<PAGE>
FORM 8-K. -- Current Report
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): March 1, 2000
FIRST STATE BANCORPORATION
--------------------------
(Exact name of registrant as specified in charter)
New Mexico 22-25144 85-036665
---------- -------- ---------
(State or other jurisdiction (Commission File (IRS Employer
incorporation) Number) Identification No.)
7900 Jefferson, N.E., Albuquerque, New Mexico 87109
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (505) 241-7500
--------------
________________________________________________________________________________
(Former name or former address, if changed since last report)
<PAGE>
Table of Contents
-----------------
<TABLE>
<S> <C>
Item 1. Changes in Control of Registrant None
Item 2. Acquisitions or Disposition of Assets Page 1
Item 3. Bankruptcy or Receivership None
Item 4. Changes in Registrant's Certifying Accountant None
Item 5. Other Events None
Item 6. Resignations of Registrant's Directors None
Item 7. Financial Statements and Exhibits Page 3
Item 8. Change in Fiscal Year None
Item 9. Sales of equity Securities Pursuant to Regulation S None
Signatures Page 6
</TABLE>
<PAGE>
Item 2. Acquisition or Disposition of Assets
On March 1, 2000, First State Bancorporation ("First State") sold the assets and
liabilities comprising its Leasing Division, First Capital Group, Inc., detailed
below to First Banks, Inc. a Missouri Corporation, under an agreement dated
December 31, 1999. There is no material relationship between First State and
First Banks, Inc., or any of their affiliated interests. The transaction was
structured as an asset sale. The consideration received, the amount of which was
determined in arms length negotiations, was cash at closing.
<TABLE>
<S> <C>
Cash proceeds from sale $ 65,128,986
Book value of leases sold (63,672,960)
Book value of fixed assets sold (125,038)
Liabilities transferred 91,438
Costs of sale:
Commission to third party broker (315,187)
Commission to Leasing Division employees (203,000)
Estimated legal and accounting fees (25,000)
------------
Gain on sale $ 879,239
============
</TABLE>
The management of First State believes this transaction will be beneficial to
its shareholders because it will increase liquidity, improve its risk-based
capital ratio, and increase profitability.
Management intends to use the proceeds from the sale to purchase investment
securities, fund loan demand, and reduce borrowings.
Liquidity will be increased as management intends to reduce certain borrowings
and invest a portion of the remaining proceeds in securities with a maturity
which will allow it to fund existing loan demand.
At December 31, 1999, First State's wholly-owned bank subsidiary's total risk-
based capital ratio was 10.2%. If the proceeds had been invested in U.S. agency
securities as described in Item 7, its total risk-based capital ratio would have
been approximately 11.4%. The ultimate reinvestment of the proceeds may be in
items with a higher risk weighting which would make the actual ratio less than
the pro forma ratio.
Management believes that the reduction of $1.5 million in non-interest expense,
as detailed in Item 7., coupled with its intention to reinvest a significant
portion of the proceeds in loans without incurring significant increases in non-
interest expense will increase First State's long-term profitability.
<PAGE>
Management may reposition a portion of its "available for sale" investment
portfolio by incurring losses and reinvesting in similar securities with higher
current yields. Any such losses would not exceed $450,000.
All of the employees of the Leasing Division were offered employment with First
Banks, Inc. First Banks, Inc. also assumed the lease obligation of the Leasing
Division's office space. First State also transferred the name "First Capital
Group, Inc." to First Banks, Inc.
Statements which are forward-looking are not historical facts, and involve risks
and uncertainties that could cause First State's results to differ materially
from those in any forward-looking statements. These risks include changes in
economic conditions, which would limit First State's ability to make additional
loans, changes in interest rates that would cause the yield anticipated for
investment securities to be lower than expected, factors which could affect
First State's ability to compete in its trade areas, changes in regulations and
governmental policies, and the risks described in First State's Form 10K.
<PAGE>
Item 7. Financial statements and exhibits
Financial Statements
First State Bancorporation and Subsidiary
Consolidated Condensed Balance Sheets
(unaudited)
<TABLE>
<CAPTION>
December 31, Pro forma adjustments
Assets 1999 Debit Credit
------ -------------------------------------------------
<S> <C> <C> <C>
Cash and due from banks $ 22,725,861
Federal funds sold -
-------------------------------------------------
Total cash and cash equivalents 22,725,861
Investment securities:
Held to maturity 22,590,081 31,200,000 (A)
Available for sale
72,211,289 31,200,000 (A)
-------------------------------------------------
94,801,370 62,400,000
Loans net of unearned interest 428,637,703 60,107,000 (B)
Less allowance for loan losses 5,386,622
-------------------------------------------------
Net loans 423,251,081 60,107,000
Premises and equipment 15,060,722 2,244,000 (B)
Accrued interest receivable 3,062,575
Other real estate owned 1,917,126
Goodwill, net 569,264
Other assets 5,495,565 49,000 (B)
-------------------------------------------------
Total assets $566,883,564 $62,400,000 $62,400,000
=================================================
Liabilities and Stockholders' Equity
------------------------------------
Liabilities:
Deposits
Non-interest-bearing $ 89,303,965
Interest bearing 374,231,608
-------------------------------------------------
Total deposits 463,535,573
Securities sold under agreements to repurchase 38,927,736
Other liabilities 8,842,326
Long-term debt 11,150,902
-------------------------------------------------
Total liabilities 522,456,537
Stockholders' equity:
Preferred stock, no par value, 1,000,000 shares
authorized. None issued or outstanding -
Common stock, no par value. 20,000,000 shares authorized,
outstanding 5,150,593 at December 31, 1999 and 5,128,112 at
December 31, 1998 29,459,807
Treasury stock, at cost (228,750 shares at December 31, 1999) (3,012,031)
Retained earnings 19,309,878
Unrealized gains (losses) on investment securities available for sale (1,330,627)
-------------------------------------------------
Total stockholders' equity 44,427,027
-------------------------------------------------
Total liabilities and stockholders' equity $566,883,564
=================================================
<CAPTION>
Assets Pro forma
------ ---------
<S> <C>
Cash and due from banks $ 22,725,861
Federal funds sold -
------------
Total cash and cash equivalents 22,725,861
Investment securities:
Held to maturity 53,790,081
Available for sale
103,411,289
------------
157,201,370
Loans net of unearned interest 368,530,703
Less allowance for loan losses 5,386,622
------------
Net loans 363,144,081
Premises and equipment 12,816,722
Accrued interest receivable 3,062,575
Other real estate owned 1,917,126
Goodwill, net 569,264
Other assets 5,446,565
------------
Total assets $566,883,564
============
Liabilities and Stockholders' Equity
------------------------------------
Liabilities:
Deposits
Non-interest-bearing $ 89,303,965
Interest bearing 374,231,608
------------
Total deposits 463,535,573
Securities sold under agreements to repurchase 38,927,736
Other liabilities 8,842,326
Long-term debt 11,150,902
------------
Total liabilities 522,456,537
Stockholders' equity:
Preferred stock, no par value, 1,000,000 shares
authorized. None issued or outstanding -
Common stock, no par value. 20,000,000 shares authorized,
outstanding 5,150,593 at December 31, 1999 and 5,128,112 at
December 31, 1998 29,459,807
Treasury stock, at cost (228,750 shares at December 31, 1999) (3,012,031)
Retained earnings 19,309,878
Unrealized gains (losses) on investment securities available for sale (1,330,627)
------------
Total stockholders' equity 44,427,027
------------
Total liabilities and stockholders' equity $566,883,564
============
</TABLE>
<PAGE>
Item 7. Financial statements and exhibits
Financial Statements
First State Bancorporation and Subsidiary
Consolidated Condensed Statements of Operations
For the three and twelve months ended December 31, 1999 and 1998
(unaudited)
<TABLE>
<CAPTION>
Three months
Ended Pro forma adjustments Pro forma
December 31, Debit Credit December 31,
----- ------
1999 1998
---- ----
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $37,303,249 $4,817,889 (C) $32,485,360
Interest on investment securities:
Taxable 5,447,551 3,726,250 (D) $ 9,173,801
Non-taxable 227,478 $ 227,478
Federal funds sold 166,006 $ 168,006
--------------------------------------------------------------
Total interest income 43,146,284 4,817,889 3,726,250 42,054,645
--------------------------------------------------------------
Interest expense:
Deposits 12,408,726 $12,408,726
Short-term borrowings 1,830,981 $ 1,830,981
Long-term debt and capital leases 446,600 $ 446,600
--------------------------------------------------------------
Total interest expense 14,686,307 14,686,307
--------------------------------------------------------------
Net interest income before provision for loan losses 28,459,977 4,817,889 3,726,250 27,368,338
Provision for loan losses 3,074,992 406,792 (E) $ 2,668,200
--------------------------------------------------------------
Net interest income after provision for loan losses 25,384,985 4,817,889 4,133,042 24,700,138
--------------------------------------------------------------
Other income:
Service charges on deposit accounts 2,106,035 $ 2,106,035
Other banking service fees 395,012 $ 395,012
Credit card transaction fees 1,771,106 $ 1,771,106
Operating lease income 503,233 480,757 (F) $ 22,476
Other 1,099,463 328,842 (F) $ 770,621
--------------------------------------------------------------
Total other income 5,874,849 809,599 5,065,250
--------------------------------------------------------------
Other expenses:
Salaries and employee benefits 10,795,796 750,086 (F) 10,045,710
Occupancy 2,649,310 77,772 (F) 2,571,538
Data processing 1,037,497 35,353 (F) 1,002,144
Credit Card interchange 984,710 984,710
Equipment 1,645,794 44,084 (F) 1,601,710
Leased equipment depreciation 426,730 426,730 (F) 0
Legal, accounting and consulting 654,822 88,911 (F) 564,911
Marketing 1,073,045 8,282 (F) 1,064,763
Other real estate owned expenses 246,303 246,303
Amortization of goodwill 104,206 104,206
Other 3,590,084 115,394 (F) 3,474,690
--------------------------------------------------------------
Total other expenses 23,208,287 1,547,812 21,660,685
Income before income taxes 8,051,537 5,627,488 5,680,654 8,104,703
Income tax expense 2,845,429 18,773 (G) 2,864,202
--------------------------------------------------------------
Net income $ 5,206,108 $5,627,488 $5,661,881 $ 5,240,501
==============================================================
Weighted average shares outstanding:
Basic 5,008,157 5,008,157
=========== ===========
Diluted 5,142,543 5,142,543
=========== ===========
Earnings per share:
Basic $ 1.04 $ 1.05
=========== ===========
Diluted $ 1.01 $ 1.02
=========== ===========
</TABLE>
<PAGE>
Financial Statements
Explanatory notes to Pro forma Financial Statements
(unaudited)
(A) Assumes proceeds from sale reinvested in U.S. agency securities.
(B) December 31, 1999 balance of leases and fixed assets sold.
(C) Actual interest income for leasing division less interest on 1.1 million
dollars in leases retained.
(D) Assumes that the average balances in finance leases (58.0 million) and
operating leases (1.6 million) were invested in U.S. Government agency
securities at a yield of 6.25%. Management anticipates that a significant
portion of the proceeds will be used to fund loan demand at a significantly
higher yield and that the portion invested in investment securities will be at a
yield greater than that used in this performance.
(E) Actual amount provided in the leasing division.
(F) Actual amount recorded in the leasing division.
(G) Assumes actual 1999 tax rate of 35.34%.
Exhibit
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Exhibit Number Descriptions
-------------- ------------
2 Asset Purchase Agreement dated
December 31, 1999, between First
State Bancorporation and First
Banks, Inc.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
First State Bancorporation
----------------------------------------
(Registrant)
Date March 14, 2000
--------------
Brian C. Reinhardt
----------------------------------------
Brain C. Reinhardt
Executive Vice President & CFO
<PAGE>
EXHIBIT 2
ASSET PURCHASE AGREEMENT
by and among
FIRST BANKS, INC.,
a Missouri corporation,
FIRST STATE BANK OF TAOS,
a New Mexico state bank,
and
FIRST CAPITAL GROUP, INC.,
a New Mexico corporation
December 31, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Article I - Terms of the Asset Purchase
Section 1.01. Purchase and Sale of Assets....................... 1
Section 1.02. Assumption of Liabilities......................... 2
Section 1.03. Designation of Assumed Leases..................... 3
Article II - Closing, Calculation of Purchase Price and Closing Deliveries
Section 2.01. The Closing....................................... 3
Section 2.02. The Closing Date.................................. 3
Section 2.03. Calculation and Payment of Purchase Price......... 3
Section 2.04. Prorations........................................ 4
Section 2.05. Closing Deliveries................................ 4
Article III - Representations and Warranties of First State Bank and FCG
Section 3.01. Organization...................................... 6
Section 3.02. Authorization..................................... 6
Section 3.03. Non-Contravention................................. 6
Section 3.04. Consents to Transaction........................... 6
Section 3.05. Compliance with Law............................... 6
Section 3.06. Litigation........................................ 7
Section 3.07. Title to Assets................................... 7
Section 3.08. Employee Contracts................................ 7
Section 3.09. Taxes and Insurance............................... 7
Section 3.10. Books and Records................................. 7
Section 3.11. Brokerage......................................... 7
Section 3.12. Lease and Loan Portfolios......................... 8
Section 3.13. Year 2000 Preparation............................. 8
Article IV - Representations and Warranties of First Banks
Section 4.01. Organization...................................... 9
Section 4.02. Authorization..................................... 9
Section 4.03. Non-Contravention................................. 9
Section 4.04. Consents to Transaction........................... 9
Section 4.05. Litigation........................................ 9
Section 4.06. Brokerage......................................... 9
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Article V - Agreements of First State Bank and FCG
Section 5.01. Business in Ordinary Course....................... 10
Section 5.02. Breaches.......................................... 10
Section 5.03. Consents to Assumed Leases and Office Lease....... 10
Section 5.04. Consummation of Agreement......................... 11
Section 5.05. Access to Information............................. 11
Section 5.06. No Solicitations or Negotiations.................. 11
Section 5.07. Further Assurances................................ 11
Section 5.08. Covenants Not to Compete.......................... 11
Section 5.09. Year 2000 Compliance.............................. 11
Article VI - Agreements of First Banks
Section 6.01. Regulatory Approvals.............................. 12
Section 6.02. Breaches.......................................... 12
Section 6.03. Consummation of Agreement......................... 12
Section 6.04. Lease Servicing................................... 12
Section 6.05. Non-Solicitation.................................. 12
Section 6.06. Forward Looking Statements........................ 12
Article VII - Conditions Precedent
Section 7.01. Conditions to the Obligations of First State Bank
and FCG........................................... 13
Section 7.02. Conditions to the Obligations of First Banks...... 13
Article VIII - Termination or Abandonment
Section 8.01. Mutual Agreement.................................. 14
Section 8.02. Breach of Representations or Agreements........... 14
Section 8.03. Failure of Conditions............................. 14
Section 8.04. Denial of Regulatory Approval..................... 15
Section 8.05. Unilateral Termination............................ 15
Article IX - Transitional and Post-Closing Matters
Section 9.01. Transitional Matters; Notification to Lessees..... 15
Article X - Indemnification
Section 10.01. Indemnification of Purchaser...................... 16
Section 10.02. Indemnification of First State Bank and FCG....... 16
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
Article XI - General
Section 11.01. Confidential Information.......................... 16
Section 11.02. Publicity......................................... 17
Section 11.03. Return of Documents............................... 17
Section 11.04. Notices........................................... 17
Section 11.05. Expenses.......................................... 18
Section 11.06. Survival of Representations, Warranties and
Agreements....................................... 18
Section 11.07. Entire Agreement.................................. 18
Section 11.08. Headings and Captions............................. 18
Section 11.09. Waiver, Amendment or Modification................. 18
Section 11.10. Rules of Construction............................. 18
Section 11.11. Counterparts...................................... 18
Section 11.12. Successors and Assigns............................ 19
Section 11.13. Governing Law; Assignment......................... 19
Section 11.14. Arbitration....................................... 19
Signatures......................................................... 20
Exhibit 1 Assignment and Assumption of Leases
Exhibit 2(a) Bill of Sale (First State Bank)
Exhibit 2(b) Bill of Sale (First Capital Group, Inc.)
Exhibit 3 Definition of Book Value
Schedule A Schedule of Personal Property
Schedule B Schedule of the Loans
Schedule C Schedule of Assets to be Purchased from First Capital
Group, Inc.
Schedule D Schedule of Lease
</TABLE>
iii
<PAGE>
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement, dated as of December 31, 1999 (the
"Agreement"), is by and among First Banks, Inc., a bank holding company
organized as a Missouri corporation ("First Banks"), First State Bank of Taos, a
New Mexico state bank ("First State Bank"), and First Capital Group, Inc., a New
Mexico corporation ("FCG").
WHEREAS, FCG is a wholly owned subsidiary of First State Bank; and
WHEREAS, upon the terms and provisions and subject to the conditions set
forth in this Agreement, First Banks has agreed to purchase, and First State
Bank and FCG have agreed to sell, certain assets of First State Bank and FCG
which are identified herein, to First Banks;
NOW, THEREFORE, in consideration of the mutual representations, warranties,
agreements and covenants contained herein, First Banks, First State Bank and FCG
hereby agree as follows:
Article I
Terms of the Asset Purchase
Section 1.01. Purchase and Sale of Assets. (a) Pursuant to the terms and
provisions and subject to the conditions set forth in this Agreement, (i) First
Banks (or, at the option of First Banks, a subsidiary of First Banks, in either
case referred to herein as "Purchaser") shall purchase from First State Bank,
and First State Bank shall sell to Purchaser, all of the assets described in
subsection (b); and (ii) Purchaser shall purchase from FCG, and FCG shall sell
to Purchaser, all of the assets described in subsection (c) hereof (the "Asset
Purchase"), for a purchase price to be calculated and paid as set forth in
Section 2.03.
(b) The assets to be purchased by Purchaser from First State Bank
(collectively, the "Assets") consist of the following:
(i) All of the rights of First State Banks and FCG pursuant to
the Assumed Leases (as defined in Section 1.03 below).
(ii) The furniture, fixtures, equipment, leasehold improvements,
software, software licenses and other items of tangible personal property
utilized by First State Bank or FCG in the equipment leasing business as of
the close of business on the Closing Date and, if technically feasible, the
rights to telephone or facsimile numbers used by FCG (collectively, the
"Personal Property"). Set forth on Schedule A to this Agreement is a
depreciation schedule that is a complete listing of the Personal Property
as of the date of this Agreement. If, prior to the Closing Date, any item
of Personal Property is stolen, destroyed or otherwise lost, such item
shall be excluded from the sale contemplated hereby, and the term "Personal
Property" as used herein shall exclude any such item(s). If, prior to the
Closing Date, any item of Personal Property is damaged by fire or other
<PAGE>
casualty, such item(s), if reasonably repairable, shall be, at the option
of First Banks, either (i) sold to First Banks (in accordance with the
provisions hereof) and the insurance proceeds relating to such item shall
be assigned to First Banks, or (ii) repaired by First State Bank prior to
the Closing Date.
(iii) All books, records, files and original documents directly
relating to the Assets and the Assumed Liabilities (as defined in Section
1.02 herein), including all records relating to the Assumed Leases
(collectively, the "Records").
(iv) First State Bank may grant to First Banks the option to
acquire any or all of the loans identified on Schedule B attached hereto
(the "Loans"). Not later than five business days preceding the expected
Closing Date, Purchaser shall provide to First State Bank a list of Loans,
if any, which Purchaser will acquire at the Closing (the "Acquired Loans").
(c) The assets to be purchased by Purchaser from FCG are set forth on
Schedule C attached hereto.
Section 1.02. Assumption of Liabilities. Upon the terms and subject to the
conditions set forth herein, First State Bank shall transfer and assign to
Purchaser, and Purchaser shall assume from First State Bank and agree to pay,
perform and discharge, as of the close of business on the Closing Date, the
following liabilities, and none other (collectively, the "Assumed Liabilities"):
(a) the obligations of the lessor under all leases owned by First
State Bank and the obligations of the servicer under all leases serviced by
First State Bank or FCG for third parties, which such leases as of the date
hereof are identified on Schedule D hereto (collectively, all of such
leases which are to be assigned to and assumed by Purchaser on the Closing
Date in accordance with Section 1.03 are referred to herein as the "Assumed
Leases");
(b) the obligations of First State Bank pursuant to the sublease
dated October 11, 1998, by and between First State Bank and St.
Joseph/S.E.D.Medical Laboratories, Inc., for the office premises located at
5601 Office Blvd. NE, Suite 200, Albuquerque, New Mexico and utilized by
FCG in the conduct of its business (the "Office Lease"); and
(c) if the Purchaser exercises the option to acquire all or any of
the Loans, then Purchaser shall also assume the obligations of First State
Bank with respect to the Acquired Loans.
Purchaser shall not assume any other liabilities of First State Bank,
whether known or unknown, undisclosed, contingent or otherwise, which have
arisen or may arise or be established in connection with the conduct of FCG's
business.
2
<PAGE>
Section 1.03. Designation of Assumed Leases. (a) Five business days prior
to the expected Closing Date, First State Bank shall provide to First Banks a
schedule (the "Pre-Closing Schedule") of all of the equipment leases which it
then owns and as to which the representations and warranties set forth in
Article III hereof are true and correct (the "Lease Portfolio").
(b) Subject to the remaining terms and conditions of this Agreement, First
Banks shall have the right to acquire all of the leases in the Lease Portfolio
and the obligation to acquire leases having an aggregate net book value (as
defined in Exhibit 3) ("Book Value") as of the date of the Pre-Closing Schedule
equal to the total Book Value of the Lease Portfolio less the Book Value (up to
but not exceeding one million dollars) of specific leases on the Pre-Closing
Schedule excluded from the Asset Purchase by First Banks. Any leases thus
excluded by First Banks shall not be transferred at the Closing and shall not be
included within the term "Assumed Leases."
(c) All of the remaining leases in the Lease Portfolio shall be assigned
to and assumed by First Banks. The Assumed Leases shall be listed on the
schedule agreed to by First State Bank and First Banks and attached to the
Assignment and Assumption of Leases to be delivered at the Closing pursuant to
Section 2.05(a)(iv) hereof.
Article II
Closing, Calculation of Purchase Price and Closing Deliveries
Section 2.01. The Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at 5601 Office Blvd. NE, Suite
200, Albuquerque, New Mexico on the Closing Date (as defined in Section 2.02),
or such other time and place as the parties may mutually agree.
Section 2.02. The Closing Date. At First Banks' election, the Closing
shall take place on either (i) one of the last five (5) business days of the
month or (ii) the first business day of the month following the month, in either
case during which each of the conditions in Sections 7.01 and 7.02 is satisfied
or waived by the appropriate party, or on such other date as First Banks and
First State Bank may agree (the "Closing Date").
Section 2.03. Calculation and Payment of Purchase Price. The calculation
and payment of the purchase price shall be made as follows:
(a) The purchase price for all of the Assets except Acquired Loans (the
"Fixed Purchase Price") shall be equal to 102.5% of the Book Value of all of the
Assumed Leases, determined as of the close of business on the business day prior
to the Closing Date.
(b) If Purchaser exercises the option to acquire one or more of the Loans,
it shall pay First State Bank at the Closing, in immediately available funds, a
price to be mutually agreed upon.
3
<PAGE>
Section 2.04. Prorations. The parties intend that First State Bank and FCG
shall operate for their own accounts the equipment leasing business to be
transferred until the close of business on the Closing Date, and that the
Purchaser shall operate such business for its own account after the Closing
Date. Except as otherwise specifically provided in this Agreement, items of
expense directly attributable to the operation of the Assumed Leases and the
office expenses of FCG (including all bonuses and incentive compensation of
employees of First State Bank and FCG that have accrued prior to the Closing)
shall be prorated as of the close of business on the Closing Date, whether or
not such payments would normally have been made as of such time. Expenses to be
prorated may include, without limitation, employee compensation, property and
casualty insurance (if such prorations are not made by the applicable
insurer(s)), telephone, electric, gas, water, and other utility services,
security services, assessments (including regulatory assessments), payments due
on Assumed Leases, and similar expenses and revenue related to the business of
FCG.
Section 2.05. Closing Deliveries.
(a) At the Closing, First State Bank and FCG shall deliver to Purchaser:
(i) certificates signed by appropriate officers of each entity
stating that (A) each of the representations and warranties contained in
Article III is true and correct in all material respects at the time of the
Closing with the same force and effect as if such representations and
warranties had been made at Closing, and (B) all of the conditions set
forth in Section 7.02(b) have been satisfied or waived as provided therein;
(ii) certified copies of currently effective resolutions of the
Boards of Directors of each entity, approving the execution of this
Agreement and the consummation of the transactions contemplated hereby;
(iii) certificates of the Secretary of State or comparable official
of the state of incorporation of each entity, dated a recent date, stating
that both of such entities are in good standing;
(iv) an Assignment and Assumption of Leases in substantially the
form set forth in Exhibit 1 to this Agreement, to which shall be attached
an agreed list of the Assumed Leases;
(v) a Bill of Sale in substantially the form set forth in Exhibit
2(a) to this Agreement, transferring the Personal Property from First State
Bank to First Banks, and a Bill of Sale in substantially the form set forth
in Exhibit 2(b), transferring the assets described thereon from FCG to
First Banks;
(vi) such other bills of sale, assignments, and other instruments
and documents as counsel for Purchaser may reasonably require as necessary
or desirable for transferring, assigning and conveying to Purchaser good,
marketable and insurable title to the Assets;
4
<PAGE>
(vii) a schedule of the Assumed Leases as of the close of business on
the day preceding the Closing Date, setting forth such information as
Purchaser shall reasonably request;
(viii) original, negotiable promissory notes evidencing each of the
Acquired Loans, duly endorsed by First State Bank to the order of
Purchaser, without recourse, and such other documents evidencing the
transfer of all of First State Bank's interest in the Acquired Loans, the
security therefor and its other rights pertaining to the Acquired Loans as
Purchaser shall have reasonably requested;
(ix) such Records as are capable of being delivered to Purchaser (it
being understood that after the Closing Date, First State Bank shall
provide Purchaser with access to any Records which are not capable of being
transferred to Purchaser at the Closing); and
(x) a legal opinion of counsel for First State Bank and FCG
regarding First State Bank and FCG, this Agreement and the transactions
contemplated hereby, in form reasonably satisfactory to First Banks.
(b) At the Closing, Purchaser shall deliver to First State Bank:
(i) a certificate signed by an appropriate officer of First Banks
stating that (A) each of the representations and warranties contained in
Article IV is true and correct in all material respects at the time of the
Closing with the same force and effect as if such representations and
warranties had been made at Closing, and (B) all of the conditions set
forth in Sections 7.01(b) and 7.01(d) have been satisfied;
(ii) a certified copy of currently effective resolutions of the
Board of Directors of Purchaser authorizing the execution of this Agreement
and the consummation of the transactions contemplated hereby;
(iii) payment to First State Bank of the Cash Purchase Price and, if
applicable, the purchase price for Acquired Loans, in a form reasonably
acceptable to First State Bank;
(iv) an Assignment and Assumption of Leases in substantially the
form set forth in Exhibit 1 to this Agreement; and
(v) a legal opinion of counsel for First Banks, regarding First
Banks, this Agreement and the transactions contemplated hereby, in form
reasonably satisfactory to First State Bank.
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Article III
Representations and Warranties of First State Bank and FCG
First State Bank and FCG make the following representations and warranties
to First Banks:
Section 3.01. Organization. First State Bank is a state bank duly
organized, validly existing and in good standing under the laws of the State of
New Mexico, the deposits of which are insured by the Federal Deposit Insurance
Corporation ("FDIC"). FCG is a corporation duly organized, validly existing and
in good standing under the laws of the State of New Mexico. First State Bank and
FCG each has the corporate power to carry on the business of equipment leasing
as the same is being conducted and to enter into and perform its obligations
pursuant to this Agreement.
Section 3.02. Authorization. The Board of Directors of First State Bank
has, by all appropriate action, approved this Agreement and the transactions
contemplated hereby and has authorized the execution hereof on behalf of First
State Bank by its duly authorized officers and the performance of its respective
obligations hereunder. Prior to the Closing, First State Bank will cause the
board of directors of FCG to approve this Agreement and the transactions
contemplated hereby and to authorize and ratify the execution hereof on behalf
of FCG by its duly authorized officer or officers and the performance of the
obligations of FCG hereunder. Approval of this Agreement and the transactions
contemplated hereby by the shareholders of First State Bank or First State
Bancorporation is not required. This Agreement has been duly and validly
executed and delivered by First State Bank and FCG and constitutes a legal,
valid and binding obligation of each of them, enforceable against them in
accordance with its terms, subject to bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights generally and
to general principles of equity.
Section 3.03. Non-Contravention. The execution and delivery of this
Agreement by First State Bank and FCG do not and, subject to the receipt of all
required regulatory approvals and consents, the consummation of the transactions
contemplated by this Agreement, will not constitute a breach or violation of or
default under any law, rule, regulation, judgment, order, governmental permit or
license, agreement, indenture, or instrument of First State Bank or FCG or to
which either is subject.
Section 3.04. Consents to Transaction. The consummation of the
transactions contemplated by this Agreement does not require First State Bank or
FCG to obtain the prior consent or approval of any person, other than any
required regulatory approvals or consents.
Section 3.05. Compliance with Law. First State Bank and FCG have all
licenses, franchises, permits and other governmental authorizations that are
legally required to enable them to conduct their respective businesses as
presently conducted in all material respects. The business and operations of
First State Bank and FCG have been and are being conducted in accordance with
all applicable laws, rules, and regulations of all authorities, including all
regulations pertaining
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to the receipt of customer information required by state and federal law
concerning taxpayer identification numbers, social security numbers and the
like, except such conduct as would not have a material adverse effect on the
equipment leasing business and operations of First State Bank and FCG.
Section 3.06. Litigation. There is no litigation, claim or other
proceeding pending or, to the knowledge of First State Bank or FCG, threatened
against First State Bank or FCG arising out of the equipment leasing business as
conducted by First State Bank and FCG, affecting any of the Assets or Assumed
Liabilities, or materially affecting the ability of First State Bank or FCG to
carry out this Agreement or the transactions contemplated hereby.
Section 3.07. Title to Assets. First State Bank and FCG have, and on the
Closing Date Purchaser will acquire, good and marketable title to all of the
Assets, free and clear of all liens, encumbrances, restrictions or conditions
(except for any limitations on the use of software imposed by written license
agreements, copies of which have been provided to First Banks).
Section 3.08. Employee Contracts. There are no employment contracts
between First State Bank or FCG and any employees of FCG not terminable on
thirty or fewer days' notice after the Closing Date. Neither First State Bank
nor FCG is a party to any contract or arrangement with any union relating to the
business conducted by FCG, and First State Bank and FCG are not aware of any
pending organizational efforts. First State Bank and FCG have not entered into
any agreement or otherwise made any commitment or representation to any
employees with respect to their employment by Purchaser.
Section 3.09. Taxes and Insurance. First State Bank and FCG have paid all
property, excise, sales and use and other taxes imposed by any taxing authority
in connection with the Assumed Leases which are due and payable as of the date
hereof, and there are no unpaid taxes which could result in liens being placed
on any of the Assets. First State Bank and FCG shall maintain in full force and
effect through the Closing Date its present insurance coverage as it relates to
the Assets.
Section 3.10. Books and Records. The books and records of First State Bank
and FCG pertaining to the Assumed Leases and the Loans and all other financial
or other information provided by First State Bank and FCG to First Banks prior
to the execution hereof are accurate and complete in all material respects.
Section 3.11. Brokerage. Except as disclosed in Section 3.11 of a schedule
prepared by First State Bank and FCG and executed by all of the parties
concurrently with the execution of this Agreement ("the Disclosure Schedule"),
there are no claims, agreements or obligations for brokerage commissions,
finders' fees, financial advisory fees or similar compensation payable by First
State Bank or FCG in connection with the transactions contemplated by this
Agreement.
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Section 3.12. Lease and Loan Portfolios. With respect to all of the leases
described on Schedule D attached hereto, all of the Assumed Leases and all of
the Loans:
(i) all leases, loans and discounts reflected in the documents,
books, records, schedules and data (all as of October 31, 1999) previously
made available by First State Bank for First Banks' review and analysis of
the Assets, and all leases which were or will be entered into after October
31, 1999 and before the Closing Date were and will be made for good,
valuable and adequate consideration in the ordinary course of the business
of First State Bank and FCG, in accordance in all material respects with
sound banking practices, and they are not subject to any material known
defenses, setoffs or counterclaims, including without limitation those
afforded by usury or truth in lending laws, except as may be provided by
bankruptcy, insolvency or similar laws or by general principles of equity;
(ii) the documents evidencing the leases, the notes and other
evidences of indebtedness evidencing the Loans and all forms of pledges,
mortgages and other collateral documents and security agreements relating
to the Loans are and will be in all material respects enforceable, valid,
true and genuine and what they purport to be; and
(iii) First State Bank and FCG have complied and will through the
Closing Date comply with all laws and regulations relating to the leases
and the Loans, or to the extent there has not been such compliance, the
failure to comply will not materially interfere with the realization of the
benefits of any lease or the collection of any Loan. The Loans and all
leases and lease commitments extended by First State Bank and FCG and
extensions, renewals or continuations of such Loans, leases and lease
commitments were made in accordance with its customary lending standards in
the ordinary course of business. Such leases and the Loans are evidenced by
appropriate and sufficient documentation, based upon the customary and
ordinary practices of First State Bank in the ordinary course of its
business.
Section 3.13. Year 2000 Preparation. The hardware and software systems
utilized by First State Bank and FCG in the origination and administration of
equipment leases (i) are in compliance with the Interagency Guidelines
Establishing Year 2000 Standards for Safety and Soundness promulgated by the
federal bank regulatory agencies and (ii) have not been a subject of any notice
or other communication from any regulatory agency to the effect that any of them
has failed to comply with applicable requirements. First State Bank and FCG have
no reason to believe that the equipment leasing business of First State Bank and
FCG as presently conducted or the hardware and software systems utilized by them
in that business will be adversely affected as a result of any Year 2000 issue.
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Article IV
Representations and Warranties of First Banks
First Banks makes the following representations and warranties to First
State Bank and FCG:
Section 4.01. Organization. First Banks is a corporation, duly organized,
validly existing and in good standing under the laws of the State of Missouri.
First Banks has the corporate power to carry on its business as the same is
being conducted and to enter into and perform its obligations pursuant to this
Agreement.
Section 4.02. Authorization. First Banks' Board of Directors has, by all
appropriate action, approved this Agreement and the transactions contemplated
herein and authorized the execution hereof on its behalf by its duly authorized
officers and the performance of First Banks of its obligations hereunder.
Approval of this Agreement and the transactions contemplated hereby by the
shareholders of First Banks is not required. This Agreement has been duly and
validly executed and delivered by First Banks and constitutes a legal, valid and
binding obligation of First Banks, enforceable against First Banks in accordance
with its terms, subject to bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights generally and to
general principles of equity.
Section 4.03. Non-Contravention. The execution and delivery of this
Agreement by First Banks do not and, subject to the receipt of all required
regulatory approvals and consents, the consummation of the transactions
contemplated by this Agreement will not constitute (a) a breach or violation of
or default under any law, rule, regulation, judgment, order, governmental permit
or license, agreement, indenture, or instrument of First Banks or to which it is
subject, which breach, violation, or default would have a material adverse
effect on First Banks; or (b) a breach or violation of or a default under the
Articles of Incorporation or Bylaws of First Banks or any material contract or
other instrument to which it is a party or by which it is bound.
Section 4.04. Consents to Transaction. The consummation of the
transactions contemplated by this Agreement does not require First Banks to
obtain the prior consent or approval of any person, other than any required
regulatory approvals or consents.
Section 4.05. Litigation. There is no litigation, claim or other
proceeding pending or, to First Banks' knowledge, threatened that would prohibit
First Banks from consummating the transactions contemplated by this Agreement.
Section 4.06. Brokerage. There are no claims, agreements or obligations
for brokerage commissions, finders' fees, or similar compensation payable by
First Banks in connection with the transactions contemplated by this Agreement.
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Article V
Agreements of First State Bank and FCG
Section 5.01. Business in Ordinary Course. (a) From the date of this
Agreement through the Closing Date, First State Bank and FCG shall conduct the
equipment leasing business in substantially the same manner as it has previously
been conducted, and in that regard they will utilize the same procedures,
methods and credit and asset quality policies in such business as they have
previously utilized.
(b) Neither First State Bank nor FCG will, without the prior written
consent of First Banks:
(i) engage or participate in any material transaction or incur or
sustain any material obligation affecting the Assets, except in the
ordinary course of business;
(ii) fail to maintain good relations with employees employed in the
equipment leasing business, and the parties to the Assumed Leases or the
Loans; or
(iii) enter into or commit to enter into any new lease with a Book
Value as of the date of the lease in excess of $500,000 or that would
increase the aggregate Book Value of leases outstanding to any one customer
(or group of affiliated customers) to more than $1,000,000, without the
prior written consent of First Banks.
(c) First State Bank and FCG shall not, without the prior written consent
of First Banks, engage in any transaction or take any action that would render
untrue in any material respect any of the representations and warranties of
First State Bank and FCG contained in Article III hereof, if such
representations and warranties were given immediately following such transaction
or action.
(d) First State Bank and FCG shall promptly notify First Banks in writing
of the occurrence of any matter or event known to or involving First State Bank
and FCG that is materially adverse to the equipment leasing business or any of
the Assets.
Section 5.02. Breaches. In the event that First State Bank or FCG has
knowledge of the occurrence, or impending or threatened occurrence, of any event
or condition which would cause or constitute a breach (or would have caused or
constituted a breach had such event occurred or been known prior to the date
hereof) of any of its representations or agreements contained herein, First
State Bank and FCG shall give prompt written notice thereof to First Banks and
use their best efforts promptly to prevent or cure the same.
Section 5.03. Consents to Assumed Leases and Office Lease. First State
Bank and FCG shall obtain all consents required for the transfer of the Assumed
Leases and the assumption of the Office Lease by Purchaser.
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Section 5.04. Consummation of Agreement. First State Bank and FCG shall
each perform and fulfill all conditions and obligations on its part to be
performed or fulfilled under this Agreement and use their best efforts to
consummate the transactions contemplated by this Agreement in accordance with
the terms and conditions hereof. First State Bank and FCG shall furnish to First
Banks in a timely manner all information, data and documents in the possession
of First State Bank and FCG requested by First Banks as may be required to seek
any required regulatory approvals of the transactions contemplated by this
Agreement and shall otherwise cooperate fully with First Banks to carry out the
purpose and intent of this Agreement.
Section 5.05. Access to Information. From and after the date of this
Agreement through the Closing Date, First State Bank and FCG shall provide to
First Banks reasonable access, in a manner which will avoid undue disruption or
interference with their normal operations, to the books, documents, files and
records relating to the Assets, including but not limited to books of account
(including the general ledger), tax records, material contracts and agreements,
lease files, filings with any regulatory authority, correspondence and
litigation files. First Banks will hold any such information which is nonpublic
in confidence in accordance with the provisions of Section 11.01 hereof.
Section 5.06. No Solicitations or Negotiations. From and after the date
of this Agreement through the Closing Date or a permissible termination of this
Agreement, First State Bank and FCG shall not solicit or encourage, or hold
discussions or negotiations with or provide information to, any person or entity
in connection with any proposal for the acquisition of all or a substantial
portion of the Assets. First State Bank and FCG shall promptly advise First
Banks of its receipt of any such proposal or inquiry relating to any of the
foregoing and the substance thereof.
Section 5.07. Further Assurances. On and after the Closing Date, First
State Bank and FCG shall give such further assurances to First Banks and, upon
First Banks's reasonable request, shall execute, acknowledge and deliver all
such acknowledgments and other instruments and take such further action as may
be necessary and appropriate to effectively transfer the Assets to First Banks
in accordance with the terms of this Agreement.
Section 5.08. Covenants Not to Compete. First State Bank and FCG each
hereby covenants and agrees for a period of two (2) years following the Closing
Date, neither it nor any of its affiliates will purchase, operate, control or
otherwise have an interest in any corporation, partnership, joint venture or
other legal entity engaged directly or indirectly in the business of equipment
leasing.
Section 5.09. Year 2000 Compliance. First State Bank and FCG shall
cooperate with First Banks in addressing any issues in connection with the
operation of hardware and software owned or utilized by First State Bank and FCG
in equipment leasing that may arise with respect to errors relating to, or the
product of, data which represents or references dates or periods of time before
and after calendar year 2000 A.D.
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Article VI
Agreements of First Banks
Section 6.01. Regulatory Approvals. First Banks shall promptly file all
regulatory applications required in order to consummate the transactions
contemplated by this Agreement. First Banks shall timely file all documents
required to seek all necessary permits and approvals required to carry out the
transactions contemplated by this Agreement, shall pay all expenses incident
thereto and shall use its best efforts to obtain all required regulatory
approvals and consents on a timely basis.
Section 6.02. Breaches. In the event that First Banks has knowledge of
the occurrence, or impending or threatened occurrence, of any event or condition
which would cause or constitute a breach (or would have caused or constituted a
breach had such event occurred or been known prior to the date hereof) of any of
its representations or agreements contained or referred to herein, First Banks
shall give prompt written notice thereof to First State Bank and FCG and use its
best efforts promptly to prevent or cure the same.
Section 6.03. Consummation of Agreement. First Banks shall perform and
fulfill all conditions and obligations on its part to be performed or fulfilled
under this Agreement and use its best efforts to consummate the transactions
contemplated by this Agreement in accordance with the terms and conditions
hereof.
Section 6.04. Lease Servicing. It is contemplated that First State Bank
will continue after the Closing Date to own those leases that are excluded from
the Asset Purchase and are not part of the Assumed Leases ("Retained Leases").
At its sole option, First State Bank may engage First Banks to service the
Retained Leases in consideration of a servicing fee equal to 3/8% per annum of
the Book Value thereof, pursuant to usual and customary servicing arrangements
to be mutually agreed upon by First Banks and First State Bank.
Section 6.05. Non-Solicitation. First Banks hereby covenants that, for a
period of two (2) years following the Closing Date, neither it nor any of its
affiliates will knowingly solicit banking business from parties to Assumed
Leases who are also banking customers of First State Bank, but this Section 6.05
does not prohibit or limit (i) general solicitations (such as advertising, mass
mailings, or similar forms of solicitation) to the public or to First Banks'
customers, including parties to Assumed Leases, for banking and banking-related
services or (ii) solicitations of additional leasing business from leasing
customers.
Section 6.06. Forward Looking Statements. First Banks will not rely upon
(i) any oral representations or statements made by First State Bank or FCG
regarding the future prospects of the equipment leasing business being acquired
pursuant to this Agreement, or (ii) projections prepared by either of them with
regard to future returns or tax effects associated with the Assumed Leases.
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Article VII
Conditions Precedent
Section 7.01. Conditions to the Obligations of First State Bank and FCG.
The obligations of First State Bank and FCG to effect the transactions
contemplated by this Agreement shall be subject to the satisfaction (or waiver
by First State Bank and FCG) prior to or on the Closing Date of the following
conditions:
(a) The representations and warranties made by First Banks in this
Agreement shall be true in all material respects on and as of the Closing Date
with the same effect as though such representations and warranties had been made
or given on the Closing Date;
(b) First Banks shall have performed and complied in all material respects
with all of its obligations and agreements hereunder required to be performed
prior to the Closing Date under this Agreement;
(c) No temporary restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the transactions
contemplated by this Agreement shall be in effect, nor shall any proceeding by
any bank regulatory authority or other governmental agency seeking any of the
foregoing be pending. There shall not be any action taken, or any statute, rule,
regulation or order enacted, entered, enforced or deemed applicable to the
transactions contemplated by this Agreement which makes the consummation of such
transactions illegal;
(d) All necessary regulatory approvals, consents, authorizations and other
approvals required by law for consummation of the transactions contemplated by
this Agreement shall have been obtained and all waiting periods required by law
shall have expired; and
(e) First State Bank and FCG shall have received all documents required to
be received from First Banks on or prior to the Closing Date, all in form and
substance reasonably satisfactory to First State Bank and FCG.
Section 7.02. Conditions to the Obligations of First Banks. The
obligations of First Banks to effect the transactions contemplated by this
Agreement shall be subject to the satisfaction (or waiver by First Banks) prior
to or on the Closing Date of the following conditions:
(a) The representations and warranties made by First State Bank and FCG in
this Agreement shall be true in all material respects on and as of the Closing
Date with the same effect as though such representations and warranties had been
made or given on and as of the Closing Date;
(b) First State Bank and FCG shall have performed and complied in all
material respects with all of its obligations and agreements required to be
performed prior to the Closing Date under this Agreement;
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(c) No temporary restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the transactions
contemplated by this Agreement shall be in effect, nor shall any proceeding by
any bank regulatory authority seeking any of the foregoing be pending. There
shall not be any action taken, or any statute, rule, regulation or order
enacted, entered, enforced or deemed applicable to the transactions contemplated
by this Agreement which makes the consummation of such transactions illegal;
(d) All necessary regulatory approvals, consents, authorizations and other
approvals required by law for consummation of the transactions contemplated by
this Agreement shall have been obtained without any material conditions which in
First Banks' reasonable opinion are materially adverse to the interests of First
Banks (First Banks shall notify First State Bank and FCG in writing within ten
(10) days of the receipt of such regulatory action if any conditions have been
imposed which are unacceptable to First Banks), and all waiting periods required
by law shall have expired;
(e) Purchaser shall have received all documents required to be received
from First State Bank and FCG on or prior to the Closing Date, all in form and
substance reasonably satisfactory to Purchaser; and
(f) Purchaser shall have agreed to mutually satisfactory employment and
compensation arrangements with Gary Millhollon. With regard to employees of FCG
other than Mr. Millhollon, First Banks and First State Bank agree that First
Banks will be given the opportunity to employ any or all of such employees, and
First State Bank will not offer employment to any employee who is offered
employment by First Banks.
Article VIII
Termination or Abandonment
Section 8.01. Mutual Agreement. This Agreement may be terminated by the
mutual written agreement of the parties at any time prior to the Closing Date.
Section 8.02. Breach of Representations or Agreements. In the event that
there is a material breach in any of the representations and warranties or
agreements of First State Bank and FCG, on the one hand, or First Bank, on the
other hand, which breach is not cured within thirty days after notice to cure
such breach is given to the breaching party by the non-breaching party, then the
non-breaching party may terminate and cancel this Agreement by providing written
notice of such action to the other party hereto.
Section 8.03. Failure of Conditions. In the event that any of the
conditions to the obligations of a party are not satisfied or waived on or prior
to the Closing Date, and if any applicable cure period provided in Section 8.02
of this Agreement has lapsed, then the party that seeks performance of such
condition(s) may terminate and cancel this Agreement by delivery of written
notice of such action to the other party on such date.
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Section 8.04. Denial of Regulatory Approval. If any regulatory
application filed pursuant to Section 6.01 should be finally denied or
disapproved by a regulatory authority, then this Agreement shall be deemed
terminated and canceled; provided, however, a request for additional information
or undertaking by First Banks, as a condition for approval, shall not be deemed
to be a denial or disapproval so long as First Banks diligently provides the
requested information or undertaking. If any regulatory authority requests that
an application be withdrawn and First Banks, in consultation with First State
Bank and FCG, cannot effectively respond to or appeal any regulatory concerns,
First Banks shall be deemed to have failed to obtain regulatory approval. In
the event an application is denied pending an appeal, petition for review, or
similar such act on the part of First Banks (hereinafter referred to as the
"appeal") then the application will be deemed denied unless First Banks prepares
and timely files such appeal and continues the appellate process for purposes of
obtaining the necessary approval.
Section 8.05. Unilateral Termination. If the Closing Date does not occur
on or prior to the date which is 180 days following the date hereof, then this
Agreement may be terminated by any party by giving written notice to the other
parties.
Article IX
Transitional and Post-Closing Matters
Section 9.01. Transitional Matters; Notification to Lessees. (a) The
parties recognize that it will be necessary to cooperate in preparing for the
orderly transfer of the Assets and the Records prior to the Closing and
completing the same following the Closing. Upon the reasonable request of First
Banks, First State Bank and FCG agree to provide to Purchaser access to their
books, records, accounts and personnel familiar with the Assets, in order to
assist First Banks in planning for the transfer of the Assets and the Records,
servicing the Assets, providing good customer service and realizing the economic
benefits of the Asset Purchase. In that regard, First State Bank and FCG will
make available their personnel for the purpose of coordinating the transfer of
software, Records and accounts to Purchaser prior to the Closing.
(b) If requested by Purchaser, at a reasonable time prior to the expected
Closing Date, First State Bank will assist Purchaser in distributing a written
notice to the parties to the Assumed Leases describing the pending transfer of
their accounts, in a form acceptable to both parties and in compliance with any
applicable regulations. The cost of such notice shall be borne by First Banks.
First State Bank will cooperate with First Banks in providing such other notices
to lessees as First Banks may reasonably request. Purchaser may, at its own
expense, after the date on which all regulatory approvals contemplated by this
Agreement shall have been received, communicate with and deliver information,
brochures, bulletins and other communications concerning the transactions
contemplated by this Agreement and the business and operations of Purchaser;
provided, however, that all such communications shall be subject to the prior
review and reasonable approval by First State Bank.
(c) Following the Closing Date, Purchaser shall service the Assumed Leases
and the Acquired Loans in the usual course of business. In the event that First
State Bank or FCG shall
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receive payments, documents or information relating to the Assumed Leases or the
Acquired Loans, they shall promptly forward the same to Purchaser and, upon
Purchaser's reasonable request, provide sufficient information regarding such
receipt in order to enable Purchaser to account for and service the relevant
asset in a timely manner.
(d) First State Bank and FCG shall cooperate with Purchaser in the
execution and filing of such documents as may be necessary to enable Purchaser
to use the name "First Capital Group, Inc." from and after the Closing Date.
Article X
Indemnification
Section 10.01. Indemnification of Purchaser. First State Bank and FCG
shall indemnify, hold harmless and defend Purchaser from and against any and all
damage, loss, liability, cost, claim, or expense (including reasonable legal
fees and expenses) incurred or suffered by Purchaser by reason of or resulting
from any breach by First State Bank or FCG of a representation, warranty or
covenant herein or in any other agreement executed in connection herewith, any
liability relating to the Assets or the Assumed Leases which was incurred on or
prior to the Closing Date, or any liability of First State Bank or FCG not
expressly assumed by Purchaser.
Section 10.02. Indemnification of First State Bank and FCG. First Banks
shall indemnify hold harmless and defend First State Bank and FCG from and
against any and all damage, loss, liability, cost, claim, or expense (including
reasonable legal fees and expenses) incurred or suffered by First State Bank and
FCG by reason of or resulting from any breach by Purchaser of a representation,
warranty or covenant herein or in any other agreement executed in connection
herewith or any liability relating to the Assets or the Assumed Leases which is
incurred after the Closing Date.
Article XI
General
Section 11.01. Confidential Information. The parties acknowledge the
confidential and proprietary nature of the "Information" (as herein described)
that has heretofore been exchanged and that will be received from each other
hereunder and agree to hold and keep, and to cause their respective agents,
representatives, shareholders, affiliates, employees and consultants to hold and
keep, such Information confidential. Such Information will include any and all
financial, technical, commercial, marketing, customer or other information
concerning the business, operations and affairs of a party or the party's
affiliates that may be provided to the other, irrespective of the form of the
communication of such information, by such party's employees or agents. Such
Information shall not include information that is or becomes generally available
to the public other than as a result of a disclosure by a party or its
representatives in violation of this Agreement. The parties agree that the
Information will be used solely for the purposes contemplated by this Agreement
and that such Information will not be disclosed to any person
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other than employees and agents of a party who are directly involved in
evaluating the transaction. The Information shall not be used by a party or its
affiliates in any way detrimental to the other party or its affiliates,
including use directly or indirectly in the conduct of a party's business or any
business or enterprise in which such party may have an interest, now or in the
future, and whether or not now in competition with such other party.
Section 11.02. Publicity. First Banks, First State Bank and FCG shall
cooperate with each other in the development and distribution of all news
releases and other public disclosures concerning this Agreement and the
transactions contemplated hereby and shall not issue any news release or make
any other public disclosure without the prior consent of the other party, unless
such is required by law upon the written advice of counsel or is in response to
published newspaper or other mass media reports regarding the transaction
contemplated hereby, in which such latter event the parties shall consult with
each other regarding such responsive public disclosure.
Section 11.03. Return of Documents. Upon termination of this Agreement
without the transactions contemplated by this Agreement becoming effective, each
party (i) shall deliver to the other originals and all copies of all Information
made available to such party, (ii) will not retain any copies, extracts or other
reproductions in whole or in part of such Information, and (iii) will destroy
all memoranda, notes and other writings prepared by either party based on the
Information.
Section 11.04. Notices. Any notice or other communication shall be in
writing and shall be deemed to have been given or made on the date of delivery,
in the case of hand delivery, or three (3) business days after deposit in the
United States Registered Mail, postage prepaid, or upon receipt if transmitted
by facsimile telecopy or any other means, addressed (in any case) as follows:
(a) if to First Banks: First Banks, Inc.
11901 Olive Boulevard
Creve Coeur, Missouri 63141
Attention: Donald W. Williams
Facsimile: (314) 854-5454
with a copy to: John S. Daniels
Attorney at Law
7502 Greenville Avenue, Suite 500
Dallas, Texas 75231
Facsimile: (214) 890-4003
(b) if to First State Bank: First State Bank of Taos
7900 Jefferson NE
Albuquerque, New Mexico 87109
Attention: Brian Reinhardt, Chief
Financial Officer
Facsimile: (505) 241-7572
17
<PAGE>
with a copy to: Marshall G. Martin
Attorney at Law
500 Marquette, NW
Albuquerque, New Mexico 87102
Facsimile: (505) 768-1529
(c) if to FCG: First Capital Group, Inc.
5601 Office Blvd. NE, Suite 200
Albuquerque, New Mexico 87109
Attention: Gary Millhollon
Facsimile: (505) 241-7177
or to such other address as any party may from time to time designate by notice
to the others.
Section 11.05. Expenses. Except as specifically provided herein, First
State Bank and FCG and Purchaser each shall pay all of their own out-of-pocket
expenses incurred in connection with this Agreement, including appraisals,
accounting fees, legal fees and data processing charges, if any, whether or not
the transactions contemplated by this Agreement are consummated.
Section 11.06. Survival of Representations, Warranties and Agreements. The
representations, warranties and agreements contained herein shall survive for a
period of two years following the Closing Date or the earlier termination of
this Agreement.
Section 11.07. Entire Agreement. This Agreement constitutes the entire
agreement between the parties and supersedes and cancels any and all prior
discussions, negotiations, undertakings, agreements in principle and other
agreements between the parties relating to the subject matter hereof.
Section 11.08. Headings and Captions. The captions of Articles and
Sections hereof are for convenience only and shall not control or affect the
meaning or construction of any of the provisions of this Agreement.
Section 11.09. Waiver, Amendment or Modification. The conditions of this
Agreement that may be waived may only be waived by notice from the party waiving
such condition to the other party. The failure of any party at any time or times
to require performance of any provision hereof shall in no manner affect the
right at a later time to enforce the same. This Agreement not be amended or
modified except by a written document duly executed by the parties hereto.
Section 11.10. Rules of Construction. Unless the context otherwise
requires: (a) a term has the meaning assigned to it; (b) "or" is not exclusive;
and (c) words in the singular may include the plural and in the plural include
the singular.
Section 11.11. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which shall
be deemed one and the same instrument.
18
<PAGE>
Section 11.12. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. There shall be no third party beneficiaries hereof.
Section 11.13. Governing Law; Assignment. This Agreement shall be governed
by the laws of the State of New Mexico and any applicable federal laws and
regulations. This Agreement may not be assigned by any of the parties hereto,
except that First Banks may designate one of its subsidiaries to act as the
Purchaser hereunder, provided that First Banks shall remain obligated to First
State Bank and FCG for the performance of its obligations and those of Purchaser
hereunder.
Section 11.14. Arbitration. (a) Except as provided in subparagraph (b),
any controversy or claim arising out of or relating to this Agreement or the
breach hereof shall be settled by arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association. Unless otherwise
agreed, such arbitration shall be conducted at offices of the American
Arbitration Association located in Albuquerque, New Mexico, and the parties
hereto hereby consent to personal jurisdiction in any arbitration proceeding
instituted pursuant to this provision. Judgment upon an award rendered by the
arbitrator in such a proceeding may be entered in any court having jurisdiction
thereof. If any arbitration or other proceeding is brought arising out of or
relating to this Agreement or the breach thereof, the prevailing party shall be
entitled to recover reasonably attorneys' fees and other costs incurred in the
proceeding, in addition to any other relief to which such party may be entitled.
(b) Notwithstanding subparagraph (a), in the event of a breach of any
provision of Sections 5.06, 5.08, 6.05 or 11.01 hereof, the non-breaching party
shall not be required to institute such claim in arbitration, but it shall have
the option of seeking any form of relief to which it may be entitled, including
injunctive or other equitable relief, in any court having jurisdiction over such
claim. The prevailing party in such proceeding shall be entitled to recover
reasonably attorneys' fees and other costs incurred in the proceeding, in
addition to any other relief to which such party may be entitled.
19
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
FIRST BANKS, INC.
By: Donald Williams
------------------------------
Its: Executive Vice President
------------------------------
FIRST STATE BANK OF TAOS
By: Brian C. Reinhardt
------------------------------
Its: Executive Vice President & CFO
------------------------------
FIRST CAPITAL GROUP, INC.
By: Gary Millhollan
------------------------------
Its: President
------------------------------
20
<PAGE>
AMENDMENT TO ASSET PURCHASE AGREEMENT
This Amendment to Asset Purchase Agreement, dated as of February 29, 2000,
is by and among First Banks, Inc., a Missouri corporation ("First Banks"), First
State Bank of Taos, a New Mexico state bank ("First State Bank"), and First
Capital Group, Inc., a New Mexico corporation ("FCG").
On December 31, 1999 First Banks, First State Bank and FCG executed the
Asset Purchase Agreement. The parties have concluded that it would be desirable
to amend certain provisions of the Asset Purchase Agreement, as set forth herein
(the "Agreement"). Except as specifically amended herein, the terms and
provisions of the Agreement shall remain in full force and effect. Capitalized
terms used but not defined herein shall have the meanings given to such terms in
the Agreement, except that following the execution of this Amendment, the term
"Agreement" refers to the Asset Purchase Agreement, as amended hereby.
1. Section 2.03(a) of the Agreement is hereby amended to read in its
entirety as follows:
The purchase price for all of the Assets except Acquired Loans shall
be determined on the Closing Date as described on the Exhibit to this
Amendment, and shall be equal to the Book Value of the Lease Portfolio at
the close of business on the business day preceding the Closing Date plus a
purchase premium of $1,577,089.32, minus the Book Value of participated
leases at the close of business day preceding the Closing Date, minus the
Book Value at the close of business on the business day preceding the
Closing Date of the leases excluded from the Asset Purchase by First Banks
pursuant to Section 1.03(b) of this Agreement, minus 2.5%times the Book
Value of the leases excluded from the Asset Purchase pursuant to Section
1.03(b) if this Agreement.
2. Section 2.04 of the Agreement is hereby amended to read in its
entirety as follows:
Section 2.04 Prorations; Incentive Compensation. (a) Except as
otherwise specifically provided in this Agreement, First State Bank and FCG
shall operate for their own accounts the equipment leasing business to by
transferred until the close of business on the Closing Date, and the
Purchaser shall operate such business after the Closing Date.
(b) Items of expenses directly attributable to the operation of the
Assumed Leases and the office expenses of FCG, except for incentive
compensation relating to leases originated from January 1, 2000 through the
Closing Date, shall be prorated and paid as of the closing of business on
the Closing Date, whether or not such payments would normally have been
made as of such time. Expenses to be prorated may include, without
limitation, employee compensation other than incentive compensation,
property and casualty
<PAGE>
insurance (if such prorations are not made by the applicable insurer(s)),
telephone, electric, gas, water, and other utility services, security
services, assessments (including regulatory assessments), payments due on
Assumed Leases, and similar expenses and revenue related to the business of
FCG. Prior to the Closing, First State Bank and FCG will pay all incentive
compensation relating to leases originated prior to January 1, 2000.
(c) Promptly following the Closing, First Banks will implement a
system for the payment of incentive compensation to employees of First
State Bank and FCG who become employees of the Purchaser after the Closing
(the "First Banks Plan"), which system will govern compensation of the
employees of Purchaser who receive incentive compensation and will be
different than that utilized by First State Bank and FCG. In the event that
any such compensation is payable as of the Closing Date to employees with
respect to leases originated by FCG from January 1, 2000 through the
Closing Date (according to the terms of the First Banks Plan), First Banks
or Purchaser will pay the appropriate amounts to such employees within ten
days following the Closing Date.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
FIRST BANKS, INC.
By: Donald Williams
-----------------------------------
Executive Vice President
FIRST STATE BANK OF TAOS
By: Brian C. Reinhardt
-----------------------------------
Executive Vice President & CFO
FIRST CAPITAL GROUP, INC.
By: Gary Millhollon
-----------------------------------
President
<PAGE>
EXHIBIT TO AMENDMENT TO ASSET PURCHASE AGREEMENT
Purchase Price Calculation:
Book value of the Lease Portfolio at the close of business on the
business day preceding the Closing Date
Plus Purchase Premium of $1,577,089.32
Minus Book Value of participated leases at the close of business on the
business day preceding the Closing Date
Minus Book Value of leases excluded from the Asset Purchase pursuant to
Section 1.03 (b) of the Asset Purchase Agreement at the close of
business on the business day preceding the Closing Date
Minus 2.5% times the Book Value of leases excluded from the Asset Purchase
Pursuant to Section 1.03(b) of the Asset Purchase Agreement
- --------------------------------------------------------------------------------
Example:
Assume: Values as of December 31, 1999
$1,000,000 Book Value of leases excluded from the Asset Purchase
pursuant to Section 1.03(b) of the Asset Purchase Agreement
<TABLE>
<CAPTION>
<S> <C> <C>
Book Value of the Lease Portfolio
Financing Leases $66,188,738.60
Operating Leases 2,213,988.63
--------------
$68,402,727.23
Plus Purchase Premium $ 1,577,089.32
Minus Book Value of participated leases $ 5,319,154.47
Minus Book Value of excluded leases $ 1,000,000.00
Minus 2.5% times B.V. of excluded leases $ 25,000.00
Purchase Price $63,635,662.08
</TABLE>
