UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K/A - Amendment Number 1
CURRENT REPORT
Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
July 09, 1996
Date of Report (Date of earliest event reported)
CENIT BANCORP, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-20378 54-1592546
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification Number)
225 West Olney Road Norfolk, Virginia 23510
(Address of principal executive (Zip code)
office)
Registrant's telephone number, including area code: (804) 446-6600
CENIT Bancorp, Inc.
Item 5 - Other Events
On July 3, 1996, the Registrant issued a press release, and the disclosures
contained therein are deemed significant to stockholders. Therefore, though
not specifically required to be reported on Form 8-K, these disclosures are
incorporated by reference to the press release, which is included herein as
Schedule A. Additionally, the Branch Purchase and Deposit Assumption
Agreement referred to in the press release is included herein as
Exhibit 10.1.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CENIT BANCORP, INC.
DATE: July 19, 1996 /S/ Michael S. Ives
Michael S. Ives
President and Chief Executive Officer
DATE: July 19, 1996 /S/ John O. Guthrie
John O. Guthrie
Senior Vice President and
Chief Financial Officer
_____________________________________________________________________________
INDEX TO EXHIBITS
Schedule A - July 3, 1996 CENIT Bancorp, Inc. press release E-2
Exhibit 10.1 - Branch Purchase and Deposit Assumption Agreement E-3 - E-40
E-1
July 3, 1996
CONTACT: Michael S. Ives
President and Chief
Executive Officer
Norfolk, Virginia
(804) 446-6600
FOR IMMEDIATE RELEASE
CENIT BANCORP ANNOUNCES DEPOSIT ASSUMPTION
AND BRANCH TRANSFERS
(Norfolk, Virginia) -- Michael S. Ives, President and Chief Executive
Officer of CENIT Bancorp, Inc. (NASDAQ: CNIT), the holding company for
CENIT Bank, FSB ("CENIT Bank"), today announced that Essex Savings Bank, FSB,
and CENIT Bank have executed a definitive agreement in which CENIT Bank will
assume the deposits of five Essex Bank Branches located in Hampton,
Newport News, Portsmouth, Norfolk, and Grafton, Virginia.
CENIT Bank will operate the branches located in Hampton and Newport News.
The branches located in Portsmouth and Norfolk will be consolidated into
existing CENIT Bank branches in those neighborhoods. The Grafton branch will
either be sold to another financial institution or the branch will be closed
and the deposits transferred to another CENIT Bank branch. CENIT Bank plans
to offer employment to all Essex employees in the branches whose deposits are
transferred to CENIT.
At June 30, 1996, these five branches had approximately $70 million in
deposits in the aggregate.
Mr. Ives, President and CEO of CENIT, said that this transaction will
increase CENIT's overall local market share and enhances CENIT Bank's
presence and branch network on the Peninsula. In addition, CENIT expects
this transaction to be accretive to earnings in 1997. Both parties are
committed to closing the deposit assumption and branch transfer as soon as
practicable.
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BRANCH PURCHASE AND DEPOSIT ASSUMPTION AGREEMENT
THIS BRANCH PURCHASE AND DEPOSIT ASSUMPTION AGREEMENT (the
"Agreement") is entered into as of the 2nd day of July, 1996, between Essex
Savings Bank, F.S.B., a federally-chartered stock savings bank
(the "Seller"), and CENIT BANK, F.S.B., a federally-chartered stock savings
bank (the "Purchaser").
WHEREAS, the Seller wishes to sell the deposits and certain assets of
the branch offices operated by the Seller and listed on Exhibit A (each
a "Branch," and collectively, the "Tidewater Branches").
WHEREAS, the Purchaser wishes to purchase the deposits and certain
assets of the Tidewater Branches.
NOW, THEREFORE, in consideration of the foregoing, of the mutual
agreements, covenants, representations, warranties and conditions contained
herein, and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Seller and the Purchaser
agree as follows:
ARTICLE 1.
TRANSFER OF ASSETS AND ASSUMPTION OF LIABILITIES
1.01 Effective Date. Except as otherwise provided herein, the closing
date (hereinafter referred to as the "Effective Date") shall be: (i) the
later of September 30, 1996 or the last business day of the month next
ending at least ten (10) calendar days following the date on which all
regulatory approvals for this transaction, required by law and this
Agreement, have been obtained and all waiting periods required by statute
have expired so that this sale may be legally consummated in accordance with
the terms of this Agreement; or (ii) such other date thereafter as may be
mutually agreed to by the parties, which agreement shall not be unreasonably
withheld.
1.02 Transfer of Assets and Consideration Therefor.
(a) Subject to the terms and conditions of this Agreement, the Seller
will sell, assign, transfer, convey and deliver to the Purchaser, and the
Purchaser will purchase from Seller, on the Effective Date:
(i) all of the Seller's right, title and interest in and to the
real property described on Exhibit B hereto (the "Branch
Property"); and
(ii) all of the Seller's right, title and interest in and to all
of the furniture, fixtures and equipment used in the operation
of the Hampton and Newport News Branches, except as provided in
Section 1.11 (the "Fixed Assets").
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A schedule of the Fixed Assets will be furnished by the Seller
to the Purchaser within ten (10) business days following the
date of execution of this Agreement; and
(iii) all of the Seller's right, title and interest in and to certain
deposit related loans of the Tidewater Branches (the "Deposit
Loans"), consisting of loans secured by deposit instruments,
including but not limited to, savings accounts and
certificates, on the books of the Tidewater Branches as of the
close of business on the Effective Date. A schedule of the
Deposit Loans as of May 31, 1996 will be furnished by the
Seller to the Purchaser contemporaneously with the execution of
this Agreement; and
(iv) all of the Seller's right, title and interest in and to the net
amount of proration items, as described in Section 1.10, paid
by the Seller on or prior to the Effective Date but relating
to periods after the Effective Date, deposits (other than those
related to the real property leases attached as Exhibit C (the
"Branch Leases")) held by others with respect to the Tidewater
Branches, and cash on hand in the Tidewater Branches.
The purchase price for the Deposit Loans shall be equal to the unpaid
principal balance of the Deposit Loans, plus accrued and unpaid interest, as
of the close of business on the Effective Date. On the Effective Date, the
purchase price for the Deposit Loans shall be calculated based on the unpaid
principal balance of the Deposit Loans, plus accrued and unpaid interest, as
of 12:01 a.m. of the first day of the month in which the Effective Date
occurs (the "Measurement Date"). The purchase price for the Deposit Loans
shall be paid by offsetting the purchase price against the deposit liabilities
assumed pursuant to Section 1.02(d).
(b) The Seller may elect to exclude the Grafton Branch from the
Tidewater Branches by delivering notice of such exclusion to Purchaser on or
before July 16, 1996. Upon delivery of such notice, the Purchaser shall
have no obligation under this Agreement regarding the Grafton Branch.
(c) The Seller acknowledges the Purchaser's intent to relocate the
Norfolk and Portsmouth Branches to existing branches operated by the
Purchaser and to close the Grafton Branch. If the Seller does not elect to
exclude the Grafton Branch from the Tidewater Branches as provided in
Section 1.02(b) above, the Seller will promptly provide all notices required
by 12 U.S.C. 1831r-1 regarding the closure of the Grafton Branch. The
regulatory applications to be submitted to the OTS in connection with the
transactions contemplated by this Agreement shall provide notice of the
short distance relocations of the Norfolk and Portsmouth Branches.
(d) On the Effective Date, subject to the terms and conditions of this
Agreement, and in consideration for the aforesaid sale, assignment,
transfer, conveyance and delivery:
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(i) the Purchaser will pay to the Seller pursuant to Section
1.05(c), by offset against the deposit liabilities assumed
pursuant to subsection (iii) below, the "Fair Market Value"
(as defined below) of the Branch Property, calculated as
provided in Section 1.07; and
(ii) the Purchaser will pay to the Seller pursuant to Section
1.05(c), by offset against the deposit liabilities assumed
pursuant to subsection (iii) below, the book value of the
Fixed Assets, calculated by reference to the Seller's
books as of the calendar month next ending on or prior to the
Measurement Date; and
(iii) the Purchaser will assume and agree to pay, perform and
discharge all deposit liabilities of the Seller, including
accrued interest, now existing or hereafter arising and
existing as of the close of business on the Effective
Date, attributed on the records of the Seller to the Tidewater
Branches (the "Assumed Deposits").
1.03 Payment of Premium. On the Effective Date, subject to the terms and
conditions of this Agreement, the Purchaser also shall pay to the Seller a
premium (the "Premium") for the Assumed Deposits in the amount of three
percent (3%) of the aggregate balance of Qualifying Deposits. For the
purposes of this Agreement, "Qualifying Deposits" shall consist of all
Assumed Deposits, other than:
(a) deposit accounts having a balance, as of the close of business on
the Effective Date, in excess of Ninety-Five Thousand Dollars ($95,000)
("Jumbo Accounts"), except for Jumbo Accounts the holders of which have one
or more other deposit relationships (other than solely other Jumbo Accounts)
with the Seller or the Purchaser involving aggregate deposit balances of at
least $750, and
(b) the Assumed Deposits associated with the Grafton Branch.
1.04 Purchase of Loans. All Deposit Loans (and any notes, other evidences
of indebtedness or security instruments associated therewith) transferred to
the Purchaser on the Effective Date pursuant to Section 1.02 shall be
transferred without recourse except as provided in this Agreement and
without any representations or warranties as to the collectability of any
such Deposit Loans or the creditworthiness of any such obligors.
1.05 Obligations of the Seller on the Effective Date. On the Effective
Date, the Seller will:
(a) deliver to the Purchaser such of the assets purchased as shall be
capable of physical delivery;
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(b) execute, acknowledge (if appropriate) and deliver to the Purchaser
Deeds and a Bill of Sale in the forms attached as Exhibits D and E hereto,
and, at the Seller's expense, all such other deeds, endorsements, assignments
or other instruments of conveyance, assignment and transfer as shall be
reasonably necessary or advisable to consummate the sale and transfer to
the Purchaser of the Branch Property and the Fixed Assets;
(c) deliver to the Purchaser cash or immediately available funds equal
to the Assumed Deposits, measured as of 12:01 a.m. on the Measurement Date,
less the sum of:
(i) the unpaid principal balance, plus accrued and unpaid
interest, of the Deposit Loans to be purchased by the Purchaser
pursuant to Section 1.02(a)(iii), measured as of 12:01 a.m.
on the Measurement Date,
(ii) to the extent not accounted for in the calculation of the
Assumed Deposits, all amounts owed by deposit customers as a
result of writing a check or similar instrument and creating
an overdraft on an account,
(iii) the payment for the Branch Property and Fixed Assets set
forth in Sections 1.02(d)(i) and 1.02(d)(ii),
(iv) the net amount of proration items, as described in Section
1.10, paid by or obligated to be paid by the Seller on or
prior to the Effective Date but relating to periods after
the Effective Date,
(v) the total amount of all unpaid rent and other payments
related to the Branch Leases and related to periods after
the Effective Date and until the scheduled expiration or
termination of the Branch Leases, reduced by the amounts,
if any, by which the landlords under the Branch Leases may
have agreed to reduce the remaining obligations of the
Seller as tenant under the Branch Leases,
(vi) the amount of all deposits (other than those related to the
Branch Leases) held by others with respect to the Tidewater
Branches,
(vii) cash and cash equivalents on hand in the Tidewater Branches,
and
(viii) the Premium, based on the amount of Qualifying Deposits as
of 12:01 a.m. on the Measurement Date.
(d) assign, transfer and deliver to the Purchaser such of the records
pertaining to the Assumed Deposits and the Deposit Loans and any other
records reasonably requested by the Purchaser as exist and are in the
Seller's possession or control, as detailed in Section 1.08(g).
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The Purchaser agrees that it will preserve and safely keep, for as long as
may be required by applicable law, all of the signature cards, orders,
contracts, forms, taxpayer identification number certifications, and records
hereinabove referred to for the joint benefit of itself and the Seller,
and that it will permit the Seller and its representatives to inspect, and
make extracts from or copies of, any such records, at any reasonable time, and
at the expense of the Seller, as shall be reasonably necessary to the Seller
for purposes of its records. The Seller agrees that it will preserve and
safely keep, for as long as may be required by applicable law, all of the
files, books of accounts and records as exist and are in Seller's possession
(and not delivered to the Purchaser as provided above) pertaining to the
past history of the accounts transferred hereunder, including deposit slips,
cancelled checks or withdrawal orders, for the joint benefit of itself and
the Purchaser, and that it will permit the Purchaser and its representatives
to inspect, and make extracts from or copies of, any such files, books of
accounts or records, at any reasonable time and at the expense of the
Purchaser, as shall be reasonably necessary to the Purchaser for purposes of
its records.
1.06 Assumption Agreement. To evidence the assumption by the Purchaser of
the liabilities and obligations of the Seller assumed pursuant to this
Agreement, the Purchaser and the Seller will execute, acknowledge and
deliver, on the Effective Date, an Assumption Agreement in the form attached
as Exhibit F hereto. The Seller acknowledges that the Purchaser does not
assume and shall have no liability for any debts, liabilities or obligations
of the Seller of any kind whatsoever except as specifically set forth in
this Agreement and the Assumption Agreement.
1.07 Fair Market Value of Branch Property. The Branch Property includes the
land and improvements associated with the Hampton and Newport News Tidewater
Branches. The Seller and Purchaser hereby designate Richard Burroughs of
Harvey Lindsay Commercial Real Estate (the "Broker") to determine the fair
market value (the "Fair Market Value") of the Branch Property, which will be
rendered in the form of a broker's price opinion. The Broker's determination
of Fair Market Value shall be reported to the Seller and the Purchaser within
thirty (30) days of the date of this Agreement, will be based upon such
factors as the Broker deems appropriate, and shall be binding upon the
parties. All costs associated with the Broker's determination of Fair
Market Value will be shared equally by the Purchaser and the Seller.
1.08 Certain Transitional Matters.
(a) On or before the Effective Date, the Seller and the Purchaser shall
cooperate and take all actions as are necessary to arrange for the direct
routing to the Purchaser through the check clearing system of the banking
industry, effective immediately following the Effective Date, all checks,
drafts and withdrawal orders on forms provided by the Seller and carrying
its imprint (including name and transit routing number) drawn against amounts
transferred to the Purchaser. Such items will be presented to the Seller's
item processor ("BISYS") with other items drawn on the Seller's transit
routing number. Upon presentation to BISYS the following process will be
employed:
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(i) A copy of the report noting all checks, drafts, withdrawal
orders and ACH items presented for payment will be sent via
facsimile to the Purchaser.
(ii) A copy of the report noting ACH and other credit items, with
all pertinent information, will be sent via facsimile to the
Purchaser.
(iii) Based on the total debits and total credits reported, the
Purchaser will take those steps necessary to make wire
transfer payment for the net amount due to the Seller at an
account to be provided by the Seller.
(iv) The items presented for payment and/or credit will be
consolidated into a cash letter. Said cash letter will be
available for pick up by the Purchaser at BISYS by 4 p.m. the
day following the day of presentment or at a mutually agreed
upon location and time.
All checks, drafts and withdrawal orders drawn against balances transferred
will be consolidated into a cash letter by BISYS for pick up by the
Purchaser as specified in Section 1.08(a)(iv) above.
Within ten days after the Effective Date, checks, drafts and
withdrawal orders with the Purchaser's transit routing number should be
provided to the holders of all transferred accounts with checks, drafts or
withdrawal orders carrying the Seller's transit routing number. After
ninety (90) days, or such other period as may be mutually agreed upon by the
Seller and the Purchaser, all checks, drafts, and withdrawal orders on forms
provided by the Seller and carrying its imprint will be returned to the
payee unpaid and will not be available for pick up by the Purchaser.
All items clearing through Automated Clearing House ("ACH") will be
processed and settled by Federal Reserve Bank ("FRB") through the Seller's
transit routing number. After presentment of the ACH item, all items
settling against accounts transferred to the Purchaser will be provided to
the Purchaser on a daily ACH clearing report to allow posting of the item
to the transferred account. Immediately after the Effective Date, the
Purchaser shall use its reasonable best efforts to provide notification of
changes to the FRB to request the change of the transit routing number to
the Purchaser's number on all ACH items settling to a transferred account.
After ninety (90) days, or such other period as may be mutually agreed upon
by the Seller and the Purchaser, the ACH item will be returned to the
originator and the daily ACH report will not be available to the Purchaser.
The Purchaser agrees to pay the Seller for all checks, drafts and
withdrawal orders drawn against funds transferred to the Purchaser and ACH
debit items presented to the Seller drawn against transferred accounts less
ACH credit items payable to transferred accounts each day by wire transfer.
If ACH credit items exceed debit items, the Seller agrees to make payment to
the Purchaser each day via wire transfer.
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(b) After the Effective Date, the Purchaser agrees to pay in accordance
with law, up to the collected amount on deposit to the extent of the amount
transferred to the Purchaser on the Effective Date (and any other funds
available by reason of any agreement between the depositor and the
Purchaser), all properly drawn and presented checks, drafts and withdrawal
orders presented to the Purchaser by mail, over its counters or through the
check clearing system of the banking industry, by depositors of the accounts
assumed, whether drawn on the checks, withdrawal or draft forms provided by
the Seller, or by the Purchaser, subject to the Purchaser's rules and
regulations regarding deposit accounts.
(c) If any of such depositors, instead of accepting the obligation of
the Purchaser to pay the Assumed Deposits, shall demand payment from the
Seller for all or any part of the Assumed Deposits, the Seller shall not be
liable or responsible for making such payment. Instead, the Seller may, at
its discretion, assume custody of the check or other item presented for
payment on an account which has been transferred with the Tidewater Branches,
and shall immediately forward such items to the Purchaser in the manner
provided in subsection (a) above. The Seller shall not, at any time, be
liable or responsible for making payment on such items by reason of its
obtaining custody of them for transmittal to the Purchaser.
(d) The Purchaser agrees, no later than noon of the second business day
after demand by the Seller, to pay the Seller an amount equivalent to the
amount of any uncollected item included in a depositor's balance as of the
close of business on the Effective Date which is returned on or within
thirty (30) days after the Effective Date as uncollected within the time
contemplated by applicable clearinghouse rules and applicable federal
regulations and that is not charged directly to the depositor's account with
the Purchaser. Provided the Purchaser has not honored checks written on
uncollected funds, the extent to which the Purchaser shall be required to
make such payment for an item shall be limited to the amount on deposit with
the Purchaser at the time the Seller makes the demand aforesaid.
Uncollected funds will be defined by the Seller's availability schedules
pursuant to Regulation CC.
(e) If the balance due on any Deposit Loan has been reduced by the
Seller as the result of a payment by check received on or prior to the
Effective Date, which item is returned within thirty (30) days after the
Effective Date as uncollected within the time contemplated by applicable
clearinghouse rules, the asset value represented by the Deposit Loan shall be
correspondingly increased and an amount in cash equal to such increase shall
be paid by the Purchaser to the Seller after the Effective Date upon demand.
(f) Not later than the last business day of the month following the
month in which the Effective Date occurs (the "Settlement Date"), the Seller
and the Purchaser shall reconcile the amount of cash or immediately available
funds paid by the Seller to the Purchaser on the Effective Date pursuant to
Section 1.05(c) by recalculating the amount payable pursuant to Section
1.05(c) by substituting measurements of Deposit Loans, Assumed Deposits and
Qualifying Deposits, plus accrued interest, as of the close of business on
the Effective Date for the measurements as of the Measurement Date that were
utilized on the Effective Date, and by making such adjustments to
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the amounts of proration items utilized for the purposes of Section
1.05(c)(iv) as shall be necessary to reflect bills and invoices received after
the Effective Date. On the Settlement Date, the Seller shall make an
additional payment to the Purchaser, or the Purchaser shall refund to the
Seller, as the case may be, in cash or immediately available funds, the amount
necessary (i) to adjust the amount originally paid by the Seller on the
Effective Date to the amount that would have been paid if measurements as of
the close of business on the Effective Date had been utilized on the
Effective Date, (ii) to reflect such adjustment to the proration items,
(iii) to pay to the Purchaser any payments on any of the Deposit Loans
received by the Seller after the Effective Date, (iv) to adjust for the
parties' respective shares of the costs associated with the Broker's
determination of Fair Market Value, (v) to adjust for the parties' costs
associated with the regulatory applications prepared and filed as
contemplated by Sections 5.02 and 10.06, and (vi) to adjust for any unpaid
overtime expenses payable by the Purchaser pursuant to Section 4(d).
(g) The Seller will provide the following records pertaining to the
Assumed Deposits as are contained in the BISYS system at no charge (except
as otherwise provided below) to the Purchaser:
At least thirty (30) days prior to the Effective Date, the
Seller will provide a copy of tapes and layouts containing
customer information files for the Assumed Deposits. Prior
to the Effective Date, the Seller will provide, subject to
reimbursement by the Purchaser of the Seller's out-of-pocket
costs associated with additional tapes subsequent to the first
"clean" tape, additional tapes and layouts within five (5)
business days (subject to the ability of BISYS to provide the
information within five (5) business days) after receipt of a
written request.
At least thirty (30) days prior to the Effective Date, a
printed copy of all information contained in the customer
information file (customer name, tax I.D., address(es),
account relationships, etc.) and all customer financial
data reasonably required by the Purchaser and an unlabeled,
standard display format (EBCIDIC) and a comma delineated or
other word processing format, fixed record length, machine
readable tape copy with blocks not exceeding 5,000 bytes.
On or immediately preceding the business day next following
the Effective Date, a printed copy of information contained
in the customer information file (customer name, tax I.D.,
address(es), account relationships, etc.) and all customer
financial data reasonably required by the Purchaser as of the
close of business on the Effective Date and an unlabeled,
standard display format (EBCIDIC), fixed record length,
machine readable "clean" tape copy with blocks not exceeding
5,000 bytes.
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The Seller will also provide reasonable assistance to the Purchaser
prior to and for a period of forty-five (45) days after the Effective Date
in the deconversion of the deposit records relating to the Tidewater Branches
from the BISYS system presently used by the Seller, and will assist the
Purchaser, at Purchaser's request and expense, in extending the contract of
the Seller with BISYS for the Purchaser's account and in providing any
special deconversion assistance to the Purchaser; provided that unless the
Purchaser has requested such an extension, any termination or similar fee
and all reasonable expenses incurred by the Seller associated with such
deconversion shall be borne by the Seller. In the event such an extension is
requested, all expenses incurred must be approved by the Purchaser and billed
directly to the Purchaser by BISYS. During any such conversion prior to the
Effective Date, the Seller will permit the Purchaser to have employees and/or
agents in the Seller's premises to monitor and assist with the conversion,
provided that such monitoring and assistance does not unreasonably interfere
with the Seller's operations.
(h) On or before the Effective Date, the Seller will cancel all
automatic teller machine (ATM) cards issued by it to customers of the
Tidewater Branches. At least thirty (30) days prior to the Effective
Date, the Seller will furnish to the Purchaser a printed copy of the
Seller's complete ATM cardholder information, including PIN numbers
(to the extent such information is available to the Seller).
(i) The Seller will forward by wire to the Purchaser all incoming wires
received after the Effective Date relating to accounts assumed by the
Purchaser.
(j) The Seller will render a final statement as of the Effective Date
to each depositor of an account assumed under this Agreement.
1.09 Indemnification.
(a) The Seller shall indemnify, hold harmless and defend the Purchaser,
its directors, officers, employees, representatives and agents (collectively,
the "Purchaser Indemnified Parties") from and against all claims, losses,
liabilities, demands, obligations, costs and expenses, including reasonable
legal fees and expenses, real estate, personal property, sales and use,
social security and unemployment taxes, all accounts payable and operating
expenses including salaries and utility charges (collectively, "Claims"),
which the Purchaser Indemnified Parties may receive, suffer or incur
relating to matters that arise from ownership and operation of the Tidewater
Branches on or before the Effective Date. The Seller agrees further to
defend, indemnify and hold harmless the Purchaser Indemnified Parties against
all Claims resulting from any material breach of this Agreement by the
Seller, or from any breach of any representation or warranty made by the
Seller in the Agreement or in any certificate delivered to the Purchaser
hereunder. The Purchaser will give the Seller written notice of a threatened
or pending claim within thirty (30) calendar days (except in the case where
the Purchaser's first notice is its receipt of the complaint, in which case
such time for giving notice shall be fifteen (15) calendar days) of its
learning about such claim, together with a statement of facts known to it
regarding such claim. The Seller will then have
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forty-five (45) calendar days
from the date it received such notice to investigate the claim and determine
whether it will elect to assume the defense of the matter involving such
claim. If it does so elect, the Seller will be given the Purchaser
Indemnified Parties' full cooperation and assistance in maintaining said
defense. The Seller shall not be liable for any amounts in settlement of a
claim or action as described above if such settlement is effected without
the Seller's written consent, which consent shall not be unreasonably
withheld. It is understood that the obligations of the Seller under this
paragraph shall survive the Effective Date.
In addition to and without limitation of any other provision of
this Agreement, the Seller agrees that the foregoing obligations shall extend
to all Claims arising out of, relating to or resulting from any violation of,
non-compliance with, or liability under any Environmental Law (as hereinafter
defined) occurring, relating to or arising from conditions, circumstances,
events or practices occurring at the Branch Property, or the release,
emission, discharge, handling, generation, treatment, storage or disposal of
hazardous materials at the Branch Property, on or after the time the Seller
acquired the Branch Property and prior to the Effective Date.
(b) The Purchaser shall indemnify, hold harmless and defend the Seller,
its directors, officers, employees, representatives and agents (collectively,
the "Seller Indemnified Parties") from and against all Claims which the Seller
Indemnified Parties may receive, suffer or incur relating to matters that
arise from ownership and operation of the Tidewater Branches after the
Effective Date. The Purchaser agrees further to defend, indemnify, and hold
harmless the Seller Indemnified Parties from and against all Claims resulting
from any material breach of this Agreement by the Purchaser, or from any
breach of any representation or warranty made by the Purchaser in this
Agreement or in any certificate delivered to the Seller hereunder. The
Seller will give the Purchaser written notice of a claim within thirty (30)
calendar days (except in the case where the Seller's first notice is its
receipt of a complaint, in which such time for giving notice shall be fifteen
(15) calendar days) of its learning about such claim, together with a
statement of facts known to it regarding such claim. The Purchaser will then
have forty-five (45) calendar days from the date it receives such notice to
investigate the claim to determine whether it will elect to assume the
defense of the matter involving such claim. If it does so elect, the
Purchaser will be given the Seller Indemnified Parties' full cooperation and
assistance in maintaining such defense. The Purchaser shall not be liable
for any amounts in settlement of a claim or action as described above if
such settlement is effected without the Purchaser's written consent, which
consent shall not be unreasonably withheld. It is understood that the
obligations of the Purchaser under this paragraph shall survive the Effective
Date.
1.10 Prorata Adjustment of Expenses; Service Contracts.
(a) All rent and other payments related to the Branch Leases, real
estate taxes, personal property taxes, intangibles taxes, utility payments,
service contracts assumed by the Purchaser as provided in subsection
1.10(b) below, deposit premiums (except to the extent provided in
Section 5.08), insurance and similar expenses relating to the Tidewater
Branches, the
10 E-12
Assumed Deposits and/or the Branch Property shall be prorated between the
parties as of the close of business on the Effective Date.
(b) The Purchaser may elect, at its option, to assume and discharge, and
the Seller shall transfer and assign to the Purchaser upon the Purchaser's
request, certain service contracts and other contractual obligations and
undertakings of the Seller incurred by the Seller in the ordinary course
of business in connection with the operation and maintenance of the Tidewater
Branches. The Seller has provided to the Purchaser information regarding such
service contracts and other contractual obligations. Unless the Purchaser
elects to assume any such obligations by notice to the Seller within thirty
(30) days after the date of this Agreement, the Seller shall arrange for the
termination of all such service contracts and other contractual obligations
and undertakings at or before the close of business on the Effective Date,
and shall have sole responsibility for all costs of termination in
connection therewith. The Seller shall retain all liability under service
contracts and other contractual obligations not assumed by the Purchaser.
1.11 Essex Signage and Other Retained Property. The Seller shall be entitled
to remove from the premises of the Tidewater Branches, not later than five (5)
business days following the Effective Date, at its expense, and at reasonable
times, upon reasonable notice and without damage or unnecessary disruption,
(a) all signage displaying the "Essex" name and/or trademarks or service
marks utilized by the Seller in the conduct of its business, and (b) all
software and dedicated lines associated with Seller's internal data
processing and internal communications systems (collectively, including the
signage, the "Excluded Assets"). The Purchaser agrees to allow the Seller to
retain the Excluded Assets, which will be identified on the Fixed Assets
schedule to be furnished by the Seller pursuant to Section 1.02(a)(ii).
ARTICLE 2.
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to the Purchaser as follows:
2.01 Corporate Organization and Powers. The Seller is a federally chartered
capital stock savings bank duly organized, validly existing and in good
standing under the laws of the United States of America and the rules and
regulations of the Office of Thrift Supervision ("OTS"). The Seller has the
corporate power and authority to own its properties, to effect this
transaction and carry on its business as presently conducted. The Seller's
deposits are, subject only to monetary limits established by law and
regulation, insured by the Savings Association Insurance Fund ("SAIF").
2.02 Branch Property and Fixed Assets.
(a) The Branch Property is subject to no mortgage, pledge, lien,
security interest, conditional sale agreement, encumbrance or charge of any
nature whatsoever (other than for taxes not yet due and payable) not
reflected in the title insurance commitments attached as Exhibit G.
11 E-13
(b) The Seller has, and at the Effective Date will have, good and
marketable title to the Fixed Assets, and in each case subject to no mortgage,
pledge, lien, security interest, conditional sale agreement, encumbrance or
charge of any nature whatsoever.
(c) Except for the Excluded Assets, the Fixed Assets are all of the
physical assets owned by the Seller and used by it to conduct the business of
the Tidewater Branches as of the date hereof; the banking equipment, fixtures
and furniture comprising the assets being sold is in good operating condition
and repair, giving consideration to its age and use and subject to ordinary
wear and tear. The Purchaser, however, acknowledges and agrees that all such
property is being sold "as is" and without any warranties, express or implied,
other than those specified in this paragraph.
(d) No notice of any violation of zoning laws, building, fire, or other
regulating laws, statutes, ordinances and regulations relating to the
Tidewater Branches has been received by the Seller and the Seller has no
knowledge of any such violation.
2.03 Deposit Loans. The Seller owns, as of the Effective Date, all Deposit
Loans, free from liens and encumbrances, and has no actual knowledge of any
defense to payment of any maker of any Deposit Loan. The outstanding
principal and interest balances of the Deposit Loans do not exceed the
balances of the deposit accounts with which they are associated.
2.04 No Violation. Neither the execution and delivery of this Agreement,
nor the consummation of this sale or the Seller's performance hereunder,
will violate or conflict with: (i) the Charter or Bylaws of the Seller;
(ii) any provision of any agreement or any other restriction of any kind to
which the Seller is a party or by which the Seller is bound; or (iii) any
statute, law, decree, regulation or order of any governmental authority, once
the governmental consents referred to in this Agreement are obtained; or will
result in a default under, or cause the acceleration of the maturity of, any
obligation or loan to which the Seller is a party.
2.05 Corporate Authority. The execution and delivery of this Agreement, the
consummation of this sale and the Seller's performance hereunder, have been
duly authorized by the Board of Directors of the Seller. No further
corporate authorization on the part of the Seller is necessary to consummate
the transaction.
2.06 No Litigation. There is no action, suit, proceeding, inquiry or
investigation, at law or in equity, or before any court, public board or body
pending, or to the knowledge of the Seller threatened, against the Seller,
wherein an unfavorable decision, ruling or finding would materially and
adversely affect the Tidewater Branches, the Branch Property, the assets or
liabilities being transferred or assumed pursuant to this Agreement, the
Seller's ability to perform this Agreement or the transactions contemplated
hereby.
2.07 Taxes. The Seller has filed all required tax returns and reports
(including payroll withholding, sales, use, transfer, excise and property
taxes) to the taxing authority of each
12 E-14
jurisdiction to which its operations at the Tidewater Branches are subject.
Seller has collected and paid over to
the taxing authority of each jurisdiction to which its operations at the
Tidewater Branches are subject all taxes (including tax penalties and
interest) that are due and payable for periods on or prior to the Effective
Date and for which the Purchaser could have transferee liability or in
respect of which any of the assets being transferred to the Purchaser in
connection with this Agreement could be subjected to a lien therefor. No
taxing authority has assessed any claim against the Seller for the assessment
of any such tax liability (including additions to tax penalties and
interest), withholding or other governmental charges.
2.08 Environmental Matters. Except as previously disclosed to the
Purchaser, neither the Seller nor to the Seller's knowledge any other
occupant or user of the Branch Property or any part thereof or any other
person or entity has taken any action or received any written report that
would result in or indicate, and the Seller has no knowledge of, any
condition such that the Branch Property, including without limitation, the
improvements thereon and the groundwater and soil thereunder, (i) contains or
is contaminated by, any Hazardous Material (as defined below), (ii) contains
(or has previously contained) any underground storage tanks, (iii) contains
any asbestos, (iv) has been used for the generation, treatment, release,
installation, storage or disposal of any Hazardous Material, or for
manufacturing, mining, landfilling, dumping or drycleaning purposes, (v) has
been the subject of any activities representing a violation or alleged
violation of any Environmental Law (as defined below) or requiring corrective
action regarding elimination or control of any Hazardous Material, (vi) has
had any release of any Hazardous Material from, on, in or upon it, or faces
any risk of contamination by any Hazardous Material from any nearby property,
(vii) has been the subject of an environmental audit or assessment, or
remedial action for any environmental problem or (viii) has transported any
Hazardous Material from the Branch Property in violation of any Environmental
Law or other code, ordinance, statute, rule, regulation, permit, approval or
other legal requirement. As used herein, "Hazardous Material" means any
substance or material meeting any one or more of the following criteria:
(i) it is or contains a substance designated as a hazardous waste, hazardous
substance, hazardous material, pollutant, contaminant or toxic substance
under any Environmental Law; (ii) it is toxic, reactive, corrosive,
ignitable, infectious or otherwise hazardous; or (iii) it is or contains,
without limiting the foregoing, petroleum hydrocarbons. As used herein,
"Environmental Law" shall mean any federal, state or local law
(including common law), statute, ordinance, rule, regulation, permit,
directive, license, approval, guidance, interpretation, order, or other legal
requirement relating to the protection of human health, industrial hygiene or
the environment, including, but not limited to, CERCLA, RCRA and the
Superfund Amendments and Reauthorization Act of 1986.
2.09 Insurance. The Fixed Assets are covered by effective insurance in
amounts at least equal to their respective fair market values and insurance
against such losses as are generally insured against by comparable businesses.
In addition, the Tidewater Branches are insured against casualties and such
other events as included in extended coverage fire and casualty policies.
All amounts due and payable under such insurance policies are fully paid, and
all such insurance policies are in full force and effect.
13 E-15
2.10 Brokered Deposits. The Assumed Deposits do not include any
"brokered deposits" within the meaning of 12 C.F.R. - 337.6 (as in effect on
January 1, 1996).
2.11 Compliance with Laws. The Tidewater Branches, the Branch Property, and
the Seller's operation of the Tidewater Branches are in compliance in all
material respects with all applicable laws, statutes and governmental
regulations that relate to the Seller or its operation of the Tidewater
Branches.
2.12 Employment Contracts. The Seller has no employment contracts with any
employees who are employed by Seller in connection with the Tidewater
Branches. Except as provided in Section 5.04 below, no liability or
obligation to any of Seller's employees will be transferred to the Purchaser
pursuant to this Agreement or the transactions contemplated hereunder.
2.13 Finders or Brokers. The Seller has not in any manner whatsoever paid
or agreed to pay any fee or commission to any agent, broker, finder or other
person for or on account of services rendered as a broker or finder in
connection with this Agreement or the transactions covered and contemplated
hereby. All negotiations relating to this Agreement have been conducted
by the Seller directly and without the intervention of any person in such
manner as to give rise to any valid claim against any party hereto for any
brokerage commission or finder's fee or other like payment.
2.14 Information. The financial and other information regarding the
Tidewater Branches provided by the Seller to the Purchaser and attached to or
listed in Exhibit H was accurate and correct in all material respects as of
the dates reflected therein.
2.15 Limitation of Warranties. Except as may be expressly represented or
warranted in this Agreement by the Seller, the Seller makes no
representations or warranties whatsoever with regard to any assets being
transferred to the Purchaser, or liability or obligation being assumed by the
Purchaser.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser hereby represents and warrants to the Seller the following:
3.01 Corporate Organization. The Purchaser is a financial institution duly
organized, validly existing and in good standing under the laws of the
jurisdiction under which it was established. The Purchaser has the corporate
power and authority to own or lease its properties, to effect the
transactions contemplated hereby and to carry on its business as presently
being conducted. The Purchaser's deposits are insured, subject only to
monetary limits established by law or regulation, by the Savings Association
Insurance Fund.
14 E-16
3.02 No Violation. Neither the execution and delivery of this Agreement,
nor the consummation of this sale or the Purchaser's performance hereunder,
will violate or conflict with: (i) the Charter or the Bylaws of the
Purchaser; (ii) any provision of any agreement or any other restriction of
any kind to which the Purchaser is a party to or by which the Purchaser is
bound; or (iii) any statute, law, decree, regulation or order of any
governmental authority, once the governmental consents referred to in this
Agreement are obtained, or will result in a default under, or cause the
acceleration of the maturity of, any obligation or loan to which the
Purchaser is a party.
3.03 Corporate Authority. The execution and delivery of this Agreement, and
the consummation of this sale and the Purchaser's performance hereunder, have
been duly authorized by the Board of Directors of the Purchaser. No further
corporate authorization on the part of the Purchaser is necessary to
consummate this transaction.
3.04 No Litigation. There is no action, suit, proceeding, inquiry or
investigation, at law or in equity, or before any court, public board or body
pending, or to the knowledge of the Purchaser threatened, against the
Purchaser, wherein an unfavorable decision, ruling or finding would
materially and adversely affect the Purchaser's ability to perform this
Agreement or the transactions contemplated hereby.
3.05 Finders or Brokers. The Purchaser has not in any manner whatsoever
paid or agreed to pay any fee or commission to any agent, broker, finder or
other person for or on account of services rendered as a broker or finder in
connection with this Agreement or the transactions covered and contemplated
hereby. All negotiations relating to this Agreement have been conducted by
the Purchaser directly and without the intervention of any person in such
manner as to give rise to any valid claim against any party hereto for any
brokerage commission or finder's fee or other like payment.
ARTICLE 4.
CONDUCT OF BUSINESS PENDING THE EFFECTIVE DATE
Pending the Effective Date, and except as otherwise consented to by the
Purchaser or provided for by this Agreement:
(a) The Seller will carry on the business of the Tidewater Branches
diligently and substantially in the same manner as on the date of this
Agreement.
(b) The Seller will use reasonable efforts to preserve its business
operations as conducted at the Tidewater Branches intact. The Seller further
agrees to use reasonable efforts to preserve for the Purchaser the goodwill
of its customers and others having relations with the business normally
conducted at the Tidewater Branches, and to cooperate with and assist the
Purchaser in assuring the orderly transition of such business from the Seller
to the Purchaser. Nothing in this paragraph shall be construed as requiring
the Seller to engage in any activities or efforts outside of the ordinary
course of business as presently conducted.
15 E-17
(c) The Seller will not (i) accept any new Jumbo Accounts at the
Tidewater Branches unless the deposit rates paid with respect to such
accounts are equal to or less than the deposit rates for accounts offered by
the Seller that are not Jumbo Accounts or (ii) originate or renew any
National Market Certificates of Deposit at the Tidewater Branches.
The Seller will use its reasonable best efforts to maintain deposit
rates at levels not in excess of the highest rates for identical maturities
offered by Life Savings Bank, F.S.B. or Virginia Beach Federal Savings Bank
(the "Compared Institutions") at the times at which the Seller establishes
its rates from time to time, and with respect to deposit maturities not
offered by the Compared Institutions, will use its reasonable best efforts to
maintain deposit rates not in excess of the highest rates, on an interpolated
basis, offered by the Compared Institutions at the time at which the Seller
establishes its rates from time to time, for their next longer and shorter
maturities.
(d) The Purchaser shall have reasonable access to the Seller's
employees before the Effective Date for training and other purposes. If the
Seller's employees work overtime to accomplish these purposes, Purchaser will
pay the Seller's actual overtime payroll expense. Payment will be made to
the Seller by the purchaser within five (5) business days after the
Purchaser's receipt of written documentation of overtime paid.
ARTICLE 5.
OBLIGATIONS OF THE PARTIES PRIOR TO AND AFTER EFFECTIVE DATE
5.01 Full Access. The Seller shall afford to the officers, employees and
authorized representatives of the Purchaser access to the properties, books
and records pertaining to the Tidewater Branches, upon reasonable notice by
the Purchaser to the Seller and at reasonable times, in order that the
Purchaser may have full opportunity to make such investigations as it shall
desire, of the affairs of the Seller relating to the Tidewater Branches. The
Purchaser shall be entitled to inspect from time to time the condition of
the Tidewater Branches and of the Fixed Assets being transferred to the
Purchaser in accordance with this Agreement, and the officers of the Seller
will furnish the Purchaser with such additional financial and operating data
and other information as to its business and properties at the Tidewater
Branches as the Purchaser shall from time to time reasonably request and as
shall be available, including, without limitation, information required for
inclusion in all governmental applications necessary to effect the
transactions contemplated by this Agreement. Nothing in this Section 5.01
shall be deemed to require the Seller to breach any obligation of
confidentiality.
5.02 Regulatory Applications. Each party shall prepare and file, with the
cooperation of the other, as soon as practicable, but no event later than 30
days following the date of this Agreement, such applications, as required by
law, to the appropriate Federal and/or State regulatory authorities for
approval for the Seller and the Purchaser, respectively, to effect the
transactions contemplated by this Agreement, and the parties hereto shall, if
required by applicable statute or regulation, publish appropriate notice of
the sale. The parties agree to use
16 E-18
their good faith reasonable efforts to file such applications jointly if
possible and to obtain such approval in a diligent manner and on a priority
basis. To the extent that such applications may be filed jointly, the
Purchaser shall pay the regulatory application fees and publication costs
related thereto. Each party shall otherwise pay its own regulatory
application fees, publication costs, if any, and legal expenses.
5.03 Further Assurances. Both parties hereby agree to execute and deliver
such instruments and take such other actions as the other party may reasonably
require in order to carry out the intent of this Agreement, and the Seller
agrees to give such bills of sale, acknowledgments and other instruments of
conveyance and transfer as, in the reasonable judgment of the Purchaser, shall
be necessary and appropriate to vest in the Purchaser legal and equitable
title to the assets of the Seller being sold hereunder, free and clear of all
liens and encumbrances. The Purchaser shall be responsible for the costs of
examining title, surveys, recording of documents, etc.
5.04 Retention of Employees. The Purchaser agrees that it will offer
employment to any or all employees of the Seller at the Tidewater Branches
who are still so employed by the Seller as of the close of business on the
Effective Date, initially at a salary comparable to that provided by the
Seller to such employees, and on other terms and conditions comparable to
those provided either by the Seller to such employees or by the Purchaser to
similar employees. Each employee will have the right to carry over to its
employment by the Purchaser all accrued but unused vacation time and sick
leave. A schedule of each employee's accrued but unused vacation time and
sick leave as of May 31, 1996 is attached as Exhibit I. Each employee has
the option of accepting the offer of employment by the Purchaser, and the
Seller will use reasonable efforts to encourage the employees to accept the
Purchaser's offer. Employment by the Purchaser will commence as of the close
of business on the Effective Date, and the Seller will terminate the
employment of each employee (and their participation in employee benefit
plans of the Seller) as of the close of business on the Effective Date. The
Purchaser agrees that if any employee accepting employment with the Purchaser
is discharged by the Purchaser within ninety (90) days of the Effective Date,
such employee will receive severance benefits no less generous than those
that employee would have received had he/she remained in the employ of the
Seller and been terminated under the same circumstances. However, the
Purchaser shall have the right to dismiss any former employee of the Seller
for "cause" at any time, whether the actions or inactions constituting cause
occurred under the Seller's or the Purchaser's employment, and any employee
dismissed for such cause shall have no right to receive severance benefits.
Notwithstanding any other provision in this Agreement, any employee of the
Seller who becomes an employee of the Purchaser, like other of the
Purchaser's employees, shall be an employee at will. "Cause," as used in
this paragraph, shall include but not be limited to, fraud, embezzlement,
dishonesty, insubordination, failure to comply with instructions, or other
action or omission which the employer believes does or may materially or
adversely affect its business or operations.
5.05 Confidentiality. From and after the Effective Date, the Seller will
keep confidential and will not furnish to any other person the names of the
deposit and other customers of the Tidewater
17 E-19
Branches other than as may be required under applicable law or in connection
with the defense of any claim.
5.06 Risk of Loss. Until the close of business on the Effective Date, the
risk of loss of all assets to be transferred to the Purchaser pursuant to
this Agreement shall be upon the Seller.
5.07 Best Efforts. The Purchaser and the Seller each agree to use their
reasonable best efforts to ensure the occurrence of the Effective Date not
later than September 30, 1996.
5.08 SAIF Assessment. The Seller and the Purchaser acknowledge that the
United States Congress is presently considering a number of measures designed
to recapitalize the SAIF, including the imposition of a one-time special
assessment on institutions the deposits of which are insured by the SAIF
(a "Special Assessment"). The Seller agrees that it will remain liable for,
and will indemnify the Purchaser for the payment of, any Special Assessment
or portion of any Special Assessment that is based upon the deposits of the
Branches at any time prior to or as of the Effective Date, regardless of the
date when such Special Assessment is imposed. However, the Seller shall not
be liable for the amount of any Special Assessment to the extent that it is
based upon deposit balances in excess of the following: (i) the Assumed
Deposits or (ii) if higher, the actual amount of deposits associated with the
Branches (excluding the Grafton Branch, if applicable) as of a date prior to
the Effective Date.
5.09 Seller's Covenant Not to Compete. The Seller agrees that (subject to
the occurrence on the Effective Date of the transactions contemplated by this
Agreement) it will not: (i) solicit the deposit relationships of customers
owning the Assumed Deposits with current actual knowledge that the person
solicited was such a customer; (ii) for a period of one (1) year after the
Effective Date, open a branch within a two (2) mile radius of any Tidewater
Branch (except by acquiring (through merger or otherwise) one or more
branches of another financial institution); or (iii) for a period of one (1)
year after the Effective Date, solicit the Purchaser's employees in the
Branches to work for the Seller.
5.10 Reporting. The Purchaser shall report in accordance with federal
statutes and regulations on Forms 1099 the amount of interest on the Assumed
Deposits actually paid in 1996 by the Seller and the Purchaser. The Seller
agrees to provide the Purchaser with all information necessary to enable the
Purchaser to comply with all tax reporting obligations for 1996 related to
the Assumed Deposits (including Individual Retirement Accounts) and Deposit
Loans, and the Purchaser agrees to comply with such obligations.
5.11 Purchaser's Covenant. The Purchaser agrees that for a period of one
(1) year after the Effective Date (subject to the occurrence on the Effective
Date of the transactions contemplated by this Agreement), it will not solicit
any of the Seller's employees to work for the Purchaser.
18 E-20
ARTICLE 6.
CONDITIONS TO PURCHASER'S OBLIGATIONS
Each and every obligation of the Purchaser under the Agreement to be
performed on or before the Effective Date shall be subject to the
satisfaction, on or before the Effective Date, of the following conditions:
(a) The representations and warranties made by the Seller in this
Agreement shall be true in all material respects at and as of the Effective
Date as though such representations and warranties were made at and as of
such time, except for any changes permitted by the terms hereof or consented
to by the Purchaser.
(b) The Seller shall have performed and complied in all material
respects with all obligations and agreements required by this Agreement to be
performed or complied with by it prior to or on the Effective Date.
(c) From the date of this Agreement through the close of business on
the Effective Date, there shall have been no material adverse change, not
cured, in the business or material conditions (financial or otherwise)
affecting the Tidewater Branches or the assets to be acquired by the
Purchaser, except for any changes permitted or contemplated by the terms
hereof, or consented to by the Purchaser. For the purposes of this
subsection, a material adverse change shall be deemed to include the
discovery by the Purchaser of a material environmental condition of the type
described in Section 2.08.
(d) As of the close of business on the Effective Date, no action, suit
or proceeding shall be pending or threatened: (i) against the Seller which
might materially and adversely affect the business, properties and assets of
the Tidewater Branches or the other assets to be acquired by the Purchaser;
or (ii) against either party pertaining to this transaction.
(e) The Seller shall have made delivery to the Purchaser of the items
described in Sections 1.05(a), 1.05(b) and 1.05(d).
(f) The Seller shall have delivered to the Purchaser all appropriate
tax affidavits, IRS "B" and "C" notices regarding taxpayer identification
numbers and withholding, and schedules listing the deposit customers of the
Tidewater Branches, the Fixed Assets and the Deposit Loans, each as of the
Measurement Date or such later date on or prior to the Effective Date as is
practicable under the circumstances.
(g) The Seller and Purchaser shall have received from the appropriate
regulatory authorities approval (i) to effect the transactions contemplated
by this Agreement; and (ii) to operate the Tidewater Branches, which approval
is not subject to any conditions that cannot be satisfied with reasonable
effort within a reasonable time.
19 E-21
(h) The Seller shall have delivered to the Purchaser a certificate
executed by its President, dated the Effective Date, certifying that the
representations and warranties made by the Seller in this Agreement are true
in all material respects at and as of the Effective Date as though such
representations and warranties were made at and as of such time, except for
any changes permitted by the terms hereof or consented to by the Purchaser.
ARTICLE 7.
CONDITIONS TO THE SELLER'S OBLIGATIONS
Each and every obligation of the Seller under this Agreement to be performed
on or before the Effective Date shall be subject to the satisfaction, on or
before the Effective Date, of the following conditions:
(a) The representations and warranties made by the Purchaser in this
Agreement shall be true in all material respects at and as of the Effective
Date as though such representations and warranties were made at and as of
such time, except for any changes permitted by the terms hereof or consented
to by the Seller.
(b) The Purchaser shall have performed and complied in all material
respects with all obligations and agreements required by this Agreement to be
performed or complied with by it prior to or on the Effective Date.
(c) The Seller and Purchaser shall have received from the appropriate
regulatory authorities approval to effect the transactions contemplated by
this Agreement, which approval is not subject to any conditions that cannot
be satisfied with reasonable effort within a reasonable time.
(d) The Purchaser shall have delivered to the Seller a certificate
executed by its President, dated the Effective Date, certifying that the
representations and warranties made by the Purchaser in this Agreement are
true in all material respects at and as of the Effective Date as though such
representations and warranties were made at and as of such time, except for
any changes permitted by the terms hereof or consented to by the Seller.
ARTICLE 8.
CONDITIONS TO THE SELLER'S AND THE PURCHASER'S OBLIGATIONS
Each and every obligation of the parties under this Agreement to be performed
on or before the Effective Date shall be subject to the satisfaction, on or
before the Effective Date, of the following conditions: approval by the
appropriate regulatory authorities shall have been obtained and, as
applicable, termination or relocation of branch operations conducted by the
Seller at the Tidewater Branches' locations and the Seller's consummation of
this sale shall not have been objected to by the appropriate regulatory
authority.
20 E-22
ARTICLE 9.
TERMINATION
9.01 Methods of Termination. This Agreement may be terminated at any
time, but not later than the Effective Date:
(a) By mutual agreement of the Purchaser and the Seller; or
(b) By the Purchaser if any of the conditions provided for in Article 6
of this Agreement shall not have been met or waived in writing by the
Purchaser at the earlier of the time established for the Effective Date and
December 31, 1996 after the Purchaser's written notice to the Seller and the
Seller's failure to cure within a reasonable period of time; or
(c) By the Seller if any of the conditions provided for in Article 7 of
this Agreement shall not have been met or waived in writing by the Seller at
the earlier of the time established for the Effective Date and December 31,
1996 after the Seller's written notice to the Purchaser and the Purchaser's
failure to cure within a reasonable period of time; or
(d) By either party if any of the conditions provided for in
Article 8 shall not have been met at the earlier of the time established for
the Effective Date and December 31, 1996.
9.02 Procedure Upon Termination. In the event of termination pursuant to
Section 9.01 hereof, written notice thereof shall be given to the other party,
and this Agreement shall terminate immediately upon receipt of such notice,
unless an extension is consented to by the party or parties having the right
to terminate. If this Agreement is terminated as provided herein:
(a) Each party will redeliver all documents, work papers and other
materials of the other party relating to this transaction, whether so
obtained before or after the execution hereof, to the party furnishing the
same; and
(b) All information received by either party hereto with respect to the
business of the other party (other than information which is a matter of
public knowledge or which has heretofore been or is hereafter published in
any publication for public distribution or filed as public information with
any governmental authority) shall not at any time be used for business
advantage by such party or disclosed by such party to third persons to the
detriment of the party furnishing such information or if otherwise prohibited
by state or federal law.
(c) Nothing contained in this Article 9 shall be deemed to excuse either
party for a breach of any of its obligations or agreements undertaken or made
in this Agreement.
21 E-23
9.03 Payment of Expenses. If this Agreement is terminated as provided
herein:
(a) then if this Agreement has been terminated because of the
Purchaser's failure to perform and comply in all material respects with its
obligations under this Agreement, then the Purchaser shall be liable for the
reasonable expenses of the Seller incurred in connection with the
transactions contemplated by this Agreement.
(b) then if this Agreement has been terminated because of the Seller's
failure to perform and comply in all material respects with its obligations
under this Agreement, then the Seller shall be liable for the reasonable
expenses of the Purchaser incurred in connection with the transactions
contemplated by this Agreement.
ARTICLE 10.
MISCELLANEOUS PROVISIONS
10.01 Amendment and Modification. The parties hereto, by mutual consent of
their respective duly authorized officers, may amend, modify and supplement
this Agreement in such manner as may be agreed upon by them in writing.
10.02 Assignment. This Agreement and all of the provisions hereof shall be
binding upon, and inure to the benefit of, the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned,
prior to the Effective Date, by either of the parties hereto without the prior
written consent of the other.
10.03 Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.04 Headings. The headings of the Sections and Articles of this Agreement
are inserted for convenience only and shall not constitute a part hereof.
10.05 Survival of Representations and Warranties. The respective
representations and warranties of the parties hereto contained herein shall
survive for a period of eighteen (18) months after the Effective Date,
unless stated otherwise herein.
10.06 Payment of Expenses. Each party herein shall pay for its own expenses
incurred in connection with the transactions contemplated by this Agreement
except as stated otherwise herein. Except as otherwise provided herein, any
expenses, fees and costs necessary for any approvals of the appropriate
Federal and/or State regulatory authorities or for any notice to depositors
of the assumption of deposit liabilities provided for in this Agreement shall
be paid by the Purchaser.
22 E-24
10.07 Governing Law. This Agreement shall be deemed to have been made and
executed in the Commonwealth of Virginia, and shall be governed by the laws of
the Commonwealth of Virginia.
10.08 Customer Notices. The Seller shall permit the Purchaser access to
names and addresses of depositors, including Individual Retirement Account
("IRA") customers, of the Tidewater Branches at least 30 days prior to the
Effective Date for purposes of preparing for publication and direct mailings,
and the Seller will cooperate with the Purchaser to enable the Purchaser to
notify such depositors of the impending transfer of their accounts, which
notice will be subject to the Seller's approval, which shall not be
unreasonably withheld. In addition, the Seller will give all legally
required notices to its customers at the Tidewater Branches. With respect
to the transfer of any IRA accounts at the Tidewater Branches, the Seller
shall comply with all laws and regulations relating to the prior notification
of the transfer of IRA accounts.
10.09 Addresses for Notice, etc. All notices, requests, demands and other
communications provided for hereunder and under the related documents shall
be in writing (including telegraphic and facsimile communications) and mailed
(by registered or certified mail) or telegraphed or delivered in person or by
facsimile to the applicable party at the addresses indicated below.
If to the Seller: Mr. Gene D. Ross
Chief Executive Officer
Essex Savings Bank, F.S.B.
200 Golden Oak Court, Suite 200
Virginia Beach, VA 23452
With a copy to: James J. Wheaton, Esquire
Willcox & Savage, P.C.
1800 NationsBank Center
Norfolk, VA 23510
If to the Purchaser: Mr. Michael S. Ives
President and Chief Executive Officer
CENIT Bank, FSB
225 West Olney Road
Norfolk, VA 23510
With a copy to: Hugh B. Wellons, Esquire
Mays & Valentine
1111 East Main Street, 23rd Floor
Richmond, VA 23219
or, as to each party, at such other address as shall be designated by such
party in a written notice to each other party complying as to delivery with
the terms of this Section.
23 E-25
10.10 No Third Party Beneficiaries. It is the intention of the parties that
nothing in this Agreement shall be deemed to create any right with respect to
any person or entity not a party to this Agreement.
10.11 Confidentiality. The Seller and the Purchaser agree that they will
not, without the consent of the other, issue any press releases or make any
public disclosure regarding the transactions contemplated by this Agreement,
except as otherwise required by law. The Seller and the Purchaser agree that
the terms of this Agreement are confidential, and shall not be disclosed to
any other party, except as otherwise required by law or with the consent of
the other. The Seller and the Purchaser acknowledge that it is contemplated
that the Purchaser will issue a press release, subject to the Seller's review
and consent, in connection with the execution of this Agreement.
24 E-26
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their duly authorized officers and their corporate seals to be
affixed as of the date first written above.
ESSEX SAVINGS BANK, F.S.B.
By: ____________________________________
Gene D. Ross
Chief Executive Officer
CENIT BANK, FSB
By: ____________________________________
Michael S. Ives
President and Chief Executive Officer
25 E-27
EXHIBIT A
TIDEWATER BRANCHES
1. Hampton Branch
550 Settlers Landing Road
Hampton, VA 23669
2. Newport News Branch
13307 Warwick Boulevard
Newport News, VA 23602
3. Portsmouth Branch
3511 High Street
Portsmouth, VA 23707
4. Norfolk Branch
1901 Granby Street
Norfolk, VA 23517
5. Grafton Branch
4428 George Washington Memorial Highway
Grafton, VA 23692
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EXHIBIT B
BRANCH PROPERTY
1. Hampton Branch
550 Settlers Landing Road
Hampton, VA 23669
2. Newport News Branch
13307 Warwick Boulevard
Newport News, VA 23602
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EXHIBIT C
BRANCH LEASES
1. Norfolk Branch
1901 Granby Street
Norfolk, VA 23517
5. Grafton Branch
4428 George Washington Memorial Highway
Grafton, VA 23692
Copies of Leases are attached.
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EXHIBIT D
FORM OF DEED
SPECIAL WARRANTY DEED
THIS DEED made as of this ____ day of ____________, 1996, by and between
ESSEX SAVINGS BANK, F.S.B., a federally-chartered stock savings bank
(hereinafter called "Grantor") and CENIT BANK, FSB, a federally-chartered
stock savings bank (hereinafter called "Grantee").
WITNESSETH:
That for and in consideration of the sum of _________________________
Dollars ($__________), said sum being the actual consideration paid or to be
paid on account hereof, the receipt and sufficiency whereof are hereby
acknowledged, the Grantor does grant and convey unto the Grantee, its
successors and assigns, in fee simple, the following described land and
premises (the "Property"), known as __________________________ and situate
in the City of ______________, Virginia, and described as follows:
[DESCRIPTION OF PROPERTY]
TO HAVE AND TO HOLD the Property for the use and benefit of Grantee, its
successors and assigns, in fee simple.
Grantor covenants that it has done no act to encumber the Property;
that it will warrant specially the Property; and that it will execute such
further assurances thereof as may be requisite.
IN WITNESS WHEREOF, the Grantor has caused this Deed to be executed on
its behalf as of the day and year first above written.
ATTEST: ESSEX SAVINGS BANK, F.S.B.
By:
Secretary Gene D. Ross
Chief Executive Officer
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COMMONWEALTH OF VIRGINIA
CITY OF VIRGINIA BEACH, to-wit:
On the ____ day of ____________, 1996, before me, the undersigned
officer, personally appeared Gene D. Ross, who acknowledged himself to be an
officer of Essex Savings Bank, F.S.B., and that he, as such officer, being
authorized to do so, acknowledged to me that he executed the foregoing
instrument for the purposes therein contained as such officer.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
Notary Public
[SEAL]
My commission expires:
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EXHIBIT E
FORM OF BILL OF SALE
BILL OF SALE AND ASSIGNMENT
THIS BILL OF SALE AND ASSIGNMENT is executed as of ______________ ___,
1996, by Essex Savings Bank, F.S.B. (the "Seller") to CENIT Bank, FSB
(the "Purchaser"). All capitalized terms not defined herein shall have the
meanings ascribed to them in that certain Branch Purchase and Deposit
Assumption Agreement (the "Agreement") dated as of July 2, 1996 between the
Seller and the Purchaser.
For good and valuable consideration, the receipt and sufficiency of
which are acknowledged, the Seller hereby sells, grants, assigns, transfers,
conveys and delivers to the Purchaser all its right, title and interest in,
to and under the following assets, properties and rights:
1. the Fixed Assets;
2. the Deposit Loans;
3. the net amount of proration items, as described in Section 1.10 of
the Agreement, paid by the Seller on or prior to the Effective Date but
relating to periods after the Effective Date, security deposits held by
others with respect to the Tidewater Branches, and cash on hand in the
Tidewater Branches;
4. all records pertaining to the deposit liabilities to be assumed by
the Purchaser as provided in the Agreement or to any of the foregoing, except
as otherwise provided in Section 1.05(d) of the Agreement.
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TO HAVE AND TO HOLD all of the property hereby sold, assigned, transferred,
conveyed, and delivered unto the Purchaser, its successors, and assigns,
forever.
The Seller acknowledges that the Purchaser does not assume and shall
have no liability for any debts, liabilities or obligations of the Seller of
any kind whatsoever except as specifically set forth in the Agreement and in
the separate Assumption Agreement between the Seller and the Purchaser of
even date herewith.
IN WITNESS WHEREOF, the Seller has caused this Bill of Sale and
Assignment to be duly executed, sealed, delivered in its name as
of _______ on the ____ day of _______________, 1996.
ESSEX SAVINGS BANK, F.S.B.
By:
Gene D. Ross
Chief Executive Officer
ATTEST:
(Corporate Seal)
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EXHIBIT F
FORM OF ASSUMPTION AGREEMENT
ASSUMPTION AGREEMENT
THIS ASSUMPTION AGREEMENT (the "Agreement") is made as of the ____ day
of _________________, 1996, by and between ESSEX SAVINGS BANK, F.S.B., a
federally-chartered stock savings bank (the "Seller"), and CENIT BANK, FSB,
a federally-chartered stock savings bank (the "Purchaser").
WITNESSETH:
WHEREAS, the Seller and the Purchaser have entered into that certain
Branch Purchase and Deposit Assumption Agreement (the "Purchase Agreement"),
dated as of July 2, 1996, pursuant to which, for the consideration set forth
therein, and upon the other terms and conditions therein described, the
Seller has agreed to sell, transfer, assign and convey to the Purchaser
certain of the assets owned by the Seller and used in connection with the
operation and maintenance of the branches of the Seller located
in __________________ (the "Tidewater Branches"); and
WHEREAS, the Purchase Agreement requires that, in connection with the
sale, transfer, assignment, and conveyance by the Seller to the Purchaser of
such assets, the Purchaser shall assume from the Seller, and agree to
discharge and pay, certain liabilities and obligations of the Seller.
NOW, THEREFORE, in consideration of the premises and in accordance with
the terms and conditions of the Purchase Agreement, and for other good and
valuable consideration the adequacy and receipt of which are hereby
acknowledged, the Seller and the Purchaser agree as follows:
1. The Seller hereby assigns to the Purchaser and the Purchaser hereby
assumes from the Seller and agrees to discharge and pay all deposit
liabilities of the Seller with respect to the deposit accounts attributed on
the records of the Seller to the Tidewater Branches as of the close of
business on the Effective Date, in the amount of such deposit accounts,
including accrued interest, as of the close of business on the Effective Date.
2. The deposit liabilities assumed hereby are more particularly
described in the savings trial balance report and the checking trial balance
report for the Tidewater Branches, dated as of the Effective Date, that are
attached hereto. The Purchaser may administer the deposit accounts hereby
transferred pursuant to the Purchaser's own internal policies and
E-35
procedures, and the Purchaser shall have no liability or obligation to
maintain in effect the policies and procedures of the Seller governing
administration of such accounts after the Effective Date; provided, however,
that the Purchaser and not the Seller shall be responsible for properly
implementing with affected customers any such changes in policies and
procedures, and the Purchaser and not the Seller shall be liable for any
damages, claims or losses, including costs and reasonable attorneys' fees,
resulting from any claims that such changes were improperly implemented.
3. The Seller acknowledges that the Purchaser does not assume and shall
have no liability for any debts, liabilities or obligations of the Seller of
any kind whatsoever except as specifically set forth in this Agreement and in
the separate Assignment and Assumption of Lease Agreements of even date
herewith.
4. This Agreement is not intended to and does not create in third
parties (including deposit account holders): (a) any rights or remedies
against the Purchaser which such parties did not have against the Seller
prior to the execution and delivery of this Agreement with respect to the
deposit liabilities assumed or (b) any claims against the Purchaser with
respect to the deposit accounts transferred hereby other than for payment of
the amount of principal and accrued interest thereon in accordance with the
terms of those accounts.
5. The Seller and the Purchaser agree to execute such further
agreements and documents as may be necessary or appropriate to effectuate the
purposes of this Agreement.
6. This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns. This
Agreement shall be governed by and construed in accordance with the laws of
the Commonwealth of Virginia.
IN WITNESS WHEREOF, the Seller and the Purchaser have executed and
delivered this Agreement as of the day and year first written above.
ESSEX SAVINGS BANK, F.S.B.
ATTEST:
By:
Gene D. Ross
Chief Executive Officer
(Corporate Seal)
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CENIT BANK, FSB
ATTEST:
By:
Michael S. Ives
President and Chief Executive Officer
(Corporate Seal)
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EXHIBIT G
TITLE INSURANCE POLICIES
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EXHIBIT H
INFORMATION PROVIDED BY THE SELLER
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EXHIBIT I
UNUSED VACATION TIME AND SICK LEAVE AS OF MAY 31, 1996
See attached.
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