force and effect. As of the date hereof, Seller has not received
any notice of cancellation or material amendment of any insurance policy or
bond, and is not in default under any such policy or bond, no coverage
thereunder is being disputed, and all claims thereunder have been filed in
timely fashion.
3.7 FINANCIAL STATEMENTS AND REPORTS.
(a) Seller has furnished to Buyer, or will so furnish promptly upon
filing thereof, true and complete copies of the following Holding Company
documents: (i) its annual report on Form 10-K for the fiscal year ended June
30, 1994, as filed with the SEC; (ii) its quarterly reports on Form 10-Q for its
fiscal quarters ended September 30, December 31, and March 31, 1995,
respectively, as filed with the SEC; and (iii) all other reports and other
filings made by Holding Company or any subsidiary with the SEC under the
Exchange Act after June 30, 1994 and prior to the Closing Date (such reports,
together with any amendments or supplements thereto, collectively, the "SEC
FILINGS").
(b) The audited consolidated financial statements and any unaudited
interim consolidated financial statements of Holding Company included in the SEC
Filings to the extent they relate to or reflect the results of operations, cash
flows or assets or liabilities of Seller, complied, and in the case of SEC
Filings made after the date hereof will comply, in all material respects with
the applicable rules and regulations of the SEC, were or will be, as the case
may be, prepared in accordance with generally accepted accounting principles
applied on a consistent basis (except as may be indicated therein or in the
notes thereto or, with respect to interim financial statements, as permitted by
Form 10-Q) and fairly present or will fairly present, as the case may be, the
financial information purported to be presented thereby.
(c) No offering circular, proxy statement, schedule or report
(including, without limitation, the SEC Filings) filed by Holding Company or any
subsidiary since June 30, 1993, with the
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SEC, the OTS or the FDIC under the Exchange Act or other applicable federal,
state or territorial laws or regulations, as of the date thereof, contained or,
in the case of filings made after the date hereof, will contain any untrue
statement of a material fact or omitted, or in the case of filings made after
the date hereof will omit, to state a material fact required to be stated
therein, or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading,
except in each of the foregoing cases (other than the SEC Filings) for any such
statements or omissions as may have been revised or supplemented by subsequent
filings. Since June 30, 1994, each of Seller and Holding Company has filed and
will file in a timely manner all required filings with the SEC, the OTS, the
FDIC and all other appropriate Governmental Authorities, and all such filings
complied and will comply in all material respects with the regulatory
requirements applicable thereto.
3.8 NO BROKER'S OR FINDER'S FEES. No person or firm acting on behalf of
Holding Company or Seller or any of their affiliates is or will be entitled to
receive from Buyer any broker's or finder's fee or similar fee directly or
indirectly in connection with this Agreement or the transactions contemplated
hereby.
3.9 RECORDS AND DOCUMENTS. The Records are and shall be sufficient to
permit the conduct of a federal savings bank business in compliance in all
material respects with all applicable laws, regulations and contractual or other
obligations to customers. Without limiting the foregoing, the Records
accurately reflect in all material respects all material agreements and
understandings with all depositors regarding the Deposits.
3.10 HAZARDOUS MATERIALS.
(a) To Seller's Best Knowledge, (i) no Hazardous Materials (as
defined below) have been deposited or disposed of in, on or under, or handled or
processed on, or released, emitted or discharged from any of the Owned
Facilities or REO and any leased real property on which the Leased Facilities
are located, during the time when Seller owned or leased the property; and (ii)
as of the date of this Agreement no prior owners, occupants or operators of any
such properties ever deposited, disposed of, or allowed to be deposited or
disposed of in, on, or under or handled or processed on, or released, emitted or
discharged from, such properties, any Hazardous Material, or that any prior or
present owners, occupants or operators of any such properties in which Seller
holds a security interest, mortgage or other lien or interest, deposited or
disposed of in, on or under or handled or processed on, or released, emitted or
discharged from, such properties, any Hazardous Material; other than, for
purposes of both clauses (i) and (ii) above, such quantities and for such uses
as are typical for operating and maintaining such properties which
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shall not be in violation of applicable laws as of the Closing Date. "HAZARDOUS
MATERIAL" shall mean any substance, chemical, waste or other material which is
listed, defined or otherwise identified as hazardous, toxic or dangerous under
any applicable law, regulation or order of any Governmental Authority, as well
as any petroleum, petroleum product or by-product, crude oil, natural gas,
natural gas liquids, liquefied natural gas, or synthetic gas useable for fuel,
and "source," "special nuclear," and "by-product" material as defined in the
Atomic Energy Act of 1985, 42 U.S.C. Section 3011 et seq.
(b) To the Best Knowledge of Seller, as of the date of this
Agreement, none of its Mortgagors is in violation (either directly, including as
a successor-in-interest in connection with the realization of properties serving
as collateral, or indirectly, as a collateral interest holder) of any judgment,
decree, order, law, license, rule or regulation relating to environmental laws,
except to the extent that such violations, individually or in the aggregate,
could not be reasonably expected to have a material adverse effect on the on the
value of the related Loan, nor has Seller or, to the Best Knowledge of Seller,
any of its Mortgagors, received notice from any Governmental Authority of any
such violation or of any remedial investigation or action which could reasonably
be expected to have a material adverse effect on the value of the related Loan.
3.11 DAMAGE TO MORTGAGED PROPERTIES. To Seller's Best Knowledge, none of
the properties securing any of the Loans has suffered material damage or
casualty loss not covered by an insurance policy written by a reputable insurer
whose claims-paying capacity has not been impaired.
3.12 CONTRACTS AND DEFAULTS. No event has occurred and remains uncured
which constitutes a default or results in a right of acceleration, termination
or any similar right by any party (or would, but for the passage of time or the
giving of notice, constitute a default or result in such a right of
acceleration, termination or similar right) under any contract relating to the
operation of the Facilities, any of the other Assets or any other assumed
contract except for any such defaults which would not, individually or in the
aggregate, have a material adverse effect on the Facilities, or on the Deposits
or on the Assets and business of Seller to be transferred to Buyer hereunder.
3.13 LABOR CONTRACTS AND RELATIONS. Seller is not party to, or bound by,
any collective bargaining agreement, contract, or other agreement or
understanding with a labor union or labor organization, nor, to Seller's Best
Knowledge, is Seller the subject of a proceeding asserting that it has committed
an unfair labor practice or seeking to compel it to bargain with any labor
organization as to wages and conditions of employment, nor is any
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such proceeding threatened, nor is there any strike or other labor dispute
involving Seller, pending or, to Seller's Best Knowledge, threatened, nor is
Seller aware of any activity involving its employees seeking to certify a
collective bargaining unit or engaging in any other organizational activity.
3.14 EMPLOYEE BENEFITS.
(a) All benefit plans, contracts and arrangements (regardless of
whether they are funded or unfunded) covering current employees, former
employees or retirees of Seller, including, but not limited to, "employee
benefit plans" within the meaning of Section 3(3) of the ERISA (the "PLANS"),
are listed on SCHEDULE 3.14. True and complete copies of all the Plans have
been made available to Buyer.
(b) All of the Plans, to the extent subject to ERISA, are in
material compliance with ERISA. Each Plan that is an "employee pension benefit
plan" within the meaning of Section 3(2) of ERISA ("PENSION PLAN") and which is
intended to be qualified under Section 401(a) of the Code, has received a
favorable determination letter from the IRS, and Seller is not aware of any
circumstances likely to result in revocation of any such favorable determination
letter. There is no material pending or, to Seller's Best Knowledge, threatened
litigation relating to the Plans. Seller has not engaged in a transaction with
respect to any Plan that, assuming the taxable period of such transaction
expired as of the date hereof, could subject either Seller or Buyer to a tax or
penalty imposed by either Section 4975 of the Code or Section 502(i) of ERISA in
an amount which would be material.
(c) No liability under Subtitle C or D of Title IV of ERISA has been
or is expected to be incurred by Seller with respect to any ongoing, frozen or
terminated "single-employer plan", within the meaning of Section 4001(a)(15) of
ERISA, currently or formerly maintained by it, or the single-employer plan of
any entity which is considered one employer with Seller under Section 4001 of
ERISA or Section 414 of the Code (an "ERISA AFFILIATE"). Seller has not
incurred and does not expect to incur any withdrawal liability with respect to a
multiemployer plan under Subtitle E of Title IV of ERISA (regardless of whether
based on contributions of any ERISA Affiliate). No notice of a "reportable
event", within the meaning of Section 4043 of ERISA for which the 30-day
reporting requirement has not been waived, has been required to be filed for any
Pension Plan or by any ERISA Affiliate within the twelve-month period ending on
the date hereof.
(d) All contributions required to be made by Seller under the terms
of any Plan have been timely made when due.
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(e) Seller does not have any obligations for retiree health and life
benefits under any Plan.
(f) Seller intends to make all contributions required to be made by
Seller after the Closing under the terms of any Plan.
3.15 LITIGATION AND LIABILITIES. SCHEDULE 3.15 lists all actions, suits
or proceedings of any type pending or, to Seller's Best Knowledge, threatened
against Seller or the Assets, and, to Seller's Best Knowledge, there are no
facts or circumstances that, individually or in the aggregate, could reasonably
be expected to result in claims asserted or judgments rendered in excess of
$500,000 or have a material adverse effect on the Facilities, or on the
Deposits, or on the Assets and business of Seller to be transferred to Buyer
hereunder.
3.16 EMPLOYMENT AND SIMILAR AGREEMENTS; OBLIGATIONS UPON CHANGE IN
CONTROL. Except for the severance agreements and policies listed on SCHEDULE
2.2(C), there are no agreements between Seller, on the one hand, and any officer
or employee of Seller, on the other hand, under which any of the transactions
contemplated by this Agreement will require any payment by Buyer to any
director, officer, employee, former employee or retiree of Seller or of any
other party, and neither Seller nor any of its officers, directors or
representatives have made any representation to the contrary to any employees of
Seller.
3.17 REGULATORY APPLICATIONS. None of the information provided or to be
provided by Seller for inclusion in any applications for Regulatory Approvals in
connection with the approval of this Agreement and the transactions contemplated
hereby contains or will contain any untrue statement of a material fact or omits
or will omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading.
3.18 DISCLOSURE. No written statement, certificate, schedule, list or
other written information furnished by or on behalf of either Seller or Holding
Company to Buyer prior to the date hereof contained any statement that was
incorrect or misleading in any material respect.
3.19 AMERICANS WITH DISABILITIES ACT. To the Best Knowledge of Seller,
the Facilities are in all material respects in compliance with the "readily
achievable" standards of the ADA. In the event that any of the Facilities do
not, or are determined not to, comply with the "readily achievable" standards of
the ADA after the date of this Agreement and prior to the Closing, Seller shall
cooperate with, and shall provide such information to, Buyer as is reasonably
necessary to bring the Facilities into compliance with the "readily achievable"
standards of the ADA.
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3.20 LOANS.
(a) All of the Loans are presently serviced by the third parties
listed on SCHEDULE 3.20(A) hereto, and have been and are being serviced in
accordance with applicable law and prudent mortgage loan servicing standards for
similar residential, multi-family, commercial or industrial mortgage loans or
mobile home loans, as the case may be, and each such Loan was made substantially
in accordance with Seller's standard underwriting and documentation policies as
in effect at the time of its origination.
(b) Except where any breach or inaccuracy in any of the following
representations would not in the aggregate have a material adverse effect on the
value of the Loans to be acquired by Buyer hereunder as a whole, with respect to
each Loan to be transferred to Buyer hereunder:
(i) Such Loan was solicited, originated and currently exists in
material compliance with all applicable requirements of federal, state, and
local laws and regulations promulgated thereunder (for purposes of this clause
(i), a Loan would not be in material compliance if, among other things the non-
compliance adversely affects the value or collectibility of the Loan);
(ii) The Mortgage Note evidencing such Loan and any related
security instrument (including, without limitation, any guaranty or similar
instrument) constitutes a valid, legal and binding obligation of the obligor
thereunder, enforceable in accordance with their terms, subject as to
enforcement to bankruptcy, insolvency and other laws of general applicability
relating to or affecting creditors' rights and all actions necessary to perfect
any related security interest have been duly taken;
(iii) The terms of the Loan Documents with respect to such Loan
are consistent in all material respects with the terms of the internal loan
approval for such Loan and there has been no material modification to or waiver
of such terms except as evidenced in documents executed by the parties and
included in the Loan Documents;
(iv) No claims or defenses to the enforcement of such Loan have
been asserted and to Seller's Best Knowledge there are no acts or omissions that
would give rise to any claim or right of rescission, independent legal action,
setoff, counterclaim or defense by Mortgagors, obligor or any other person
obligated to perform under any related Loan Documents;
(v) All information provided hereunder pertaining to such Loan,
including information contained in the related Loan
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Documents, is a true and correct reflection of Seller's records regarding such
Loan;
(vi) Seller is in possession of a complete file containing all of
the Loan Documents required by law, regulation and prudent lending policies,
including those of Seller;
(vii) There are no delinquent taxes, ground rents, water
charges, sewer rents, assessments or other outstanding charges attaching to the
related Mortgaged Property;
(viii) There are no mechanics' liens or claims for work, labor
or material or similar encumbrances affecting any Mortgaged Property which are
or may be liens prior to, or equal with, the lien of the related Mortgage except
those which are insured against;
(ix) The related Mortgaged Property is free of damage and waste
and there is no proceeding pending for the total or partial condemnation
thereof;
(x) The related Mortgage constitutes a valid and enforceable
lien on or security interest in the related Mortgaged Property, having the
priority indicated for it on SCHEDULE 2.1(C), which Mortgaged Property is free
and clear of all encumbrances and liens having priority superior to that of the
lien of the Mortgage, except for (a) liens for real estate taxes and special
assessments not yet due and payable, (b) covenants, conditions, restrictions,
rights of way, easements and other matters of public record as of the date of
recording of such Mortgage, which exceptions of record are of a character
acceptable to mortgage lending institutions generally, (c) any prior liens
reflected on SCHEDULE 2.1(C) and (d) other matters to which like properties are
commonly subject which do not materially interfere with the benefits of the real
property security intended to be provided by such Mortgage;
(xi) Seller has not waived, modified, altered, satisfied,
canceled or (except with respect to the prior liens, if any, reflected on
SCHEDULE 2.1(C)) subordinated any Loan in any respect, or rescinded, and the
related Mortgaged Property has not been released from the lien or other
encumbrance of, nor has the Mortgagor been released from its obligations under,
the Mortgage, in whole or in part, in a manner which materially interferes with
the benefits of the security intended to be provided by the Mortgage or the
value or marketability of the Mortgaged Property for the purposes specified in
the Mortgage, nor has any instrument been executed by the Seller that would
effect any such waiver, modification, alteration, satisfaction, cancellation,
subordination, rescission or release, with the exception of written instruments
which are part of the related Loan Document;
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(xii) None of the improvements which were included for the
purpose of determining the appraised value of the related Mortgaged Property at
the time of the origination of the Loan lies outside of the boundaries and
building restriction lines of such Mortgaged Property; no improvements on
adjoining properties materially encroach upon such Mortgaged Property; no
improvement located on or forming part of the related Mortgaged Property is in
violation of any applicable zoning and building laws and ordinances;
(xiii) No Loan is secured in whole or in part by a Mortgage upon
a leasehold estate of a Mortgagor under a ground lease of the related Mortgaged
Property and not by the related fee interest therein;
(xiv) To the Best Knowledge of the Seller, there is no
litigation, proceeding or governmental investigation pending nor any order,
injunction or decree, outstanding, existing or relating to the Loan or Mortgaged
Property, which in either case could reasonably be expected to have a material
adverse effect upon the related Loan;
(xv) If the Loan entitles Seller to a participation interest in
sale or refinance proceeds with respect to the related Mortgaged Property,
Seller will not retain any right, title or interest therein following the
Closing.
(xvi) To the extent required under applicable law, Seller and
each prior holder of a Loan, was authorized and licensed to transact and do
business in the jurisdiction in which the related Mortgaged Property is located
at all times when it held such Loan;
(xvii) Each Mortgage is insured by an ALTA lender's title
insurance policy (each, a "TITLE POLICY"), issued by an insurer generally
acceptable in the industry with respect to comparable mortgage loans at the time
of the issuance of such policy, ensuring that such Mortgage is a valid lien on
the related Mortgaged Property with the priority shown on the Loan Schedule,
subject only to the exceptions stated therein. Each such Title Policy is in
full force and effect. Unless disclosed in the applicable Loan Documents, no
claims have been made under any such Title Policies, the Seller and all prior
mortgagees have not done, by act or omission, anything which would impair the
coverage of any such Title Policies, and, to the Best Knowledge of Seller, there
are no facts or circumstances which would result in the impairment, diminution
or negation of such coverage;
(xviii) The Mortgaged Properties securing Loans that are single
family residential mortgage loans are insured in amounts and by insurers that
meet the requirements of the Federal
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Home Loan Mortgage Corporation or the Federal National Mortgage Association for
resale in secondary market transactions. Each other Mortgaged Property
(including all improvements thereon) is insured by a hazard insurance policy as
required by the applicable Mortgage, issued by an insurer generally acceptable
to the industry with respect to comparable properties at the time of the
issuance of such policy, in an amount not less than the lesser of (A) the
outstanding principal balance as of the date hereof of the applicable Loan or
(B) the replacement value of the improvements on such Mortgaged Property. All
individual insurance policies contain a standard mortgagee clause naming the
Seller and its successors and assigns as mortgagee, all premiums on such
insurance policy have been paid, and all such insurance policies require prior
notice to the mortgagee of termination or cancellation (and no such notice has
been received by the Seller). Each Mortgage obligates the related Mortgagor to
maintain all such insurance at the Mortgagor's cost and expense and, upon
Mortgagor's failure to do so, authorizes the mortgagee to maintain such
insurance at the Mortgagor's cost and expense and to seek reimbursements
therefor from such Mortgagor. The Seller has not engaged in, and has no current
actual knowledge, without the duty of inquiry or investigation, of the
Mortgagor's having engaged in, any act or omission which would impair the
coverage of any such policy, the benefits of the indorsement provided therein,
or the validity and binding effect of either. If upon origination of the Loan
the Mortgaged Property was in an area identified in the Federal Register by the
Federal Emergency Management Agency as having special flood hazards (and such
flood insurance has been made available), and if required by applicable law, a
flood insurance policy meeting the requirements of the current guidelines of the
Federal Insurance Administration is in effect. The hazard insurance policy is
in full force and effect and will be in full force and effect and inure to the
benefit of the Buyer upon the consummation of the transactions contemplated
hereby;
(xix) No Mortgage provides that the related Mortgaged Property
secures any other promissory note or obligation, and no Mortgage Note is secured
by any collateral not a part of the Loan Documents;
(xx) Each Loan contains valid and enforceable provisions for the
acceleration of the indebtedness if, without the prior written consent of the
mortgagee, the Mortgaged Property, or any interest therein, is directly or
indirectly transferred, sold or master leased;
(xxi) To Seller's Best Knowledge, (i) no Hazardous Materials
have been disposed of, or identified on, at or under, any Mortgaged Property,
other than such quantities and for such uses as are typical for operating and
maintaining like properties which shall not be in violation of applicable laws
as of the Closing
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Date; (ii) such Mortgaged Property has not been used for the storage, treatment
or disposal of Hazardous Materials, other than such quantities and for such uses
as are typical for operating and maintaining like properties which shall not be
in violation of applicable laws as of the Closing Date; and (iii) Hazardous
Materials are not present in, on or below such Mortgaged Property in such a
manner or concentration as to violate any law or regulation; and such Mortgaged
Property, by itself or as a part of any other property, has never been
identified by any governmental agency as the site of a "release", within the
meaning of the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, or the Resource Conservation and Recovery Act, as
amended, and any other environmental law, of a Hazardous Material; and
(xxii) With respect to each Loan, the indebtedness secured by
any senior lien thereto is current and there is no default thereunder or event
which with the giving of notice or the passage of time, or both, would
constitute a default thereunder;
3.21 IRAS AND KEOGH PLANS. Each type of IRA and each type of Keogh plan
offered by Seller (the "PROTOTYPE PLANS") is listed in SCHEDULE 3.21. Seller
has delivered to Buyer correct and complete copies of each Prototype Plan, a
copy of the last IRS approval letter with respect to the form of Prototype
Plans, and copies of all forms of IRA and Keogh agreements including any
currently effective amendments.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 ORGANIZATION AND RELATED MATTERS. Buyer is a federal savings bank
validly existing and in good standing under the laws of the United States of
America, with the requisite corporate power and authority to execute, deliver
and perform this Agreement.
4.2 AUTHORIZATION. This Agreement has been duly and validly authorized,
executed and delivered by Buyer and is a valid and binding agreement of Buyer,
enforceable against Buyer in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, and similar laws relating to creditors' rights
generally and the rights of creditors of federal savings banks and to general
equitable principles.
4.3 NO BREACHES OF STATUTE OR CONTRACT; REQUIRED CONSENTS. Neither the
execution, delivery and performance of this Agreement by Buyer, nor the
consummation by Buyer of the transactions
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contemplated hereby, nor compliance with any of the provisions hereof, will
(a) conflict with the charter or bylaws of Buyer; (b) violate any applicable
laws, orders or regulations; (c) conflict with or result in a breach of any
judgment, order, decree or ruling to which Buyer is a party, or by which it or
any of its property is bound, or any injunction of any court or governmental
authority to which it or any of its property is subject, or any material
agreement to which it is a party or by which any of its property is affected; or
(d) require the approval or consent of any third party other than as
contemplated by this Agreement.
4.4 GOVERNMENTAL APPROVALS. Except for the Regulatory Approval, no
consents, approvals, orders, resolutions or forbearances, by or from any
Governmental Authority are required in order for Buyer to enter into this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby.
4.5 NO BROKER'S OR FINDER'S FEES. No person or firm acting on behalf of
Buyer or any of its affiliates is or will be entitled to receive from Seller any
broker's or finder's fee or similar fee directly or indirectly in connection
with this Agreement or the transactions contemplated hereby.
ARTICLE V.
PRE-CLOSING COVENANTS OF SELLER
Except as the parties may otherwise agree in writing:
5.1 OPERATIONS IN ORDINARY COURSE. Seller shall operate the Facilities
and each of its deposit-gathering and other business activities, from the date
hereof through the Closing, in the ordinary course, consistent with Seller's
past practice, EXCEPT that Seller may complete any of its contemplated sales of
certain classified and nonperforming assets that do not prevent, hinder or delay
any of the transactions provided for herein (such classified and nonperforming
asset sales not affecting the transactions provided for herein being referred to
herein as the "CLASSIFIED ASSETS SALES") and Seller shall be permitted to raise
its deposit levels at the LA Main Facility to $35 million.
5.2 PRESERVATION OF BUSINESS. Seller shall use its best efforts to
preserve intact the business organization of its deposit-gathering activities
and to preserve the present relationships of Seller with all of its deposit and
other customers and with all entities having significant business dealings with
Seller. Without limiting the generality of the foregoing, from the date hereof
through the Closing, Seller shall not amend or modify
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any of its promotional or deposit account practices without Buyer's prior
written consent and Seller shall offer rates on the Deposits that are consistent
with general market rates for similar deposits and with the intent of retaining
its deposit base at approximately the current level; PROVIDED, HOWEVER, that,
subject to the provisions of the following sentence, Seller shall be permitted
to increase its rates above general market rates at the LA Main Facility (but
not at any other of the Facilities) if necessary or desirable to permit the
increase in deposit levels to $35 million. In addition, Seller shall not issue
any brokered deposits, including, without limitation, any deposits solicited by
officers or employees of Seller that would meet the definition of a "brokered
deposit" set forth in the regulations of the FDIC at 12 C.F.R. Section 337.6;
PROVIDED, HOWEVER, that Seller, acting only through third party deposit brokers,
may issue up to a maximum of $15,000,000 of such brokered deposits which
deposits, in the event the Alternative Bank Transaction is consummated, shall be
retained by Seller.
5.3 EMPLOYEES. Seller shall use its best efforts to keep available the
services of the present employees of Seller who continue to perform in a manner
that Seller reasonably deems satisfactory and that are necessary to preserve
substantially intact the business organization of Seller. Seller shall not
change or agree to change the salary, remuneration or compensation of any of its
employees (or make any increase in the number of such persons), or pay or agree
to pay any uncommitted bonus to any such employees. Seller shall amend to the
extent necessary all severance payment policies in respect of employees of
Seller, as listed and described in SCHEDULE 2.2(C) (but not including the
individual severance or employment contracts listed therein), to provide that no
benefits shall be payable thereunder to any employees who are offered comparable
employment with Buyer.
5.4 FACILITY LEASES. Any defaults under any lease relating to any of the
Leased Facilities under which Seller is the lessee shall be cured prior to the
Closing and Seller shall provide Buyer with written evidence of such cure
acceptable to Buyer. Seller shall use its best efforts to obtain any consents,
estoppel certificates or other documents with respect to any such lease that
Buyer shall deem reasonably necessary or desirable in connection with this
Agreement or the transactions contemplated hereby.
5.5 NEGATIVE COVENANTS OF SELLER. From the date hereof until the Closing
Date, except with the prior consent of Buyer, Seller shall not:
(a) DIVIDENDS. Declare or pay any dividend (whether in cash, stock
or other property) or make any other distribution in respect of its capital
stock.
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(b) ISSUANCE OF SECURITIES. Issue, reissue, sell or acquire (or
agree to issue, reissue, sell or acquire), shares of its capital stock, other
equity securities or Voting Debt or rights, options or warrants to acquire any
such shares of stock or other equity securities or Voting Debt.
(c) CONTRACTS; ASSET SALES. Enter into, amend or terminate any
contract, arrangement, or commitment to be assumed by Buyer at the Closing,
except as required by the terms of this Agreement; or sell or transfer to any
third party any of the Assets to be acquired by Buyer hereunder, or enter into
any contract or agreement to do so.
(d) EMPLOYEE MATTERS. (i) Enter into, adopt or amend any pension,
retirement, profit sharing, bonus, welfare benefit or other employee benefit
plan or any agreement, arrangement, plan or policy between Seller and one or
more of its officers or employees; (ii) increase in any manner the compensation
or fringe benefits of any officer or employee of Seller or pay any benefit not
required by any plan or arrangement in effect on the date of this Agreement, or
enter into any contract, commitment or arrangement to do any of the foregoing,
or (iii) enter into or renew any contract, agreement, commitment or arrangement
providing for the payment to any officer or employee of Seller or any of its
subsidiaries of compensation or benefits contingent, or the terms of which are
altered, upon the occurrence of any of the transactions contemplated by this
Agreement.
(e) MODIFICATION, WAIVER OR FORECLOSURE OF LOANS. Waive, modify,
alter, cancel, accept a discounted payoff of, or (except with respect to the
prior liens, if any, reflected on SCHEDULE 2.1(C)) subordinate any Loan in any
respect, or foreclose or otherwise proceed against the collateral for, accept a
deed in lieu of foreclosure of, or compromise or settle any claims with respect
to, any Loan, or rescind, and the related Mortgaged Property shall not be
released from, the lien or other encumbrance of, nor shall the Mortgagor be
released from its obligations under, the related Mortgage, in whole or in part,
in a manner which would materially interfere with the benefits of the security
intended to be provided by the related Mortgage or the value or marketability of
the related Mortgaged Property for the purposes specified in the related
Mortgage, nor shall any instrument be executed by Seller that would effect any
such waiver, modification, alteration, cancellation, discounted payoff,
subordination, foreclosure, deed in lieu of foreclosure, compromise or
settlement, rescission or release, except as required by law or by the related
Loan Documents, true and correct copies of which have been made available to
Buyer prior to the date hereof.
(f) INDEBTEDNESS. Incur any indebtedness for borrowed money (other
than indebtedness incurred in respect of advances from
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the FHLB-San Francisco having maturities not extending beyond the Closing Date),
or assume, guarantee, endorse or otherwise become responsible for, the
obligations of any other individual or entity, other than endorsements and
guarantees in the ordinary course of Seller's banking business consistent with
past practice.
(g) INVESTMENTS. Make any investment in the capital stock or
securities (excluding notes issued by Mortgagors in respect of loans made by
Seller in the ordinary course of business) of any other person, except for (i)
capital stock of the FHLB-San Francisco to the extent required by law; (ii)
interest-bearing accounts or certificates of deposits in the FHLB-San Francisco
with maturities of thirty (30) days or less; (iii) direct obligations of the
United States of America or for which the full faith and credit of the United
States of America is pledged to provide for the payment of principal and
interest and, in all such cases, having maturities of thirty (30) days or less;
(iv) repurchase agreements, having maturities of thirty (30) days or less, of
primary dealers secured by U.S. government agency mortgage-backed securities;
and (v) overnight or term federal funds (with maturities of thirty (30) days or
less) with money-center banks.
(h) BUSINESS PRACTICES. (i) Enter into any new line of business;
(ii) change its lending, investment, liability management and other material
management policies; or (iii) incur or commit to incur any capital expenditures.
ARTICLE VI.
TRANSFER OF DEPOSIT ACCOUNTS
6.1 NOTICE TO CUSTOMERS. Seller shall provide Buyer with a customer list
relating to the Deposits within five (5) days after the date hereof for the
purposes of the mailings required to be made by Buyer referred to below (the
"INITIAL LIST"). On the Closing Date, Seller shall provide a customer list
relating to the Deposits as of the close of business on the last business day
before the Closing Date. As soon as practicable after the date hereof, Seller
shall notify all holders of the Deposits that, subject to regulatory approval
and satisfaction or waiver of the other conditions to the Closing hereunder,
Buyer will be assuming Seller's liability for the Deposits. The notification
shall be based on the Initial List and a log maintained by Seller of new
Deposits opened since the date of such list. Seller shall provide Buyer with a
copy of such log up to the date of Seller's mailing. Buyer shall send
notifications to the same holders as soon after Seller's mailing as practicable,
setting out the details of its administration of the Deposits to be assumed.
Each party shall obtain the written approval of the other of its notification
letter(s) prior to mailing, which approvals shall not be
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unreasonably withheld or delayed. Holders of Deposit accounts opened following
the notifications provided for above and prior to the Closing shall be given a
copy of both Buyer's and Seller's notification letters by Seller at the time
such accounts are opened. Each party shall be responsible for its own costs and
expenses incurred in connection with the design, printing and distribution of
the materials included in their respective notifications pursuant to this
SECTION 6.1. Notwithstanding the foregoing provisions of this SECTION 6.1, no
notice shall be sent to holders of the Deposits related to the LA Main Facility
until such time as the parties determine whether the Alternative Bank
Transaction shall be effected at the Closing.
6.2 INTEREST REPORTING. Seller shall report for all periods through the
Closing Date, and Buyer shall report for periods from and after the Closing
Date, all interest credited to, interest premiums paid on, interest withheld
from and early withdrawal penalties charged with respect to the Deposits, all
such reports to be made to the holders of the Deposits, and to governmental
agencies as required by applicable tax and other law.
6.3 RETIREMENT ACCOUNTS. The parties acknowledge that Seller holds
certain of the Deposits for participants in individual retirement accounts and
basic retirement accounts ("RETIREMENT ACCOUNTS") and that Buyer desires to act
as trustee thereof from and after the Closing Date, to the extent permitted
under the applicable trust agreements. The parties shall confer and determine
as soon as practicable prior to the Closing Date which, if any, of the
Retirement Accounts cannot be transferred to Buyer under this Agreement. Seller
shall make appropriate arrangements to transfer to another depositary
institution or terminate any Retirement Accounts which cannot be transferred to
Buyer. Prior to the Closing Date, Seller shall take such action as Buyer shall
require to ensure that the computer records of Seller with respect to the
Retirement Accounts appropriately indicate the Retirement Accounts to be
transferred to Buyer. Seller shall be responsible for all government reporting,
including, without limitation, federal and state pension withholding reporting
(and complying with any applicable withholding requirements) relating to
Retirement Accounts transferred to Buyer for all periods through the Closing
Date. Buyer shall be responsible for all such government reporting commencing
on the day after the Closing Date for the Retirement Accounts transferred to
Buyer. As of and after the Closing, Buyer shall succeed to the fiduciary
relationships of Seller arising out of the Retirement Accounts transferred to
Buyer.
6.4 OPERATIONAL COOPERATION. Seller and Buyer shall cooperate, provide
such information as is reasonably necessary, and take such steps as are
reasonably required, to reconcile transactions related to the Deposits that are
not settled as of the Closing, effectuate the assumption by Buyer of the
liabilities and
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obligations of Seller relating to the Deposits, and otherwise effect the
transfer of the Deposits from Seller to Buyer. After the date hereof, Seller
and Buyer shall each in good faith negotiate an agreement specifying the
procedures to be followed in connection with the transfer of deposit accounts by
Seller to Buyer not inconsistent with this ARTICLE VI.
ARTICLE VII.
ADDITIONAL AGREEMENTS; TAXES
7.1 BEST EFFORTS. Each of Seller and Buyer agrees to use its best efforts
to take, or to cause to be taken, all reasonable actions and to do, or to cause
to be done, all reasonable things necessary, proper or advisable to consummate
the transactions contemplated by this Agreement or to satisfy the conditions to
consummation set forth herein, including without limitation, all such actions or
things as may be required under applicable laws and regulations, and to furnish
to the other such further information and documents as are reasonably requested
in connection with this Agreement and the transactions contemplated hereby.
7.2 REQUIRED APPROVALS. As soon as practicable after the date of this
Agreement, (a) Buyer shall, at its own expense, submit an appropriate
application to the OTS with respect to the transactions contemplated by this
Agreement, and (b) Buyer and Seller shall each, at its own expense, prepare and
submit for filing any and all other applications, proxy or information
statements, filings and registrations with and notifications to, all federal and
state authorities required of them pursuant to applicable law and regulation
with respect to the transactions contemplated by this Agreement. Thereafter,
Buyer and Seller shall each pursue all such applications, proxy or information
statements, filings, registrations and notifications diligently and in good
faith, and shall file such supplements, amendments and additional information in
connection therewith as shall be reasonably necessary. Buyer and Seller shall
each deliver promptly to the other a copy of each material notice, order,
opinion and other item of correspondence received by it or them, as the case may
be, from such federal and state authorities (except for any portions thereof
deemed confidential by the party or parties making such applications, filings,
registrations or notifications) and shall advise the other at such party's or
parties' request of developments and progress with respect to such matters.
7.3 ASSISTANCE IN OBTAINING REGULATORY APPROVALS. Each of Buyer and
Seller agrees to use all reasonable efforts to assist the other in obtaining all
regulatory approvals necessary to complete the transactions contemplated hereby
(the "REGULATORY APPROVALS"), and each of Buyer and Seller shall provide the
other or the
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appropriate regulatory authorities, with all information reasonably required to
be submitted by the party or parties making such applications, filings,
registrations or notifications in connection with such approvals.
7.4 EMPLOYEES. (a) This Agreement is intended to result solely in the
transfer of the Assets and the Liabilities specified herein to Buyer in
accordance with the terms and conditions of this Agreement. No transfer of
employment of any employee, representative or agent of Seller associated with
the Facilities or otherwise is intended by the parties. Except as set forth in
SECTION 2.2(C) hereof, Seller shall remain solely responsible for its employees,
former employees, retirees, representatives and agents during their employment
with Seller and with respect to all matters arising during or from their
employment with Seller, including, without limitation, benefits, continuation of
benefits (COBRA and retiree medical) the payment of any accrued vacation pay,
sick pay, severance payments or other payments to which such employees may be
entitled.
(b) Without limiting the provisions of SECTION 7.4(A), Buyer will endeavor
in good faith to identify employment opportunities within its branch office
system for all employees of Seller employed in the branch offices of Seller.
Such efforts shall include posting of employment opportunities with Buyer in the
branch offices of Seller and interviewing any such employee of Seller who seeks
to be considered for such a position with Buyer and Seller shall cooperate with
Buyer in facilitating such interviews; PROVIDED, HOWEVER, that Buyer shall not
seek to induce any Seller employee to commence employment with Buyer prior to
the Closing Date without Seller's consent. Buyer shall also post employment
opportunities available in other operations of Buyer and shall interview
qualified employees of Seller who seek to be considered for such a position with
Buyer. Except for the provisions relating to severance payments set forth in
SECTION 2.2(C) hereof, Seller shall be responsible for the provision of benefits
and continuation of benefits and for the payment of any and all accrued vacation
pay, sick pay and any other amounts due such employees, former employees,
retirees, representatives and agents, if any, in respect of or arising out of
their employment by Seller, it being the intention and agreement of Seller and
Buyer that Buyer shall have no responsibility therefor. It is agreed that any
employee accepting employment with Buyer will not receive a guarantee of any
minimum period of employment, and that, except as provided below, his or her
employment tenure at Seller will not carry over to Buyer. Seller agrees to make
no representations to its employees regarding employment by Buyer. It is the
intention of Buyer to train all employees of Seller employed at the Facilities
and all other employees of Seller whom Buyer expects to employ in Buyer's branch
office procedures prior to the
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Closing Date. Seller shall cooperate in good faith with Buyer in facilitating
such training.
(c) Employees hired by Buyer in connection with the transactions
contemplated by this Agreement will receive credit for their prior service with
Seller for purposes of eligibility and vesting only, and not for purposes of
determining the amount of benefits payable, under Buyer's existing employee
benefit plans and programs.
7.5 INVESTIGATIONS; CONFIDENTIALITY. Seller shall provide Buyer and its
representatives and agents access, at all times and upon notice, to the
Facilities and all books and records of Seller, including without limitation,
such information with respect to the employees of Seller as Buyer may reasonably
request for the purpose of enabling Buyer to determine whether to offer
employment to such persons. Buyer shall maintain the confidentiality of all
information obtained from Seller ("CONFIDENTIAL INFORMATION"), exercising the
same degree of care as it uses to preserve and safeguard its own confidential
information, except to the extent that such Confidential Information: (a) was
in the public domain at the time it was disclosed to Buyer; (b) enters the
public domain after receipt by Buyer through any source other than Buyer or its
representatives or agents; (c) is required to be disclosed by the order of a
governmental agency or legislative body or a court of competent jurisdiction;
PROVIDED, HOWEVER, that if Buyer intends to make any disclosure of Confidential
Information pursuant to such an order, Buyer shall give notice to Seller upon
receipt of such order and prior to any disclosure; or (d) is required to be
disclosed in connection with any application for regulatory approval of the
transactions contemplated herein pursuant to SECTION 7.2. Buyer agrees that it
will use the Confidential Information only for purposes related to this
Agreement and the transactions contemplated hereby and will circulate
Confidential Information internally only to those of its employees and agents
who have a need to know such Confidential Information for such purposes.
7.6 NOTIFICATION. Each party to this Agreement shall notify the other
party promptly after becoming aware of the occurrence of, or the impending or
threatened occurrence of, any event that would constitute a breach on its part
of any obligation under this Agreement or the occurrence of any event that would
cause any representation or warranty made by it herein to be false or
misleading, or if it becomes a party or is threatened with becoming a party to
any legal or equitable proceeding or governmental investigation or upon the
occurrence of any event that would result in a change in the circumstances of
either party described in the representations and warranties contained herein.
7.7 WARN ACT. Seller is responsible for any costs and for providing any
notifications required under the Worker's Adjustment
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and Retraining Notification Act, 29 U.S.C. Section 2101 ET SEQ., as amended, and
the regulations issued pursuant thereto (the "WARN ACT"), and any similar state
laws or regulations.
7.8 SALES AND TRANSFER TAXES. All Taxes, including excise, sales, use and
transfer taxes that are payable or that arise as a result of the consummation of
the purchase and sale contemplated by this Agreement, not including any tax
relating to income of Buyer, shall be paid by Seller and Seller shall indemnify
and hold Buyer harmless from and against any such Taxes.
7.9 INFORMATION RETURNS. At Closing, Seller shall provide Buyer with a
list of all Deposits for which Seller has not received a properly completed Form
W-8 or W-9 or on which Seller is back-up withholding as of the applicable
Closing Date, and such list shall include the date that each such Deposit was
opened. Seller shall, prior to the Closing, remit to the appropriate
governmental agency all amounts required to be withheld under applicable law
with respect to any Deposit at any time prior to the Closing and Buyer shall
have no responsibility therefor. Seller shall indemnify Buyer for any penalties
and interest imposed upon Buyer if such penalties and interest arise out of
actions taken or omitted to be taken by Buyer in reliance upon information
provided under this SECTION 7.9 and such penalty and interest does not result
from an act or omission of Buyer not made in reliance upon such information.
7.10 SALES TAX CLEARANCE. Seller shall cooperate, provide such information
as is reasonably necessary, and take such steps as are reasonably required, to
enable Buyer promptly to obtain a certificate of payment (the "SALES TAX
CERTIFICATE") of the California State Board of Equalization issued pursuant to
Sections 6811 ET SEQ. of the California Revenue and Taxation Code (the
"CALIFORNIA CODE"), stating what amounts, if any, are unpaid and owed by Seller
pursuant to Division 2, Parts 1, 1.5 and 1.6 of the California Code with respect
to any sale or other transfer occurring on or before the Closing Date; and
Seller shall pay such amounts, if any, stated in such Sales Tax Certificate.
ARTICLE VIII.
CONDITIONS TO CLOSING
8.1 CONDITIONS TO BUYER'S OBLIGATIONS. Buyer's obligations to consummate
the transactions contemplated hereby are subject to the satisfaction on or
before the Closing Date of the following conditions, unless Buyer waives such
satisfaction:
(a) PERFORMANCE BY SELLER; THIRD PARTY CONSENTS. Seller shall have
complied in all material respects with and shall have
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performed all the terms, covenants and conditions of this Agreement required to
be performed by it on or before the Closing Date, shall have delivered all
documents required to be delivered pursuant to this Agreement and shall have
taken all other actions required of it under this Agreement; all third party
consents required for the consummation of the transactions contemplated by this
Agreement, in form and substance satisfactory to Buyer, shall have been obtained
by Seller and delivered to Buyer; and there shall have been delivered to Buyer
on the Closing Date a certificate executed by the chief executive officer of
Seller certifying compliance with all the provisions of this SECTION 8.1(A).
(b) REPRESENTATIONS. The representations and warranties of Seller
herein shall be true and correct in all respects material as of the Closing to
the Facilities, to the Deposits, and to the Assets and business of Seller to be
acquired by Buyer pursuant to this Agreement as though they had been made on and
as of the Closing Date.
(c) DESTRUCTION OF PROPERTY. Between the date hereof and the Closing
Date, there shall have been no material damage to or destruction of any of the
Facilities and no zoning or other order, limitation or restriction shall have
been imposed against the same that might have a materially adverse impact upon
the use of those Facilities that are currently used as banking offices for such
use.
(d) NO MATERIAL ADVERSE EFFECT. No material adverse change in the
financial condition, business, assets or liabilities of Seller, including the
Assets and the Liabilities, shall have occurred between the date hereof and the
Closing Date; PROVIDED, that the Classified Assets Sales contemplated by SECTION
5.1, and any change in Seller's capital levels resulting therefrom, shall not be
considered to be such a material adverse change.
(e) AMOUNT OF DEPOSITS. As of the close of business on the last
business day before the Closing Date, the aggregate amount of the Deposits,
together with accrued interest thereon, to be transferred to Buyer shall not be
less than eight hundred forty million dollars ($840,000,000).
(f) OPINION OF COUNSEL. Buyer shall have received an opinion or
opinions of Gibson, Dunn & Crutcher and Morris, Nichols, Arscht & Tunnel,
counsel to Seller, substantially in the form of EXHIBIT A hereto.
(g) NO RESOLUTION AMENDMENTS. Neither the Board of Directors of
Holding Company, acting as in its capacity as sole stockholder of Seller, nor
Seller, nor any committee thereof, shall have amended or modified the
resolutions approving this Agreement and the consummation of the transaction
contemplated herein and
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neither of such Boards shall have adopted any resolutions inconsistent with such
resolutions.
(h) THIRD PARTY CONSENTS. Seller shall have obtained the consent or
approval (other than pursuant to the Regulatory Approvals referred to in SECTION
8.3(B)) of each person whose consent or approval is required in order to permit
the consummation of the transactions contemplated herein, including Buyer's
succession to any right or interest of Seller or its subsidiaries under any
servicing or other contract, note, mortgage, policy of insurance or other
insurance benefits, lease, license or other agreement or instrument.
8.2 CONDITIONS TO SELLER'S OBLIGATIONS. Seller's obligations to
consummate the transactions contemplated hereby are subject to the satisfaction
on or before the Closing Date of the following conditions, unless Seller waives
such satisfaction:
(a) PERFORMANCE BY BUYER. Buyer shall have complied with and
performed in all material respects all the terms, covenants and conditions of
this Agreement required to be performed by it on or before the Closing Date,
shall have delivered all documents required to be delivered pursuant to this
Agreement and shall have taken all other actions to be taken by it under this
Agreement; and there shall have been delivered to Seller on the Closing Date a
certificate executed by the chief executive officer of Buyer certifying
compliance with all the provisions of this SECTION 8.2(A).
(b) REPRESENTATIONS. The representations and warranties of Buyer
herein shall be true and correct in all material respects as of the Closing as
though such representations and warranties had been made on and as of the
Closing Date.
(c) OPINION OF COUNSEL. Seller shall have received an opinion of
Mayer, Brown & Platt, counsel to Buyer, substantially in the form of EXHIBIT B
hereto.
8.3 CONDITIONS TO OBLIGATIONS OF ALL PARTIES. The obligations of all
parties to consummate the transactions contemplated hereby are subject to the
satisfaction on or before the Closing Date of the following conditions, unless
all parties waive such satisfaction:
(a) ABSENCE OF LITIGATION OR GOVERNMENT ACTION. There shall not be
in effect a preliminary or permanent injunction or other order by any federal or
state court or governmental entity which prohibits the consummation of the
transactions contemplated hereby; and no governmental or private action or
proceeding seeking to restrain or prohibit the transactions contemplated by this
Agreement or assert any material liability in connection herewith
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shall have been instituted or, in the reasonable opinion of Seller or Buyer, be
imminent before a court or other governmental body.
(b) REGULATORY APPROVALS. All Regulatory Approvals necessary for
consummation of the transactions contemplated by this Agreement shall have been
obtained without the imposition of any terms or conditions that are reasonably
deemed by a party affected thereby to be materially adverse; such approvals
shall be in effect and no proceedings shall have been initiated or threatened
challenging or questioning such approvals by any governmental agency with
jurisdiction therein; all applicable waiting periods with respect to such
approvals shall have expired, and all conditions and requirements prescribed by
law or otherwise imposed in connection with such Regulatory Approvals shall have
been satisfied.
ARTICLE IX.
THE CLOSING
9.1 TIME AND PLACE OF CLOSING. The consummation of the transactions
contemplated hereby (the "CLOSING") will take place at the offices of Mayer,
Brown & Platt in Los Angeles, California at the close of business on a business
day mutually acceptable to Seller and Buyer as soon as practicable after receipt
by the parties of all required governmental approvals, satisfaction of any
conditions to consummation set forth therein, and the expiration of any required
waiting periods (the "CLOSING DATE"), but in no event later than June 30, 1995,
which date may be extended to July 15, 1995 by either Buyer or Seller unless
such extension is not permitted by applicable regulatory authorities (the
"TERMINATION DATE").
9.2 PROCEDURE AT CLOSING.
(a) CASH PAYMENT. The cash included in the Assets that Seller is to
deliver to Buyer at the Closing and the Accounts Payable Amount, if any,
specified in accordance with SECTION 2.3 hereof, reduced by the sum of the
Purchase Price plus the difference in cost to Seller of obtaining ALTA owner's
policies of title insurance with respect to the Owned Facilities as opposed to
CLTA owner's policies of title insurance (as so reduced, the "CASH PAYMENT"),
shall be paid to Buyer no later than 12:00 noon Pacific Time on the Closing
Date, by wire transfer of immediately available funds to an account to be
designated by Buyer. If the payment to be made hereunder on the Closing Date
shall not be made on or before 12:00 A.M. Pacific Time on such date, Seller
shall make such payment on or before 12:00 A.M. Pacific Time, on the next
business day together with interest thereon at the current federal funds
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rate as determined daily from the Closing Date to the date of such payment.
(b) Except for the payments made pursuant to subsection (a) of this
SECTION 9.2, the sales, purchases, transfers, assumptions, leases and other acts
made or taken at the Closing will be made or taken to be effective as of the
opening of business on the Closing Date; PROVIDED, that all of the actions,
deliveries, assumptions and payments required to be taken, made, effected or
paid in connection with the Closing shall be deemed to constitute one single
transaction and none shall be deemed completed unless and until all are
completed.
(c) If any instrument of transfer contemplated herein shall be
recorded in any public record before the Closing and the Closing is not
completed, then at the request of such transferring party the other party shall
deliver (or execute and deliver) such instruments and take such other action as
such transferring party shall reasonably request to revoke of record such
purported transfer.
9.3 DELIVERIES BY SELLER. At or prior to the Closing, Seller shall
deliver to Buyer the following:
(a) Possession of the Facilities and the Assets being transferred on
the Closing Date;
(b) With respect to each Owned Facility, an ALTA owner's policy of
title insurance in form, substance and policy amount satisfactory to Buyer and
issued by an insurer satisfactory to Buyer, together with all endorsements and
binders thereto as may be required by Buyer, naming Buyer as the insured,
subject only to such encumbrances, including property tax liens with respect to
property taxes that are not delinquent, and other exceptions as shall be
expressly permitted by Buyer.
(c) The Cash Payment as provided in SECTION 9.2(A) hereof.
(d) The CLOSING SCHEDULES required pursuant to SECTIONS 2.1 and 2.2
hereof;
(e) A duly executed Bill of Sale in the form of EXHIBIT C hereto;
(f) A duly executed Assignment of Lease in the form of EXHIBIT D
hereto with respect to each of the Leased Facilities, and any subleases relating
thereto;
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(g) A duly executed Consent in the form of EXHIBIT E hereto with
respect to each of the Leased Facilities and any subleases relating thereto;
(h) An Officer's certificates of Seller, dated as of the Closing
Date, confirming that the conditions to Buyer's obligations set forth in
SECTIONS 8.1 have been satisfied;
(i) A legal opinion of counsel to Seller, addressed to Buyer, as set
forth in SECTION 8.1(F);
(j) The Records;
(k) The Loan Documents;
(l) The Mortgage Notes, each endorsed to Buyer or its designee
pursuant to an endorsement or allonge executed by a duly authorized officer of
Seller;
(m) Assignments of mortgage, in recordable form, with respect to all
of the Mortgages, executed and acknowledged by Seller by a duly authorized
officer, in favor of Buyer or its designee; and
(n) Such other instruments and documents as Buyer shall reasonably
deem necessary or convenient, including bills of sale and assignments, in order
to convey, transfer and assign to Buyer good, marketable and insurable title to
the Assets and the Liabilities pursuant to this Agreement.
9.4 DELIVERIES BY BUYER. At the Closing, Buyer shall deliver to Seller
the following:
(a) A duly executed Assumption Agreement as to the Liabilities as
shall be necessary to effect the assumption by Buyer of the Liabilities in
accordance with the terms hereof, in the form of EXHIBIT F attached hereto;
(b) An officer's certificate, dated as of the Closing Date,
confirming that the conditions to Seller's obligations set forth in SECTIONS 8.2
have been met;
(c) A legal opinion of counsel to Buyer, addressed to Seller, as set
forth in SECTION 8.2(C); and
(d) Such other documents and instruments as are reasonably requested
by Seller to evidence Buyer's purchase of the Assets and assumption of the
Liabilities.
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ARTICLE X.
POST-CLOSING OBLIGATIONS
10.1 HOLDBACK. A portion of the Purchase Price equal to $750,000 (the
"PURCHASE PRICE HOLDBACK") shall be retained by Buyer for a period of ninety
(90) days after the Closing (the "HOLDBACK PERIOD") in accordance with the
provisions of this SECTION 10.1; PROVIDED, HOWEVER, that, to the extent not
previously utilized or made subject to a claim as provided below, the Purchase
Price Holdback shall be reduced to $500,000 after thirty (30) days and to
$250,000 after sixty (60) days.
(a) During the Holdback Period, and in order to cover
payments to Buyer of post-Closing adjustments, as provided in this ARTICLE X,
any unpaid sales tax liability (as reported by the California State Board of
Equalization in the Sales Tax Certificate to be obtained by Buyer as provided in
SECTION 7.10 hereof) of Seller with respect to any sale or other transfer
occurring on or before the Closing Date, and any other amounts payable hereunder
after the Closing by Seller to Buyer which are not otherwise paid by Seller
(collectively, the "HOLDBACK CHARGES"), Buyer shall be entitled to reduce the
amount of the Purchase Price Holdback (each time, as so reduced, the "REDUCED
HOLDBACK AMOUNT") from time to time by an amount equal to any Holdback Charges,
five (5) business days after written notice is sent to Seller, which notice
shall set forth (i) the amount of such Holdback Charge(s) and (ii) a description
of the basis for such Holdback Charge(s). If Seller disputes a reduction of
the Purchase Price Holdback as set forth in any such notice, Seller shall,
within five (5) business days, provide Buyer with written notice disputing such
a reduction and stating the reasons for Seller's assertion. In such event, the
parties shall negotiate in good faith to resolve any such dispute.
(b) No later than 12:00 noon Pacific Time on or before the fifth
business day following the end of each 30 days of the Holdback Period, Buyer
shall pay the portion of the Purchase Price Holdback released at such time or,
in the event that the Purchase Price Holdback was reduced during the Holdback
Period, the Reduced Holdback Amount (if a positive number), in either case with
interest accrued daily at the federal funds rate from the Closing Date to (but
not including) the date of payment, to Seller by wire transfer of immediately
available funds to such account as shall be designated by Seller for such
purpose.
10.2 POST-CLOSING ADJUSTMENTS.
(a) GENERAL. The parties hereto acknowledge that certain amounts
referred to herein may not be finally determinable until after the Closing as a
result of the processing of checks and other transactions on or shortly before
the Closing Date and other activity occurring in the operation of the
Facilities. The parties shall cooperate in the prompt determination and
settlement of such amounts within ninety (90) days after the Closing Date in a
manner
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consistent with the terms of this Agreement. Any amounts settled after the
Closing shall accrue interest at the then current federal funds rate.
(b) RETURNED ITEMS. As part of the post-Closing adjustments, Buyer
shall pay to Seller the amount of any items accepted by Seller for deposit to
customer accounts prior to the Closing and included in the Deposits which are
subsequently returned unpaid. With respect to any item, if (a) Buyer cannot
recover from the account holder an amount otherwise payable to Seller pursuant
to this SECTION 10.2, and (b) Buyer has not permitted withdrawals prior the
expiration of the period of time such Deposits are not available for withdrawal
as properly determined by Seller and communicated to Buyer at Closing, then
Buyer shall not be obligated to reimburse Seller for such item(s) hereunder.
(c) PAYMENT. Other than post-closing adjustments payable to Buyer
that are paid by means of a reduction of the Purchase Price Holdback, post-
closing adjustments shall be paid daily by wire transfer of immediately
available funds, or other mutually acceptable means, no later than 12:00 noon
Pacific Time to an account to be designated by the party due payments hereunder.
10.3 RECORDS. Upon consummation of the Closing, Seller or any successor
shall deliver or make available to Buyer all of the Records that Seller has and
which Buyer requests. Following the Closing, Seller shall provide Buyer with
access to, or copies of, all such Records relating to the Facilities, the
Deposits and the other Assets and Liabilities, and the employees of Seller, as
may be retained in the possession or control of Seller or any successor that are
requested by Buyer. After the Closing, Seller shall have reasonable access to
such books, records and documents, including the Records, and have the right to
make copies thereof (including electronic copies where appropriate) to the
extent required for the ongoing business operations of Seller or Holding
Company.
10.4 NON-COMPETITION AGREEMENT. On and after the Closing Date and ending
on the date which is three years after the Closing Date, Seller shall not, and
shall not permit any of its affiliates to, without the prior written consent of
Buyer, open, operate, purchase or retain an office of a depository financial
institution in any of the California Counties of Los Angeles, Orange or Ventura
under the name "Union Federal Bank" or any variant thereof which employs the
names "Union" or "UnionFed".
10.5 USE OF OFFICE SPACE. For a period of twelve (12) months after the
Closing, Buyer shall make available for the use of Seller, without rent or other
charge, up to 6,000 square feet of office space in the Brea Facility or such
other location as Buyer shall designate.
10.6 LOAN INTEREST REPORTING. Seller shall deliver to Buyer within five
(5) days after the Closing Date (i) taxpayer
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identification numbers (or records of appropriate exemptions) for all Mortgagors
under the Loans and (ii) all other information in Seller's possession required
by applicable law to be provided to the IRS and/or the Mortgagors with respect
to the Loans transferred. Buyer shall prepare and deliver all required notices
and reports with respect to all interest paid by the Mortgagors with respect to
the Loans, all such notices and reports to be made to the Mortgagors under the
Loans and to governmental agencies as required by applicable tax or other law.
10.7 CONDUCT OF BUSINESS; COMPLIANCE WITH LAW. At all times after the
Closing, Seller shall continue to conduct its business and other activities in
compliance with all legal, contractual and other obligations applicable to it,
including without limitation its dealings with creditors and the operation or
termination of each and all of its employee Plans.
10.8 PROVISION OF PROCESSING SERVICES. In the event the Alternative Bank
Transaction is effected at the Closing, for a period of six (6) months
commencing on the Closing Date Buyer shall make available to Seller on terms to
be negotiated such data processing, cash item processing, deposit application
processing and general ledger services as are currently provided to Seller under
Seller's existing third party contracts for such services, but only to the
extent Buyer can reasonably do so at such time under its then existing internal
operations and then existing third party contracts for such services.
ARTICLE XI.
TERMINATION
11.1 EVENTS OF TERMINATION. This Agreement may be terminated at any time
prior to the Closing, as follows:
(a) By mutual written consent of Seller and Buyer;
(b) By either party, upon written notice to the other, if the
conditions to all party's obligations to consummate the transactions
contemplated by this Agreement as provided in SECTION 8.3 cannot reasonably be
met, satisfied or waived, or shall have become impossible to fulfill, on or
before the Termination Date, unless the failure of such condition is the result
of the breach of this Agreement by the party seeking to terminate;
(c) By Seller on the one hand and Buyer on the other hand, each upon
written notice to the other, if the conditions to such party's obligations to
consummate the transactions contemplated by this Agreement, in the case of
Seller as provided in SECTION 8.2 and in the case of Buyer as provided in
SECTION 8.1, cannot reasonably be met, satisfied or waived, or shall have become
impossible to fulfill, on or before the Termination Date, unless
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the failure of such condition is the result of the breach of this Agreement by
the party seeking to terminate;
(d) By Seller on the one hand and Buyer on the other hand, if the OTS
or any other governmental agency whose approval of the transactions contemplated
hereby is required, notifies either party that by its final determination it
will refuse to approve the transactions contemplated hereby, or any material
element thereof, or will approve the transactions contemplated hereby, or any
material element thereof, only with the imposition of terms or conditions deemed
by a party affected thereby to be materially adverse; and
(e) By Seller or Buyer if the Closing does not occur on or before the
Termination Date.
11.2 EFFECT OF TERMINATION. If this Agreement is terminated as provided
above, it shall be of no further force or effect, except that the parties shall
continue to be bound by SECTIONS 7.5 and 12.4, and shall cooperate in rescinding
such notices to customers, employees, or other third parties as have been given;
and there shall be no liability on the part of one party to the other party
under or by reason of this Agreement or the transactions contemplated hereby,
except for (a) fraudulent acts by a party, and (b) prior breaches by a party of
any representation, warranty, covenant or obligation of this Agreement, the
remedies for which shall not be limited by the provisions of this SECTION 11.2;
PROVIDED, that an inability of Seller to provide sufficient cash to Buyer to
permit completion of the Closing despite application of its best efforts in good
faith to do so shall not by itself be deemed to constitute a breach of this
Agreement giving right to a claim for damages pursuant to this Agreement. The
foregoing provision shall not, however, limit or restrict the availability of
specific performance or other injunctive or equitable relief to the extent that
specific performance or such other relief would otherwise be available to a
party hereunder.
ARTICLE XII.
MISCELLANEOUS
12.1 AMENDMENT. This Agreement may only be amended, modified or
supplemented by an instrument in writing signed by a duly authorized officer of
each of the parties hereto.
12.2 WAIVER. The failure of either party at any time to require
performance at any time of any provision of this Agreement shall in no manner
affect such party's right at a later time to enforce such provision. No waiver
by either party of any condition, or of the breach of any term, covenant,
representation or warranty contained in this Agreement, whether by conduct or
otherwise, in any one or more instances shall be deemed to be or
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construed as a further or continuing waiver of any such condition or breach or a
waiver of any other condition or the breach of any other term, covenant,
representation or warranty contained in this Agreement.
12.3 NOTICES. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given when delivered by hand, or by confirmed facsimile transmission,
or on two business days following consignment, freight prepaid, to a commercial
overnight air courier service, or three days after being mailed by United States
mail, first class postage prepaid, return receipt requested.
Notices shall be addressed as follows:
If to Seller:
Union Federal Bank
330 East Lambert Road
Brea, California 92621
Attention: David S. Engelman
Chairman of the Board and
Chief Executive Officer
Facsimile: (714) 256-4841
with a copy to:
Gibson, Dunn & Crutcher
Jamboree Center
4 Park Plaza, Suite 1700
Irvine, California 92714-8557
Attention: Robert E. Dean, Esq.
Facsimile: (714) 451-4220
If to Buyer:
Glendale Federal Bank, Federal Savings Bank
414 North Central Avenue
Glendale, California 91203
Attention: Richard A. Fink,
Senior Executive Vice President
Facsimile: (818) 409-3151
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With a copy to:
Mayer, Brown & Platt
350 South Grand Avenue
25th Floor
Los Angeles, California 90071
Attention: James R. Walther, Esq.
Facsimile: (213) 625-0248
or such other person, address or facsimile number as the parties hereto may
notify the others in writing.
12.4 EXPENSES. Each party hereto shall pay its own expenses in connection
with this Agreement and the transactions contemplated hereby, including
financial advisory fees, attorneys' fees and filing or other fees payable in
connection with all applications, notifications, reports, and notices.
12.5 PRORATIONS. All operating expenses related to the Facilities,
including, but not limited to, real estate taxes, SAIF deposit insurance
premiums, personal property taxes (to the extent applicable), utility payments
and maintenance and service contracts, shall be prorated between the parties on
the basis of a 365 day year as of the close of business on the Closing Date;
PROVIDED, HOWEVER, that Buyer shall not be required to assume any service or
other contract relating to the Facilities and Seller shall have sole
responsibility for the payment or termination of any such contract not assumed
by Buyer pursuant to this Agreement; and PROVIDED, FURTHER, that the proration
of SAIF deposit insurance premiums shall be computed using the SAIF deposit
insurance premium rate of Buyer not Seller. All recording and documentary
transfer taxes, sales taxes and any other fees, charges and assessments
resulting or arising from the sale and purchase of the Assets and the assumption
of the Liabilities shall be paid by Seller.
12.6 INDEMNIFICATION.
(a) Seller shall indemnify and hold Buyer harmless from any and all
losses and expenses arising from or in connection with the operations of the
Facilities, Seller's deposit-gathering activities, including the administration
of the Deposits, and the Assets acquired by Buyer pursuant to this Agreement,
prior to the Closing, except in each case for those Liabilities specifically
assumed by Buyer at the Closing hereunder (but not including within this
exception any related but unspecified liabilities, such as (without limitation)
liabilities as a result of any breach or violation of any legal, regulatory,
contractual or other duty or obligation of Seller or its affiliates) insofar as
such losses and expenses, or the occurrence giving rise to or constituting the
basis for such losses and expenses, arose prior to the Closing, including,
without limitation, losses arising from or in connection with claims by
employees, former employees, retirees,
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representatives or agents of Seller against Buyer relating to their employment
by Seller prior to the Closing Date.
(b) Seller shall indemnify and hold Buyer harmless from any and all
losses which Buyer may incur or to which Buyer may become subject as a result of
any material breach by Seller of its representations, warranties and covenants
contained in this Agreement, including without limitation each of its covenants
to be performed and complied with after the Closing hereunder.
(c) Buyer shall indemnify and hold Seller harmless from any and all
losses and expenses arising from or in connection with the operations of the
Facilities, other Assets and the Deposits and other Liabilities, from and after
the Closing, insofar as such losses and expenses, or the occurrence giving rise
to or the basis for such losses and expenses, arose after the Closing. Buyer
shall also indemnify and hold Seller harmless from any and all losses which
Seller may incur or to which Seller may become subject as a result of any
material breach by Buyer of its representations, warranties and covenants
contained in this Agreement, including without limitation each of its covenants
to be performed and complied with after the Closing hereunder.
(d) If any claim or proceeding brought by a third party arises with
respect to which Seller or Buyer (an "INDEMNIFIED PARTY") may assert
indemnification hereunder, the Indemnified Party shall give reasonable written
notice to the other party (the "INDEMNIFYING PARTY"), which shall have the right
to assume the defense thereof with legal counsel selected by it. Any
Indemnified Party shall have the right to employ separate counsel and to
participate in the defense thereof, but at the Indemnified Party's own expense
unless (i) the Indemnifying Party has consented in writing to such separate
counsel, (ii) the Indemnifying Party has failed to assume the defense, or (iii)
the named parties to such action include both the Indemnified Party and the
Indemnifying Party and the Indemnified Party shall have been advised by counsel
that there reasonably may be one or more legal claims available to it which are
different from or additional to those available to the Indemnifying party. The
Indemnified Party, as a condition to the indemnification hereunder, shall use
its best efforts to cooperate with the Indemnifying Party in the defense of any
such action. The Indemnifying Party shall not be liable for any settlement
without its written consent.
(e) Neither Seller nor Buyer shall have any liability for
indemnification with respect to matters set forth in this SECTION 12.6 (which
shall not include any specific payment obligations of either party set forth in
other provisions of this Agreement) until the total of all losses and expenses
with respect thereto incurred by either Buyer or Seller, as the case may be,
exceeds an amount equal to Two Hundred Fifty Thousand Dollars ($250,000). The
liability for indemnification or reimbursement by either Seller or Buyer under
this Agreement shall terminate on the Evaluation Date.
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12.7 PUBLICITY. The parties agree that any written public announcement of
the execution of this Agreement or consummation of the transactions contemplated
hereby in addition to those notices provided for in this Agreement shall be made
only upon the consent of all parties, which consent shall not be unreasonably
withheld or delayed; PROVIDED, HOWEVER, that nothing herein shall restrict any
statement deemed, on the advice of legal counsel, by the party making such
statement to be required by law, regulation or stock exchange requirements.
12.8 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the parties hereto contained in this Agreement or made pursuant
hereto shall survive the Closing and the consummation of the transactions
contemplated by this Agreement until the Evaluation Date.
12.9 GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of California, not including
the conflicts of laws provisions or principles thereof, and, to the extent
applicable, the laws of the United States.
12.10 ENTIRE AGREEMENT. This Agreement and the Schedules and Exhibits
attached hereto set forth the entire agreement and understanding of the parties
with respect to the transactions contemplated by this Agreement and supersede
all prior agreements, arrangements and understandings related to the subject
matter of this Agreement. Without limiting the foregoing, the warranties of
Seller and Buyer set forth in this Agreement constitute the sole warranties on
which Buyer and Seller, respectively, may rely and there are no implied
warranties upon or from which either party may rely or take benefit.
12.11 METHOD OF CONSENT OR WAIVER. Any consent hereunder or any waiver of
conditions or covenants that may be provided for in this Agreement shall be
evidenced in writing properly executed by a duly authorized officer of the party
so electing hereunder.
12.12 BINDING EFFECT; NO ASSIGNMENT. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns; PROVIDED, HOWEVER, that neither Seller nor Buyer shall
assign or transfer any right or interest in and to this Agreement without the
prior written consent of the other party or parties hereto, as the case may be;
PROVIDED, FURTHER, that Seller may transfer any of its rights or benefits
hereunder to Holding Company, upon dissolution or otherwise if, but only if,
Holding Company also assumes all of Seller's obligations and liabilities,
including, without limitation, indemnification obligations, in writing and in
form and substance satisfactory to, and delivered to, Buyer.
12.13 COUNTERPARTS. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be
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deemed to be an original, but all of which together shall constitute one and the
same instrument.
12.14 HEADINGS. The Article, Section and Subsection headings contained in
this Agreement are for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
12.15 SEVERABILITY. If any provision of this Agreement which is not
essential in order to effect the basic purpose of this Agreement shall be held
invalid or unenforceable, the remainder of this Agreement shall, nevertheless,
remain in full force and effect.
12.16 NO THIRD PARTY BENEFICIARIES. Each of the parties hereto intends
that this Agreement shall not benefit or create any right or cause of action in
any person other than the parties to this Agreement.
12.17 EFFECT OF INVESTIGATIONS. Any due diligence review, audit or other
investigation or inquiry undertaken or performed by or on behalf of Buyer shall
not limit, qualify, modify or amend the representations, warranties and
covenants of, and indemnities by, Seller made or undertaken pursuant to this
Agreement, irrespective of the knowledge and information received (or which
should have been received) therefrom by Buyer.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
GLENDALE FEDERAL BANK,
FEDERAL SAVINGS BANK
By: \s\Richard A. Fink
---------------------------------
Its: Senior Executive Vice President
--------------------------------
UNION FEDERAL BANK, A
FEDERAL SAVINGS BANK
By: \s\David S. Engelman
-------------------------------
Its: Chairman/CEO
------------------------------
CONSENT OF UNIONFED FINANCIAL CORPORATION
UnionFed Financial Corporation, a Delaware corporation that is the Holding
Company referred to in the above Asset Purchase and Liability Assumption
Agreement ("Agreement") entered into between Glendale Federal Bank, Federal
Savings Bank ("Buyer") and Union Federal Bank, a federal savings bank
("Seller"), hereby (i) adopts and makes to Buyer each of the representations and
warranties relating to Holding Company set forth in the Agreement, (ii) consents
to and approves the Agreement in its capacity as the sole stockholder of Seller
and (iii) agrees to cooperate with Buyer and Seller, and to take all such action
as either of them shall reasonably request, to facilitate the purchase of assets
and assumption of liabilities provided for therein.
UNIONFED FINANCIAL CORPORATION
By: \s\David S. Engelman
-------------------------------
Its: Chairman/CEO
------------------------------
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EXHIBIT A
Form of Legal Opinion of the Counsel of Seller
Unless otherwise defined, capitalized terms shall have the same meaning as
in the Agreement. Gibson, Dunn & Crutcher and, to the extent appropriate,
Morris, Nichols, Arscht & Tunnel, counsel to Seller, shall deliver an opinion to
the effect that:
(i) Seller is a federally chartered savings bank validly existing and
in good standing under the laws of the United States of America, with the
requisite corporate power and authority to execute, deliver and perform
this Agreement, to own, lease and operate the Assets and to conduct a
federal savings bank business;
(ii) Holding Company is a corporation, validly existing and in good
standing under the laws of the State of Delaware, with all requisite
corporate power and authority to execute, deliver and perform this
Agreement. All corporate action required by law to be taken by Holding
Company to authorize the execution, delivery and performance of this
Agreement has been taken; and no actions are required by law, or by the
certificate of incorporation or by-laws of Holding Company, to be taken by
the stockholders of Holding Company to authorize the execution, delivery
and performance of this Agreement;
(iii) This Agreement has been duly and validly executed and delivered
by Seller, and is a valid and binding agreement of Seller, enforceable
against Seller in accordance with its terms, subject to bankruptcy,
insolvency, receivership, conservatorship, reorganization, and similar laws
and court decisions applicable generally to thrift institutions such as
Seller, including, without limitation, statutory and other laws relating
to, limiting or affecting enforcement of creditors' rights generally, to
the assumptions that enforcement will be undertaken in a commercially
reasonable manner, and to the understanding that we are expressing no
opinion as to the availability of equitable defenses in a proceeding or the
equitable remedy of specific performance as a remedy for any breach of the
terms of the agreements and instruments referred to herein;
(iv) The execution, delivery and performance of this Agreement by
Seller, the consummation by Seller of the transactions contemplated thereby
and compliance by Seller with the provisions thereof will not (a) conflict
with the organizational documents of Seller; (b) violate any applicable
laws, orders or regulations; or (c) conflict with or result in a breach of
any judgment, order, decree or ruling known to us to which Seller is a
party, or by which
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it or any of its property or assets is bound, or any injunction of any
court or governmental authority to which it or any of its property or
assets is subject and of which we are aware, or any agreement identified to
us by Seller as material ("Material Agreement") to which it is a party or
by which any of its property or Assets is affected, or (d) require the
approval of any nongovernmental third party under any Material Agreement
other than as contemplated by the Agreement;
(v) Except for the Regulatory Approvals, no approval of any federal
or state governmental authority is required for the execution, delivery,
and performance of this Agreement by Seller; and
(vi) The execution, delivery and performance of this Agreement by
Seller will not constitute a "fraudulent conveyance" or be subject to any
similar challenge under any applicable Federal or State of California law.
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EXHIBIT B
FORM OF LEGAL OPINION OF BUYER'S COUNSEL
Unless otherwise defined, capitalized terms shall have the same meaning as
in the Agreement. Mayer, Brown & Platt, counsel to Buyer, shall deliver its
opinion to the effect that:
(i) Buyer is a federal savings bank validly existing and in
good standing under the laws of the United States of America, with
the requisite corporate power and authority to execute, deliver and
perform this Agreement;
(ii) This Agreement has been duly and validly executed and
delivered by Buyer and is a valid and binding agreement of Buyer,
enforceable against Buyer in accordance with its terms, subject to
bankruptcy, insolvency, receivership, conservatorship, reorganization,
and similar laws relating to creditors' rights generally and the
rights of creditors of federal savings banks and to equitable
principles;
(iii) The execution, delivery and performance of this Agreement
by Buyer will not (a) conflict with the charter or bylaws of Buyer;
(b) violate any applicable laws, orders or regulations; (c) conflict
with or result in a breach of any judgment, order, decree or ruling
to which Buyer is a party, or by which it or any of its property is
bound, or any injunction of any court or governmental authority to
which it or any of its property is subject, or any material agreement
to which it is a party or by which any of its property is affected;
or (d) require the approval of any governmental or nongovernmental
third party other than as contemplated by this Agreement; and
(iv) Except for Regulatory Approval, no approval of any federal
or state governmental authority is required for the execution,
delivery, and performance of this Agreement by Buyer.
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EXHIBIT C
BILL OF SALE
For good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Union Federal Bank, a federal savings bank ("SELLER"), does
hereby assign, grant, sell, transfer and deliver to Glendale Federal Bank,
Federal Savings Bank, a federal savings bank ("BUYER"), all of the Fixed Assets,
Records and other Assets as and to the extent set forth in that certain Asset
Purchase and Liability Assumption Agreement dated as of May 20, 1995 by and
between Seller and Buyer (the "AGREEMENT").
Unless otherwise defined herein, all capitalized terms used in this Bill of
Sale have the meanings attributed to them in the Agreement.
This Bill of Sale has been duly executed by Seller and Buyer as of
__________, 1995.
UNION FEDERAL BANK, A FEDERAL SAVINGS BANK
By:___________________________
Its:__________________________
GLENDALE FEDERAL BANK,
FEDERAL SAVINGS BANK
By:___________________________
Its:__________________________
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EXHIBIT D
ASSIGNMENT AND ASSUMPTION OF LEASE
For good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Union Federal Bank, a federal savings bank ("SELLER"), does
hereby assign to Glendale Federal Bank, Federal Savings Bank, ("BUYER"), all of
its right, title and interest as [lessee][sublessee] under that certain
[description of lease and all assignments and amendments][description of
sublease and all assignments and amendments] (the "[Lease][Sublease]") pursuant
to that certain Asset Purchase and Liability Assumption Agreement dated as of
May 20, 1995 (the "AGREEMENT") by and between Seller and Buyer.
Buyer hereby accepts such assignment and assumes all of the obligations and
liabilities of Seller under the [Lease][Sublease] as set forth above but only to
the extent that such obligations and liabilities accrue from and after the date
hereof. Seller agrees to remain liable for any of the obligations and
liabilities of Seller under the [Lease][Sublease] arising prior to the date
hereof.
This Assignment and Assumption of Lease has been duly executed by Seller
and Buyer as of __________, 1995.
UNION FEDERAL BANK, A FEDERAL
SAVINGS BANK
By:___________________________
Its:__________________________
GLENDALE FEDERAL BANK,
FEDERAL SAVINGS BANK
By:___________________________
Its:__________________________
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EXHIBIT E
CONSENT
This Consent (this "CONSENT"), is made and entered into as of __________,
1995, by __________ ("LANDLORD").
A. Union Federal Bank, a federal savings bank ("SELLER"), and Glendale
Federal Bank, Federal Savings Bank, a federal savings bank ("BUYER"), are
parties to that certain Asset Purchase and Liability Assumption Agreement dated
as of May 20, 1995 by and between Seller and Buyer (the "AGREEMENT").
B. The Agreement requires Seller to assign (the "ASSIGNMENT AND
ASSUMPTION") to Buyer all of its right, title and interest in and under that
certain [description of lease], a copy of which is attached hereto as EXHIBIT A-
1 (the "[LEASE][SUBLEASE]"), with respect to the property described therein (the
"PROPERTY") and for Buyer to assume all of Seller's obligations and liabilities
under the [Lease][Sublease] but only to the extent such obligations and
liabilities accrue from and after the date hereof. Seller agrees to remain
liable for any of the obligations and liabilities of Seller under the
[Lease][Sublease] arising prior to the date hereof.
C. The [Lease][Sublease] requires that Seller obtain the prior written
consent of Landlord to the Assignment and Assumption, a copy of which is
attached hereto as EXHIBIT A-2, which consent shall not be unreasonably
withheld.
NOW, THEREFORE, the Landlord agrees and represents as follows:
1. Landlord hereby consents to the Assignment and Assumption.
2. Seller is the [lessee][sublessee] under the [Lease][Sublease]. The
copy of the [Lease][Sublease] (including all assignments, modifications,
supplements and amendments) attached hereto as EXHIBIT A-1 is a true, correct
and complete copy of the [Lease][Sublease] and the [Lease][Sublease] is the
valid and binding obligation of Lessor and is in full force and effect and has
not been assigned, modified, supplemented or amended in any way except pursuant
to the documents that comprise EXHIBIT A-1. The [Lease][Sublease] represents
the entire agreement between Seller and Landlord as to the Property. The
[Lease][Sublease] terminates on __________, unless earlier terminated.
[Description of option or right of first refusal terms.] The rent due under the
[Lease][Sublease] is currently $__________ per month. The [lessee][sublessee]
under the [Lease][Sublease] is permitted to use the premises to conduct a
federal savings bank business. The [Lease][Sublease] supersedes
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and cancels any previous agreements written or verbal between Landlord and
Seller.
3. All conditions of the [Lease][Sublease] to be performed by Seller and
necessary to the enforceability of the [Lease][Sublease] have been satisfied,
and Seller is not in default of any of its obligations, including payment
obligations, under the [Lease][Sublease]. There are no defenses or offsets
against the enforcement of the [Lease][Sublease] by Seller, and Landlord knows
of no events or conditions which, with the passage of time or notice or both,
would constitute a default by Seller or entitle Landlord to a defense or offset
under the [Lease][Sublease].
4. The Property is in compliance with all applicable governmental laws,
orders and regulations, including without limitation, the Americans with
Disabilities Act of 1990, 42 U.S.C. Section 12101 ET SEQ., as amended, and the
regulations issued pursuant thereto.
5. In consideration of the Assignment and Assumption, Landlord hereby
releases Seller from all of Seller's obligations and liabilities under the
[Lease][Sublease] but only to the extent such obligations and liabilities accrue
from and after the date hereof.
6. Landlord is not involved in (as a debtor), or the subject of any,
bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or
liquidation proceedings and, to the knowledge of Landlord, no such proceeding is
contemplated or threatened. Landlord is not aware of any violation of any
ordinances, building codes, zoning regulations or other law or regulations
affecting the Property.
7. This Consent shall be governed by the laws of the State of California.
8. Landlord understands that Buyer will rely upon this Consent in
entering into and performing the Agreement and the transactions contemplated
thereby.
IN WITNESS WHEREOF, Landlord has caused this Consent to be executed by its
duly authorized representative as of the date first above written.
[LANDLORD]
By:______________________
Its:_____________________
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EXHIBIT F
ASSUMPTION AGREEMENT
FOR VALUE RECEIVED, Glendale Federal Bank, Federal Savings Bank, a federal
savings bank ("BUYER"), has executed and delivered this Assumption Agreement
(this "ASSUMPTION AGREEMENT") to Union Federal Bank, a federal savings bank
("SELLER"), pursuant to that certain Asset Purchase and Liability Assumption
Agreement dated as of May 20, 1995 (the "AGREEMENT") by and between Seller and
Buyer. Unless otherwise defined herein, all capitalized terms used in this
Assumption Agreement have the meanings attributed to them in the Agreement.
Buyer hereby assumes and agrees to perform the liabilities, duties and
obligations of Seller arising from and after the date hereof under and with
respect to the Liabilities specified and described in Schedules __, ___, ___
attached hereto. Without limiting or expanding the foregoing, Buyer hereby
specifically assumes and agrees to pay the liability of Seller to pay to each
account holder whose account is included within the Deposits specified and
described in Schedule __ the principal amount of such account holder's deposits
plus interest accrued thereon through the date hereof in accordance with the
terms of such deposit accounts and assumes and agrees to perform and be bound by
the terms of the deposit agreements governing such Deposits as such agreements
are in effect as of the date hereof. Buyer further agrees that Buyer is solely
responsible for properly implementing any changes to those agreements following
the Closing.
IN WITNESS WHEREOF, Buyer and Seller have caused this Assumption Agreement
to be signed by their duly authorized officers as of __________, 1995.
GLENDALE FEDERAL BANK, UNION FEDERAL BANK, A FEDERAL
FEDERAL SAVINGS BANK SAVINGS BANK
By:___________________________ By:___________________________
Its:__________________________ Its:__________________________
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